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Infrastructure: Do all Roads Lead to Green Investments?

Jordan Schwartz's picture

Infrastructure: Do all Roads Lead to Green Investments?

I am sitting in a conference room in Panama and the room is so cold it just might start snowing. I can barely write, my fingers are so stiff, and this makes me wonder about the psychology of being cold in a hot climate…about the excessive use of energy while oil hovers around US$86 per barrel and the Earth’s temperature creeps higher.

Since it is often beyond a question of comfort, is it a statement about our rights to consume, about our control over our environment, about wealth? Whatever the cause, the citizens of Mexico City and Managua share the habit with those of Manila and Miami.

The use of power expresses itself as a sign of power. ....And so, too, the use of the automobile. One hundred and fifty years ago, in “Song of the Open Road,” Walt Whitman wrote

“O public road …
You express me better than I can express myself.
From this hour, freedom!
Pausing, searching, receiving, contemplating
Gently, but with undeniable will,
divesting myself of the holds that would hold me.”

This poem remains a celebration of the opportunity that the highway provides. Across the Americas, the relationship between personal freedom and physical movement—especially the kind provided by a car on an open road—has become part of our DNA.

Latin America and the Caribbean has the highest rates of motorization of any region in the world—about the same as China at nearly 4.5 percent per year. Unlike China, however, the majority of our population already lives in cities.

Since 78 percent of LAC’s population is urban, this means that the region’s municipalities are clogged, polluted and getting worse. So too are the arteries that connect the cities. In energy generation, Latin America runs the risk of losing its green mantel from its baseload of hydropower and natural gas. With demand for the region’s energy growing historically about 1.5 times faster than economic growth, big investments in generation are on the horizon.

We estimate that the region will need the equivalent of 5 Itaipu’s over the next 8 years… and there are only so many large rivers to dam in Latin America. Greater energy efficiency, as well as scale economies from regional markets, may abate that growth, but growing (i.e, with power) green (i.e, with renewables and low emitting technologies) will require a re-thinking of the region’s common practice of subsidizing fuel prices upstream and electricity prices downstream.

In the absence of a carbon tax, it may also mean more regulatory incentives and feed-in tariffs that reflect the full benefits of cleaner generation. In our last two discussions, we looked at the relationships between infrastructure and growth and between infrastructure and social inclusiveness—and we found the relationships to be positively correlated in both cases.

But what about infrastructure and the environment? Can we “grow green” with the help of infrastructure or does infrastructure investment always mean more power, more cars, more emissions, more environmental degradation?

In fact, infrastructure investments that balance economic, social and environmental needs do happen—and they are happening with increasing frequency in Latin America and the Caribbean—in urban transport, in energy production and in freight transport.

Better Transport Systems

Bus Rapid Transit systems are springing up across the region like grass in the cracks of pavement—not only in Bogota, Santiago, Mexico City and Lima, but in the secondary cities of Colombia, Brazil and Mexico. Costa Rica may be next.

Upcoming research from the World Resources Institute on urban transport in Mexico City illustrates how expansion of “Metro-Bus”—the dedicated bus lanes and services of the Metropolitan Area—has helped reverse a 15-year trend of increased dependence on polluting micro-buses, stemming the growth in emissions.

People and the environment benefit from better mass transit, and when cities become healthier, safer and less congested, investment and economic growth are likely to respond.

What has been missing so far is the integration of these mass transit projects into land use planning—planning that would densify cities, curb peri-urban sprawl and bring scale to basic urban service provision. To be truly transformative, the next generation of these investments will require greater forethought and integration into the urban landscape.

In freight transport, the greenness of the investment follows the incentives and options that shippers have when moving cargo. When they are faced with the true cost of fuel, including the costs of pollution, firms often decide on their own to seek more efficient modes. Cargo moves from small trucks to large trucks, and from large trucks to railroads and waterways.

The expansion of the Hidrovia system along the Parana-Paraguay Rivers will allow more ships and barges to move grains hundreds of kilometers. It takes hundreds of trucks off the roads of the Southern Cone--and carbon out of the air.

Realistically, the vast majority of the region’s freight will continue to move by truck, so greening the freight haulage industry itself will be a necessary step in the process of green growth. This means enforcement of tailpipe regulations, incentives for upgrading truck technologies, and training for drivers. The World Bank is now helping the Government of Brazil to build a strategy for greening the trucking industry… a regional example that will spread in the years ahead.

Phew.

In three blogs, we raced through the Triple Win, finding that investments in infrastructure can potentially (1) spur Growth that is (2) Inclusive and (3) Green. But, as I’ve learned from your posts and comments, we also have to admit that there is no easy recipe, that investments that are inclusive and green include costs—typically, the loss of a subsidy—that consumers and/or taxpayers may have to bear in the short-run.

I also read in your posts an observation that Walt Whitman would have appreciated: It is the human component—planning, coordinating, educating, changing behavior—that remains our greatest challenge.

Comments

Whitman wrote that when horses were used on the roads. Judging by the US experience, the more that can be done early with respect to different transportation choices will help limit development of the automobile habit. Once it is acquired, it is very difficult to control, or change.

Submitted by Jordan on
I agree. Path dependency--along with incentive structures and force of habit--is one of our biggest challenges in greening infrastructure service patterns. This is true not only for car use and transport networks, but also in our urban footprint and in energy networks. Ioannis Kessides and David Wade have a great article in the latest "Energy Policy" about the physical properties of energy and how hard it will be to transition to a sustainable energy supply infrastructure. It is sober reading. I took liberties with Whitman's "public road" in the sense that he related the road with peaceful travel, even man's proximity to nature. In fact, he was referring to walking on the road, not riding horses. We would have to amble down rural roads or drive the "blue highways" (have you read William Least Heatmoon?) to find that exact relationship these days, but I believe the poem spells out clearly the sentiment we attach to roads and to the physical movement they provide--be it on foot or horse as in Whitman's day or car as in our day.

Submitted by samuel on
What can the public and private sectors actually do to reduce the number of polluting vehicles from the roads in Latin America? Is this a matter of public policy or just an economic factor? (where people need to user private transportation rather than public transportation because the latter is utterly inefficient). Many thanks.

Submitted by Jordan on
Your excellent question infers a truism: without reliable and affordable alternatives, commuters will continue to buy cars--and use them. As our societies grow in wealth (and car purchases get easier), it may not be possible to stop the car purchase. The trick will be to get people to use the cars less frequently. Public policy responses surround this challenge, which is why car use differs so dramatically across countries of similar income levels and population densities. Public policy levers include demand side management (eg., the use of fuel taxes, tolling, parking pricing, tail pipe emission standards and regulation) and supply side management(e.g., reliable public transit systems, alternative transport networks, secure and safe buses and public transport). Punishing automobile drivers through harsh pricing without offering reliable and affordable alternative forms of transport is a recipe for frustration--and hampered growth. The two have to go hand and hand.

Submitted by Ali on

Here in pakistan Metro bus has lanuched in Punjab "Lahore" by Chief ministr Punjab it has mass transit system and one of the best thing which i know it shorten the distance and with luxuries travel faclitiy in city. Now he won election of 2013 he told that he will soon lanuch this gaint new era Metro bus service in karachi and other cities

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