Public-Private Partnerships in Roads: Economic and Policy Analyses

Abstract

In recent decades, public-private partnerships has converted in an alternative way of providing transport infrastructures that has been traditional delivered by public sector. Between 1990 and 2017, governments all over the world have awarded more than 1600 PPPs transport infrastructure. However, there are some aspects that affect public-private partnerships that has not been analyzed and which could facilitate the study of their economic impact. This Thesis analyses public-private partnerships in road infrastructures. The context for the analysis is Spain, both because of its pioneering nature in the extension of such public-private partnerships and because of the undisputed weight of the road infrastructure industry in the international context. The thesis is structured in five chapters. The first chapter is the introduction and examines the role of PPPs in road infrastructures and the road PPPs in Spain’s toll motorways. The second chapter is divided into two sections. The first part of the chapter analyze whether the allocation of risks that has been carried out in Spain and other countries complies with the predictions of contract theory. To this end, the framework of institutional and economic relations between the state and private concessionaires is reviewed in detail. The purpose of this case analysis is to identify the main limitations of these models and to delineate those aspects that have a significant influence on the incentives of the different parties, the efficiency of the contract, the financial evolution of the concession and its impact on public finances, taxpayers and users. Additionally, good regulatory practices are suggested in the concession business, which make it possible to take advantage of the benefits that private participation in road infrastructure projects can bring. The second part of the chapter examines whether the financial downturn experienced by most concessions awarded at the beginning of the new millennium can be attributed to Spain’s particular model of risk sharing and guarantees. This analysis intends to shed light on the debate on possible solutions to the crisis in the sector. Chapter third quantify and evaluate the social and distributive impact of one of the last political renegotiations, which took place in 1997 between the state and the concessionary in Spain. Specifically, the case of the renegotiation of the concession contracts for the AP-7 motorway in its sections between Tarragona-Valencia and Valencia-Alicante is illustrated. In order to carry out this study, the change in well- being resulting from the renegotiations has been calculated. This approximation allows us to compare the real status quo situation with renegotiation, with the alternative that would have been not to renegotiate and delimit the monetary impact of such renegotiations for each of the agents involved and for the added social well- being.

The fourth chapter analyses whether the type of management on high-capacity roads has any impact on road safety. We use the Spanish case as an analysis model. Spain’s mixed composition of high-capacity roads is an excellent opportunity to empirically test whether private road management through PPP contracts offers better quality than traditional provision. To this end, we apply different econometric techniques based on tallying data on a data panel for the period 2008-2012. Lastly, chapter five extracts the most important conclusions from the previous chapters and provide some public policy recommendations based on them.