Abstract

This paper provides an overview of the major current debates on infrastructure policy. It reviews the evidence on the macroeconomic significance of the sector in terms of growth and poverty alleviation. It also discusses the major institutional debates, including the relative comparative advantage of the public and the private sector in the various stages of infrastructure service delivery as well as the main options for changes in the role of government (i.e. regulation and decentralization). Document type: Book

Abstract

To increase investment in infrastructure, in the early 1990s Chiles government introduced private capital into the transport infrastructure sector, covering roads and highways, bridges, tunnels, and airports. The chosen mechanism: a concession scheme through which private firms would finance and build a given project and then operate the infrastructure for a set of number of years, recovering their investment by collecting tolls from users. Among the lessons learned from the experience: 1) As much as possible, avoid concessioning roads for which there are convenient alternative freeways nearby. 2) Choose the right variable for awarding a concession. Avoid mechanisms that (by promoting large payments to the state or short-term concession periods) encourage high tolls, and if you choose to award a concession to the firm charging the lowest tolls, place a floor and ceiling on possible bids. The floor is to guarantee the concessions financial viability; the ceiling is to prevent inefficient traffic diversions. Ties at either end should be resolved by a second variable, such as the level of transfers between the state and the firm. 3) Allow downward toll flexibility so that the concessionaire can react to unexpectedly low traffic flows, especially for certain types of vehicles. 4) Pay special attention to the tendering mechanism and to the general incentive structure. There are limits to the pure least-present-value-of-revenue (LPVR) auction, but income guarantees do enhance liquidity. In fact, a minimum-income guarantee through an LPVR auction is an instrument for credit enhancement, not income support. Alternatively, some form of financial innovation should be encouraged to make debt service commitments more flexible. 5) If concessions are tendered by traditional methods and income guarantees will be given, cover only a fraction of the concessionaires expected income stream, to reduce the states financial exposure and to improve the incentives to the concessionaire. 6) Make the contracts as complete as possible but allow for later modifications or renegotiations, and include a well-designed dispute resolution mechanism. Document type: Book

Abstract

The Tool for Rapid Assessment of City Energy (TRACE) is used for conducting rapid assessments of energy use in cities. It helps prioritize sectors with significant energy savings potential, and identifies appropriate energy efficiency interventions across six sectors-transport, municipal buildings, water and waste water, public lighting, solid waste, and power and heat. It is a simple, low-cost, user-friendly, and practical tool that can be applied in any socioeconomic setting. This report is based on the implementation of the TRACE tool in Constanta in July 2013 and it outlines ideas on what the city could further do to improve its energy efficiency performance. It details the analysis carried out and the recommendations derived as a result, for district heating maintenance and upgrade, non-motorized transport, public transport development, parking restraint measures, municipal building benchmarking program, municipal buildings audit and retrofit, street lighting timing program, energy efficiency action plan and strategy, and awareness raising campaigns. Document type: Book

Abstract

The Tool for Rapid Assessment of City Energy (TRACE) is used for conducting rapid assessments of energy use in cities. It helps prioritize sectors with significant energy savings potential, and identifies appropriate energy efficiency interventions across six sectors-transport, municipal buildings, water and waste water, public lighting, solid waste, and power and heat. It is a simple, low-cost, user-friendly, and practical tool that can be applied in any socioeconomic setting. This report is based on the implementation of the TRACE tool in Iasi in July 2013 and it outlines ideas on what the city could further do to improve its energy efficiency performance. It details the analysis carried out and the recommendations derived as a result, for energy efficiency action plan and strategy, district heating maintenance and upgrade, non-motorized transport, public transport development, traffic flow optimization, parking restraint measures, municipal building benchmarking program, traffic restraint measures, municipal buildings audit and retrofit, and street lighting timing program. Document type: Book

Abstract

Discussions of competition and regulatory reform typically focus on price and quantity effects. But improving certain infrastructure services can also stimulate entry, and competition in user industries downstream, allowing new firms to enter, incumbent users to offer new products, and rivalry to intensify. The authors present a case study of how innovations in road freight services affect selected downstream users of those services after regulatory reform. After a period of rigid regulation, and heavy government interference, Mexico in 1989 developed a new policy framework for road transport, with free entry, and market-based price setting. The result: faster, more reliable trucking has allowed user companies to offer new, previously unavailable products, and to reach new areas with existing products. Cheaper, more customer-responsive trucking services have allowed logistical innovations in user firms, and some user firms have decided not to keep their own fleets of trucks, but to outsource trucking services on the open market, thereby converting fixed costs to variable costs. For one fertilizer company, the benefits of reform included a ten percent improvement in operating margin. Successful reform requires careful planning and execution, and political support at high levels. Regulatory reform also profoundly changes the sectoral institution formerly responsible for the regulation. Enough resources should be provided to help organizations in the reformed industry make the transition to the post-reform environment - helping with such tasks as defining the organizations new role, and facilitating the redeployment of staff. The national competition agency can help greatly in laying the groundwork for reform by making a compelling case for the reforms expected benefits. After reform, the competition agency should also help with enforcement, to ensure that the cozy, cartel-like behavior stimulated by tight entry restrictions does not persist. In Mexico, three strong interventions were required to discipline attempted anti-competitive practices in the trucking industry in the years following reform. Document type: Book

Abstract

Transport infrastructure is deemed to be central to development and consumes a large fraction of the development assistance envelope. Yet there is debate about the economic impact of road projects. This paper proposes an approach to assess the differential development impacts of alternative road construction and prioritize various proposals, using Nigeria as a case study. Recognizing that there is no perfect measure of economic well-being, a variety of outcome metrics are used, including crop revenue, livestock revenue, non-agricultural income, the probability of being multi-dimensionally poor, and local gross domestic product for Nigeria. Although the measure of transport is the most accurate possible, it is still endogenous because of the nonrandom placement of road infrastructure. This endogeneity is addressed using a seemingly novel instrumental variable termed the natural path: the time it would take to walk along the most logical route connecting two points without taking into account other, bias-causing economic benefits. Further, the analysis considers the potential endogeneity from nonrandom placement of households and markets through carefully chosen control variables. It finds that reducing transportation costs in Nigeria will increase crop revenue, non-agricultural income, the wealth index, and local gross domestic product. Livestock sales increase as well, although this finding is less robust. The probability of being multi-dimensionally poor will decrease. The results also cast light on income diversification and structural changes that may arise. These findings are robust to relaxing the exclusion restriction. The paper also demonstrates how to prioritize alternative road programs by comparing the expected development impacts of alternative New Partnership for Africas Development projects. Document type: Book

Abstract

The aim of this paper is to provide feedback on the question of socioeconomic benefits from rural road development and the impact of transport infrastructure on the poor, particularly the poorest and the bottom 20 percent of the population. This paper relies on impact evaluation methodologies, which are traditionally used in social sectors but less so in the transport sector. The study, including first surveys, was launched in 2003 under the Tocantins Sustainable Regional Development Project. The paper highlights the context that led to the project’s design, which included an impact evaluation of the works envisaged under the project. The paper also highlights some of the main challenges faced by this impact evaluation and how these challenges were addressed for the present study. It then provides details about the data collected during the surveys and the key relevant characteristics of the population targeted by the surveys. It discusses the possible estimation methods envisioned to undertake the study and provides the main results of the assessment based on these methods. The analysis shows that improved rural roads changed people’s transport modal choice. People used more public buses and individual motorized vehicles after the rural road improvements. The paper also finds that the project increased school attendance, particularly for girls. Although the evidence is relatively weak in statistical terms, it indicates that the project contributed to increasing agricultural jobs and household income in certain regions. Document type: Book

Abstract

It is widely accepted that the costs of underpricing energy are large, whether in advanced or developing countries. This paper explores how large these costs can be by focussing on the size of the external effects that energy subsidies in particular generate in two important sectors—transport and agriculture—in two countries in the Middle East and North Africa, the Arab Republic of Egypt (transport) and the Republic of Yemen (agriculture). The focus is mainly on the costs associated with congestion and pollution, as well as the impact of underpriced energy for depletion of scarce water resources, including through crop selection. Quantifying the size of external effects in developing countries has received relatively little analytical attention, although there is a significant body of literature for developed countries. By building on earlier research, as well as employing the United Nations ForFITS model, the paper provides indicative estimates of the external costs of energy subsidies, as manifested in congestion and pollution. The estimates using simulations indicate that these costs could be materially reduced by elimination or reduction of energy subsidies. The paper also describes the impact of energy subsidies on water consumption in a region where water resources are particularly limited. The findings provide further evidence of the adverse and significant consequences of subsidizing energy. Document type: Book

Abstract

In Croatia, initial steps to reform the railway sector date back to the middle of the first decade of the 2000s, with the formation of Croatian railways as a holding company. To help with further reforms of the Croatian railway sector, over the period 2011-2013, the World Bank was engaged in dialogue with the Croatian Government and the Croatian railway companies which resulted in a Croatian railway policy note. The poverty and social impact analysis (PSIA) is an analysis of the intended and unintended consequences of policy reforms on the wellbeing or welfare of different social groups, with particular focus on the poor and vulnerable. PSIA offers a set of analytical and process tools that: (a) determine distributional impacts to improve the analytical underpinnings of policy making; and (b) engage appropriate stakeholders in the policy-making process. The report is divided into following sections: first section gives executive summary. The introduction provides information on the economic situation in Croatia, including unemployment rates and pensions, the situation of the railway sector, and data on the restructuring process of the Croatian railways companies in second section. The third section contains the results obtained from the group discussions and in-depth interviews which are divided into four parts: the circumstances upon leaving the railway companies, after leaving, transferring to a new workplace, and the broader impacts on the community, including the impacts of closed and reduced lines. The last part of the section contains recommendations based on the obtained results.

Abstract

Turkey’s demographic and economic transformation has been one of the world’s most dramatic, with urban growth and economic growth proceeding hand in hand. Distinguishing Turkey from many other developing countries has been the pace, scale, and geographical diversity of its spatial and economic transformation. Fast-growing secondary cities bring added challenges that define Turkey’s second-generation urban agenda. New and differentiated service standards will need to be established across both dense urban built-up areas and small villages and rural settlements within the newly-expanded metropolitan municipality administrative area. These developments make planning, connecting, and financing important policy principles for Turkey’s second-generation urban development agenda. This policy brief frames a second-generation urban development agenda to support Turkey’s transition from upper middle income to high income.