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Affordability and Subsidies in Public Urban Transport: What Do We Mean, What Can Be Done?


  • Tomás Serebrisky
  • Andrés Gómez‐Lobo
  • Nicolás Estupiñán
  • Ramón Muñoz‐Raskin


Subsidy policies on public urban transport have been adopted ubiquitously. Both in developed and developing countries, subsidies are implemented under two major premises: (1) to increase public transport use and to reduce externalities, such as greenhouse gas emissions and congestion, and (2) to make transport more affordable, particularly for the poorest. This paper focuses on the latter. Despite the widespread implementation of subsidies, there are virtually no quantitative assessments of their distributional incidence, making it impossible to determine if these policy instruments are pro‐poor. Using different tools to quantitatively evaluate the incidence and distributive impacts of subsidy policy options, this paper analyses the findings of a series of research papers that have studied urban public transport subsidy policies in developed and developing countries. Available evidence indicates that current public urban transport subsidy policies do not make the poorest better off. Supply side subsidies—provided to the operator—are, for the most part, neutral or regressive; while demand side subsidies—provided to the user—perform better, although many of them do not improve income distribution. Considering that the vast majority of developing countries justify public urban transport subsidies on social grounds, as a means to improve the mobility, and thus welfare, of the poorest, it is imperative to move away from supply side subsidies towards demand side subsidies and integrate transport social concerns into wider poverty alleviation efforts, which include the possibility of channelling subsidies through monetary transfer systems or through other welfare instruments (food subsidies, health services and education for the poor).

Suggested Citation

  • Tomás Serebrisky & Andrés Gómez‐Lobo & Nicolás Estupiñán & Ramón Muñoz‐Raskin, 2009. "Affordability and Subsidies in Public Urban Transport: What Do We Mean, What Can Be Done?," Transport Reviews, Taylor & Francis Journals, vol. 29(6), pages 715-739, January.
  • Handle: RePEc:taf:transr:v:29:y:2009:i:6:p:715-739
    DOI: 10.1080/01441640902786415

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    References listed on IDEAS

    1. Kristin Komives & Vivien Foster & Jonathan Halpern & Quentin Wodon, 2005. "Water, Electricity, and the Poor : Who Benefits from Utility Subsidies?," World Bank Publications, The World Bank, number 6361.
    2. Alderman, Harold, 2002. "Subsidies as a social safety net: effectiveness and challenges," Social Protection and Labor Policy and Technical Notes 25299, The World Bank.
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    Cited by:

    1. Georgina Santos & Thomas von Brunn, 2011. "Factors influencing modal split of commuting journeys in 34 medium-sized European cities," ERSA conference papers ersa11p1019, European Regional Science Association.
    2. Gerlinde Verbist & Michael Föster & Vaalavou, M., 2013. "GINI DP 74: The Impact of Publicly Provided Services on the Distribution of Resources: Review of New Results and Methods," GINI Discussion Papers 74, AIAS, Amsterdam Institute for Advanced Labour Studies.
    3. Javier Asensio & Andrés Gómez-Lobo & Anna Matas, 2013. "How effective are policies to reduce gasoline consumption? Evaluating a quasi-natural experiment in Spain," Working Papers 2013/9, Institut d'Economia de Barcelona (IEB).
    4. Drevs, Florian & Tscheulin, Dieter K. & Lindenmeier, Jörg & Renner, Simone, 2014. "Crowding-in or crowding out: An empirical analysis on the effect of subsidies on individual willingness-to-pay for public transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 250-261.
    5. repec:rom:mancon:v:11:y:2017:i:1:p:196-210 is not listed on IDEAS
    6. Zegras, Christopher & Nelson, Joshua & Macário, Rosário & Grillo, Christopher, 2013. "Fiscal federalism and prospects for metropolitan transportation authorities in Portugal," Transport Policy, Elsevier, vol. 29(C), pages 1-12.
    7. Grieco, Margaret, 2015. "Poverty mapping and sustainable transport: A neglected dimension," Research in Transportation Economics, Elsevier, vol. 51(C), pages 3-9.
    8. repec:eee:jotrge:v:48:y:2015:i:c:p:115-120 is not listed on IDEAS
    9. Verbich, David & Badami, Madhav G. & El-Geneidy, Ahmed M., 2017. "Bang for the buck: Toward a rapid assessment of urban public transit from multiple perspectives in North America," Transport Policy, Elsevier, vol. 55(C), pages 51-61.
    10. Sun, Yanshuo & Guo, Qianwen & Schonfeld, Paul & Li, Zhongfei, 2016. "Implications of the cost of public funds in public transit subsidization and regulation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 91(C), pages 236-250.
    11. repec:eee:trapol:v:59:y:2017:i:c:p:93-105 is not listed on IDEAS
    12. repec:eee:trapol:v:68:y:2018:i:c:p:37-51 is not listed on IDEAS
    13. repec:eee:retrec:v:62:y:2017:i:c:p:25-36 is not listed on IDEAS
    14. Asensio, Javier & Gómez-Lobo, Andrés & Matas, Anna, 2014. "How effective are policies to reduce gasoline consumption? Evaluating a set of measures in Spain," Energy Economics, Elsevier, vol. 42(C), pages 34-42.
    15. Munoz-Raskin, Ramon, 2010. "Walking accessibility to bus rapid transit: Does it affect property values? The case of Bogotá, Colombia," Transport Policy, Elsevier, vol. 17(2), pages 72-84, March.
    16. Antonio Russo, 2015. "Pricing of Transport Networks, Redistribution, and Optimal Taxation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(5), pages 605-640, October.
    17. repec:eee:trapol:v:65:y:2018:i:c:p:114-125 is not listed on IDEAS

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