The massive shift to working from home is causing Canada's major urban centres to lose out on the wider, often overlooked, economic benefits of public transit, says a new report from the C.D. Howe Institute.
In Trains, Lanes and Automobiles: The Effect of COVID-19 on the Future of Public Transit, authors Benjamin Dachis and Rhys Godin explore the wider economic benefits of public transit, how transit has been impacted by the COVID-19 pandemic, and how it should adapt in the future.
As Canadians continue to work from home in response to the pandemic, the drop in public transit ridership persists. Post-pandemic, however, less travel on transit jeopardizes some of the driving forces that lead to higher incomes and living standards when more people congregate in an urban area.
As one case study, Dachis and Godin estimate that reduced Toronto Transit Commission ridership has caused an economic loss of a staggering $1.7 billion for the Toronto region alone. This is due to a reduction in the wider economic benefits of agglomeration that public transit provides.
Agglomeration economies are the benefits that come when firms and people locate near one another together in cities. Fast public transit enables riders to have access to a wider set of job opportunities, higher wages, new services, and learning partners. It also means businesses can draw better talent. Simply, publicly financed transportation infrastructure enables more people to connect with each other, resulting in increased economic efficiency and growth, benefitting both people and firms.
The authors warn, however, that these agglomeration benefits will continue to diminish if people increasingly decide to work from home and create a more geographically dispersed workforce.
"The long-term, post-pandemic economic cost of urban residents not leaving their homes for work could extend well beyond the hardest hit sectors," says Dachis. "This may result in many more workers experiencing lower productivity and wages, producing fewer innovations and having less joy in their personal connections if urban life doesn't return to its pre-pandemic state."
As governments make decisions on transit operations and investment, the economic benefits of agglomeration should be an explicit part of the cost-benefit analysis, conclude the authors. Without including these wider economic benefits, future decisions may result in under investing in economically critical transportation infrastructure.
Benjamin Dachis is Director of Public Affairs for the C.D. Howe Institute. In his role, he furthers the Institute's mission to improve Canada's economic performance by enhancing the visibility, reputation and impact of its research and activities. Benjamin started with the C.D. Howe Institute in 2006 as a Research Fellow and also has experience with major U.S. and U.K. think tanks.
Rhys Godin is a former IMCO Policy Intern at the C.D. Howe Institute.