Americas Quarterly

Consider Innovative
Financing Mechanisms

Planners need to establish clear priorities of funding. Which projects require immediate attention from the government? Which projects could exploit the use of public-private investment? Although the majority of private-sector transportation financing has been channeled toward the construction of highways, some Latin American countries have achieved important progress by incorporating the private sector into the financing of urban transport infrastructure. For example, in the last 15 years, private-sector investment in Chile has helped close the gap in funding urban-transport infrastructure. One example is the concession scheme of urban highways in Santiago.

The Kyoto Protocol’s Clean Development Mechanism (CDM) is an example of alternative models of funding for emissions reductions. This mechanism, based on setting achievable targets also allows developing countries to host projects that reduce GHG emissions. The emission reductions are then transformed into credits. Developed countries can buy those credits to comply with their emission reduction targets set by the Kyoto Protocol.

Developing countries benefit as they incorporate projects with cleaner technologies, producing an improvement in their environmental quality. Projects have to go through a process that analyzes the emission reductions, whether the existence of the mechanism was a key element for its development, among others steps in order to be validated and registered under this mechanism. Once a project has been implemented, the emission reductions must be certified to be able to sell as tradable emission credits. The stages through which projects must pass are administered by agencies established by the Protocol.

The CDM mechanism has already been used in sectors such as energy, manufacturing, mining, chemical and metal production, waste handling, and agriculture. Transport has been one of the sectors with the fewest registered projects (only two). In Colombia, the city of Bogotá designed a plan for a new transport system that became the first trans-

portation project to be registered as part of the CDM. Bogotá’s project shows how the current CDM scheme can serve as a tool for the provision of urban-transport infrastructure.

Despite Colombia’s successful experience, CDM has not been used broadly for transportation projects, or for transportation policies. Rather, CDM credits have been awarded for specific projects. 13 To overcome this barrier, further work is needed to better adapt the CDM mechanism to facilitate the inclusion of a broader array of actions under a general policy to support innovation in transportation. The mechanism should also be able to consider transport systems that reduce incentives for urban growth and harmful land-use change.

Don’t Forget the Importance
of Public Administration

A smart approach to planning urban transport infrastructure requires the development of efficient, transparent institutions that can execute plans and monitor their implementation. This means extensive capacity-build-ing efforts at different levels of government—and, in particular the adoption of a bureaucratic culture attuned to coordinating all aspects of a system among different ministries and agencies.

These five policy approaches can go a long way toward developing an urban transport infrastructure that makes the most efficient use of available resources and has the least impact on the environment. Urban planning is a matter of making choices. As our cities face new strains brought about by economic pressures, they must face up to their role in preserving our natural resources and maintaining a livable environment for future generations. Creating environmentally sound public-transit systems that promote sustainable growth is not only the right choice: it is an obligation—to the world and to the city’s inhabitants.