The RCCAO’s strange argument on fares

I’m not entirely unwilling to hear arguments about how Toronto should implement fares-by-distance, provided that there’s also an explicit and substantial commitment to dealing with the reality in Toronto, which is that the people who use the TTC for the longest trips are frequently the poorest, while the people who take frequent, short, trips are more well-to-do.

But one thing I have a hard time believing is that the TTC’s fare structure (and similar flat fares in the GTA) is driving suburban sprawl, as the RCCAO suggests in a report that got some play in the newspapers.

The full report is here. The full passage, lest you think I’m being unfair, is on page 26:

The efficiency of transit fares depends not only on their average level, but also their structure. Fares in the GTHA are inefficient in several respects. First, although the social costs of transit trips increase with distance travelled, fares do not vary systematically with distance traveled (except for GO Transit). Short-distance travellers overpay, and long distance travellers underpay. This is inconsistent with the benefits-received principle, and it creates an incentive for urban sprawl that works against “smart growth” objectives.

The first thing that occurred to me, reading this passage, was the old joke about an economist being kept up at night worrying about whether what works in practice could possibly work in theory. There’s nothing inherently silly about the theory that flat-rate fares might cause people to settle further out than they otherwise would, but that’s quite different from saying it “creates an incentive for urban sprawl”.

Why? Because transit, almost always and everywhere, comes after sprawl has already happened. People buy new homes in greenfield developments and then, years later, their town councillors might throw some transit option their way. But in municipal politics, new arrivals always have to line up behind long-time residents.

The other rock that this theory founders on, specifically in the case of the GTA, is the fact that the sprawling-est places in the GTA get their transit service primarily from GO which charges fares based on distance. If flat fares create an incentive to sprawl and fare-by-distance doesn’t, the fact that GO hasn’t substantially curbed sprawl (indeed, it exists to serve sprawl) should at least be acknowledged. The RCCAO report doesn’t.

Meanwhile, flat fares in Toronto aren’t having an obvious impact on settlement that the RCCAO would predict. If we take the hypothesis seriously, we should see preferential settlement at the city’s fringes as people snap up the combination of land and cheap transit but less settlement in the core. (The actual level of migration to Bloor West and Danforth East is barely offsetting demographic shrinkage.) We’re seeing the opposite: hypertophy in the city’s core, where flat fares offer the least benefit to new condo dwellers–someone who rides from Dufferin to Spadina on the 501 is handsomely subsidizing someone who starts their commute on the Lawrence East Bus.

Obviously there are cases where the user-pays principle can be used effectively–I’m a longtime advocate of pricing roads and parking more accurately than we currently do–and transit may actually be one of them. Like I said, I’m not opposed in principle to fares by distance. But the RCCAO has, I think, failed to make the argument that it induces more sprawl. The more boring, unexceptional contributors to sprawl (land use regulation and highway spending at Queen’s Park) still, I think, probably explain 90% of what we see in the GTA.