Supply Chains and Transportation

How cities can benefit from intelligent transport systems

David Thorpe
Special Consultant, Sustainable Cities Collective
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Self-driving vehicles are being touted as a big part of the landscape of future cities. Amongst other positive features they are predicted to bring are enabling people to pursue other tasks while being driven, let cars drive more efficiently and drastically reducing the number of road casualties.

But what will be the ultimate cost-benefit balance for cities? A recent piece of research from Brookings, argues that in order to maintain effective governance systems, then public sector management needs to overcome inertia and be more proactive in the face of technological innovation.

Amongst the disruptive technological challenges facing cities are:

  • proliferation of drone technologies;
  • artificial intelligence;
  • autonomous vehicles;
  • 3-D printing;
  • the Internet of things;
  • and peer-2-peer services.

The report’s principal author, Kevin Desouza, an associate dean in the College of Public Service and Community Solutions at Arizona State University, argues that policymakers in government manages must chart out trends and study pathways to map out the intended and unintended consequences of these technologies.

Autonomous vehicles could have deleterious consequences for cities, the report says. “It turns out that automated vehicle technology – unlike humans – abides by the law. And that’s bad news for local government revenues. Deep revenue sources acquired from driving-related violations, such as speeding tickets and DUIs, will decrease sharply.”

But, is this true? Ken Strobeck, executive director of the League of Arizona Cities and Towns is one person who disagrees: “I’m assuming that these statements are coming from people that don’t have any idea how city budgets operate, because revenue from traffic tickets and DUIs is not a significant source of revenue,” he said, adding: “traffic laws are enforced to promote safety, not make money.”

So will the implementation of Intelligent Transport Systems (ITS) and the introduction of autonomous vehicles bring financial benefits or costs to cities, on balance?

The balance sheet

The technology will be costly to implement. Autonomous vehicles will expect to communicate with sensors all around the city, including and especially traffic lights, traffic management systems linked to CCTV networks and embedded road sensors around the city monitoring the flow of traffic, and car parks.

Representative ITS connections, standards and applications

Representative ITS connections, standards and applications. Source:

Companies such as Cisco, Arup and IBM are touting their technological solutions to procurement departments of major cities. According to Pike Research, from 2012 to 2020, $117bn will be invested worldwide on smart city infrastructures, of which $31.2bn will be in the digital systems and infrastructure for smart transport solutions. [Quoted in a UK Departmenrt for Business and Innovation report from 2013, The Smart City Market: Opportunities for the UK.]

National ITS Architecture physical entities

ITS Architecture physical entities. Source:

But this investment, high as it is, is alleged to save much more money. A 2009 report Intelligent Transport Systems and Services – Innovation Platform from the Technology Strategy Board (now Innovate UK), argued that:

  • A 5% reduction in travel time on the roads could save businesses around £2.5bn;
  • or 0.2% of GDP;
  • Eliminating existing road congestion would be worth £7-8bn of GDP each year to the UK;
  • The cost of congestion could be an extra £22bn in 2025 if action is not taken.

But regardless of the accuracy of these figures, the benefits of these technologies don’t stop there. A more recent report at the beginning of this year from Juniper Research, Smart Cities: Strategies, Energy, Emissions & Cost Savings 2014-2019, suggests that over the next three years smart city traffic management will essentially reduce the equivalent of CO2 emissions produced by 35 million vehicles, or 164 million metric tonnes.

The author of the report, Steffen Sorrell, says that each city will need to identify its own tipping point to find the most cost-effective strategy.

Congestion is already a huge problem across many cities, possibly the most infamous of these are cities in India where these technologies are already being applied. Congestion and increased travel time causes, in addition to the above problems, increased fuel consumption and vehicle emissions which translate to air pollution, which translates to severe health costs.

All of these external costs must be factored in by municipal chiefs when making their calculations on the cost-effectiveness of implementing the technologies.

Sorrell added that pilot projects are important for evaluating the technologies. Once they are underway for smart grids, smart street lighting or smart parking, project leaders should be actively soliciting feedback from the population in the test area to evaluate the impacts.

The experience of leading cities will help to inform decision-making of those trailing along behind. Amongst these leading cities is Amsterdam, which has made available to the public a dashboard displaying real-time traffic information, public transport performance, air quality and more, plus a website detailing all of the smart city projects underway, how they affect the city.

On the cost downside, receipts from parking meters could be reduced, as smart transport management will enable vehicles of the future to determine the availability of parking spaces in real time.

But cities could compensate by introducing congestion charging, as in London, where congestion charging has brought in £1.2 billion of revenue since its introduction in 2003, as well as reducing traffic accidents.

According to a Lancaster University survey there has been a 40% reduction in traffic accidents with 46 fewer fatalities per year and an average driving speed increased from 8.6 mph to 20 mph.

Fewer traffic incidents means that the cost to the city from legal and health costs will be correspondingly reduced.

Transport for London says that revenue from the congestion charge has been re-invested in:

  • £960m on improvements to the bus network;
  • £102m on roads and bridges;
  • £70m on road safety;
  • £51m on local transport/borough plans;
  • £36m on sustainable transport and the environment.

So, on balance, provided the decisions are made correctly, it seems that the introduction of these technologies will bring huge benefits for cities. What do you think?

This article is published in collaboration with Sustainable Collective. Publication does not imply endorsement of views by the World Economic Forum.

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Author: David Thorpe writes for Sustainable Collective.

Image: Labourers work at a flyover undergoing construction in the southern Indian city of Hyderabad. REUTERS/Krishnendu Halder

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