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2017 Improving Sustainable Development in Through Public Transportation Investment Kyle Fischer Lehigh University

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Recommended Citation Fischer, Kyle, "Improving Sustainable Development in Lima Through Public Transportation Investment" (2017). Volume 35 - Leveraging Peru's Economic Potential (2017). 6. https://preserve.lehigh.edu/perspectives-v35/6

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Introduction GDP growth rates in , averaging 5.9 percent per year, with a large percentage Every day citizens of Lima travel across of that growth coming from Lima, the capital the city for work or personal reasons, like city, where over one-third of Peru’s population people all over the world. Yet they face lives (Peru Overview…). For high growth rates more obstacles in their daily travels, with a to continue in the coming years, however, good portion of their time wasted sitting on Lima needs to decrease its income inequality, overcrowded, unregulated, dangerous buses which has seen little improvement over the in traffic. Thus, the average person in Lima same period. Public transportation investment spends four hours a day commuting to and can help reduce income inequality by allowing from work. This inhibits citizens living in lower-income citizens access to better-paying lower-income areas from accessing potential jobs across the city. The election of President jobs in wealthier parts of the city and damages Pedro Pablo Kuczynski in June 2017 put Peru the health of all citizens by polluting the air. By on this path. One of Kuzcynski’s priorities is reducing the productivity of Lima’s population, an increase in infrastructure investment to the inefficient transportation limits Peru’s help close the significant infrastructure gap, overall growth potential. providing hope for a brighter future for Lima An increase in public transportation and Peru. infrastructure is crucial to Lima’s and Peru’s My purpose in this article is to analyze continued growth and sustainable development the transportation system within Lima and since few public transportation options exist to offer recommendations that will allow for because of the rapid growth of the city. Over sustainable and inclusive growth. I begin by the past decade, Peru had one of the highest examining the development of Lima into Peru’s 125 capital city and its rapid population growth over nearby port of . By 1796 the population the past century. The development pattern led stood at around 50,000 people in an area to the current socio-spatial inequality. Next, I surrounded by the still-standing wall (Oliver- detail the current transportation in Lima with Smith, p. 263). Lima’s population remained a focus on how the historical socioeconomic constant for the next century as diseases such income distribution has led to deregulated as malaria and dysentery were rampant due to and informal transportation with long transit poor sanitation. The wall was demolished and a times and dangerous levels of pollution. Lima plan for development was created in the 1860s, currently has limited public transportation but growth was halted when the Chilean navy options, consisting of only one main bus bombed and then occupied Lima during the corridor and one operating metro line. The War of the Pacific (1879–1883). existing metro line can integrate with future The most recent period of Lima’s growth metro lines, some of which are currently began with reconstruction of the city center under construction. When combined, the following the war with and is still metro lines will create a more complete continuing today. Following the war, Peru public transportation network across Lima. I borrowed money from Britain to rebuild, in conclude by analyzing the current metro line exchange for British control over all Peruvian project and the plans for moving forward with a mineral resources. Under British influence, recommendation for how to best proceed with rail systems were built for industrial purposes continued public transportation investment. with a focus on linking center city Lima to other coastal settlements and to the Andes Background Mountains in the West. Electrical grids and sanitation systems were constructed and basic Lima’s Development public services provided, including schools, from 1535 to 1908 hospitals, and police and fire departments. Despite the modernization of the urban Founded in 1535 by the Spanish centers, agriculture production was stagnating conquistador Francisco Pizarro, the city of and economic inequality was growing in rural Lima grew in bursts, with alternating periods areas. The declining quality of life pushed of expansion and destruction from its founding people out of rural areas toward Lima and through the twentieth century. Lima was resulted in mass migration to Lima. established on the banks of the Rímac River near the coast of Peru. This provided fresh water for Development from the city and a central location through which 1908 to the Present gold and silver could be routed, allowing for the initial growth of the city. At the same time, the The migration that followed can be port of Callao was formed directly west of the broken down into three stages: 1908–1940, city center of Lima on the Pacific Ocean. The 1940–1960, and 1960–present. During the first central district of Lima is still in its original stage, the annual urban population growth location on the river and sits 13 km from the rate jumped from 2.5 to 6.1 percent from 1920 ocean. The layout of the original town followed to 1930 (Oliver-Smith, p. 266). This was an traditional Spanish guidelines, with central increase from approximately 6,000 people per plazas and streets in an east-west, north-south year to almost 23,000 people per year. Most of grid pattern, bringing organization to the city. the people were wealthy elites who settled in In the late 1600s the boundaries were clearly dense suburbs closer to the coast and expanded defined by a defensive wall built around the beyond the city footprint established over the city. However, the city interior became less past 300 years. The second stage, from 1940 to organized as diagonal streets cut across the 1960, saw the continued expansion of the city grid and racially segregated neighborhoods into peripheral areas as the population growth appeared. Unfortunately, most of the early rate climbed to upwards of nine percent development was destroyed in 1746 when an annually (Oliver-Smith, p. 267). The area earthquake hit Lima, and a tsunami struck the from the old city center of Lima all the way to 126 Callao became fully urbanized, with migrants vulnerable (“International Bank…,” p. 2). The of a lower socio-economic class. Lima entered outer districts, which have the most poverty, the third and current stage of growth around consist largely of the pueblos jóvenes in 1960. By 1984 Lima had grown to 6 million deteriorated areas without public services. people, equal to the entire population of Peru The location of the pueblos jóvenes on in 1940 (Oliver-Smith, p. 267). This later group the periphery of Lima creates transportation of migrants were primarily low income and issues for the people living there and reinforces settled even further out on the city periphery. the economic inequalities within Lima. The This wave of migration was most significant average age within the pueblos jóvenes is lower because a large portion of it was in the form than the average age in Lima, representing of “land invasions,” in which large groups of a key demographic for growth. Growth and migrants moved during the night onto property the country’s future are dependent on the to which they did not have rights. education of the youth and their access to Communities were built quickly and formal employment. Although there may forced the government into a difficult decision be jobs in the informal sector within the of either forcibly removing the squatters or pueblos jóvenes, most better-paying formal allowing them to remain. The city of Lima sector jobs are located around the city center allowed the migration and added legitimacy by in the wealthier districts (“International granting land titles and formally recognizing Bank…,” p. 81). Jobs within the formal sector community charters. The quickly constructed have significantly higher wages and higher settlements developed into pueblos jóvenes productivity per hour of labor. In addition (young towns) as the buildings became to formal jobs, most education, health care, permanent. This process continued on available and other services are located in the urban land on the city periphery, and more pueblos centers. Access to these services for everyone jóvenes arose farther from the city center. The is necessary for the development and growth informal migration led to widespread urban of Lima, and requires efficient transportation sprawl as the city limits expanded into hills unfit throughout the entire city. for houses and lacking public services such as water and electricity. This latest migration was Transportation in Lima significantly different from the previous waves of migration in which the communities were The current transportation system is planned and infrastructure built along with the holding back economic growth by creating houses. excessive travel times that reduce productive hours of work and by emitting pollution that Social/Economic Inequality in Lima adversely affects public health. Every day Limean residents make approximately 22.3 The high rate of population growth led million trips. About half of these trips are made to a lack of available services in the outer on largely unregulated, private, mass transit parts of the metropolitan area and a lack of vehicles. One-quarter of all trips include infrastructure and transportation throughout personal vehicles, and the rest are made the city. As illustrated in Figure 1, the central on non-motorized transportation or public districts, circled on the map, have very few transportation. poor people while the outer districts have The unregulated private vehicles large numbers of people living in poverty. include jitneys (also known as combis), In the wealthier districts, over 98 percent of which have a capacity of approximately 12 people have incomes in the top quintile. Yet in people; microbuses, which have a capacity of the poorest districts, the darkest areas on the approximately 24 people; and larger standard map, poverty rates are upwards of 26 percent buses, which have a capacity of approximately (“Planos Estratificados...”). In total, there are 60 people. There are approximately 31,000 1.3 million people considered poor by World vehicles among the three types on more than Bank standards in the Lima metropolitan 560 routes around the city. The stops of each region and another 1.7 million considered bus route are communicated by painting the 127 Figure 1 Total Poverty Rate in 2009, Districts of Lima Metropolitan Region

Source: “International Bank...”

stops on the exterior of the bus. The small size add significantly to the number of vehicles of the jitneys and microbuses leads to constant on the road—a single bus carrying 60 people overcrowding, and most of these vehicles are could eliminate 30 cars if each car has two old and therefore emit significant levels of passengers. pollution. Despite these inefficiencies, these three private modes account for 98 percent of Transportation Issues the miles traveled using mass transportation. The existing transportation modes within The jitneys account for 48 percent of vehicle Lima, especially informal public transportation, miles traveled per day on mass transportation, result in congestion and safety issues and place microbuses account for 39 percent, and a greater burden on the poor. The informal standard buses account for 11 percent mass transportation on gridlocked streets is (“International Bank…”). inefficient with regard to travel time largely The trips in personal vehicles, which due to traffic and the number of stops. Based on make up one-quarter of all trips, include surveys of average travel times from 2012, the personal autos and taxis and are accounted standard buses take the longest with an average for primarily by wealthier citizens. Cars and travel time of 47 minutes. This is followed by motorcycles carrying only single occupants the microbuses, with an average travel time of 128 40 minutes (“International Bank…”). These 2.5 per cubic meter. Based on its study of Lima, times are longer than private vehicle trips and the World Health Organization found average formal public transportation, placing a greater levels between 38 and 63 micrograms per cubic time and cost burden on the poor who rely meter (“Ambient [Outdoor] Air Pollution…”). heavily on informal public transportation. The This was the worst level of pollution found longer travel times reduce the number of jobs among Latin America cities. According to that are within commuting distance as well as the Consorcio de Investigación Económica y the quality of life by decreasing the amount Social (CIES), a research agency organization of time spent with family. This is especially in Peru, this high level of pollution has caused true for the poor communities because over 5,000 deaths from 2007 to 2011 (Joly, p. they are primarily located on the outskirts 1). In addition, and more commonly, pollution of Lima and the formal, higher-paying jobs can also cause or aggravate asthma and other are concentrated in the central districts of health problems. The International Study Lima (“International Bank…”). According on Asthma and Allergies in Childhood found to Antonio Brack, a former environmental asthma symptoms in 26 percent of children minister in Peru, “Traffic congestion makes in Peru, which was the highest of all Latin the average commute in Lima over an hour America countries (Mallol et al., p. 441). each way and costs more than $1 billion a year CIES also found that 80 percent of the in lost output and health problems caused by air pollution in Lima is directly attributable to pollution” (“The Train Leaves…”). public transportation, with the old age of the In addition to monetary and time costs, vehicles adding to the increased pollution. As the current transportation infrastructure Susan Villaran, the former mayor of Lima, said, poses a significant health risk for the citizens “52 percent of Lima’s buses and combis are of Lima. For children aged 5 to 14, the leading over 20 years old” (quoted in Joly, p. 2). Studies have shown a direct correlation between heavy cause of death is traffic accidents (Fraser, p. traffic in Lima and adverse health effects. One 543). This is due to unsafe transportation study found that children ages 13 to 15 living both on the roads and roadsides, with large within 100 meters of a heavily trafficked avenue numbers of vehicles on the roads because are twice as likely to display asthma symptoms of the insufficient infrastructure to allow (Baumann et al., p. 875). Another study found for alternative transportation options. In that the prevalence of asthma in children ages addition to the cost and physical safety issues, six to seven and 13 to 14 is significantly related current transportation modes present serious to the traffic flow density (Carbajal-Arroyo environmental and health concerns due to et al., p. 197). Together these studies show a pollution. Most transportation modes release pattern of dangerous health effects associated carbon dioxide and soot into the air, polluting with the high traffic density and the modes of the environment and creating health concerns transportation currently in use in Lima. These for the citizens of any metropolitan area. consequences of congestion and pollution led However, citizens in the Lima metropolitan government agencies to begin implementing region are especially susceptible to pollution public mass transportation around 15 years because of the aging private vehicles used for ago, but still further expansion is necessary. mass transportation and Lima’s geography: the prevailing winds off the Pacific Ocean push the Current Public pollution inland where it is held by the hills Transportation Initiatives and mountains. One common measurement of air pollution is the amount of particulate To help alleviate the many issues matter under 2.5 microns in diameter (PM 2.5) associated with transportation in Lima, the per cubic meter. The particulate matter is made municipality of Lima began operating two up of sulfates, nitrates, black carbon, and other public mass-transit systems within the past 10 matter from the burning of fossil fuels. The to 15 years and has plans to implement more. World Health Organization’s guideline value for In 2012 a rapid bus transit system known as clean air is a maximum of 10 micrograms of PM El Metropolitano began accepting riders. It 129 includes 26 km of a bus line In fact, rider demand was so high that the along one main north-south corridor as well Peruvian government funded an extension as a north and south feeder bus network that of 12.4 km with 10 additional stations. This operates on local roads. The bus rapid transit addition cost $900 million for the fully elevated line has separated lanes down the middle of extension, and it opened for operation in July highways reserved for buses and has stations 2014. was completed with 26 stations for on-and-off boarding. The line contains 35 spanning 34.4 km of elevated track. According intermediate stations, a central underground to a study from 2015, the average weekday station, and a north and south terminal for ridership is around 450,000 passengers and transfers. The stations are elevated platforms exceeds capacity at peak periods (“Lima Metro, that require payment of fares before entering. Peru…”). Ridership is expected to increase to Approximately 300 buses operate on the core 665,000 passengers per day by 2017 (“Lima line with more on the feeder bus networks. All Metro, Peru…”). In 2012 the 22-km stretch buses run on natural gas and have a capacity of Line 1 had an average travel time of 23.5 of 40 to 80 people (Instituto Metropolitano minutes, which was significantly less than Protransporte de Lima). The system is heavily other modes of transportation (“International utilized with 700,000 trips made daily on the Bank…,” p. 82). Line 1 has been a success with Metropolitano. Taking the Metropolitano respect to ridership, but its current impact reduces travel time by over 25 percent from end is still somewhat limited due to the lack of to end and at 33 minutes has significantly lower interconnectivity and lack of multiple routes. average travel time than other transportation With part of Line 1 completed and an modes (“International Bank…,” p. 3). While expansion planned for in 2012, President the bus rapid transit line only runs on one Garcia in December 2010 signed Supreme main corridor, it runs through 12 districts Decree No. 59-2010-MTC. The decree approved and provides access to 18 districts when the and laid out five metro lines with defined stops feeder networks are considered. The feeder bus for each line and put the Ministry of Transport networks allow the Metropolitano to be more and Communications (MTC) in charge of the accessible to the periphery districts and help use, operations, maintenance, and concessions. increase public transportation options for the The plan included Line 1 as constructed poor. and four other lines spread out in different In addition to the Metropolitano directions, allowing the metro system to serve bus network, Lima is in the process of the periphery and core of Lima. They will all be implementing an electric train mass transit connected at a central station where transfers system. The process began in 1986 when Metro can be made. See Figure 2 for the layout of the Line 1, which is currently the only operational five lines in the Lima metropolitan region. line, was authorized. The Autoridad Autonoma Line 2 and a portion of Line 4 are currently del Sistema Eléctrico de Transporte Masivo under construction as the Metro Line 2 project. de Lima el Callao (AATE…) was created to The project includes 27.2 km of track for Line plan, coordinate, implement, and supervise 2 oriented along an east-west axis and 7.7 km the project. Design and construction went of track for Line 4 from the Lima Airport to on for three years, during which 9 km of the Line 2. The entire route will be underground planned 22 km of track was built using $200 with 35 stations, which span the route from million. However, claims of corruption halted Callao into eastern Lima. The decision to put progress in 1989. Construction did not begin it underground was partially due to the already again until 2006 when Alan Garcia returned congested corridors through which it runs, to the presidency for a second non-continuous making it difficult to obtain the necessary land term. Peru then took out a $300 million loan for an above-ground system but significantly from the Andean Development Corporation increasing costs. Most of the tunnels will each to finish construction on the planned 22 km contain two tracks, and initially there will be of track. In early 2012, the 22 km of track 34 train cars operating on Line 2 and seven on began passenger service with great success. Line 4, with increases planned over the years 130 Figure 2 Metro Line Map: Planned and Built

Source: “AATE Planificación de la Red.”

to meet growing demand (“Line 2 and Avenida the ridership and continued operation of the Faucet…”). project, he has the incentive to keep costs low In early 2013, a public bid was released and to complete the project on time. Ultimately, for the concession for the Line 2 project in a multinational consortium, Nuevo Metro de the form of a design–finance–build–operate– Lima, won the bidding as the only consortium transfer contract, establishing it as the largest to submit a bid. In all, the Nuevo Metro de infrastructure project in Peru’s history, Lima consists of six companies from several with a cost of $5.37 billion. This is a public- countries, including Spain and Italy, and a private partnership (P3) in which the project smaller partner from Peru. The consortium is partly financed by the government of Peru began construction on the rail tunnels shortly as well as by the contractor. The contractor is after the project was awarded in 2014 with responsible for a portion of the funding, in this a scheduled operational date of June 2019 case $1.6 billion, and is then fully responsible (Quigley). for all aspects of the project, including the design, construction, railcars, and operation Analysis of Current Plans before transferring the infrastructure back to the government at a specified date. Since The Inter-American Development Bank the contractor’s revenue is partially based on recognized that the project was high risk 131 at the onset when it approved financing for destinations along the route will be reduced the construction (“International Bank…,” by as much as 70 percent compared to driving, p. vii). The large scale of the project adds to making travel easier and quicker for citizens of the challenge of managing costs and finishing Lima (“International Bank…,” p. 84). For the the project on time. Questions concerning estimated 360,000 daily riders in 2020, this will the cost and profitability of the project for free up large amounts of time, reducing their a private contractor should have surfaced two- to three-hour commutes and helping initially when only one of the three companies improve their quality of life. The effect will be that participated in the pre-investment study especially noticeable for people who can take submitted bids for the concession, with the advantage of the connection with Line 1 and other two contractors citing cost as their fully utilize the feeder network. In addition, it reason to not submit a bid. The bid received will begin to help with the pollution in Lima was above what the MTC had projected for the by taking many cars off the road. Estimates cost; yet it met the requirements, allowing from the project feasibility study based on the the process to continue with only the one bid lower-level demand scenario show greenhouse received. The MTC had significant motivation gas emissions from vehicles will decrease by to underprice the project initially to get it 30,000 to 50,000 metric tons per year of CO2 approved, and the private evaluation of cost equivalent (“International Bank…,” p. 16). To may be an early indicator that it did just that. put that into perspective, 30,000 metric tons of Generally, after a project is approved and a CO2 is equivalent to the burning of 3.4 million bid accepted, there are likely to be changes gallons of gasoline. These are appreciable to the contract, often increasing the cost results and constitute significant progress and/or extending the deadline. In Peru, from toward meeting the goals desired from mass 1999 to mid-2016 there were 17 changes in transportation. just four concessions for either rail or metro Although the implementation of the Line systems (OECD, p. 83). The current contract 2 project is making progress, once completed is structured such that the state is responsible it will be insufficient to fully resolve Lima’s for most cost overruns during construction, transportation issues, making continued leaving the contractor with little incentive investment necessary. One of the main issues to keep costs low during construction. The is whether it will be able to better serve the problems have already become obvious after poorest communities. The Metropolitano and a comptroller investigation in August 2016 metro lines have reduced fares for certain showed increases in costs of $156 million portions of the population, thereby serving (Post). While this is a minor cost increase poorer citizens. Yet the Line 2 project focuses compared to the value of the total project, the mainly on serving the wealthier communities cost increase is nonetheless worrisome. The of Lima because the chosen route runs contractor has been using slower and more through wealthy areas in the city center and expensive tunneling methods instead of tunnel accesses the airport rather than running to the boring machines and has already delayed the periphery of the city. Even with the forecasted opening of the first section up to 15 months. demand, the reduction in daily automobile As Vice President Martin Vízcarra pointed out, trips will be insufficient if Lima’s population it is concerning that the five-year project is and car ownership continue to grow at the less than ten percent complete after two years current rate. Based on the 2007 census, the (Post). The early performance of the project population of the affected districts was 2.53 has seen many of the risks come to fruition and million and had an average annual growth is troublesome for the project from a financial rate of 2.93 percent since the 1993 census and timeline perspective. (“Line 2 and Avenida Faucet…”). If growth Yet, if the Line 2 project is completed continues at this rate, from 2015 to 2020 the successfully, it will provide significant districts would see a population growth of benefits to the riders and the surrounding 494,000, which is a greater increase than the communities. Travel times between many additional transportation capacity provided 132 by the Line 2 project. Since this project is city. Most of the mass transit vehicles operate currently the only major public transportation on the informal network, which prevents project in the metropolitan area, it is clear the integration with the metro and a complete current initiatives are insufficient to resolve system of transportation. Although the metro the transportation issues within Lima. To is already a tremendous undertaking, it would provide the economic development necessary be a missed opportunity not to implement a and achieve the goals of public transportation broader formal bus network and integrate the infrastructure, Lima needs to invest more two systems. resources and to do it more efficiently. In addition to improving its physical infrastructure, Peru can continue to improve Recommendations for the Future how it implements large infrastructure projects. The use of a P3 allows for foreign Moving forward, Peru can take advantage expertise on completing large projects to be of learning from the Line 2 project and other brought in. This model has been successful large transportation projects in Latin America. in other Latin American countries and allows Lima could benefit from placing portions of for the influx of additional financing as well. the metro above ground on the outskirts of When run successfully, a P3 can increase the city, just as City did, due to the the accountability of the private contractor, lower population density and lower level of increase the efficiency of operations, and deliver formal development, which allow for more better service. Yet for a P3 to be successful, it above-ground construction. Placing the metro requires strong regulatory commissions, close above ground would cut costs and allow for supervision, and stiff penalties to be built into more kilometers of track to be built. It is also the contract. At the same time the country essential to ensure smooth integration with the must provide assurance of long-term stability bus network for the transportation system to in governing bodies, public policy, and support be effective, especially in the early stages where of infrastructure projects. Peru’s recent history the metro covers only certain parts of the city. of successful elections and improvement in its This requires multiple integrated stations business and political climate have brought where passengers can transfer seamlessly. about an influx of foreign investment, and it For example, the Metro Line 4 in São Paulo, is important for this to continue. Having a , a city of comparable size at 12 million specialized government agency for private people, is integrated with municipal and inter- investment—ProInversión—also aids the municipal buses at all the stations along the process and allows professionals within Peru to route (São Paulo…). This allows extended become more experienced with managing P3 access into the periphery of the city, making concessions. By strengthening that investment the transportation system more effective at agency and by committing to long-term serving the poor. Similar interconnectivity in stability and infrastructure development, Peru Lima would require more formal bus routes. can take advantage of P3s to continue to build Currently there is only one express corridor its infrastructure and work toward sustainable and only a few formal routes on the periphery development amid the continued growth of of the city, which are not enough to cover the Lima.

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