Complementary Pricing and Land Use Policies: Does It Lead to Higher Transit Use?

Abstract

Problem, research strategy, and findings: A shift toward more sustainable transportation requires both adequate pricing of externalities from driving and supportive land use policies. However, proponents of each approach often under-estimate the complementarity and potential synergy between them. This study investigates the interaction effects between gasoline prices and land use (policy) variables using a panel dataset of transit ridership in 67 urbanized areas between 2002 and 2010. We found that while doubling the average gasoline price would increase transit ridership by 8.4% in an urbanized area with mean density and no regional containment policy, in areas with slightly higher density and a regional containment policy, the impact of higher gasoline prices would rise to 21%. In communities that had adopted a package of smart growth land use options, the impact of higher gasoline prices on transit use is even greater.

Takeaway for practice: Pricing schemes will be more effective where alternatives to automobility and supportive land use policies exist. The impacts of urban form on travel behavior are also strengthened when driving externalities are correctly priced. Planners and policymakers should take advantage of the complementarity between pricing and land use planning approaches by implementing policies in combined and well-coordinated ways.

Keywords:

• transit ridership
• land use planning
• pricing
• elasticity
• complement

Acknowledgments

This study uses a dataset and preliminary analysis developed for the second author's thesis research.

Notes

1 Elasticity is the most widely used measurement of how responsive one variable is to a change in another variable. It typically measures what percentage of change in the dependent is associated with a 1% change in an independent. Thus, the gasoline price elasticity of transit ridership measures what percentage of change in transit ridership a 1% increase in gasoline prices would cause. In strict economic terms, the gasoline price elasticity of transit ridership is a cross-price elasticity of transit demand since gasoline prices are the price of automobile use, a substitute for transit.

2 While complementarity and synergy effects in policy instruments can be defined distinctively, we use these terms loosely to denote any positive interactions of combined policies that reinforce the effects of one another (May, Kelly, & Shepherd, 2006). The complementarity in this research refers to the first two cases in the table below.

3 This combined elasticity of transit ridership with respect to operation subsidy is estimated to be about 0.8 in pooled data models. The coefficients of many other key variables, including the gasoline price and urban form variables, are generally estimated to be larger in the pooled data models in which time-invariant but UA-specific effects are not controlled.

4 Providence (RI–MA) and Fresno (CA) urbanized areas have population-weighted densities that are close to the sample mean (10,964 persons per square mile). Densities in Boston (MA–NH–RI) and Philadelphia (PA–NJ–DE–MD) are about 1 standard deviation (6,109 persons per square mile) above the mean. A change from the density level in Atlanta (GA) to that of Dallas–Fort Worth–Arlington (TX) or San Diego (CA) also approximates the density increase by 1 standard deviation.

5 The U.S. federal gasoline tax rate has been 18.4 cents per gallon since 1993.

1 Population-weighted density can be obtained by the following equation, while a traditional density measure , where P_i and A_i are population and land area in census block i, respectively.

2 Between 2000 and 2010 census definitions, land areas of 67 urbanized areas in our sample expanded by 19% on average. Area expansion was particularly significant in southern UAs such as Charlotte (NC–SC) (70.5%), Austin (TX) (64.4%), and Raleigh (NC) (62.1%). These significant boundary expansions artificially lower the density when assessed by the conventional density measure, although the majority of the population still lives in areas of similar density.