Objectives-Criteria Selection

3.3.1 Objectives-Criteria Selection

The second level of the structure represents the objectives and sub-criteria used to evaluate the different subsidy schemes. The objectives were selected based on the impacts and attributes that could present any change or improvement with the implementation of the schemes and also with the help of experts on the field of transportation and economy. Every objective is based on the premise of sustainability. The criteria used to evaluate the schemes are based on sustainable

Sustainable Subsidy Schemes for

Panama

Subsidy

Cost-Effectiveness Subsidy per passenger

Subsidy Equity

Out-of-Pocket expenses

Affordability

Service Effectiveness Passenger trips per day

Service Quality

Frequency

Integration

Environmental

Sustainability CO2 Emissions

Government Financial

Sustainability Total Subsidy Operator Financial

Sustainability Operator profit

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indicators, which provide qualitative and quantitative test that serves to indicate the results of a given action. For the evaluation of the subsidies, criteria such as: Administration cost, systems financial performance, overall impacts and implications are included in the evaluation. As it was mentioned by Litman (2008) indicators of cost, equity (social) and environmental impacts must be included to provide a more comprehensive and balanced analysis. A total of 7 objectives and 9 criteria were proposed as follows (Table 8):

Economic sustainability is used to evalute the performance of a given action in a business point of view. This mean how are the monetary resources being utilized? and how are being expended?. Subsidy cost-effectiveness reflect the value of the benefits obtained for dollar invested. Policy makers, should focus on expending funds in an effective maner. The proposed sub-criteria tu measure this objective is subsidy per passenger, which reflects the allocation of subsidies per each passenger. Another important performance measure is Service effectiveness, which conteplates the gap between service consumption and service outputs. Is the measure of outcome compared to unit of input in terms of service (Eboli, 2012). As such, these measures are a critical indicator of the success of a transit system and should be heavily relied upon when evaluating a particular system, in this case in terms of passenger trip per day measure of the extent to which passengers consume the outputs (Barata et al., 2012). Subsidy Equity relates to avoiding exclusion or reduction of trips undertaken by citizens from certain socioeconomic groups or geographical locations and concerns about the affordability of the service provided (CIE 2006). Consumption of transportation is directly affected by travelling expense (Litman 2013); in other words the fare that users paid for public transport service. For the evaluation of equity tow indicators were selected: Out-of-pocked expenses and affordability. The user expenditure represents an indicator of importance of public transport modes in relation to one another, to other modes, and within total expenditure (TRL ,2004). Affordability is estimated as the percentage of monthly income or expendinture used on transport by poor families (Echenique, 2007). The affordability index is commonly used to exprese monthly income expenses by trips per moth. In a report developed for the World Bank to determine the affordability in developing countries, this index was used based on a fixed amount of 60 trips and the percentage of income per capita of the lowest income groups (Carruthers, 2005)

Social sustainability concerns the impacts caused on users or the system, when a policy is implemented and their overall satisfaction. This concep usually contemplates elements such as equity, affordability, service quality; etc. Service Quality, reflect the quality of service

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experienced by users (Litman, 2009). One of the most distinctive aspects used to measure service quality is frequency. Service frequency measures how often transit service is provided.

It is considered an important factor in the mode choice behaviour of passengers, and the attribute with the highest weight on the overall transit service quality (Eboli, 2012). Another quality performance criteria included in the evaluation is the modal integration. This subcirteria is utilize to measure how easy is to transfer within different transit systmes (Litman, 2013).

Environmental Sustainability is one of the most important elemenst in sustainable development, measures how transit services produce any reduction of environmental impacts.

The environmental indicators measure the benefits of a mode of travel in terms of its contribution to environmental protection (Woldeamanuel, 2012). Generally and depending on the occupancy rates public transport produces much lower CO2 emissions than private car (Behrendt et al., 2010). While petrol and diesel fuelled cars emit 130.9 g and 124.2 g of CO2

per passenger kilometer, the CO2 emissions from bus and coach journeys per passenger kilometer are 89.1 (Behrendt et al., 2010). CO2 emissions is the indicators proposed to evaluate environmental impacts of subsidy schemes. This indicator can be measure by kg of CO2 per passenger kilometer. The importance of this criteria is evaluate the ability of reduce CO2

emissions and to improve the environmental performance (Bernardini et al., 2011).

Financial sustainability is usually omitted in sustainability evaluation, however as (Buehler and Pucher, 2011) mention improving this element would help realize the potential environmental and social benefits of public transport, since it would make expanded public transport service more affordable, both for the governments who provide it and for the passengers who use it. This objective include both extremes government and operators. The authorities which to allocate transit subsidies to improve current inefficiencies and cover operating subsidies, and operators try to obtain support to cover their expenses. Governmental Financial Sustainability expresses the total government expenditure on subsidy to transport systems. The appropriate distribution of state funds to achieve transit improvement (Glauthier 1976). The selected criteria is the total subsidy assigned. Operator Financial Sustainability.

This indicator was included to measure the effect that a given policy may have on the productive efficiency of operator. In (Gómez‐Lobo et al., 2009) is explained that capital subsidies increase technical change while operating subsidies reduce technical change. On the other hand, operating subsidies promote the use of more labor and fuel than would be optimal, and that capital subsidies do not wholly compensate for this effect. When receiving subsidies some firms

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do not minimize the cost as a result of the incentives, which is reflected in its profits. All of these factors can be captured by considering the profit of the operators.

Table 8 Criteria and Sub-criteria

Objectives Criteria Description Study

Subsidy Cost to the resources expended.

Benefits obtained for dollar invested. benefits of subsidies among income classes. Impacts caused on users or the system.

Service Quality  Frequency

 Integration

Reflect the quality of service experienced by users.

trips per day Critical indicator of the success of a transit system.

Benefit of each modes of travel in terms of its contribution to environmental protection. Transit services produce any reduction of environmental impacts.

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The effect that a given policy may have on the productive efficiency of operator.

(P A Pienaar, 2005), (Nassi and Costa, 2012).