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Urban transportation: challenges for local development

Milan, 20/11/2017, National Interest

The participants at this National Interest event highlighted that local public transport is a key factor for local development, both in terms of the opportunities for connection that it offers individuals, businesses, and institutions (including universities, for whom it is particularly crucial), and because it improves the livability of the urban environment thanks to the greater average sustainability provided in comparison to the alternative of private vehicle use.

It was noted that Italy’s local public transport system suffers from several evident problems, due in large part to the high rate of car ownership that characterizes the country’s urban landscapes, and to parochial approaches to governance, which make the high level fragmentation among providers in the local public transport sector a pernicious factor, in that it creates barriers to exit from the sector for those that cannot overcome difficulties stemming from the failure to reach economies of scale. Also seen as weighing heavily were regulatory uncertainty arising from high political turnover, especially at the local level, and from a high volume of legal challenges.

Several experiences abroad, cited during the discussions with a view to eliciting comparisons with the Italian situation, were seen as demonstrating the effectiveness of having an expert management team that is unfettered by the political sphere and its fleeting life cycles, and which is also capable of taking advantage of the opportunities offered by ICT and big data. Indeed, it was stressed that what is more significant than the dichotomy between public and private or between concentration and fragmentation is the distinction between efficient and inefficient management, in addition to the importance of overcoming once and for all the adverse effect of public funding on efficiency.

It was suggested that the main difficulties in Italy lie with the troubled finances of transport firms, municipal budgetary constraints, and the consequent decline in investment (not just in infrastructure and vehicle fleets, but also in technology), in a scenario where the competition from innovative mobility services is intensifying.

Nevertheless, the participants acknowledged that there are a number of cases of best practice in Italy, such as the city of Milan, which, as a strategic choice, has adopted a multiannual outlook largely untethered to the terms of office of individual administrations, and has accompanied efforts to develop public transport services with a policy aimed at discouraging mobility in the form of private vehicle use. Figures cited showed that the public share of the local transport market in Milan is around 60% and rising, and that, taking into consideration the share of bicycle use and journeys on foot, two-thirds of local journeys can be described as conducted sustainably. The recent sharp decline in the number of driving licenses obtained by young people in Milan was held up as an indicator of the effectiveness of the city’s local public transport strategy. Indeed, the station density (stations/sq. km) of the Milan subway has now risen to higher than that of the London Underground. Hence, the main challenge no longer relates to infrastructure, but rather involves increasing inclusivity and accessibility for a user catchment area that has also grown larger. It was submitted that this goal should be pursued through the concept of intermodality, though it was recognized that the challenge is being made tougher by the fact that several innovative services have – due to demand density levels – proven profitable only in central areas, even though their social utility is greater in the city’s outskirts.

More generally, it was felt that regulatory policies should also take into account social costs pertaining to both passenger mobility and goods transport, with fleet inefficiency and the disruptiveness of loading and unloading vehicles seen as in need of reining in through appropriate incentive and disincentive measures.

For that matter, local transport services are no longer just "public": the dividing line between traditional local public transport and other services is shifting, but in the view of some participants the importance of the former will remain predominant for a long time to come, with private mobility services – including those electrically-powered – mostly fulfilling a supplementary role. It was urged that the process of assimilating such services needs to be effective and open to innovation and competition.

Lastly, it was suggested that in order to boost funding capacity, it may be useful to seek out value-capture opportunities both among transport users (with a higher level of price discrimination) and from the knock-on effects of local public transport on other sectors (bearing in mind, for instance, the increase in real estate values generated by proximity to local public transport routes). Yet another option highlighted were mechanisms geared to stimulating private funding solutions. In this regard, it was noted that the European Investment Bank offers agglomeration mechanisms that would be useful in overcoming the limited size of local public transport providers.