Whoever says there is no such thing as a free lunch hasn’t been to the Estonia’s capital city, Tallinn. The City recently became the first in the world to offer free transit to its residents. There is a catch, however. You must be a registered resident of the Tallinn and pay a one-time 2 euro fee (well, maybe a 2 euro lunch?) for a transit card that gets you on all buses, streetcars, and trolleybuses. The City’s transport authority reports that ridership is up 10 percent while the number of cars on city streets has fallen by 15 percent.
Mayor Edgar Savisaar developed this concept to reduce traffic congestion and pollution while making it easier for low-income residents to travel. Skeptics of this decision can’t help but reveal that this decision will be costing the City nearly 12 million euros ($16 million) annually from lost fare revenue, which could result in bankruptcy.
However, City officials are relying on new city tax revenue as a result of more residents moving to the City to take advantage of the program and current residents spending more money by being able to at no cost.
The City has acknowledged two fundamental risks of the experimental policy: insufficient service capacity to satisfy expected spikes in demand and homeless folks spending all day on the buses. The former is something that can affect the quality of service for all and may require additional cost to provide additional service.
The City seems to be on the right track in attracting more people to travel via public transit. And while that isn’t the only solution to curbing traffic congestion, they are gaining more political steam to implementing drastic policy measures to get people out of their cars. The next step could be some sort of road pricing, which as Small suggests, is the perfect combination to solve the congestion dilemma. 
However, I believe there is a “sweet spot” between highly discounted (not necessarily free) transit in order to both accomplish the City’s goals but also maintain a reliable revenue stream to keep the agency on its feet financially.
It will be very interesting to find out how well this program has worked a year from now. Will ridership continue to increase? Will automobile use continue to decline? I guess we will soon find out.
This post was graciously edit by Ahmed Tashkandi
2. Small, Kenneth A., “Road Pricing and Public Transit.” Access 5 (2005): 10-15.