Gilles Duranton 2020 #Infra4Dev Conference: Decarbonizing Infrastructure www.worldbank.org/infra4dev2

1. Wither urban travel?
Gilles Duranton, Wharton School, University of Pennsylvania

2. Urban Travel is mispriced
• Best estimates for car externalities in developed countries (Parry et al JEL 2007)
- Congestion (4c/km) > Accidents (2.5c/km) >Local pollution (2c/km)
> Global pollution (<1c/km)
- Missing: negative amenity effect
- Overall: close to 20% wedge between social and private marginal cost
• What about developing cities?
- Except for GHG emissions and gas prices, it’s mainly relative
- Mildly worse congestion externality? (Akbar Duranton wp 2020)
- Worse congestion in large cities, less in small cities (Akbar et al wp 2020)
- Worse accident externalities
- Worse local pollution

3. How much excess travel?
• What does the demand for travel look like?
- Close to unit speed elastic? (Duranton Turner JUE 2018, Couture wp 2018, etc)
- 0.1/0.2 income elasticity (Duranton Turner JUE 2018, Couture et al REStat 2018)
 Mileage: 20-30% above optimum (and only a tiny part is associated with GHG
emissions)
 Development will increase the demand for travel, particularly travel with cars
• Further implications:
- Traffic improvements (eg better infrastructure) increase the demand for travel
(Duranton Turner AER 2011)
- Economic development will also reduce part of the wedge between social and
private marginal costs

4. Solutions (part 1)
• Direct externality pricing?
- Technically harder than we think. Cordon pricing appears ineffective (Akbar
Duranton wp 2020)
- Politically deeply unpopular
- Still worth fighting for, but don’t expect miracles
• Indirect pricing? (gas, cars, etc)
- Differing political economies leading to either too much or too little
• Regulate quantities?
- Evidence is mixed (Davis vs Carillo and others)
- Personally I am down (Bogota is both its main proponent and the most
congested city in the world according to Akbar et al wp 2020)
• Standards? In an nth-best world… And even that is hard with transport informality

5. Solutions (part 2)
• Urban planning?
- Density and network shape only have a mild effect (Duranton Turner JUE 2018)
- The benefits from density are offset effect by lower speeds
• Mode switching
- Bicycles, electric scooters, transit, walking all seem desirable
- But in practice, substitution is more often towards motorbikes and ride-hailing
- Cheaper transit is slow which makes it an inferior good
- Faster transit is more appealing but more expensive (a lot more)
• New propulsion (and energy generation) technologies
- Arguably the only game changer(s)
- Will take time before they are fully competitive
- Wide adoption in developing countries will be a challenge

6. Summary
• Urban transportation matters a lot for GHG emissions…
… but GHG emissions are only a small part of the urban transportation
problem and urban households value urban travel, highly so
• So, implementing the optimal amount of travel will be incredibly
challenging and will only reduce GHG emissions a little
• After giving up on the more direct policy tools (pricing) a lot of popular
instruments are of questionable efficacy and may reduce welfare – cities
are fundamentally about the ease of going places…
• Only solutions that reduce emissions per km drastically without affecting
travel can be transformative
Improving the technology and fostering adoption are two main challenges