POVERTY & EQUITY NOTES JUNE 2018 · NUMBER 7 Urban Transport Infrastructure and Household Welfare: Evidence from Colombia Tobias Pfutze, Carlos Rodríguez-Castelán, and Daniel Valderrama-González The distributional effects of urban transport policies are a broadly understudied topic, particularly when in comes to developing countries. This study1 seeks to fill in this gap in the existing literature by analyzing the effects of a newly established bus rapid transit system in Barranquilla, Colombia. The analysis focus on evaluating the compositional and distributional effects that may follow from the displacement of households originally living in the areas in close proximity to bus rapid transit stations. Overall, the analysis performed points to poor households living in proximity to stations being replaced by households from upper socioeconomic strata. Latin America and the Caribbean are experiencing urban areas, contrasting with 49 percent and 45 rapid urbanization. Rapid urbanization is one of the percent, respectively, in the 1960’s. The rapid growth defining characteristics of the development process of urban population thus requires the development of developing countries. In Latin America and the of adequate infrastructure that supports the efficient Caribbean, despite a reduction in the urban provision of essential services in urban areas. Of population growth rate from 4.4 percent in the 1960’s particular importance are urban transportation to 1.4 percent (as of early 2010s), the urban services, since lack thereof leads to saturated roads population growth rate is higher than the overall and low rates of mobility. In response to this, bus population growth rate, currently documented at 1 rapid transit (BRT) systems have shown a dramatic percent. Similarly, for Colombia, after a decrease of growth over the recent decade. the urban population growth rate from 5.9 percent in the 1960’s to a current 1.4 percent, the rate is still BRT systems have adequately responded to higher than the population growth rate registered at transportation needs stemming from 0.9 percent. urbanization. The BRT system is an urban mass transport. It consists of a bus network that uses Correspondingly, urbanization requires adequate dedicated lanes that allow buses rapid mobility. So infrastructure growth. Today, 80 percent of Latin far, BRT systems have been implemented in 205 cities Americans and 77 percent of Colombians live in across the world, transport 34 million passengers 1 This note summarizes findings of a larger working paper: Pfutze, Tobias; Rodriguez-Castelan, Carlos; Valderrama- Gonzalez, Daniel. 2018. Urban Transport Infrastructure and Household Welfare: Evidence from Colombia. Policy Research Working Paper; No. 8341. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/29375 daily and cover a network of over 5,600 kilometers. In the Transmetro system was originally intended to Latin America, this system was pioneered by Curitiba benefit the poorest households through better in Brazil and Quito in Ecuador. Soon after, BRT connectivity and lower fares. Currently, there are 18 systems spread to large capital cities, including stations on the main lines and over 600 stops along Mexico City and Bogota. Colombia adopted the BRT the feeder lines. The number of passengers using this in 2001, introducing it in Bogota, and later expanding BRT system rose from 3,658,421 in 2010 to over it to major and mid-size cities. 36,400,00 in 2016. This study combined geocoded household survey The Issue and Our Approach data with information of the expansion of the BRT system. Because we are interested in evaluating Analysis of BRT systems is still lacking welfare any possible effects that the introduction of the BRT effects. The benefits of BRT systems, in terms of system may have had on household characteristics, improved transport efficiency and environmental we rely on data from the 2008–15 rounds of the Gran gains, have been widely documented in the literature. Encuesta Integrada de Hogares—GEIH survey, the Nevertheless, the literature on the economics of main labor survey in Colombia conducted by the public transportation is still scarce, particularly National Administrative Department of Statistics regarding the impact on household welfare. (DANE). This survey provides information on an Furthermore, urban transport studies are scarce for ample set of welfare, housing, and labor smaller cities and middle-income countries. This characteristics that are relevant for this study. It is study seeks to fill in the knowledge gap on the also the only survey that offers a large, representative welfare effects that urban transport may have on sample size at the metropolitan area level for 13 cities households in mid-size cities. To this end we including the Barranquilla-Soledad metropolitan investigate the distributional effects of the BRT area. To assess the exposure of households to the system in Barranquilla, Colombia. In particular, we Transmetro system, including both main lines and focus on the compositional changes that feeder line stations, we use geo-coded information neighborhoods may have experienced as an effect of collected from official maps of this system. proximity to Transmetro stations. Households are aggregated on blocks, and then proximity to a Transmetro station is calculated as the Transmetro is the BRT system serving distance from the block centroid. The study used a Barranquilla in Colombia since 2010. The total of 2,088 blocks. Barranquilla metropolitan area is Colombia’s fourth largest population center, with over 2 million people. Select Findings It consists of the municipalities of Barranquilla, Galapa, Malambo, Puerto Colombia, and Soledad. Barranquilla’s BRT system, Transmetro, entered Following the implementation of Transmetro, the service on April 2010 and currently serves the quality and quantity of housing improved. The municipalities of Barranquilla and Soledad. Because main results on home characteristics have to do with of the demographic and socio-economic the quality and quantity of housing. First, proximity characteristics of the Barranquilla metropolitan area, to Transmetro stations had a strong effect on the June 2018 · Number 7 2 quality of the housing stock. The results show that children decreased in households, both owning and there was an increase in the number of apartments, renting, living in proximity to feeder stations. the number of rooms, and the number of exclusive toilets in the households in closer proximity to Poor and less educated households were replaced stations. Second, home values and rents increased by richer and more educated ones. The educational also in proximity to stations. The value effect on attainment of adults living in households close to BRT homes was only registered for houses in proximity to stations also changed. Our results show that, in feeder stations, while the effect on rents was found proximity to stations, there was a decrease in the on both main and feeder stations. number of individuals who completed less than high school. Interestingly, this decrease was offset by an Housing prices went up, but not as a direct effect increase in the number of individuals achieving of the BRT system. The results suggest that the higher education. Thus, higher educated adults increases in home-values and rents are only the result replaced lower educated ones in the areas close to of the increase in the quality of housing, and not of Transmetro stations. Further effects on household the proximity to stations per se. One possible economic characteristics were also found. There was explanation is the signal that the Transmetro system an important reduction in the number of poor public investment gives to the households about the households in the areas nearby main line stations. overall commitment of local authorities to those With regards to proximity to feeder stations, the areas of the city. Thus, public investment could have number of households owning a motor vehicle secondary effects such as better-maintained roads. increased. Similarly, the average per capita income These associated secondary effects could potentially rose among households in proximity to Transmetro drive wealthier households, without the need to use stations, except for household-owners close to main public transportation, and more private housing stations. Furthermore, there was reduction in the investments to areas within BRT stations proximity. number of households in the bottom two income quintiles, and at the same time an increase in the Compositional changes in households also number of households in the fifth quintile. This followed, including an increase in smaller confirms that the implementation of Transmetro led households. The better and more expensive housing to a replacement of poorer households by wealthier stock that developed in response to the Transmetro ones. system, suggests that a change occurred in the composition of households living in proximity to stations. Our results show that indeed more well-off Conclusions individuals and families replaced poorer ones. First, proximity to feeder stations raised the number of The main results point towards a negative smaller households in the area, consisting of one or distributional impact of the BRT system two members, and reduced the number of large implementation among poor households, despite households, consisting of more than five members. the original objective to benefit them through Related to this, is the additional finding that better connectivity. This study documents an proximity to feeder stations reduced the number of important displacement of poor households, and a young individuals, between 16 and 22 years old, replacement of them by households in middle- and living in owner-households. Similarly, the number of June 2018 · Number 7 3 upper-income strata, following the implementation ABOUT THE AUTHORS of the Transmetro system in Barranquilla. In previous Tobias Pfutze is an Assistant Professor of literature, distributional effects of BRT systems have Economics at Florida International University been often overlooked. Nevertheless, our study sets tpfutze@fiu.edu a precedent for analyzing household welfare effects Carlos Rodríguez-Castelán is as a Senior of public transportation and, more importantly, Economist and Global Lead of the Markets and questioning the often-unstated assumption that Institutions GSG at the WBG Poverty and Equity households do not relocate in response to public Global Practice. transportation policies. crodriguezc@worldbank.org Daniel Valderrama-González is a PhD student in Economics at Georgetown University This note series is intended to summarize good practices and key policy findings on Poverty-related topics. The views expressed in the notes are those of the authors and do not necessarily reflect those of the World Bank, its board or its member countries. Copies of these notes series are available on www.worldbank.org/poverty June 2018 · Number 7 4