Cost per passenger km by mode in Sydney

This simple but extraordinary chart (see first graphic) is from a paper written last year by one of the country’s leading transport researchers, Dr Garry Glazebrook, of Sydney’s University of Technology.

In the paper, the author estimates the total cost of different transport modes, taking account of both private and social (i.e. external) costs. The costs are based on Sydney.

A number of interesting things about travel are evident from the chart, some of which are familiar and some which may surprise.

First, both private and public transport modes generate significant social costs. These costs are borne generally by society, “either in the form of subsidies (e.g. rail and bus subsidies from government, or hidden parking subsidies for car users) or in the form of externalities (including pollution, congestion, accidents, etc)”.

Second, although their composition is quite different, the social costs of private and public transport are essentially the same, at around 38c per passenger kilometre. One big difference of course is that subsidies for public transport are paid in actual dollars by government whereas the social costs of cars are largely an unpaid burden on others (primarily other road users).

Third, motorists pay much more out of their own pockets to drive than they do to travel by public transport. Cars cost motorists 48c/passenger-km whereas trains only cost 11c and buses 19c. In my view, travellers are prepared to pay more for car travel because for most trips it is faster, more convenient and more comfortable than public transport (CBD work trips are the most obvious exception).

Fourth, motorists tend to perceive the cost of car travel as lower than it actually is – they take account of petrol and tolls (14c/passenger-km) but neglect standing costs like depreciation and interest (34c/passenger-km). This means some trips are taken by car when it would’ve been cheaper to travel by public transport (in reality, most of the social benefits of this difference could only be realised at the time of deciding whether or not to own a car. Or if drivers rented their cars rather than bought them).

Annual social cost of operating a car in Sydney

This chart which I’ve adapted from the paper (see second graphic) is also interesting. It shows that the most significant externality associated with cars – accounting for more than half of their total social cost – is traffic congestion. Greenhouse emissions from cars cost society less than 1c/passenger-km. The author used a carbon price of $10/tonne, but even at $40/tonne, I calculate the cost is still less than 1c/passenger-km.

There are inevitably data limitations in an exercise like this. Dr Glazebrook puts some caveats on his findings. His estimate of the externalities associated with cars is conservative – for example, he says he does not value road space or make allowance for subsidies to drivers from local government.

Debates about what’s regarded as a legitimate “cost” are also inevitable. I disagree, for example, with his view that “free” shopping centre parking is a social cost – in my view the cost is paid by the shopping centre manager. I think there’s also an argument that the travelling time of each mode should be included as a private cost.

The final word belongs to the author, who argues that the key focus of policy should not just be on subsidies to public transport. He contends that when environmental and other externalities are considered and not just financial subsidies to operators, “cars are in fact subsidised by society to a similar level to that of public transport”.