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Regulation of the informal transport sector in Rio de Janeiro, Brazil: welfare impacts and policy analysis

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Abstract

In Brazil, the explosion of informal transport activity during the past decade has had profound effects on formal public transport systems and is a source of great controversy in the urban transportation sector. A variety of policies have been proposed to manage the growth of the sector. This study seeks to understand how proposed policies will impact the users of these systems. A corridor in Rio de Janeiro with substantial informal activity was used as a case study. Measures of welfare changes in a discrete choice framework were used to estimate proposed policies’ impacts on users. Eleven candidate policies were evaluated, ranging from the eradication of the informal modes and investment in formal modes, to the legalization of the informal modes. Benefits were compared with costs and the distribution of benefits across income classes was explored. Net benefits from some policies were found to be substantial. Legalizing the informal sector was found to benefit users slightly but further investments in the sector are probably inefficient. Users benefited most from improvements in formal mass transit modes, at roughly 100–200 dollars per commuter per year. Finally, policies to foster a competitive environment for the delivery of both informal and formal services were shown to benefit users about 100 dollars per commuter per year. Together, the regulation of the informal sector and investments in the formal sector serve to reinforce the movement towards competitive concessions for services and help reduce the impacts of cartelization and costly in-road competition.

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Abbreviations

NTU:

The National Association of Urban Transportation Companies

ANTP:

National Association of Public Transportation

CUT:

National Workers Union

CNTT:

National Confederation of Transport Workers

CV:

Compensating variation

MRMC:

Medium-run marginal cost

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Acknowledgments

The background research for this project could not have been accomplished without the help of Professor Romulo Dante Orrico Filho and other staff in the Transportation Engineering Program at the Federal University of Rio de Janeiro. Golub’s doctoral committee at University of California, including Martin Wachs, Elizabeth Deakin, Robert Cervero, and Samer Madanat also contributed to this work. This work was funded in part by the Brazilian Conselho Nacional de Desenvolvimento Científico e Tecnológico (CNPq), the Institute of Transportation Studies and the Center for Latin America Studies at UC Berkeley, the National Science Foundation, and the Tinker Foundation.

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Authors and Affiliations

  1. School of Geographical Sciences and Urban Planning and School of Sustainability, Arizona State University, P.O. Box 872005, Tempe, AZ, 85287-2005, USA

    Aaron Golub

  2. Centro de Tecnologia Ilha do Fundão, Transportation Engineering Program, Federal University of Rio de Janeiro, Cidade Universitaria, Bloco H, Sala H 106, CP 68512, Rio de Janeiro, RJ, CEP: 21945-970, Brazil

    Ronaldo Balassiano

  3. ENGEVIX Engenharia S/A, Barueri, Brazil

    Ayres Araújo

  4. Faculdade de Tecnologia da Baixada Santista, Santos, Brazil

    Eric Ferreira

Authors
  1. Aaron Golub
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  2. Ronaldo Balassiano
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  3. Ayres Araújo
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  4. Eric Ferreira
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Correspondence to Aaron Golub.

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Golub, A., Balassiano, R., Araújo, A. et al. Regulation of the informal transport sector in Rio de Janeiro, Brazil: welfare impacts and policy analysis. Transportation 36, 601–616 (2009). https://doi.org/10.1007/s11116-009-9215-y

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  • DOI: https://doi.org/10.1007/s11116-009-9215-y

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