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Poliq, Vol. 2, No. I, pp. 4349, 1995 Copyright 0 1995 Elsevier Science Ltd Printed in Great Britain. All rights reserved 0967-070X/95 $ IO.00 + 0.00

From predict and provide to predict and prevent?: pricing and planning in transport policy
Susan Owens
Unilversity of Cambridge, Department @Geography, Cambridge CB2 3EN, UK

Transport policy in Britain is under the influence of a new realism. This paper explores policy instruments which are central to the new approach - getting the price right and influencing travel patterns through land use planning. It suggests that the concept of the right price is problematic, that land use measures are necessary but not sufficient and that neither pricing nor planning policies are likely, in isolation, to have sufficient effect across the range of environmental impacts of transport. A sustainable transport policy means maximising accessibility within environmental constraints and must be achieved by means of a co-ordinated policy package.
Keywords: pricing, planning, sustainability

UK transport policy in the mid-1990s presents a paradox. On the one hand there is a pervasive sense of crisis, fluidity and change - what Goodwin er al. (1991) have called the new realism. On the other hand there is a feeling, amounting sometimes to resignation, that underlying rigidities, ideologies and interests will make it difficult, if not impossible, to move from where we are now to a more sustainable transport future. The Governments Strategy for Sustainable Development (Secretary of State for the Environment et al., 1994), looking forward nearly 20 years to the year 2012, identifies transport as a major challenge. This concern is strongly reiterated in the eighteenth report of the Royal Commission on Environmental Pollution (1994) which, in its call for radical reorientation of prevailing policies, is both a manifestation and a powerful reinforcement of the new realism. This paper explores three possible approaches to transport policy which might take us towards a more environmentally sustainable future: in doing so it raises questions about certain aspects of the new realism particularly those concerned with pricing and land use policies which are themselves rapidly becoming basic tenets of conventional wisdom. Before outlining these approaches, it is salutary to look back over the past 20 years. In the mid 1970s environment and especially resource issues were prominent in the aftermath of the first environmental revolution and the 1973/4 oil crisis. Though many of the predictions made during the 1960s and 1970s (of rapidly escalating oil prices, for example) have proved false, Buchanans (1963) warning

that deliberate limitation of the volume of motor traffic in our cities would be quite unavoidable was prescient. Since then, road traffic in Britain has increased by more than two and a half times, and such trends have been singled out as a major environmental threat. The three routes to the future explored in this paper for brevity, Predict and Provide, The Price is Right and The Planning Panacea - are neither mutually exclusive nor exhaustive of all possible policy approaches. But all are influential and much debated. The familiar predict and provide strategy has been severely criticised. It is included here not only as a benchmark, but because the philosophy of provision to accommodate demand, though modified at the margin, is still a powerful force in transport policy. Nevertheless, an important element of the new realism is the acknowledgement that trends can be influenced as well as predicted. The other two approaches involve different means of exerting such influence. The second - getting the price right - has rapidly gained ground in the rhetoric of transport policy and is beginning to have an impact in practice. The third - the pursuit of land use policies which promote sustainable travel patterns has risen recently to prominence from a position of relative obscurity. Pricing and land use planning are not of course the only alternatives to the predict and provide approach; but each has recently been the subject of renewed attention, and each is widely acknowledged to be a significant component of a sustainable transport policy (Royal Commission on Environmental Pollution, 1994).



and plannincg: S Owens

The underlying assumptions of each approach and the likely efficacy of policies are important issues for debate. Furthermore, though the implications of these strategies are considered in turn, the extent to which pricing and planning policies are mutually interdependent is itself a consideration for research and policy. These three approaches, therefore, while necessarily selective, illustrate a number of important emergent themes in the development of a sustainable transport policy.

Predict and provide

The philosophy which has dominated transport policy has been one in which demands are projected, equated with need and met by infrastructure provision at least in as far as the public purse will allow; this philosophy has underpinned the process of traffic forecasting and has provided its main rationale. Trend projection and its implications have been extensively analysed elsewhere, and it is not the purpose of this paper to consider yet again official forecasts of vehicle ownership and traffic and their likely social, economic and environmental impacts (for full discussion, see Adams, 1981; Banister and Button, 1992; Goodwin, 1991; RAC Foundation, 1992; Royal Commission on Environmental Pollution, 1994; Transnet, 1990; Tyme, 1978). The focus here is on the acceptability of the predict and provide approach, the questions which it raises about freedom of choice, and the degree of mutability of the trends on which it seems to be based. In projecting environmental impacts, allowance must be made for various technical changes, for example in vehicle emissions or fuel efficiency, either already required by legislation or likely to be achieved within the relevant time horizon. Many commentators agree, however, that impact reductions through technical fixes are likely to be outweighed by traffic growth and by factors such as a preference for larger and more powerful cars (Martin and Shock, 1989; Secretary of State for the Environment et al., 1994; Transnet, 1990). Specifically, in the UKs Strategy for-Climate Change, it is acknowledged that strong [traffic] growth trends will continue to put pressure on the ability of the UK to curb levels of CO, emissions (Secretary of State for the Environment et al., 1994, p 69). The Royal Commission (1994) is more forthright: it believes that a substantial t-eduction in emissions from the transport sector is an essential element if stabilisation of carbon dioxide concentrations in the atmosphere is to be achieved in the longer term (p 44, emphasis added). Its proposal to reduce emissions from surface transport to no more than 80% of their 1990 levels by 2020 will, in the light of forecast traffic growth, require radical measures (p 44). An equally important point is that pollution is only one (albeit highly significant) way in which transport damages the environment and the quality of life. In the absence of other policies, social impacts, landscape and habitat congestion, degradation and the sheer tyranny of traffic in many urban and rural areas will remain largely unaffected even if individual vehicles become cleaner and more efficient.

For these reasons, the vision of the future as a continuation of current trends, even mitigated by pollution abatement and other palliative measures, has become indigestible. While the critique of policy is not new, transport has reached that point of controversy where local and generic issues reinforce each other in a powerful challenge to the foundations of policy as well as resistance to its implementation: energy policy experienced a similar upheaval during the 1980s (Peake and Hope, 1991; Owens, 1985). Indications of crisis include mounting criticism of policy from diverse groups, growing concern about the links between traffic pollution and health, complaints about noise and dissatisfaction with the extent to which traffic dominates townscapes and peoples daily lives (for example, Birmingham City Council, 1993; Vidal, 1994). Traffic projections and the roads programme have become a focus for this discontent, reflected in the existence of more than 200 protest groups opposing new road schemes in the UK (Ghazi, 1994). Media images of a Britain covered by superhighways (for example, Ghazi, 1993 and Vidal, 1993) which will still not solve the problem of congestion, contribute to the sense that the predict and provide strategy has become untenable. Significantly, the opposition spans a broad political spectrum. In short, as the Royal Commission (1994, p 4) points out, [tlhere has been a convergence towards a recognition that current trends are not sustainable. Given this apparently widespread dissatisfaction, it seems paradoxical that trends are often represented as an expression of freedom of choice, with which politicians interfere at their peril. The assertion that there is no option but to build more roads unless we change our aspirations (Parkinson, 1990, emphasis added) is typical of the way in which this view has been promoted in ministerial statements, but a sense of immutability also permeates the literature on transport, land use and the environment. So, for example, Gossop and Webb (1993, p 111) claim that effective policies to restrain road traffic growth may prove electorally unpopular and Breheny and Rookwood (1993, p 15 1) assert more categorically that the major trends . . . currently determining patterns of urban change . . . are so powerful that policies that aim to reverse them are doomed to failure. In transport, it seems, we have a situation where both current trends and the policies needed to change them are politically unacceptable. One explanation lies in the very nature of transport trends as the aggregate of a myriad of individual decisions. Parfit (1984) cites travel decisions (in this case, for commuting) as a classic case of a many-person prisoners dilemma: in such circumstances, because
Robin Grove-White used this phrase in the context of energy policy in the 198Os, arguing that whatever the merits of policy options, in a democracy they have to be digestible (Grove-White, personal communication, 1994). The analogy is pertinent, since it sometimes seems that transport has inherited from nuclear power a prime position in the demonology of the environmental movement. 2Again, these are reminiscent of alarming maps of planned nuclear installations in the 1980s.

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costs are extemalised and we act in ignorance of what others will do, our rational choices as consumers do not produce the outcome we would choose as citizens (Sagoff, 1988). For other reasons too, travel patterns are a poor advertisement for the invisible hand of the market: perceptions of even the internal costs of travel are 1982; notoriously inaccurate (Dix and Goodwin, Metcalf, 1978), and some of the forces influencing behaviour, such as provision of company cars, investment criteria for infrastructure, and certain locational trends are clearly attributable to policy. It is important to recognise that choice, even for those mobile enough to enjoy it, is influenced in many visible and less visible ways, and it is increasingly apparent that in transport, individuals exercising choice constrain their own future choices, the choices of others and the choices of future generations. It is interesting, therefore, to observe a discernible shift from deployment of the freedom of choice argument in defence of individual mobility to a new rhetoric of choice across all transport modes. We now find the Assistant Director of the British Roads Federation, for example, advocating a policy that covers public transport, cycling and walking as well as roads so we can provide people with more choice (Everitt, quoted in Ghazi 1994). Similar language permeates the Governments sustainability strategy and other recent transport statements. There can be little doubt that the established approach to transport policy in Britain is under sustained attack. To the long-standing critique of other groups has now been added the influential voice of the scientific establishment in the form of the Royal Commission on Environmental Pollution (1994). What remains to be seen is whether the underlying premises of transport policy will be demolished, or whether they will survive with the policy modified only to take account of physical and political impossibilities. Some modification at least seems inevitable, and one widely accepted means of achieving this is to attempt, through fiscal measures, to intemalise some of the social and environmental costs of transport. This approach - getting the price right - is considered in the following section.

The price is right

The notion that transport users should pay their full social costs now permeates the discourse on transport policy, whether this emanates from official sources or from their most vigorous critics. The European Commission (CEC, 1992 para 95) refers to the true costs of transport and the necessity of intemalising external costs; the UK Government wants to ensure that users pay the full social and environmental costs of their transport decisions (Secretary of State for the Environment et al., 1994); and environmentalists have consistently argued that transport is underpriced in this respect. Whether any increase will cover external costs is, however, very much open to question. Economic analysis tells us that environmental costs could be intemalised

by setting a tax on pollution (or whatever) equal to the marginal damage cost at the socially optimum level of pollution: this is the level at which the costs imposed by the next unit of pollution are equal to the costs of its abatement. Increasing transport costs is thus represented as a way of achieving the optimum level of pollution: this logic lies behind the notion that the benefits of transport should be weighed against its full social costs. The concept of intemalising the latter implies the prior determination of the true value of the environment and its subsequent weighing against the benefits of transport in the formulation of policy objectives. There are a number of problems, however. One, widely acknowledged, is that environmental costs are typically difficult, sometimes impossible, to anticipate, recognise, quantify and evaluate (see, for an overview, Royal Commission on Environmental Pollution, 1994). After extensive debate about the methodology and underlying philosophy of evaluation, the issues are far from resolved (for different perspectives see Bowers, 1993; Cropper and Oates, 1992; Kelman, 1990; Pearce et al., 1989; Price, 1993; Sagoff, 1988). Most fundamentally, cost-benefit analysis is considered by some critics to be an inappropriate framework for the formulation of policies with profound environmental implications (see, for example, Kelman, 1990; Sagoff, 1988). The Royal Commission (1994, p 102) acknowledges that putting money values on irreversible loss of habitat, degradation of landscape or destruction of cultural assets may be objectionable on grounds of principle as well as practicality and others have argued that for reasons of uncertainty, risk, obligations to future generations or respect for the intrinsic value of nature, we may wish to withdraw some aspects of the environment from the arena of trade off (Owens, forthcoming; Jacobs, 1994). The need to protect critical natural capital, those aspects of the environment considered non-substitutable and effectively deemed inviolable, implies that a sustainable transport policy would involve environmental capacity constraints (Hatton, 1992; Jacobs, 1994). On this reasoning whatever the current benefits of a transport system which might cause irreversible damage to the atmosphere, or consume sites of great natural or cultural significance, it would be wrong to pursue it. To recognise these problems is not to deny a role for the price mechanism: it clearly has potential as a policy instrument. But to use pricing as a means to politically chosen ends is not the same as determining what the environment is worth in order to decide what those ends ought to be. This important distinction is accepted explicitly by the Royal Commission on Environmental Pollution (1994) in its treatment of the relationship between cost-benefit analysis, environmental targets and economic instruments. The challenging objectives that it sets stem from a recognition that the present and prospective use of transport is creating environmental damage which is in the long term unacceptable (p 106). While the targets are not defined in terms of costs and benefits, the Commission accepts that economic instru45

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ments should make it possible to minimise the cost to the community of achieving a particular target (p 106). Even so, important questions arise about the effectiveness of pricing as a means of reducing the environmental impacts of transport. A back of the envelope calculation may serve to illustrate the point. While all the details can be questioned, the overall implications are interesting. Some estimates suggest that motorists bear only a small proportion of the more obvious costs that they impose: the figure of 27% is often quoted (for example, Whitelegg, 1993). This includes congestion and accidents as well as estimates of some, but by no means all, of the environmental costs of road travel. Ignoring this complication for the moment, we might argue that if the costs of motoring were quadrupled, this would go some way towards intemalising external costs and towards achieving the socially optimum level of movement. It might further be assumed that the cost increase would be effected entirely by fuel taxation, often regarded as the most efficient and direct way to influence travel behaviour.3 To predict the effects of such an increase is no easy matter. Since there has not been a prolonged period of sustained increase in real fuel prices, empirical evidence is in short supply. Timescales are also significant, because short- and long-term demand elasticities diverge significantly (Goodwin, 1992; Oum et al., 1992). However, analysis using a Department of Transport econometric model may give some indication of potential impact (Virley, 1993).4 This suggests that in order to stabilise carbon dioxide emissions at 1990 levels, an approximate doubling of fuel prices in real terms by the year 2000 and an increase of a factor of four to five by 2025 (on top of increases assumed in National Road Traffic Forecasts) would be needed. Interestingly, the Royal Commission (1994) recommends steady increases in fuel duty so as to double the price of fuel, relative to prices of other goods, by 2005, when it proposes that the case for further increases should be reviewed. The effects of these price increases on carbon dioxide and other emissions are not insignificant, though many in the climate change scientific community would regard stabilisation as an inadequate and interim objective. The predicted effect on traffic is modest, however. In the Departments model, price increases of the order considered lead to reductions, compared with base case traffic projections, of 7-12% by the year 2000 and 20-30% by 2025. This still implies an absolute increase in traffic. Although the long-term demand elasticities used are relatively high, consistent with those of recent estimates in the literature, it is assumed that travel behaThe Royal Commission (1994) maintain that fuel duty has a number of advantages as an economic instrument for influencing decisions about additional journeys. Some authors have taken a different view (see, for example, Pearce et 01.. 1993). 4Also, Instone, Department of Transport. personal communication, 1993. % suggests. however. that the Department of Transport may underestimate the scope for longer term adjustment. 46

viour will continue to be more responsive to GDP than to fuel price. The more significant impact on pollution occurs because of changes in vehicle characteristics. (Put simply, people tend to choose more efficient cars but maintain their mobility.) The impact on the roads programme, in the absence of other policy changes, would be negligible. If the assumptions are correct, quadrupling prices may stabilise or reduce vehicle emissions but would have little or no effect on other serious impacts of traffic and road construction. It seems unlikely that those concerned with the environmental costs of transport would accept that they had thereby been intemalised. Two implications follow: cost increases would need to be more draconian to effect substantial reductions in traffic; and/or the impacts of traffic and roads on many aspects of social life and the environment need to be dealt with by additional policy instruments, including changing investment priorities, other regulatory measures and land use planning policies. The availability of alternative modes of transport, and land use patterns that reduce the need for movement, may in turn effect increases in the price elasticity of demand for individual motorised mobility. The above analysis suggests not only that the notion of the right price is conceptually and operationally problematic, but that economic instruments in isolation may not be markedly effective across the whole range of environmental effects..It will be argued, of course, that if impacts remain unacceptable when prices have been increased, this simply means that the right price has still not been applied. From a theoretical perspective, this is an interesting tacit acknowledgement that objectives have been defined independently of cost-benefit analysis (it suggests that we know what we want in the first place). The pragmatic problem - if we accept that prices should nevertheless be used as a means to an end - lies in the political risks associated with high and sustained real increases in motoring costs.

The planning panacea

One explanation for the relative price inelasticity of travel demand is that increasing mobility and dispersal of land uses have reinforced each other over at least half a century, so that in many areas car use has become more of a necessity than a choice. There is nothing new in recognition of a relationship between land use and transport: it has long been accepted that travel costs, broadly defined, have a dynamic effect on land use, while development patterns influence both the amount and mode of travel. Researchers and planners have been attempting to understand and model these interactions for at least 30 years and they are the subject of a substantial literature. What is surprising is how long it has taken to gain political acceptance for the strategy that logically follows: the adoption of land use planning policies to reduce the need for movement and encourage the use of less polluting modes of transport. A flurry of activity during the 197Os, driven by concern about

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resource depletion in the wake of the oil crisis, was characterised by confusion about the legitimacy of using the planning system to reduce resource consumption in transport. Policies related to this objective were in some instances deleted from structure plans by the Department of the Environment on the grounds that they were non-land use policies (Owens, 1986). The substantial shift in thinking in recent years can be attributed in part to environmental concerns - this time with a focus on pollution, especially CO, emissions - but also to some restoration of faith in land use policy after the retreat from government (Cherry, 1982) during the 1970s and 1980s. The new thinking culminated in the publication of planning policy guidance on transport (PPG 13, Department of the Environment, 1994) which legitimises the use of land use planning as an instrument of wider transport and environmental policies:
By planning land use and transport together in ways which enable people to carry out their everyday activities with less need to travel, local planning authorities can reduce reliance on the private car and make a significant contribution to the environmental goals set out in the Governments sustainable development strategy (para I .3). development raises two interesting questions. Why did it take so long to make the land use/transport/environment connection? And how effective are the policies urged in PPG 13 likely to be in practice? One reason for the long time scale, apart from the usual difficulties of translating intellectual recognition into practical policies, is that we have been asking the wrong questions. The emphasis in research has been on the travel or energy requirements associated with different land use patterns, typically informing a search for the most efficient. The goal has proved elusive, because we will never have perfect knowledge about the relationship between land use and transport. Models provide a simplified mathematical description of an observed situation; empirical work has to deal with the real world in all its complexity. Neither of these approaches has provided unambiguous information, nor are they ever likely to do so. What can be demonstrated in theory will often not happen in practice; what is efficient will be contingent: and while it is possible to identify robust policies, these will seem to counter well established trends. A clear limitation of approaching the problem from this direction is that the research findings identify necessary but not sufficient conditions for reducing the amount of travel and inducing modal shift: and there is a confusion of the need to travel (which can reasonably be related to land use variables) with the inclination to do so. When travel is cheap, people use mobility to extend their choice of jobs, retail facilities and leisure opportunities, and to improve their residential amenity. Employers, retailers and developers respond appropriately in their locational decisions. The most attractive, rather than the closest facilities are used: and homes are This important

chosen for reasons other than proximity to work. Time and money spent on travelling is readily traded against these other factors. This simple fact makes it difficult to define the most travel-efficient forms of development without making assumptions about future mobility, and therefore about other factors and policies strongly influencing the propensity to travel. It also means that land use planning in isolation is not an effective way of reducing travel demand. These qualifications often seem to be forgotten in the new found enthusiasm for planning as an instrument of transport and environmental policy, especially amongst those who find the prospect of other measures, such as pricing, more immediately threatening and unpalatable. If no other steps are taken to restrain traffic growth, the advice in PPG 13 is likely to be wasted. Even if it persuades planning authorities, in the face of other pressures, to increase densities, mix land uses and relate development to public transport, the changing spatial pattern of opportunities may have little effect on the number and length of journeys undertaken. At worst, the policies could be counter-productive: concentration of development in conditions of high mobility, for examcongestion. At best, ple, may simply exacerbate planning will be reduced to a contingency safeguard (Webster er al., 1988, p 377).(j In any case, there is something inconsistent about using a relatively blunt and typically long-term instrument to influence travel behaviour without applying more direct measures, such as pricing. As the Royal Commission (1994, p 153) points out, the effectiveness of the policies advocated in PPG 13 will depend crucially on the transport policy context as a whole and on the ability of local planning authorities to achieve the necessary shifts in policy. Thus while the Commission welcomes the Guidance as an important statement of intent, it stresses the need to address specific limitations in the wider policy framework which will otherwise frustrate the intentions of integrating land use and transport policies (p 153). Publication of PPG 13 implies a tacit acceptance that enough is known, especially about inefficient and robust development patterns to inform policy, as long as advice is flexible and adaptable to specific circumstances. What is needed to reduce uncertainty about the workings of the new guidance is not more research, but a clear and consistent policy framework. If we begin with a commitment to constrain travel by road, the question becomes one of how land use planning policies might accommodate this trend-break in an efficient and equitable manner. Results need not always be qualified by how particular land use patterns would perform under current conditions of mobility, since it is axiomatic in this framework that current trends are unacceptable. Planning then emerges as permissive, rather than causal: it becomes an important means of maintaining access and choice within a future of lower mobility. The poliThis is essentially the argument that even if policies have little impact on travel patterns under current conditions, they are still useful because they keep options open for the future.

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ties advocated in PPG 13 - avoidance of obviously transport intensive development, concentration of growth in moderately sized centres and design of the physical environment to provide safe and attractive conditions for walking and cycling - would then be logical and necessary complements to other policy measures. The interesting question is whether PPG 13 is part of the process of this broader policy shift, or an isolated (and therefore ineffectual) attempt to modify land use while the broader framework remains patterns unchanged. In support of the first interpretation is the fact that publication of the Guidance owes more to the new realism than it does to definitive new answers from research. Although a major project funded by the Departments of Environment and Transport provided the basis for PPG 13 and was published simultaneously with the draft (ECOTEC, 1993) it produced few insights that could not have been gleaned from a thorough review of the existing literature. It certainly did not eliminate all uncertainties in a field in which the timescale for well-founded empirical work stretches beyond the policy horizon and the costs may be disproportionately high. In such circumstances, the model of research-led policy can, if required, provide an excuse for indefinite procrastination. Though it was still necessary politically to point to research to legitimise the new policies in PPG 13, in the absence of startling new findings its publication would seem to be both indicative and partly constitutive of a significant policy shift.p



The old tenets of conventional wisdom in transport policy have been seriously challenged. This paper suggests, however, that there is a temptation to replace them with new panaceas, implying that the answer lies in getting the price right, planning to reduce the need to travel or (though it is not discussed in detail in public transport. The here), major investment potential effects of such policies tend to be explored in isolation, whereas a growing consensus suggests that they must work in combination, and that the whole is likely to be greater than the sum of the parts. Increasing prices, while people remain locked into land use patterns requiring high mobility, for example, may be inequitable and politically risky, whereas land use planning policies aiming to reduce the need to travel will not persuade people to travel less if using cars remains cheap and convenient. But working together, and supported by complementary policies (such as traffic restraint and investment in public transport), these approaches have the potential to be mutually reinforcing. In proposing its own comprehensive package of policy measures, the Royal Commission (1994, p 251) stresses that its recommendations complement and reinforce each other, and must be viewed as a whole. Only through such reinforcement will the intellectual recognition of the need for radical change - the new

realism - be translated into workable policies. Further research will be useful in clarifying specific issues. We need to recognise, however, when there are inherent uncertainties and when the time and cost of producing meaningful results will simply be too great. In the context of land use and transport the call for further research has too often been used to avoid facing difficult policy decisions and the wheel has been reinvented many times. Theoretical and empirical research can now most fruitfully be conducted in parallel and in conjunction with policy development, implementation and monitoring. There is a further implication if the objective is a sustainable transport policy. It will be necessary to consider the kind of environment that we want to hand on to future generations and to some extent to tailor transport policy to it. Ceilings on emissions would provide one step in this direction, and they need to be disaggregated so that the expected contribution of the transport sector becomes clear. But an equally important dimension lies in protection of other aspects of the environment valuable habitats and cultural landscapes, for example - which have too readily been traded off against transport benefits such as the aggregate of many small time savings. The clear environmental targets proposed by the Royal Commission on Environmental Pollution (1994) as a framework for transport policy are a welcome and significant development in this context. In a sense they imply a rethinking of what we mean by integration of transport and environmental policies. While the concept of integration found in European Union and UK policy documents implies meeting the need for mobility while taking the environment into account, sustainability may require that we meet the imperatives of environmental protection while maximising accessibility within these constraints.

The author is grateful for the support of the Economic and Social Research Council. This paper was written she held a Global Environment Change when Programme Fellowship to explore issues of land use planning and enivommental change.

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