Association for Public Policy Analysis & Management

Panel: Public-Private Partnerships for Infrastructure: New Evidence on Accountability and Performance Around the World

(Public and Non-Profit Management and Finance)

According to the American Society for Civil Engineers, by 2025 the US must invest $2 trillion in its infrastructure to ensure its global economic competitive advantage. Many other developed and developing countries face similar gaps to support their own economic growth targets. Infrastructure and public finance experts around the world believe public-private partnerships (P3s) can help close this gap between actual and needed investment. In fact, P3s were the centerpiece of President Trump’s 2018 infrastructure plan, and are a core focus of many multi-lateral and bi-later organizations.

 

P3s are a procurement method where private partners are held accountable for the performance of a piece of public infrastructure, in exchange for some or all of the revenues that infrastructure generates. This method is common in areas like highways, bridges, tunnels, seaports, and airports where private partners design, build, and often operate/maintain the facility in exchange for new revenues generated through tolls and user charges. More recently, P3s have also emerged as a tractable procurement model for “social infrastructure” like courthouses, city hall buildings, universities, and libraries, and for “essential infrastructure” in areas like water/wastewater, electricity, and natural gas. By some estimates there were more than $1 trillion in P3 projects worldwide in 2017, including $100 billion in the US.

 

P3s raise a variety of new accountability concerns. Traditional theories of government accountability follow from the assumption that the government controls the asset or service in question. But with a P3 the government cedes some or all control over how the asset is designed, built, or operated in exchange for benefits from the private sector like up-front investment or ongoing cost sharing. Moreover, many P3s are for long periods of time, and private partners often change their strategies and tactics in response to changing circumstances. This further complicates any effort to understand if and how a P3 is accountable to citizens.

 

There is a nascent literature on P3 accountability. Most of it is based on detailed small-N analyses of selected P3s, often in Europe. This panel will feature four cutting-edge papers on accountability in P3s around the world. All the papers are based on robust datasets that identify trends across both space and time. Two papers are focused on US P3s, with one focused on the factors that associate with P3 cancellations, and another that examines the factors that determine P3 financing costs. Two papers are comparative, with one focused on procurement methods in Chinese municipal government P3s, and another focused on how perceptions of political accountability shape how and when multi-lateral organizations invest in P3s in low and middle-income countries.