This paper attempts to quantify capital investment in transport around the world. Distinguishing public and private investment at the national and international level is the first step needed to shift investment towards more sustainable, low-carbon modes and systems.

Key Findings

The transport sector is growing quickly, with the global vehicle fleet on course to double by 2050. Without proper planning and investment, negative externalities from congestion to pollution will grow equally fast. Since the longevity of physical transport assets locks-in a particular pattern of mobility and resource consumption, capital investments made today must support sustainable-low-carbon transport. The first step to shifting investment trends is mapping out their composition.

A new working paper, “The Trillion Dollar Question,” is the first attempt to distinguish public and private capital investment in transport around the world. According to the paper, global transport investment is between $1.4 and $2.1 trillion annually. In aggregate, private investment constitutes about 58% of global investment, although this proportion varies by country and mode. In high-income countries, where three-quarters of investment takes place, private investment is nearly double that of the public sector. In middle- and low-income countries, however, the public share is slightly larger.

But private investment in the developing world is growing. According to the World Bank, private participation in transport projects increased 400% from 1990 to 2012. The report concludes that attracting private investment and leveraging public resources to do so will be essential to shifting future investment patterns toward sustainable, low-carbon transport in developing countries. The findings of this working paper are preliminary and will benefit from continued research on global transport investment vehicles, sources, and recipients. In particular, defining the financial flows to sustainable, low-carbon transport is a critical next step to changing the future impacts of global transport.

Executive Summary

In a first step to quantify global public and private investment in transport across all modes, WRI estimated annual capital expenditures (excluding consumer spending) at between US$1.4 trillion and US$2.1 trillion annually. In aggregate, this investment consists of slightly more private investment than public. Public investment, at US$569 billion to US$905 billion per year, consists almost exclusively of domestic budget expenditures. In 2010, 2 percent of public investment was international, mostly provided through official development assistance (ODA). Less than half a percent comes from climate-focused funds and institutions. Private investment, including both domestic and cross-border flows, is estimated to be between US$814 billion and US$1.2 trillion per year. About three-quarters of private investment occurs in high-income countries.

This working paper sets the stage for analysis on how to shift financial flows to meet transport needs sustainably and with lower greenhouse gas emissions. Although these data are preliminary, we conclude that shifting future transport investment patterns, especially in the rapidly urbanizing and motorizing countries where transport growth is fastest, will depend on leveraging public finance and the establishment of a secure investment climate for private investment. To successfully target future investment in sustainable, low-carbon transport, more research is needed on the relationships among financial instruments, financing sources, and transport modes.