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Public Sector and Governance

Climate finance: why is transport getting the short end of the stick?

Shomik Mehndiratta's picture
Going nowhere fast... Photo: Simon Matzinger/Flickr
Climate change is a global challenge that threatens the prosperity and wellbeing of future generations. Transport plays a significant role in that phenomenon. In 2013, the sector accounted for 23% of energy-related carbon emissions… that amounts to some 7.3 GT of CO2, 3 GT of which originate from developing countries. Without any action, transport emissions from the developing world will almost triple to reach just under 9 GT of CO2 by 2050.

In previous posts, we’ve explored the policies that would maximize a reduction of transport emissions. But how do you mobilize the huge financial resources that are required to implement these policies?  So far, transport has only been able to access only 4.5% of Clean Development Mechanisms (CDM) and 12% of Clean Technology Funds (CTF). Clearly, the current structure of climate finance does not work for transport, and three particular concerns need to be addressed.

Urban transport: Lagos shows Africa the way forward (again)

Roger Gorham's picture
Photo: Ben Eijbergen
With a metropolitan population approaching 23 million, Lagos is the economic engine of Nigeria and one of the largest cities on the African continent. Rapid growth, unfortunately, has come with a myriad of urban transport challenges. To get around, most residents rely on the thousands of yellow mini-buses that ply the streets—the infamous "Danfos"—and on a growing supply of three-wheelers. These limited options, combined with endemic congestion, make commuting in Lagos a slow, unreliable, and expensive endeavor.
 
But this entrepreneurial city cannot afford to be stuck in traffic. Things started moving in 2008, when Lagos introduced Africa's first Bus Rapid Transit (BRT) corridor with technical support from the World Bank under the Lagos Urban Transport Project. The corridor was referred to as BRT-lite, a local adaptation that did not apply all the "classical" features of a BRT (level loading, fancy stations) but was well integrated with the local environment and became immediately successful. In fact, the operator was able to recoup its capital investment in the bus fleet in 18 months even without banning competitor services. The BRT services demonstrated that improving the erstwhile chaotic system was indeed possible.
 
Building on this success, Lagos has taken steps to improve and expand the reach of the BRT. The Second Lagos Urban Transport Project (LUTP2), supported jointly by the World Bank and the French Development Agency, provided about $325 million in 2009 toward building a 13-km extension of the BRT corridor between Mile 12 and the satellite town of Ikorodu. In addition to the BRT infrastructure, the project financed the rehabilitation and widening of the road from four to six lanes, the construction of pedestrian overpasses, a bus depot, terminals, a road bridge, measures to enhance flood resilience, as well as improved interchange and transfer facilities.

Sustainable mobility: can the world speak with one voice?

Nancy Vandycke's picture

 
The transport sector is changing at breakneck speed.
 
By 2030, global passenger traffic is set to rise by 50%, and freight volume by 70%. By 2050, we will have twice as many vehicles on the road, with most of the increase coming from emerging markets, where steady economic expansion is creating new lifestyle expectations and mobility aspirations. Mega-projects like China’s One Belt, One Road could connect more than half of the world’s population, and roughly a quarter of the goods that move around the globe by land and sea.
 
These transformations create a unique opportunity to improve the lives and livelihoods of billions of people by facilitating access to jobs, markets, and essential services such as healthcare or education.
 
But the growth of the transport sector could also come at the cost of higher fossil fuel use and greenhouse gas emissions, increasing air and noise pollution, a growing number of road fatalities, and worsening inequities in access.
 
Although these are, of course, global challenges, developing countries are disproportionately affected.
 
The vast majority of the one billion people who still don’t have access to an all-weather road live in the developing world. Although low and middle-income countries are home to only 54% of the world’s vehicles, they account for 90% of the 1.25 million road deaths occurring every year. If we don’t take action now, transport emissions from emerging markets could triple by 2050, and would make up 75% of the global total.
 
While the case for sustainable mobility is evident, the sector still lacks coherence and clear objectives. There is a way forward, but it requires pro-active cooperation between all stakeholders.
 
That’s what motivated the creation of Sustainable Mobility for All (SuM4All), a partnership between a wide range of global actors determined to speak with one voice and steer mobility in the right direction.
 
SuM4All partners include Multilateral Development Banks, United Nations Agencies, bilateral organizations, non-governmental organizations, civil society organizations, and is open to other important entities such as national governments and private companies. Together, these organizations can pool their capacity and experience to orient policymaking, turn ideas into action, and mobilize financing.

How have recent bus reforms changed accessibility in Bogotá?

Camila Rodriguez's picture
Photo: Galo Naranjo/Flickr
Bogotá has received a lot of attention for its Bus Rapid Transit (BRT) system, known as Transmilenio. Today, many cities are looking to replicate the Transmilenio experience, and an extensive body of research has documented the impact of the system on users and on the city as a whole, highlighting benefits such as: significant travel time savings; more affordable commuting options, particularly for low-income users now pay a single fare for their trips; and an overall decrease in congestion, pollution, and accidents.
 
However, much less is known about the impact of the Sistema Integrado de Transporte (SITP), a more recent reform to modernize and integrate all of the city’s bus services, eliminate the old, sometimes unsafe traditional buses, and put an end to the guerra del centavo—a phenomenon whereby drivers aggressively compete for passengers at the expense of everyone’s safety. The reform introduced a number of sweeping changes:
  • The multitude of small private operators were required to form companies and to formalize their drivers and maintenance personnel
  • Services were contractualized via concession arrangements
  • The overall number of buses on the roads was reduced
  • Bus routes were reorganized
  • Old buses were replaced with a more modern fleet
  • Cash payment gave way to a smartcard system
  • The city applied stricter quality control, regulation and enforcement.
To implement this model, Bogotá opted for a gradual roll-out of the SITP, as opposed to the “Big Bang” approach followed in other cities like Santiago de Chile.

Is it too early to agree on SDG indicators for transport?

Muneeza Mehmood Alam's picture

 
In March, the international community of statisticians will gather in New York and Ottawa to discuss and agree on a global indicator framework for the 17 Sustainable Development Goals and the 169 targets of the “2030 Agenda for Sustainable Development”. The task at hand is ambitious. In 2015, heads of state from around the world committed to do nothing less than “transform our world”. Monitoring progress towards this ambition is essential, but technically and politically challenging: it will require endorsement from all UN Member States on how to measure progress. In March, it will be the second attempt at getting this endorsement.

Why is it important? “What gets measured, gets done”. Measuring progress is essential for transparency and accountability. It allows us to understand our accomplishments and failures along the way, and identify corrective measures and actions—in short, it allows us to get things done.

What is the issue? Politically, the SDG process has been country led. This means that countries—and not international agencies, as in the case of the Millennium Development Goals—have guided the whole SDG process, including leading discussions and the selection of goals, targets and indicators.   Technically, the development of a robust and high-quality indicator framework is highly complex: the indicator should align closely with each target, have an agreed-upon methodology, and have global coverage. In reality, many indicators do not. For example, the indicator proposed to measure the 11.2 SDG target (“By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all”) is the “proportion of population that has convenient access to public transport”. Data is not yet available for this indicator. Additional indicators may be needed to cover all aspects of the target.

Three factors that have made Singapore a global logistics hub

Yin Yin Lam's picture
Then vs. now: the Port of Singapore circa 1900 (left) and today (right). Photos: KITLV/Peter Garnhum

When it gained independence in 1965, Singapore was a low-income country with limited natural resources that lacked basic infrastructure, investment and jobs.

A few decades later, the picture couldn’t be more different. Singapore has become one of Asia’s wealthiest nations, due in large part to its emergence as the highest-performing logistics hub in the region (see World Bank Logistics Performance Index).

The numbers speak for themselves. Today, the small city-state is home to the world’s largest transshipment container port, linked to over 600 ports worldwide. Singapore Changi airport is voted the best internationally, and is served by about 6,800 weekly flights to 330 cities. Finally, the island nation’s trade value amounts to 3.5 times its GDP.

Singapore’s achievements did not happen by chance. They result from a combination of forward-looking public policy and extensive private sector engagement. This experience could provide some lessons to any developing country seeking to improve its logistics network. Let us look at three key factors of success.

Getting a global initiative off the ground: What can transport learn from energy?

Nancy Vandycke's picture

In May last year, key stakeholders joined the World Bank Group in calling for global and more concerted action to address the climate impact of transport while ensuring mobility for everyone. More recently, the Secretary-General’s High-Level Advisory Group on Sustainable Transport noted, in its final recommendations to Ban Ki-Moon, emphasized the need for “coalitions or partnership networks” to “strengthen coherence” for scaling up sustainable transport, as well as establishing monitoring and evaluation frameworks. These issues have been raised at Habitat III, COP22 and at the Global Sustainable Transport Conference in Ashgabat.
 
As the global community readies itself to move from commitments to implementation, what can transport learn from similar initiatives in other sectors, such as Sustainable Energy for All (SE4All)?

First-ever Global Conference on Sustainable Transport: What is at stake?

Nancy Vandycke's picture

On November 26, 2016, UN Secretary-General Ban-Ki Moon will convene the first-ever Global Conference on Sustainable Transport, in Ashgabat, Turkmenistan. What is at stake in this capstone two-day event? What fresh developments might it yield, and how might it change the dynamics for transport?
 
The new transport agenda. A number of earlier high-level events—including the UN Climate Action Summit, the OECD/International Transport Forum, and the Habitat III Conference—helped give a long-needed boost to the visibility of transport in the international arena in 2016. The events also helped position transport within the current set of global commitments that include the Sustainable Development Goals, the Paris climate agreement, the Decade of Action on Road Safety, and the Habitat III New Urban Agenda. The forthcoming Ashgabat event will put front and center one simple notion: for the next 15 years, the transport agenda will be framed by that set of global commitments. The commitments define the space within which governments, international organizations, the private sector, and civil society will have to act on transport. And they will dictate the future size and direction of transport funding.
 
This is a paradigm shift. Previously, the transport agenda was defined by the goal of providing access to transport infrastructure. Under the new framework, the international community has committed itself to much more. First, the issue is no longer simply access but equitable access for all. Second, other, equally important objectives have been added, including the efficiency and reliability of mobility services, transport safety, and decarbonization. In sum, the internationally accepted transport agenda concerns more than economic and social development; it is also about being part of the climate change solution.

Próxima Parada: El Centro Comercial

Daniel Pulido's picture
Also available in: English
Sigue a los autores en Twitter: @danpulido y @IrenePortabales
 

Estación de Metro de Madrid esponsorizada
Muchos de los sistemas de metro del mundo no consiguen cubrir sus costos de operación con los ingresos tarifarios, mucho menos sus costos de capital. Una comparativa internacional llevada a cabo por las asociaciones de metros CoMET y Nova indica que, en promedio, los ingresos tarifarios de un sistema de metro cubren el 75% de sus costes de operación, mientras que los ingresos comerciales cubren aproximadamente un 15%, lo que supone un déficit del 10%. De igual modo, hemos hecho un cálculo de “números gordos” basado en los estados financieros de diversas empresas de metro de América Latina, corroborando que en promedio éstas presentaron un déficit en operación del 10% en el 2012, el cual asciende al 30% si se incluyen los costes de capital. Por supuesto existen ejemplos de metros que sí cubren sus gastos operacionales como son Santiago de Chile o Hong-Kong, pero otros como México DF necesitan subvención de la mitad de sus gastos de operación. Esta brecha de fondeo es un gran impedimento para mantener la calidad de los servicios y para ampliarlos para poder responder adecuadamente a las crecientes necesidades de desplazamiento.

Lamentablemente, el desfinanciamiento de los sistemas de transporte urbano es un problema generalizado, difícil de remediar con presupuestos públicos sobrecargados y/o soluciones inmediatas que aunque efectivas en teoría son difíciles de implementar en la práctica: el aumento de tarifas, por ejemplo, es una medida políticamente difícil y además genera mayor presión sobre los pobres, quienes más usan el transporte público; cobrar una tarifa que realmente cubra los costes socioeconómicos del uso del vehículo particular (tales como cargos por congestión) como instrumento de financiación del transporte público es también una medida impopular y difícil de implementar.

Dada esta situación, los operadores de transporte están continuamente buscando nuevas formas de recaudar fuentes adicionales de ingresos y así disminuir el déficit de financiación,  en muchos casos a través de asociaciones con el sector privado. A pesar de que muchos de los ejemplos se concentran en países desarrollados, algunos metros en América Latina y en otras regiones en vías de desarrollo están buscando aumentar sus ingresos no tarifarios:

Mind the (funding) gap, next stop: Making some extra money

Daniel Pulido's picture
Also available in: Español
Follow the authors on Twitter: @danpulido and @IrenePortabales
 

A branded metro station in Madrid
Most metro systems around the world are unable to cover their operating costs with fare box revenues, let alone fund capital expenditures. According to data from international benchmarking programs CoMET and Nova, tariff revenues cover an average 75% of operating costs, while other commercial revenues provide about 15%, resulting in an operating deficit of 10%. Similarly, a back of the envelope exercise that we conducted for Latin American metro companies showed that these had an average operating deficit of 10% in 2012. When including capital expenditures, this deficit grew to 30%. There are of course examples of metro systems that do recoup their operating costs, such as Santiago de Chile and Hong Kong, but others like the Mexico City Metro only cover half of their operating expenses with fare revenues. We should all mind this funding gap as it is a significant impediment to maintaining service quality and addressing growing urban mobility needs.

Unfortunately, the underfunding of transit systems can become chronic as public budgets are under growing pressure and the most direct solutions for increasing revenues are hard to implement: increasing fares, for instance, has proved to be politically difficult and disproportionately affects the poor, who use public transport the most; and charging a price that fully covers the social cost of private vehicle usage (i.e., congestion charges) as a way to fund transit is also politically sensitive.

In that context, transit operators are increasingly looking at new ways to tap additional sources of commercial revenue and make up for funding shortfalls, often through agreements with the private sector. Although most examples are concentrated in developed countries, some metro systems in Latin America and the developing world are looking at ways to increase non-tariff revenues:

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