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.