18 December 2005

Should Asian governments try to slow down motorisation?

Should governments actively slow down the rate of increase in private vehicle ownership? This is relevant to urban transport predicaments in many developing countries.

It seems to be out of fashion (not to mention politically difficult) for governments to consider trying to influence the rate of change of vehicle ownership (or ‘motorisation’ in transport studies jargon).

India's recent draft national urban transport policy (go here for pdf) explicitly rejects slowing down ownership growth but suggests that urban areas contain vehicle use. Shanghai's efforts to contain car ownership through its licence plate auction are disapproved of by China's national government. Even Singapore now wants to 'strike a better balance between the ownership and usage costs of a car' (see Budget 2002). (BTW I have a relevant paper: go here for the journal page or here for a pdf.)

There seems to be a widespread consensus that transport demand management should focus on vehicle usage not ownership. There are various good reasons for this.

However, there are also some arguments in favour of influencing ownership (especially slowing its growth).
  1. the practical difficulties of usage pricing in the context of low and middle-income countries
  2. by contrast, taxes and charges on vehicle ownership are common and feasible for most countries
  3. there are some valid budgetary and luxury tax arguments suggesting purchase or ownership taxes can be welfare enhancing
  4. household travel behaviour seems to change drastically with the purchase of a vehicle, with the ease of movement inducing extra travel
  5. and this effect seems difficult to reverse ... there seems to be 'hysteresis' with cars being seen as a luxury before they are bought but as a necessity after they are owned! (see Dargay, J.M. (2001) ‘The effect of income of car ownership: evidence of asymmetry’, Transportation Research A, 35, pp. 807-21).
  6. The sunk costs of vehicle ownership also contribute probably. A household has a considerable incentive to make good use of such a significant piece of capital equipment that is depreciating whether it is used or not.
  7. at the whole-metropolitan area level we can also see difficult to reverse changes:
    • once motorisation reaches highish levels a series of system-wide changes seem to start to happen in the transport system and the land-use system that may tend to 'lock in' continued high levels of car use (many call this the emergence of 'automobile dependence' or 'automobile dependency').
    • conversely, slowing down the rate of motorisation might buy time in which cities can enhance their ability to cope and enhance the various alternatives to private motor vehicles (Singapore, Hong Kong, Seoul, Tokyo and others seem to have benefited from this effect, even if it was not always deliberate, and have been able to retain high levels of public transport use despite high levels of affluence).
  8. Finally, in the big picture it seems clear that motor vehicle use, fossil fuel use in transport, and other impacts of traffic such as road deaths, are all highly correllated with vehicle ownership. At the national scale, differences in usage per vehicle are relatively small (although in cities such differences can be larger apparently).
But what government could even consider taxing car purchases or ownership more severely? Doesn't everyone aspire to the freedom offered by private vehicle ownership?

Certainly the politics are curly. I wonder if the way forward is to look for the aspirations that lie behind the desire for car ownership?

People certainly do want transport to serve them very well... including many or all of the benefits that a private vehicle offers. But is it a car that most people really want? Or is it the convenient access to the contacts, goods, services and places that high mobility with your own car seems to offer?

Obviously none of the alternatives can match the attractions of cars on their own - even in the most transit-oriented places I suspect. Not public transport. Not even a wonderful metro system. Not bicycles. Not taxis. Not car sharing even.

But there are some signs that maybe a package of all of these alternatives, working in cooperation, MIGHT just start to offer people a level of mobility service that approaches car ownership's and which beats it on price decisively. Switzerland's car sharing industry has been leading the way on this. HannoverMobile in Germany seems to be taking it further - offering a mobility package that is competitive with car ownership.

If we can offer a vision of meeting people's real mobility aspirations without private car ownership then could a policy of slowing vehicle ownership actually become politically acceptable?


Sivasothi said...

Hey Paul, try this for the link to your paper - link

Anonymous said...

A quick comment on sunk cost. I read your points 4, 5, and 6 as being essentially the same. In other words, the drastic change in travel behavior and “hysterasis” with cars once purchased, both can be explained in large part by the sunk cost associated with the initial purchase. Of course your other points play into this as well, especially the land use patterns and transportation infrastructure policies and projects that result from political pressures of an increasingly auto-owning public.

However, considering the increase in driving attributed to the “sunk cost” of vehicle purchase, insurance, and taxes, licensing and fees, it would be logical to assume that increasing the initial costs through increasing ownership fees (ala Singapore) would further encourage use of vehicles once purchased. It would be great to see some data on the impact of ownership cost on total vehicle miles traveled in comparison to vehicles purchased. Perhaps Singapore has such information? This leads into the broader question of whether transportation decisions should be based on managing number of cars or on vehicle miles traveled (given financial and political constraints, “both” may not be a reasonable answer).

Another concern with ownership control is that it does not manage demand by location. Once the vehicle is purchased, the same cost applies to driving downtown as it does to intercity and rural road travel, resulting in rural communities paying the same to drive on empty roads as urbanites do to use congested city routes. My understanding is that efforts to balance this by imposing ownership costs at the local level are repeatedly foiled by those who buy cars and registration outside the area of enforcement.

Thanks for creating this blog. I look forward to reading and contributing on a regular basis and hope that others interested in Asian transportation issues will do the same.

Also, the link to your paper in this post does not work for me. Maybe you can check it?

-Scott TenBrink

J Krishnayya said...

Excellent start.

I wonder if anyone has studied the problem of MOTOR CYCLES (as distint from Cars, and bicycles).

In my city, in particular - Pune - these are really making it impossible for any other means of transport to survive, including pedestrians.

Motor bikes are used for student transportation to college, as well as for going to and from work. How can we provide end-to-end public transport for this mode of use? At present busses are really not doing the job, and in many cases require too many changes. Jobs in Industrial areas are pretty much out of bus range (since the stop would be upto 1.6 km or more from the plant.)

J G Krishnayya
Systems Research Institute
Pune, India

Paul Barter said...

In response to Scott:

I do see points 4, 5 and 6 as being slightly different. Even if you gave me a car for free (no sunk cost to me) I think it would have a considerable influence on my travel behaviour. It would change the places that seem easy to get to, would reduce my use of walking, cycling, public transport, and reduce my visits to places that are easy to reach by walking, cycling and public transport.

Point 5 (irreversibility) is about how easily i could get used to that convenience of having a car (again even if it had been a gift). Having a car is rather addictive maybe.

But I agree that sunk costs are a big issue. My paper on Singapore vehicle taxes actually suggests a way to control vehicle ownership AND eliminate the extra sunk costs of vehicle taxes. But the trick involved (a usage tax paid as a lump sum giving an allowance of usage, which you would have to top up each time your usage allowance runs out) might not be feasible in most places, especially not low-income countries.

BTW the paper also has some (rather anecdotal) evidence on the impact of the high fixed costs of cars on the amount each car is used.

Paul Barter said...

In response to J G Krishnayya:

Thanks for this question. Yes indeed motorcycles are a big issue. Lots of people are thinking about this. No easy answers that I can see. But very interesting dilemmas and options. Maybe I should post a blog entry on the motorcycle issue soon!

Anonymous said...

Paul, thanks for the expanded explanation. I realized after submitting the post that your paper seemed to address the issue of high fixed cost. I was frustrated that I could not access the paper. Any chance that you could make it available without registration/fees?

Your no-sunk-cost ownership fee is similar in concept to Parking Cash-Out (PCO), which I did research for in Ann Arbor, Michigan. This program also creates a kind of reward for not driving (or actually, for not parking). In the case of PCO, the up-front cost is replaced with a behavior-based pay-out.
I found the two biggest problems with implementing this kind of scheme are the complex information systems required, and the difficulty in conveying the benefit to users. I agree that both of these issues would be inflated in a "developing" country.


Paul Barter said...

I have now provided a link to a pdf of the pre-print version of the paper to make it more accessible.