Published in Special Issue of ‘Studies’, Summer 2007 on ‘Quality of Life’
Frank Allen & Finbarr Bradley
The case for investment in high capacity public transport has engaged public interest in Ireland in recent years to an extent unusual for a European country. Increased employment and population, especially in urban areas such as Dublin, Galway and Cork, have resulted in greater traffic congestion and longer journey-to-work times for large numbers of commuters. Beneficiaries of Ireland’s increased material prosperity may wonder if several hours’ commuting time is an inevitable consequence of this prosperity or if an alternative model of transport policy could offer a less car-dependent life style. Many people making the daily commute to urban areas have experience of a higher quality of life elsewhere in Europe before returning to live in Ireland or before emigrating here. Concern about the impact of long-distance commuting on individual well-being has recently been reinforced by the recognition of the environmental impact of high car-dependency. People have not been surprised to find that a pattern of commuting that they do not regard as sustainable from a personal point of view may not also be sustainable from an environmental perspective.
Learning from Luas
The launch of passenger service on Dublin’s Luas light rail scheme in 2004, after many years of discussion and planning, has given residents in the areas served by Luas a sense of the benefits offered by high capacity public transport. Few investments in public infrastructure were scrutinised so carefully or for so long by policy-makers and by the wider public. The first three years’ experience of passenger service suggest that the public scrutiny of the balance of cost and benefits that would be delivered by Luas may have ignored or at least underestimated many important benefits that are evident now that the system is in operation. Some of the most significant benefits that have been delivered suggest that high quality public transport, especially when combined with appropriate land-use planning, can offer a quality of life for individuals rooted in stronger communities that is more sustainable than the alternative model of car-dependent commuting. This in turn has implications for how we evaluate major projects and the risks of making transport decisions in isolation from other aspects of planning. It also points to the risk of making decisions primarily according to economic criteria. The impact of Luas on the communities it serves offers an opportunity to study how improvements can be achieved in the quality of people’s lives and their capacity for growth and learning, aspects that are rarely included in formal evaluation of infrastructure projects.
Luas took a long time to plan and even to agree on its scope. This may not be too surprising considering that it was the first attempt since the nineteenth century to initiate a completely new rail transport system in Ireland. Prior to Luas, the last major investment in rail was the development of Iarnród Éireann’s DART in the 1980s, which was also controversial. It is worth noting that Government investment in both DART and Luas has been consistently opposed by most Irish economists who specialise in transport economics. The grounds for this opposition have usually centred on the argument that rail in Ireland does not offer an adequate benefit to cost ratio. While economists acknowledge the central role that urban rail plays in providing mobility elsewhere in Europe, many argue that the density of population in urban Ireland does not justify the large capital investment in rail here.
Limits of Analysis
The focus on cost-benefit analysis, as applied by economists, has gained public acceptance as the key criterion to be used in evaluating the worth of transport project and indeed whether the project in question merits exchequer funding at all. The limited range of benefits that are included in the standard cost-benefit analysis methodology may not be widely understood. For example, only benefits that are directly attributable to the project and that can be expressed in monetary terms are included in the evaluation. For a transport project such as Luas, the main benefits included are a monetary value attributed to the savings in journey time gained by travelling by Luas rather than by other mode of transport. Smaller values are included for savings in journey time for other road users and for the likelihood of fewer accidents on the highway to the extent that these changes can be directly attributed to reduced congestion brought about by Luas. While the environmental benefits resulting from passengers transferring from car to Luas are widely recognised, these benefits have until recently not been included in the standard cost-benefit analysis, partly due to lack of consensus among economists as to how their money value should be estimated. A monetary value for reduction in emissions due to passengers transferring from car to public transport is now included in the calculation but represents a very small proportion of the estimated benefits.
For a Luas line to achieve a high benefit to cost ratio, it would need to have high passenger numbers in the peak commuting time when there is congestion on city streets. The very high passenger numbers on the Luas Red and Green lines since passenger service began in 2004 have indeed resulted in a high ex-post benefit to cost ratio and by these standards of conventional economic analysis, Luas is thereby deemed a success.
For most observers, the benefits of Luas extend well beyond high passenger numbers during peak commuting periods. In fact, it is the success of Luas in attracting high passenger numbers at the time of day traditionally regarded as off-peak that has attracted most attention among public transport specialists internationally. The savings in journey time realised in the off-peak period is necessarily more limited and therefore contributes little to economists’ calculation of benefits in the standard analysis. The popularity of Luas for people going shopping at weekends, for entertainment in the evening or other non-commuting purposes has resulted in Luas being a financial success, allowing it to earn financial surpluses on operations and maintenance within its first year of operations. This financial success is exceptional for public transport in Ireland and for rail projects internationally, where exchequer subventions for transport operations are common.
But this analysis still suffers from a focus on benefits (and costs) that can be expressed in money. For many Dublin residents, the success of Luas has been that it provides substantially improved access for people with disability or for groups who have suffered other social exclusion. High Luas passenger numbers in the off-peak have improved the social and economic vitality of city centre neighbourhoods throughout the day and evening. When Luas management carried out qualitative research with Luas passengers, attention was drawn to the tendency of Luas passengers to strike up conversations with strangers at stops and on trams. Perhaps using light rail adds to a sense of community that travelling by car or even walking along a street cannot match.
Most important of all, there is a clear pattern of urban development emerging within short distances of existing and proposed Luas stops that is less car-dependent and more environmentally sustainable than the urban sprawl that is taking place elsewhere. This pattern of urban development creates greater opportunities for people to interact with neighbours, encourages social and economic activity locally and creates stronger communities. The standard cost-benefit analysis that includes only the direct monetary effects of investment in a piece of infrastructure and then focuses largely on savings in journey time, neglects these critically important attributes of high capacity transport.
Policy-makers responsible for authorising investment in public transport have in recent years recognised the need for a multi-criteria analysis of transport investment. The Department of Transport commissioned Goodbody Economic Consultants (2005) to develop an appraisal manual that encompasses the benefits and costs of transport projects, whether these have money values or not. This welcome initiative needs wider acceptance among economic commentators. In particular, it is necessary to emphasise that benefits that are not amenable to monetary evaluation should not be seen as merely supplemental to the economist’s cost-benefit analysis. Criteria such as integration with sustainable land-use planning, benefits to the environment and greater social inclusion for vulnerable individuals are central to strengthening communities. They should therefore be key factors in analysing infrastructure proposals.
Limits of Economics
A rail project not only contributes to the economic development of the communities it serves but is also an instrument of wider social change. It is worth exploring whether or not the conventional approach is appropriate for considering infrastructure which has a significant societal impact. Although based on sound technical principles and widely-accepted procedures, by attempting to quantify everything using a monetary yardstick, cost-benefit analysis fails to adequately take account of deeper values and relationships that permeate people’s lives. These values ultimately matter most to members of a community. Derived conceptually from the formal analytics of economic science, cost-benefit analysis treats human behaviour as showing universal characteristics within an individualistic, rational-choice, utility-maximising framework regardless of cultural or social context. In this world, community or society is an atomised one, populated by self-interested individual decision-makers rather than a dynamic, interactive and complex social sphere founded on the relationships among people.
Decisions on infrastructure projects should therefore also address how the project will affect shared values such as the sense of community, neighbourliness or the potential for nurturing integrated manageable communities. It is these qualities that determine the capacity of a locality over time for creativity, vitality and sustainability. A challenge for policy-makers is to recognise the limits of economic quantification and that the valuation of intangible qualities requires a broader approach if the development of dynamic, innovative and healthy communities is to be fostered.
The Bigger Picture
An approach to evaluating infrastructure projects along a range of criteria, both those amenable to monetary evaluation and otherwise, is consistent with some of the key guiding themes coming to the fore in public debate on Irish development. Some of the themes that are gaining recognition include sustainability, quality of life, social cohesion, well-being and cultural diversity. In its Strategy 2006 Report entitled People, Productivity and Purpose, the influential policy-making body, the National Economic and Social Council (NESC), attempts to find a new shared understanding of the Irish economy and enrich the account of how Irish economic, social and environmental factors are related in what it terms a ‘successful society’. This society is one in which individuals, families, enterprises, associations and communities can flourish and in which the public system enables them to achieve their changing goals. Low-quality social and environmental standards limit the ability to achieve a dynamic knowledge-based economy. In the past, there was a sense that economic reality set limits to Ireland’s social and environmental possibilities. Now it appears likely that the medium and long-term strength of the economy depends on social capital. The natural and built environment is also being regarded as crucially important as an integral part of economic activity, social relations and the quality of family and individual life.
While the movement towards globalisation of markets and economies gets much of the attention, Paul Krugman (1996) argues that the economies of modern cities show that the process of localisation is even more dominant. An increasing share of the workforce, for instance, produces non-tradable services that are sold only within the same metropolitan area. However, this does not necessarily imply a loss of national or regional competitiveness. As NESC itself believes, we need to escape from the usual refrain that Irish prosperity is virtually all created in the export, mostly foreign-owned sector, with the rest of economic activities, such as services, merely a recycling of that value. Accepting this view suggests that our goal should not just be to maximise productivity, as conventionally measured, in the non-traded sectors but that other objectives such as quality neighbourhoods must also be considered vital.
Innovative Communities
The late Jane Jacobs, iconic activist and author of the classic The Death and Life of Great American Cities (1961) believed that short-sightedness and intellectual arrogance characterised the field of US urban planning. She held that flawed assumptions, such as that an empty street was safer than a crowded one or that the car represented progress over the pedestrian, damaged modern cities. She argued that ideas should come from experience, not the other way around. Through first hand observation, she studied how neighbourhoods operate within the larger organism of the city or why some remain impoverished while others regenerate themselves.
The nature of community that we aspire to today is a departure from the model of suburban living which involves travelling to the city centre to work in an office or to a distant industrial estate to engage in manufacturing activity. Best practice in land-use and transport planning today recognises that the worlds of work, recreation, learning and residence are not so segregated. We aspire to live and work in diverse communities where interaction and communication with others in the community contributes to a sense of place that is innovative and conducive to learning. Richard Florida (2002) in his best seller, The Rise of the Creative Class, notes that creative people are attracted by the qualities of a community, its diversity and lifestyle, while this in turn attracts enterprise, the reverse of the traditional direction. What’s there (that is, the natural and built environment), who’s there (that is, the diverse kinds of people) and what’s going on there (that is, the vibrancy of activities) are what attract these individuals. Creative places provide an integrated eco-system where all forms of creativity, artistic and cultural, technological and economic, can take root and flourish. The analytical approach to evaluating transport and land-use decisions needs to reflect this changed aspiration. We need to update our conventional cost-benefit analysis that is based on measuring the monetary cost of commuters travelling to remote offices and factories at peak commuting hours and attempting to shorten this journey time.
Place is becoming the central organising dimension for the new economy and society. Unlike earlier approaches to planning where reducing the cost of business or grouping companies in industrial estates away from central urban areas were seen as the way to stimulate development, attraction of human capital to special places is what increasingly ensures competitiveness. Clusters of related activities that take advantage of local knowledge, relationships and motivation are of particular benefit and it is these that offer competitive advantages in the global economy. Places that in future can reach out to, attract and keep as community members the most creative people and organisations will have the highest quality of life. These places will be multi-culturally diverse, sustainable and unique.
Some conclusions
Decisions in relation to infrastructure can define the communities we will live in for generations to come. It is important that major decisions in relation to transport are not made in isolation from policies about land-use and without a vision of the urban space we hope to create.
Ireland’s recent prosperity has resulted in an increase in employment and population that could not have been imagined as recently as the early 1990s. The increased prosperity has created the need for rapid development of infrastructure but it has also allowed us to afford the large capital investment in rail systems that will last for generations. In the Dublin area, some communities have experienced urban sprawl and high traffic congestion while some other communities have benefited from a high capacity rail system. These offer alternative models of how our urban areas can develop.
Conventional economic analysis focuses on factors that are amenable to monetary valuation and does indeed assist policy-makers to assess how value for money can be achieved when choosing between alternative investments that are similar in nature. However, investment decisions that have such a profound impact on the quality of life for current and future generations should not be based solely on factors that can be estimated in money terms.
The appropriate choices of mobility and the pattern of urban development depend on our vision of the communities we aspire to live in and see prosper. Contemporary concern about the environment and quality of life encourages us to consider what pattern of community development is sustainable and what land-use and transport policies support such development. A community that nurtures creativity is likely to be based on local relationships and not one characterised by commuting long distances for employment, education and recreation. Our decision-making methodology needs to reflect the changing aspirations for these communities. It is indeed an exciting challenge.
Frank Allen is Chief Executive of the Railway Procurement Agency, which is the infrastructure provider for Luas. Finbarr Bradley is a visiting professor at the UCD Smurfit School of Business.
Bibliography
Florida, R. (2002) The Rise of the Creative Class (New York: Basic Books).
Goodbody (2005) Transport Project Appraisal Manual (Dublin: Goodbody Economic Consultants in Association with Atkins and Mazars).
Jacobs, J. (1961) The Death and Life of Great American Cities (New York: Vintage Books/Random House).
Krugman, P. (1996) Pop Internationalisation (London: MIT Press).
National Economic and Social Council (2005) NESC Strategy 2006: People, Productivity & Purpose (Dublin: NESC).