Private highway
Encyclopedia
A private highway is a highway
owned and operated for profit by private industry. Private highways are common in Asia
and Europe
; in addition, a few have been built in the United States
on an experimental basis. Typically, private highways are built by companies that charge tolls for a period of time while the debt is retired, after which the highway is turned over to government control. This allows governments to fulfill immediate transportation needs despite their own budget constraints, while still retaining public ownership of the roads in the long term.
An obstacle to private highways is that government regulation can stifle price flexibility and introduce negotiation and paperwork requirements that increase operational expenses. In addition, private highways lack some advantages that governments have, such as sovereign immunity
against liability for accidents and the ability to issue tax-exempt securities
.
Free market roads
are advocated by libertarians
, who consider them more efficient and safer than public roads.
provided for in the Federal Aid Highway Act was a federally-funded, non-toll system. According to Simon Hakim and Edwin Blackstone, "by 1989, [private] roads comprised just 4657 miles (7,494.7 km) of the 3.8 million miles of streets and roads in the United States and only 2695 miles (4,337.2 km) out of the 44759 miles (72,032.4 km) of the interstate system."
and the Cato Institute
have proposed that the Demsetz auction
s commonly used to award franchises be replaced with Present Value of Revenues auction
s in order to reduce risk and thus required rates of return by private highway owners. Under this system, contractors would bid an amount equal to the present value of cash flows from user fees they are willing to accept for the project. The lowest bid would win.
Boarnet and DiMento believe that private highways will become more important as the rise of gasoline-efficient hybrids
causes a decline in gas tax revenues.
Many highways are constructed under a "build-operate-transfer
" model in which ownership ultimately goes to the government.
government was planning to securitize five toll tunnels and a toll bridge through bond issues. According to Captain Japan, the Tokyo Expressway
is the city's only private highway. It is not funded with tolls, but rather with rent from three floors of businesses directly beneath the highway. India also has a private highway between the two cities of Bangalore and Mysore in the state of Karnataka.
is operated privately under a 99-year lease agreement with the provincial government. The highway uses electronic toll collection
. Users who do not have a toll tag (called a transponder) in their vehicle are tracked by automatic number plate recognition
, with the toll bill being mailed to the address of the plate on file. There are also some private highways in the United States
.
's highways (comprising 56% of the country's toll roads) are controlled by Autostrade Concessioni e Costruzioni Autostrade. According to Forbes
, "Autostrade was an early Electronic Age entry, computerizing to its highway system in 1988". The M6 Toll
was the first private toll motorway in the United Kingdom
. The project was described by urbantransport-technology.com as a "27 mile [43 km] dual three lane (plus hard shoulder), £485.5 million motorway" with six toll stations.
Highway
A highway is any public road. In American English, the term is common and almost always designates major roads. In British English, the term designates any road open to the public. Any interconnected set of highways can be variously referred to as a "highway system", a "highway network", or a...
owned and operated for profit by private industry. Private highways are common in Asia
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...
and Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
; in addition, a few have been built in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
on an experimental basis. Typically, private highways are built by companies that charge tolls for a period of time while the debt is retired, after which the highway is turned over to government control. This allows governments to fulfill immediate transportation needs despite their own budget constraints, while still retaining public ownership of the roads in the long term.
An obstacle to private highways is that government regulation can stifle price flexibility and introduce negotiation and paperwork requirements that increase operational expenses. In addition, private highways lack some advantages that governments have, such as sovereign immunity
Sovereign immunity
Sovereign immunity, or crown immunity, is a legal doctrine by which the sovereign or state cannot commit a legal wrong and is immune from civil suit or criminal prosecution....
against liability for accidents and the ability to issue tax-exempt securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...
.
Free market roads
Free market roads
Free-market roads is the theory that a society should have entirely privately owned roads.Free-market roads are advocated by many classic anarcho-capitalist works, including Murray Rothbard's For a New Liberty, Morris and Linda Tannehill's The Market for Liberty, David D. Friedman's The Machinery...
are advocated by libertarians
Libertarianism
Libertarianism, in the strictest sense, is the political philosophy that holds individual liberty as the basic moral principle of society. In the broadest sense, it is any political philosophy which approximates this view...
, who consider them more efficient and safer than public roads.
History
The Interstate Highway SystemInterstate Highway System
The Dwight D. Eisenhower National System of Interstate and Defense Highways, , is a network of limited-access roads including freeways, highways, and expressways forming part of the National Highway System of the United States of America...
provided for in the Federal Aid Highway Act was a federally-funded, non-toll system. According to Simon Hakim and Edwin Blackstone, "by 1989, [private] roads comprised just 4657 miles (7,494.7 km) of the 3.8 million miles of streets and roads in the United States and only 2695 miles (4,337.2 km) out of the 44759 miles (72,032.4 km) of the interstate system."
Recent trends
The National Center for Policy AnalysisNational Center for Policy Analysis
The National Center for Policy Analysis is a non-profit American conservative think tank whose goals are to develop and promote private alternatives to government regulation and control...
and the Cato Institute
Cato Institute
The Cato Institute is a libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Edward H. Crane, who remains president and CEO, and Charles Koch, chairman of the board and chief executive officer of the conglomerate Koch Industries, Inc., the largest privately held...
have proposed that the Demsetz auction
Demsetz auction
A Demsetz auction is a system which awards an exclusive contract to the agent bidding the lowest price. This is sometimes referred to "competition for the field." It is in contrast to "competition in the field," which calls for two or more agents to be granted the contract and provide the good or...
s commonly used to award franchises be replaced with Present Value of Revenues auction
Present Value of Revenues auction
A Present Value of Revenues auction, sometimes called a least present value of revenues auction, is a method of awarding contracts in which the bids are for the total present value of cash flows from the project. The lowest bid wins, and the winner collects user fees until the present value of user...
s in order to reduce risk and thus required rates of return by private highway owners. Under this system, contractors would bid an amount equal to the present value of cash flows from user fees they are willing to accept for the project. The lowest bid would win.
Boarnet and DiMento believe that private highways will become more important as the rise of gasoline-efficient hybrids
Hybrid electric vehicle
A hybrid electric vehicle is a type of hybrid vehicle and electric vehicle which combines a conventional internal combustion engine propulsion system with an electric propulsion system. The presence of the electric powertrain is intended to achieve either better fuel economy than a conventional...
causes a decline in gas tax revenues.
Many highways are constructed under a "build-operate-transfer
Build-Operate-Transfer
Build-own-operate-transfer or build-operate-transfer is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, and operate a facility stated in the concession contract...
" model in which ownership ultimately goes to the government.
Asia
As of 2003, the Hong KongHong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
government was planning to securitize five toll tunnels and a toll bridge through bond issues. According to Captain Japan, the Tokyo Expressway
Tokyo Expressway
The , also known as the KK Expressway, is a short untolled expressway in central Tokyo that is owned and maintained by Tokyo Kōsoku Dōro K.K. It runs in a semicircular loop around the Ginza district of Chūō-ku...
is the city's only private highway. It is not funded with tolls, but rather with rent from three floors of businesses directly beneath the highway. India also has a private highway between the two cities of Bangalore and Mysore in the state of Karnataka.
North America
Mexico has some highways operated by private companies. The 108 km Highway 407 ETR through the Greater Toronto AreaGreater Toronto Area
The Greater Toronto Area is the largest metropolitan area in Canada, with a 2006 census population of 5.5 million. The Greater Toronto Area is usually defined as the central city of Toronto, along with four regional municipalities surrounding it: Durham, Halton, Peel, and York...
is operated privately under a 99-year lease agreement with the provincial government. The highway uses electronic toll collection
Electronic toll collection
Electronic toll collection , an adaptation of military "identification friend or foe" technology, aims to eliminate the delay on toll roads by collecting tolls electronically. It is thus a technological implementation of a road pricing concept...
. Users who do not have a toll tag (called a transponder) in their vehicle are tracked by automatic number plate recognition
Automatic number plate recognition
Automatic number plate recognition is a mass surveillance method that uses optical character recognition on images to read the license plates on vehicles. They can use existing closed-circuit television or road-rule enforcement cameras, or ones specifically designed for the task...
, with the toll bill being mailed to the address of the plate on file. There are also some private highways in the United States
Private highways in the United States
There are many private highways in the United States.The Philadelphia and Lancaster Turnpike, begun in 1792 between Philadelphia, Pennsylvania and Lancaster, Pennsylvania was the first major American turnpike...
.
Europe
France is planning a private project to build 10 miles (16.1 km) of double-decked tunnel to close a gap in the beltway around Paris. 3,120 kilometers of ItalyItaly
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
's highways (comprising 56% of the country's toll roads) are controlled by Autostrade Concessioni e Costruzioni Autostrade. According to Forbes
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
, "Autostrade was an early Electronic Age entry, computerizing to its highway system in 1988". The M6 Toll
M6 Toll
The M6 Toll , connects M6 Junction 4 at the NEC to M6 Junction 11A at Wolverhampton with of six-lane motorway. The weekday cash cost is £5.30 for a car and £10.60 for a HGV...
was the first private toll motorway in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
. The project was described by urbantransport-technology.com as a "27 mile [43 km] dual three lane (plus hard shoulder), £485.5 million motorway" with six toll stations.
See also
- Private roadPrivate roadA private road is a road owned and maintained by a private individual, organization, or company rather than by a government.Consequently, unauthorized use of the road may be considered trespassing, and some of the usual rules of the road may not apply...
- Road pricingRoad pricingRoad pricing is an economic concept regarding the various direct charges applied for the use of roads. The road charges includes fuel taxes, licence fees, parking taxes, tolls, and congestion charges, including those which may vary by time of day, by the specific road, or by the specific vehicle...
- ShunpikingShunpikingThe term shunpiking comes from the word shun, meaning "to avoid", and pike, a term referring to turnpikes, which are roads that require payment of a toll to travel on them...
- Toll roadToll roadA toll road is a privately or publicly built road for which a driver pays a toll for use. Structures for which tolls are charged include toll bridges and toll tunnels. Non-toll roads are financed using other sources of revenue, most typically fuel tax or general tax funds...
- Toll roads around the worldToll roads around the World- Bangladesh :Bangladesh has 5 toll bridges and 3 toll roads. All of them are of Electronic collection system. In Bangladesh, roads and bridges are built by the Government. After building the roads and bridge, the governmement invites tender to give an Operation and management contract for 5 years...
Further reading
- Samuel, Peter: Virginia bureaucrats finally OK toll hike for Dulles Greenway Virginia, Toll Roads News, July 8, 2004.
External links
- IBTTA, International Bridge, Tunnel and Turnpike Association.
- Privatized Highways: A Toll Too Far?, The Growth Management Institute, May, 1996.
- A state-by-state tally of highway privatization projects in the United States, Mother Jones magazine, Jan 2007