Equity and Option Value Benefits
Transportation planning decisions have significant impacts on social equity objectives which should be considered in economic evaluation.
Walking, cycling and public transport service improvements improve mobility options for non-drivers.
More affordable public transit helps increase transportation affordability.
Parking unbundling and cash out provide financial savings to residents and employees who use alternative modes, which tends to benefit lower-income people.
Universal design (transport facilities and services designed to accommodate all possible users) improves accessibility for people with disabilities and other special needs.
More affordable housing in transit-oriented neighborhoods improves accessibility for lower-income households.
Transportation decisions can have significant equity impacts. Transportation represents a major portion of consumer, business and government expenditures. It consumes a significant portion of public resources, including taxes and public land. The transport options available to a person can significantly affect their opportunities in life, including their ability to obtain education, employment, healthcare services and other critical goods. Transportation activities have external impacts (noise and air pollution, crash risk and barrier effects) that affect the quality of community and natural environments, and personal safety.
Most modern transportation systems provide relatively convenient and comfortable travel by private automobile, but relatively poor alternatives, resulting in poor accessibility for people whose ability to drive is constrained. As a result, improving walking, cycling and public transit tends to achieve social equity objectives. Even people who do not currently use these modes may value having them available for possible future use in the future, which is called option value.
Definitions of Transportation Equity
Equity impacts can be difficult to evaluate, in part because the word “equity” has several meaning, each with different implications. Four general types of equity related to transportation are discussed below.
This refers to treating everybody the same, regardless of who they are. Egalitarianism implies that everybody should receive the same quality of services, pay the same price, and bear the same costs. In practice, this can be arbitrary and unfair, because it depends on how impacts are measured, and does not take into account differences in abilities and needs. For example, egalitarianism might be used to justify charging every passenger pay the same fare (regardless of trip length), that each transit rider receive the same subsidy (regardless of income or need), that each resident pays the same amount or tax support transportation services (regardless of income or use), or that roads are unpriced (so everybody is stuck in traffic equally). Although each of these may seem fair and equitable from a particular perspective, they are contradictory and can increase inequity from other perspectives.
2. Horizontal Equity (also called “fairness”)
This is concerned with the fairness of impact allocation between individuals and groups considered comparable in ability and need. Horizontal equity implies that consumers should “get what they pay for and pay for what they get,” unless a subsidy is specifically justified. It is often cited when communities compete for transportation resources, such as state or federal funding, and is the basis for cost allocation studies that compare how the costs imposed by different vehicle classes compare with their user payments (FHWA, 1997).
3. Vertical Equity With Regard to Income and Social Class
This focuses on the allocation of costs between income and social classes. According to this definition, transport is most equitable if it provides the greatest benefit at the least cost to disadvantaged groups, therefore compensating for overall social inequity. Policies that provide a proportionally greater benefit to lower-income groups are called “progressive,” while those that make lower-income people relatively worse off are called “regressive.” For example, a tax or fee that represents a greater portion of annual expenditures for lower-income households than for higher-income households is considered regressive, while a discount that targets lower-income households is considered progressive. This definition is often used to support transport subsidies and oppose price increases.
4. Vertical Equity With Regard to Mobility Need and Ability
This is a measure of how well an individual’s transportation needs are met compared with others in their community. It assumes that everyone should enjoy at least a basic level of access, even if people with special needs require extra resources and subsidies. Applying this concept requires establishing a standard of "basic access," that is, the types of transport that society considers essential. This tends to focus on two issues: access for people with disabilities, and support for transit and special mobility services.
Because of these different definitions it is important to specify which perspective is being used when evaluating transportation equity. For example, it may be unclear to simply say that a particular transportation policy or project increases or decreases equity, without indicating which type of equity is being considered.
Equity evaluation is affected by how people are grouped. Below are some categories that may be important for equity analysis:
Income class (with special attention to very low income).
Travel mode (walker, cyclist, transit rider, rideshare passenger, motorist, etc.).
Gender and age.
Ability to drive (i.e., whether or not people have access to an automobile) and type of driver (i.e., high- and low-mileage, high- and low-risk).
Geographic location (urban, suburban or rural resident, resident within or outside a particular jurisdiction).
Physical ability (able-bodied, people with various types and degrees of disability).
Travel need (employed, parents with children, people with special medical needs).
Cost bearer (i.e., degree to which a group pays taxes and fees, or bears other costs such as noise pollution or crash risk).
For example, when evaluating the equity impacts of a particular road pricing program it may be important to determine whether it is regressive (lower-income people pay a relatively large portion of their income); how it affects low-income workers, very low income households and people with disabilities; how it affects people who use alternative modes; which types of travelers are likely to reduce their automobile travel, what types of changes they make and what burden this imposes on them, how it affects residents of various neighborhoods, what portion of the fee is paid by people from other jurisdictions, whether the people who pay the fee benefit from better roads or reduced traffic congestion delay, and how revenues are used.
These factors often overlap. For example, residents of certain areas tend to be lower income or ride transit more than residents of other areas. Since politics tends to be based on geography (politicians represent residents of a particular jurisdiction), equity analysis often focuses on geographic conditions, but this is not optimal, since people’s need vary within a jurisdiction. For example, even suburban communities with high levels of automobile use and low levels of transit ridership, some residents are non-driver, while even city residents use automobiles and benefit from highways. It is therefore a mistake to assume that transit improvements are only a concern in cities, or highway improvements do not benefit urban residents.
Transportation Diversity and Option Value
Transportation Diversity (also called Option Value, Transport Choice or Balanced Transportation) refers to the quantity and quality of transport services available in a particular situation, that is, at a particular location and time, taking into account a users’ needs and abilities (Litman 2007). It can include diversity of modes (particularly modes suitable for use by people who are physically, economically or socially disadvantaged), prices (such as various vehicle and vehicle rental prices), services (such as public transit, taxi, and delivery services), and location options (such as affordable housing located in accessible locations, and a diverse range of shops near residential and employment areas).
Inadequate diversity is both inefficient and inequitable. It forces people to use modes that are not optimal for a particular trip. For example, in automobile dependent communities people must drive even when they would prefer to use alternatives, and motorists are often forced to devote considerable time and effort to chauffeuring non-drivers, which would not be necessary if transport systems were more diverse. This increases economic, social and environmental costs and is particularly harmful to people who are physically, economically and socially disadvantaged, and so are unable to drive.
People often value a particular transport service even if they do not currently use it, which is called option value (DfT 2003). This justifies support for facilities and services that carry a relatively small portion of total travel, particularly those that can be used by people who are physically, socially and economically disadvantaged. Since most industrialized countries are relatively automobile dependent, transportation diversity is primarily concerned with the availability, convenience and affordability of non-automotive (often called alternative) travel options, including the quality of connections between these modes. Most people can expect to rely on non-automotive modes at certain periods of their life, when their ability to drive is limited by physical disability, vehicle failures, financial constraints or disasters.
Two general perspectives can be used for transportation diversity evaluation (Litman 2009). A planning perspective evaluates specific benefits provided by increased transport diversity. For example, improving alternative modes helps reduce traffic congestion, consumer costs, parking costs, energy consumption and pollution emissions, and helps improve mobility options for non-drivers and public fitness. Some of these impacts can be quantified, and others can be evaluated qualitatively. For example, households in communities with more balanced transport systems save about $3,000 annually in transportation costs, and benefit from reduced need to chauffeur family members and friends who cannot drive. Surveys can be used to identify and estimate residents willingness to pay for improved transportation options.
Bailey (2004) uses the portion of residents who do not travel on a given day as reported in travel surveys as an indication of the number of people who are significantly transportation disadvantaged in a community. It found that the portion of residents age 65+ who do not travel on an average day ranges from 44% up to 69%, and is affected by their ability to own an automobile, ability to drive, quality of walking conditions and transit services, and community design factors.
An economic perspective evaluates the degree that current policies and planning practices are distorted in ways that reduce transportation diversity. For example, to the degree that current planning is biased in favor of motor vehicle travel over non-motorized modes, private automobile travel over public transport, and spawl over compact development, the transportation system will be excessively automobile oriented and less diverse than optimal. Until such biases are fully corrected, policies that increase transport diversity, such as subsidies for alterantive modes, can be justified on second-best grounds.
Another method of quantifying transportation diversity benefits is to survey people concerning their concerns and preferences. For example, an opinion survey of the general public or representative officials might ask the value they place on improving transportation options and insuring basic mobility for people who are transportation disadvantaged, and how such objectives compare with other transportation improvement objectives such as congestion reduction and traffic safety improvements.
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