ECEE - Sustainable Transport and Urban Development Fostering SD

Potential for $mart Growth Services and Technology Transfer in Emerging Markets

Fostering Sustainable Development: Smart Growth Is a Potential Money Maker for Business

Technological advances, and the advancement of industry, will be critical to ensuring that transport systems are brought to their full potential in terms of life-cycle economics, energy efficiency, and minimal adverse environmental and societal impacts. Given increasing attention to sustainable development by policymakers, civil society and the international community, smart growth transport and urban development technologies and services could be highly competitive with oil and conventional infrastructure for a share of the estimated annual US$147 billion mobility market in developing countries. There appears to be a lucrative opportunity for the companies and firms that lead the way in designing, testing, and commercializing smart growth transport and urban development technologies and services, and combining technologies and services in innovative ways that add value and create new businesses.

Strategic Business Development: Transport Service Companies Profiting from Less Transport

The transport sector reflects a globalizing economy. Manufacturing and logistics chains. now rely upon the transport operations and facilities of many countries. Consider if you had actual bottomline responsibility for a company whose economic viability depended on moving more stuff more miles around the globe in more motor vehicles, ships, planes and trains? What do you do to ensure profitability, and to position your company to be as competitive as possible in an increasingly competitive and globalizing world?

Consider the case of ASG, a US$1.6 billion Scandinavian trucking/shipping/transport company. In ASG’s traditional business model, like that of most transport-related companies, more was better – move more cargo over greater distances and make more money. Its key performance indicators were, for example, tons of payload shipped and miles traveled by its fleet of trucks, ships, and planes. As ASG management increasingly understood future ecological, geopolitical and business constraints, it recognized that this focus left the company dependent on increasing fossil fuel consumption, vulnerable to price and supply changes, urban congestion, etc. And because its indicators often shape performance by shaping management attention, ASG found itself with an intrinsic disincentive to the kind of adaptability it knew it needed.

And it responded most creatively. ASG came to recognize that its core competence is not so much moving stuff around efficiently as it is ensuring that people have access to the stuff they need when they need it – which could mean both less transport and a way to profit from it. As such, ASG re-articulated its vision as follows: "We develop, market and produce efficient transport and logistic services that create competitive advantages for our customers." ASG now tracks performance indicators like revenue per gallon of gasoline burned or per VMT – thus shifting its indicators from gross quantity to value-ratio – and plans a future name change to ASG Logistics. The experiment seems to be paying off. ASG has created a unique new business and won exclusive contracts with several major clients—getting paid based primarily on environmental performance.

Source: Friend, G., "The New Bottomline: Strategic Perspectives on Business and Environment," Volume 6, March, 1997.

Technologies and Services to Increase Transport Productivity

Smart growth technology and technical services, either individually or combined with other technologies and services, can increase transport system productivity. For instance, transport systems all over the world are being transformed by the growing overlay of an information infrastructure on existing capital infrastructure and functions. By 2025, advances in computer, information and communication technologies will have dramatically changed ways of organizing and managing transport and business activities. Future growth in demand for energy and mobility may be moderated by the application of electronics and information technologies to increase transport system productivity. The most significant applications of electronics and information technologies to increase transport system productivity in use are for traffic control, travel substitution and route planning. Singapore provides an example of this trend. The city chose to overlay electronic sensing equipment on existing infrastructure to charge transport systems user a fee for driving on roads as peak periods of use (i.e. congestion pricing).

Singapore: Using Economic Incentives and ITS Technology to Reduce Traffic Congestion

For over twenty years, Singapore's Land Transport Authority has operated under the premise that because Singapore has very little land, there is a limit to the amount of road space they can provide to meet the demand for mobility. The Authority restrains use of cars by employing an Area Licensing Scheme (ALS). Using electronic sensing equipment, the ALS places restrictions on where, when, and at what price a private auto may travel in the city center.

Additionally, a quota system was put in place in 1990 that held the rate of growth of car ownership to 3.4 percent per year. In order for an individual to purchase a car, they have to bid at an auction on a limited number of Certificates of Entitlement (COE). Without a COE, an individual cannot purchase a car. The result is car prices are among the highest in the world. At the same time, however, Singapore invested in one of the most modern and efficient public transport systems in the world. This system includes 67 kilometers of light rail (the MRT) and an extensive network of bus lanes. As a result, approximately 51 percent of all trips made are by public transport. Singapore is also renowned for low levels of traffic congestion, very little transport-related air pollution, and a high level of accessibility to all parts of the city for all residents.

Source: Birk, M. et. al., Moving Toward Integrated Transport Management and Development: Energy, Environment and Mobility in Four Asian Cities, International Institute for Energy Conservation, Washington, D.C., 1993.

According to Amory Lovins, energy-efficient technology expert and founder of the Rocky Mountain Institute, comparative advantage lies more with the fastest-learning systems integrators — innovative designers and manufacturers. For example, a company that produces sensor equipment may not initially appear to be part of the transport industry. Yet sensor equipment that can help improve traffic flow and aid the management of traffic congestion by relaying traffic information to congestion managers. Another example is a company that produces computer software. Simulation programs can be used for simulating a policy measure’s potential impacts on traffic congestion, energy consumption, air pollution and GHG emissions. While the following examples are not an exhaustive account of smart growth technologies and services, they provide a glimpse of the range. They may be used to increase transport system productivity through such means as enhanced traffic control, travel substitution and route planning.

Information Technologies

Information technology is one of the largest categories of smart growth transport and urban development technologies. Information technologies refer to a wide range of information processing, communication control, computer software, navigation and sensor technologies. They can also help individual commuters make more informed decisions about how, when and where they travel; improve operations of public transport systems, management, scheduling and fleet planning; and provide a more efficient transport system that allow for easy intermodal access. If integrated and used effectively with supporting policies, information technologies can decrease the demand for travel itself, and increase the competitiveness of public transport service with it strongest competitor: the private passenger car. Examples of smart growth information technologies are:

"Smart Commuter" Information Systems. There is a range of technologies that can help keep commuters informed about their transport options as they go about the business of meeting their daily needs and wants. These smart traveler technologies make using the public transport system easier, facilitate carpooling and vanpooling, and help commuters avoid getting caught in (and contributing to) traffic jams. For example, public transport kiosks could display information — in real time — about where traffic jams are, or how many minutes it will be before a bus arrives at a certain stop. The information provided to commuters helps to creates a positive psychological benefit as they are able to make immediate and informed travel decisions that best meet their needs.

"Smart Commuter" Information Systems
Available Technologies smart cards computers and voice synthesis television, radio, cable television on-board bus information displays information kiosks dynamic multimodal database	Potential Applications real-time commuter information integrated fare payment workplace multimodal information on-board traveler information integrated billing dynamic ridesharing

Source: U.S. Department of Transportation

"Smart Vehicle" Fleet Management Systems. In order to compete in a marketplace for transport services, some public transport managers and entrepreneurs turn to information technologies — or smart public transport vehicle technologies — which improve fleet planning, scheduling, and operations. To compete for ridership with private modes of transport, public transport must be just as convenient, reliable, flexible, and comfortable as its competition. Public transport must also be — or at least perceived to be — quicker and cheaper if it is to capture significant marketshare. The same is true for vehicle operators who seek to run a profitable business providing vanpool service to urban commuters. Vanpool services must be competitive with private passenger cars in order to be profitable. Smart public transport vehicle systems help this category of private sector service provider compete in the marketplace for mobility services.

"Smart Vehicle" Fleet Management Systems
Available Technologies vehicle component sensors automatic passenger counter automatic vehicle location data/voice/cellular radio computer aided dispatch smart card readers geographic information systems	Potential Applications automated demand responsive dispatching on-board automated guidance fleet monitoring, control and management real-time data collection and analysis schedule planning and passenger information equipment performance monitoring assist driver performance

Source: U.S. Department of Transportation

"Smart Intermodal" Management Systems. Traffic signalization systems that give mass transit vehicles priority can increase travel speeds of buses and other roadway transit vehicles. Such systems can be operated manually by drivers. More sophisticated systems can operate automatically and vary the signal according to various traffic and roadway factors including the length of traffic queues, the levels of roadway congestion, and need to help transit operators meet with city-wide transit schedules. These systems — which involve sensor equipment, computer networks, and traffic management software programs — help transport planners and traffic engineers collect, use, and disseminate information regarding congestion and incidents causing traffic tie-ups.

Smart intermodal management systems use sensors, reports from police, communication networks, roadside-mounted video cameras, and even call-ins by individuals as input data to sophisticated computer systems that predict road conditions and alert drivers to alternative routes. These systems also include on-board monitor and communications equipment for drivers to use to get information on traffic delays and alternative routes. Electronic toll collection is easily accomplished. By electronically identifying and classifying vehicles at high speed, deducting tolls from pre-paid user accounts, and automatically identifying violators via capturing their image on video, electronic toll collection allows traffic to pass unimpeded across the roadways, minimizing congestion and pollution. As governments in developing countries increasingly privatize parts of their nation’s transport systems, demand for automated, integrated toll collection technologies will likely increase.

"Smart Intermodal" Management Systems
Available Technologies automatic vehicle identification vehicle guidance systems multimodal dispatching software electronic sensors for traffic management smart card systems	Potential Applications automatic toll collection high occupancy lane management centralized system management real-time travel information integrated fare payment

Source: U.S. Department of Transportation

Technical Services

There is a range of technical support services provided by private sector firms that are increasingly in demand by all levels of government trying to address transport-related and urban planning problems. These services involve consultants and technicians with substantive and technical expertise, and an array of software programs to store and analyze information. Examples of smart growth technical services are:

Economic Analysis and Evaluation. In order to make well-informed investment decisions, it is important to conduct an economic analysis and evaluation of investment choices for those investments that will lead to sustainable development. A smart growth economic analysis calls for the full costs and benefits of potential policy, technology, or infrastructure investment alternatives be estimated and quantified to the extent possible. Economic analysts measure direct market costs, i.e. those costs that you can actually see in the everyday economic transactions that you make. Indirect external costs, or externalities, which are those costs not reflected in these economic transactions, are analyzed to the extent possible in a smart growth approach.

Vehicle Inspection and Maintenance Programs. Older vehicles in many emerging markets countries account for a disproportionate share of air pollution. A badly maintained older vehicle can emit 100 times the pollutants of a properly maintained vehicle. Inspection and maintenance programs can reduce emissions from old vehicles and ensure that new vehicles remain in good condition. According to U.S. data, an inspection and maintenance program can reduce emissions from older vehicles up to 25 percent. Such programs are especially critical in emerging markets because the vehicle fleet tends to be composed of older, more polluting vehicles.

Transport Energy, Emissions, and Landuse Impact Assessment Models. Computers and selected software programs can offer enormous power for collecting, storing and organizing information to help forecast and analyze and interpret a community’s livability and the effect of its residents on quality of life. Modelers use the information stored and organized in computers to test theories about complex processes in a transport and urban systems — based on assumptions about such factors as economic and population growth — and the causal relationship between landuse and energy consumption, air pollution, GHG emissions or traffic congestion. Models, with the help of GIS specialists, transport engineers, and landuse planners, help predict the performance of a particular scenario against the established baselines to gauge trade-offs and determine what kind of livability is or is not being achieved. Professionals involved in this area are programmers, data analysts, and GIS specialists.

Geographic Information Systems. GIS refers to a system of computer hardware, software, data and procedures designed to support the capture, management, analysis, modeling and display of spatially referenced data. It may be used to help solve urban planning and environmental management problems. GIS can be as important as other personal productivity tools such as word processing, spreadsheets, project management tools. A focus of GIS in a smart growth context is to incorporate the interrelated functional requirements of a city’s transport and urban management: community and economic development planning, engineering and design, operations and maintenance, administration and finance.

Opportunities for Innovative Finance Consultants

There are opportunities for project development consultants to help broker deals between the public and private sectors to create value capture (VC) and joint development (JD) agreements. Value capture and JD can help finance the capital cost of light rail, and ensure that higher density and mix landuse considerations are an integral part of the planning and investment decisionmaking process. Governments facing capital constraints, burgeoning demand for mobility and more stringent air quality controls and the call by citizens for greater community livability may means more job opportunities for VC&JD consultants.

"Value capture" is a financing mechanism that allows both private sector developers and government to earn money from the increased value of land along a transport corridor. "Joint development" is a financing mechanism whereby government and the private sector join in partnership to develop light rail infrastructure and associated commercial and residential development. The most common form of VC&JD is the sale or lease of rights to develop the open space over public transport rights-of-way known as "air rights development" or ARD. An example of ARD is the government selling the rights to private developers to build office buildings and lease office space over subway stations.

Private developers gain VC&JD because the rail system delivers a clientele directly to their door. Government gains because those who benefit economically, i.e. the private sector, partially pay the cost to develop infrastructure. Civil society and communities gain as rail system development and associated changes in landuse provides a practical way to reduce externalities such as traffic congestion, air pollution, GHG emissions, etc.

Source: Adapted from Newman, P., et al. Winning Back the Cities, Institute for Science and Technology Policy, Murdoch University, Perth, Australia, 1993.

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Prepared by the International Institute for Energy Conservation (IIEC)
September 1999

Support for this document was provided by the Export Council for Energy Efficiency (ECEE) and the US Department of Energy (award DE-FC41-94R110679). This support does not constitute an endorsement by the US Department of Energy of the views expressed in the article.

� 1997-2002 Export Council for Energy Efficiency

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Updated: 03/29/02