Bad conditions of mobility and accessibility to jobs and services in most metropolitan regions in developing countries are a key development issue. Besides the negative effects on the well being of their populations associated with traffic congestion and time spent on transportation, the latter mean economic losses in terms of waste of human and material resources.
That led me to read with much interest a recent book - available on Google Play - "São Paulo and Mumbai: The Impact of Rail-Based Networks on Two BRIC Mega Cities" written by Jorge Rebelo, a transport specialist who worked for more than 25 years at the World Bank. São Paulo and Mumbai are both mega-metropolitan regions with about 20 million inhabitants and in dire need of quick solutions for better mobility and accessibility for their populations. As their population and income grew, auto and motorcycle ownership and their use also increased in both cities. Their mass transport systems are overloaded and traveling conditions are reaching their limit or are above their limit at peak-hours. Congestion is becoming unbearable in these two megacities and any new infrastructure requires relocation of houses and businesses, a very sensitive issue which in turn demands careful planning and heavy investment.
Both Mumbai and São Paulo metropolitan regions have extensive suburban railway networks dating from the 19th century that are now serving primarily a huge number of mostly low-income commuters every day. Built initially for transportation of freight and intercity passengers, these railways are now major commuter networks which are used by millions of passengers every day. According to Rebelo, both mega-metropolitan regions have delayed too long the substantial extension of their subways and other rail based systems either because of lack of coordination between levels of government and/or unreliable financing mechanisms which did not allow the required continuity to ensure annual additions to their rail based systems. The price for having procrastinated in facing those challenges has been huge!
Increasing challenges with mobility are of course not unique to those two mega-metropolises. Nineteen of the twenty-six largest metropolitan areas in the world are in non-advanced economies and most of them have suffered from a mismatch between, on the one hand, the fast dynamics of densification and transformation of space use and, on the other, the slower pace of institutional adaptation and/or investment finance to cope with the evolution of transportation needs. Mobility difficulties have become more intense even where population dynamics and rural-urban migration are not major factors, like in Russia, as approached by JungEun Oh and Kenneth Gwilliam in a recent World Bank review of the urban transport sector in the Russian Federation:
"Russian cities are undergoing critical economic and social changes that affect the performance and condition of their urban transport systems. While the population of most large cities in Russia (over one million residents) has remained relatively unchanged over the last decade, the average income of the urban dwellers has sharply increased. The number of private cars per capita has increased rapidly, generating a demand for urban mobility which is increasingly difficult to meet."
Through the long series of projects and analyses with which the World Bank has been supporting urban transport improvements in developing countries over the years - openly accessible on worldbank.org - one can notice how challenges associated with the mismatch between evolution of urban transport needs and institutional and investment finance responses are widespread in the developing world. One can also see how far ago those challenges had already become significant. For instance, a World Bank appraisal report on a project in Rio de Janeiro more than 20 years ago stated the following:
"Urban Transportation is in a crisis in Brazil. Although the nation has invested heavily in the sector over the past 15 years, the effective demand for urban transport services particularly in major metropolitan regions (MRs), increased by about 82% in the last decade, and under present pricing policies, exceeds the existing peak hour supply in most MRs. To add to this capacity shortage, the Brazilian urban transport sector suffers from institutional problems due to a lack of coordination between the three levels of government responsible for urban transport in the MRs."
Not by chance, the issue of coordination between levels of government is highlighted in a set of policy proposals argued in Rebelo's book - one that certainly serves as a reference for most metropolitan areas in developing countries. First and foremost, it is fundamental to establish some sort of real, effective Metropolitan Authority as a coordinator of long-term planning, evaluation and prioritization of new investments and coordination of their tariff and subsidy policy. This has also been pinpointed in a recent World Bank report - Institutional Labyrinth:
"Typically, multiple agencies, at different levels of government, are involved in the management and delivery of urban transport infrastructure and services. More often than not, there is little or no coordination among them. This results in duplication and inefficiency in the use of resources and poor-quality services. The need for institutional coordination across space and function is increasingly being recognized as critical to developing an integrated and comprehensive urban transport system."
The rapid transformation of space use and densification of connections between urban areas tends to turn previous transport- and urban-related political and administrative mandates obsolete and dysfunctional. Natural political inertia or resistance then often becomes a hindrance to building some sort of new, effective authority able to cope with the evolving metropolitan reality.
Some other recommendations follow in Rebelo's book. For instance, there should be a search for financing mechanisms that are less dependent on floating government general budgets. A greater use of Public-Private Partnerships seems to be a trend in many parts of the world, and that might require operating subsidies. Therefore, financing mechanisms to guarantee the payment on time of those subsidies must be in place to avoid situations where concessions risk failing when operating subsidies are not paid on time. Revenues from advertising, use of station space, real estate developments around stations and urban operations can also be carefully planned.
Another key consideration is to strongly encourage the transparency of the bidding and evaluation process to foster international competitiveness and decrease costs. It also seems advisable to create an inventory of projects contained in the long-term strategy well beyond preliminary design stages. That would cut into the implementation schedule and make projects more attractive from a political standpoint. Finally, in most cases probably with the help of the judiciary, an effort must be made to find ways to simplify and accelerate expropriation/resettlement processes that may be deemed as necessary. All these recommended procedures require a definition of lines of authority appropriate to the evolving metropolitan reality.
The reality is some of the developing world's transport infrastructures are beyond simple congestion; they are in danger of complete collapse or paralysis. There is reason to believe, however, that authorities in many countries have got the message and started to act more decisively. For instance, Mumbai just had its first monorail inaugurated and there are other rail and metro projects underway under the leadership of the Mumbai Metropolitan Region Development Authority. Sao Paulo and Rio de Janeiro are also undertaking substantial programs to try to address their mobility issues, and it's high time they do it. Pay-offs from adjusting institutions and finance to the urban dynamics are clearly huge. It's time to unclog the arteries of urban transport now to prevent stroke and paralysis tomorrow.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.