Transport and urban development on a regional level (ThUNDER).

This research project starts from the problems associated with mobility, transport and spatial planning. The PhD contains an overview of work inspired by research and consultancy work performed at Transport & Mobility Leuven and the KU Leuven during the last decade. The PhD bundles four papers from a wide variety of research topics.

These four papers are:

1) To raise or not to raise? An impact assessment of Russia’s incremental gas price reform

2) Distributional impact of a regional road pricing scheme

3) Language and cultural change in the setting of a regional economic model: application to Brussels

4) Substituting regular bus services by mobility on demand: theory and application

The first paper on gas price reform in Russia and the second paper on the introduction of kilometer charging in Flanders use general equilibrium models that are very similar in methodology and implementation. In both cases the respective models SUSTRUS and EDIP were used in large-scale research projects. Both papers study reforms in pricing. For Russia it is a correction to gas pricing as the current price is still highly subsidized. In Flanders it is a kilometer charge for passenger cars. In both countries the market price is not conform to the cost that either natural gas or private mobility impose on society. In both countries the proposed reforms are controversial as they may have a disproportionately large impact on poor households. As such, both papers focus on distribution of impacts across a variety of households as well as the possible channels for redistributing tax revenues to mitigate adverse effects on equity. Moreover, in the second paper on kilometer charging, we integrated a microsimulation model with a general equilibrium model. This was an idea that had arisen in the investigation of the household impacts of gas pricing in Russia, but we were forced to abandon it due to a lack in reliable data. For Flanders however, with the help of the public economics research group, we were able to integrate both approaches. As we expected, this offers a much more nuanced view on the impact of economic policy across households. We have also shown that the impact of kilometer charging within an income group may be as diverse as the impact across different income groups. The traditional modelling approach using a limited number of income quintiles may therefore be insufficient to study the relative impact of kilometer charging. This may also be true for other economic policies.

The third and fourth papers are quite different from the first two. They serve as a point of departure from complex and numerical general equilibrium modelling to more micro based models. The third paper, on language and cultural changes in Brussels was inspired by a combination of assisting in the teaching of urban economics at the KU Leuven. Combining ideas of amenities in cities first proposed by Brueckner, Thisse and Zenou (1999)[1], the model was modified to include a cultural amenity that counteracts agglomeration in the city center. The city center is then shared by two opposing groups. In this model, people prefer to live close to people with similar culture and language, but are also attracted to the higher wages in the city center. Transport and mobility play a critical role in the model, as the places people live and work from may not accord with their preferred cultural environment, but they may feel forced to live there due to better accessibility. The critical intuition of the paper was that in the long term, language and cultural preferences may evolve. If a certain (opposing) group has a larger utility than the own group, people start adopting the language and culture of that group. This increases social welfare, but reduces the influence of the own group. We find results in the line with T. Schelling (1978)[2]: under the right circumstances an initially small dominance of a cultural aspect like language could have a large impact on overall culture and that transport accessibility can play a role in this process. This fits well with the history of the language communities in Brussels. The paper offers a new view on the interplay between culture, economy and transport accessibility that has not been studied in this way before. It is also a paper that has become more relevant in recent years, as political forces increasing polarization have become stronger in Belgium, Europe and the rest of World.

The fourth and final paper handles about recent transport innovations that lead to an increase in on-demand mobility, it was inspired by a complex and demanding project on the reorganization and privatization of bus services in Flanders. On-demand transport is often considered as an alternative to fixed route bus services. This idea has been hanging around for more than a decade, but implementation has often failed. Very little literature was available on this issue and it had only been marginally studied from a cost-benefit view. Developing a model required combining ideas from the urban economics literature (the third paper), applied numerical modelling (the first two papers), operations research and the available economic literature on public transport. This resulted in a highly stylized model for replacing fixed route transit with on-demand transport. This paper shows that ‘door-to-door’ on-demand mobility has limited returns-to-scale effects in contrast to bus services. This means that it is principally a niche service for low density / low-demand peripheral areas or is in direct competition for taxi services in the urban area. Its principle role is feeding into higher frequency bus services. It is therefore neither a good alternative for bus services in the urban area or a catch-all replacement for rural bus services. Analyzing welfare aspects we see that the benefits and costs of replacing fixed route services by on-demand transport are distributed in a very unequal way. The policy leads to a small benefit for a larger group of more centrally located households and large costs for those passengers who need to use a combination of a feeder (on-demand) and bus service to get to their location. The paper also hints at the operational restraints and high cost of on-demand transport that have contributed to its failures in the past.

All papers display a clear trade-off between efficiency and equity. Distribution of the impact of the policy is therefore a critical component of each paper. This can be either the distribution of impacts across income groups, culture & language groups (paper 3) or by location in the urban or rural area (paper 4). From a political perspective, the distribution of impacts is often more important for its acceptance than the overall social benefit of a policy. In that way, all papers have in common that they touch on issues where the distribution of the impact is at least slightly controversial. In the case of the reform of gas prices in Russia it is reflected in the larger cost for regions depending on gas as well as poor households depending on gas for heating. In paper 2, the introduction of kilometer charging faces a similar regressive impact for poor car-dependent households. At the same time, tax recycling with the aim of increasing economic efficiency may exacerbate negative impacts on social equity. Paper 3 discusses how politically and socially sensitive issues such as the disappearance of a language group from a city (taking Brussels as an example) can be linked to economic conditions and transport accessibility. The paper also briefly discusses a number of real world policies that have been common-place in trying to slow down or even reverse social changes. In paper 4, we show how a move from a fixed route transit system to a hierarchic system with high-frequency lines in the center and on-demand transport in the urban periphery disproportionately affects passengers that need to travel from the periphery to the urban center or vice versa. Although none of the papers in this PhD uses political economy models as (for example) Besley (2006)[3], each paper adds insights that could be used to underpin such models and improve understanding of policy relevant questions with equity trade-offs in general.

[1] Brueckner, Jan K. ; Thisse, Jacques-François ; Zenou, Yves, 1999. Why is central Paris rich and downtown Detroit poor? An amenity-based theory, European Economic Review, 1999, Vol.43(1), pp.91-107

[2] Schelling T. , 1978. Micromotives and macrobehavior, New York (N.Y.) : Norton

[3] Besley T., 2006. Principled agents? The political economy of good government (The Lindhal lectures),Oxford university press