The Economic Case for Encouraging Bicycling as a Mode of Transport

The Economic Case for Encouraging Bicycling as a Mode of Transport
An Examination of two bicycle-friendly policies in London

Pillars of Planning A BENVGPLA
Economics
Candidate Number STWD7

Introduction

The Mayor of London Boris Johnson wants to transform the British capital into a “cyclised city” (TFL 2010 p 12). His objective: to make bicycling account for 5 per cent of all journeys in London, requiring a 400 per cent increase from 2001 levels by 2026 (TFL 2010 p 6).

This essay seeks to analyse the economic impact and rationale of having more bicyclists on London’s roads. Transport for London (TFL), the local government body chaired by Johnson, has designated 2010 London’s year of cycling and is launching two major initiatives which will be the focus of this essay.

Johnson, himself a keen cyclist, has staked huge personal capital on the highest profile initiative, a cycle hire scheme in central London that has become known as Boris Bikes. The idea, inherited from his predecessor Ken Livingston, had already enjoyed popular success in Paris, Montreal, and elsewhere.

The second measure is a planned network of twelve cycle routes called Cycle Superhighways designed to make bicycling safer and faster on key routes. Both programs are sponsored by Barclays Bank, which is paying £25 million over five years (GLA May 2010) towards the reported £140 million (Spillane July 2010) cost.

The essay will examine the rationale for such investments by considering the positive externalities (health, lower pollution, lower congestion etc.) of increased bicycle use. The essay also asks whether a conservative mayor seen to have profited from motorist voters frustration with the perceived anti-car policies of his predecessor (Hill 2009), would ally himself to a scheme that could clash with the interest group that helped him into power.

Public provision

The services provided by TFL are commonly referred to as public transport, suggesting they are a public good. In an economic sense, many services, such as seats on a bus, would not be considered public goods, a term taken to mean “goods that are nonrival in consumption” (Heikkila 2000, p 103). However roads or pathways do conform to the economic definition of public good because the use of them would prelude others only in cases of extreme congestion. There is little incentive for private individuals to construct roads or cycle tracks in cities when it is difficult to prevent others from taking free advantage of the infrastructure, not to mention the cost and complexity of sourcing the appropriate land.
Externalities

Johnson wants to encourage bicyclists not just because he is fond of them, but because there are real economic benefits in doing so. Environmental concerns and congestion have made policy makers re-examine transport policies that favour car use (CTC 1993) and look at bicycling as a cheap way of alleviating some of the problems. Hudson (1982 p 2) sets out ten reasons to plan for cyclists (and encourage cycling), arguing that bicycling is a cheap way of providing mobility; an efficient use of space; energy saving; healthy; equitable; reliable; inclusive; benign and it can be quicker than other means of transport as well as preventing death and injury.

These benefits are referred to by economists as positive externalities as illustrated by Graph 1. Under normal market conditions, a quantity Q1 of bikes will be supplied at equilibrium conditions (where demand equals supply). This is socially inefficient because some of the social benefits of bicycling aren’t accounted for. If positive externalities are factored in, consumption would occur at Q2.



Changing public attitudes

In developing the road network, transport planners paid little attention to cyclists after the popularity of the bicycle waned dramatically in the post WWII years and the motor car took over (Hudson 1982 p 1). Bicycling remains in the minds of many a poor man’s mode of transport, fit only for those not rich enough to avoid the vagaries of weather and traffic. However, studies by the European Commission (Dekoster 1999 pp 23-31) show that given the right image, even hilly terrain need not be a disincentive to bicycling.
But how to fire up the public imagination and make bicycling fashionable again? Cyclists in London are regarded by many as crazy – or even irresponsible. Friends of Eilidh Cairns, a female cyclist who died last year after being knocked down by a lorry driver with defective eyesight were outraged by his retribution: a £200 fine and three points on his licence (Moore-Bridger 2010). “It seems to be the attitude that you are putting yourself in the way of danger and therefore it is your own fault if it happens to you, which is not the same as if it were a pedestrian killed," said Emma Chesterman, Cairns' former flatmate.
Evidence suggests that the novelty of bicycle hire schemes elsewhere have proved to be more effective than information campaigns in boosting the popularity of bicycling by changing people’s attitudes. Bike shop owners in Paris said that the Velib reintroduced the idea of cycling as a means of transport, boosting sales of regular and even electric bikes (Vandore 2008). Such a move is explained in Graph 2.


Graph 2

The market provision of bicycles before the introduction of Boris’ Bikes is at price P1 and quantity Q1. The cycle hire scheme increases the supply of bikes, making the supply curve S1 shift out to S2 as the quantity of bikes available at a particular level of demand increases. For the purposes of simplicity this graph deals with equilibrium conditions (when supply equals demand), which should be attained following an initial period of adjustment. The quantity of bikes available for use will thus increase from Q1 to Q2. But as more people come to like bikes as the novelty to the new scheme prompts them to overcome negative perceptions, the demand curve shifts from D1 to D2. After a period of adjustment to new market conditions, even more bikes will be available (Q3) for a price (P3) lower than before the scheme but higher than after its initial introduction. Bike retailers are happy as the revenue gained increases from P1xQ1 (as shown by the yellow square) to P3xQ3 (as shown by the green square). Policy makers have altered the market.


Alternative theories

Even if bicycles are a private good, providing a cycle hire service is shrewd. It encourages people to cycle, freeing up space in buses, on the tube or on roads. From a Marxist perspective, it could be seen as averting the crisis from the overconsumption of transport and road systems. Infrastructure development in the past was “conceived and built when attitudes toward energy use and design in the transport sector were different” (Batterbury 2003, p 151). He notes that the response to rising vehicle ownership has typically been to build more and bigger roads, thereby encouraging even more car use. Encouraging bicycling could be seen as a response to the congestion and pollution problems of London’s roads, and an overstretched public transport system.

Outer London

The cycle hire scheme for the moment is limited to central London, although there are plans to start extending it to East London (TFL Nov 2010). TFL calculates that two-thirds of the growth potential for cycling exists in outer London – or 2.4 million journeys a day that could be made by bicycle but are currently being made by car (TFL Jan 2010). An increased willingness to view bicycling as a means of transport combined with facilities such as parking could increase housing demand in areas not on the tube network as shown in Graph 3.

Graph 3

Crouch End is a 15 minute bus ride away from Finsbury Park tube station. A cycle park facility provided by TFL at the station allows users to leave their bicycles in secure and weather proof conditions. Cycling to the station from Crouch End takes five minutes, and the faster journey time could increase demand for property in the area from cyclists. This would cause the demand curve to shift from D1 to D2. This would boost the price of housing in the area from P1 to P2. Eventually, developers would be attracted to the area to serve this increased demand, boosting supply of housing in the area from Q1 to Q2, as prices settled at the equilibrium level (where supply equals demand) P3 . This graph shows that bicycling could have an effect on potential housing demand, although many other more significant factors are involved in house buying and I expect the impact to be marginal.

The motorist lobby

With Superhighways, London planners are now designating road space for cyclists, reducing the surface area available to motorists. This may be partly a response to increasing numbers of cyclists: “the values of consumption rather than production guide central city land use decisions” (Smith 1996 p 52). But McClintock (2002) says getting sceptical Londoners onto bikes will require taking sticks to motorists, as well as tempting potential cyclists with carrots and if Johnson is really committed he may have to square up to the motorist lobby. Cycling groups CTC (CTC 2010) and London Cycling Campaign (London Cyclist 2010) have given a lukewarm response to the first two Superhighways. The CTC notes the blue lanes are often hidden under parked cars, and at 1.5 metres wide they are no wider than regular cycle tracks. The next ten Superhighways will test his resolve. In Germany, “the resurgence of bicycling as a practical mode of daily urban travel is due almost entirely to public policies that have greatly enhanced the safety, speed and convenience of bicycling whilst making auto use more difficult and expensive.” (Pucher p 31).

Competitive City

Cycling, Johson says, is “arguably the single most important tool for making London the best big city in the world.”(TFL 2010 p 3). One reason for taking on motorists might be because London’s competitivity depends on making it a liveable city. Johnson may have been inspired by Global trends magazine Monocle, which named bicycle-friendly Copenhagen as the world’s second most liveable city in 2010 thanks to its green-living ways, and the fact that “you can bike safely through the city.” (Monocle 2010).

The image of the cool metropolitan cyclist would certainly gel with the “creative” classes, a term coined by Richard Florida (2002). He argues that as low skill jobs shift to cheaper production areas, global cities should seek to attract architects, graphic designers, engineers, artists and other high paid professionals. “Advanced economic sectors are often engaged in global competition to attract good staff and these people would sooner choose to work in a pleasant city than a polluted, ugly and crime-ridden one.” (OECD 2006, p 137).

British Prime Minister David Cameron, Johnson’s boss as head of the Conservative party, also likes to be photographed on a bicycle. The Economist (Nov 2010) reports that Cameron credited Florida “for devising a blueprint for government’s role in the economy.” Although much criticised (Markusen 2006, Peck 2005), Florida has – according to The Economist - become “the government’s philosopher” and the idea of the cool metropolis may be gaining sway.

Conclusion

An argument for investing in bicycling can be made due to the positive externalities of cycling, but also due to the negative externalities of motorcar transport. The latter, to a mayor of London confronted with the ever more urgent problems of congestion, may be compelling enough for him to confront the motorist lobby, or at least ask them to make room for cyclists. The popularity of the Paris Velib bicycle rental scheme, which has improved the image of the French capital as a liveable city, may also have influenced Johnson. He knows that quality of life is a factor in the global competition for talent that pits London against other big cities.




Word count: 1950
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Urban Design Project Part 1

Urban design is supposed to be for and about people.
For anyone visiting Victoria Embankment however, it’s clear that the space is dominated by cars.

The road splits the water from the parks and buildings, and the noise and pollution keep people away. I felt any intervention needed to address the traffic problem if it were to be successful.

So I have chosen the road as my element, and inspired by Paris, I want to encourage people to develop new relationships with the built environment along this stretch of the Thames by quite simply banning traffic on Sundays.

Let’s take a look. Here are some photographs of the Victoria Embankment today. Lots of traffic and pollution. Very few pedestrians using the wide riverside walkway. Rubbish and neglected areas. Unused facilities.

Here’s what it could look like on a traffic-free Sunday. Cyclists instead of traffic. People dancing. Crowds enjoying music at the bandstand. Local communities using the space for festivals. Skateboarders practising their tricks. Once people have come to re-appropriate the space, they might be encouraged to come up with ideas for the unused plinth just as they did for Trafalgar Square.

Such a move would require little infrastructure, but it would involve a lot of community involvement.

The smiley faces here represent local bars and restaurants who would be glad of the extra trade, and who could be persuaded to get involved to promote it. To create awareness, the first traffic free Sunday should be advertised as part of a big event, such as the Jubilee Celebrations next year, or possibly a new annual festival every May 24, Queen Victoria’s birthday.

The orange face here is The Farmer’s Club, whose members might like to help organise a Farmer’s market here.

Inspired by the bandstand, local dance groups might like to show off their cha-cha, merengue, waltz, tango and jive skills here. Further along, space could be reserved for rollerblades and skateboarders.

I see it as an evolutionary rather than a prescriptive system, empowering people to develop new relationships with a space that has potential to be developed further.

We were told not to worry about cost, but I am a practical person and on the day the government announces massive spending cuts, this is a project which could actually still happen because it would cost very little.

It would be the first step in “healing” this part of the city.