The Mobility Opportunity Improving Public Transport to Drive Economic Growth
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The Mobility Opportunity Improving public transport to drive economic growth. A research project commissioned by Siemens AG Contents 1. Executive summary 5 Why transport matters 5 A unique study 5 Key findings 6 Pointers for investment strategies 7 2. How the study was conducted 9 Scope of study 9 The true cost of transport 9 High-level approach 10 Economic audit 10 3. The economic opportunity 11 Cost and the size of the prize today 11 How cost and opportunity will change by 2030 13 4. How cities compare 17 Well-established cities 17 High density compact centres 17 Emerging cities 19 5. Pointers for investment strategies 21 The scale of the opportunity should dictate the level of investment 21 Using technology to improve quality may be the best route to economic uplift 24 Urban rail networks are a key way for larger cities to meet capacity demand 25 Integrated governance is crucial in planning and operating an efficient network 27 Appendix 1: Selected investment cases 29 Appendix 2: City profiles 35 Appendix 3: Methodology 71 Overview of approach 71 Key principles 72 Appendix 4: Technical audit 75 3 “Efficient transport can attract economic activity to cities, and boost productivity by improving connectivity and reducing time lost to travel” 4 1. Executive Summary Why transport matters cities face a need to upgrade and supplement existing infrastructure to meet modern requirements. Transport plays a key role in economic growth Cities account for around 80% of the world’s economic In other cities, such as Tokyo and Seoul, relatively recent output, and drive an even higher share of global growth. wealth has created high density, compact centres, where However, in a globalised economy, with businesses and infrastructure is more modern. These cities face the workforces increasingly able to relocate internationally, they challenge of keeping pace with rapidly growing demands on must compete to offer the most attractive environment for the transport network. economic activity. Transport plays a key role in this. Less wealthy, emerging cities such as Cairo or Delhi are less Efficient transport can attract economic activity to cities, and likely to have invested in infrastructure historically, and boost productivity by improving connectivity and reducing face rapidly growing populations that lack mobility. Some time lost to travel. Better transport can also improve quality cities like Santiago have been able to invest to build efficient of life. Making a city more attractive to live in helps provide networks with sufficient capacity, positioning them for business with the labour force to create its products and buyers future growth. In other cities such as Lagos, the challenge to consume them, and so fuels economic growth. Conversely, is very different, as investment capabilities are constrained, inefficient transport networks represent a cost to cities and their threatening to limit future growth. inhabitants – both in economic and welfare terms – through productive time lost to travel and through poor-quality service. A unique study Transport networks in cities are increasingly under pressure Growth in the world’s population and increasing migration This study is unique in seeking to put an economic value on to major cities will place ever more strain on cities’ transport the cost of inefficient transport to a city’s economy and in turn, networks. In the 35 global commercial centres analysed in the economic benefits investing in transport improvements this study, the commuting population for public transport will would bring. It quantifies the economic costs by calculating increase by over 40% between now and 2030. The scale of the true cost of commuting: considering factors such as the future demand challenge varies hugely between cities. As journey time, the value of time, fare, crowding levels, ease of figure 1 shows, cities in the developing world like Lagos and using the network, service reliability, user functionality and so Delhi will face more rapid growth than those in the West. on. This reflects the efficiency and speed with which a journey can be undertaken in a given city, capturing the knock-on Cities face differing challenges effects on productivity. Investing in transport to reduce this Population growth challenges the transport infrastructure of cost would bring benefits for commuters and business, drive cities in different ways. In some of the world’s largest cities, productivity and stimulate new economic activity as a city such as London or Paris, infrastructure was built the best part becomes better connected and more attractive. of a century ago, to meet vastly different demands from a population with different expectations. These well-established To put a value on the economic benefits referred to above, Figure 1: Percentage change in the volume of peak commuters on public transport (present - 2030) 297% 165% 100% 93% 80% 82% 69% 65% 60% 58% 48% 47% 50% 50% 44% 40% 42% 35% 34% 28% 27% 29% 27% 31% 28% 25% 25% 26% 22% 20% 18% 20% 11% 10% 7% 8% 8% 0% 1% 1% 0% -25% Paris Cairo Delhi Seoul Berlin Lagos Tokyo Dubai Riyadh Beijing Vienna Madrid Jakarta Sydney London Toronto Istanbul Chicago Mumbai Moscow Bangkok Santiago Shanghai New York New Sao Paulo Singapore Stockholm Melbourne Hong Kong Mexico City Mexico Guangzhou Los Angeles Copenhagen Buenos Aires Johannesburg 5 the study analyses the performance of transport networks The economic costs of transport range from 9% to 28% of of 35 commercially important centres across six continents, GDP per capita – and will generally rise by 2030 both now and in 2030. We consider 2030, since due to the Current costs of transport range from about 9% of GDP lead times of major transport projects, this is a reasonable per capita in Copenhagen to about 28% in Lagos. For timescale for cities to address their challenges, and attempt many cities, the economic cost of transport is forecast to to unlock the benefits highlighted. The benefits identified for increase by 2030. Where cities have not already put plans 2030 take into account existing investment plans. Therefore in place to react to increased demand by 2030, or where they represent the potential benefits available to cities current plans are insufficient, transport costs will consume through investment beyond their existing plans. However, an increasingly large portion of economic output. For to consider the benefits individual transport projects can instance, taking into account known investments, the cost bring, we have attempted to assess the impact of a selected of transport in New York is forecast to increase from 15% to number of planned transport investments. Details of the 18% GDP per capita. Conversely Paris, which, as seen above, examples, which are purely indicative in nature, can be has clear plans in place, will see the economic cost of its found in appendix 1. transport decrease. To reflect different levels of wealth and development, we Greater transport efficiency across the 35 cities in our assess cities in three categories: ‘well-established cities,’ ‘high study would boost GDP already today by $119bn, and by density compact centres’ and ‘emerging cities’. Comparing circa $238bn annually by 2030 cities to the leading examples in their categories, we Our analysis suggests that if all the cities in the study determine the economic cost of sub-optimal transport and invested to make their transport networks as efficient as consequently the economic uplift if cities were to improve the relevant ‘best in class’, the current economic benefit transport to the levels of the leading examples. The economic would be worth $119bn annually. The cities that stand the uplift includes benefits to public transport commuters, road most to gain in absolute terms today are Tokyo ($15.4bn), users, businesses, and the wider economic impact in terms Moscow ($14.1bn), London ($11.9bn), Paris ($10.6bn) and of increased productivity and new economic activity. To help New York ($9.8bn) on an annual basis. Rising populations, urban authorities identify how they might access this uplift, labour force engagement and wealth will increase the gain, we provide in-depth case studies from global cities, as well and so by 2030, the economic benefit will be worth $238bn as key pointers for investment strategies. annually (in current prices). This study focuses solely on public transport. While The potential economic opportunity from investing in pedestrian, bicycle and car infrastructure are also important, transport in cities globally could be as much as $800bn, public transport is a key part of the solution to the mobility or around 1% of global GDP challenge and thus merits a specific focus. In our analysis Extrapolating to all relevant cities globally suggests an the transport network includes all forms of mass transit in a economic opportunity of almost $800bn – equivalent to city such as bus, rail and light rail. For the most part the city almost 1% of global GDP – on top of which would come population is typically that of the metropolitan area, with a further social and environmental benefits (see figure 2). few exceptions where we used the population of the “city Without investment in their transport networks, cities will proper” as this more closely represents the area served by be unable to unlock this opportunity cost, and face being the transport network. Data are drawn from a wide range left behind in the competition for growth. The investment of publicly available sources, using a single source for each needed to address the future mobility challenge will often metric where possible and using proprietary research where be high, but some cities have found relatively low cost ways published data sets were unavailable. The economic modeling of improving their transport systems. Furthermore, the used to quantify the costs and benefits has been verified by benefit of improvement is a permanent increase in GDP.