TRANSPORT INFRASTRUCTURE INVESTMENT: Options for Efficiency for Options INVESTMENT: INFRASTRUCTURE TRANSPORT
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TRANSPORT INFRASTRUCTURE INVESTMENT Options for Efficiency Surface transport plays a fundamental role in nearly all social and economic activity. TRANSPORT INFRASTRUCTURE INVESTMENT: Options for Efficiency Providing and maintaining the infrastructure consumes enormous resources. Thus, it is essential that this be carried out in the most efficient and effective way possible. Many options are available to provide surface transport infrastructure – public ministries and agencies, public-private partnerships (PPPs), state-owned companies, private and non-profit entities, and outright privatisation. There are also various means of paying for it, including user charging, subsidies, public borrowing or private financing. This report examines key principles that should be considered by governments in deciding how to provide and pay for TRANSPORT surface transport infrastructure, with a view to best serving societies’ needs and employing public resources. It also INFRASTRUCTURE considers the key issues that must be resolved in making more use of private financing and expertise. INVESTMENT TRANSPORT RESEARCH CENTRE www.internationaltransportforum.org Options for Efficiency www.oecd.org/publishing (77 2008 01 1 P) -:HSTCSC=VUVZZV: ISBN 978-92-821-0155-1 2008 TRANSPORT INFRASTRUCTURE INVESTMENT Options for Efficiency TRANSPORT RESEARCH CENTRE Caecilia_histo_gen_A_19x27.fm Page 1 Tuesday, January 29, 2008 10:21 AM ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. Also available in French under the title: Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda. © OECD 2008 No reproduction, copy, transmission or translation of this publication may be made without written permission. Applications should be sent to OECD Publishing [email protected] or by fax 33 1 45 24 99 30. Permission to photocopy a portion of this work should be addressed to the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, fax 33 1 46 34 67 19, [email protected] or (for US only) to Copyright Clearance Center (CCC), 222 Rosewood Drive, Danvers, MA 01923, USA, fax 1 978 646 8600, [email protected]. 003a.fm Page 1 Tuesday, January 29, 2008 2:41 PM INTERNATIONAL TRANSPORT FORUM The International Transport Forum was created under a Declaration issued by the Council of Ministers of the ECMT (European Conference of Ministers of Transport) at its Ministerial Session in Dublin on 17 and 18 May 2006. It reflects the Ministers’ will to transform the ECMT into an international forum whose specific objective is to help political leaders and a larger public better understand the role of transport as a key element in economic growth, as well as its effects on the social and environmental components of sustainable development. Established under the legal authority of the Protocol of the ECMT signed in Brussels on 17 October 1953, as well as the appropriate legal instruments of the OECD, the Forum is considered an international entity endowed with all the necessary support structures and financing mechanisms. Its administrative headquarters is located in Paris. The International Transport Forum is a global body with world-wide reach. The topics addressed by the Forum are strategic in nature and over-arching in scope, as they can cover all modes of transport. The International Transport Forum is above all a place for discussion and negotiation. The full member countries and associate member countries of the ECMT are the founding members of the Forum, namely: Albania, Armenia, Australia, Austria, Azerbaijan, Belarus, Belgium, Bosnia- Herzegovina, Bulgaria, Canada, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, FRY Macedonia, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Moldova, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, the United Kingdom and the United States. Morocco has observer country status. Corporations, organisations, institutions and leading figures from civil society may be asked to enter into partnerships with the Forum. The International Transport Forum organises an Annual Conference attended by Ministers as well as leading figures from civil society and representatives of organisations involved in transport policy. As of May 2008, the meeting will take place each year in Leipzig, Germany. The theme chosen in 2008 is: “Transport and Energy: the Challenge of Climate Change”. In 2009, the theme will be: “Globalisation of trade and its impact on transport and infrastructure”. In 2004, the ECMT and the OECD created the Joint Transport Research Centre. The Centre conducts co-operative research programs that address all modes of transport that in turn support policy-making in member countries. Through some of its projects, the Centre also makes contributions to the activities of the International Transport Forum. Also available in French under the title: Investissements en infrastructures de transport VERS PLUS D’EFFICIENCE Further information about the International Transport Forum is available on Internet at the following address: www.internationaltransportforum.org © OECD/ITF 2008 No reproduction, copy, transmission or translation of this publication may be made without written permission. Applications should be sent to OECD Publishing [email protected] or by fax 33 1 45 24 99 30. FOREWORD – 5 FOREWORD This report examines principles for determining the most appropriate models for investment in surface transport infrastructure. The primary focus is on network-based infrastructure – roads, rail and, to a lesser extent, inland waterways. The extent and quality of transport infrastructure is of profound importance for the functioning of society and the economy. All governments are faced with the challenge of maintaining vast transport infrastructure networks, and adding new capacity in strategic areas. This requires very large investments. In the context of intense competition for public resources from other policy priorities, governments are looking to a wider range of models for the delivery of surface transport infrastructure, many of which are characterised by increasing use of private sector resources, expertise and/or management practices. The full set of options considered in this report includes public ministries and agencies, fully or partially state-owned companies, private not-for-profit companies, public-private partnerships (PPPs), and outright privatisation. As an important point of departure for the analysis, it is argued that the pursuit of efficiency should be at the core of the decision regarding which model to employ. Pursuing efficiencies through the introduction of market forces and private sector practices is complicated by the potential for infrastructure operators to exploit monopoly rents. Care must be taken to ensure that the provision of infrastructure serves society’s wider needs. Achieving the right balance is at the heart of the ongoing debate over how best to provide surface transport infrastructure. All of the models have their benefits and costs. While government ministries allow for the highest degree of accountability, their short-term budgeting, diffuse mandates, bureaucratic processes, and susceptibility to political interference in operational questions can reduce the focus on efficiency in decision-making. Complete privatisation of surface transport infrastructure assets is only applicable under certain circumstances, and creates a need for more proactive government regulation. A range of intermediate arrangements exists. Public-private partnerships (PPPs) have attracted much attention in recent years. Appropriately designed, PPPs have the potential to allow for important efficiency gains by transferring the responsibility for long-term cost management to private organisations that are intrinsically motivated to reduce overall costs in pursuit of profits, including