CHALLENGES OF URBAN GROWTH November 6, 2009 Jose A. Gomez-Ibanez OUTLINE: 1.CITIES AND ECONOMIC GROWTH 2.HCMC PROBLEMS  GROWTH, CONGESTION, FLOODING, HOUSING, DOWNTOWN AND FINANCE 3.HCMC PLANS  TRANSPORTATION, LAND USE Based on paper with David Dapice and Nguyen Xuan Thanh

CITIES AND ECONOMIC GROWTH BENEFITS OF AGGLOMERATION lEconomies of scale within firms lEconomies of agglomeration across firms and households lIn production: lWithin industries (cluster) lAcross industries (diversity) lIn consumption COSTS OF AGGLOMERATION lScarcity of central locations lCongestion, pollution, flooding CITY SIZE lTradeoff between marginal benefits and costs of agglomeration lMarket not necessarily optimal given that both benefits and costs involve externalities (spillovers)

OPTIMAL CITY SIZE (AFTER ALONSO) MSB MSC SOCIAL COST AND BENEFIT OF AGGLOM- ERATION CITY POPULATION

ROLE OF CITY GOVERNMENT MAXIMIZE AGGLOMERATION BENEFITS lGood business climate lIdentify, nurture clusters MINIMIZE AGGLOMERATION COSTS lEfficient infrastructure Transport, water, sewage, drainage lEfficient land controls Titles, density and use controls, state-owned lands EASIER FOR GOVERNMENT TO INFLUENCE COSTS THAN BENEFITS?

ROLE OF CITY GOVERNMENT MB MC efficient SOCIAL COST AND BENEFIT OF AGGLOM- ERATION CITY POPULATION MB efficient MC

HCMC PLANS AND PROBLEMS PLANS  1998: 2020 LAND USE MASTER PLAN  2008: 2025 LAND USE MASTER PLAN  TRANSPORTATION MASTER PLAN  MASS RAIL TRANSIT (MRT) PLAN PROBLEMS  GROWTH  CONGESTION  FLOODING  HOUSING  THE DOWNTOWN  FINANCE AND IMPLEMENTATION

HO CHI MINH CITY POPULATION GROWTH  OFFICAL POPULATION AND EMPLOYMENT HCMC population (000)6,24010,000 HCMC employment (000)2,6764,523 Share services49%56%  OFFICIAL AND ACTUAL POPULATION GROWTH Official recent: 2.5%/year Official projection ( ): 2.3%/year Actual recent:5% to 7%/year?

HO CHI MINH CITY SOURCES OF CONGESTION 1.URBAN POPULATION AND EMPLOYMENT GROWTH 2.INCREASE IN TRIP RATES AND LENGTH trips/capita/day HCMC: 1.4 United States: 4 - 5

HO CHI MINH CITY SOURCES OF CONGESTION 3.THE SHIFT TO THE PRIVATE AUTO THRESHOLD US$3,000 GDP PER CAPITA TYPICAL EVOLUTION: ANIMALMOTORIZED MOTORIZED POWERED PUBLIC PRIVATE (walk, cycle) (bus) (car) HO CHI MINH CITY: ANIMALMOTORIZED MOTORIZED POWERED PRIVATE PRIVATE (walk, cycle)(motorcycle) (car)

HO CHI MINH CITY FLOODING

HO CHI MINH CITY HOUSING COSTS PHU MY TOWN HOUSE DEVELOPMENT COSTS (millions of VND) LAND PRICE 75% OF TOTAL COSTS Land (VND 16/m 2 * 60 m 2 ) =VND 960 Construction (VND 4/m 2 * 80 m 2 ) = VND 320 Total =VND 1,280 LAND PRICE 3.4 TIMES ACQUISTION COST Agriculture payment VND 1.6/m 2 Land use fee VND 2.3/m 2 Infrastructure cost VND 0.8/m 2 Total land acquisition costsVND 4.7/m 2 Land priceVND 16/m 2

HO CHI MINH CITY THE DOWNTOWN

USE OF STREET CAPACITY BICYCLEMOTOR- CYCLE BUSAUTO Passenger car equivalents (PCEs) per vehicle 0.15 – 0.4 (?) 0.15 – Passengers per vehicle Passengers per PCE 2.5 –

HO CHI MINH CITY TRAVEL PATTERNS: 2002 vs WalkBikeBusMetroMotor bike Car, taxi All modes Pass. 2000n.a.19%5.10%74%1.9%100% Pass. 2020n.a.0.6%24.5%10%43.3%21.6%100% Passengers/ vehicle PCEs/vehicle PCEs in 2000, per 100 pass PCEs in 2020, per 100 pass

HO CHI MINH CITY TRAFFIC LANE PRIORITY CURRENT BUS PRIORITY (= bus and motorcycle) ( = bus only) MOTORCYCLE MEDIAN CURB SIDE PROTECTION ISSUES  Enforcement  Turns  Passenger access (if median)  Congestion on remaining lanes

INTERNATIONAL EXPERIENCE BUS RAPID TRANSIT (BRT) CHARACTERISTICS  Segregated busways and stations  High frequency services  High platform boarding  Pay before boarding  Special operators

CRITIBA BRT  1970, Brazil  15,000 phd

BOGOTA BRT  2002, Colombia  50,000 phd

2025 TRANSPORTATION PLAN 6 MRT LINES, 161 KM

2025 TRANSPORTATION PLAN 4 ELEVATED EXPRESSWAYS, 40 KM

INVESTING IN NEW CAPACITY 1.EXPENSIVE  MRT LINES: US$ 9.7 BILLION  ELEVATED EXPRESSWAYS: ~US$ 1.4 BILLION 2.LIMITED CAPACITY GAINS 3.IMPLEMENTATION PRIORITIES  MRT LINE 1 EAST  ELEVATED EXPRESSWAYS

INTERNATIONAL EXPERIENCE BRT PRO: High speed, high volume Cheaper, easier to build than Metro BRT: $2-$15 mil/km Metro: $ mil/km LRT: $15-$40 mil/km CON: Not full separation from other traffic Spillover congestion

2025 TRAVEL FORECASTS WITH 161- KILOMETER RAIL SYSTEM OptimisticBus trend All modesPublic onlyAll modesPublic only Motorcycle, Bicycle38%49% Car18%29% Subtotal private56%78% Rail transit9.2%21%6.8%31% Bus30.8%70%12.9%59% Ferry0.4%1%0.1%0% Intercity rail or bus3.5%8%2.3%10% Subtotal public44%100%22%100% All modes100% Modes on urban streets87%91%

2025 LAND USE PLAN KEY ELEMENTS 1.EXTENDED DOWNTOWN 2.SATELLITE CENTERS 3.MANUFACTURING CORRIDORS ISSUES 1.HOUSING? 2.EXTENDED DOWNTOWN VIABLE? 3.DESIGN OF TRADITIONAL DOWNTOWN 4.THU THIEM

2025 LAND USE PLAN

MANAGING HCMC’S GROWTH  DECISIONS  FINANCE  IMPLEMENTATION