Fighting Climate Change with Climate Tickets? The Effect of Reduced Public Transit Fares on Transportation, Congestion, and the Environment

Areas to be worked on

• Ludwig Erhard ifo Center for Social Market Economy and Institutional Economics
• Assistant Professorship of Energy Markets and Energy Systems Analysis at FAU Nuremberg

Tasks

Climate tickets in the form of fare reductions for public transportation gain popularity as to decarbonize the transportation sector and to become more independent from Russian oil and soaring fuel prices. The environmental association Deutsche Umwelthilfe has been calling for some time for the introduction of a ticket for the German public transportation system of €365 annually. Some German municipalities already introduced such climate tickets on a trial basis (e.g. Reutlingen during 2019–mid 2021; Amberg since February 2020). Germany introduced a nation-wide ticket for local public transportation for €9 per month during June–August 2022. Austria also offers climate tickets. The state Upper Austria started a regional climate ticket in October 2021, followed by the region Vienna-Lower Austria-Burgenland (25 Oct. 2021), Vorarlberg (1 Nov. 2021), Styria (1 Jan. 2022), Salzburg (1 Jan. 2022), Carinthia (1 Jan. 2022), and Tyrol (1 Mar. 2022). On October 26, 2021, a nation-wide ticket was introduced.

We intend to empirically evaluate the effects of climate tickets on the use of different modes of transportation and the consequences changes in mobility patterns have on traffic volumes and greenhouse gas emissions. Given the variation in treatments across regions (introduction of local, regional, and nation-wide tickets in Germany and Austria) and time, we will analyze multiple treatment effects. We will utilize different datasets to estimate the effects on different outcome variables, e.g. rail traffic (local, regional, and express trains), road traffic, as well as delays and cancellations of different train types. We are interested in the question if the reduction of public transport fares has led to a traffic shift from road to rail or primarily to windfall gains. We will quantify the magnitude of substitution effects between different modes of transportation (e.g. from car to rail, but also within different rail transport modes, e.g. from highspeed to local trains). Moreover, we will also analyze the environmental consequences of the introduction of climate tickets, using average emissions of CO2, NO2, and PM10 as dependent variables. An adverse effect of climate tickets could be reduced public transport reliability via congestion, delays, and cancellations, which we also seek to analyze. Finally, we will also be able to assess the policy costs (e.g. subsidy payments for fare reductions) against their environmental benefits and we derive both short-term and long-term sustainability implications.
Methods:

To identify causal effects, a promising approach will be to apply a difference-in-differences (DiD) model. To evaluate the effects of regional climate tickets, we compare mobility patterns in the affected municipalities with mobility patterns in other non-treated cities before and after the policy change. To ensure that the common trend assumption holds, we combine the DiD approach with matching techniques where appropriate. Evaluating the impact of nation-wide climate tickets is more challenging, because there is no natural control group that is not affected by the treatment. To address this problem, we compare the mobility developments in regions where public transport is well developed relative to regions where public transport is poorly developed. Thus, we exploit differences with regard to treatment intensities to identify a causal effect.

Data and other sources

We will utilize different datasets for our empirical analysis. Mobile phone data from the telecommunications provider Telefonica (sold by Teralytics, a data provider) will be used to analyze mobility flows across administrative districts in Germany and Austria for different modes of transportation (car, train) at a daily frequency. The data have been used by ifo in the past in a research project evaluating the possible effects of the introduction of a congestion charge in Munich. Data on planned and actual train arrival times, as to analyze delays and cancellations, will be obtained from the online portal zugfinder.net (train finder), covering all train connections (from regional trains to fast trains) in Germany, Austria, France, and Italy, back to the year 2019. Data on German road traffic volume by vehicle category (motorcycle, car, truck) from traffic measuring points and by road type (highway, country road, etc.) at a daily frequency (back to 2015) will be provided by the Federal Highway Research Institute (Bundesanstalt für Straßenwesen; BASt). These data allow for an in-depth analysis of road traffic in response to the introduction of climate tickets. Moreover, using average values of CO2, NOx, SO2, and PM10 emissions, we will analyze the environmental impact of traffic changes induced by climate tickets.

Results

First results are planned to be published by the end of 2023.