NCPA - National Center for Policy Analysis

Public-Private Partnerships in Transportation

February 2, 2011

Broadening the use of public-private partnerships (PPPs) in transportation projects can build new roads, bridges, and tunnels quickly and efficiently without adding to the federal deficit.  PPPs empower motorists by allowing them to become consumers, not merely users, of our nation's roadways.  As consumers of transportation, Americans have tremendous power -- the power to demand the facilities and the services they need, says R. Richard Geddes, an adjunct scholar at the American Enterprise Institute.

  • In a PPP, a private investor assumes responsibility for financing, designing, building and operating a transportation facility.
  • Because private investors shoulder upfront costs -- as well as the considerable risk that their investment might fail -- they have strong incentives to make sure projects are completed on time and on budget.
  • In a government-funded roadway, that cost and risk are borne by taxpayers.

Tolls are the key to revitalizing America's transportation infrastructure because toll revenue can be used to leverage enormous amounts of private capital, says Geddes.

  • Another critical benefit of tolls is that fees can be adjusted to reduce congestion -- increasing during times of peak road use, decreases during off-peak times, and adjusted in real time to keep traffic flowing smoothly.
  • Congestion tolling saves motorists an enormous amount of time that would otherwise be spent stuck in traffic, thereby reducing stress, saving fuel and making trip times much more predictable.

Currently, 29 states have enacted legislation enabling private investment in transportation infrastructure, but the number of PPP-operated projects remains small, says Geddes.

Source: R. Richard Geddes, "Road Tax Alternative: Pay for Each Mile You Drive," American Enterprise Institute, January 28, 2011.

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