Externalities: If only there were an alternative to cars

If only there were an alternative to cars

Mar 4th 2011, 17:34 by R.A. | WASHINGTON

SPEAKING at a conference, Ford Motor Chairman Bill Ford expressed his worry that the likely increase in global automobile ownership, from today's 800m vehicles to between 2 and 4 billion cars, could doom the world to a fate of global gridlock:

“Where are these people going to go? Where are those cars going to go?” Mr. Ford asked in an interview Thursday at the Wall Street Journal’s ECO:Nomics conference here.
Already, he says, daily commutes in Beijing can last five hours – and that’s when motorists don’t bog down in multi-day traffic jams as they did last summer.
“People in Los Angeles and New York think they’re in gridlock,” Mr. Ford says. “It’s nothing like what they have seen already in other parts of the world.”
As more of the world’s population moves into big cities, the answer to traffic congestion won’t be building more roads, Mr. Ford says, because there won’t be any space.
“This is going to be a real drag on global growth unless we solve it,” he says.

The great hope, Mr Ford says, is technology. In the future, vehicles will be able to communicate with each other, helping cars to find alternate routes and cut traffic. Let's hope so, because otherwise there will be no way for New Yorkers to avoid sitting in crippling congestion. NO WAY AT ALL.

Let's set aside for the moment Mr Ford's puzzling ignorance of things like buses, subways, bicycles, and feet. What is the actual problem here? Mr Ford suggests that the real downside to traffic is that it prevents critical trips from happening in a timely fashion. Gridlocked cities are unable to ship goods around or deliver people to hospital, and it's important that those things take place.

One might go so far as to say that some trips are more important than others. An ambulance carrying a seriously ill passenger needs to use the road more than the fellow driving two blocks to buy a coffee. So, too, does the person trying to get to a job interview. What's needed is some way to make sure that the important trips get made. One potential solution is to build more roads—just keep on adding new lanes until one of them is free enough to let the ambulance through. The problem with this is that modern cities tend to use up all available land. This is true in dense downtowns, where it's generally considered unwise to knock down office buildings to pave new roads. And it's true in suburbs, where the local homeowners typically aren't too excited to have new roads on their property. So in most cases, new roads are out.

What's needed then is a way to make sure the less important trips are not made, or are delayed, or are taken using some other mode of transportation. But how to do this? If there were an omniscient central planner, she could simply ring up the sort-of hungry guy who decides he may as well drive to get that burrito and tell him to wait a bit. But sadly, no central planner can know which people need to go where when and how much value should be attached to each trip. Only the individuals themselves know this.

But wait! What if there were a way to auction off the right to use the road at various times? Then it would be clear that the winning bidders placed the most value on the use of the road at the time for which they purchased the right! People who didn't need to drive as much simply wouldn't bid as much as others, and would instead handle their particular need in some other way. Enterprising companies could even bid on slots in order to run buses, on which people not willing to pay to drive alone could ride for less money.

Of course, an auction would be difficult to coordinate. But perhaps the market could be set up like a grocery store, in which prices are set to match supply and demand and are adjusted if one outstrips the other. A toll could be placed on a roadway, raised if traffic bogs down, and reduced if there's spare capacity. Then the roadway wouldn't be congested, and it would be clear that in most cases the people placing the most value on use of the road were in fact the ones using the road. Genius!

I'd love to take credit for this brilliant idea, but it's actually quite old and already in use in various places around the world. Singapore's system is rightly famous, though not apparently famous enough for Mr Ford to have heard of it.

Well, ok, so let's say this system is adopted everywhere, so that there isn't any traffic and people are all efficiently moving their travel demand around. Population and wealth will continue to grow. Demand for travel will rise, and tolls will go up. Eventually, the tolls will reach extremely high levels, such that only the wealthiest can afford to travel on a regular basis. Other citizens will be able to get around by taking buses (which will themselves become more expensive) or by living more densely so that more destinations are within easy walking or biking distance. But fixed supply will become a constraining factor on economic activity.

Ah, but there is a solution. Those rising tolls? They generate a pool of money. And as tolls rise, it will be increasingly clear on the busier routes that tolls are high enough to cover the cost of new construction. But where should such new construction take place? Well, some existing transportation right-of-way can be repurposed for higher capacity vehicles. A roadway lane, for instance, could be closed off and used for a light-rail line that can carry more passengers per hour.

But if tolls continue to rise, then it will become sensible to dig. New subway lines will generate net economic benefits, new capacity will facilite growth, and the world will still have managed to avoid congestion.

Not every city will reach this equilbrium, of course. In some places, a small toll at rush hour and a few buses will be enough to keep traffic running smoothly indefinitely. In China, where cities of 50 million people are supporting very rapid income growth, high tolls and substantial new transit construction will be the order of the day. But it's just not the case that the world must bog down in permanent congestion. And neither does the world need fancy new technology, although technologies may improve the way the above systems function. The silver bullet that will help the world keep moving is just an economic approach to transportation demand and infrastructure construction.

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LaContra wrote:

Mar 4th 2011 5:45 GMT

I don't care I'm not giving up my car.

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