Sustainible Urban Transport Financing from the Sidewalk to the Subway




    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.










    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: