Blog » Sustainible Urban Transport Financing from the Sidewalk to the Subway
Introduction
In many cities in developing countries, urban transport is characterized by severe
congestion and low-quality public transport. While a majority of trips is made by
public transport, trips take a long time. Meanwhile, with only a minority of trips
made by private vehicles, streets are congested and roads in poor condition. This
congestion and poor road quality are affecting economic development and further
hurt public transport—typically used by the poor and less affluent—as buses
also need to use the congested lanes. In addition, the urban development pattern
is further hurting the poor as they live farther away from job centers, and their
neighborhoods are frequently developed informally with precarious road networks,
sidewalks, and other urban infrastructure. The low quality of these public
transport systems, the relatively small scale of the transit networks, and the poor
condition of roads and sidewalks indicate that these urban transport systems do
not have the financial resources to cover all costs, including capital investments
and operation and maintenance expenses. This large and increasing financing gap
for urban transport is currently seen as the main difficulty faced by cities trying
to improve their transport systems.
Indeed—as described in more detail in chapter 1—many cities in developing
countries are stuck in an “underfunding trap” for urban transport. In these cities,
the up-front investments that are needed for new transport infrastructure are
huge, while revenue from their still small-scale and perhaps even poor-quality
systems and other sources is insufficient to cover maintenance and operation
expenses, let alone new investment projects. The urban transport financing gap
in these cities is further widened by the implicit subsidies for the use of private
cars, which represent only a minority of trips but contribute huge costs in terms
of congestion, sprawl, accidents, and pollution. While cars generate more costs
than benefits and public transport actually generates more benefits than costs,
explicit subsidies for public transport are subject to political controversy, while
the implicit subsidies for cars are not. Current literature presents several strategies
for cities to address this urban transport financing gap, but individual strategies
only partially address its complex causes.
In this book, an analytical framework is proposed and applied to support comprehensive
financing for urban transport systems, especially for cities in developing
countries that need to close a growing financing gap.
Based on the concept of
“Who Benefits Pays,” the framework presents a standardized approach for
analyzing and assessing available financing mechanisms based on beneficiaries
(general public or direct and indirect beneficiaries), funding periodicity, and financial and
transport sustainability. The book also uses the concept of making wise investments,
which are investments that can decrease the funding gap by adding benefits
and reducing expenditures, especially over time.
Acknowledgements
The authors would like to thank the World Bank for providing the initial funds
to write this book. Also, we thank peer reviewers Shomik Raj Mehndiratta and
Victor M. Vergara for their careful review and comments, as well as anonymous
reviewers at the World Conference on Transport Research and the Latin
American Congress on Urban Public Transport (CLATPU), who provided comments
on earlier drafts. Leonardo Canon, Harvey Scorcia, and Anita Shrestha
provided support, comments, and suggestions as the research effort evolved.
Invaluable editorial assistance was provided by Anna van der Heijden. Aurelio
Menendez, Indu John-Abraham, Maria Dolores Arribas-Banos, Thierry Desclos,
Om Prakash Agarwal, Nancy Vandycke, Sara Sultan, Alejandro Hoyos, Kirti Devi,
and Luciana Silva also supported this effort. Financial support for the finalization
of this book was provided by PPIAF, which is a multidonor trust fund that
provides technical assistance to governments in developing countries to develop
enabling environments and to facilitate private investment in infrastructure. For
more information on PPIAF visit: http://ppiaf.org.
Blog » Sustainible Urban Transport Financing from the Sidewalk to the Subway
Sustainible Urban Transport Financing from the Sidewalk to the Subway
Introduction
In many cities in developing countries, urban transport is characterized by severe
congestion and low-quality public transport. While a majority of trips is made by
public transport, trips take a long time. Meanwhile, with only a minority of trips
made by private vehicles, streets are congested and roads in poor condition. This
congestion and poor road quality are affecting economic development and further
hurt public transport—typically used by the poor and less affluent—as buses
also need to use the congested lanes. In addition, the urban development pattern
is further hurting the poor as they live farther away from job centers, and their
neighborhoods are frequently developed informally with precarious road networks,
sidewalks, and other urban infrastructure. The low quality of these public
transport systems, the relatively small scale of the transit networks, and the poor
condition of roads and sidewalks indicate that these urban transport systems do
not have the financial resources to cover all costs, including capital investments
and operation and maintenance expenses. This large and increasing financing gap
for urban transport is currently seen as the main difficulty faced by cities trying
to improve their transport systems.
Indeed—as described in more detail in chapter 1—many cities in developing
countries are stuck in an “underfunding trap” for urban transport. In these cities,
the up-front investments that are needed for new transport infrastructure are
huge, while revenue from their still small-scale and perhaps even poor-quality
systems and other sources is insufficient to cover maintenance and operation
expenses, let alone new investment projects. The urban transport financing gap
in these cities is further widened by the implicit subsidies for the use of private
cars, which represent only a minority of trips but contribute huge costs in terms
of congestion, sprawl, accidents, and pollution. While cars generate more costs
than benefits and public transport actually generates more benefits than costs,
explicit subsidies for public transport are subject to political controversy, while
the implicit subsidies for cars are not. Current literature presents several strategies
for cities to address this urban transport financing gap, but individual strategies
only partially address its complex causes.
In this book, an analytical framework is proposed and applied to support comprehensive
financing for urban transport systems, especially for cities in developing
countries that need to close a growing financing gap.
Based on the concept of
“Who Benefits Pays,” the framework presents a standardized approach for
analyzing and assessing available financing mechanisms based on beneficiaries
(general public or direct and indirect beneficiaries), funding periodicity, and financial and
transport sustainability. The book also uses the concept of making wise investments,
which are investments that can decrease the funding gap by adding benefits
and reducing expenditures, especially over time.
Acknowledgements
The authors would like to thank the World Bank for providing the initial funds
to write this book. Also, we thank peer reviewers Shomik Raj Mehndiratta and
Victor M. Vergara for their careful review and comments, as well as anonymous
reviewers at the World Conference on Transport Research and the Latin
American Congress on Urban Public Transport (CLATPU), who provided comments
on earlier drafts. Leonardo Canon, Harvey Scorcia, and Anita Shrestha
provided support, comments, and suggestions as the research effort evolved.
Invaluable editorial assistance was provided by Anna van der Heijden. Aurelio
Menendez, Indu John-Abraham, Maria Dolores Arribas-Banos, Thierry Desclos,
Om Prakash Agarwal, Nancy Vandycke, Sara Sultan, Alejandro Hoyos, Kirti Devi,
and Luciana Silva also supported this effort. Financial support for the finalization
of this book was provided by PPIAF, which is a multidonor trust fund that
provides technical assistance to governments in developing countries to develop
enabling environments and to facilitate private investment in infrastructure. For
more information on PPIAF visit: http://ppiaf.org.