Affordability and subsidies in public urban transport : what do we mean, what can be done?

Subsidy policies on public urban transport have been adopted ubiquitously. In both developed and developing countries, subsidies are implemented to make transport more affordable. Despite their widespread implementation, there are virtually no quantitative assessments of their distributional incidence, making it impossible to determine if these instruments are pro-poor. This paper reviews the arguments used to justify subsidy policies in public urban transport. Using different tools to quantitatively evaluate the incidence and distributive impacts of subsidy policy options, the paper analyzes the findings of a series of researchpapers that study urban public transport subsidy policies in developed and developing countries. The available evidence indicates that current public urban transport subsidy policies do not make the poorest better off. Supply-side subsidies are, for the most part, neutral or regressive; while demand-side subsidies perform better-although many of them do not improve income distribution. Considering that the policy objective is to improve the welfare of the poorest, it is imperative to move away from supply-side subsidies towards demand-side subsidies and to integrate transport social concerns into wider poverty alleviation efforts, which include the possibility of channeling subsidies through monetary transfer systems or through other transfer instruments (food subsidies, health services and education for the poor). The general conclusion of the paper is that more effort should be devoted to improve the targeting properties of public urban transport subsidies using means-testing procedures to ensure a more pro-poor incidence of subsidies.Transport Economics Policy&Planning,Transport in Urban Areas,Urban Transport,Taxation&Subsidies,Economic Theory&Research

Infrastructure performance and reform in developing and transition economies: evidence from a survey of productivity measures

The authors review about 80 studies on electricity and gas, water and sanitation, and rail and ports (with a footnote on telecommunications) in developing countries. The main policy lesson is that there is a difference in the relevance of ownership for efficiency between utilities and transport in developing countries. In transport, private operators have tended to perform better than public operators. For utilities, ownership often does not matter as much as sometimes argued. Most cross-country studies find no statistically significant difference in efficiency scores between public and private providers. As for the country-specific studies, some do find differences in performance over time but these differences tend to matter much less than a large number of other variables. Across sectors, private operators functioning in a competitive environment or regulated under price caps or hybrid regulatory regimes tend to catch up best practice faster than public operators. There is a very strong case to push regulators in developing and transition economies toward a more systematic reliance on yardstick competition in a sector in which residual monopoly powers tend to be common.Enterprise Development&Reform,Labor Policies,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,Health Monitoring&Evaluation,Health Economics&Finance

Is debt replacing equity in regulated privatized infrastructure in developing countries?

The main purpose of this paper is to describe the evolution of the financing structure of regulated privatized utilities and transport companies. To do so, the authors rely on a sample of 121 utilities distributed over 16 countries, and 23 transport infrastructure operators and 23 transport services operators distributed over 23 countries. They show that leverage rates vary significantly across sectors, with the highest rates observed in transport and the lowest in water. Moreover, the authors also show that the 1997 Asia crisis led operators to adjust their financial structure differently in different regions. Overall, the evidence they present shows that debt is replacing equity in financing the investment needs of utilities and transport services in developing countries. These results raise some questions as to whether the regulator's mandate should be expanded to monitor the financial structure of companies and as to whether the international community should make a stronger commitment to more transparent regulatory accounting systems.International Terrorism&Counterterrorism,Banks&Banking Reform,Payment Systems&Infrastructure,Public Sector Economics&Finance,Municipal Financial Management,Banks&Banking Reform,Public Sector Economics&Finance,Rural Finance,Municipal Financial Management,Environmental Economics&Policies

The limits to competition in urban bus services in developing countries

The authors make the case for the return of regulation in the organization of urban bus services in developing countries. During the past three decades urban public transport policy has gone through several phases. The 1980s and 1990s were characterized by liberalization of the sector from public ownership and monopoly provision. The experience of several countries, in particular Chile, indicates that a full liberalization of the sector may not be the welfare-maximizing option. The authors discuss the market failures that justify this claim and present the regulatory options available in this emerging new role of government. Throughout the paper they illustrate ideas with examples from Chile, Colombia, and a few other countries.Labor Policies,Roads&Highways,Economic Theory&Research,Environmental Economics&Policies,Banks&Banking Reform,Urban Transport,Inter-Urban Roads and Passenger Transport,Roads&Highways,Environmental Economics&Policies,Banks&Banking Reform

An Analytic Hierarchy Process for The Evaluation of Transport Policies to Reduce Climate Change Impacts

Transport is the sector with the fastest growth of greenhouse gases emissions, both in developed and in developing countries, leading to adverse climate change impacts. As the experts disagree on the occurrence of these impacts, by applying the analytic hierarchy process (AHP), we have faced the question on how to form transport policies when the experts have different opinions and beliefs. The opinions of experts have been investigated by a means of a survey questionnaire. The results show that tax schemes aiming at promoting environmental-friendly transport mode are the best policy. This incentives public and environmental-friendly transport modes, such as car sharing and car pooling.Analytic Hierarchy Process, Transport Policies, Climate Change

Where do we stand on transport infrastructure deregulation and public-private partnership?

The evolution of transport public-private partnerships (PPPs) in developing and developed countries since the early 1990s seems to be following a similar path: private initiatives work for a while but after a shock to the sector takes place the public sector returns as regulator, owner or financier; after a while the public sector runs into problems and eventually finds a hybrid solution to ensure the survival of the sector. This paper reviews the effectiveness of transport infrastructure deregulation from three angles: efficiency, fiscal and users'viewpoint. The paper emphasizes the difficulties and strong political commitments required to make the reforms sustainable and argues that governments willing to make corrections to the reform path are faced with the need to address recurrent and emerging issues in transport systems: tariff structure, quality (timetable, safety, environment), access rules for captive shippers, the trend toward rebundling and decrease in intrasectoral competition, multimodalism and the stimulus through yardstick competition.Decentralization,Banks&Banking Reform,Environmental Economics&Policies,Health Economics&Finance,Municipal Financial Management,Banks&Banking Reform,Health Economics&Finance,Municipal Financial Management,Environmental Economics&Policies,Public Sector Economics&Finance

Partnering to improve public transport in developing countries

This paper demonstrates the importance of—and potential for—partnerships between the private and public sectors, and citizen groups, as a crucial means towards the improvement of public transport services in the developing world. It draws mainly upon the research findings of case studies in Karachi, Faisalabad, Dar es Salaam and Colombo between 1999 and 2003. The paper looks at some of the factors that need to be taken into consideration if a partnership is to be successful, before demonstrating the potential of existing links between users, operators and regulators. The potential for partnerships to improve upon the existing situation emerged on several occasions during the research, and these are summarised. Later sections look at the types of partnership that might be encouraged in the transport sector, as well as the importance of nurturing and supporting such partnerships. Finally, the paper highlights priorities for intervention—in the areas of infrastructure investment, land use and employment strategy, regulation and stakeholder collaboration—and the role partnerships could play in these interventions. The paper concludes with the importance of strengthening existing partnerships in public transport provision and creating and developing new ones. In this respect the authors consider it crucial that policymakers give due consideration to partnering approaches in the future

Information-based instruments for improved urban management

The task of urban managers is to ensure the provision of basic urban services, such as water, waste removal, security, transport, and an environment conducive to economic activity, while maintaining fiscal sustainability of city operations. City managers in developing countries face increasing pressure in achieving these goals because of rapid urbanization, the larger responsibilities following decentralization, and the economic challenges of globalization. Based on experience in Bangalore, India, the authors argue that effective, forward-looking urban management requires a much better information infrastructure than is currently available in most cities.Environmental Economics&Policies,Public Health Promotion,Public Sector Economics&Finance,Decentralization,ICT Policy and Strategies,Environmental Economics&Policies,ICT Policy and Strategies,Public Sector Economics&Finance,Municipal Financial Management,Banks&Banking Reform