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.
example - Community Colleges