Rail transit development in lagging regions: A development-oriented investment and financing approach
Keywords:Transportation infrastructure, Financing, Urban development, Rail transit, China, Land value capture
AbstractTransportation infrastructure investment can play a significant role in promoting urban development. How can governments finance expensive rail transit investments and promote urban development in lagging regions? This paper reviews a case in Chongqing, China, a municipality that proactively invested in rail transit development through a mechanism of land value capture and guided rapid urbanization. We use path analysis to test the assumption that the rail transit system investment, which is directly linked to the amount of available government reserve land, was an important determinant in promoting urban development. We found that the availability of government reserve land alone cannot promote urban development. However, building transportation infrastructure on government reserve land serves as the catalyst to foster urban development. We see this development-oriented investment and financing approach as promising for raising funds for rail transit investment in other lagging regions in the world.
Alonso, W. (1964). Location and land use: Toward a general theory of land rent. Cambridge, MA: Harvard University Press.
Alwin, D. F., & Hauser, R. M. (1975). The decomposition of effects in path analysis. American sociological review, 37–47.
Barker, T. C., & Robbins, M. (1963). A history of London transport: Passenger travel and the development of the metropolis: Vol. 1: The Nineteenth Century. Crows Nest, Australia: Allen and Unwin.
Baum-Snow, N. (2007). Did highways cause suburbanization?The Quarterly Journal of Economics, 122(2), 775–805.
Blalock, H. M. (1964). Causal inferences in nonexperimental research. Chapel Hill: University of North Carolina Press.
Blalock, H. M. (1969). Theory construction: From verbal to mathematical formulations. Englewood Cliffs, NJ: Prentice-Hall.
Burgess, R. (2000). The compact city debate: A global perspective. Compact cities: Sustainable urban forms for developing countries (pp. 9–24). London: Spoon Press.
Cao, X. J., & Porter-Nelson, D. (2016). Real estate development in anticipation of the Green Line light rail transit in St. Paul. Transport Policy, 51, 24–32.
Cervero, R. (2003). Road expansion, urban growth, and induced travel: A path analysis. Journal of the American Planning Association, 69(2), 145–163.
Cervero, R., Bernick, M., & Gilbert, J. (1994). Market opportunities and barriers to transit-based development in California. Berkeley, CA: University of California Transportation Center.
Cervero, R., & Day, J. (2008). Suburbanization and transit-oriented development in China. Transport Policy, 15(5), 315–323.
Cervero, R., & Landis, J. (1997). Twenty years of the Bay Area Rapid Transit system: Land use and development impacts. Transportation Research Part A: Policy and Practice, 31(4), 309–333.
Christaller, W., & Baskin, C. W. (1966). Central places in southern Germany: Translated by Carlisle W. Baskin. Upper Sadle River, NJ: Prentice-Hall.
Cipriani, E., Gori, S., & Petrelli, M. (2012). Transit network design: A procedure and an application to a large urban area. Transportation Research Part C: Emerging Technologies, 20(1), 3–14. doi: http://dx.doi.org/10.1016/j.trc.2010.09.003
CQMetro. (2017). Overview of Chongqing urban rail transit development Phase 1. Retrieved from http://www.cqmetro.cn/wwwroot_release/crtweb/jiansheguihua/ylgh/336034.shtml
Duncan, O. D. (1966). Path analysis: Sociological examples. American Journal of Sociology, 72(1), 1–16.
Fan, J., Bai, B., & Pan, Q. (2004). Progress made by the study on the contributions of infrastructure capital to economic growth—A summary of the method of production function [J]. Modern Economic Science, 26(2), 87–96.
Fan, W., & Machemehl, R. B. (2006). Optimal transit route network design problem with variable transit demand: Genetic algorithm approach. Journal of Transportation Engineering, 132(1), 40–51.
Ferbrache, F., & Knowles, R. (2016). Generating opportunities for city sustainability through investments in light rail systems: Introduction to the Special Section on light rail and urban sustainability. Journal of Transport Geography, 54, 369–372. doi: http://dx.doi.org/10.1016/j.jtrangeo.2016.06.004
Forman, R. T., & Wu, J. (2016). Where to put the next billion people. Nature, 537(7622), 608–611.
Giuliano, G. (2004). Land use impacts of transportation investments-highway and transit. New York: Guilford Publications.
Glaeser, E. L., & Kahn, M. E. (2004). Chapter 56 — Sprawl and urban growth. In J. V. Henderson & T. Jacques-François (Eds.), Handbook of regional and urban economics, 4, 2481–2527).
Hanson, S., & Giuliano, G. (2004). The geography of urban transportation. New York: Guilford Press.
He, S., & Wu, F. (2005). Property — led redevelopment in post — reform China: A case study of Xintiandi redevelopment project in Shanghai. Journal of Urban Affairs, 27(1), 1–23.
Hess, D., & Lombardi, P. (2004). Policy support for and barriers to transit-oriented development in the inner city: Literature review. Transportation Research Record: Journal of the Transportation Research Board, (1887), 26–33.
Hodge, G. A., & Greve, C. (2007). Public–private partnerships: An international performance review. Public Administration Review, 67(3), 545–558.
Hood, C. (2004). 722 miles: The building of the subways and how they transformed New York. Baltimore: Johns Hopkins Univeristy Press.
Hoover, E. M. (1948). The location of economic activity. New York: McGrawHill.
Isard, W. (1956). Location and space-economy. New York: Wiley.
Jiang, H., & Levinson, D. (2017). Accessibility and the evaluation of investments on the Beijing subway. Journal of Transport and Land Use, 10(1), 395–408.
Junge, J., & Levinson, D. M. (2012). Financing transportation with land value taxes: Effects on development intensity. Journal of Transport and Land Use, 5(1), 49–63.
King, D. (2011). Developing densely: Estimating the effect of subway growth on New York City land uses. Journal of Transport and Land Use, 4(2), 19–32.
Kirwan, R. M. (1989). Finance for urban public infrastructure. Urban Studies, 26(3), 285–300.
Knight, R. L., & Trygg, L. L. (1977). Evidence of land use impacts of rapid transit systems. Transportation, 6(3), 231–247.
Li, W., Rosenheim, N. P., Dong, H., Boarnet, M., & Zhong, H. (2017). Rail transit and economic growth: Documenting evidences from a panel data analysis of eighteen metropolitan areas in the United States. Paper presented at the Transportation Research Board 96th Annual Meeting, Washington, DC.
Long, H., Wu, X., Wang, W., & Dong, G. (2008). Analysis of urban-rural land-use change during 1995-2006 and its policy dimensional driving forces in Chongqing, China. Sensors, 8(2), 681–699.
Losch, A. (1954). Economics of location. New Haven, CT: Yale University Press.
Lou, H. (2003). Study on infrastructure investment and economic growth. PhD Dissertation, Tsinghua University, Beijing.
Loukaitou-Sideris, A., & Banerjee, T. (2000). The Blue Line blues: Why the vision of transit village may not materialize despite impressive growth in transit ridership. Journal of Urban Design, 5(2), 101–125.
Luscher, D. R. (1995). The odds on TODs: Transit-oriented development as a congestion-reduction strategy in the San Francisco Bay area. Berkeley Planning Journal, 10(1), 55–74.
Lv, M. (2012). Deficit of Line 1 happens in Hangzhou and the local oppose the high transit fee. Retrieved from http://news.ifeng.com/shendu/nfzm/detail_2012_11/02/18775016_0.shtml
Mackett, R. L., & Edwards, M. (1998). The impact of new urban public transport systems: Will the expectations be met? Transportation Research Part A: Policy and Practice, 32(4), 231–245. doi: http://dx.doi.org/10.1016/S0965-8564(97)00041-4
Mamun, S. A., Lownes, N. E., Osleeb, J. P., & Bertolaccini, K. (2013). A method to define public transit opportunity space. Journal of Transport Geography, 28, 144–154. doi: http://dx.doi.org/10.1016/j.jtrangeo.2012.12.007
Medda, F. (2012). Land-value capture finance for transport accessibility: A review. Journal of Transport Geography, 25, 154–161. doi: http://dx.doi.org/10.1016/j.jtrangeo.2012.07.013
Mills, E. S. (1967). An aggregative model of resource allocation in a metropolitan area. The American Economic Review, 57(2), 197–210.
Moses, L. N. (1958). Location and the theory of production. The Quarterly Journal of Economics, 73, 259–272.
Muth, R. (1969). Cities and housing: The spatial patterns of urban residential land use. Chicago: University of Chicago.
Pagano, M. A., & Perry, D. (2008). Financing infrastructure in the 21st century city. Public Works Management & Policy, 13(1), 22–38.
Pendall, R. (1999). Opposition to housing NIMBY and beyond. Urban Affairs Review, 35(1), 112–136.
Phang, S.-Y. (2007). Urban rail transit PPPs: Survey and risk assessment of recent strategies. Transport Policy, 14(3), 214–231. doi: http://dx.doi.org/10.1016/j.tranpol.2007.02.001
Pucher, J., Peng, Z., Mittal, N., Zhu, Y., & Korattyswaroopam, N. (2007). Urban transport trends and policies in China and India: Impacts of rapid economic growth. Transport Reviews, 27(4), 379–410.
Sclar, E. D. (2001). You don't always get what you pay for: The economics of privatization. Ithaca, NY: Cornell University Press.
Shen, W., Xiao, W., & Wang, X. (2016). Passenger satisfaction evaluation model for Urban rail transit: A structural equation modeling based on partial least squares. Transport Policy, 46, 20–31.
Sidenbladh, G. (1965). Stockholm. Scientific American, 213(3), 106–121.
Siemiatycki, M. (2013). The global production of transportation public–private partnerships. International Journal of Urban and Regional Research, 37(4), 1254–1272.
Smith, J. J., & Gihring, T. A. (2006). Financing transit systems through value capture. American Journal of Economics and Sociology, 65(3), 751–786.
Squires, G. D. (2002). Urban sprawl: Causes, consequences, and policy responses. Washington, DC: The Urban Insitute.
Suzuki, H., Murakami, J., Hong, Y.-H., & Tamayose, B. (2015). Financing transit-oriented development with land values: Adapting land-value capture in developing countries. Washington, DC: World Bank Publications.
United Nations. (2015a). The Millennium Development Goals report 2015. New York: United Nations.
United Nations. (2015b). World urbanization prospects: The 2014 revision. New York: United Nations Department of Economics and Social Affairs, Population Division.
von Thünen, J. H., & Hall, P. (1966). Von Thünen's isolated state: An English version of Der Isolierte Staat. Oxford, UK: Pergamon Press.
Walker, C. T., & Smith, A. J. (1995). Privatized infrastructure: The build operate transfer approach. London: Thomas Telford
Wang, C., Wu, D., Hu, Y., Liang, W., & Wang, S. (2015). Financing mod of urban rail transit project: A case-based comparison. Urban Mass Transit, 8(006).
Wang, D., Zhang, L., Zhang, Z., & Zhao, S. X. (2011). Urban infrastructure financing in reform-era China. Urban Studies, 48(14), 2579–2998.
Wheaton, W. C. (1977). Residential decentralization, land rents, and the benefits of urban transportation investment. The American Economic Review, 67(2), 138–143.
Wright, S. (1920). The relative importance of heredity and environment in determining the piebald pattern of guinea-pigs. Proceedings of the National Academy of Sciences, 6(6), 320–332.
Wright, S. (1921). Correlation and causation. Journal of agricultural research, 20(7), 557–585.
Wu, W. (2010). Urban infrastructure financing and economic performance in China. Urban Geography, 31(5), 648–667.
Xin, Y. (2015). Performance evaluation of rail transit PPP model cooperation project in view of knowledge transfer. Urban Mass Transit, 4, 009.
Xu, W., Guthrie, A., Fan, Y., & Li, Y. (2017). Transit-oriented development in China: Literature review and evaluation of TOD potential across 50 Chinese cities. Journal of Transport and Land Use, 10(1), 743–762.
Yang, J., Chen, J., Le, X., & Zhang, Q. (2016). Density-oriented versus development-oriented transit investment: Decoding metro station location selection in Shenzhen. Transport Policy, 51, 93–102.
Zhang, M. (2007). Chinese edition of transit-oriented development. Transportation Research Record: Journal of the Transportation Research Board, 2038, 120–127.
Zhang, M., & Wang, L. (2013). The impacts of mass transit on land development in China: The case of Beijing. Research in Transportation Economics, 40(1), 124–133. doi: http://dx.doi.org/10.1016/j.retrec.2012.06.039
Zhang, M., & Xu, T. (2017). Uncovering the potential for value capture from rail transit services. Journal of Urban Planning and Development, 143(3), 04017006.
Zhang, X. (2009). Transport infrastructure, spillover, and regional economic growth. Nanjing: Nanjing University Press.
Zhao, J., & Block-Schachter, D. (2016). Shaping rapidly growing Chinese cities. In E. D. Sclar, M. Lonnroth, & C. Wolmar (Eds.), Improving urban access: New approaches to funding transport investment, Abingdon, UK: Routledge.
Zhao, Z., Das, K., & Larson, K. (2010). Tax increment financing as a value capture strategy in funding transportation. Transportation Research Record: Journal of the Transportation Research Board, 2187, 1–7.
Zhao, Z. J., Das, K. V., & Larson, K. (2012). Joint development as a value capture strategy for public transit finance. Journal of Transport and Land Use, 5(1), 5–17.
Zheng, S., & Kahn, M. E. (2008). Land and residential property markets in a booming economy: New evidence from Beijing. Journal of Urban Economics, 63(2), 743–757. doi: http://dx.doi.org/10.1016/j.jue.2007.04.010
Zhong, H., & Li, W. (2016). Rail transit investment and property values: An old tale retold. Transport Policy, 51, 33–48. doi: 10.1016/j.tranpol.2016.05.007
Zou, W., Zhang, F., Zhuang, Z. Y., & Song, H. R. (2008). Transport infrastructure, growth, and poverty alleviation: Empirical analysis of China. Annals of economics and finance, 9(2), 345–371.
How to Cite
Authors who publish with JTLU agree to the following terms: 1) Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under Creative Commons Attribution-Noncommercial License 4.0 that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal. 2) Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal. 3) Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.