The contribution of public transport to economic productivity

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Publication Date


Subject Area

economics - benefits, economics - appraisal/evaluation, place - australasia, mode - bus, mode - rail


public transport, economic productivity, agglomeration economies


The objective of this research was to quantify the contribution of public transport to economic productivity. Based on our review of the literature we decided to extend and apply Venables’ microeconomic model of the productivity benefits of transport improvements, which considers the interplay between commuting costs and agglomeration economies. We extended Venables’ model in two ways: first, we incorporated non-linear congestion costs that are typical of major urban centres in which public transport tends to operate. Second, we allowed for space previously used for car parking to be reallocated, primarily for employment, which in turn would generate additional agglomeration economies. The model was subsequently applied to two transport case studies and we found additional productivity benefits in the order of 3% to 19% of conventional transport benefits. These findings have implications for the economic evaluation of public transport improvements and transport funding priorities.


Permission to publish the abstract has been given by NZ Transport Agency, copyright remains with them.