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The Transport and ICT Global Practice

TRANSPORT IN LATIN AMERICA AND THE CARIBBEAN: Strategies and Actions in Support of an Inclusive and Sustainable Development

Aurelio Menéndez Practice Manager, Transport and ICT

Latin America and the Caribbean World Bank

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GENERAL CONTEXT

• Diversity of countries

• Income, size and fragility

• Common challenges

• Inequality and poverty • Recent slowdown in economic growth • In general, institutional frameworks need to

be strengthened

• Historical gap in infrastructure assets

• Need to invest in infrastructure and human capital to improve competitiveness

• Global issues (eg. climate change terms of trade)

Upper middle income

Lower middle income

IDA/Blend

Mexico

Guatemala El Salvador

Honduras Jamaica

Nicaragua

Costa Rica Panama

Haiti Dominican Republic

Trinidad & Tobago

Suriname Guyana Venezuela

Colombia

Ecuador

Peru

Bolivia

Paraguay

Uruguay Chile

Argentina

Brazil

Belize

Bahamas

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Social and Environmental Impacts

Urbanization

Motorization

Continuous increase in demand for transport

Economic slowdown; dependence on

commodity prices

Climate change; natural disasters

Economic inequality

Economic growth driven by exports and consumption

Average GDP growth in the region has been strong during the commodity boom though it has since slowed down. Focus on exports leads to substantial increase in transport flows.

Very high and rising levels of urbanization

By 2030, Latin America will have a level of urbanization of over 80%. Urban Areas: pillars of economic growth

Increasing motorization levels

Growing number of motor vehicles above GDP growth.

TRANSPORT SECTOR AGENDA INCREASINGLY COMPLEX

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HIGH LEVELS OF URBANIZATION

Percentage of population living in urban areas (1950-2030) Sources: United Nations (2002), World Bank (2002)

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MOTORIZATION … CONTEXT AND GROWTH

Comparatively low use of private transport High percentage of non-motorized and public

transport travel But as income per capita and urbanization rates

increase, increase: number of cars and motorcycles per person number of trips

Evolution of motorization rates in Colombia

Motorization rates per 1000 population in 2010 Vehicules Motorcycles

Brasil 259 57 Colombia 108 42 Chile 175 4 Ecuador 75 6 Perú 79 27 Venezuela 162 17 R. Dominicana 217 125 México 235 7 Estados Unidos 822 25 Canadá 629 18

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• Transport is the fastest growing source of CO2 emissions

• Accounts for ~15% of all emissions in urban areas

IMPACTS ON CLIMATE CHANGE & AIR QUALITY

Despite the low motorization rate on in Latin America and be the means for less than 30% of trips, cars and motorbikes contribute over 70% of

local pollutants and CO2

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0 5,000 10,000 15,000 20,000 25,000

GH

G e

mis

sion

per

cap

ita

GDP per capita

U.S (1850 - 2002) U.K (19850 - 2002) France (1851 - 2002)

Japan (1870 - 2001) China (1950 - 2002) Brazil (1904 - 2002)

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Source: Low Carbon High Growth, World Bank (2010).

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INVESTMENTS IN INFRASTRUCTURE IN THE REGION ARE INSUFFICIENT …

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0,50

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2 000

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4 000

5 000

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Tran

spor

te (%

PBI)

PBI T

rillo

nes

USD

cor

rient

es

Investment in Transport: volatile and insufficient

PBI Trillones USD corrientes Transporte (%PBI)* Argentina, Brazil, Chile, Colombia, México y Perú

Infrastructure and growth Quality of infrastructure and growth

Tasa

de

crec

imie

nto

del P

BI r

eal p

er c

apit

a (%

)

Tasa

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crec

imie

nto

del P

BI r

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apit

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Infrastructure Quality Index Infrastructure Quality Index

Infrastructure is important for growth

Calderon-Serven 2012

The countries of the region do not prioritize investment in the economic growth cycle (2007-2014)

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Sub-SaharanAfrica

Latin Americaand the

Caribbean

Emerging andDeveloping Asia

Emerging andDeveloping

Europe

Middle East,North Africa,and Pakistan

Advancedeconomies

Quality Index transport infrastructure World Economic Forum 2014-2015

Caminos Infraestructura Portuaria Infraestructura Transporte Aereo

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… BUT REDUCING THE INFRASTRUCTURE DEFICIT IS NOT JUST A MATTER OF RESOURCES

Rigorous sectoral planning and project evaluation are needed to ensure the selection of adequate economic return projects with attention to:

the needs of poorest areas risk management related to climate change and natural disasters

Mitigation and adaptation maintenance of existing stocks

Strengthen policy/financing framework

user charges/taxes/subsidies in the sector should be analyzed and allocated strategically (expanding options, correcting inefficiencies by creating incentives, improving transparency)

policies/regulations to encourage private sector participation

Need to generate a portfolio of projects with appropriate designs and processes ready for bidding / execution

Improve budget execution ...

avoiding excessive delays in the bidding process ... ... and in the proper execution of the works

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PRIORITY STRATEGIC THEMES AND LINES OF ACTION

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STRATEGIC PRIORITY AREAS

Rural accessibility

Management / maintenance of road assets

Urban mobility (and accessibility of low-income urban populations)

Externalities / social impacts

Logistics and Regional Integration

Private sector participation

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The rural population accounts for about 20% of the population but contains over 50% of the extreme poor in Latin America and the Caribbean. The percentages of deficiencies vary substantially from 2% without permanent service (CL) to the lack of basic access (HT, GT, HN, PE)

Three challenges: • Reaching unserved locations: low cost technologies consistent capacity management and financing;

• Improving sustainability: emphasis on ongoing maintenance through contractual arrangements based on local labor (micro);

• Maximize impact: promote productive use services for the poorest through coordinated access to other complementary services (on territorial development mechanisms although they involve greater territorial complexity)

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water+electricity water+electricity+telephone

water+electricity+telephone+all-weather road

in

com

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water+electricity water+electricity+telephone

water+electricity+telephone+all-weather road

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com

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water+electricity water+electricity+telephone

water+electricity+telephone+all-weather road

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com

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Percent change in income of rural families with the provision of rural infrastructure (Peru)

With interaction

Without interaction

RURAL AREAS: ENHANCED ACCESSIBILITY S CRUCIAL FOR POVERTY REDUCTION

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TERRITORIAL APPROACHES TO INCREASE IMPACT OF ENHANCED ACCESS

Requirements?

• Participatory planning long-term strategic identification based on comparative advantages to enhance productive opportunities in rural areas

• Establish mechanisms to facilitate coordination across sectors and institutions at different levels

• Links between geographic areas based on productive connections that often extend beyond limits of administrative jurisdictions

• Prioritization and funding schemes taking into account payment capacity/funding stakeholders

• Sustainable maintenance systems, with community involvement (micro enterprises)

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Note: Quantities in US$ represent amount of World Bank lending

RURAL TRANSPORT AND TERRITORIAL DEVELOPMENT: EXAMPLES WORLD BANK SUPPORT

Ongoing projects: • Nicaragua: Rural Roads Improvement Project (US $ 35 m.) + Additional Financing (US $ 57

m.) • Improved market access infrastructure and social services • Community modules for road maintenance

• Haiti: Central and Artibonite Territorial Development Project (US $ 50 m.) • Territorial perspective

• Peru: Rural Transport Project (US 50 m., co-financing from the IDB.) • Two goals: feeding logistics corridors; access to areas of greatest poverty • Improved capabilities at the provincial level

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time

Maintenance Phase

Rehabilitation Phase

12-18 months 0 60 months

Service Level

Minimum Level of Service Requirement during maintenance phase

Minimum Level of Service Requirement after rehabilitation

Initial Service Level

Specific Performance Indicators for key Project characteristics

Increasingly widespread use of multi-year performance contracts for maintenance and rehabilitation ... .... better governance (but requires ability to monitor/enforce compliance contracts)

ROAD ASSET MANAGEMENT INCREASING USE OF PERFORMANCE CONTRACTS

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IMPROVING ROAD MANAGEMENT: EXAMPLES WORLD BANK SUPPORT

Ongoing projects: • Bolivia: Road Sector Capacity Development Project (US $ 220 m)

• Performance-Based Conservation Program (Santa Cruz-Trinidad) • Bolivia: National Road and Airport Infrastructure Project (US $ 109 m.)

• Improvement and road paving San Buenaventura-Ixiamas; and strengthening systems for environmental and social management; Rurrenabaque airport improvement

• Brazil: Highway Improvement Project in the State of Bahia (US $ 200m - co-financed with the European Investment Bank) • Brazil: Tocantins Integrated and Sustainable Regional Development (US $ 300 m.)

• Improvement works and paving state highways in coordination with productive activities and improvements to education systems and environmental management

• Brazil: Mato Grosso do Sul (US $ 300 m.) • Brazil: Sustainable Transport Project in Sao Paulo (US $ 300m + MIGA guarantee US $ 300 m..)

• Logistics perspective; strengthening risk prevention systems (adaptation) • Paraguay: Road Rehabilitation Project (US $ 150 m.) • Argentina: Highway Program in Norte Grande (US $ 400 m.)

• Road improvement program in logistics corridors and access areas smaller in the northern region in integration with social and environmental management

Projects under preparation: • Paraguay: Rehabilitation and Maintenance Project (US $ 100 m.) • Bolivia: Santa Cruz Road Corridor Connector Project (US $ 230 m.)

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NATURAL DISASTERS: ATTENTION TO IMPACTS, MITIGATION AND ADAPTATION

• Several countries in the region prone to natural disasters

• Expanded physical impacts of poverty and governance challenges

• Strategy: blend of quick response and long-term actions to improve sustainability

• Rehabilitation and maintenance: Cash for Works, SMEs • Infrastructure adaptation: design criteria, lower cost options • Institutional support: infrastructure management, disaster

preparedness

• Key: link between maintenance and resilience • Assignments appropriate maintenance needs • Adjust maintenance work to incorporate adaptation factors

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NATURAL DISASTERS: WORLD BANK SUPPORT EXAMPLES

Ongoing projects / recently completed: • Haiti: Infrastructure and Institutions Emergency Project (US $ 65 m.)

• Restore the functioning of the sector entities, improvement of sewage and waste management, road reconstruction

• Haiti: Emergency Reconstruction Project Bridges and Vulnerability Reduction Network (US $ 20 m.) • Honduras: Second Rehabilitation and Improvement of Roads (US $ 73 m, incl AF..)

• Components of investment to restore corridors affected by Tropical Depression 16, 2008 • Haiti: Risk Management and Reconstruction (US $ 60 m.)

• Strengthening risk management systems and reconstruction of water infrastructure, sanitation and transport against floods

• Incorporation of mitigation and adaptation • Brazil: Sustainable Transport Project Sao Paulo (adaptation) • Brazil: Urban Transport Project Rio, supporting the definition of mechanisms for emergency care

resulting from climate change • Peru: new phase of rural roads program

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URBAN AREAS: ACCESS FOR LOW-INCOME POPULATIONS, AIR QUALITY, AND QUALITY OF LIFE?

Accessibility. Urban transport is costly for poor households. For 40% of households with incomes: • lack of access to public transport exacerbates social exclusion • subsidies often are not progressive. Competitiveness. With high levels of urbanization, cities represent the economic pillar of the country: its operation affects competitiveness • Approx. 50% of GDP is generated in the 15 largest metropolitan areas • Innovation centers, cultural exchange, and quality of life Air Quality • Transport is the fastest growing source of CO2

• About 15 percent of all emissions in many cities in Latin America • Adverse health effects ("Transport for Health")

• Despite the low motorization rate on in Latin America, cars and motorbikes contribute to large portion of local pollutants and CO2

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CHALLENGE: "GREEN" AND ACCESSIBLE TRANSPORT FOR SUSTAINABLE AND INCLUSIVE URBAN MOBILITY

Three key pillars of strategies & action areas: • Institutional framework and planning • Technical and operational dimensions • Financing and private sector participation

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Sedicated stations Smart Cards Access for disabled

• Supporting the implementation of BRT systems in response to the needs of urban mobility (Colombia, Mexico, Santiago, Lima)

WORLD BANK-SUPPORTED PROJECTS

• Colombia: Project to Support Urban Transport Program (Loan US $ 200m) • Continued mass transit project (BRT), including secondary cities

• Mexico: Transformation Program of Urban Transport (CTF, US $ 200m, IBRD, US $ 150m) • Strengthening the planning and construction of infrastructure for the operation of systems with

low-emission technologies • Argentina: Urban Transport Project in Metropolitan Areas (two phases) (phase, US$100m)

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Rail systems (trains and metros) with system integration

WORLD BANK-SUPPORTED PROJECTS

• Brazil: Projects Lines 4 and 5 of the Sao Paulo metro and suburban train (CPTM) (US $ 130m, US $ 650m, and additional funding US $ 113 m, respectively...) • Procurement of rolling stock and signaling and communications system

• Brazil: Rio de Janeiro and Improved "Greening" Suburban Train System (SuperVia) (additional 600 m loan for US $.) • Acquisitions of trains and the integrated transport system and urban development to

reduce carbon emissions • Ecuador: Quito Metro (US $ 205 m, financed with IDB, CAF and EIB.) • Peru: Metro Line 2 of Quito (US $ 300 m, financed with IDB, CAF, AFD, other.)

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The Decade of Action 2011-2020: The Decade of Action 2011-2020: Sets the ambitious goal to save 5 million lives and prevent 50 million serious injuries in low- and middle-income countries.

NEGATIVE EXTERNALITIES: SOCIAL / HEALTH IMPACTS (ROAD SAFETY)

Road safety • Latin America and the Caribbean has countries with the death rates from road

accidents highest in the world • Approximately 130,000 deaths and 6 million injured each year • No further action would increase by 36% by 2020

• They exceed 25 deaths per 100,000 population (five times more than good performing countries)

• Accidents represent a cost of ~ US $ 20 billion • A matter of social equity

• Vulnerability to accidents is more concentrated in certain groups (pedestrians, young, lower income)

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Pedestrian 40%

Bicyclist 5%

Two-wheeler

rider 18% Van

occupant 2%

Truck occupant

2%

Bus occupant

2%

Other road injury 2%

Car occupant

29%

Road injury deaths by road user type

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Note: Amounts in US $ represent loan amounts (in millions)

ROAD SAFETY: EXAMPLES WORLD BANK SUPPORT

Road safety • Argentina: Road Safety Project (USM + possible AF additional US $ 30 m.)

• strengthening institutional processes and equipment acquisitions Road Projects: incorporate audits and road safety components

• Colombia: Strengthening the institutional and operational framework for • Regional / Ecuador road safety attention to the most vulnerable users (SFLAC) • Regional: Development a regional road safety observatory

• Global Road Safety Facility; IRTA / OECD; DGT of Spain, Argentina ANSV; and Sites

Projects / recently approved or under development initiatives: • Brazil, Ecuador: Institutional Framework Assessment • Brazil: support for the preparation of medium term evaluation of the Decade of Action for

Road Safety (contributing efforts of the Government of Brazil and WHO) • Paraguay: Strengthening the institutional framework for road safety

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SOCIAL IMPACT: GENDER KEY CROSSCUTTING AGENDA IN THE ACCESS TO OPPORTUNITIES

The issues that motivate the consideration of gender: Improving equal access to employment opportunities and services Take into account differences in transport needs, to improve access

and journey times Fewer women have a car; They are responsible for family

activities requiring different travel patterns Addressing impacts of violence and crime Also in rural areas and indigenous groups because of limited

mobility and isolation Gender analysis helps improve design and implementation success Analysis as part of the social analysis of the project Incorporate indicators (depending on type of project) In projects financed by the World Bank is required to

confirm/identify possible actions to address gender issues

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SUPPLY CHAIN & LOGISTICS: IMPROVING THE COMPETITIVENESS OF THE ECONOMIES

Countries making more efficient transport chains / logistics ensure more stable benefits against possible fluctuations in the market: Reducing logistics costs between 20 and 50% are possible

by improving the efficiency of supply chain Reduction of logistics costs can be transferred into

reductions in prices of food products of 5 to 25% When transportation services are inefficient, firms must

maintain higher inventories, resulting in financial costs (30% in LAC, 15% in the US

Key issue on the competitiveness agenda and increased trade (particularly vis-à-vis Asian countries)

Need of an overall vision: infrastructure and transport services, chain management and operators, trade facilitation (regulations, "software" processes)

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MODAL SPLIT IN LOGISTICS CARGO

• Dominance of road transport (over 70%) • The imbalance in the supply matrix freight generates inefficiencies in the transport

chain ... • ... And a better balance can have positive effects on environmental factors and energy

consumption Colombia

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SUPPLY CHAIN & LOGISTICS: WORLD BANK SUPPORT EXAMPLES

Projects / activities concluded recently: Central America: Identifying Bottlenecks Logistics Infrastructure Integration and Border

Crossings Panama: Study of Strategies for the Maritime Sector (SFLAC) Paraguay: Options for Using Waterway Paraguay-Parana River Argentina, Brazil: Studies Strategies for Improving Policies for Transport Logistics Brazil: Transport "Green" by load (improve cargo vehicle operations to reduce costs and

emissions) Guatemala: Opportunities for Improved Transport Logistics Brazil: Multimodal Corridor for San Francisco River Valley (RAS) Caribbean: Improving Connectivity

Ongoing activities: Southern Cone: "From Farm to Market: Analysis of Soya Transport Chains" Peru: "Analysis of Value Chain Selection" Brazil: Opportunities for cabotage transport (SFLAC)

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PRIVATE SECTOR PARTICIPATION: RENEWED INTEREST IN PUBLIC-PRIVATE PARTNERSHIPS

Search for private funding to increase the quantity and quality of infrastructure and transport services

Transfer risks to generate efficiencies and innovation Options that vary in the level of risk transfer

Low…………………………...Private Sector Participation.………………………… High

Public-Private Participation

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PRIVATE INVESTMENT IN INFRASTRUCTURE PROJECTS

Investors focus on quality projects: reduced participation of countries with lower income levels

Private Investment in Transportation Projects by Region

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IBRD/IDA

• Partial Risk Guarantee Covers lenders against the risk of default by governments (or agencies) of its contractual obligations in a private sector project

• Partial Credit Guarantee (IBRD only) Covers credit risk in public sector projects of governments / public borrowers

IFC

• Private Sector Guarantees: • Trade finance

• Liquidity

• Credit

MIGA

• Risk Insurance (policy, not sovereign) covers the international debt providers and equity by:

• Restrictions on transfer of resources

• Expropriation

• War and civil disturbance

• Breach of contract

• Non-compliance of sovereign financial obligations

WORLD BANK PRODUCTS TO ADDRESS RISKS IN PPPS

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PPPS: RECENT ACTIVITIES IN THE REGION

Brazil Strengthening the regulatory framework and capacity at the federal level and in the states of Minais

Gerais, Bahia and Sao Paulo "Reimbursable Advisory Service" support framework for evaluating proposals for the extension of Metro

de Sao Paulo Uruguay:

Training program for the public sector on issues of PPP (SFLAC). Study of technical assistance and advice on issues of financing a program of road PPPs

Colombia: Technical assistance and support in reforming the agency transport concessions Study financing of a PPP road program Study of options for structuring the financing of Bogota Metro

Chile: technical assistance program evaluation system for concessions (development of conceptual framework of the Value for Money and strengthening the institutional framework for the management of concessions)

Peru: program of technical assistance grant program (implementation of the methodology of value for money and guidance on issues of financial structuring of concessions)

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Portfolio Summary of projects and activities in the transport sector of

LAC

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TRANSPORT AND ICT LENDING PORTFOLIO

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US$

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SAR MNA LCR ECA EAP AFR

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TRANSPORT AND ICT YEARLY LENDING

/Metros

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TRANSPORT AND ICT GLOBAL PRACTICE PROJECT PORTFOLIO

/Metros

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ACCESS TO PROJECT INFORMATION: HTTP://WWW.WORLDBANK.ORG/PROJECTS

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ACCESS TO INFORMATION ON PROCUREMENT OPPORTUNITIES AND CONSULTANCIES

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ACCESS TO INFORMATION ON PROCUREMENT OPPORTUNITIES AND CONSULTANCIES

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Thank you!