The effect of land costs on the economics of urban transportation systems

Using Sydney, Australia, as a case study, this paper reports on calculations of the costs of automobiles, heavy rail and buses, taking into account the costs of land, infrastructure, rolling stock, operations and maintenance. Land is found to be the principal contributor to the total direct economic cost to society of transportation by automobile. This total cost of automobile transport, measured in dollars per passenger per kilometer traveled, is about 15 times the cost of train travel and is about double the cost of bus travel. All three urban transport modes receive public subsidies. The annual subsidy to automobiles is largest in terms of billions of dollars and second largest (after heavy rail) in terms of dollars per passenger per km traveled. These results suggest that, in Sydney and many other cities where land costs and car use are high, the economic optimal mix of transport modes would contain a smaller contribution from automobiles and a larger contribution from trains and buses.