Financing Transport Projects

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The role of government in facilitating transport projects is inevitable. But governments are monopolists and largely cannot be trusted with the efficient allocation of resources, not to mention the problem of corruption. So, the less the state is involved the better off everyone is.

Transport has gone a full circle. Until the beginning of the 17th century it was largely privately financed. The state took over until the last two decades of the twentieth century. And now there is a revival of the involvement of the private sector in financing infrastructure. Additionally, transport has become a commodity and is securitized, as we shall see.

All social (or public) goods carry social costs and bring on negative externalities (such as environmental damage). Embedded in every public good there is a moral hazard - others bear a disproportionate part of the costs while the perpetrators go "free". This is why accurate statistics, forecasting and cost benefit analysis systems are a must. I am not talking only about cost coverage calculations but also about finding ways to impose on the users of transport infrastructure the real costs of their actions. This is known today as "user pays" charging schemes. But to do so, the state needs to know what ARE these costs. This is one way of forcing the private sector to participate in t...

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