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Social welfare analysis of investment public-private partnership approaches for transportation projects

Rouhani, OM; Geddes, RR; Gao, HO; Bel, G; (2016) Social welfare analysis of investment public-private partnership approaches for transportation projects. Transportation Research Part A: Policy and Practice , 88 pp. 86-103. 10.1016/j.tra.2015.11.003. Green open access

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Abstract

This paper has two objectives: (i) to introduce a new approach in order to gain widespread support for road pricing; and (ii) to develop a detailed social welfare analysis for road pricing schemes. We first describe our novel approach that stimulates public support for road pricing, which we refer to as an investment public–private partnership, or IP3. This approach returns a significant portion of the economic value created by road pricing back to the citizens who own the newly priced facility. We then present a social welfare framework that estimates the benefits and costs of using the IP3 approach on an urban transportation network. A P3 project’s impact on overall social welfare provides a more comprehensive evaluation criterion than the often-used Value for Money (VfM) analysis. Apart from several theoretical studies, a detailed social welfare analysis that includes all major P3 project stakeholders is absent from the literature. We use Fresno, California as our case study in order to conduct a welfare analysis on IP3s. Our results show that system-optimal tolling favors average users, but that government—and consequently taxpayers—should pay for costly tolling systems (negative profits). In contrast, unlimited profit-maximizing tolls raise substantial profits for government, for the infrastructure’s citizen-owners, and for the private sector, but the average user is worse off. From a social-welfare perspective, one should search for a Pareto improvement under which all major stakeholders are better off. Our estimates indicate that a mixed public and private tolling scheme offers such an improvement.

Type: Article
Title: Social welfare analysis of investment public-private partnership approaches for transportation projects
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.tra.2015.11.003
Publisher version: http://doi.org/10.1016/j.tra.2015.11.003
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: social welfare analysis; investment public private partnerships; residents; road concession; urban transportation systems; road pricing.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Political Science
URI: https://discovery.ucl.ac.uk/id/eprint/10123085
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