Microincentives for Sustainable Mobility in Europe: A New Study by Factual Consulting reveals potential for more targeted incentives in two UPPER sites
UPPER partner FACTUAL, with the support of EIT Urban Mobility, CARNET, Karos Mobility, FAIRTIQ, Meep, Dott, Transport & Mobility Leuven, the City of Tartu, and Stad Hasselt, has released a new thought leadership study titled Microincentives for Sustainable Mobility in Europe
Subsidies to public transport are common in Europe, accounting for about half of the total revenue for most Public Transport Authorities (PTAs). The COVID-19 pandemic and the war in Ukraine have put additional strain on public transport funding, leading some governments to reduce or even eliminate fares, thus making public transport free for everyone. However, this approach has not always been effective in reducing car dependency. Current systems often involve rather flat fare structures which may not always target those who need subsidies the most. The study suggests that current subsidies, while effective in providing access to mobility, are not efficient. One way to improve this situation is through microincentives, narrowly defined incentives, down to the characteristics of a single trip, such as transport modes, times, or user categories. The underlying idea behind microincentives is simple and not new, as it replicates the concept of price discrimination widely used in mainstream economics, but in this case, applied to subsidies in public transport.
Moreover, in the context of MaaS, microincentives can be an excellent solution to unlock the positive impact of new mobility services like the bike, scooter, moped sharing, ride-hailing or carpooling, which are usually constrained by the need to remain profitable. This new mechanism would enable them to expand their operating areas further into the periphery and make their rides more affordable, thus effectively becoming a complementary service to public transport.
To assess their potential impact, Factual Consulting conducted a stated preference study in five cities: Barcelona, Madrid, Lisbon, Berlin, and Oslo. Respondents were asked to reconsider their last car trip and consider switching to an alternative, incentivised, multimodal trip which would include a combination of public transport and a more sustainable mode (shared electric bike, scooter or moped, carpooling or, for a higher price, ride-hailing). Each time the alternative option changed, but the cost was always lower than the car trip. The cost difference between the alternative trip and the car trip is called the discount rate.
Using as an example the UPPER sites, in Lisbon the study found that providing a multimodal trip at 79% the cost of the equivalent car trip (e.g., a 2.1 EUR multimodal trip vs. a 10 EUR car trip – sum of the costs for fuel, parking and tolls) could lead to a half of car users switching to public transport, even if the travel time remains the same. The price should drop to 1.1 EUR (89% discount rate) to achieve the same results in case the multimodal trip takes 10 minutes longer. In Oslo, the results were even more promising, with only a 43% discount rate potentially leading to the same results. To incentivise 20% of car users to switch to a multimodal trip (which is already a remarkable result), the discount rates needed are much lower, to the point where in Oslo, users are willing to take the alternative trip even at the same price of the car trip, given that this multimodal alternative is supplied to them.
Table 1: Minimum discount (approximately) needed to have a 50% (or higher) probability of accepting a multimodal trip
Travel time | Barcelona | Madrid | Lisbon | Berlin | Oslo |
20 minutes longer | Never | Never | Never | Never | 53% |
10 minutes longer | Never | 88% | 89% | Never | 48% |
Same | 80% | 64% | 79% | 76% | 43% |
10 minutes faster | 48% | 34% | 66% | 41% | 37% |
20 minutes faster | 18% | 7% | 55% | 9% | 31% |
Table 2: Minimum discount (approximately) needed to have a 20% (or higher) probability of accepting a multimodal trip
Travel time | Barcelona | Madrid | Lisbon | Berlin | Oslo |
20 minutes longer | 72% | 52% | 52% | Always | Always |
10 minutes longer | 42% | 25% | 41% | Always | Always |
Same | 15% | 1% | 31% | Always | Always |
10 minutes faster | Always | Always | 19% | Always | Always |
20 minutes faster | Always | Always | 8% | Always | Always |
The full report, which includes detailed findings and recommendations for policymakers and transport operators, can be downloaded at https://factual-consulting.com/microincentives-sustainable-mobility-europe
In addition to the insights presented in the report, the UPPER project is actively working on five measures that leverage incentives to promote sustainable urban mobility:
- IDF_07 - To incentivise the use of Public Transport for commuters https://www.upperprojecteu.eu/measure/idf_07/
- LEU_05 - Mobility for all by optimising the use of financial incentives to increase the share of PT https://www.upperprojecteu.eu/measure/leu_05/
- ROM_09 - Incentive packages to support multimodality https://www.upperprojecteu.eu/measure/rom_09/
- OSL_04 - Reduce dependency on car ownership https://www.upperprojecteu.eu/measure/osl_04/
- TES_08 - To create new incentive-based services in the MDMS system to increase the use of PT https://www.upperprojecteu.eu/measure/tes_08/
