Financing Future Cities The Future of Asian and Pacific Cities 2019 Report
Who Am I & Transparency Declaration ▰ Infrastructure Development Financing specialist ▰ As an Economist, I believe that pricing can and should be used to allocate scarce resources / capacity ▰ Considerable exposure to less developing country environments with: ▻ Limited human and financial capacity ▻ Limited range of (sophisticated) finance options available to them ▻ Bias towards ”secondary cities” ▰ Many years living in London and Singapore 2
What Am I Doing Here? ▰ Responsible for producing the Municipal Finance Chapter of ESCAP’s ”The Future of Asian & Pacific Cities 2019” Report ▰ “Common Solutions for Common Problems” ▰ Focus on three key urbanisation challenges: ▻ Housing ▻ Land (scarcity & availability) ▻ Pollution / Congestion (Externality Pricing) ▰ 4,000 words limit – further focus on financing solutions that are available to a broad range of municipal authorities that are also realtively simple to implement 3
Externality Finance – Road Pricing 4
Externality Financing: Positive Outcomes ▰ Relatively easy to introduce – essentially an IT project – and administer Potentially significant benefits: ▰ ▻ Reduced Congestion ▻ Improved Environment ▻ Economic benefits - principally Revenue Raising + Avoided Cost elimination ▻ Fewer accidents 5
Externality Financing: Congestion Benefit 6
Externality Financing: Environmental Benefits 7
Externality Financing: Economic Benefits 8
Externality Financing: Barriers & Solutions BARRIER SOLUTION Investment cost (London & Singapore $200+ mn) IT costs coming down making congestion schemes affordable for secondary cities Political Willpower / Resistance from public: Combination of: • • Already paid the the ‘right’ to use a road Public relations – “selling” the concept • • Privacy concerns Use of revenues to invest in transport Scheme design – need to have desired outcome Needs to be flexible (e.g. change exemption permits) Shopkeepers concerned about loss of business Evidence indicates limited impact especially when the scheme is accompanied by subsitutution measures 9
Conclusion Congestion Charging can: Enables cities to simultaneously tackle traffic ▰ congestion and high levels of pollution Potentially raise significant revenues which may be ▰ used to improve quality of life 10
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