What costs society more – cars or public transport?

Cost per passenger km by mode in Sydney

This simple but extraordinary chart (see first graphic) is from a paper written last year by one of the country’s leading transport researchers, Dr Garry Glazebrook, of Sydney’s University of Technology.

In the paper, the author estimates the total cost of different transport modes, taking account of both private and social (i.e. external) costs. The costs are based on Sydney.

A number of interesting things about travel are evident from the chart, some of which are familiar and some which may surprise.

First, both private and public transport modes generate significant social costs. These costs are borne generally by society, “either in the form of subsidies (e.g. rail and bus subsidies from government, or hidden parking subsidies for car users) or in the form of externalities (including pollution, congestion, accidents, etc)”.

Second, although their composition is quite different, the social costs of private and public transport are essentially the same, at around 38c per passenger kilometre. One big difference of course is that subsidies for public transport are paid in actual dollars by government whereas the social costs of cars are largely an unpaid burden on others (primarily other road users).

Third, motorists pay much more out of their own pockets to drive than they do to travel by public transport. Cars cost motorists 48c/passenger-km whereas trains only cost 11c and buses 19c. In my view, travellers are prepared to pay more for car travel because for most trips it is faster, more convenient and more comfortable than public transport (CBD work trips are the most obvious exception).

Fourth, motorists tend to perceive the cost of car travel as lower than it actually is – they take account of petrol and tolls (14c/passenger-km) but neglect standing costs like depreciation and interest (34c/passenger-km). This means some trips are taken by car when it would’ve been cheaper to travel by public transport (in reality, most of the social benefits of this difference could only be realised at the time of deciding whether or not to own a car. Or if drivers rented their cars rather than bought them).

Annual social cost of operating a car in Sydney

This chart which I’ve adapted from the paper (see second graphic) is also interesting. It shows that the most significant externality associated with cars – accounting for more than half of their total social cost – is traffic congestion. Greenhouse emissions from cars cost society less than 1c/passenger-km. The author used a carbon price of $10/tonne, but even at $40/tonne, I calculate the cost is still less than 1c/passenger-km.

There are inevitably data limitations in an exercise like this. Dr Glazebrook puts some caveats on his findings. His estimate of the externalities associated with cars is conservative – for example, he says he does not value road space or make allowance for subsidies to drivers from local government.

Debates about what’s regarded as a legitimate “cost” are also inevitable. I disagree, for example, with his view that “free” shopping centre parking is a social cost – in my view the cost is paid by the shopping centre manager. I think there’s also an argument that the travelling time of each mode should be included as a private cost.

The final word belongs to the author, who argues that the key focus of policy should not just be on subsidies to public transport. He contends that when environmental and other externalities are considered and not just financial subsidies to operators, “cars are in fact subsidised by society to a similar level to that of public transport”.


9 Comments on “What costs society more – cars or public transport?”

  1. wilful says:

    Interesting study.
    A $10 a tonne carbon price is far too low. $40 is reasonable for the immediate future, but it’ll end up at $100/tonne, you mark my words. But equally, new car efficiency ought to be able to at least double by then, so it’s square. And my calculations are the same as yours, 0.8c/km in fact

    Not valuing road space and associated infrastructure (car parks) is pretty huge though, isn’t it? Surely the footprint of mass transit is far far smaller? Though I see that noise isn’t counted for public transport either, which isn’t right.

  2. Jim Wells says:

    Garry G’s analysis of bus and rail costs are simplistic in that they take total cost divided by an estimate of actual pass km.

    One gets a quite different view if one divides by some measure of capacity. This brings load factors into account. Bus suffers in GG’s analysis because of very low load factors particularly in outer suburban operations.

    At the margin bus is far cheaper than rail, even for quite high volumes, arguably for all volumes depending on infrastructure.


  3. jack horner says:

    Land used for car parking has opportunity cost regardless of whether it’s private or public land. Whether it’s private or public will affect where the cost falls – in the the case of public land, on the community as a whole; in the case of private land, on property owners and/or their customers in some proportion depending on how much the coast is passed through.

    A fee for parking, if any, is a transfer payment which affects where the cost falls, but does not affect the basic calculation of how much the cost is.

    The opportunity cost of land occupied by roads and parking (public and private) should be included and is probably significant, given that roads and parking occupy I guess a quarter to a third of the total land of a typical car-dependent post WW2 city (correct figure, anyone?)

    How much this cost is avoidable is an interesting question, as of course without roads for access none of the other land of a city would be usable. Possibly the cost of actual roads and parking should be considered as an increment to a hypothetical base case where there are enough roads for access only. Or a hypothetical transit-oriented city, if yiou’re interested in comparing the costs of the status quo with the costs of possible alternatives.

    • MB says:

      Very good points, jack.

      During the 90’s something called an Urban Landscape Taskorce was formed in Vancouver to help derive a policy to build urban “greenways”. That term ended up being synonymous with hundreds of km of roads that are now shared with bikes and pedestrians, that featured calming measures and pedestrian / cyclist-operated signals at major crossings, and that ultimately covered 100 km of waterfront seawall development.

      During their research and consultation phase the Taskforce calculated that fully 1/3 of Vancouver’s landbase consists of public roads and lanes. That figure would obviously climb if one factored in private parking and driveways.

      Name one city that accounts for the value of the land public roads sit on, outside of the initial acquisition costs and road construction and maintenance budgets (which already consume a very large chunk of average municipal budgets in car-dependent cities).

      Under new federal government rules, Canadian cities are now actually starting to provide valuations on the land under the roads, and it is very significant. Perhaps the value isn’t technically a “cost”, but an asset that could be devoted to more efficient forms of transportation when the price of fossil fuel rises.

  4. […] One of Annie Leonard’s complaints about the greedy rich guys in top hats is that they’re not paying for the costs they impose on others. These ‘externalities’ include the pollution caused by electronic waste dumped in places like Ghana. At the Melbourne Urbanist, Alan Davies is also looking at externalities when he asks: What costs society more – cars or public transport? […]

  5. ben ewald says:

    Glazebrook’s analysis is a fantastic resource for those of us pushing for more sustainable transport. I disagree with the comment that “free’ parking at supermarkets should not be counted as a cost. The cost of the parking is distributed across the cost of the products sold. In effect it falls on the whole society except those people who shop at a shopping centre without a car park. For most of us there is no option but to shop at a shopping centre with a big car park. As a cyclist Im paying for the carpark via shelf prices even though I dont use it.
    Ben Ewald, Newcastle.

    • Alan Davies says:

      Ben, I assume you’re referring to my comment about ‘free’ parking at supermarkets. If so, I’m not arguing that it’s not a cost – it is. My point was that it’s a private rather than social cost, since it’s paid by the shopping centre owner and (some proportion of it) is ultimately passed back onto motorists.

  6. […] There’s another issue I haven’t addressed about who actually pays when travellers shift from cars to public transport, but that’s a complex topic I’ll have to leave for another time (I’ve looked at some aspects here). […]

  7. […] increase while simultaneously reducing road accidents – one of the largest negative externalities associated with roads – by eliminating drunk drivers, hoons and simple driver error. If accidents are less likely, […]

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