limate change and growing populations are two factors spurring us from both sides to rethink and redo mobility in and around our cities. In the 21st century, society grew to love the private car as it evolved to be the status quo mode of mobility. But today, we see and experience the long string of negative externalities they’re creating.
We need innovation, namely electric and shared mobility, to cut our environmental impact in wake of the climate crisis and to improve the quality of urban living. However, such an idea is only the first step. The next step, and perhaps the bigger challenge, is implementing it where it is needed the most — low density suburban and rural areas.
But implementing innovative shared services in suburban and rural areas is not all that simple. It requires understanding the nature of the sharing economy and what drives it to deliver better and more sustainable mobility.
Looking back on the sharing economy and shared services to look forward.
The phenomenon of sharing is not a new one — during the agricultural era shared ownership and services was the norm. Industrialisation and the growth of urban centres resulted in a shift. When people lived closer to one another, they actually became more distant and anonymous. Trust decreased among society and status expression with ownership increased.
Today, the recent digital communication revolution triggered a new wave of sharing within society and commerce. It is facilitated by the ease of use that smartphone technology brings — so that users can be connected everywhere and at any time. And, once enhanced with rating systems, a combination of catalysts gave way to the sharing economy, alongside being propelled by several other factors.
Factors driving the sharing economy and shared services forward:
- Millennials and younger generations. As young people have not accumulated many assets in their life yet, they tend to lean to renting or sharing assets at the lesser financial expense, rather than buying at a much higher expense.
- Middle-age populations. When it comes to replacing assets, they are similarly open-minded about sharing or renting over owning.
- Innovation. Technology and business models enable continuously improved quality, availability, and ease of sharing which spurs cheaper prices and utilisation.
- Environmental impacts. Consumers at large are becoming aware of their own ecological footprint, which is largely tied to how we use goods or services.
What’s moving the sharing economy today.
Sharing economy and shared services are different models with different objectives. A sharing economy starts with consumer to consumer, or P2P (peer-to-peer), sharing which aims to offset the cost of the asset rather than make a profit. On the other hand, shared services aim for a profit with business innovation with the usage-over-ownership trend.
Between these two models is the gig economy; it allows people more flexible work and this is revolutionising the labour market. It continues to pull people into the service industry and away from industries, like manufacturing or agriculture, which are being automated.
This type of work also enables a relatively easy labour market entry for young people reaching productive work age or new residents to the city. Moreover, in marginalized or lower-income communities, it has the great potential of lifting people out of poverty — if the gig economy and shared services make their way to these suburban and rural areas.
However, the gig economy doesn’t fit into employment nor freelance regulatory frameworks, so its own regulatory framework is still being understood and defined. Because its own context is still evolving, it makes it even more challenging to pin down suitable rules and regulations.
It is rarely the other way around, that an outer city business would pick up traction and from there extend itself to urban centres. These outer city areas normally present a much narrower cost-benefit and more low-density economic viability. Outer city areas also imply longer travel distances which further thins the market reach when we’re talking about mobility.
To get the ball rolling for innovation in outer city areas where there are low-density markets and lower ROI opportunities, it’s about finding a way to leverage the business potential from the right angle.
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Spurring shared mobility services and innovation in the suburbs.
To leverage business potential, we need a lever to help balance and redistribute business potential.
In more low-density markets, there is a higher per-unit cost for the provider and then higher prices result in less demand. This is a double-sided problem that applies to any shared mode of transportation, be it mass transit or other new forms of shared transportation such as bikesharing, carsharing, taxi, or on-demand transport.
So just how do we keep the cost low to attract a higher volume market? The rules of supply and demand will tell us that lowering the price will increase the demand. But, this same rule will dampen the motivation for the supply owner to sell at a lower price. Keeping the supplier motivated and demand at optimal volumes results in a gap that cannot be bridged, in lower density markets, without external intervention, i.e. financial subsidies.
However, financial subsidies are not an out of the box, fix-all solution to bridge this gap to motivate innovators and to engage in low-density markets. There are other social factors, such as habits and reluctance to change, which play a big role in how people spend their money.
Looking beyond subsidising innovation.
To stimulate supply and demand beyond subsidising the price, we should turn our attention to negative externalities other alternatives can bring and apply accountability for their costs.
The European Emission Allowance System (EU ETS) is an example of a market framework that penalises manufacturers primarily, but also other tertiary sectors, like aviation and maritime operations, for their carbon emissions. If we apply such penalty systems like the EU ETS to consumers, they can be made more accountable for their consumption.
If I drive my combustion engine car to the city in my morning commute, it leaves a trail of unintended negative externalities, like noise and air pollution which affects those living around my commute.
Furthermore, by adding to congestion, it also affects fellow commuters. This congestion doesn’t just affect other car drivers; it also can affect those taking mass transit that shares routes. If there is a delay from congestion which I am contributing to, it affects transit commuters not just on that bus, but also those waiting for it.
Once I get to my destination and park my car, my car is taking up valuable urban space which could have been better utilised as a biking route or for roadside greenery. This affects the livability of the city at large.
If I drive my EV vehicle to the city, I won’t produce emissions in this scenario. But, I am still adding to congestion just the same and taking up urban space that could have a better use.
If I use an EV carshare vehicle in this scenario, we see more improvement and fewer negative externalities. It decreases, but not eliminates, the issue of the urban space that the car uses while parked. However, I still contribute to congestion more than if I had used my bike or even shared an electric moped.
Helping shared, electric mobility from two sides: subsidies and disincentivisation.
While any shared services are better than using a private car and should therefore be part of the mix of future sustainable transportation. As shared services impose the fewest negative externalities, they are an essential model to implement for better urban mobility.
But, different forms and modes of shared mobility work more effectively at different times of location. It is both the service providers and consumers who decide when and what is the best mode of transport.
Governments play a role; they can start developing tools that quantify the cost of negative externalities for both the consumer and the service provider. This needs to be assessed from several perspectives; not just related to carbon emissions as the EU ETS does, but also in regard to resource scarcity and renewability or livability and quality of life — all of which are impacted by private car use.
Implementing shared, electric mobility services to outer city areas needs to be done with subsidies to lower the cost for consumers and by disincentivising other less sustainable modes of transport. This double-edged tactic can together motivate commuters to more sustainable models of modes of transport that will make our cities and towns more liveable.
This article was originally written for and published by Motion Magazine.
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