Article share: on subsidies to public transportation

d0ctrine

February 18

Here's a nice article that presents arguments for subsidies to support transit or public transportation:

Wilson, K. (February 5, 2024) "Study: Subsidizing Transit Actually Makes It More Efficient," Streets Blog USA, https://usa.streetsblog.org/2024/02/05/study-subsidizing-transit-actually-makes-it-more-efficient [Last accessed: 2/18/2024]

Subsidies to public transportation can be quite tricky and may require quite a balancing act. There seems to be few options outside of the straightforward subsidies national and local governments in the Philippines provide. Rail transit, for example, is heavily subsidized but these are rare for road-based public transportation. The concept of service contracting has been considered but it also has a few variations. While there seems to have been a proof of concept tested during the pandemic, it required so much funds that government apparently lost interest (i.e., the funds were also needed by other sectors). Local governments meanwhile, or at least those that had resources, decided to operate their own public transport (e.g., Quezon City bus).

To quote from the article:

"Newmark's study doesn't definitively determine why, exactly, high subsidies seem to correlate with better efficiency and transit agencies collecting more fares, but he has some theories. Some systems, he says, use subsidies to increase service frequency or install dedicated lanes to speed routes up along heavily-utilized corridors — and riders are responding, predictably, by showing up in droves. (Route expansion can help, too, he said, but only if agencies expand service to places "where there's actual demand.") Others use subsidies to keep ticket prices low, but not to eliminate fares outright, which Newmark argues is a smart move.

"People value stuff they pay for, and they pay for stuff they value," Newmark added. "An underlying point in this paper is that transit offers something [valuable], and it's worth trying to capture that value, whether through fares or in other ways."

If transit networks and the taxpayers who support them can get that recipe right, it could create a virtuous cycle.

"If people see the benefits [of subsidies], that may make them more willing to invest [their taxpayer dollars]," he adds. "Good transit leads to a real social movement for more subsidies." "

What do you think about subsidies to public transport in the Philippine setting? Of course, we are referring to 'formal' public transportation here. There are many 'informal' or paratransit modes like tricycles and non-motorized pedicabs. There are also motorcycle taxis providing services or filling in the gaps in transport services.