Urban transportation system plays a vital role in supporting regional economic development and building equity for households. However, as welfare spending increases along with recent economic recession, a priority in national budget has been shifted away from transportation investment. Moreover, some transport Social Overhead Capital (SOC), which were recently completed, have been less utilized than initially predicted. Therefore, transportation planners expect to be hurt by further budget cuts.
Many experts agree on the idea that the current amount of investment on transport SOC is not adequate for the entire country when it is compared to other advanced nations. Nonetheless, there is little agreement if the level of investment within the Seoul Metropolitan Area is appropriate. This is the case despite the fact that half of nation’s population lives in the region. Only national budget on transport SOC is reviewed at the moment if it is set at the right size enough to sustain economic growth. As a consequence, we are left with insufficient information necessary to determine a suitable level of transport investment for the metropolitan region. This study fills this gap.
Our research estimates the amount and level of transport investment that could encourage economic opportunities and promote social welfare in the Seoul region. Further, we suggest a scheme that efficiently allocates transport budget for different travel modes.
First, we find that 3.8~5.2% of Gross Domestic Product (GDP) is an appropriate level of investment on transport SOC for the nation. The proper amount for the Seoul Metropolitan Area, however, should be higher than the national level by 1.0~1.5% - 6.7% (Maximum Growth Scenario) and 4.8% (Maximum Social Welfare Scenario) of GDP depending upon different growth scenarios. This result implies that the correlation between transport SOC and economic activities is stronger in the region than the whole nation. In other words, the investment on transport infrastructure appears to have greater multiplier effect in the metropolitan area than the country. Thus, we recommend increasing total investment on transport SOC, which is 8,000 billion Won at present, by 2,000 billion in near future.
Second, as noted, our analysis indicates that adequate levels of capital spending for rails and roadways are varied based on different growth scenarios at the national level. This is not the case for the metropolitan area. It makes most sense when 40% of transport investment is spent on roadways and 60% on railways in the Seoul Metropolitan Area. This means that public transit is critically important in Seoul where land is intensely developed. In such a dense built environment, new investment on roadways must have not generated sufficient consumer utility perhaps because of its limitation in lessening traffic congestion. Yet the Seoul Metropolitan Government currently authorizes railway funds that are only 60~70% of the roadways. We propose increasing investment on rail system in Seoul.
Third, this research compares level of investment for bus and rails. We find that investing on bus system is as effective as committing resources on railways. Thus, rail and bus systems should be two core pillars of urban transportation system. Interestingly, improving bus operation has greater impact on traveler’s utility than initiating capital projects for bus system. Hence this study concludes that it may be more important to enhance bus software by improving service rather than expanding hardware of bus systems.