Posts tagged as "economics"

Webinar Recordings Online: Veterans Transportation and Rural Transit Cost-Benefit Analysis

Recordings of recent webinars conducted by SURTC staff are available online. Del Peterson presented findings from his study on veterans transportation in a webinar on July 10. Earlier this year, Ranjit Godavarthy and Jeremy Mattson presented a webinar on their cost-benefit analysis research for small urban and rural transit. Both webinars were presented as part of the Center for Urban Transportation Research (CUTR) webcast series. Recordings of the webinars can be found at the links below. Links to the full reports and executive summaries of the research are available in the Completed Reports section of the SURTC website.

Webinar recordings:

Research Report – Cost-Benefit Analysis of Rural and Small Urban Transit

SURTC has published a report analyzing the costs and benefits of providing transit services in rural and small urban areas. The full report and an executive summary can be found at the following link:

Cost-Benefit Analysis of Rural and Small Urban Transit

This study focuses on the qualitative and quantitative benefits of small urban and rural public transit systems in the United States. First, a thorough review of previous literature is presented. Then, a framework is developed which focuses on three main areas of transit benefits most relevant to rural and small urban areas: transportation cost savings, low-cost mobility benefits, and economic development impacts. This study estimates the cost savings from using transit in place of alternative modes and the significant costs that would result from trips foregone in the absence of transit. Estimated benefits are compared to the costs of providing service to derive benefit-to-cost ratios. Results are presented nationally, regionally (FTA regions), and statewide. Sensitivity analysis is also conducted to illustrate how the benefits and benefit-cost ratios vary with changes in key variables. With estimated benefit-cost ratios greater than 1, the results show that the benefits provided by transit services in rural and small urban areas are greater than the costs of providing those services.

For more details, contact Ranjit Godavarthy at ranjitprasad.godavar@ndsu.edu or Jeremy Mattson at jeremy.w.mattson@ndsu.edu.

Upcoming Webcast: Cost-Benefit Analysis of Rural and Small Urban Transit

SURTC researchers Ranjit Godavarthy and Jeremy Mattson will be presenting results from their cost-benefit analysis research as part of the Center for Urban Transportation Research (CUTR) webcast series. The webcast, titled "Cost-Benefit Analysis of Rural and Small Urban Transit," will be presented March 20 at 11:00 am central time.

This research estimates the benefits of public transit systems in small urban and rural areas in the United States. A framework is developed which focuses on three main areas of transit benefits most relevant to rural and small urban areas: transportation cost savings, low-cost mobility benefits, and economic benefits from transit operations. This study estimates the cost savings from using transit in place of alternative modes and the significant costs that would result from trips foregone in the absence of transit. Estimated benefits are compared to the costs of providing service to derive benefit-to-cost ratios. Results are presented both nationally and by state to demonstrate the impacts of investments in rural and small urban transit.

Information on how to view the webcast can be found at the CUTR website: View Connection Information

Report Published: Organizing Transit in Small Urban and Rural Communities

A new SURTC study conducted by David Ripplinger provides information and a decision-making framework for designing and administering rural transit policies given limited public resources. Using data from transit agencies in rural North Dakota, Ripplinger estimated the benefits of different service alternatives, evaluated the justification of government subsidy of rural transit on the basis of its cost structure, and investigated the most efficient regional organization of transit.

The study investigated whether it would be more cost efficient for a single existing agency to expand service and provide both fixed-route and demand-response service or if it would be more efficient to have multiple operators in an area providing service. If service is to be increased within the service area of an existing transit agency, the study found it is more efficient for the existing agency to provide that service than to create a new agency to do so. If new service is to be added outside the service area of an existing agency, the more efficient option is influenced by the size of the existing agency. It was found to be more efficient for small transit operators to increase service into a new area than for a second agency to do so, but for larger regional systems, the study found it may be more efficient for a second agency to provide the new service. The study also found it is more efficient for small transit systems to provide both fixed-route and demand-response service than to have two different agencies specializing in each. However, for larger regional systems, the results differ, and it may be more efficient to have providers specialize in one mode. In many cases, a single transit agency operating as a monopoly was found to provide service at a lower cost than two transit agencies would, but this was not always the case.

The findings and implications are directly applicable to rural transit in North Dakota and should be helpful in informing future federal policy as well as rural transit policy, service design, and operation in other states.

The publication can be downloaded at the following link: Organizing Transit in Small Urban and Rural Communities. The study was sponsored by the University Transportation Centers Program of the U.S. Department of Transportation. Questions related to the research should be directed to David Ripplinger, who can be reached at david.ripplinger@ndsu.edu

Transportation Seminar: Marginal Cost Pricing and Subsidy of Transit

As part of UGPTI's Transportation Seminar Series, SURTC researcher Jeremy Mattson will present a seminar on Marginal Cost Pricing and Subsidy of Transit.  This seminar, which is based on a recently completed study, will present results from a survey of small urban transit agencies regarding recent changes in service levels, fares, and funding; discuss the rationale for subsidizing transit; present cost data for small urban transit systems; focus on economies of scale, marginal cost pricing, and transportation externalities; and present results from a cost model. The seminar will be held Nov. 1, 2011 at 2:00 p.m. in Room 422 of the IACC building on the campus of North Dakota State University. Shortly after the conclusion of the seminar, links to the presentation and a recording of the presentation will be posted online on the Transportation Seminar Series website.

Marginal Cost Pricing and Subsidy of Transit in Small Urban Areas

A SURTC study conducted by Jeremy Mattson and David Ripplinger found that small urban transit agencies experience increasing returns to scale and density. This implies that increasing service levels will result in lower average costs. The report, titled "Marginal Cost Pricing and Subsidy of Transit in Small Urban Areas," has been published and is now available online.

This study analyzes economies of scale and density as a rationale for subsidizing transit agencies in small urban areas. A long-run cost model is estimated using data for 168 transit agencies that directly operate fixed-route bus service in small urban areas. Using vehicle revenue miles as transit output, results show that small urban transit agencies experience economies of scale and density. A full cost model was estimated that included the addition of external costs, such as environmental effects, and benefits. A benefit of increasing service levels is a reduction in rider waiting times. The study attempted to quantify this benefit. Results from the model were used to estimate the marginal social cost of providing service. Setting the fare equal to marginal social cost would maximize social welfare.

The results provide justification for subsidizing transit. The needed subsidy is calculated as the difference between the revenue generated by the optimal fare and that needed to maintain efficient levels of production. The rationale for subsidies is an important issue as many agencies have experienced recent reductions in operational funding.

Included in the report is a survey of transit agencies in small urban areas regarding recent changes in fares, service levels, and funding. The survey found that nearly half of these transit providers have either reduced service or increased fares over a two-year period, primarily because of decreases in operational funding.

For more information, contact Jeremy Mattson at jeremy.w.mattson@ndsu.edu. The publication can be downloaded at the following link: Marginal Cost Pricing and Subsidy of Transit in Small Urban Areas (pdf)

SURTC is a part of the Upper Great Plains Transportation Institute at North Dakota State University