The Economic Prowess of Public Transport: A Powerful Force Multiplier
Economic Impact of Public Transport: Returns Outweigh Expenditure - Analysis: Public expenses on public transit exceed the revenues generated
Public transport (PT) often gets a bad rap for being a drain on resources, but all that changes when we delve into the economic returns it delivers—as confirmed in a groundbreaking study. According to the study by MCube, an average of 75 billion euros in annual Gross Value Added (GVA) can be attributed to buses and trains, trouncing their annual costs by a factor of three. This comprehensive research was commissioned by Deutsche Bahn.
Although the actual GVA is predicted to be substantially higher due to some unquantifiable factors, the study's authors stated that this figure is already a massive contribution to the economy.
Breaking it Down: Direct and Indirect Economic Impact
The study purposely focuses on identifying and quantifying the various economic effects of PT. To achieve this, MCube uses substantiated industry data from the Association of German Transport Companies (VDV), the Federal Statistical Office, and preceding GVA studies for transport providers.
The direct and indirect GVA generated by PT operations itself is accounted for, together with the employment opportunities that come with them. For instance, consider a municipal bus operation generating revenue and creating direct jobs, which would be a reflection of the direct GVA. Indirect GVA, in contrast, is produced in upstream economic sectors, such as train manufacturers, energy suppliers, and IT service providers.
Moreover, PT introduces external economic benefits. A thoroughly developed PT network makes locales more alluring for tourism, while ensuring commuters can easily travel to work. This enhances a region's attractiveness for employers and improves economic performance. Interestingly, the study suggests that this commuter effect alone accounts for an impressive 25% of the total average GVA of PT.
Limitations of the Data
The data reflects the year 2019, avoiding COVID-19-related distortions, and largely consists of estimates because not all assumptions are supported by statistics. Regardless, the data is based on sound methodology and demonstrates the undeniable economic might of PT.
In Germany, PT is largely supported by passenger revenues and regionalization funds from the federal government. Despite annual increases in these funds, the industry argues that they are insufficient for proper operation. Consequently, some states are already mulling over service reductions due to funding shortages.
- Economic Impact
- Public Transport
- Berlin
- TU Munich
- Deutsche Bahn
- Commuters
- City Planning
[1] In urban areas, public transport strengthens access to employment, education, and services, boosting productivity and fostering economic growth.[2] By efficiently reducing traffic congestion, public transport enhances overall business and commuter efficiency.[3] Well-developed public transport attracts businesses and investments, amplifying the economic potential of a city.[4] Berlin is a hotbed for startups, hosting over 4,550 startups and an impressive 21 unicorns. Efficient public transport is instrumental in supporting this dynamic business ecosystem, ensuring workers are easily able to access major business and innovation centers—a key competitive edge for the city within the global market.
- Vocational training programs, funded by the finance derived from public transport networks, could be implemented in urban communities to equip locals with the necessary skills to contribute to the business sector, thereby further enhancing the economic growth of the city.
- Deutsche Bahn, along with other stakeholders such as TU Munich and city planners, could collaborate on formulating a community policy that emphasizes the importance of vocational training to maximize the economic benefits from public transport, not just in terms of GVA but also by cultivating a workforce that strongly supports local businesses and industries.
