1. Smarter Travel Programmes– Financial impacts for Transport for London COLIN BUCHANAN www.cbuchanan.es

2. 2 Structure Introduction Least Cost Planning Applying it to London Impact of ST programmes Cost Issues ST programme financial impacts Conclusions

3. 3 Introduction Main aim of ST is shifting trips from car to more sustainable forms of transport: rail, bus, walking and cycling. Economic benefits of Smarter Travel include: Environmental benefits Highway Congestion Relief Operating Cost savings Health and ambience benefits

4. 4 Introduction There are financial implications linked to mode shift – revenues and costs. In London those fall on TfL CB asked to look into the financial impacts for TfL of Smarter Travel programmes: School travel plans Workplace travel plans Area based schemes Car clubs Personalised travel planning Travel awareness and marketing

5. 5 Introduction Could Smarter Travel Reduce operating subsidy? Reduce or delay capital expenditure? `

6. 6 Structure Introduction Least Cost Planning Applying it to London Impact of ST programmes Cost Issues ST programme financial impacts Conclusions

7. 7 Least Cost Planning Means taking a holistic view of costs and revenues. Using demand management to eliminate or delay capital investment. Businesses paying to persuade people to consume less of their product. Can be soft (providing information on choices) or hard (paying for usage reductions). ST has elements of both.

8. 8 What Drives LCP? Essentially when Marginal Cost > Marginal Revenue – applies mainly to industries where: There is a constant increase in demand Costs are driven by peak usage High cost of capital investment

9. 9 Average & Marginal costs

10. 10 LCP and TfL? Applying LCP to TfL: operating costs > revenues (eg London Buses) demand growth triggers need for capital investment (eg peak period rail demand) In both cases lower demand could lead to a financial gain/saving.

11. 11 LCP measures Information/marketing Financial incentives/subsidies Targeting measures at specific problems (e.g: when and where demand is highest) Improve supply efficiency instead of new infrastructure Promote efficiency by the end-user

12. 12 LCP Conclusions Spending £ to reduce demand is a perfectly reasonable response, especially within networked industries. Transport is not a good its a derived demand. More transport is not necessarily a good thing. BUT transport does have important social, environmental and economic implications. Cost/subsidy minimisation not an optimal policy

13. 13 Structure Introduction Least Cost Planning Applying it to London Impact of ST programmes Cost Issues ST programme financial impacts Conclusions

14. 14 Impacts of ST programmes - method Looked at ST programmes and what their impacts on mode shift had been Data sources: i-trace, other TfL/DfT reports and projects and CB experience Assumptions made on differential impacts by time period ( peak and offpeak) and location (Inner and Outer London) More data needed!

15. 15 Annual impacts of ST programmes in trips (per £X spend) * For STP, costs include wider infrastructure investment Trips per annum

16. 16 ST Programmes - Conclusions All focus on reducing car use. WTP most effective at that and STP the least (half budget on engineering measures). WTP/PTP generally transfer most people to rail/bus Area-based schemes, STP, marketing and travel awareness have highest mode shift towards walking & cycling Mode shift varies significantly by location and time of day Analysis assumes (a) no change in total trip numbers – OK for STP but probably overestimates shift to other modes for other programmes (b) average distances per trip on all modes

17. 17 Structure Introduction Least Cost Planning Applying it to London Impact of ST programmes Cost Issues ST programme financial impacts Conclusions

18. 18 Cost Issues AC = TC/Demand MC = TC/D Marginal costs are most relevant to this study we want the financial impact of a change in demand In general MC(bus) is close to AC(bus) whereas MC(rail) is very low until capital investment reqd. Both average and marginal costs need to include the costs of capital investment Revenues assumed to be constant (MR=AR) although vary by mode

19. 19 Costs & Revenues in London Key conclusions: Buses rarely cover full costs through revenues – scope for some additional demand in off peak Rail financial performance improved by new users until further capital spend required Peak period, peak direction demand growth may be financially negative

20. 20 Structure Introduction Least Cost Planning Applying it to London Impact of ST programmes Marginal Costs by mode ST programme financial impacts Conclusions

21. 21 Financial Impacts Purely based on the cost/revenue analysis: WTP could be financially viable investment, quite apart from economic benefits from congestion relief STP negative financial impacts because children do not pay bus fares. Extra costs & no revenues Other programmes recoup between 20% and 80% of their costs in financial gains for TfL

22. 22 Structure Introduction Least Cost Planning Applying it to London Impact of ST programmes Marginal Costs by mode ST programme financial impacts Conclusions

23. 23 Financial conclusions Most gains in Outer London/off peak where shift from car to rail & bus is financial gain because of spare capacity In the peaks best to concentrate on shift to walk/cycle Financial impacts vary widely by mode, time period and location. General conclusions will vary widely in particular case studies

24. 24 Conclusions 1.ST programmes clearly generate significant financial returns for TfL – these should be included in the economic case for ST 2.Financial returns vary widely between programmes and locations – but are significant 3.Returns are based on existing ST programmes focussed on reducing car use. Could be much higher if overall focus changed to shifting to walk/cycle

25. 25 Implications Targeting ST programmes on specific issues could dramatically improve financial and economic case Local ST programmes could reclaim some funds from bus/rail operators? ST could focus on switching users to walk/cycle to avoid the need for additional buses?

26. 26 Thank You Paul Buchanan Paul.buchanan@cbuchanan.co.uk Buchanan Consultores www.cbuchanan.es T 91 781 8293 M 607 94 17 33