The Transit Referendum and Congestion

March 20th, 2015 § 2 comments § permalink

The yes side wants me to believe that supporting the Mayors’ Council Transit Plan will reduce congestion in Metro Vancouver. Their transit plan will increase bus, SeaBus, and Skytrain service, build a infuriatingly incomplete Broadway subway, increase bicycling infrastructure, and expand and improve our road infrastructure. But it will not reduce congestion.

Some simple economics explains why we have congestion. Before we take a trip, we weigh the cost of driving—fuel, parking fees, and our time, against its benefit. If the benefit of driving is higher than the cost, we drive. When benefits are higher, say from going to work, we tolerate more congestion. If the cost of driving is lower, from the opening of a new 6 lane freeway, we drive more.

On entering a road we also create a small delay to all other drivers already on it. As the number of cars increases this small delay becomes long waits at traffic lights, higher emissions, accidents and frustration. This is what one experiences when almost 2200 drivers pass through the Boundary intersection on Hastings in a single rush hour (from city data). As there are many drivers and we are anonymous, we never consider how we impact others on the road. Even if we do, and choose not to drive today—in an effort to make Hastings less congested—we only encourage someone else to drive tomorrow. This is the logic underlying the “Fundamental Law of Highway Congestion,” by Andrew Downs. If we double road capacity, we also double long run traffic. The net effect on congestion: zero. A corollary to this law implies that if investment in transit removes vehicles from the road, other vehicles fill in to take this space.

So unless the Mayors amend the transit plan to include more than just a discussion of congestion pricing, our vote has no influence on long run congestion.

Instead our vote influences the future of our region. Expanding road capacity, and transit, induces development and growth. More transit induces greater growth around transit corridors and higher density, which in turn encourages alternative transportation like bikes and car sharing. Expanding road capacity induces lower density development, suburban expansion, additional cars, and more driving and emissions overall. This is the choice you make as you fill in your ballots.

Regulating E-autos in India

January 8th, 2015 § Comments Off on Regulating E-autos in India § permalink

e-auto

An Electric Auto-Rickshaw at Tilak Nagar, Delhi.

Over the last few years, New Delhi saw the swift and stealthy rise of the electric auto-rickshaw, till they were banned earlier this year. Passengers travelled on fixed routes for an affordable flat rate fare of Rs10-15 on some 1 lakh e-rickshaws, all of which functioned without official sanction. Regulating e-rickshaws has been tricky. Proponents first claimed a majority of the fleet was below the 250kW threshold, classifying them as non-motorised vehicles under the Motor Vehicles Act, thus precluding regulation. This was not true. Compliance with the act requires mandatory commercial licences for e-rickshaw drivers. This mandated a removal of the entire fleet, impacting both urban transport and driver livelihoods. A protracted discussion is still ongoing among the judiciary, Delhi government and the transport department. As per a court order, authorities could allow e-rickshaws only after making necessary changes to the law. While Parliament passed a bill to regularise e-rickshaws by bringing them under the Motor Vehicles Act, the Delhi government and police are still taking action against e-rickshaws operating in violation of court orders.

While there are many opinions on how e-rickshaws should be regulated, nobody asks “Why regulate?” What is the public benefit? Regulation might protect a passenger from an unsafe machine. With almost no reports of accidents involving mechanical failures, this new technology has performed quite well. However, even if the technology is safe, it could be driven rashly. Regulation can protect people from dangerous driving. Delhi’s e-rickshaws operate at low speeds, causing fewer accidents. Although there were 36 accidents involving e-rickshaws till this July, there were only two fatalities in Delhi. In contrast, in just 2012, 205 people died in cars and 489 on motorcycles. E-rickshaw seems safer than most other vehicles on Delhi’s roads.

Even if we accept e-rickshaws are safe, there is still what economists call “asymmetric information” — not knowing the right fare, passengers can be overcharged. However, this does not apply to Delhi’s fleet, as most ran on fixed routes with a flat fare. Regulation can minimise externalities, such as congestion and pollution. But cracking down on the potential impact of a fleet of small electric vehicles rather misses the point in a city adding more than 600 fossil-fuel powered private vehicles per day.

E-rickshaw drivers are also part of the “public”. An “open-access” market for passengers can reduce efficiency spreading passengers, and thus income, thinly across a growing number of drivers. However, deciding on numbers, usually through a permit system, is difficult. For many years, a strict permit system for auto-rickshaws created a permit raj in which non-driving permit holders received half the driver’s daily revenues.

If we don’t need to protect passengers or operators, why regulate? Regulating the e-rickshaw sector is justified for a single reason common to both passengers and drivers — insurance. The Delhi High Court judgment directs e-rickshaws to be allowed only after ensuring insurance coverage, among other things. Passengers injured in an uninsured e-rickshaw cannot make insurance claims. Without insurance, the e-rickshaw is vulnerable to accident or theft. Without state regulation and legal status, obtaining insurance coverage is impossible. Solving the insurance problem should be at the heart of any regulatory strategy. Authorities should implement light-touch regulation, refraining from imposing unrealistic burdens on operators and enabling insurance companies to access the e-rickshaw market. This might include a register of drivers and a database linking vehicles to owners. Some form of basic driver-training should be instituted too.

However, all this should stop well short of the permit raj that hampers auto-rickshaw drivers.

This post is jointly written with Simon Harding, and first appeared on the Indian Express Daily: http://indianexpress.com/article/opinion/columns/one-for-the-road-21/99/#sthash.4H0Gn8bM.dpuf.

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  • About Me

    I am an Associate Professor in Environmental and Resource Economics at the University of British Columbia, Canada.

    Through my research I try to gauge the efficacy of policy designed to help the environment. This research is usually joint with colleagues from the University of British Columbia---the real brains behind it. I recently studied automobile sales in Canadian provinces to determine if tax rebates for hybrid vehicles were cost-effective. Studying appliance sales in the US, I analyzed whether mail-in rebates for energy star appliances helped promote their adoption. I am currently studying whether British Columbia's vehicle retirement program, BC SCRAP-IT is cost-effective and am trying to understand what motivates someone to participate in it.

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