Saturday, August 13, 2011

Supernetwork Analytics -- Paying for the True Cost of Transportation and Negative Externalities

How many of us realize the true costs of the impact of our driving on others?

Of course, those of us who work on networks and transportation regularly compute costs of operating various systems (system-optimization) as opposed to figuring out which is the best route of travel from an origin to a destination (user-optimization). Typically, the costs that we consider in such applications reflect time or a monetarization of time and costs of fuel consumption and since the classical work of Beckmann, McGuire, and Winsten's (1956) book, "Studies in the Economics of Transportation," we also include congestion, which is a negative externality and what, in economics and beyond, refers to the negative impacts of one's activities.

Increasingly, we are also utilizing generalized costs, which, for example, can include other costs such as the emissions generated and many of us have worked on the price of anarchy, relevant to congested networks from transportation to the Internet.

What if there was a computerized financial and telecommunications system that could quantify the true cost of using our transportation networks? Such a system might actually provide a powerful feedback loop to alter individuals' driving behavior and might even motivate them to switch to more environmentally friendly modes of travel, such as public transportation, bicycles, or even one's feet.

While traveling recently in San Diego on, yes, 8 lane highways (each way), I was stunned by the passing on the right, on the left, but overall quite decent drivers although the wide spans of highways made me yearn for the northeast of the US (weather notwithstanding). There was limited public transit in sight and we spent 6 days there.

The Netherlands has begun an experiment, which demonstrates supernetworks (networks of networks) in action. Various vehicles, including cars, were installed with high technology to track vehicle movements in order to calculate not only the distance traveled, but also the fuel efficiency of the vehicle, the associated emissions, plus the expected "business" of the roads, as well as the wear and tear of the vehicle on the roads (very cool but more on this aspect later).

Other factors that I might include would be the number of passengers traveling (of course, the greater the number the greater impact on fuel consumption but a lightening of the congestion).

The New York Times reported on this experiment in a recent article, Netherlands Meter Plan Links Gas Pedals to Wallets, from Eindhoven, which, interestingly, is the location of a fellow research group on supernetworks, and our Virtual Center for Supernetworks is planning on hosting a visiting scholar from that group this Fall.

My research team has been working on sustainable transportation for many years now and in my Sustainable Transportation Networks book I describe many different policies to alleviate congestion and emission including marketable pollution permits, emission and congestion tolls, etc. The book is focused on transportation whereas our Environmental Networks book emphasizes models and algorithms to enhance sustainability on a macro scale.

Now for the clincher, as my students in transportation and logistics know, we can construct link tolls and they will always be nonnegative, but path tolls can be constructed that take on negative values (think of subsidies and one of my favorite ones is that children in strollers and their caretakers ride free on busses in Stockholm, Sweden, which I even took advantage of when we lived there with our daughter and the busses are so comfortable and handsome).

So, as someone who is extremely frustrated by the low quality of road infrastructure in the area of Massachusetts that I live in, would the government pay the vehicle operators for the wear and tear on their vehicles (plus their anatomies) if such a supernetwork system were to be installed in the US?

Infrastructure matters and with the right public and private partnerships we should be able to make the US a model for transportation and logistics but in whose lifetime?