rural-urban dynamics_report.pdf - Khazar University

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148 URBANIZATION AND THE MDGS GLOBAL MONITORING REPORT 2013 BOX 3.6 Using output-based aid in urban projects The people most affected by the lack of access to basic services in urban areas are the poor, who often obtain essential services such as drinking water or electricity from informal vendors at substandard quality and at a high premium. Given the growing demand for basic services, the need to improve service delivery in lowincome urban settlements in increasing. One way to help the urban poor gain access to basic services is through output-based aid (OBA), which links the payment of public funds or subsidies to the achievement of specified outputs and actual service performance. Output definitions are designed to be as close to the desired development outcomes as is practicable and still within the scope of the service provider to deliver. Most urban OBA projects also require that a portion of the subsidy payment be withheld until sustainable service delivery has been demonstrated. Targeting the urban poor: A core component of OBA is explicit targeting of low-income households. For the urban poor, a major hurdle to obtaining basic services is the high initial cost of access, such as a connection fee for water supply. OBA can help reduce this barrier by paying a subsidy to bridge the gap between the actual cost of access and what users are willing and able to pay. Geographic targeting can be effective in cities where poor households tend to be concentrated in slums and informal communities; alternative targeting strategies subsidize only those services that the nonpoor are less likely to use, or target beneficiaries based on their income or poverty level. Risk transfer and access to finance: In OBA schemes, payment on delivery of specific outputs shifts performance risk to service providers, which can be public, private, or nongovernmental organizations. Since service providers are not paid the subsidy in full until they deliver outputs, they must have access to sufficient finance for the initial investments, a significant risk and one of the biggest constraints to developing output- or results-based projects. When service providers cannot afford to finance the whole project in advance, phased subsidy payments against intermediate outputs have been used. On rare occasions, small advance payments have been required for start-up costs and awareness campaigns. Most service providers meet prefinancing needs from internal cash flows or externally sourced funds, or both. Designing OBA projects for the urban poor: A major obstacle to service provision in informal or slum settings is the often precarious tenure status of slum dwellers; many are ineligible by law for formal household connections. Residents also have no guarantee that their dwellings will be safe from demolition. Service providers may lack legal or regulatory authority to serve these informal areas and are also likely to lack incentives to do so for fear of low uptake or because they see it as a high-risk investment. For OBA schemes to succeed, they must have buy-in and commitment from local governments. Furthermore, the government agency should have the administrative capacity to manage OBA contracts and subsidies. Lessons learned and prospects for scaling-up or replication: Although OBA is not the solution for all urban service problems, it is a tool to help increase the access of urban poor households to basic services, particularly where the cost of service access is unaffordable, and where service access needs to be built into urban project design. Land tenure issues must be addressed early on in the design stage. Active outreach and engagement with community-based organizations and political and community leaders is also key for successful project design and implementation. Incorporating OBA schemes into broader urban reform and slum upgrading programs can also be effective in bringing multiple stakeholders together, acting as a resource convener, and potentially playing an important role in shaping the urban development policy framework for service provision and service access for the urban poor. Source: Adapted from Ahmed and Menzies 2012. met by revenues. Cities such as Bogotá, Curitiba (Brazil), London, and Seoul have solved the problem with gross-cost contracts, which assure operators that their revenues will be based on performance, not on fare box collections (or not directly so). To cover costs fully, public agencies then seek other sources of revenue. Transport systems around the world vary widely in the share of operating costs recovered through fares. In a sample of
GLOBAL MONITORING REPORT 2013 URBANIZATION AND THE MDGS 149 FIGURE 3.4 Ratio of public transit fares to operating costs in a sample of large cities Hong Kong SAR, China Curitiba Singapore Bangalore Santiago Mumbai Toronto London Seoul Delhi Ahmedabad Paris Vancouver Mexico City New York 20 public transit systems, only 5 fully covered their costs through fares. In New York City, 35 percent of costs were recovered through fares; in Mexico City, 40 percent (figure 3.4). Connecting cities 0 20 40 60 80 100 120 140 Percentage Source: World Bank 2013a. Note: The numbers in this chart relate to bus and metro systems operated by public entities or large corporate entities. A weighted average was based on ridership across modes. Small private operators were not included because data were lacking. Connections—between and within cities— benefit producers and consumers, both in urban and rural areas. They give producers access to input (including labor) and output markets. They give consumers options and, in many cases, better prices. And connections provide cities and rural areas with new economic opportunities. But policy makers who envision better transport connections for cities and neighborhoods face difficult choices. With limited resources, they cannot invest in everything. It is hard to know which new or improved connections will yield the highest returns over time. Setting priorities for connective investment means picking winners and losers in the short run, but in the long run, thinking about priorities can make a vast difference for cities, surrounding rural areas, and even countries. To identify the most effective additions and improvements to the networks connecting cities and neighborhoods, policy makers can take the steps described in the following three subsections. Value the city’s external and internal connections For external connections to other cities and rural areas, policy makers can compare transport costs—and the density, quality, and capacity of roads, railways, waterways, and the like—with data from similar places. In this way, they can determine where improvement is most needed. Systematically disaggregating transport costs can identify bottlenecks and reveal opportunities for infrastructure improvements that yield high dividends. A survey of truckers in India showed that transport costs were highest near large cities and their surrounding rural and peri-urban areas, a pattern similar to that found in Brazil and Vietnam. Freight rates for metropolitan transport in India, defined as trips shorter than 100 kilometers, averaged as high as Rs 5.2 per ton-kilometer ($0.12)—twice the national average of Rs 2.6, and more than five times the cost of such trips in the United States (figure 3.5). Why are India’s metropolitan freight transport costs so much higher than its long-haul FIGURE 3.5 Price per ton-km (Rs) 6 5 4 3 2 1 0 Source: World Bank 2013b. Costs of moving freight in India >10 4–10 1–4
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Global Monitoring Report 2013 Rural
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© 2013 International Bank for Reco
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vi CONTENTS GLOBAL MONITORING REPOR
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viii CONTENTS GLOBAL MONITORING REP
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Foreword Global Monitoring Report (
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Acknowledgments This report has bee
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Abbreviations and Acronyms ADB Asia
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GMR 2013 Rural-Urban Dynamics and t
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4 OVERVIEW GLOBAL MONITORING REPORT
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10 OVERVIEW GLOBAL MONITORING REPOR
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Goals and Targets from the Millenni
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Progress toward the MDGs Only two y
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primary completion, and access to s
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FIGURE 1a Poverty rates (living on
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MDG 2 Achieve universal primary edu
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MDG 3 Promote gender equality and e
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MDG 4 Reduce child mortality In mos
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MDG 5 Reduce maternal mortality MDG
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MDG 6 Combat HIV/AIDS, malaria, and
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FIGURE 6e Children under age 5 who
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FIGURE 7b Access to sanitation by r
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Improving the measurement of develo
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1 Macroeconomic, Trade, and Aid Dev
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GLOBAL MONITORING REPORT 2013 MACRO
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2 Rural-Urban Disparities and Dynam
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GLOBAL MONITORING REPORT 2013 RURAL
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