Towards a green economy

and regional rail. Bogotá’s TransMilenio infrastructure cost US$ 5.8 million per km, US$ 0.34 per passenger over three years compared with estimates for metro rail with US$ 101 million per km, US$ 2.36 per passenger (Menckhoff 2005). As a result and unlike most public transport systems, TransMilenio is not only able to cover its costs but is making a profit (Whitelegg and Haq 2003).

A preliminary study has been carried out to provide additional information on the costs and potential savings of green city projects (Table 3: Investment and operating costs of selected green city projects). Column 3 in Table 3 contains either the project operating revenue (such as the fares collected or the sale of the collected energy) or the savings the project allowed. The savings have been calculated by looking at the difference between what would have been spent in resources without the project and what has been spent since its realisation. For example, Tokyo’s water leakage control leads to savings both in terms of electricity (less of which is needed for the same amount of water reaching end-consumers) and in terms of water.

Reduced congestion costs Bigger, more productive cities tend to suffer from crowding and congestion, as firms and households compete for space in the most popular locations (Overman and Rice 2008). Real-world examples of urban agglomerations such as Mexico City, Bangkok and Lagos suggest that the economic advantages of being in cities tend to mitigate even severe congestion problems (Diamond 2005). Even so, however, the financial and welfare costs to cities and citizens can be substantial. In the largely urbanised European Union, these costs are 0.75 per cent of GDP (World Bank 2002). In the case of the UK, they amount to an annual costs of up to £ 20bn (Confederation of British Industry 2003). They reach even higher figures in developing countries. The costs of congestion in Buenos Aires are 3.4 per cent of GDP, in Mexico City 2.6 and in Dakar 3.4 per cent (World Bank 2002).

One proven method for controlling congestion is demand management via charging. For example, Central

London’s congestion charge reduced

congestion by 30 per cent from February 2003 to February 2004 compared with previous years (Transport for London 2004a) and led to benefits such as the reduction in the number of trips by private vehicles entering central London (Transport for London 2004b) and a 19.5 per cent drop in CO2

emissions

(Beevers and Carslaw 2005). Stockholm’s congestion tax also resulted in a reduction in traffic delays by one- third and a decrease in traffic demand by 22 per cent (Baradaran and Firth 2008). The annual social surplus of Stockholm’s congestion tax is estimated to be in the region of US$ 90 million (Eliasson 2008).

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Many public transport projects around the world have brought about significantly reduced congestion costs, notably BRT systems such as in Bogotá and successfully emulated in Lagos, Ahmadabad and Guangzhou and Johannesburg. A synergetic interplay of compact urban form and an efficient bus system has been observed in Curitiba, which boasts the highest rate of public transport use in Brazil (45 per cent). There, reduced congestion means much less fuel is wasted in traffic jams: only US$ 930,000, compared with an estimated US$ 13.4 million in Rio de Janeiro (Suzuki et al. 2010).

3.2 Social benefits

Job creation Greening the cities can create jobs on a number of fronts: 1) urban and peri-urban green agriculture; 2) public transport; 3) renewable energy; 4) waste management and recycling; and 5) green construction. Green services will generally be more urban-orientated than green manufacturing or primary industry, although there will be some high-tech green manufacturing clusters in or close to urban cores, drawing on knowledge spillovers from universities and research labs. Already, the 100 largest metropolitan regions in the USA have far greater shares of low-carbon employment in wind and solar energy (both 67 per cent), energy research (80 per cent) and green buildings (85 per cent) compared with the 66 per cent share of the national population (Brookings and Battelle 2011).

At the same time, specific sectors and firms may combine remote or off-shored production with highly urbanised consumer/service/support markets. This means that there is potential for cities to grow both green tradable activity (high value, exportable) and develop greener non-tradable activities (lower value, goods and services for local consumption) (Chapple 2008). Overall, a green economy cannot be expected to create or destroy net jobs in the long run; the supply and demand for labour tend to equate in accordance with labour market conditions. In a well-functioning labour market, in the long run, increased demand for labour in one sector will put upward pressure on the going wage rate and displace labour in another sector. Labour creation in low-carbon sectors will crowd out labour creation elsewhere. Hence, although gross employment in the sector may rise in the long run, net employment across all sectors may not. In the short run, with unemployed resources, the net employment creation effect is likely to be larger.

First, there is considerable policy interest in urban and peri-urban agriculture (Smit and Nasr 1992; Baumgartner and Belevi 2001). Green urban agriculture can reuse municipal wastewater and solid waste, reduce transportation costs, preserve biodiversity and