Who Captures the Benefits of Transport Infrastructure Investments?

Despite evidence confirming that transport infrastructure can contribute to poverty reduction, experience would tell us that this relationship is by no means automatic. In many instances, transport investments have failed to provide benefits for the poor and the vulnerable, despite aggregate gains in productivity and income.

In countries where the distribution of income and opportunities is skewed, in general it is the non-poor who benefit more from investments. Because they are better endowed, the non-poor, particularly the larger landowners and the vehicle owners/operators, tend to disproportionately capture cost savings as a result of better transport infrastructure. Improvements in agricultural productivity and the shift to commercial production have tended to benefit the larger and wealthier farmers who could intensify land use and benefit immediately from improved market access. On the other hand, smallholders often require further assistance in coordinating the bulk purchase of inputs and the collective marketing of outputs. In most cases, this could lead to a worsening of income distribution in the short and medium term (Setboonsarng, 2005). Without further assistance, these and other benefits such as rising land values are typically captured by the local elite. In addition, despite better access to social services due to improved connectivity, the poor’s access to such services remains disproportionately low compared to the non-poor (ADB, 2005).

Improved roads lower the operational costs of vehicles and bring immediate benefits to the owners and operators of vehicles; however, these savings are rarely passed on to the poor since the poor do not own or operate vehicles but are typically users of transport services provided by others (Rayner, 2005). In many countries, to make transport services more affordable to the poor, either subsidies are provided or fares are controlled, but the poor rarely capture the benefits of these interventions.

All of these outcomes can be expected to aggravate existing patterns of inequity. Cook (2005), for instance, reports that although at best, the benefit incidence of transport infrastructure has been neutral, increasing access for the poor and non-poor alike with no significant difference between the poor and the non-poor in terms of impacts on education, health, safety, security and social interaction, for some of the poorest of the poor, transport improvements may produce negative effects on welfare.

The hard-core poor in Asia are generally the landless and unskilled workers. Without land or skills, the poor spend most of their productive time on fulfilling their subsistence needs. While investment in transport infrastructure can bring eventual benefits to this group of people who have limited resource endowments, the challenge seems to rest on tailorsuiting transport investments to make them more responsive to the prevailing conditions faced by the poor.

Comment(s)

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1. Anura Widana
   (posted 28 April 2010 / 07:19:56 PM)
   
   Excellent study, hats off to authors!
   Wish to add three more reasons why poor have not benefited from investments on infrastructure.
   a) In the planning process, the poor people were not identified and planning itself was undertaken poor exclusive
   b) The method/s adopted to rehabilitate/ build infrastructure have not been pro-poor. The implementation team decided to get construction work done through private contractors or politicized institutions both of which did not pay attention to poor in the area. Their main interest was to maximize profits for themselves from investments. Hence, poor lost the opportunity to work in construction and thereby could not benefit by way of wages.
   c) The design teams did not include poverty/social but technical specialists only. This made it difficult for implementers to identify poor people, to plan strategies to get them involved and to brain-storm on other projects/activities to be funded so that poor people benefit more from investments.
2. Mohammad Ziaul Ahsan
   (posted 23 April 2006 / 09:49:14 PM)
   
   Transport not only makes econmic development but also saves climate. This book has given us such path to make sustainable development for poverty eradication. Thanking you for your great participation.