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Public transit provides many economic benefits to a city. These factors are important to consider when deciding how much money to invest.

Public transit is an integral part of a city’s transportation system, and it benefits the entire community, including those who don’t use public transit. Public transit is one of the largest economic players in any city, and transit policies, practices, and investments play an important role in creating a better business environment and supporting the local economy. This fact is important when considering how much money to invest into building and operating transit.

One goal of the Transit Strategy is to look at how much money Edmontonians think we should invest in our transit system and why. To answer these questions, we need to better understand the role that public transit plays in the city’s economic sustainability.

What is the economic impact of transit investments and expenditures?

Public transit attracts substantial investments and influences economic activities of business and travel patterns. Infrastructure investments affect a city’s economic sustainability by helping to maintain or improve its long-term competitiveness, productivity, innovation, cost of living and incomes. A 2007 study revealed that a $2 billion investment in transit projects produced a $3.7 billion increase in Canada’s GDP, $160 million in taxes and 22,570 full-time equivalent jobs as direct economic benefits.

How does transit policy influence economic development?

The overall impact of public transit on economic development can be classified into three categories: generative, redistributive and financial transfer.

Generative impacts increase net economic growth by using underused resources or using existing resources more efficiently. Examples of generative impacts include travel time savings, user safety benefits, creation of new jobs and easier access to employment.

Redistributive impacts shift economic activities between locations within a region, but do not actually increase them. Examples include changes in land development such as the clustering of development around transit stations and the shift of existing economic activities to areas within a transit corridor.
Financial transfer impacts refer to the transfer of monies between entities. Examples include property tax payments and joint development income that may involve financial transfers from land developers to transit agencies.

The most direct impact of transit service on economic development comes from the delivery of transit service, which requires workers, vehicles and a procurement of other goods and services. The local benefits of this impact is maximized by using local suppliers as much as possible. Another direct economic impact of transit is that it makes it easier for people to work further from where they live, particularly for lower income groups who can’t afford to commute by other means. Other people can benefit as well if transit service is faster or more convenient than personal vehicles, or if it helps to create  a more efficient transportation system with lower congestion directly benefiting drivers of personal vehicles. In turn, employers are able to tap into a larger pool of potential employees.

How does transit relate to business agglomeration patterns?

Transit design can affect and be affected by the agglomeration patterns of businesses in the region. Agglomeration refers to businesses independently choosing to locate in proximity to one another to collectively enjoy what is termed economies of agglomeration. Concentrating in the same areas reduces transportation costs from suppliers and distribution costs to customers. In addition, agglomeration allows businesses and their employees to participate in labour market pooling and enjoy industry knowledge spillovers.

How does public transit influence property values?

Understanding the effect of investments in transit infrastructure on property values may create opportunities to achieve higher economic return from transit investments and deserves consideration in transit planning. Transportation improvements in Edmonton – such as the Ring Road and the LRT expansion will cause affected areas to experience a 10% -20% increase in real estate values if the market goes up.

Conclusion

Public transit can contribute to the economic sustainability of a city through two pathways: 1) through transit investments and expenditures, and 2) though its impact on creating a better living and business environment. Investments in public transit have immediate effects in local economies in the form of new economic activities resulting from these expenditures and long-term effects in the form of a better living and business environments. Public transit is necessary for economic growth and can have a substantial positive impact on the economy of a region.

For More Information

Transit Strategy Project Team

Telephone

In Edmonton: 311
Outside Edmonton: 780-442-5311

TTY 780-944-5555
Email whatmovesyou@edmonton.ca

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