Introduction

Rapid urbanization in the developing world means more people than ever will be living and working in cities. Today cities harbor approximately 45 percent of the world’s 6 billion inhabitants. Estimates suggest that by 2050 the world’s population will be approximately 10 billion, 60 percent of all people will live in cities, and there will be an increasing number of cities with more than 10 million inhabitants, i.e. "megacities." The United Nations reports that there will likely be 33 megacities in the world by 2015 and that 27 of them will be located in the developing world. A predominant challenge in the future, therefore, will be to work with developing countries so they may attain a higher standard of living than most currently enjoy while avoiding depletion and damage to environment assets (e.g. energy resources, land, water, air, biodiversity, etc.) from rapid urbanization. Enabling economic growth and the attainment of a higher standard of living while conserving and protecting environmental assets for the use of current and future generations may be defined as "sustainable development." Managing the demand for energy – and how it is produced, distributed and consumed – is at the nexus of the sustainable development challenge.

Managing the demand for energy in all sectors is key to sustainable development; given current trends, it is especially important in the transport and urban development sector. By 2000 the worldwide fleet of road motor vehicles will have grown 34 percent since 1989, from 557 million to 745 million vehicles. If the current urbanization, land development and economic development trends continue, the world will have over a billion cars — in addition to millions of trucks, buses and motorcycles — by 2014. Given current urbanization and economic growth trends in the developing world, more people and more goods will be making more trips in urban areas, often over longer distances, than ever before, i.e. an increase in the demand for mobility or vehicle-miles-traveled (VMT). Current trends also suggest that the developing countries will eventually be the world’s biggest consumers of, and investors in, motor vehicles, transport energy and urban infrastructure. Projections reflect that the developing world will be home to approximately 50 percent of the world’s motor vehicles by 2030 and it will have the highest rate of growth in VMT. Comparative rates of motorization from around the world support these projections. For example, in China the current average annual rate of growth in the motor vehicle population is 20 percent. The average annual growth rate throughout the developing world is 16 percent. By contrast, the U.S. and other developed countries have an average annual rate of growth in motor vehicle population of 2 percent.

The energy, environmental and financial implications of these trends are profound. For example, the United Nations estimates that to keep itself supplied with oil and natural gas to fuel its one billion cars over the next 20 years the world will have to spend (in 1990 US$) a total of US$1.98 trillion. The biggest spenders for transport energy will likely be developing countries; by 2020 developing countries will have spent approximately US$1.62 trillion for oil and natural gas to fuel their rapidly growing motor vehicle population. The projected developing country expenditures for transport energy dwarf the estimated US$360 billion that the developed countries will likely spend over the same time period. Infrastructure investments will be another big ticket item in the developing world. Under a business-as-usual scenario, the World Bank estimates that by 2020 the developing countries will invest approximately US$66 billion dollars per year in additional urban infrastructure for surface freight and passenger transport. If projected energy and infrastructure investments are added together, the total size of the mobility market in the developing world may be worth US$147 billion per year by 2020. Smart growth transport and urban development technologies and services could satisfy some of the world’s current and growing demand for energy and mobility and thus compete with oil and conventional infrastructure for a share of an annual US$147 billion mobility market.

Business-as-Usual: The Supply-side Approach

The above trends and statistics indicate the critical importance of addressing transport in the context of sustainable development. For nearly the last 100 years, many policymakers, urban planners and transport engineers around the world have followed a supply-side paradigm that originated in the developed countries to guide transport and urban development policies, practices, technology choices, and infrastructure and energy investments. Critics of the supply-side paradigm characterize it as an approach that seeks first to move vehicles on a road and highway-based system — the private passenger car as the most prevalent mode — as opposed to people in a transport system based on pedestrian access, public transit and mixed-use landuse patterns. Under a supply-side paradigm, planning and investment decisions tend to be skewed against a more multimodal system in matters of policy, infrastructure investment priorities and planning practices and favor private passenger cars as the primary vehicle for passenger conveyance. Countries such as the U.S. and Australia, and the high degree of car dependence they reflect, provide examples of transport systems from the developed world that are products of the supply-side paradigm. Examples of how the supply-side approach emphasizes moving vehicles as opposed to people is reflected in part by the following foci:

• Physical Infrastructure. The majority of transport and urban development policies and physical infrastructure investment tends to be directed toward the expansion and construction of new roads and highways to accommodate an ever-growing number of motor vehicles, usually the private passenger car. It may also include investment in mass transit infrastructure such as bus lines or light rail, but often to a lesser degree.

• Energy Supply. Policy and investment in energy supply is directed toward the procurement, production and distribution of oil, natural gas and sometimes coal for synthetic fuel to power motor vehicles. Investment in the energy supply system may include some attention to cleaner alternative fuels and non-fossil fuels such as hydrogen fuel cells but investment is directed primarily toward a fossil fuel-based energy system.

• Vehicle Fleets. The focus on how to decrease energy consumption is how to make vehicles as fuel-efficient as possible. It includes the full range of internal-combustion engine (ICE) technologies as well as vehicle components and manufacturing materials.

• Landuse and Urban Form. The focus of landuse policies (e.g. zoning) is to foster a lightly populated urban form defined as fewer than 12 people per acre. This type of landuse strategy tends to foster separation of shops, dwellings, offices and industries. The design of street patterns is not based on a grid but a more circuitous, branching pattern of streets and roads that seek convenient linkages to high speed highways and freeways as a primary goal.

Problems with a Conventional Supply-side Approach

The results of the supply-side paradigm have been mixed. Without question the provision of roads and highways has increased the mobility of people, goods, and services and facilitated economic and societal development. In the face of this apparent success, however, many cities worldwide now face difficult and costly transport and urban development-related environmental and social problems. One example from the U.S. is Los Angeles, a city notorious for a high degree of car-dependence, traffic congestion and air pollution. Examples of transport-related problems in the developing world are:

• Many nations continue to rely heavily upon oil imports resulting in trade deficits and energy security risks. Some countries spend up to 40 percent of foreign exchange earnings on imported oil for consumption by the transport sector.

• Millions of people live in urban areas with air considered unhealthy by international standards, despite intensive pollution control efforts. In cities like Mexico City and Sao Paulo, the transport sector is responsible for 70 to 86 percent of total airborne pollutants.

• Lack of public transport for low-income earners who cannot afford a car hinders economic and community development efforts, and social equity goals. In Dakar, Senegal some workers walk a total of six hours daily back and forth from their homes on the outskirts of Dakar to work. Many cannot move closer to their jobs in the city due to the lack of affordable housing and limited access to affordable public transport.

Traffic jams and polluted air in car-dependent cities such as Los Angeles and Mexico City suggest that investments in car-based transport systems that exclude investment in a more multimodal system tend to foster fossil fuel dependence, growing energy consumption, land degradation, and GHG emissions. In addition to environment and financial consequences, there are often negative impacts on social equity. Sprawling urban development based on a car-dependent transport system can be problematic for the urban poor in developing countries. In such an urban area, everyone must have his or her own car in order to meet mobility needs. Given that most poor people in developing countries cannot afford a car or the relative high housing prices in the city where many of the jobs are located means that they have to travel a long way, and pay a high price in relation to their incomes and time budgets, to get to work. For instance, in Manila, the Philippines the average poor person pays 14 percent of their monthly income on transport compared to 7 percent for the nonpoor.

The above problems are some of the issues and hidden costs (i.e. "externalities") that appear to result from a supply-side emphasis on meeting mobility demand. Proponents of a smart growth approach submit that as these and other externalities mount, a transport system’s total economic return to the local community it serves is reduced and the preservation of the global climate is threatened. Central to these externalities is the fact that planning skills and paradigms that have been relevant to conditions and needs in developed countries have historically been deployed uncritically in developing countries. A result is that investment and policy priority tends to be given to the provision of high mobility and high standards of road and highway performance as opposed to basic accessibility for people to jobs, housing, social services and educational opportunities. The supply-side paradigm from the developed countries has tended to favor persons that already have mobility by motor vehicle.

Toward Sustainability: A Smart Growth Response

The good news is that many cities in developing countries may not yet be locked completely or irreversibly into a car-dependent, fossil fuel-based transport system. That is not to say, however, that many cities in developing countries are not already experiencing increased traffic congestion, urban air pollution, energy consumption, sprawled development and GHG emissions. Many are entering a phase of accelerated growth in motorization and cities all over the developing world are facing these problems at earlier stages in their economic and social development than their industrialized-country counterparts. The magnitude and pace of improvements in the next century will depend on the public policy choices and investment decisions about public resources and private capital being made now.

A window of opportunity and a need exists to identify and implement an alternative to conventional practice and achieve a higher net benefit to government, civil society, the private sector and the global community. In order to realize the opportunity, this report suggests using an approach to transport policy, investment and practices called "smart growth." A smart growth approach works with a variety of stakeholders in the design and construction industry, businesses and land developers, governments and civic leadership, system users, and planners and engineers in order to:

• Influence Users to Drive Less and Encourage Multimodal Systems. Transport system users can be influenced to drive less and the demand for mobility can be better managed by using smart growth economic incentives, such as pricing, and landuse strategies. For example, paying a premium (i.e. a toll) to operate a car on a specific road at a peak time of demand — such as rush hour — is an example of an economic measure that may influence users to drive less or choose another mode of transport, assuming its available. If private developers had to pay all or some of the congestion costs that their new developments would create, and all or some of the cost of new infrastructure (e.g. roads, sewer lines) they might choose to concentrate new growth in developed areas instead.

• Maximize the Use and Management of Existing Infrastructure Prior to Expansion. The essence of better managing existing infrastructure and existing transport supply is to make sure it is being utilized to its fullest capacity before there is investment in new infrastructure — particularly in infrastructure to accommodate travel by private passenger car. Investment emphasis, for example, would be placed on improving the existing public transport system to be more competitive with the private passenger car in terms of comfort, convenience, speed, reliability and cost. Examples of information technologies to manage and maximize the operational capacity of existing infrastructure are GIS programs and Global Positioning System (GPS) devices. Service examples are transit-oriented urban design and evaluating landuse strategies to help make public transit more competitive with the private passenger car for ridership.

• Shift the Energy Base to Renewable Resources and Increase Vehicle Efficiency. Shifting to an energy system that is based upon renewable energy resources and ensuring that vehicles that are as fuel-efficient as possible is part of a smart growth approach. While such a shift is a supply-side measure, it would help protect air and water quality, and reduce GHG emissions. The protection of environmental assets is achieved while the current consumer demand for the private passenger car is recognized. Other examples are vehicle inspection and maintenance equipment and fuel injection technologies.

Smart Growth is Not Anti-Car

The essence of smart growth is not anti-car but favors greater diversity and balance of modal options for system users that can compete in the mobility marketplace with one another in terms of cost, speed, reliability and convenience. Its primary focus is to move people as opposed to motor vehicles. In this regard, the primary goal of a smart growth transport system is to provide "access," i.e. providing the means for people to access to the places, goods and services they need and want at the least total cost. The smart growth approach differs from conventional practice in which the primary goal is the movement of motor vehicles – usually the private passenger car – and the provision and maintenance of high standards of vehicle and road performance. Smart growth is not a "command-and-control" approach to be associated with planning exclusively by government. It is a process based on free market principles and the role of the private sector in identifying and implementing practical solutions to transport and urban development-related problems.

While extremely difficult to achieve, the smart growth approach seeks to evaluate modal options by incorporating the full cost, including societal costs and benefits and environmental externalities, into a determination of total cost prior to investment in new infrastructure, technologies and services. To implement a smart growth approach entails an array of technologies and technical services, tethered to support policies and practices, that help slash oil dependence, smog, traffic congestion, GHG emissions and urban sprawl. Included are technologies as conventional as a catalytic converter or as innovative as a hydrogen fuel cell-powered bus, or the use of GIS software and GPS devices to facilitate the management of public transport fleets. Services may include a range of expertise from designing software programs to drafting a transit-oriented landuse plan to conducting a comparative economic evaluation of transport investments.

A Money Saver for Taxpayers and Government

Sprawled urban development burdens the economy in general, and taxpayers specifically. Taxpayers often must pick up the tab for billions of dollars worth of infrastructure provision to sprawled development in the form of more roads, sewer pipes, electric and water lines, stormwater drains, etc. It is not uncommon for the development fees charged to private developers to be insufficient to cover the costs of new infrastructure and additional public services. This shortfall constitutes a subsidy to private developers by government that is ultimately paid for by taxpayers. The infrastructure bill is usually not cheap. For instance, in the U.S. the cost of extending infrastructure to new dwellings on the edge of an existing neighborhood, assuming housing is built at urban densities of 12 units per acre, costs about US$23,000 per dwelling. Research by municipal authorities in Santiago, Chile suggests that the cost of providing water, sewage, electricity, pavement, drainage and sidewalks in urban neighborhoods is approximately US$15 per square foot. A smart growth approach, and its emphasis on concentrating growth in area already developed first before developing new areas, seeks to minimize and defer infrastructure and public service costs to business, government and the taxpayer.

Infrastructure maintenance is an important smart growth component. It is important because maintenance can save government and taxpayers money. Fiscal crises in many developing countries have reduced the public resource base for transport sector funding. Capital constraints have served to highlight the need to properly maintain existing infrastructure as a means of using it more efficiently in order to defer or eliminate the need to invest in new infrastructure to displace the old. Proper maintenance would thus help use scarce public capital resources more judiciously. Infrastructure maintenance is, therefore, a key aspect of a smart growth approach. While this point seems so obvious that it doesn’t need to be mentioned, the World Bank reports that over a two-decade period from 1964 to 1984 approximately US$45 billion worth of transport infrastructure was lost in 85 developing countries because of inefficient use and inadequate maintenance. Individual users, not just governments, are affected too. World Bank calculations suggested that every dollar of essential maintenance postponed decreased the efficient use of the infrastructure and increased the cost to users of operating a vehicle in the current period by more than US$3 dollars.

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Prepared by the International Institute for Energy Conservation (IIEC)
September 1999

Support for this document was provided by the Export Council for Energy Efficiency (ECEE) and the US Department of Energy (award DE-FC41-94R110679). This support does not constitute an endorsement by the US Department of Energy of the views expressed in the article.

Updated: 03/29/02