Benefit/Cost of Public Transit

When considering public transit we tend to focus on the subsidy cost to the taxpayer and overlook the possible economic benefits that might accrue from the existence of the system. Studies have shown that in fact the financial benefits accruing to the community considerably outweigh the subsidy cost, usually expressed as a Benefit/Cost ratio.

A landmark study, Assessment of the Economic Impacts of Rural Public Transportation, was conducted in 1999 for the U.S. Department of Transportation in which twenty-two bus transit systems were studied. Overall the B/C ratio ranged from 4.22 to 1.67.

A similar study in Quebec, conducted in six counties in the region, showed B/C ratios ranging from 1.75 to 0.73.

What are the "costs" and who benefits from them? Well - a large portion is cost of local labour - drivers and administrative staff and vehicle maintenance. Thus a large chunk of the costs are ploughed right back into the community whose taxpayers provided the funds. This money recirculates within the local economy, e.g. the driver buys groceries locally and the grocer then pays his employees and so on. The maintenance company pays its mechanics and buys parts locally. Even the fuel and acquition cost of the buses pass through companies and add to the bottom line. This recirculation process (formally known as the "Local Multiplier Effect") in the case of public transit would be equivalent to at least half of the face value "cost".

Who are the " Beneficiaries" in the Benefit-Cost equation? We can classify them as follows:

The following table outlines typical benefits.

  • Those without ready access to private transportation:
    • improved access to education, leading to improved opportunities for employment
    • incentive to remain in a rural home, saving cost (and stress) of relocation to a town
    • access to more shopping alternatives, leading to improved utilization of money
    • Savings in taxi cost when a trip is absolutely necessary (Note: displaced taxi drivers can drive buses.)
  • Those in two-car families:
    • possibility of saving the expenses of ownership of a second vehicle
the Community
  • Improved prosperity of individuals, businesses, and institutions, hence collective prosperity
  • Attraction of more residents, especially young families, fostering rural schools, volunteer fire departments; sustainable community initiatives and supporting agrarian activity
  • .
  • Healthy retention of long-time residents

example - Community Colleges

  • More income from students funded through Federal and Provincial incentives.)
Local Governments
  • Influx of educational incentive dollars, transferred from other governments, into the local economy.
  • Improved tax base if new businesses locate as general prosperity and economic climate improve.
  • Retention of residents, hence tax income.
Provincial government
  • Reduced cost of transportation subsidies for medical purposes
  • Improved access for individuals to medical, dental, eye care, mental health and other professional services contributes to prevention of illness and improved management of health -- more affordable than the treatment of illness.