Positive socioeconomic impacts of major public transport projects

Posted June 05, 2015

  • Business
SGS Economics and Planning major public transport projects

City shaping public transport projects and the behavioural and land use changes they induce can have a substantial positive socio-economic impact throughout the project’s design, construction and operating phases.

Economic expansion effects

The positive impacts of the design and construction phases of city shaping public transport projects include economic expansion effects:

  • New design and construction contracts for existing and potentially new businesses, which stimulate local economic activity
  • The associated increase in design related and trades employment, and
  • The flow-on effects enjoyed by other firms in the contracting firm’s supply chains.

Once construction is complete, the operation of the transport project can lead to a wide variety of positive impacts. These also include economic expansion effects, though at the operation stage they often manifest in supply opportunities across a different array of goods and services. Other benefits associated with the operations stage are all fundamentally linked with the improved metropolitan accessibility arrangements that the project delivers.

Behavioural change

Users of the transport system are amongst the major beneficiaries. By switching modes from private vehicle to public transport, public transport users can save time travelling on congested roads, avoid vehicle operating costs, and enjoy improved safety. Interestingly, this modal shift of travel increases the potential for travel both ‘on’ and ‘off’ the public transport network, as accessibility enhancements filter through the related systems.

Land use change

A key outcome of these changed accessibility arrangements are the land use impacts that emerge. The development potential of land parcels (that enjoy improved accessibility arrangements) rises, and this is often directly incorporated into land value increments. As time goes on land owners and developers act on this value and convert affected land into more compelling development mixes and intensities, and in doing so incrementally reshape the metropolis. Land uses that crave superior access are attracted and their relocation often intensifies development along the transport corridor, thereby reducing development pressures at the fringe of the metropolis.

In turn, these improved accessibility arrangements can have significant effects on economic productivity, social inclusion and environmental sustainability.

Economic productivity

The more accessible a location (defined as the quantum of economic or social activities that can be reached using the transport system), the larger the effective size of the local geographic ‘market’, which promotes economic activity between firms and fosters higher levels of local area competition.

This enhanced market size benefits firms in numerous ways, including:

  • The ability to achieve economies of scale and scope through the specialization that is enabled by the large numbers of readily accessible customers
  • The availability of numerous supply sources and potentially specialized infrastructure, and the competitive environment that stems from this, and
  • Access to a deep and diverse pool of skilled labour, often complemented by high levels of technological/ knowledge transfer between firms, which helps bolster innovation.
  • Consequently, improved accessibility has the potential to create new business and trading opportunities, and increased competition, which results in higher profitability for firms that are able to adapt to the new market conditions. While this increased competition is detrimental to the interests of some firms, which are unable to adapt or afford higher rents in highly accessible locations, the positive impacts have been shown to completely overshadow the negative impacts.

Improved accessibility also helps to improve the quality of labour inputs available by increasing the stock of human capital (the value of knowledge and experience in the labour force). This benefit is afforded to workers and stems from their improved ability to match their skills with available job opportunities, and to move easily from job to job, thereby expanding their set of experiences.

Social inclusion

Greater access and mobility can address social exclusion, thereby contributing to higher levels of social cohesion and engagement. Often improved accessibility can act to alleviate disadvantage, and research has suggested that this can lead to improved engagement with employment and education opportunities, which in turn contributes to improved health and criminal justice outcomes.

Perhaps most significantly, a new public transport network significantly bolsters the employment and service access opportunities available to those who cannot drive. Not only does this enhance social equity, but it also helps to build solidarity with previously disengaged and/ or disadvantaged community members.

Environmental savings

Investments in public transport have the potential to alter user behaviours (as discussed above), leading to less vehicle kilometres travelled and modal shifts in favour of public transport. This reduces greenhouse gas emissions, other pollutants, noise and waste.

Importantly, in congested cities, patronage is the single most significant driver of all the benefits discussed above. The more patrons public transport projects effectively serve (i.e. with frequent and reliable services), the greater the improvements in accessibility and mobility across the transport network. In turn, the greater this effective servicing, the better the economic, social and environmental outcomes delivered.


Given the relatively short timeframes associated with the design and construction phases, relative to the project’s operational lifecycle, initial economic expansion impacts are relatively limited when viewed against the benefits driven through improved accessibility.

Indeed the benefits of the operational phase manifest over a long period and may take some time to evolve. This is because city shaping transport projects drive changes to urban form - in particular, changes to the distribution of population and employment, which occur over a long period and which are influenced by the degree to which they are enabled (by planning arrangements, public education, developer engagement, etc.).

Importantly, the cumulative impacts of city shaping transport projects, once operational, can far outweigh the impacts that are generated by the design and construction phases (refer Figure 1).

Figure 1: Likely scale and timing of impacts

SGS Economics and Planning Positive socioeconomic impacts charts 01 01

Enabling the benefits to be realised

As indicated in Figure 2, there are numerous ‘enablers’ which must be in place if the potential benefits from city shaping public transport projects are to be fully realized. These obviously include the coverage, quality and pricing of the network itself, along with the propensity for the population to use it.

Figure 2: Benefits and enablers

SGS Economics and Planning Positive socioeconomic impacts charts 02

Other key enablers leverage local production capabilities and promote land use change, such as:

  • Local production capability leveraging enablers:
  • Understanding the existing capacity of local supply sources and skills
  • Better matching the linkages between local suppliers and the users of these supplies and skills
  • Accounting for the degree to which local content is mandated, recognizing some of the trade-offs involved with this, and
  • Developing initiatives that promote technology and skills transfer and which balance the degree to which IP development needs to be protected.

Land use response enablers:

  • The degree to which planning controls/ incentives encourage responsiveness
  • Public land banking, which can be used to leverage land use change, often through demonstration projects
  • Public sector coordination surrounding land use change, and the necessary infrastructure and services required to support this change
  • The degree to which developers are actively engaged in the redevelopment process, and
  • The risk appetite for financiers and how this affects the ability to fund redevelopment projects.

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