33900 THE WORLD BANK GROUP WASHINGTON, D.C. TRANSPORT PAPERS TP-3 JANUARY 2005 Affordability of Public Transport in Developing Countries Robin Carruthers, Malise Dick and Anuja Saurkar TRANSPORT SECTOR BOARD © 2005 The International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www/worldbank.org The findings, interpretations, and conclusions expressed here are those of the author and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. This paper has been produced with the financial assistance of a grant from TRISP, a partnership between the UK Department for International Development and the World Bank, for learning and sharing of knowledge in the fields of transport and rural infrastructure services. To order additional copies of this publication, please send an e-mail to the Transport Help Desk transport@worldbank.org Transport publications are available on-line at http://www.worldbank.org/transport/ AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES iii TABLE OF CONTENTS Preface ................................................................................................................iv 1 The Fundamental Paradox of Urban Transport Strategy............................................ 1 2 The Context of Affordability ................................................................................ 1 3 Existing Information on Affordability..................................................................... 3 3.1 Latin America in the Late 1980s ................................................................... 3 3.2 Buenos Aires ............................................................................................. 3 3.3 Sao Paulo ................................................................................................. 4 3.4 Belo Horizonte........................................................................................... 4 3.5 Mumbai.................................................................................................... 5 3.6 Delhi ....................................................................................................... 5 3.7 Islamabad ................................................................................................ 6 3.8 Eastern Europe .......................................................................................... 6 3.9 United Kingdom......................................................................................... 7 3.10 France ..................................................................................................... 8 3.11 Kyrgyz Republic ......................................................................................... 8 3.12 Beijing and Nanjing, China .......................................................................... 8 3.13 Wuhan, China ........................................................................................... 8 3.14 African Cities............................................................................................. 9 3.15 Australia .................................................................................................. 9 3.16 United States.......................................................................................... 10 4 Construction of the Affordability Index ................................................................ 10 4.1 Sample of Cities ...................................................................................... 10 4.2 Level of Income ....................................................................................... 10 4.3 Quantity of Travel.................................................................................... 10 4.4 Level of Fares.......................................................................................... 11 5 Data used in construction of the Affordability Index............................................... 11 5.1 Sample of Cities ...................................................................................... 11 5.2 Quantity of travel..................................................................................... 12 5.3 Fares ..................................................................................................... 12 6 Evidence From the Affordability Index................................................................. 13 6.1 Income Distributions ................................................................................ 13 6.2 Fares ..................................................................................................... 13 6.3 Affordability Index for People on an Average Income ...................................... 13 7 Affordability Index for People in the Bottom Quintile of the Income Distribution ......... 13 8 Further Work on the Affordability Index .............................................................. 15 8.1 City Income Distribution............................................................................ 15 8.2 Passes and Concessions ............................................................................ 15 8.3 Changes in Fare Structures and Levels ........................................................ 15 8.4 Additional and Corrected Index Values......................................................... 15 Annex A Labor Mobility, Beneficiaries of Public Transport Services in Eastern Europe and Central Asia (ECA) ................................................................................................19 Annex B Urban Poverty and Transport: The Case of Mumbai. ........................................20 Annex C A Five Step Method to Calculate the Affordability Index for a City......................22 Endnotes.............................................................................................................23 AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES iv PREFACE The analysis reported here was prompted by a realization that there was little reliable and consistent information on what proportion of household income is spent on urban public transport. The information available uses inconsistent definitions of what costs are included and how income is measured, making comparisons between cities difficult. To address the need for easily available and comprehensive comparative information on affordability of public transport fares, we have developed an Affordability Index that is easy to measure and can be used as a first indication of the affordability of fares in a particular city. The Index is computed for a person on an average income and for someone in the bottom quintile of the income distribution. In developing this Index there has been no intention to indicate a proportion of income that is considered “affordable” as there are many additional factors than income that should be taken into account if such a proportion is to be suggested Technical Papers are published to communicate the results of The World Bank's work to the development community with the least possible delay. The typescript manuscript of this paper therefore has not been prepared in accordance with the procedures appropriate to formally edited texts. Some sources cited in the paper may be informal documents that are not readily available. AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 1 AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 1 THE F UNDAMENTAL PARADOX OF URBAN land, either in slums or on the periphery of the TRANSPORT STRATEGY city. As average incomes grow and car ownership increases, the patronage, financial In 2002, the World Bank published Cities on viability, and eventually quality and quantity of the Move, an urban transport strategy review public transport diminishes. Motorization, that took a broader perspective than an earlier which is permitted by the growth process, may strategyi which had focused on economic and thus also make some poor people even poorer. financial viability and less on the livability of In particular, in the absence of efficient the cities, which in turn depends on their being congestion pricing for road use, piecemeal competitive, financially sustainable, well investment to eliminate bottlenecks will almost governed and well managed. Cities on the certainly benefit the rela tively wealthy at the Move has a strong focus on poverty. It expense of the poor. concentrates on the problems of people who are very poor, not only in terms of their The strategy went on to identify four main income but also in terms of the broader ways to address these problems: dimensions of social exclusion associated with inaccessibility to jobs, schools, health facilities • structural change; and social activities. Cities on the Move • improved operational efficiency of the identified three aspects of urban development transport modes; that create a fundamental paradox of urban • better focusing of interventions to assist transport strategy. the poor, and • institutional reform. (i) Urban transport can contribute to poverty reduction both indirectly through The development of an Affordability Index is its impact on the city economy and hence intended to shed more light on the impact of on economic growth, and directly through this paradoxical situation, particularly on the its impact on the daily needs of poor possible perverse distributional effects on the people. But it exhibits a fundamental paradox. very poor. How can a sector with such a n obvious excess of demand over supply, and with such a heavy 2 THE C ONTEXT OF AFFORDABILITY involvement of private suppliers of service, fail so badly to meet the aspirations of politicians Most studies of the adequacy of urban and citizens alike? Why has it not been transport make reference to a set of possible to mobilize commercial initiative to parameters that, for convenience, all start (at yield the kind of revolution in service quality least in English) with the letter “A”. Any and cost which has been achieved in comprehensive approach to improving public telecommunications, water and energy transport from a user’s perspective should sectors? And why does increasing affluence address a ll four of these parameters. seem to have the effect of reducing the quality of travel, at least for poor people? “Affordability” refers to the extent to which the financial cost of journeys put an individual (ii) Urban growth increases transport or household in the position of having to make costs. From the viewpoint of efficiency and sacrifices to travel or the extent to which they growth it is not too difficult to characterize the can afford to travel when they want to. While a central problem. Economies of agglomeration family on a low income (say in the bottom generate the growth of cities. As cities grow quartile of the income distribution) might be and become richer, vehicle ownership and use able to afford the necessary journeys to work grow more rapidly than the available road for the income owners of the family, they space, resulting in increased congestion and might not be able to afford trips to school for traffic-generated air pollution. their teenage children, or for their children to visit a grandparent in hospital. For such a (iii) Urban growth often has perverse family, urban transport would, by most distributional effects. As cities expand, the standards, be considered unaffordable. So price of more accessible land increases. Poor affordability can be considered as the ability to people are forced to live on less expensive make necessary journeys to work, school, AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 2 health and other social services, and make qualities, potential travelers may be deterred visits to other family members or urgent other by the state of the vehicles, lack of personal journeys without having to curtail other security on buses or trains, particularly at essential activities. night, drivers’ attitudes and driving style, lack of waiting facilities and other attributes of “Availability” of transport is used to refer to public transport travel. route possibilities, timings and frequency. Whatever the purposes of an individual's jour- This report focuses on the first of these ney, be it education, work, leisure, personal characteristics since it is the one that has led services, or another, her/his activities are con- to most controversy in the context of strained by the route and the time taken restructuring of previously publicly operated traveling. Even if an individual has a bus stop urban transport. within a reasonable distance, say 400 meters of their home (the most common measure of The concept of Affordability used here is based public transport accessibility), the amount of on that given above, the ability to undertake use it will be to any individual entirely depends transport movements without significantly on where he/she wants to go, how often, and constraining the ability to undertake other how long the whole journey is going to take. activities of importance. This could be Furthermore, a bus stop 400 meters away translated into a series of utility functions, in from home, particularly one with no seats or which the marginal level of utility would be shelter, or one which can only be reached by equalized across all forms of expenditure. This crossing a major traffic artery, may be of little is analogous to Pareto optimality in use to a person with, for example, a weak expenditure across consumption categories. heart or knees, heavy shopping, or young However, in the non-ideal conditions of urban children. Timings and frequency are included life, prices for many consumption goods are since if there is no service when a person not determined by market principles, so that wants to travel, there is no available transport. consumption patterns cannot be maximized. Particularly for the very poor, if all prices were "Accessibility" describes the ease with which market determined, there is a risk that their all categories of passenger can use public life would be unsustainable. An indication as to transport. For example, buses with high steps whether public transport prices could are notoriously difficult to board, particularly if contribute to such a situation is consideration they are one-person operated and there is no of an Affordability Index. assistance. They are also difficult to use for those carrying luggage or shopping or with There is a widely held belief that potential low young children. Accessibility is also sometimes income passengers are forced to curtail the used to describe the ease of accessing the bus number of trips that they make, use modes of stop or station, although sometimes these transport that do not incur a direct cost, such parts of the journey are referred to as part of as walking or cycling, or to live in locations the "public transport environment". If a walk is that minimize their transport costs. This is intimidating or dangerous, a bus stop at 200 particularly true now, when many urban meters distance may be perceived as transport services are provided by private inaccessible to a fit 14-year old boy because of operators who are under pressure to be the risk of mugging. Accessibility also includes financially self-supporting, in contrast to the ease of finding out about travel possibilities, situation common one or two decades ago, i.e., the information function. when urban passenger transport services were considered as public services and often “Acceptability” is another important quality provided with significant explicit or implicit of public transport, whether because of the subsidies. The survey reported in Section 3 transport or because of the standards of the undertaken in Mumbai found some evidence of traveler. Even if a bus has all the first three all these impacts. The form of the Index is relatively simple, and the data for its compilation is relatively easily available: Affordability Index = Number of trips x Average cost per trip expressed as a percent Per capita income AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 3 3 EXISTING INFORMATION ON AFFORDABILITY Table 1. Fare as a Percent of Income, Latin American Cities, 1988 We report here on about a dozen studies that have addressed the issue of affordability. Fare expressed as Some of these have been undertaken or percent of the City minimum wage commissioned by the World Bank, most of the others have been written contributions to La Paz, Bolivia 33% conferences on urban poverty issues. Each of the studies has taken its own perspective on Santiago, Chile 28% what income measure to use (income or Brasilia, Brazil 26% expenditure based, individual or household income , gross or disposable income, etc.) and Sao Paulo, Brazil 10% on what fare measure to use (actual Lima, Peru 9% expenditure in most cases, but theoretical or average expenditure in others), and most have Buenos Aires, Argentina 8% use a measure of poverty that is specific to the Bogota, Colombia 6% local circumstances (although about half have used a quintile or decile of the income Quito, Ecuador 5% distribution). These differences make it difficult Havana, Cuba 3% to compare the results between cities, but from the following summary of studies in Mexico City 2% South America, South Asia, Eastern and Source: The Impacts of Subsidies, Regulation and Western Europe, Africa, East Asia and different forms of ownership on the service quality and Australasia, it is clear that the affordability of operational efficiency of urban bus systems in Latin urban transport is considered an issue of America. ECLAC, 1992. importance throughout the developing world. There is also evidence that the high cost of 3.2 Buenos Aires urban transport is having a negative impact on the lives of the urban poor – either through The economy of Argentina suffered a dramatic restricting their access to jobs that are within collapse at the beginning of this decade, and feasible walking or cycling distance, by with most public utilities having been consuming an unsustainable proportion of their privatized during the previous decade, there income, or by dramatically curtailing the was a concern that the impact of market-based number of journeys that they make. The utility tariffs, including those for public problem is possibly most grave in Africa, the transport, would have an inequitable impact on continent for which we have least the poor. Even the number of poor increased documentation. The first study shown is dramatically, with the poverty rate increasing provided as evidence of a worsening from an already high of 37 percent in 2001 to affordability of urban transport for the poor a peak of 58 percent at the end of 2002. One over the last ten to fifteen years. measure of the impact of the crisis was a 15 percent reduction in the number of bus 3.1 Latin America in the Late 1980s passengers, 23 percent in suburban rail passengers, and 10 percent reduction in metro One of the earliest comparative studies of the (underground railway) passengers. There was affordability (and supply) of urban public also an increase in fare evasion on the buses, transport was undertaken by the Economic with more passengers paying the minimum Commission for Latin America and the fare rather than the one that corresponded to Caribbean in 1988ii and reported in 1992. This their journey length. showed what expenditure would be needed to make fifty trips per month, expressed as a The World Bank, together with the Center for percentage of the minimum wage, for ten cities Economic Studies at the Argentina Business in Latin America. The results (Table 1) showed University,iii undertook household surveys to a wide range of affordability, from a maximum determine the impact of higher tariffs and of 33 percent in La Paz, Bolivia to a minimum lower incomes on people in different income of 2 percent in Mexico City. These were both groups. The survey showed that in Buenos significantly lower than the figures from more Aires the number of one-way work trips per recent studies (and for those cities that are week for families in the bottom quintile of the included in the Affordability Index for 2004, income distribution reduced from more than see Table 5). AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 4 nineteen to about sixteen. Despite families in percent of the poor live in cities and urban the bottom quintile of the income distribution centers. The poor in the Sao Paulo walking for more than half their journeys to metropolitan area suffer particularly from low work (53 percent), the percentage of family mobility and lack of access to public transport. income they spent on public transport in Long distances and trip times, deficiencies in journeys to work was about 32 percent. For a the supply of public transport in the peripheral family on the average income the percentage area and lack of an integrated fare systems are of income spent was 13 percent, still quite high the main reasons for these problems. Despite but much less than for the lower income the advantages of the “ vale transporte”, a group. federally mandated subsidy that requires employers to make up the difference between 6 percent of salaries and the cost of home to Table 2. Expenditure on Travel to Work, work travel for formal employees, the Buenos Aires 2002 proportion of income of the bottom quartile of the income distribution spent on travel is very Average high. About 40 percent of the employed urban Average family household expenditure Percentage poor are either self employed or work in the income on travel to of income informal sector and therefore do not qualify for Income per week work $ per on travel to the vale transporte. Unconstrained land range ($) week work speculation had made it almost impossible for the poor to live close to the city centers, and Bottom 211.2 66.8 31.6% quintile they have been “peripheralized” to the outer suburbs, exacerbating their commuting Fourth 449.2 107.8 24.0% problem. The latest travel survey data quintile indicates that people in the lowest income Third 564.1 86.4 15.3% group (less than five minimum salaries) make quintile less than one third the number of trips of those in the highest income group (more than thirty Second 902.4 96.5 10.7% times the minimum salary). However, they are quintile spending more than 30 percent of their income Top 1748.7 149.0 8.5% on transportation compared to 7 percent for quintile the highest income group. Average 833.5 106.5 12.8% 3.4 Belo Horizonte Source: Estudio sobre el diseño de una política social para los servicios de infraestructura en Argentina, Another study was undertake n in Brazil in Banco Mundial y OBOPE, Agosto 2002. 2004. This study was aimed at finding measures of Affordability, Availability, 3.3 Sao Paulo Accessibility and Acceptability and proposing a synthetic index which translates those Brazilian urban planners have recently come to concepts into one measure, and then seeing a consensus on the problems facing urban how these measures varied between income centers in the country and agreed that public groups. The concepts were applied to Belo transport is an essential factor to shape the Horizonte which had the data required for this living conditions of the city’s inhabitants.iv This application. In the analysis of the results, a is particularly true for the poorer segments of direct relationship between the index of society. Despite improvements in many adequate transport and access of the poor to indicators, poverty and social inequality have transport services was observed, showing the remained the same or deteriorated. In important role played by affordability in the addition, the profile of urban poverty is access of the poor to these services. The worst changing, being created by unemployment, low indices were found in the areas where there income informal employment, spatial was a high concentration of low-income exclusion, lack of mobility and access to more populations, and where accessibility was dynamic city centers, and a vicious circle of blocked by physica l barriers such as lack of services and opportunities which is motorways, tunnels, viaducts and freight difficult to break. railways. The vale transporte, describes above in the case of Sao Paulo also applies to Belo Not only has the urban population increased, Horizonte, so the recommendations of this income levels have declined so that now 78 study were related to providing directed AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 5 subsidies for the unemployed and those choices, and their attitudes towards particular employed in the informal sector who do not aspects of urban transport, such as the quality qualify for the vale transporte. and reliability of bus and train services. 3.5 Mumbai In respect of the affordability of public transport, the evidence was that the poorest A study was undertaken in Mumbai in 2003v respondents in the survey spend almost 15 aimed at learning more about the transport percent of their income on public transport behavior of the poor, their residential and work (and almost nothing on personal transport), patterns and how these are affected by while the highest income category spent less transport policy. The analysis was based on the than 10 percent of their income on transport, results of an extensive household survey that and more than half of that on personal (that is, sought data on the socio-economic private car) travel and less than 4 percent of characteristics, their travel patterns and their income on public transport. Table 3. Mumbai: Expenditure and Income Share ( percent) on Transportation Income in Rs/month <5k 5k-7.5k 7.5k-10k 10k-20k >20k Total Bus 43 49 53 67 65 52 Rail 25 31 40 53 72 38 Taxi 27 33 43 78 100 46 School Bus 1 1 3 9 12 4 Fuel 13 33 52 134 378 71 Bicycle Repair 1 5 10 24 79 13 Vehicle Repair 0 0 0 0 1 0 Total (fare & fuel only) 108 148 191 341 628 211 Total (incl. maintenance) 110 153 201 365 707 224 Share(fare & fuel only) 14.7% 9.3% 8.9% 9.6% 8.2% 9.6% Share(incl. maintenance) 14.9% 9.6% 9.4% 10.3% 9.2% 10.2% Source: Urban Poverty and Transport: The Case of Mumbai, World Bank, 2004 (draft). 3.6 Delhi public transport, over 40 percent in Delhi and over 80 percent in Mumbai (44 percent bus In a paper presented to the Forum on Urban and 36 percent rail). In Delhi, the lowest Infrastructure and Public Service Delivery in income group made more than 50 percent of New Delhi in June, 2004, Badami, Tiwai and their trips by walking, about one third by bus Mohan vireported on access and mobility in and about 9 percent by bicycle. A large part of Indian cities. They observed that motorization the explanation for the high walking is growing even faster than population in percentage in Delhi was the short average trip Indian cities, and that while the poor benefit distance. Despite the high proportion of walk lest from increased motorization they bear the trips, the lowest income group (the income brunt of its negative impacts. They see the ranges were not defined by relation to the policy challenge as how to fulfill mass mobility ave rage income) spent more than 18 percent needs while minimizing the negative of their income on transport. Although the externalities. percentage of income spent on travel for the highest of the five income groups was about Most of the quantitative information presented the same, the actual amount was ten times in the paper drives from a 1994 household higher. A note in the report indicates that the travel survey in Delhi, this being the most survey results only apply to the residential extensive recent survey available. This survey, population that included at least one employed as well as a less detailed survey on Mumbai person, and so missed the unemployed, showed a high proportion of total trips by homeless, institutional and “floating” popu- AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 6 lations that together make up the majority. percentages would have been about 25 percent The authors reported that for a household and 12 percent respectively. living in the outskirts of Delhi and with an income of Rp 2000 (not the lowest quintile) 3.8 Eastern Europe would need to spend about 25 percent of their income just on the travel to work for one Another World Bank supported studyviii had person. For the lowest quintile the figure would among its objectives an analysis of the impact be closer to 50 percent of income. of public transport costs on the working poor in ECA countries and an identification of 3.7 Islamabad measures to address affordability issues. Another paper presented at the Forum on Many poor workers in many East European and Urban Infrastructure and Public Service Central Asian cities need to make long work Delivery reported on the impact of franchised trips and depend on the deteriorating public bus services in Pakistan, particularly in the transport system to have access to their jobs. Greater Islamabad Rawalpindi Area (GIRA). This was confirmed by two small pilot surveys The transportation needs of the GIRA are in Sofia and Bucharest. These also showed that rather unusual in the as a new capital despite t he relatively low fares, poor workers Islamabad is a large employment generator spend large shares of their income on their whereas as a longer established city, work trip. The danger is that for some people Rawalpindi has more residential the trip to work becomes so expensive that it accommodation, so the average journey to is no longer worthwhile to do the job. work is quite long in terms of time, distance and cost.vii The study looked at possible ways in which the problems experienced by the poorer parts of Public transport was deregulated in Pakistan the urban population concerning their work during the 1970’s but the government trips might be solved. The study looked in continued to be the main supplier of public more detail at Sofia and Bucharest through transport. By 1998 the quality and quantity of undertaking Household Mobility Surveys public transport had declined so far that the (HMS), and complemented this work with a government decided to shut down the public desk study review of statistical data for cities company and leave the task to the large in Kiev (Ukraine) and Cheboksary, Chelyabinsk number of small private operators who were and Khabarovsk (Russian Federation). already in business. But by the 1990’s this system had also failed to provide a desirable The HMS generated data and analysis proved quality and quantity of public transport and the most useful and revealing. It reviewed was specifically inadequate for the physically expenditures on transport for three groups, disabled, seniors and women, so the defined as Low, Medium and High incomes. government introduced a franchise system. The percentage of income which would be Under this operators were given exclusive absorbed by the number of trips identified (77 rights on a route in return for a guaranteed per month for Bucharest, 66 for Sofia) and minimum level o service. A subsidy of between using non-subsidized daily fares would be 4 percent and 8 percent was offered on the between 24 percent and 32 percent of income cost of non-air conditioned and air conditioned for Bucharest, and 18 percent to 23 percent for buses respectively. Sofia. Monthly passes are available in both cities at deep discounts on the price of a single While there have been many benefits of the ticket, so that the percentage of the minimum franchise system, among its dis-benefits to the wage absorbed by using monthly passes for poor has been an increase in fares of between the same number of trips would be only 13 40 percent and 60 percent on most routes. For percent in Bucharest and 16 percent in Sofia. a household in the bottom quintile of the household expenditure distribution with two Monthly tickets are not the only form of employed people (the average number), using discounted ticket available in these cities, the franchised bus services would require more some passengers continue to have access to than 40 percent take up more than 40 percent preferential passes. For example in Bucharest, of their total household expenditure, while for while only 7 percent of trips are made with a a household on an average income it would pass, this increases to 16 percent for the low still require more than 20 percent of their total income group. More detail on the availability of expenditure. With regular buses these preferential passes in Sofia indicated that most AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 7 were for pensioners and students. Also in Sofia many other defects in the current pattern of the distribution of preferential passes between subsidies to bus operations in urban areas. income groups showed little variation, suggesting that there is no policy of targeting the poor, or if there is one, that it isn’t Table 4. United Kingdom: Large Urban working. Area Passenger Subsidies Subsidy 3.9 United Kingdom Total No. of per Income Subsidy passengers passenger The government of the United Kingdom has Quintile £ million million £ pence undertaken and commissioned many studies Lowest 10 16 58.2 that deal with the affordability, availability and Second 5 7 68.8 accessibility of urban public transport. However, there is no national scheme for Third 8 7 103.2 providing subsidies to people on low incomes Fourth 16 14 118.2 to make their urban transport more affordable. Bus pass schemes are limited to students and Highest 13 11 120.2 retired people —and in some cities to the Total 52 56 92.6 unemployed when they are looking for work. The largest subsidy, a rebate on the tax on fuel Source: Obtaining Best Value for Public Subsidy for the consumed by public transport vehicles, bears Bus Industry, CfIT, March 2002. no relation to income or any other indicator of need. Some municipal governments enter into Box 1. Affordability Quality Bus Partnerships, which are agreements under which the operator will Affordability is clearly an extremely important provide services additional to those consideration in most of the areas we have visited. commercially justified while the municipality The m i pression we have is that public transport users are well aware of all the various ticket prices will invest in traffic management schemes that and the ticket differentials between the different favor buses, bus stations and other passenger services and operators. They are also clear about facilities. Rarely if ever do these agreements how it would impinge on their household budget. provide specifically for low income passengers. Those who are having the most difficulty are working people on low incomes who have to travel to work. The Commission for Integrated Transport Their travel costs can be a significant part of their (CfIT) is an independent body advising the take-home pay and they have no choice but to pay Government on integrated transport policy. it. They are also financially penalized by restricted hours of service operation, which means that they CfIT takes a broad view of integrated transport may sometimes have to take a taxi or walk. policy and its interface with wider government objectives for economic prosperity, Where there is no concession available for job- environmental protection, health and social seekers, and even, in some instances, where there inclusion. Physical integration—the principle of is, traveling to look for work can take up quite ensuring transport modes operate in significant proportions of their income. As an conjunction with one another, is just one vital example, someone who is on the minimum level of element of the bigger transport picture. The £50 in hand who wanted to spend time seriously job- hunting could easily spend £8 -£10 a week even with Commission provides expert advice supported a concession; this would be nearly a fifth of his/her by independent research. In March 2002 the income and leaves very little indeed. CfIT produced a report Obtaining Best Value for Public Subsidy for the Bus Industryix. As Many people who were on extremely low incomes part of its analyses, the CfIT assessed the and/or unemployed said that if ticket prices were distribution of current subsidies among cheaper, or better deals were available, they would passengers of different income groups, and be more likely to use transport more often. They found that highest per passenger subsidy went were likely to be spending 10 percent of their very low weekly incomes on transport. to passengers in the highest rather than the lowest income category. The subsidy per Source: Privatizing British Railways: Lessons for the passenger in the lowest category was less than World Bank and its Borrowers half that in the highest category. The report http://www.dft.gov.uk/stellent/groups/dft_mobility/d included an analyses and series of ocuments/page/dft_mobility_506795.hcsp recommendations on how to remedy this and AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 8 3.10 France of a poverty level, which varies between cities in China between about U$200 and U$300 per The French approach to urban transport is not person per year. Second, the number of urban to tackle poverty or potential users directly, poor does not include rural residents who live but rather to implement actions that reduce in urban areas, the so-called mobile residents, the exclusion of such people from social life. and whose incomes are even less than those Using a social objective and a law that who are included in the formal count. The establishes a right for public transport (Loi de’ Asian Development Bank estimates that the Orientation des transportes intérieurs ) similar poverty rate within the mobile population is 50 to public health and education, various forms percent to 100 percent higher than in the of general subsidy are still used in an attempt permanent urban population. to make urban public transport affordable to the whole population. Action plans have Households with the lowest incomes spend less focused on making affordable transport on transportation that others, since they make available to areas with otherwise low many more trips on foot and by bicycle. Fare accessibility, and where transport operators levels also contribute to the low rate of motor- have experienced security concerns, this being ized travel for the poor. While the average bus used as an indicator of social unrest in these fare is about U$0.12 per trip, the average per- districts. Financial support to urban public son trips requires 1.88 transfers and each transport in general and to these areas in transfer costs an additional fare. So the aver- particular has come from the versement age daily expenditure on bus travel is about transport, a tax paid be companies located in U$0.46, which represents about 40 percent of the area served by public transport and with the income of a poor person. Rather than more than nine employees. The level of the tax spend this amount, they appear to walk and is set by the local government subject to a cycle more and make fewer trips in total., and maximum established by the central in fact only spend between 3 percent and 8 government depending on the city size. percent of their income on transportxi However, with the changing pattern of residence and 3.11 Kyrgyz Republic employment in China, and the rapid increase in city size, the practicality of walk and cycle trips As part of the preparation of an Urban is reducing. This can be seen from the rapid Transport Project for the Kyrgyz Republic, the fall in their share of urban travel, In Beijing for World Bank undertook an Urban Transport example, cycle trips accounted for about 58 Sector Review (World Bank Report 18310-KG, percent of the total but by 2000 this had fallen 1998), part of which included a social to 38 percent, and in Nanjing walk trips assessment of urban transport in three cities reduced from 33 percent to 23 percent. (Bishkek, Osh and Jalalabad) undertaken by the Kyrgyz Peace Research Center with funding 3.13 Wuhan, China from the Dutch Government. Among the many conclusions of this study were that despite the As part of the preparation of an urban heavily subsidized fares, average expenditure transport project in Wuhan China, the World on travel was more than 18 percent of income Bank commissioned a study on the how the in Bishtek, 14 percent in Jalalabad and 13 poor travel around the cityxii. As in Beijing and percent in Osh. Taking all three cities together, Shanhai, the poverty level in Wuhan is more than 20 percent of households spent determined by the municipality, and it was more than 25 percent of their income on determined in 2002 to be Y2,520 per year. The transport, almost exclusively public transport. 156,000 permanent residents whose income was below this level qualified for an income 3.12 Beijing and Nanjing, China supplement. This number represents a 27 percent increase in the last two years, a period Until recently there have been few studies of that also saw a growing income disparity the condition of the urban poor in China. One between the rich and poor. Whereas in 2002 study that addressesx that deficiency looked at the income of the top quintile of the income the urban transport strategies in Chinese cities distribution was three and a half times greater and their impacts on the urban poor. One of than that of thee bottom quintile, by 2002 the the first problems encountered is the definition ratio had jumped to five times more. AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 9 3.14 African Cities Box 2. “The job was not worth the bus fare.” Other studies reviewed in less detail showed that in Lagos (Nigeria), 15 percent to 20 “I could have got a job delivering newspapers percent of household expenditure in 1997 was that paid Y600. But with transit costs of Y3 to Y4 spent on transport (public and personal) , per day (20 percent of gross earnings) it was not while in Doula (Cameroon) in 2000 the worth it.” equivalent figure was 14 percent of household “Someone found me job for Y500. But I would expenditure, while in Yaounde it was 15 have had to have taken the bus at a cost of Y5 percent on average, but only 11 percent for per day (30 percent of gross earnings). After the highest income quintile. In Dakar in1998, 8 taking into account having to buy a lunch, it was percent of household expenditures are spent no better than staying at home.” on transport in average, and households of the highest income quintile spend 4.5 percent. In Source: Household Interview Survey, Wuhan, these cities it appears that most of the poor 2003. simply walk, because they cannot afford public transport fares. For the bottom quintile, about 48 percent of their travel is by walking, about 27 percent by A Poverty Impact Assessmentxiii was commis- public transport and about 22 percent by cycle, sioned by the World Bank as part of the with the remaining 3 percent by other preparation of an Urban Transport Project f or motorized means (motor cycle, taxi or motor Lagos, Nigeria in 2002. Although this Assess- taxi). This modal share is a reminder of the ment did not provide a direct measure of af- planned economy where urban life was fordability, it did provide data on which it could centered on the danwei, a collectively owned be estimated for 1992. Taking the Assess- enterprise that provided employment, housing, ment’s definition of poor as having one third education, health care recreation centers and the average income for the city, and the then food shops. All these facilities were within average fare, the proportion of a poor working walking distance of the housing. Although this person’s income spent on transport would have system ahs now broken down, the slow been over 54 percent and the expenditure of development of an alternative means that someone on an average income, more than 17 many services are still close the residential percent. These are both very high and reflect areas, although employment patterns have the high fares charges on both private bus changed more quickly involving longer trips modes in Lagos, molues (large “geriatric, that cannot so easily be made by walking or clumsy, uncomfortable yellow-painted” even by cycling. busesxiv) and danfo’s (minibuses “smaller siblings of the molue ”). Fare regulations are The previously owned public transport system not strictly enforced and operators tend to in Wuhan has been privatized and there is now discharge passengers every few kilometers and also a foreign owned public transport require that they reboard and pay again or enterprise. They still operate a fixed fare the effectively bargain the fare with passen- system, but fares vary by route between Y0.5 gers according to the length of the queue. and Y2.0 depending on the route length and quality and comfort of the vehicles. There are 3.15 Australia no inter route transfer tickets, so passengers typically need to pay two or three times. In Australia, as in many other developed Transit fares were singled out by residents as countries, the affordability of public transport the main factor that prevents them from to two particular social groups with limited seeking better employment opportunities. The financial resources, students and retired jobs they can aspire to pay between Y400 and people, has received special attention, rather Y700 per month, and that precludes a than the affordability to the poor as a social commute that involves any transfers or the use group or to the working poor. As an example, of anything more expensive than a bus. So in Perth (Western Australia) fares are kept low they limit their work options to those that are with a specific objective of keeping public within walking or cycling distance. transport affordable to retired people. For AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 10 someone living on the minimum pension, a political system under which the city is daily return trip on public transport would cost administered. Although we are particularly about 3 percent of their income. interested in affordability of public transport in cities in developing countries, we have 3.16 United States included several cities in developed countries as a basis of comparison. The sample was also In the United States, the Census Bureau designed to include a number of cities for collects data on the how income is spent , which particular difficulties were expected in including that spent on commuting. By obtaining the data. aggregating the urban population into income ranges it is possible to estimate the proportion 4.2 Level of Income of income spent on travel, including that for those employed but earning below the poverty Most measures of affordability have used level, defined by the Bureau of Transportation average incomes, whether personal or family, Statistics to be U$8,000 per year. The data for and it is only recently that attempts have been 1999 is reported by the Bureau and shows that made to measure affordability for people in the working poor spent nearly 10 percent of different income groups. There is little reliable their income on commuting, whereas the and consistent data on the distribution of average expenditure was just under 4 percent incomes in cities, and not much more on the of income. With average fares of the order of distribution of per capita incomes at the U$3 for travel of 10km, the poor would need to country level. Even when there is local spend at least 27 percent of their income on information, that often comes from user daily commuting of this distance. surveys, and therefore can exclude those with the lowest affordability because they cannot afford to travel. So a better source are household surveys, but these tend to Table 5. United States: Percent of categorize income in terms of local Personal Income Spent on Commuting. parameters. For example, Brazil makes Percent Spent on frequent use of the number of multiples of the Income Range Commuting minimum legal income as the basis of income categorization (for example, the poor might be Less than US$8,000 9.5% defined as those earning less than three times US$8,000 to US$414,999 6.0% the minimum income). Other surveys use simple categorizations of “low”, “middle” and US$15,000 to US$21,999 4.6% “high” incomes, which even when the income US$22,000 to US$29,999 4.1% ranges are known makes it difficult to translate into the categorization by quintiles of income US$30,000 to US$44,999 3.5% that are now becoming more standard and Over US$45,000 2.2% used in the World Development Indicators. This source, complied by the World Bank Average 3.9% Development Research Group, also uses primary household survey obtained from government statistical agencies and World 4 C ONSTRUCTION OF THE AFFORDABILITY Bank country departments. INDEX 4.3 Quantity of Travel An Affordability Index requires four pieces of information a selection of cities for which the Most assessments of the use made of urban values of the index are to be estimated, and transport also rely on household expenditure the level of incomes, quantity of travel and survey data. The greatest constraint on the level of fares in those cities. use of household survey data that uses actual expenditure is that is difficult for them to take 4.1 Sample of Cities account of the impact of any reduction in travel because of the high level of fares. At one Our objective has been to work with a large extreme, if fares were so high as to frustrate sample of cities that would give a reliable most travel, the actual expenditure could be indication of the distribution of values of the quite low. This would not be indication of high Accessibility Index, and to indicate whether affordability of fares, but quite the reverse. For there was any correlation between the value of use in a comparative index, we need to use a the Index and city size, income per capita, or standard measure of income and a more AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 11 consistent measure of desired travel that is not have data sufficiently comprehensive data on influenced by the level of fares. income and fares for compilation of the Index. Very few studies have been made of the 5.2 Income desired rather than actual quantity of urban travel. However, an analysis of those few The most binding constraint in the city studies that have been made indicated a selection was the availability of data on per minimum desirable travel of about sixty one capita income. To provide a consistent way trips per month per person. For an definition of income we chose two values, the employed person, this could comprise about average per capita income for the city and the forty one way trips to and from work and a average per capita income for those in the further twenty one way trips per month for bottom quintile of the income distribution. We other reasonsvisiting family, seeing a doctor, had intended to use family disposable income going to a cinema or undertaking personal for both the average and bottom quintile, but it business. We have used this average of sixty proved impossible to obtain this information for one way trips per month as the quantity of more than a small number of cities, so we demand in the Index. chose the per capita income as an acceptable substitute. But even then, we were unable to 4.4 Level of Fares find any reliable source of average per capita income and the income of the lower quintile in There is no simple and generally recognized a large sample of cities. However, we were definition of what fare should be use in able to make what we considered reasonable compiling a measure of affordability. Since the estimates of both from data that was available. Index presented here needs to be consistent between many cities, we have used a standard The MCD is one of the few single sources for measure of the fare for a single trip, based on the average income for people in a number of a daily or time based ticket where this offers a cities. Although many national population lower price. We have not taken into account census also provide the data for a selection of longer period tickets, such as those that give a cities, we did not have resources to go through full week or month of travel, as these require all the national census data available on the high upfront costs that would be difficult for a internet. low income passenger to afford. We know that the average income level in 5 DATA USED IN CONSTRUCTION OF THE cities tends to be greater than in rural areas, AFFORDABILITY INDEX but except when spe cific studies are carried out, we do not know what the differences are 5.1 Sample of Cities and thus how to relate data on national income levels, which are produced on a regular basis, From an initial sample of thirty cities, we and which are compatible across countries, to managed to construct the index for twenty city income levels. As the relevant fares are seven. The database used most extensively in those for cities, assumptions have to be made constructing the Index was that provided by about city income levels for a comparison to be the Millennium Cities Database for Sustainable made between expenditure on public transport Transport (MCD), created by the International and available income, on the assumptions Union of Public Transport (UITP), with technical above defined. support from Murdoch University, Perth, Australia. The data collected relates to Information on national income levels is taken demographics, economics, urban structure, from World Bank’s World Development vehicle ownership, road and public transport Indicators (WDI). This gives three sets of networks, personal mobility, choice of relevant data: (a) per capita income levels in transport mode, transport system efficiency local currency units (LCUs); (b) exchange rates and environmental impact of transport, for 100 for conversion to US$ and (c) the percentage cities. A total of 66 indicators are provided for of total national incomes accruing to five bands the year 1995. of income, ranging from highest to lowest (the five income quintiles). This last measure is From MCD, we ended up with a sample of based upon various household expenditure twenty seven cities which have characteristics surveys, most of which are reasonably current. which are broadly representative of developing This enables the current per capita income countries, across all regions. These cities also levels both at the average income level and that for the lowest income quintile, which is AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 12 the main focus of this study, to be calculated. nominal foreign and Purchasing Power Parity This provides the basis for assessment of the (PPP) exchange rates. percentage of income at these income levels which would be absorbed by public transport In some cities, fares are based on distance, needs. The WDI also shows income levels for with individual fare stages being quite short. the poorest 10 percent but we have not For the cities included in the sample, some do employed this for two reasons (a) at a first have this characteristic, but the stage lengths inspection, some of the data looks unreliable are clearly identified, and we have thus been and (b) it is possible that even the lowest able to combine stages, to obtain the decile fails to include the very poor, for which appropriate 10 km fare, where necessary. data is often difficult to obtain. We have Where fares are flat within zones, as is therefore confined our analyses to the average becoming increasingly common, a typical zone and lowest quintile income levels. is less than 10km in radius, which means that two zones have to be crossed. For zone cities, The MCD average per capita income level, by we have assumed travel that crosses one zone city, expressed in US$ was compared with that boundary. In some other cities fares are based from the WDI data on per capita average on the time needed to make a trip. The national income levels for the same year. This minimum time in cities with this system is at enabled ratios of city to national per capita least one hour, and under normal income levels to be compiled for 1995. We lack circumstances, this will be sufficient for 10 km similar ratios for 2004, our reference year, so to be traveled. have made the assumption that these ratios have remained constant over the period. There In those cities where subsidized rail or metro is no reason to believe that city/urban income fares are lower than bus fares, we have used levels have either risen or fallen with respect the lowest available public transport fares in to national levels over the period 1995 to compiling the Index 2004. Two features which can have an important 5.3 Quantity of travel effect on the incidence of public transport costs on different sectors of the community are Our starting point is the assumption that a passes and concessions. typical public transport trip is of 10km and 60 such trips are made per month, twelve months Typically, passes can be bought for one per year. The basis for the assumptions of an month, or in some cities for a week or a few average distance of 10km is the MCD. Where days. A comparison of the costs of 60 single flat fares or zone fares are used, this distance tickets with a typical monthly pass indicates a is generally within the distance covered by the cost saving of as much as 25 percent. flat fare, and for more than 80 percent of the However, this means an “up-front” expenditure zone fare cities, even covering two zones of the equivalent of 45 or more single tickets. would only add 10 to 20 percent to the fare. The recent survey in Sofia, Bulgaria, indicated The 60 trips per month is based on seven that while low-income families benefit more return trips per week, which is the typical from passes than middle or upper income movement of the working poor, with whom we families (which may be a function of family are concerned. size) the benefit for working poor was little. The survey showed only 3 percent of low- 5.4 Fares income workers received passes; compared with 14 percent and 8 percent for middle and We obtained data on fares from official upper income workers respectively. Since sources, mainly through websites, but in many except for a few cases such as that for Sofia, cases reinforced by personal contacts (World and it is probable that people in the poorest Bank regional staff). Websites of municipal, income quintile will have difficulty in making and some private, operators often allow fares the initial payment for such passes, and will to be calculated between specific origins and thus be obliged to purchase the more destinations. In these cases, we used sample expensive single tickets, we have not taken fares for at least twenty trips of ten kms. We them into account. also used travel oriented websites that also give fares information. All fares information is Unlike time period passes that are available to current to August, 2004. These fares were anyone, concessions are available only to expressed in local currencies and, for people in specific categories. The structures comparability, were translated to US$ at the and incidence of such concessions varies from AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 13 one city to another, and thus the relationship fares are in Cairo and Bangkok at about of the fares actually paid to the nominal fares U$0.30 for 10 km. While a high correlation can vary between cities. However, concession might be expected between per capita income fares are mostly targeted at school children, and bus fare, since a high proportion of the students and retirees. There are very few cities fare is to cover labor costs, the correlation that have concessions that are available to coefficient is only 0.63, not particularly high. employed people. We have not taken these However, the correlation between fare and concessions into account but will do so in the bottom quintile income is much higher at 0.89, next round of estimation of the I ndex. This perhaps indicating that many public transport omission is particularly important in Brazil, the employees are paid at closer to the bottom country with cities that have the highest values quintile than to the average income. of the Index in its current form. 6.3 Affordability Index for People on an 6 EVIDENCE F ROM THE AFFORDABILITY Average Income INDEX The percentage of average income spent on The results from application of the above public transport varies substantially from city method to data from twenty seven cities is to city. At one extreme are Manila and shown in Table 6. Bangkok, where only about 1 percent of city average income is required to obtain the public 6.1 Income Distributions transport services as previously identified (10km trip, 60 trips per month). The reasons For most of the cities included in the Index, the are low cost bus systems, combined in the average income is much higher than the case of Thailand with a comparatively high national average, so that even for cities in average income level. At the other extreme is developing countries the average incomes are Sao Paulo (Brazil) where some 11 percent of at levels above what would be considered average income would be necessary to achieve indicating poverty. But the distribution of those the required level of public transport. In averages between the income groups tells a addition to the widespread use of concession different story. From the national household fares as noted above, this high value is also expenditure survey data, the poorest 20 attributable to the need to pay for more than percent of the population receive well under one ticket for a typical 10km journey as well as half the average income in many cities. In only the very skewed income distribution in six of the twenty seven cities for which we Brazilian cities. calculated the Index does the bottom quintile earn more than 40 percent of the per capita In between are a range of cities where the two income of the average and in another six they factors fares and income levels interplay in earn less than 20 percent of the average. Even varying degrees. Although fares vary signifi- in the cities with the lowest incomes in the cantly from city to city, they do so to a lesser bottom quintile range, the average income is extent than per capita incomes. So while there close to U$2.50 per day. While this is above is some evidence, of an inverse relationship the values of U$1.0 or U$2.0 per day often between per capita income and the value of used as broad indicators of poverty, these the Index, it is not statistically significant. people are living in large cities where the costs of living are also far above the levels in rural 7 AFFORDABILITY INDEX FOR PEOPLE IN areas for which the poverty indicators are most THE BOTTOM QUINTILE OF THE INCOME often applied. DISTRIBUTION 6.2 Fares For some of the cities in the sample, the values of the Affordability Index for people in the There is a high range between the lowest and bottom quintile income group are highest fares to travel 10km. Not surprisingly, unsustainable at over 30 percent of their most of the cities with high fares are in income. Either they are having to curtail their developed countries. The only developing amount of public transport travel, and country cities with fares of over U$1.00 therefore the also curtail the activities that equivalent to travel 10km are in Brazil, generate the need to travel, or they are not Malaysia and India, with the highest fares in paying the full fare, or their travel to work is Brazil. At the other end of the scale, the lowest much shorter than 10kms. AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 14 Table 6. Affordability Index Values for Twenty-Seven Cities. Affordability Index Per Capita Bottom Quintile Fare for 10km Income Income as Percent Travel Bottom City U$PPP of Average (PPP U$cents) Average Quintile 1 Sao Paulo 8,732 10.0% 130.1 11% 107% 2 Rio de Janeiro 14,325 10.0% 125.4 6% 63% 3 Brasilia 12,985 10.0% 106.8 6% 59% 4 Cape Town 14,452 10.0% 75.8 4% 38% 5 B. Aires 15,493 15.5% 87.6 4% 26% 6 Mumbai 8,585 41.0% 112.2 9% 23% 7 Kuala Lumpur 18,351 22.0% 121.6 5% 22% 8 Mexico City 9,820 15.5% 39.3 3% 19% 9 Chennai 3,717 41.0% 39.3 8% 19% 10 Manila 9,757 27.0% 63.0 5% 17% 11 Krakow 15,579 36.5% 130.6 6% 17% 12 Amsterdam 28,170 36.5% 226.6 6% 16% 13 Moscow 16,154 24.5% 84.6 4% 15% 14 Guangzhou 9,165 30.0% 55.1 4% 14% 15 Warsaw 26,024 36.5% 142.5 4% 11% 16 New York 51,739 27.0% 200.0 3% 10% 17 Los Angeles 42,483 27.0% 160.0 3% 10% 18 Chicago 48,300 27.0% 180.0 3% 10% 19 Singapore 38,797 25.0% 130.3 2% 10% 20 Beijing 14,379 30.0% 55.1 3% 9% 21 Seoul 16,784 40.0% 85.5 4% 9% 22 Shanghai 20,814 30.0% 55.1 2% 6% 23 Cairo 7,117 43.0% 26.1 3% 6% 24 Budapest 22,106 50.0% 89.3 3% 6% 25 London 53,057 30.5% 116.4 2% 5% 26 Prague 32,757 52.0% 88.0 2% 4% 27 Bangkok 20,386 31.0% 32.2 1% 4% Sources: Income derived from Millennium Cities Database, WB country income data; Bottom quintile derived from WB database; Fares for 10km of travel derived from Internet data and World Bank country offices For the three Brazilian cities included in the showed that the poor were spending between sample there is a federally mandated subsidy 18 percent and 30 percent of their income on which requires employers to pay the difference travel, while only making one third the number between 6 percent of salary and cost of home of daily trips of those in the highest income to work trips for formal employees (the “vale group. transporte”). But we also know that in Brazil a large number of people, probably mostly in the In Cape Town, the suburban rail service is less bottom quintile of the income distribution, are costly than the bus service but is ignored by either self employed or are employed in the many potential passengers because of security informal economy and therefore not eligible for concerns. As in many other cities, mini-buses the concession fares. The very high proportions are also available but at a higher fare. Buenos of income indicated for the poor to travel in Aires, the other city with a very high Index Brazil only confirm what has been learned from value for its bottom quintile income earners, at several other recent studies. A review of the least has a reliable and relatively safe bus potential impact of the new Line 4 of the Sao system that operates at high frequencies, even Paulo metro made for the World Bank in 2003xv into the night. But particularly when AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 15 considered together with the tariffs for other 8.2 Passes and Concessions utility services, the fare level is probably unsustainable in the long term for this income Passes and concessions are often important. group. Passes (often monthly) give significant savings to purchasers over purchasing single tickets, Even some of the cities in the developed but may require up-front payment of the countries have values for the Index, in excess equivalent of some two-thirds to three- of 10 percent, a consequence of their very high quarters of one month’s supply of single fares and/or relatively skewed income tickets. The poor may not be able to afford this distributions. and, as the cost saving in issuing a monthly pass is probably much less than the discount, A comparison of the Index values for people on the single fare purchaser is effectively average incomes and on bottom quintile subsidizing the monthly pass holder. incomes is also instructive. The average value of the ratio of the Index values is 4.0, with the Concessions are different. They are normally highest being over 10.0 and the lowest 2.0. targeted at certain groups of consumers; The correlation between the two Indices is typically students and retirees. While there 0.73, not as high as might be expected and may be a political imperative and a socio- indication of very skewed income distributions economic justification for student concessions, in many of the cities since the value of the the case is less evident for retirees. ratio is only determined by the income Furthermore, some concessions are extended distribution. Brazilian cities have the most to employees of transport organizations and skewed distributions in the sample while East even other public sector workers. We European and Indian cities, together with Cairo welcome any sources of information on and Seoul have the least skewed distributions. the use made in specific cities of passes and concessions, preferably giving data The bottom quintile of the income distribution for the use made by people of different includes a high proportion of adults who are income levels. working and therefore not eligible for concession fares that are usually only available 8.3 Changes in Fare Structures and for children, students and people of Levels pensionable age. Unless there are other concessions available to them (as for some bus Another issue that may be worth exploring is fares in Brazil or other expenditures such as how fare levels and structures change over household rent in other countries) the time, particularly in countries experiencing indicated values of the Affordability Index are significant rates of inflation. It may be that sufficiently high to raise concerns that the fare there is a lagged effect where passenger levels are unsustainable for them. In the next transport is publicly provided, which might not Section, we include an introduction to our next be the case with private opera tors. stage of work, to consider what forms of targeted subsidy would best address these 8.4 Additional and Corrected Index concerns Values 8 F URTHER WORK ON THE AFFORDABILITY The authors welcome estimates of the INDEX Affordability Index calculated for other cities. Such estimates should be based on the 8.1 City Income Distribution average and bottom quintile per capita incomes, and the standard fare for sixty trips The first and most important data is the per month for an average distance of 10km per proportion of total city income received by the trip. It would be useful if the basic data could poorest section of the population (typically the be provided together with the Index values. lowest quintile). This data is not available on a We also welcome any revisions to the data systematic basis. However, surveys are presented in Table 5. We will publish additional available for some cities, and these suggest and corrected values of the Index with our that the city income distribution is indeed next paper on Affordability, which will look at similar to that at the national level. We the use of targeted public transport subsidies welcome suggestions for sources of city for the working poor. level income distribution that gives quintile data . All correspondence should be addressed to rcarruthers@worldbank.org. AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 17 Bibliography 1986. Armstrong-Wright, Alan. Urban Transit Systems: Guidelines for Considering Options. World Bank Technical Paper 52,. World Bank, Washington, DC. http://www- wds.worldbank.org/servlet/WDS_IBank_Servlet?pcont=details&eid=000178830_98101904164939 1986. Urban Transport. World Bank, Washington, DC. http://www- wds.worldbank.org/servlet/WDS_IBank_Servlet?pcont=details&eid=000178830_98101901455677 1992. The Impacts Of Subsidies, Regulation And Different Forms Of Ownership on the Service Quality and Operational Efficiency of Urban Bus Systems in Latin America. ECLAC. 1998. Kyrgyz Republic: Urban Transport Sector Review. World Bank Report 18310-KG. World Bank, Washington, DC. http://www- wds.worldbank.org/servlet/WDS_IBank_Servlet?pcont=details&eid=000094946_99092506031980 2000. Poverty and Urban Transport: French Experience in Developing Cities. 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Public Transport for the Urban Poor in Pakistan: Balancing Efficiency and Equity. http://wwics.si.edu/index.cfm?topic_id=1410&fuseaction=topics.documents&group_id=61692 2004. Labor Mobility, Beneficiaries of Public Transport Services . Ecorys Research and Consulting for the East Europe and Central Asia Department of the World Bank. World Bank, Washington, DC. Baker, Judy, Rakhi Basu, Maureen Cropper, Somik Lall and Akie Takeuchi. 2004. Urban Poverty and Transport: The Case of Mumbai. World Bank Working Paper Draft. World Bank, Washington, DC. Peng, Zhong-Ren. Urban Transportation in Chinese Cities and their Impacts on the Urban Poor. http://wwics.si.edu/index.cfm?topic_id=1410&fuseaction=topics.documents&group_id=61692 Badami, Madhav, Geetam Tiwari and Dinesh Mohan. Access and Mobility for the Urban Poor in India: Bridging the Gap between Policy and Need. http://wwics.si.edu/index.cfm?topic_id=1410&fuseaction=topics.documents&group_id=61692 AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 18 2004 . de Avila Gomide, Alexandre and Sabina Kaurk Leite. Transporte Público e Pobreza Urbana Um Índice Síntese de Servicico Adecuado. Draft Report for the World Bank Latin America and Caribbean Department. World Bank, Washington, DC. 2003. Impacto Social de la Crisis Argentina en los Sectores de Infraestructura. Vivien Foster con el Centro de Estudios Económicos de la Regulación (CEER) y la Universidad Argentina de la Empresa (UADE). Documento de Trabajo N.1/05. World Bank, Washington, DC. http://www.bancomundial.org.ar/archivos/Impacto_Social_de_la_Crisis_Argentina_en_los_Sectores_d e_Infraestructura.pdf#search='.%20Impacto%20Social%20de%20la%20Crisis%20Argentina%20en% 20los%20Sectores%20de%20Infraestructura' AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 19 ANNEX A LABOR MOBILITY, BENEFICIARIES OF PUBLIC TRANSPORT SERVICES IN EASTERN EUROPE AND CENTRAL ASIA (ECA) ECORYS Research and Consulting, for the World Bank, 2004. This study had as its objectives to a) analyze the impact of public transport costs on the working poor in ECA countries and b) identify measures to address the issues identified. The study reviewed the situations in two ECA countries, Bulgaria and Romania, in some depth through undertaking Household Mobility Surveys (HMS), and complemented this work with desk study review of statistical data for Bulgaria, Romania and the Ukraine, together with three central Asiatic cities in the Russian Federation. The HMS generated data and analysis proved the most u seful and revealing. It reviewed expenditures on transport for three groups, defined as Low, Medium and High incomes. These groups were not defined in income terms. However, it seems reasonable to assume that the Low group is equivalent to either the lowest quintile, or a combination of the lowest and second lowest quintiles of the income groups. On that basis, the percentage of income that would be absorbed by the number of trips identified (77 per month for Bucharest, 66 for Sofia) and at the unit costs identified, would be between 24 and 32 percent of annual income for Bucharest, and 18 to 23 percent for Sofia. Monthly passes are available in both cities. Because the discount on the price of a single ticket (on the trips noted above) was very steep in B ucharest ( -46 percent) but less so in Sofia) ( -13 percent), the percentage of the minimum wage absorbed by monthly passes would be 13 percent in Bucharest and 16 percent in Sofia. For comparison, the range for the lowest quintile of the Affordability Index (excluding the Latin American cities) is from 4 to 28 percent. The study also reviews the availability and incidence of subsidized transport, through passes. In Bucharest 93 percent of trips are made without a pass; this falls to 84 percent for the Low income group. In Sofia, the percentages are 82 percent and 78 percent respectively. For Sofia, the distribution of passes between all household members and workers was also analyzed. While 28 percent of Low income household members had passes, only 3 percent of workers had this privilege. This suggests that the main recipients of passes are students and retirees; this is consistent with pass policy identified in other cities. More worrisome is the finding that 14 percent of Middle Income workers received passes. The report observes that this suggests there is no policy of targeting the poor (or that it wasn’t working!). The main conclusions drawn by the consultants are that: i) Transport expenditure is rather high for the Low Income group (between 13 percent and 16 percent); ii) Distances for work, at about 6km, are rather long. Actually, they are less than the average for the cities included in the MCD; iii) The concessionary fare system is badly targeted. This is based mainly on the Sofia study. AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 20 ANNEX B URBAN POVERTY AND TRANSPORT: THE CASE OF MUMBAI Judy Baker, Rakhi Basu, Maureen Cropper, Somik Lall and Akie Takeuchi, World Bank Working Paper, Draft, October, 2004. This paper reports work carried out by the World Bank to analyze the linkages between urban poverty and transport in Mumbai, India. The analysis draws on a household survey and focus group discussions that were carried out between August 2003 and February 2004. Relatively little is known about the transport behavior of the urban poor in develo ping countries, their residential patterns, and how these are affected by transport policy. The research that exists characterizes the transport patterns of the poor as a complex tradeoff among residential location, travel distance and travel mode, in an attempt to minimize the social exclusion associated with low earnings potential (Cities on the Move). In accessible parts of the city, the poor can often afford only precarious sites with insecure tenure. Conversely, affordable sites that may have more secure tenure are more likely to be located in the less accessible periphery of the city and involve higher commuting times and costs xvi. Empirical studies in individual cities show evidence of differences in the composition, number, and mode of trips between poor and non-poor, but the dynamics of these differences are not well explored. The urban poor make fewer trips per capita than the non-poor, but the differences are not extreme. The travel purposes of the poor are more limited in scope, with journeys to work, education and shopping dominating. Transport mode differs substantially, with the urban poor relying heavily on walking, and the non-poor making many more motorized trips. The study is specific to Mumbai, one of the world’s largest cities, and one with a unique spatial configuration. While some of the findings appear to be similar to other studies of urban transport, there are differences as well. Spatial Distribution of Households by Income Group The most salient feature of the spatial distribution of household s is its lack of pattern or segregation by income group. There is neither a large predominantly poor or rich area, nor does a large percent of a given income group live in a particular zone. There are, however, some differences across zones. In general, the city center zones have a smaller proportion of poor households than do the suburbs. Commuting Patterns In Mumbai, as in other cities, the journey to work constitutes the largest fraction of household trips in terms of distance traveled. Perhaps the most striking feature of commuting behavior in Mumbai is the distribution of commute distances. The modal commute distance is only 1-2 km, and more than 40 percent of workers commute less than 2 km. The distribution, however, has a long tail. Approximately 20 percent of workers commute 10-30 km. The mean commute distance is 5.3 km. There are significant differences in commuting patterns by income. On average, higher income workers travel significantly longer distances and spend a longer time commuting irrespective of place of residence. The difference in commuting patterns between the rich and the poor is, however, greatest in the suburbs. The percentage of workers who work in the zone in which they live varies little by income group in the city center, but in the suburbs, 55 percent of the poor live in the same zone as they work whereas this applies to only 30 percent of the highest income group. In the further suburbs the percentages are 49 percent v. 16 percent. The fact that a higher percent of the poor living in the suburbs work in the suburbs may be evidence of spatial mismatch: the cost of commuting may keep the poor in lower- paying jobs in the suburbs. Mode Choice In a city in which 57 percent of works trips are 3 km or less, it is not surprising that over 40 percent of commuters walk to work. The main mode is defined to be the mode that takes the longest time, with AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 21 the exception of “on foot” and “bicycle,” which are counted as the main mode only if they are the only mode used on the trip. 44 percent of commuters walk to work, 23 percent rely on rail as their main mode, while 16 percent rely on bus as a main mode. The respective mode shares are somewhat different for the poorest income group: 61 percent of the poor walk to work, 6 percent ride a bicycle, 16 percent take the train and 15 percent ride the bus. It is possible that the cost of commuting from the suburbs to the center results in economic disadvantages to the poor. This is suggested by two facts: (1) wages for unskilled labor are lower in the suburbs than in the center; (2) the unemployment rate among the poor appears to be higher in the suburbs. It may be the case that this is the price that the poor pay for not having to commute long distances. An alternate explanation, however, is that the cost of transportation keeps the poor in low- paying jobs in the suburbs. Frequency of Travel The poor take fewer trips than the non-poor, although the differences are not dramatic. Although there is slight increase in the number of trips as income goes up, most wage earners take two trips per day (to and from work). The major source of the difference is the large fraction of people in the lower income categories who take no trips. For example, among households with the lowest monthly incomes, 55 percent of “other” adults didn’t travel at all; this number, however, declines to less than 40 percent in the highest income category. Similar differences are observed among youths. It is clearly the case that poor people make fewer trips than the non- poor, especially for non- work trips. Affordability Expenditures on transportation increase steadily as income rises, reflecting the shift to more expensive transport modes: from walking to public transport and, eventually, to private cars, as people become richer. The share of transport-related expenses, however, is highest among the poorest households, where it constitutes 15 percent of income. It remains approximately constant at 10 percent of income for the rest of the income categories. This suggests that for the very poorest households, access to transportation (in money terms) is expensive and may affect mobility. AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 22 ANNEX C A FIVE STEP METHOD TO CALCULATE THE AFFORDABILITY INDEX FOR A CITY 1. From the latest national census of household survey data, find the average per capita monthly income and the average for the bottom quintile of the income distribution, for the city; 2. Update these values to mid-2004 using national per capita income growth rates; 3. Determine the minimum public transport fare to travel 10km using a daily ticket 4. Calculate the cost for 60 trips at this fare; 5. Express this cost as a percent of the average and bottom quintile monthly incomes. AFFORDABILITY OF PUBLIC TRANSPORT IN DEVELOPING COUNTRIES 23 ENDNOTES i Urban Transport, World Bank, 1986. ii The Impacts of Subsidies, Regulation and Different Forms of Ownership on the Service, Quality and Operational Efficiency of Urban Bus Systems in Latin America, ECLAC, 1992. iii Impacto Social de la Crisis Argentina en los Sectores de Infraestructura, Vivien Foster con el Centro de Estudios Económicos de la Regulación (CEER) y la Universidad Argentina de la Empresa (UADE). Documento de Trabajo N.1/05. World Bank, 2004. http://www-wds.worldbank.org/servlet/WDS_IBank_Servlet?pcont=details&eid=000012009_20040308155409 iv Potential impact of Metro’s Line 4 on poverty in the Sao Paulo metropolitan region, Marcia Barone and Jorge Rebelo, World Bank, 2003. http://www.worldbank.org/transport/urbtrans/poverty_14_sp.pdf v Urban Poverty and Transport: The Case of Mumbai. Judy Baker, Rakhi Basu, Maureen Cropper, Somik Lall and Akie Takeuchi, World Bank Working Paper, Draft October, 2004. vi Access and Mobility for the Urban Poor in India: Bridging the Gap between Policy and Needs, Madhav Badami, Geetam Tiwari and Dinesh Mohan. http://wwics.si.edu/index.cfm?topic_id=1410&fuseaction=topics.documents&group_id=61692 vii Public transport for the urban poor in Pakistan: Balancing efficiency and equity, Haider and Badami http://wwics.si.edu/index.cfm?topic_id=1410&fuseaction=topics.documents&group_id=61692 viii Labor Mobility, Beneficiaries of Public Transport Services in Eastern Europe and Central Asia (ECA). ECORYS Research and Consulting, for the World Bank, 2004. ix Privatizing British Railways -- Lessons for the Bank and its Borrowers. http://www.dft.gov.uk/stellent/groups/dft_mobility/documents/page/dft_mobility_506795.hcsp x Urban transportation in Chinese cities and their impacts on the urban poor, Zhong-Ren Peng. http://wwics.si.edu/index.cfm?topic_id=1410&fuseaction=topics.documents&group_id=61692 xi Yearbook of Chinese Cities, 2003. xii A Lifetime of Walking, Poverty and Transportation in Wuhan, World Bank December, 2003 xiii Lagos Urban Transport Project, Poverty Impact Assessment, TRL for the Lagos State Government, 2002. xiv http://www.nigeriavillagesquare1.com/sufferingandsmiling.htm xv Potential impact of metro’s Line 4 on poverty in the Sao Paulo metropolitan region, Marcia Barone and Jorge Rebelo, World Bank, 2003. http://www.worldbank.org/transport/urbtrans/poverty_14_sp.pdf xvi The Challenge of Slums, Earthscan, London and Sterling VA, 2003.