Saturday, November 9, 2013
3017 Monroe (Washington Marriott)
*Names in bold indicate Presenter
Private infrastructure investment in the United States is often viewed as providing an alternative financing method given a revenue stream from a transportation facility rather than as creating new revenue per se. However, private investment in the form of upfront concession lease payments for newly priced roads can be used to enhance the public appeal of road pricing, thus generating substantial new revenue from existing transportation facilities. Our new approach uses the value embedded in U.S. infrastructure that is released through pricing to make that pricing politically feasible. We suggest preserving a portion of the wealth generated by road pricing in perpetuity through a permanent fund, which is one type of public trust fund. Permanent funds are currently in use in Alaska, Texas, Norway and many other jurisdictions to preserve natural resource wealth. Following Alaska, we propose that investment income from the fund be used to provide an annual dividend payment to all households within the newly priced region. We refer to this approach as an investment public-private partnership, or IP3. The IP3 has several advantages relative to current proposals to increase citizen support for road pricing. It ameliorates the agency problem between citizens and their elected representatives that are exacerbated by the free cash flows that road pricing generates. It also creates direct citizen-stakeholdership in transportation infrastructure, which increases public support pricing. The Alaskan experience suggests that this approach can also reduce income inequality, create higher personal income, and mitigate the effects of recessions.