Output-based funding of urban public transport . Model simulation of alternative incentives and financial framework

The report studies the possibilities for introducing an alternative funding system for public transport based on a “Dutch treat” that involves local authorities and the central government. Estimates indicate that the central government can initiate a process that provides huge benefits relatively easily. This involves subsidies that vary with passenger numbers. We have studied the effects of such a system in Kristianssand, with increased road user charges of NOK 2 that are earmarked for public transport, and central government funding of NOK 4 for each new passenger. Additionally, there are output-based subsidies to the operators. According to our estimates this will yield an annual economic benefit of NOK 30m, and will increase passenger numbers by 20% and reduce rush hour car use by around 7%.