Sharing Knowledge on Targeted Subsidies in Urban Transport
GPOBA holds second webinar
Making sure the poor are included in urban transport projects is a challenge in many developing countries, and a recent GPOBA webinar gave development practitioners a chance to share their experiences and learn how GPOBA can help cities develop pro-poor subsidy schemes.
Shomik Raj Mehndiratta, lead urban transport specialist for the World Bank Group’s Latin American and Caribbean region, was the featured speaker, sharing his experiences from Bogota, where the World Bank, GPOBA and the Korean ICT trust funds financed a study to help the city design a new program to subsidize public transport for the poor. GPOBA’s infrastructure specialist, Ana Silvia Aguilera, moderated.
“It’s one of the toughest challenges faced by public transport systems: how to reconcile financial sustainability with social inclusion,” according to Mehndiratta and his colleague, Camila Rodriguez, in a blog published recently on the World Bank Group’s website. (LINK TO BLOG). “On the one hand, if fares do not cover operational costs, systems need subsides to survive, which can pose serious financial and political risks. In some cases, transport systems operating with inadequate financial resources may experience system deterioration, safety problems and service curtailment.”
“On the other hand, “ note Mehndriatta and Rodriguez, “if fares are set to reflect the real price of transport services so that operators can recoup their costs without subsidies, then the poor are often priced out.”
Cities need to balance financial sustainability and social inclusiveness, with research suggesting that cities should set fares to allow cost recovery and then offer targeted subsidies for the poor.
When the Mayor of Bogota asked the WBG to help design the targeted subsidy program, GPOBA lent its support. City leadership engaged, and, in February 2014, Bogota rolled out its pro-poor targeting subsidy program.
For the presentation and other related materials, go to Urban Tranport Documents
To hear the full webinar: go to Urban Transport Webinar