Chapter 17: Financing Transport Infrastructure

It is difficult to consider the financing of transport infrastructure without reference to the ongoing discussion on the role of the state (e.g. privatization/deregulation issues) on the one hand, and the size of public debt and hence the amount of taxation and the allocation of general tax money to specific uses on the other. The dominating view in the public sphere is that infrastructure has to be planned and provided by the state. according to public “needs” In contrast to economists' focus on efficiency, practical interest is on distribution, and the central question is: who should contribute, how much, and in what way to the financing of this infrastructure? Until very recently it seemed clear that the construction of transport infrastructure would mostly be financed by general tax money, with users contributing in one way or another (fuel taxes, tolls) to the costs of operation. However, for some time now, participation of the private sector in financing through public-private partnerships has raised expectations that public funds would no longer be a relevant constraint on the realization of single infrastructure projects. Moreover, discussions on road tolls and, rarely so far, on the introduction of road pricing have provoked curiosity about the options available for financing and regulating the use of infrastructure. Unfortunately, the complexity of the issue, the variety of dimensions involved, and the number of instruments proposed tend to create more confusion among interested practitioners than they contribute to the solution of the problems and the orientation of transport policy toward a strategy based on economic principles.