Sustainlable Urban Transport Financing by Arturo Ardila- Gomez

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    Summary

     

    Urban transport systems are essential for economic development and improving citizens’ quality of life. To establish high-quality and affordable transport systems, cities must ensure their financial sustainability to fund new investments in infrastructure while also funding maintenance and operation of existing facilities and services.

    However, many cities in developing countries are stuck in an “underfunding trap” for urban transport, in which large up-front investments are needed for new transport infrastructure that will improve the still small-scale—and perhaps  poor-quality—systems. Nonetheless, revenue 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 a minority of trips but contribute huge costs in terms of congestion, sprawl, accidents, and pollution.


    Using an analytical framework based on the concept of “Who Benefits Pays,” Sustainable Urban Transport Financing from the Sidewalk to the Subway assesses 24 types of financing instruments in terms of their social, economic, and environmental impacts and their ability to fund urban transport capital investments, operational expenses, and maintenance.


    Urban transport financing needs to be based on an appropriate mix of complementary financing instruments. In particular for capital investments, a combination of grants—from multiple levels of government—and loans combined with investments through public private partnerships could finance large projects that benefit society. Moreover, user charges and the property tax emerge as key financing instruments for capital, operation, and maintenance expenses.


    By choosing the most appropriate mix of financing instruments and focusing on “wise investments,” cities can design comprehensive financing for all types of urban transport projects, using multilevel innovative revenue sources that promote efficient pricing schemes, increase overall revenue, strengthen sustainable transport, and cover capital investments, operation, and maintenance for all parts of an urban transport system, “from the sidewalk to the subway.”

     

     

     

    Source; Ardila-Gomez, A. and A. Ortegon-Sanchez. Sustainable Urban Transport Financing from the Sidewalk to the Subway: Capital, Operations, and Maintenance Financing. 2016. Washington, DC: World Bank. DOI: 10.1596/978-1-4648-0756-5.