To define who should participate in the financing of the transition to sustainable mobility, we must start from the paradox of public transport: public transport and active mobility infrastructures (subways, BRT, buses, cables, public bicycles, sidewalks) involve significant public investments for their construction, and then for their operation and maintenance during their life span. However, such transport systems are not profitable, the ticket price does not allow to recover the initial investment, and therefore, public transport is generally subsidized.
Why do governments subsidize public transport? Because its positive externalities justify it: it allows inhabitants to have access to jobs, urban amenities (health, education, entertainment), and to be socially connected. In this sense, public transport is designed to redistribute the costs and benefits of urbanization, making it possible for citizens in less privileged areas to access what they need.
The organization Ile de France Mobilités calculated that if a Parisian were to pay the real cost of his or her transport ticket, it would cost four times more expensive than what he or she currently pays. However, beyond the user himself, different actors benefit from this redistribution: companies, property owners, inhabitants, local government, and society in general, represented by the States, and multilateral organizations. Therefore, each of these actors has a role to play in financing sustainable mobility.
However, beyond subsidies, a report by the Inter-American Development Bank on public transport subsidies in Latin America mentions two studies that conclude that "the benefits of imposing charges on car use are significantly higher than the benefits that can be achieved through public transport subsidies"*. It means that developing policies such as urban tolls; road parking charges; implementation of exclusive lanes, are more efficient than a reduction of public transport fares through public subsidies. For example, in the city of Manchester, Egis implemented a low-emission zone, with vehicle access control to reduce car use, and consequently pollution in its center. The role of cities in promoting sustainable mobility is therefore not only one of subsidies, but also of public policy and urban planning.
In conclusion, financing sustainable mobility has become a necessity for Latin American cities to remedy congestion and reduce environmental pollution. Financing this transition requires the involvement of many actors, and many tools: integrated fare systems, business contributions, taxes, local and state subsidies, loans from multilateral agencies. But beyond financing, the ability of the different levels to plan and have a true vision of the sustainable city is crucial.
In a recent article for The Economist, Kristalina Georgiva, director of the IMF, said that the first difficulty in adapting infrastructure to the demands of sustainability is to support governments to include the right specifications in their public tenders. In the future, the real challenge in the transition to transport infrastructures will be to quantify and integrate the environmental and social benefits of sustainable mobility into the calculation of project profitability, alongside financial considerations.
* Parry and Timilsina (2010) and Basso and Silva (2014), cited in Inter-American Development Bank, June 2022. Public Transport Subsidies in Latin America from an Efficiency Perspective. Application to Bogotá, Colombia. IDB-WP-01352. Julian Gómez Gélvez and Carlos Mojica. Pages 14-16.
