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An Analysis of the Full Costs and Impacts of Transportation in Santiago De Chile

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An Analysis of the Full Costs and Impacts of Transportation in Santiago De Chile AN ANALYSIS OF THE FULL COSTS AND IMPACTS OF TRANSPORTATION IN SANTIAGO DE CHILE BY: CHRISTOPHER ZEGRAS IIEC-LA General Flores 150 Providencia Santiago de Chile Tel: 56 2 236 9232 Fax: 56 2 236 9233 [email protected] WITH: TODD LITMAN Victoria Transport Policy Institute 1250 Rudlin Street, Victoria, BC V8V 3R7 CANADA Ph/Fax: 250 360 1560 [email protected] Sponsored by: Climate Change Division, U.S. Environmental Protection Agency Tinker Foundation THE INTERNATIONAL INSTITUTE FOR ENERGY CONSERVATION WASHINGTON, DC LONDON BANGKOK SANTIAGO DE CHILE MARCH 1997 Copyright © 1997 International Institute for Energy Conservation (IIEC). All rights reserved. IIEC, 750 First Street, NE, Suite 940 Washington, D.C. 20002 First printing, March 1997, Santiago de Chile. Second Printing, July 1997, Washington, D.C. Third Printing, December 1997, Santiago de Chile, by: Dolmen Ediciones, Cirujano Guzmán 194, Providencia. Preface and Acknowledgments Recent years have witnessed increasing emphasis on the “external” costs of transportation (congestion costs, air pollution costs, accident costs not borne by users, among others). Resulting in market distortions, particularly in urban areas, transportation’s external costs are frequently cited as a primary cause of the transportation woes facing many cities today as well as an important driver leading to continuous increases in transportation greenhouse gas emissions. As a consequence, a variety of international bodies -- ranging from the World Bank, to the Organization for Economic Cooperation and Development (OECD), to the Intergovernmental Panel on Climate Change (IPCC) -- have been calling for the “internalization” of costs, or “full- cost” pricing as an important policy tool for moving towards efficient transportation systems. While a number of studies have examined a range of transportation’s “external costs” in various OECD countries, little comprehensive work in this field has been conducted in the developing world. To help fill this gap, IIEC presents the following report. Generously supported by the Climate Change Division of the United States Environmental Protection Agency and the U.S.-based Tinker Foundation, this study analyzes personal costs (transportation expenditures and travel time), social costs (congestion and accidents), infrastructure costs (road, rail, parking, and land), environmental costs (air and noise pollution, energy resources), as well as issues such as urban outgrowth, water pollution, and equity. The study attempts to determine the level of externalities present in Santiago’s transportation market for 1994, and examines issues such as: where subsidies exist, how efficient current pricing mechanisms are, and what the policy measures might be used to improve actual market performance. For each cost category examined, international precedents are presented, and data and analysis for Santiago is then given. Each section then concludes with a discussion of Trends and Implications, which in some cases discusses policy and pricing implications of the results and often makes recommendations for additional and refined research. By providing a general baseline for transportation system costs in 1994, the study can be used as a benchmark from which to measure (or project) system improvements or deterioration in the future. In addition, we hope that our analysis and conclusions can be used to begin exploring the feasibility of different pricing, policy, and investment measures for improving the efficiency of Santiago’s transportation system. We also hope that our results can help guide additional research and efforts to improve specific data and cost categories in Santiago, while helping to spur and guide similar such initiatives in other cities. Beyond thanking our funders, we would like to thank the various individuals who helped in the research and writing of this report. Stephen Hall, Director of the Latin American Office of IIEC, initiated this project, helped in its conceptualization, and found funding for the work. Carmen Paz Salinas B., Office Manager for IIEC-LA, helped track down i initial data sources and contacts. Peter Kelly-Detwiler, Pablo Espinoza, and Eduardo Sanhueza each helped flush out various technical concepts and Pablo contributed research and writing to Section 6.9. Beyond these very helpful contributions from IIEC staff, the authors also wish to thank Cristian Lopez Ugalde for research contributions, written commentary, and various conversations which helped refine several parts of the report. Anibal Uribe and Ramon Riquelme were particularly helpful in providing access to traffic accident data. In addition, for access to data and leads, useful comments, and other contributions, the authors thank: Henry Malbrán R., Hugo Romero A., Gabriela Caceres, Angélica Paredes, Antonio Marzano Rios, Ricardo Tuane, Luis Felipe Martin Cisternas, Jaime Guzman Mira, Renan Retamal, Irma Solis, Jaime Tellez, Oscar Figueroa, Capitán Luis Prieto Bustos, Marcelo Fernandez G., Enrique Suárez S., Jorge Arenas B., Ricardo Pesse, Loreto Madrid F., Jorge Gomez, Mark Smith, and Ian Thompson. Of course, none of these individuals are responsible for any of this report's final content or results. This report was edited and put into final format by Chris Zegras, who takes full responsibility for all errors and shortcomings within. ii I. Introduction: Why Study Transportation Costs If you ask people to list transportation costs, those who own an automobile will probably cite their expenditures on gasoline, oil, and maintenance. These are vehicle operating costs. Some might also include a portion of their purchase, license and insurance expenditures. These are vehicle ownership costs. There are other automobile user costs associated with vehicle use such as directly paid parking and tolls. People who depend on rail, buses or taxis will probably include their fares when discussing their costs. These costs just described are all market costs because they involve a direct financial transaction. Other costs that people might mention include the value of their time, which can also have a certain market value, represented, in part, by their wages. Some people might also mention their non-market costs, such as the risk of accidents, and any discomfort that they experience while traveling. Non-market costs are not necessarily monetary costs, and there is often great subjectivity in their quantification. However, effective transportation planning requires an understanding of more than just transportation user costs. Accurately estimating these costs requires an understanding of the relatively unique characteristics of transport demand. Transport demand is characterized by its variability in time and space, and can be further differentiated according to trip purpose (work, shopping, school), mode (train, bicycle, bus), and type of passenger. These characteristics signify that transportation supply must take into account several points: a variety of products, a complex pricing structure, a broad range of service quality, and alternative forms of providing this service. The transportation market is further complicated by various additional impacts -- such as accidents and air and noise pollution. These are not transportation user costs. Rather, these are the external costs that the transportation system imposes on society. External costs can include a portion of the costs of providing roads and parking facilities, accident costs borne by somebody other than the vehicle user, the impacts of motor vehicle air pollution and noise, and land use impacts. Since these are indirect, and largely non- market costs, they are more difficult to measure, and are often ignored in transportation planning. That is a mistake, because they are very real and very significant costs, and often increase dramatically with motor vehicle use. 1.1 This Study This study summarizes research on full transportation costs to help in policy making and planning in Santiago. Each cost category is described and available cost estimates from Santiago and other comparable cities are described. This research is particularly important because Santiago is experiencing tremendous growth in automobile ownership and use. While this growth provides benefits to users, it also imposes costs on users and society. Santiago's citizens are concerned about transportation problems, particularly the impacts of increasing motor vehicle traffic. In a 1994 survey of regional environmental problems, four of the top six environmental problems listed by City residents were transportation related, including air pollution (1), congestion (2), uncontrolled urban growth (5), and noise pollution (6).1 1.2 Transportation & Economic Impacts Until recently most transportation professionals and economists assumed that increasing motor vehicle travel was essential for economic development and would need to be accommodated within cities. New research and economic analysis indicates that this is not necessarily true. Strong economies have developed with relatively low levels of automobile use, and there are indications that over-reliance on automobile travel may burden developing economies by reducing overall economic efficiency and shifting financial resources from investments to consumption.2 This is especially true of countries that import vehicles and fuel. There is increasing realization among transportation professionals that motor vehicle traffic must be constrained under some circumstances, particularly in large urban areas, and that other travel
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