TRANSPORT IN LATIN AMERICA AND THE CARIBBEAN: Strategies and Actions in Support of an Inclusive and Sustainable Development

0 TRANSPORT IN LATIN AMERICA AND THE CARIBBEAN: Strategies and Actions in Support of an Inclusive and Sustainable Development The Transport and ICT Global Practice Smart Connections for All Aurelio Menéndez Practice Manager, Transport and ICT Latin America and the Caribbean World Bank

GENERAL CONTEXT 1 Diversity of countries Income, size and fragility Common challenges Inequality and poverty Recent slowdown in economic growth In general, institutional frameworks need to be strengthened Historical gap in infrastructure assets Need to invest in infrastructure and human capital to improve competitiveness Global issues (eg. climate change terms of trade) Mexico Guatemala El Salvador Upper middle income Lower middle income IDA/Blend Haiti Dominican Republic Belize Honduras Jamaica Nicaragua Costa Rica Panama Ecuador Bahamas Colombia Peru Venezuela Chile Bolivia Trinidad & Tobago Guyana Suriname Paraguay Argentina Brazil Uruguay

2 TRANSPORT SECTOR AGENDA INCREASINGLY COMPLEX Economic growth driven by exports and consumption Average GDP growth in the region has been strong during the commodity boom though it has since slowed down. Focus on exports leads to substantial increase in transport flows. Very high and rising levels of urbanization Economic slowdown; dependence on commodity prices Climate change; natural disasters Economic inequality Urbanization By 2030, Latin America will have a level of urbanization of over 80%. Urban Areas: pillars of economic growth Increasing motorization levels Growing number of motor vehicles above GDP growth. Motorization Continuous increase in demand for transport Social and Environmental Impacts

HIGH LEVELS OF URBANIZATION 3 Percentage of population living in urban areas (1950-2030) Sources: United Nations (2002), World Bank (2002)

MOTORIZATION CONTEXT AND GROWTH 4 Motorization rates per 1000 population in 2010 Vehicules Motorcycles Brasil 259 57 Colombia 108 42 Chile 175 4 Ecuador 75 6 Perú 79 27 Venezuela 162 17 R. Dominicana 217 125 México 235 7 Estados Unidos 822 25 Canadá 629 18 Comparatively low use of private transport High percentage of non-motorized and public transport travel But as income per capita and urbanization rates increase, increase: number of cars and motorcycles per person number of trips Evolution of motorization rates in Colombia

IMPACTS ON CLIMATE CHANGE & AIR QUALITY 5 Transport is the fastest growing source of CO2 emissions Accounts for ~15% of all emissions in urban areas 6 5 GHG emission per capita 4 3 2 1 0 0 5,000 10,000 15,000 20,000 25,000 GDP per capita U.S (1850-2002) U.K (19850-2002) France (1851-2002) Japan (1870-2001) China (1950-2002) Brazil (1904-2002)? Despite the low motorization rate on in Latin America and be the means for less than 30% of trips, cars and motorbikes contribute over 70% of local pollutants and CO2 Source: Low Carbon High Growth, World Bank (2010).

INVESTMENTS IN INFRASTRUCTURE IN THE REGION ARE INSUFFICIENT 6 Infrastructure is important for growth The countries of the region do not prioritize investment in the economic growth cycle (2007-2014) Tasa de crecimiento del PBI real per capita (%) Infrastructure and growth Infrastructure Quality Index Calderon-Serven 2012 Tasa de crecimiento del PBI real per capita (%) Quality of infrastructure and growth Infrastructure Quality Index PBI Trillones USD corrientes 5 000 4 000 3 000 2 000 1 000 - Investment in Transport: volatile and insufficient 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2,50 2,00 1,50 1,00 0,50 - Transporte (%PBI) 6 5 4 3 2 1 Sub-Saharan Africa Quality Index transport infrastructure World Economic Forum 2014-2015 Latin America and the Caribbean Emerging and Emerging and Developing Asia Developing Europe Middle East, North Africa, and Pakistan Caminos Infraestructura Portuaria Infraestructura Transporte Aereo Advanced economies PBI Trillones USD corrientes Transporte (%PBI) * Argentina, Brazil, Chile, Colombia, México y Perú

BUT REDUCING THE INFRASTRUCTURE DEFICIT IS NOT JUST A MATTER OF RESOURCES 7 Rigorous sectoral planning and project evaluation are needed to ensure the selection of adequate economic return projects with attention to: the needs of poorest areas risk management related to climate change and natural disasters Mitigation and adaptation maintenance of existing stocks Strengthen policy/financing framework user charges/taxes/subsidies in the sector should be analyzed and allocated strategically (expanding options, correcting inefficiencies by creating incentives, improving transparency) policies/regulations to encourage private sector participation Need to generate a portfolio of projects with appropriate designs and processes ready for bidding / execution Improve budget execution... avoiding excessive delays in the bidding process...... and in the proper execution of the works

8 PRIORITY STRATEGIC THEMES AND LINES OF ACTION

STRATEGIC PRIORITY AREAS 9 Rural accessibility Management / maintenance of road assets Urban mobility (and accessibility of low-income urban populations) Externalities / social impacts Logistics and Regional Integration Private sector participation

RURAL AREAS: ENHANCED ACCESSIBILITY S CRUCIAL FOR POVERTY REDUCTION 10 The rural population accounts for about 20% of the population but contains over 50% of the extreme poor in Latin America and the Caribbean. The percentages of deficiencies vary substantially from 2% without permanent service (CL) to the lack of basic access (HT, GT, HN, PE) Three challenges: Reaching unserved locations: low cost technologies consistent capacity management and financing; Improving sustainability: emphasis on ongoing maintenance through contractual arrangements based on local labor (micro); Maximize impact: promote productive use services for the poorest through coordinated access to other complementary services (on territorial development mechanisms although they involve greater territorial complexity) income 30 25 20 15 10 5 0 Percent change in income of rural families with the provision of rural infrastructure (Peru) water+electricity With interaction Without interaction water+electricity+ telephone water+electricity+ telephone+allweather road

11 TERRITORIAL APPROACHES TO INCREASE IMPACT OF ENHANCED ACCESS Requirements? Participatory planning long-term strategic identification based on comparative advantages to enhance productive opportunities in rural areas Establish mechanisms to facilitate coordination across sectors and institutions at different levels Links between geographic areas based on productive connections that often extend beyond limits of administrative jurisdictions Prioritization and funding schemes taking into account payment capacity/funding stakeholders Sustainable maintenance systems, with community involvement (micro enterprises)

12 RURAL TRANSPORT AND TERRITORIAL DEVELOPMENT: EXAMPLES WORLD BANK SUPPORT Ongoing projects: Nicaragua: Rural Roads Improvement Project (US $ 35 m.) + Additional Financing (US $ 57 m.) Improved market access infrastructure and social services Community modules for road maintenance Haiti: Central and Artibonite Territorial Development Project (US $ 50 m.) Territorial perspective Peru: Rural Transport Project (US 50 m., co-financing from the IDB.) Two goals: feeding logistics corridors; access to areas of greatest poverty Improved capabilities at the provincial level Note: Quantities in US$ represent amount of World Bank lending

13 ROAD ASSET MANAGEMENT INCREASING USE OF PERFORMANCE CONTRACTS Increasingly widespread use of multi-year performance contracts for maintenance and rehabilitation...... better governance (but requires ability to monitor/enforce compliance contracts) Rehabilitation Phase Maintenance Phase Specific Performance Indicators for key Project characteristics Initial Service Level Minimum Level of Service Requirement after rehabilitation Service Level Minimum Level of Service Requirement during maintenance phase time 0 12-18 months 60 months

14 IMPROVING ROAD MANAGEMENT: EXAMPLES WORLD BANK SUPPORT Ongoing projects: Bolivia: Road Sector Capacity Development Project (US $ 220 m) Performance-Based Conservation Program (Santa Cruz-Trinidad) Bolivia: National Road and Airport Infrastructure Project (US $ 109 m.) Improvement and road paving San Buenaventura-Ixiamas; and strengthening systems for environmental and social management; Rurrenabaque airport improvement Brazil: Highway Improvement Project in the State of Bahia (US $ 200m - co-financed with the European Investment Bank) Brazil: Tocantins Integrated and Sustainable Regional Development (US $ 300 m.) Improvement works and paving state highways in coordination with productive activities and improvements to education systems and environmental management Brazil: Mato Grosso do Sul (US $ 300 m.) Brazil: Sustainable Transport Project in Sao Paulo (US $ 300m + MIGA guarantee US $ 300 m..) Logistics perspective; strengthening risk prevention systems (adaptation) Paraguay: Road Rehabilitation Project (US $ 150 m.) Argentina: Highway Program in Norte Grande (US $ 400 m.) Road improvement program in logistics corridors and access areas smaller in the northern region in integration with social and environmental management Projects under preparation: Paraguay: Rehabilitation and Maintenance Project (US $ 100 m.) Bolivia: Santa Cruz Road Corridor Connector Project (US $ 230 m.)

15 NATURAL DISASTERS: ATTENTION TO IMPACTS, MITIGATION AND ADAPTATION Several countries in the region prone to natural disasters Expanded physical impacts of poverty and governance challenges Strategy: blend of quick response and long-term actions to improve sustainability Rehabilitation and maintenance: Cash for Works, SMEs Infrastructure adaptation: design criteria, lower cost options Institutional support: infrastructure management, disaster preparedness Key: link between maintenance and resilience Assignments appropriate maintenance needs Adjust maintenance work to incorporate adaptation factors

16 NATURAL DISASTERS: WORLD BANK SUPPORT EXAMPLES Ongoing projects / recently completed: Haiti: Infrastructure and Institutions Emergency Project (US $ 65 m.) Restore the functioning of the sector entities, improvement of sewage and waste management, road reconstruction Haiti: Emergency Reconstruction Project Bridges and Vulnerability Reduction Network (US $ 20 m.) Honduras: Second Rehabilitation and Improvement of Roads (US $ 73 m, incl AF..) Components of investment to restore corridors affected by Tropical Depression 16, 2008 Haiti: Risk Management and Reconstruction (US $ 60 m.) Strengthening risk management systems and reconstruction of water infrastructure, sanitation and transport against floods Incorporation of mitigation and adaptation Brazil: Sustainable Transport Project Sao Paulo (adaptation) Brazil: Urban Transport Project Rio, supporting the definition of mechanisms for emergency care resulting from climate change Peru: new phase of rural roads program

17 URBAN AREAS: ACCESS FOR LOW-INCOME POPULATIONS, AIR QUALITY, AND QUALITY OF LIFE? Accessibility. Urban transport is costly for poor households. For 40% of households with incomes: lack of access to public transport exacerbates social exclusion subsidies often are not progressive. Competitiveness. With high levels of urbanization, cities represent the economic pillar of the country: its operation affects competitiveness Approx. 50% of GDP is generated in the 15 largest metropolitan areas Innovation centers, cultural exchange, and quality of life Air Quality Transport is the fastest growing source of CO2 About 15 percent of all emissions in many cities in Latin America Adverse health effects ("Transport for Health") Despite the low motorization rate on in Latin America, cars and motorbikes contribute to large portion of local pollutants and CO2

CHALLENGE: "GREEN" AND ACCESSIBLE TRANSPORT FOR SUSTAINABLE AND INCLUSIVE URBAN MOBILITY 18 Three key pillars of strategies & action areas: Institutional framework and planning Technical and operational dimensions Financing and private sector participation

WORLD BANK-SUPPORTED PROJECTS 19 Supporting the implementation of BRT systems in response to the needs of urban mobility (Colombia, Mexico, Santiago, Lima) Sedicated stations Smart Cards Access for disabled Colombia: Project to Support Urban Transport Program (Loan US $ 200m) Continued mass transit project (BRT), including secondary cities Mexico: Transformation Program of Urban Transport (CTF, US $ 200m, IBRD, US $ 150m) Strengthening the planning and construction of infrastructure for the operation of systems with low-emission technologies Argentina: Urban Transport Project in Metropolitan Areas (two phases) (phase, US$100m)

WORLD BANK-SUPPORTED PROJECTS 20 Rail systems (trains and metros) with system integration Brazil: Projects Lines 4 and 5 of the Sao Paulo metro and suburban train (CPTM) (US $ 130m, US $ 650m, and additional funding US $ 113 m, respectively...) Procurement of rolling stock and signaling and communications system Brazil: Rio de Janeiro and Improved "Greening" Suburban Train System (SuperVia) (additional 600 m loan for US $.) Acquisitions of trains and the integrated transport system and urban development to reduce carbon emissions Ecuador: Quito Metro (US $ 205 m, financed with IDB, CAF and EIB.) Peru: Metro Line 2 of Quito (US $ 300 m, financed with IDB, CAF, AFD, other.)

21 NEGATIVE EXTERNALITIES: SOCIAL / HEALTH IMPACTS (ROAD SAFETY) Road safety Latin America and the Caribbean has countries with the death rates from road accidents highest in the world Approximately 130,000 deaths and 6 million injured each year No further action would increase by 36% by 2020 They exceed 25 deaths per 100,000 population (five times more than good performing countries) Accidents represent a cost of ~ US $ 20 billion A matter of social equity Vulnerability to accidents is more concentrated in certain groups (pedestrians, young, lower income) The Decade of Action 2011-2020: The Decade of Action 2011-2020: Sets the ambitious goal to save 5 million lives and prevent 50 million serious injuries in low- and middle-income countries. Other road injury 2% Road injury deaths by road user type Bus occupant 2% Truck occupant Van 2% occupant 2% Car occupant 29% Twowheeler rider 18% Bicyclist 5% Pedestrian 40% 21

22 ROAD SAFETY: EXAMPLES WORLD BANK SUPPORT Road safety Argentina: Road Safety Project (USM + possible AF additional US $ 30 m.) strengthening institutional processes and equipment acquisitions Road Projects: incorporate audits and road safety components Colombia: Strengthening the institutional and operational framework for Regional / Ecuador road safety attention to the most vulnerable users (SFLAC) Regional: Development a regional road safety observatory Global Road Safety Facility; IRTA / OECD; DGT of Spain, Argentina ANSV; and Sites Projects / recently approved or under development initiatives: Brazil, Ecuador: Institutional Framework Assessment Brazil: support for the preparation of medium term evaluation of the Decade of Action for Road Safety (contributing efforts of the Government of Brazil and WHO) Paraguay: Strengthening the institutional framework for road safety Note: Amounts in US $ represent loan amounts (in millions)

23 SOCIAL IMPACT: GENDER KEY CROSSCUTTING AGENDA IN THE ACCESS TO OPPORTUNITIES The issues that motivate the consideration of gender: Improving equal access to employment opportunities and services Take into account differences in transport needs, to improve access and journey times Fewer women have a car; They are responsible for family activities requiring different travel patterns Addressing impacts of violence and crime Also in rural areas and indigenous groups because of limited mobility and isolation Gender analysis helps improve design and implementation success Analysis as part of the social analysis of the project Incorporate indicators (depending on type of project) In projects financed by the World Bank is required to confirm/identify possible actions to address gender issues

24 SUPPLY CHAIN & LOGISTICS: IMPROVING THE COMPETITIVENESS OF THE ECONOMIES Key issue on the competitiveness agenda and increased trade (particularly vis-à-vis Asian countries) Need of an overall vision: infrastructure and transport services, chain management and operators, trade facilitation (regulations, "software" processes) Countries making more efficient transport chains / logistics ensure more stable benefits against possible fluctuations in the market: Reducing logistics costs between 20 and 50% are possible by improving the efficiency of supply chain Reduction of logistics costs can be transferred into reductions in prices of food products of 5 to 25% When transportation services are inefficient, firms must maintain higher inventories, resulting in financial costs (30% in LAC, 15% in the US

MODAL SPLIT IN LOGISTICS CARGO 25 Dominance of road transport (over 70%) The imbalance in the supply matrix freight generates inefficiencies in the transport chain...... And a better balance can have positive effects on environmental factors and energy consumption Colombia

26 SUPPLY CHAIN & LOGISTICS: WORLD BANK SUPPORT EXAMPLES Projects / activities concluded recently: Central America: Identifying Bottlenecks Logistics Infrastructure Integration and Border Crossings Panama: Study of Strategies for the Maritime Sector (SFLAC) Paraguay: Options for Using Waterway Paraguay-Parana River Argentina, Brazil: Studies Strategies for Improving Policies for Transport Logistics Brazil: Transport "Green" by load (improve cargo vehicle operations to reduce costs and emissions) Guatemala: Opportunities for Improved Transport Logistics Brazil: Multimodal Corridor for San Francisco River Valley (RAS) Caribbean: Improving Connectivity Ongoing activities: Southern Cone: "From Farm to Market: Analysis of Soya Transport Chains" Peru: "Analysis of Value Chain Selection" Brazil: Opportunities for cabotage transport (SFLAC)

27 PRIVATE SECTOR PARTICIPATION: RENEWED INTEREST IN PUBLIC-PRIVATE PARTNERSHIPS Search for private funding to increase the quantity and quality of infrastructure and transport services Transfer risks to generate efficiencies and innovation Options that vary in the level of risk transfer Public-Private Participation Low...Private Sector Participation. High

PRIVATE INVESTMENT IN INFRASTRUCTURE PROJECTS 28 Private Investment in Transportation Projects by Region Investors focus on quality projects: reduced participation of countries with lower income levels

WORLD BANK PRODUCTS TO ADDRESS RISKS IN PPPS 29 IBRD/IDA Partial Risk Guarantee Covers lenders against the risk of default by governments (or agencies) of its contractual obligations in a private sector project Partial Credit Guarantee (IBRD only) Covers credit risk in public sector projects of governments / public borrowers MIGA Risk Insurance (policy, not sovereign) covers the international debt providers and equity by: Restrictions on transfer of resources Expropriation War and civil disturbance Breach of contract Non-compliance of sovereign financial obligations IFC Private Sector Guarantees: Trade finance Liquidity Credit

PPPS: RECENT ACTIVITIES IN THE REGION 30 Brazil Strengthening the regulatory framework and capacity at the federal level and in the states of Minais Gerais, Bahia and Sao Paulo "Reimbursable Advisory Service" support framework for evaluating proposals for the extension of Metro de Sao Paulo Uruguay: Training program for the public sector on issues of PPP (SFLAC). Study of technical assistance and advice on issues of financing a program of road PPPs Colombia: Technical assistance and support in reforming the agency transport concessions Study financing of a PPP road program Study of options for structuring the financing of Bogota Metro Chile: technical assistance program evaluation system for concessions (development of conceptual framework of the Value for Money and strengthening the institutional framework for the management of concessions) Peru: program of technical assistance grant program (implementation of the methodology of value for money and guidance on issues of financial structuring of concessions)

31 Portfolio Summary of projects and activities in the transport sector of LAC

TRANSPORT AND ICT LENDING PORTFOLIO 32 14 12 10 US$ Billions 8 6 4 2 0 SAR MNA LCR ECA EAP AFR

TRANSPORT AND ICT YEARLY LENDING 33 /Metros

34 TRANSPORT AND ICT GLOBAL PRACTICE PROJECT PORTFOLIO /Metros

35 ACCESS TO PROJECT INFORMATION: HTTP://WWW.WORLDBANK.ORG/PROJECTS

36 ACCESS TO INFORMATION ON PROCUREMENT OPPORTUNITIES AND CONSULTANCIES

37 ACCESS TO INFORMATION ON PROCUREMENT OPPORTUNITIES AND CONSULTANCIES 37

38 Thank you!