Assessing the Option Value of a Publicly Provided Service: The Case of Local Transport

This paper presents a theoretical and empirical study of the problem of valuation of local public transport services. A contingent valuation exercise, considering two case studies in northern Italy, is illustrated. This serves as a basis for an econometric analysis aimed at highlighting the role of socioeconomic variables in the determination of the willingness to pay, through public funds, for the subsidisation of public transport services. It is argued that social preferences for the provision of a public transport service cannot be directly deducted from observable market behaviour and that the preferred supply level of transport capacity weakly depends on individual consumption levels, whereas the perception of mobility problems (possibly generated by experience) and the characteristics of social networks (especially the family) are likely to be much more important.