Common Tragedies

Thoughts on Environmental Economics

Transport: fees or subsidies? [update]

Posted by Daniel Hall on October 1, 2007

James Joyner does some private calculus and comes out with an explanation for why more people don’t commute on Metro:

I’m now commuting into D.C. on a near-weekdaily basis. According to GoogleMaps, the office is 13.5 miles from the house. I can usually drive there in 45-60 minutes during off-peak hours, although it can sometimes take much longer if there’s an accident. I can park in the garage next to my office for the day for $12. Conversely, I can drive 15-20 minutes to a Metro station, pay $4 to park, wait as long as 15 minutes for a train, pay another $2.65 to get two blocks from the office 35-50 minutes later, followed by a 5-10 minute walk to the office.

So, in order to save $2.70 (plus a nominal amount of gasoline), it would cost me 30-75 minutes each day for the round trip, plus the privacy and autonomy I enjoy in my own vehicle. Given that I earn enough that $3 is poor compensation indeed for that much of my time, I drive unless there’s a really good reason not to.

I’ll note that he’s commuting at off-peak, which is probably skewing his decision toward “drive”, but for the most part I’ll assume he knows how to solve his own travel optimization problem. His solution for increasing ridership, however, has problems:

And they’re about to raise the rates for Metro fares and parking, further skewing the calculus in the direction of “drive.”

There seems to be an underlying assumption made by the officials in the report above that public transportation should pay for itself through fees. That’s a rather strange notion when the alternative to suburbanites parking and taking public transit into the District is more people driving and clogging up the roads, which are heavily subsidized by tax dollars.

Unless they figure out a way to create express trains to get people into D.C. from the far suburbs with making 19 stops in between, they’re probably not going to attract people like me to Metro. If, however, they decided to subsidize Metro station parking so that the cost savings of public transit vice driving was more substantial (say, $7 a day instead of $3) they would almost certainly attract far more lower middle class passengers.

Let me say first off that Joyner nails the underlying reasons for why so many people commute in their cars: we massively underprice roads by giving them away for free. This makes it even sillier that, on the other side of the transport coin, we should expect public transit riders to pay the full price of their trips. But I am skeptical that Joyner’s proposal for subsidizing Metro riders will work as well as he thinks.

I don’t know where Joyner is commuting from, but the limiting factor in Metro parking decisions out where I live is not price — it’s availability. The entire lot fills up every weekday, despite the $4 parking charge. Currently that typically happens sometime before 9 am; if parking was made free, it would happen earlier — perhaps much earlier.

The fee for parking reduces the inevitable congestion that occurs when you give something valuable — parking space at a Metro station — away for free. People are going to ‘pay’ for parking, either with money or with queuing and riding the train earlier than they otherwise would.

We could of course build more parking on the outskirts of the Metro system to help increase ridership, and perhaps the Metro system should. It certainly seems possible to me that adding more parking at Metro stations would be an efficient way to improve commute times. Building parking garages to increase ridership on an already-constructed train system would surely be less expensive than building more roads, for example.

Even if more parking was built, however, there are other good reasons to charge for parking. If parking was free at my local Metro station — and there were spaces available — I would probably drive every day. Instead, I ride the bus. It doesn’t actually take any longer once I catch it, but obviously I have to walk to the bus stop and wait, sometimes 10 minutes. I am willing to give up that ~20 minutes (there and back) for the ~$2.50 I save relative to driving and parking.

Giving parking away would make driving cheaper than the bus. This might indeed help the lower middle class commuter — presuming there are enough spaces for everyone at a parking price of zero — but it would be bad for the truly poor: it would likely ‘ghetto-ize’ bus service, leaving it the province of only those who don’t own cars. Further, the declining ridership would make the bus service less efficient than it currently is, and probably lead to long-term declines in the level of service offered, in terms of number and frequency of trips.

So I’ll argue that Joyner gets his policy the wrong way round: when faced with the problem that drivers are subsidized and rail commuters get charged, the solution is not to subsidize rail commuters, but to charge drivers. Roads should be tolled, and there should be time-variant charges that increase as congestion increases. There should be a price on carbon emissions (which would effectively tax gasoline use) to account for the costs that GHG emissions impose. Meanwhile, Metro should continue to charge for parking, to help allocate scarce parking resources and encourage many commuters to use buses. I won’t take a firm position on whether Metro should be building more parking or raising parking rates, since I don’t know that much about the specifics, but certainly one or the other should be done where I live, given how many cars you can find parking illegally in desperation in the lots by 9 am on most weekdays. Potentially both might be beneficial.

What about lower income commuters? Putting all these charges in place will make it more expensive to commute, regardless of the route taken. They should be given transportation vouchers that they can use on any mode of transportation they see fit — gasoline, tolls, parking, buses, trains — and then allowed to solve their own travel optimization problem. This approach will be far more likely to leave them with attractive choices than Joyner’s proposal for giving away a right-to-park — a ‘gift’ that would quickly become over-used and debased.

H/T: Megan McArdle

Update: More thoughts from both James Joyner and Megan McArdle.

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