REVENUE final conference
Brussels
29th - 30th November 2005
Case study Oslo:
PT optimisation under different rules for revenue use
Jon-Terje Bekken
Institute of Transport Economics, Oslo
Based on 3 different analyses
• Process evaluation
– The context of toll roads in Norway
– The political compromises behind them
• Acceptability analysis
– Attitudes among citizens
– SP analysis of politicians and planners
• Model scenarios
– Optimal packages
– Restrictions on revenue use
Process evaluation
•
What are the characteristics of the contents
and the organisation of the packages?
•
What are the impacts of the organisation of
the packages on the political goals and
priorities in the region?
Summary of process evaluation
The most important findings from the process
evaluation:
• There are strong restrictions on Revenue use:
– Modes
– Regions
• Earmarking of revenue necessary for a political
compromise
• All participants have a right to veto the proposed
schemes
– focus is kept on positive measures
– “fair” regional distribution of the revenue
Acceptability
• Acceptability among the voters
– No case for a referendum
• Preferences among decision makers
– Politicians focus on acceptability and
compromises
– Administration propose schemes with focus on
efficiency?
Acceptability of the Oslo packages
- population
Before the toll
ring started
Oslo Package 2
48
41
34
38
36
33
35
41
43
42 42
39
36
30
46
45 45
39
34
46
44
41
60
45
44
41
40
36
32
38
38
34
50
40
30
24
20
10
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
0
Positive towards the toll ring
Passing the ring to work and positive towards it
The probability to recommend
different measures
Average score
0
1
2
3
4
Car free city centre
7
9
Administration
3.8
5.8
3.4
5.4
3.3
5.2
3.4
4.10
6.6
6.8
Increased frequency
Reduced fare
8
Politicians
5.8
Increased tolls in rush
hour
Increased parking fees in
city centre
6
3.9
Increased road tolls
Reduced parking in city
centre
5
6.1
6.1
Preferences among politicians and
administration
General findings:
– Support for the package approach
– Important with central Government funds
– Inconsistency between expected effect of measures and
recommendations
– Politicians sceptical towards restrictive measures –
opposite with administration
How to find a political acceptable package
Summary acceptability
The most important findings from the acceptability surveys
were:
•
•
•
•
•
The attitude towards the toll ring increasingly positive over time.
The public acceptance of a prolongation of the toll ring is strongly
dependent on the revenue use (earmarking)
The administrative level is more likely to recommend restrictive
measures compared to the political level.
Both the political level and the administrative levels are more positive
towards packages compared to the public.
It is important that the central Government also contributes to the
packages for the actors to agree.
Model scenarios
• Scenario A/Oslopackage 1:
Low toll fare (1 euro) Fixed subsidy level for public
transport and fixed capacity constraints in the peak
period.
• Scenario B/Oslo package 2:
Additional toll fare (+0,25 Euro) and PT fare (+0,1 euro)
targeted on capacity increase in peak period. Fixed
subsidy level but flexible capacity in the peak period.
• Scenario C/Oslo package 3:
SMCP (around 4 Euro) and optimal subsidy level for PT in
the region.
Revenue use
ScenarioPricing
Revenue use
Investment
A1
Oslo package 1: Low toll fare (€1)
RU 1: Fixed subsidy level in each
Fixed subsidy level for public transport and
market segments
fixed PT capacity constraints in the peak period.
Road investments only
B1
Oslo package 2: Additional toll fare (+€0.25) RU 1: Fixed subsidy level in each
and PT fare (+€0.1) targeted on capacity
market segments
increase in peak period. Fixed subsidy level but
flexible PT capacity in the peak period.
Revenue earmarked to public transport, but not including
operational cost
B2
As B1
RU 2: Fixed total subsidy level for all Revenues earmarked to public transport, but not including
market segments, but possible
operational cost
regional redistribution
C1
Oslo package 3: SMCP (around €4) and
optimal subsidy level for PT in the region.
RU 1: Fixed subsidy level in each
market segments
Revenues earmarked to public transport with the possibility
to use the revenue for operational costs
C2
RU 2: Fixed total subsidy level for all Revenues earmarked to public transport with the possibility
market segments, but possible
to use the revenue for operational costs
regional redistribution
C3
RU 3: Welfare optimal subsidy level Revenues earmarked to public transport with the possibility
without financial constraints
to use the revenue for operational costs
FINMOD
OPTIMIZATION
MODEL:
•Socio-economics
•Business economics
PT Trips
Initial
External conditions
for the transport
market
•Population/demography
•Costs of car use and
parking
•PT fares and service
provision
•Income level
•Urban sprawl/density
Car journeys
Initial
Socially
effective factors:
Optimized
•Service provision and fares
•Level
subsidy
Theofrelationship
is
•Demand for PT and car traffic
Market effective
based on a UITP
database with
additional cities
Max W= (ticket revenue-operating costs)
+ user benefits
Framework
for - external costs
Car ownership
Initial
Production effectiveness
Exogenous framework conditions
optimization
•Degrees of freedom for
optimization
•Restrictions on revenue use
Optimization
Relative differences in fares from Oslo package 1
SMCP for PT – change in fare level
No constraints on revenue use
60 %
50 %
40 %
30 %
20 %
10 %
0%
-10 %
-20 %
-30 %
MC car 4,26
25%mcpf
Capacity peak
MC car 0 25%mcpf
non-capacity peak
MC car 0 15%mcpf
Off peak
SMCP for PT – optimal revenue use
Relative differences from Oslo package 1
200 %
No constraints on revenue use
150 %
100 %
50 %
0%
-50 %
-100 %
MC car 4,26
25%mcpf
MC car 0 25%mcpf
MC car 0 15%mcpf
off peak frequency
peak frequency
Off peak vehicle size
Additional peak vehicle size
Changes from Oslo package 1 ( mill €)
SMCP for PT – costs and benefits
250
No constraints on revenue use
200
173
157
150
123
100
50
0
-16
-50
-100
-150
-101
-115
MC car 4,26 25%mcpf
MC car 0 25%mcpf
MC car 0 15%mcpf
Profit
Passenger benefit
External benefit
Total social benefit
SMCP for PT - with restrictions on
revenue use
Relative differences from Oslo package 1
Fixed total subsidy
160 %
140 %
120 %
100 %
80 %
60 %
40 %
20 %
0%
-20 %
146 %
145 %
44 %
21 %
13 %
No transfers between
modes
134 %
57 %
43 %
21 %
13 %
Transfers between
modes allowed
27 %
Transfers between
modes, Internal
optimisation
Fare level Capacity peak
(euro/trips) Off peak
Network km (1000/hour) off peak
Network km (1000/hour) peak
SMCP for PT – Optimal allocation of
revenue on different modes
250 %
200 %
150 %
100 %
50 %
0%
-50 %
-100 %
Bus
Tram
Oslo city
Metro
Bus
Train
Akershus region
fare level capacity peak fare level off peak
frequency peak
Total number of trips
Average
All modes
Summary of optimisations
•
Oslo package 2
– a total social benefit of 211 mill euro compared to Oslo package 1 and
– 10 percent more PT passengers
•
Oslo package 3
– a total social benefit of 322 mill euro compared to Oslo package 1 and
– 33 percent more PT passengers
•
The SMCP of PT
– should reduce the capacity peak fare level under the toll fare regimes of Oslo
package 1 and 2,
– should increase if road pricing were introduced in the toll fare regime of Oslo
package 3.
•
The optimised subsidy level
– is 115 mill euro higher in the Oslo package 1 scenario
– Is 103 mill euro higher under the Oslo package 2 scenarios, due to the increased
toll fare.
– If road pricing is introduced (Oslo package 3), there will be no need to increase PT
subsidies.
Summary of optimisations (2)
The main points to draw from the model scenarios of Oslo in terms of
welfare are:
• There are social benefits from increased subsidies for PT (Oslo package
2)
• There are only small benefits from allowing transfers of revenue between
the different modes and regions
• Oslo package 2 is a step in the right direction, but only a small
improvement compared to Oslo package 1.
• A road-pricing scheme is superior to the other scenarios
• The result from the scenarios is very sensitive to the level of MCPF
(marginal cost of public funds). The result is also sensitive to the
internalisation and the level of external costs associated with car traffic.
Overall key points Oslo
• The current fare setting regimes of Oslo package 1 and 2 are
not based on any first-best pricing rules
• The estimations are sensible of the marginal cost of public
funds
• Oslo package 2 is a small step in the right direction –
compared to Oslo package 1
• There are positive cost benefit ratio from increased
subsidies for PT and reallocation between modes.
• The road pricing scheme is a “superior scheme”
• Earmarking up front necessary to make Oslo package 2
viable
• Focus on efficiency after the scheme has been politically
accepted