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Land Value Capture

Maximizing finance for sustainable urban mobility

Daniel Pulido's picture
Photo: ITDP Africa/Flickr

The World Bank Group (WBG) is currently implementing a new approach to development finance that will help better support our poverty reduction and shared prosperity goals. This crucial effort, dubbed Maximizing Finance for Development (MFD), seeks to leverage the private sector and optimize the use of scarce public resources to finance development projects in a way that is fiscally, environmentally, and socially sustainable.
 
There are several reasons why cities and transport planners should pay close attention to the MFD approach. First, while the need for sustainable urban mobility is greater than ever before, the available financing is nowhere near sufficient—and the financing gap only grows wider when you consider the need for climate change adaptation and mitigation. At the same time, worldwide investment commitments in transport projects with private participation have fallen in the last three years and currently stand near a 10-year low. When private investment does go to transport, it tends to be largely concentrated in higher income countries and specific subsectors like ports, airports, and roads. Finally, there is a lot of private money earning low yields and waiting to be invested in good projects. The aspiration is to try to get some of that money invested in sustainable urban mobility.

Budget-strapped cities are creating financing—out of thin air

Luis Triveno's picture

Photo: Jonathan O'Reilly / Shutterstock

The world is urbanizing fast200,000 people are moving to cities every day in search of homes, jobs, as well as education and healthcare services for their families. Supporting this influx with proper infrastructure and services for water, sanitation, transport, and green spaces will require an estimated $1 trillion each year.
 
Given the difficulties of further increasing the tax burden or the level of public debt, it’s time for cities to think more creatively about alternative sources of funding.

Not willing to wait for their national governments to bless them with scarce infrastructure funds, innovative mayors have figured out how to squeeze a new source of urgently needed capital out of thin air, literally.