Download `Decoupled` from Traffic Growth?

Scotland’s National Transport Strategy
Dunblane
30th May 2006
Can growth be achieved without an associated rise in traffic
emissions?
Presentation by
Professor Austin Smyth
Transport Research Institute,
Napier University Edinburgh
[email protected]
Scotland’s National Transport Strategy
Dunblane
30th May 2006
‘In developing our transport strategy, we will need to put in
place a set of coherent policies. ……developing a transport
system that is compatible with economic growth, sustainable
development, equality, social inclusion and health
improvement principles, will be the major challenges of the
NTS.’ (Scotland's National transport strategy: A Consultation)
Scotland’s National Transport Strategy
Dunblane
30th May 2006
Can growth be achieved without an associated rise in traffic
emissions? …..or in the jargon
Decoupling traffic growth from economic growthIs this plausible ?
Transport and the Economy:
Transport and Economic Trends
The last 40 years have seen growth in both the national economy, as
measured by GDP, and demand for transport.
In the case of freight, road transport has become the predominant
mode of moving goods in the UK over the last 40 years.
Also rapid rise in air transport both freight and passengers.
Many transport economists and politicians still argue that transport
growth is inextricably linked with economic growth. However, research
results clearly indicate that there is no linear relationship between the
two.
Decoupling traffic growth from economic growth-is this plausible ?
The economic expansion of an economy (economic growth) is typically
associated with a corresponding increase in traffic levels.
A greater number of economically active people boost commuting and workrelated travel and higher disposable incomes increase the amount of money
that can be spent on transport.
Between 1970-1995 the average number of kilometres travelled per person
per year has increased from 6293 to 12,337, a 96% increase.
Economic growth over the same period has totalled 72% (24% less than
traffic).
As the transport intensity of an economy increases it becomes less efficient.
The transport intensity of the UK is increasing. This is highlighted by the
difference of 24% between traffic growth and economic growth 1970-1995.
Decoupling traffic growth from economic growth-is this plausible ?
Decoupling traffic growth from economic growth-is this plausible?
Trends in transport and economic growth in EU countries expressed as a
percentage (Stead et al, 2002)
GDP
Passenger Transport
Freight Transport
Past
Projected
1970-1995 1998-2010
83%
43%
112%
24%
71%
38%
The Nature of the Debate about
Transport and the Economy
Business argues that an efficient transport network is vital to a strong economy
Some commentators argue there is scant evidence for a causal link between
transport improvements and economic growth.
In developing Transport Strategies the following Questions and Trade Offs need
to be addressed:
•Growth or Displacement?
•Growth and the needs of the Global Environment
•Globalisation, Transport Demand, Spatial Patterns of
Development and the Environment
•Growth and the distribution of Prosperity - Spatial and
Demographic aspects
Macro-Level Relationship between
Transport and the Economy
Do Transport Improvements Lead to Increased, or More Efficient,
Economic Activity?
Conclusions about the effects of transport on the economy are strongly
dependent on local circumstances.
Theory suggests that there are a number of important mechanisms by
which transport improvements could, improve economic performance.
Macro-Level Relationship between
Transport and the Economy
These mechanisms include:
•Reorganisation or rationalisation of production, distribution and
land use;
•Effects on labour market catchment areas and hence on labour
costs;
•Increases in output resulting from lower costs of production;
•Stimulation of inward investment;
•Unlocking' inaccessible sites for development; and
•Triggering growth which in turn stimulates further growth.
Macro-Level Relationship between Transport and the Economy
Geographical Aspects
Key aspect of the debate are the claims made about the impact of a
transport project on a local area or region.
Some claims deal with issues of perception, of potential inward
investors about the accessibility of particular parts of the country.
North Lanarkshire Council claimed success of Lanarkshire Enterprise
Zone during 90’s in attracting investors compared with Clydebank
Enterprise Zone can be explained by the different quality of road links
serving the two areas.
Macro-Level Relationship between Transport and the Economy
Geographical Aspects
Initiatives to promote regeneration also recognise that the degree to
which a transport scheme is complementary to other policy tools is
essential to maximising the contribution of that scheme.
Transport improvements can also harm a local or regional economy,
by exposing indigenous firms to competition from stronger rivals
outside the area - the so-called 'two-way road' argument.
UK Department for Transport has conceded that in rural areas
improved transport links could run counter to regeneration and other
policy objectives.
Micro-Level Relationship between
Transport and the Economy
A transport improvement which reduces transport costs enables firms
to sell their products more cheaply.
Parkinson pointed out transport costs were a small proportion of total
production costs (5-10%).
Importance attached by business to the need for transport
improvements has been questioned.
‘NITL Competitive Challenges: Chain Reactions’
on Business Competitiveness and the Role of the Supply
Chain on the Island of Ireland
Largely Macro Supply Chain Challenges
ROI
NI
45.5%
52.8%
Increased competition
Globalisation
13.4%
9.4%
Changes in industry / market
13.2%
10.8%
Regulations / new legislation
Currency
Other
6.9%
4.7%
9.0%
14.6%
7.0%
12.7%
Source: NITL Competitive Challenges: Chain Reactions (2005)
‘NITL Competitive Challenges: Chain Reactions’ (2005)
Largely Internal Supply Chain Challenges
ROI
53.6%
Cost reduction
Staff retention
38.0%
35.4%
Wages/salary costs
Product innovation
NI
16.1%
19.9%
8.1%
13.1%
17.5%
Lead time reduction
8.5%
5.4%
Marketshare/state of business/customer base
8.0%
7.1%
Introducing IT Systems
7.3%
Finding the right staff
5.3%
Other
4.7%
9.8%
17.8%
Source: NITL Competitive Challenges: Chain Reactions (2005)
27.3%
‘NITL Competitive Challenges: Chain Reactions’ (2005)
Critical Factors for Competitiveness
ROI
64.6%
Customer service
66.0%
54.3%
Product quality
56.6%
40.2%
Product development/innovation
33.0%
33.8%
Price competitiveness
Strategic relationships/alliances
NI
18.4%
35.4%
16.2%
Productivity
11.9%
Distribution channel ef f ectiveness
11.9%
8.8%
Intellectual capital/know ledge management
11.3%
7.7%
Employee retention/recruitment
10.3%
Market grow th
Supplier perf ormance
Other
9.3%
5.2%
11.2%
15.5%
12.1%
8.1%
7.7%
12.1%
Source: NITL Competitive Challenges: Chain Reactions (2005)
Satisfaction with Transport Systems
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
ROI
Very
Passenger ai r services
di ssatisfied
International transport servi ces freight/express sea
Fairly
di ssatisfied International transport servi ces freight/express air
Neither
Transport infrastructure within the country
Fairly
satisfi ed
Freight transport services wi thin the country
Very
Public transport services within the country
satisfi ed
Total
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
NI
Very
Passenger ai r services
di ssatisfied
International transport servi ces freight/express sea
Fairly
di ssatisfied International transport servi ces freight/express air
Neither
Transport infrastructure within the country
Fairly
satisfi ed
Freight transport services wi thin the country
Very
Public transport services within the country
satisfi ed
Total
Transport and Business Location
Theoretical Expectations
Changes in transport ‘costs’ have a range of potential economic effects:
•the location decisions of firms;
•their influence on regional patterns of commerce;
•incentives to invest and to innovate;
•the commuting and migration decisions of households
Porter's model of competitiveness highlights the interdependence of
conditions necessary to attract and sustain competitive businesses.
Transport and Business Location
Theoretical Expectations
Competitiveness theory argues transport provision in an area increases
the effective market size of an area and increases competition.
Transport can affect business location through:
•financial costs for goods transport;
•relative time costs and savings;
•certainty/reliability of travel time;
•the need to physically meet customers and suppliers; and
•staff and customer travel costs.
The Drivers Of Business Location
Key Evidence
Empirical research highlights access to markets and availability of
skilled labour, sufficient business accommodation and transport
links as key drivers of business location.
The evidence suggests that transport is a necessary, but not
sufficient condition in determining business location.
When combined with other measures, and integrated into part of a
business development programme, transport can help to influence
location.
The Drivers Of Business Location
Key Evidence
The evidence for road transport alone to attract business is mixed some research suggests it can have negative effects in certain
circumstances.
Businesses change location in discrete steps. Hence (re)location
responses to changes in transport costs will occur only after a
substantial cost saving threshold has been reached.
Transport infrastructure is likely to be relatively more influential
at local levels of (re)location than at broader levels, where other
factors may be relatively more significant.
Business Organisation and Technology
Key evidence
Changes in business operations affect the role of transport in
influencing location.
Tighter delivery and stockholding through practices such as Just-inTime (JIT) and increasing demand for added value in components
increase the logistical demands of businesses.
Outsourcing of many transport functions to third party firms and
increased demand for part-assembled components has elevated the
importance of logistics businesses in determining the location of other
firms, reducing the direct effect of transport infrastructure on
manufacturing and service firms.
Business Characteristics
Key evidence
In the UK, air transport has greater influence on location of foreign
investors and business services, whereas road transport has a larger
influence on domestic investment, light manufacturing and
commercial businesses such as retailers.
Air transport investment can be used attract foreign inward
investment. It appears to be important in promoting the perceived
accessibility of an area
Labour Supply, Travel To Work and
Social Inclusion
Key evidence
Transport investment shown to increase workplace accessibility and
therefore the labour market size and reduce job search costs.
Labour supply is often one of the most important factors in business
location, transport can be used as a tool to boost labour supply.
Implications for social policy are also centred on accessibility - certain
groups (e.g. those with dependants, part time or low paid workers
etc.) are less able and willing to travel far to work.
Spatial Scale
Key Evidence
Transport investment is likely to influence business location at
local or intra-regional level, rather than generating regional or
national growth.
Evidence transport policies are more influential at influencing intra
regional and city level location decisions than those on a wider scale.
Congestion is major problem to be tackled in urban areas - leads to
unreliability of trips, adds to business costs and can drive business
out of city centre locations.
Transport policies moving business into cities are most effective if
combined with other urban policies.
Growth versus Displacement
Key evidence
Policies aimed at inducing business to move from high to low growth
areas can have positive effects for both areas.
There is a lack of consensus on whether building transport
infrastructure into low growth areas would be significantly helpful.
Evidence that large-scale transport infrastructure policies successful in
supporting growth in under-developed regions, but relatively ineffective
in stimulating new growth.
Investment in a monopoly situation will bring competition and attract
business, but an already competitive area may not improve and suffer
from externalities such as pollution and congestion.
Macro-Level Relationship between Transport and the Economy
Now the question we posed at the beginning let us return to
Can Economic Growth be 'Decoupled' from Traffic Growth?
Traffic has been growing faster than the economy as a whole.
Result is that 'transport intensity' of the economy has been increasing,
i.e., each unit of output is associated with a greater amount of
movement of people or goods.
Private car-kilometres, Private car CO2 emissions, and household
spending, 1990 to 2003
Road transport, CO2, NOx, PM10 emissions from road transport and
Gross Domestic Product, 1990 to 2003
Road freight, Heavy Goods Vehicle (HGV) CO2 emissions, freight
kilometres, freight tonnes and Gross Domestic Product, 1990 to 2003
Summary of points made in SACTRA 1999 report on 'Transport and
the Economy':
Initial transport related impacts of transport improvements are converted to economic
impacts via, for example,
rationalisation of production/distribution/land use, effects on labour costs,
increased output, inward investment, unlocking inaccessible sites for
development, triggering growth which stimulates further growth
Policies intended to change volume of traffic that will arise from any particular
level of economic activity are feasible, in principle.
Summary of points made in SACTRA 1999 report on 'Transport and
the Economy':
Reducing traffic levels can contribute to economic performance when transport prices
are below marginal social costs (e.g. due to congestion/environmental impacts)
If transport prices are too low due to uncharged congestion then a transport
improvement could lead to additional costs for the economy.
Conversely, if transport prices are too high due to monopoly power then a transport
improvement, which successfully opens the area to external competition, could lead to
additional benefits for the economy
Optimal pricing often does not exist, so assessment of price conditions is vital to allow
appraisal to identify conditions in which transport improvements may assist the
promotion of economic growth
Decoupling traffic growth from economic growth-is this plausible ?
Questions and Trade Offs
In developing Transport Strategies and addressing the question Can Economic
Growth be 'Decoupled' from Traffic Growth? the following Trade Offs need to be
addressed:
•Growth or Displacement?
•Growth and the needs of the Global Environment
•Globalisation, Transport Demand, Spatial Patterns of
Development and the Environment
•Growth and the distribution of Prosperity - Spatial and
Demographic aspects
Scotland’s National Transport Strategy
Dunblane
30th May 2006
Can growth be achieved without an associated rise in traffic
emissions?
Presentation by
Professor Austin Smyth
Transport Research Institute,
Napier University Edinburgh
[email protected]
*