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For the love of car sharing: An economist's perspective

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Photo: Stephen Rees/flickr

It started with a car accident in February, and the total loss of our 2004 Prius, which had only been ours for less than a year. We were quickly compensated for its market value and were in a position to buy another car, but we held off due to a looming sabbatical that would take us out of the country for a couple months. So, we did not buy a car then, and upon our return we are still car free.

The choice of owning a car works out to about $5,000 per year for us (it can be much more if you like newer, fancier cars and drive a lot), a figure that covers amortization, insurance, maintenance and gas. Thus, not owning can save you a lot of money, though it clearly is a function of the number and convenience of other options: walking, biking, transit, telecommuting.

What the advent of car sharing does is close a gap in mobility: those trips that are too far, too awkward by transit, or that require hauling stuff. Fortunately, Vancouver has two good options that complement each other nicely.

Modo, the car co-operative (bonus points for being a co-op) that has a fleet of cars around the city. The cars live in a certain stretch of street and you must return the car back to that spot. There is a car about one minute from my house, another couple within a three-minute walk, and about 10 within a 15-minute walk. All at a rate of $7.50 per hour (minimum use is one hour), with a maximum of $60 per day, and essentially no limit on number of consecutive days.

Car2Go is a German outfit with a fleet of smart cars. One disadvantage is that they can only hold two passengers at a time and very little extra carrying capacity. But the plus is you can go point to point, and leave the car where you want to go, as long as it is within their boundaries (not useful if you are in the suburbs). It is 30 cents per minute flat rate. And there are many other cities with cars -- I used one in Toronto with no problem.

As an economist, I love the full marginal cost pricing. That is, with car sharing you pay for using the car in real time; all costs including gas are covered by the fee (if the car is running low, the car has a corporate credit card so you can fill 'er up). It makes you ask each time, do I really need this? For how long? Can I bundle the trip with something else?

With a regular car, the amortization is a sunk cost once you buy your car; insurance is a similar lump-sum annual cost; maintenance is always a toss up; even with gas, once you have a full tank, it lasts a while. So getting into a car is essentially zero marginal cost, since you have already spent the money.

In terms of convenience, there is no car outside my door to jump into on a whim. But between the two options, I can access the services of a car most of the time I need one, at about a quarter of the cost of owning one (plus some extra transit fares, so perhaps a third of the cost all in). On a weekend evening, I might have to venture further away from home to get a car but I have never not been able to access one. And even if we rent a car for a week or two each year for vacations, we still come out ahead.

Urban design and some good luck made the choice easier for us. Our neighbourhood has abundant shops within walking distance, which cuts down our demand for car trips. I mostly bike for my commute and around town, and we live close to a Skytrain station and rapid bus line. And school and work for other family members are readily accessible by transit and biking as well. The key is having a wide range of mobility choices for whatever trip you have in mind.

So shifting to a zero-carbon transportation system requires more complete communities, with services and jobs closer to where people live; it also requires new investments in public transit to make it a more competitive option, and repurposing of road space for bikes, buses and trams. All of which would be powered by clean electricity. The health benefits of more active transportation choices, dramatically reduced emissions from cars, and reduced car accidents would probably themselves pay for those investments.

Photo: Stephen Rees/flickr

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