Transport Action BC

2012, May 31

Public Transit Boosts Local Economies

Filed under: city transit, Rapid Transit, Uncategorized — Tags: , , , — Rick @ 8:52 pm

Some intriguing numbers surfaced in media reports on the recent disruptions of Montréal’s Métro. The Board of Trade of Metropolitan Montréal  and the Montréal Economic Institute  provided estimates of the economic impact (lost productivity) of the disruptions.  The Board of Trade estimated the 90 minutes of disruption cost the city’s economy $11,000,000 while the more conservative MEC estimated $9,300,000. Put positively, the Métro generates significant productivity benefits to Montréal’s economy.

Unfortunately, details on the methodology used to derive these numbers are not available. However, the number can be used to calculate an order of magnitude estimate of the value of public transit to a local economy.

Operating conservatively, I‘ll assume the productivity impact [PI] is a high estimate, given the political situation under which it was released.  Therefore, I’ve reduced it by approximately 50% to $5,000,000 per 90 minute time period [MTP]. Also, I’ll assume that most of the productivity impact of the Métro is provided during the peak hours when the system is at its busiest. Peak hours are generally considered as 06:00 – 09:00 and 16:00 – 19:00 or 6 hours / business day which equals four, 90 minute time periods:

  • 4 (90 MTP) X $5,000,000 (PI / 90 MTP) = $20,000,000 PI for 1 business day.
  • 20 (business days / month) X 12 (months / year) X $20,000,000 (PI /business day) = $4.8 billion PI / year.

Thus, Montréal’s transit system has a positive, $4.8 billion productivity impact on the city’s economy each year.

The Société de transport de Montréal [STM], which operates the transit system, has a 2012 operating budget of $1.23 billion. I’ve used the total budget number because the Métro and bus system operates as a network of interdependent modes – customers have to reach the subway somehow. Using the PI / year calculated above, we find that the public investment in Montréal’s transit system, through fares and taxes, generates an annual return of almost 400% in productivity impacts:

  • {($4.8 billion PI / year) ÷ ($1.23 billion STM 2012 operations budget)} X 100 = 400%
  • Eliminating the percentage gives a constant of 4, which I’ll call the TPI [Transit Productivity Impact]

Assuming, and remember we’re dealing with orders of magnitude in this discussion, that TransLink’s transit operations provide a similar boost to Metro Vancouver’s economic productivity, we can estimate the impact of transit using TransLink’s 2012 budget. TransLink forecasts that transit operations will cost $871 million and transit police $29.6 million for a total of about $900 million. I’ve included policing costs in the calculation because their presence adds safety, security and comfort to the transit system, thus encouraging ridership.

  • $900,000,000 (TransLink 2012 transit operations budget) X 4 (TPI Factor) = $3.6 billion PI / year.

Thus, in spite of all the negative publicity TransLink has received lately, the organisation still provides significant economic benefits to the region it serves. Admittedly, this is a very basic analysis based on an unsubstantiated number from a media release in a highly charged environment. However, it should help us move away from the image that public transit is simply a costly drain on taxpayers which only benefits a few (the “loser cruiser” attitude). Public transit must be treated as a valuable, respected, public investment tool that, in addition to social and environmental benefits, also has significant economic ones.

 

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