An Innovative Solution For Financing U.S. Highways: Lessons From Abroad

The PPP World

Many countries are now implementing and/or experimenting with private-sector concessions and lease arrangements in order to finance highway construction and other infrastructure requirements. In most cases, the programs require the allocation to private investors of significant project risks throughout the life of the project, including its operation and maintenance phase.

In the U.S., most PPPs have involved the more basic and common design-build (DB) contracting, while full-blown concessions are still a novelty. The significant differences between the U.S. and the rest of the world on the issue of PPPs are largely attributable to historical factors. In this country, at least until recently, we enjoyed a long period when there existed sufficient resources in highway trust funds to finance most of our highway construction requirements. In addition, tax-exempt municipal bonds provided a ready source of long-term financing at relatively low costs to the U.S.