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Raúl Prebisch Conference Room
Session 4: Financing urban mobility: a broader approach for allocating resources in Latin America
By 2050 more than two thirds of the world's population will live in urban areas, which will put pressure on the existing infrastructure and city finances. This is already a reality for many Latin American cities. However, when discussing financing for urban mobility, the discussion focuses on the region´s lagging investment in infrastructure, including transport infrastructure, and the governments’ difficulty to meet investment needs and surpass the 3% of GDP in infrastructure investment threshold that impedes productivity and economic growth.
In times of fiscal restrictions, slower economic growth and high levels of social and territorial inequities, there are many challenges affecting investment in urban mobility such as high capital and operation cost, long gestation periods, project feasibility, user fees and fare variability, cost recovery, the risk of a decreasing demand for public transport, macroeconomic policies and local politics.
In the discussions on how to access financing and in the availability of innovative financial instruments, maturity of capital markets and infrastructure projects at competitive costs, the concept of financing urban mobility as a whole (traffic and parking, urban logistics, modal integration) and not just transport infrastructure projects is often lost. Although a subtle difference, when referring to the broader concept of financing urban mobility, that which aims to encourage the use of more sustainable transport modes and optimizing the role of public transport through the improvement of urban infrastructure, while supporting modal integration, many more alternatives and combinations of sources and financing instruments arise (value capture, TOD, congestion charging, etc.). Furthermore, when looking at financing urban mobility policies in a holistic approach, it becomes clear that the optimal method of raising finance is the method that delivers overall the best value for money, including the infrastructure performance and the service it delivers. It is not necessarily the method that provides financing at the least cost. This view opens up the discussion of measuring and modelling projects in terms of value and not just costs, especially when considering the whole equation: financing and funding/repayment sources.
Structure of the session and objectives
The overall session objective was to:
Discuss how a holistic approach to thinking about urban mobility can conduce to obtaining financing and for increasing the effectiveness of investment in Latin America and the Caribbean cities.
The expected outcomes were:
- Better understanding of the available combinations of sources and financing instruments that arise from considering urban mobility projects as a whole, and understanding the effectiveness of current investment in urban mobility to improve future infrastructure investment models.
- Better understanding of how to improve the social productivity of investment resources and how to obtain financing that seek projects with social returns.
- Put forth funding optimization tools such as demand management and asset management to make urban mobility investments more attractive and to mitigate risks related to servicing and repaying capital or urban mobility infrastructure.
- Presenting how smart technologies increasingly shape the way urban mobility infrastructure is designed, built, operated and owned and how appropriate regulatory framework that considers new technologies can incentivize the emergence of alternative financing models.
- Understanding how to establish reliable and effective institutional frameworks, as well as introducing a level of innovation in governance for infrastructure related to urban mobility. This requires an inter-sectoral articulation, as different parties are responsible for financing urban mobility infrastructure and services and for paying for it.
- Identifying challenges and opportunities related to subnational financing and fiscal independence of cities; analyzing ways to enable local government to employ municipal financing tools.
Moderation and Introduction: Angie Palacios, Infrastructure Technical Analysis and Evaluation Unit, CAF – Latin American Development Bank
- Priscille De Coninck, Urban Transport and Development Regional Specialist, AFD
- Mark Major, Partnership on Sustainable, Low Carbon Transport – SloCaT
- Juan Carlos Muñoz, Director BRT Center. Pontificia Universidad Católica de Chile
- Gabriel Pérez, Officer at the Infrastructure Services Unit, CEPAL
- Anna Wollmann, Director of Public Investment and Financing, Curitiba´s Municipal Secretariat for Planning, Finance and Budget