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What does public and private sector investment in transport look like?
Both public and private sector investments play an important role in supporting sustainable urban mobility and minimizing the costs of private automobile use. Photo by Mariana Gil/EMBARQ Brasil.

Both public and private sector investments play an important role in supporting sustainable urban mobility and minimizing the costs of private automobile use. Photo by Mariana Gil/EMBARQ Brasil.

Congestion, high levels of air pollution, and traffic crashes are consequences of a culture of investment that has focused for decades on the automobile. These externalities can cost up to 10 percent of a country’s GDP, and the world’s vehicle fleet is projected to double by 2050. In 2010, the transport sector, which is responsible for the most significant growth in emissions worldwide, generated 22 percent of energy-related COemissions.

Because transport systems have a direct impact on quality of life and urban development, shouldn’t investments in the transport sector promote a path to more sustainable development for our cities? To answer this, we must think beyond the question of how much, and pay additional attention to the questions of why and how these investments occurred in transport.

The World Resources Institute (WRI) publication The Trillion Dollar Question: Tracking Public and Private Investment in Transport shows that global annual investment in transport is between US$ 1.4 and US$ 2.1 trillion, similar to Mexico and Brazil’s respective GDPs of US$ 1.1 trillion and US$ 2.2 trillion, and 28 times the value invested in urban mobility in Brazil through the Growth Acceleration Program (Programa de Açeleração do Crescimento or PAC), the World Cup, and the Olympics investment programs combined.

While the public sector invests between US$ 569 and US$ 905 billion in urban mobility annually, the private sector invests between US$ 814 billion and US$ 1.2 trillion. High-income regions like the United States and the European Union account for 75% of global investments in transport. The developing world, which is most in need of quality public transport, only receives 25%.

In 2012, the largest multilateral development banks in the world committed to providing more than US$ 175 billion over the next 10 years to promote sustainable transport in developing countries. Here, the challenge remains to engage in a similar fashion the big national banks of emerging economies like China and Brazil to invest as well.

In Brazil, investments in mobility provided by the PAC, in addition to those announced by the federal government after the protests of June 2013, totaled 110 billion reais (US$ 48.7 billion). Many of these investments are expected to occur over the next few years, and will be used to implement public transport corridors to guide urban development. In addition, Brazil will invest in transport infrastructure including paving, expanding capacity at ports, as well as rail and road projects that will amount to another 200 billion reais (US$ 89 billion) by 2025. While these projected numbers appear large, investments in transport infrastructure in 2014 are expected to total only $27 billion reais (US$ 12 billion), equivalent to 1% of the European Union budget.

Brazil’s public investments need to be used more strategically. Investments should be directed primarily at leveraging private resources and providing more sustainable transport that generates fewer greenhouse gas (GHG) emissions as compared to roads for private automobiles. However, in Brazil, greater private funding depends on the ability to attract more investors. A more stable, secure and transparent environment minimizes risks and provides a fertile ground for increasing the contribution of private resources for sustainable transport.

This text was published in Portuguese on TheCityFix Brasil. The article was originally published in the Journal Urban NTU, May/Jun 2014. Toni Lindau is the President and Director of EMBARQ Brasil