Overview

The purpose of this article is to weigh in – on the question of whether roads are public or private good. To do so effectively, I will select a preference to present my argument, while providing other sources of evidences to validates my selected preference .

In this article you will read in detail the assumed nature of public roads and the gravity of the problem’s society is facing due to the concept of roads being a public good or free for public use without charges. Especially for strategic or primary roads, I have argued that, they are more of an economic corridor and should be treated as such.

To provide an inclusive view of the argument, I have considered four major concepts that are directly tied to the overall argument of roads.

Before taking a deeper dive into the economic and social concept of roads, we should ask ourselves these questions. When we consider roads to be social, what does it really means? What is our full understanding of roads being social? I will want to assume (as I am yet to read or hear an opposing opinion) that we considered it fully free or provided for our general use without hindrances. However, come to think of it, is road really free? Is it being used without hindrances? This thinking has trickled my resolve to argue for the economic (private) roads instead. Roads that we can use at our free will because we have paid for all hindrances (congestion, pollution) to be removed or to be minimized. 

Secondly, it is a known fact that the problem of traditional financing of roads, which ultimately makes roads a public good has come under severe scrutiny due to its inefficiency and ineffectiveness at the demand and the supply point (International Road Federation). This approach, in the increasing trend of technological advancement has posed serious problems to the road transport sector. A better choice as observed in the piloted public-private partnership projects and the growing need for private management is needed. The private sector management system embedded with the user charging system is favourable to solve the problems. 

The perception of road pricing is discussed. The perception of road pricing has been echoing two very loud conversations for the past decades since the idea of private management of road has been thought of. The first of which is people perception of roads being their rights, ultimately making it a public good and the limited understanding of user charging, including its misplaced advantages. Nevertheless, as of late we are experiencing a wave of change permeating public spheres mainly due to the conversations like these (academic) and those ongoing among transport practitioners and public policy experts.

Roads are Private Good.

To get started, I will like to reaffirm my position that “roads are private good” especially roads that have high volume of traffic and connect different economic regions of a country or continent. These roads should be financed and operated by private entities while government provides regulations to create checks and balances, similar to what is happening in other sectors within the economy. 

The argument provided here seeks to address the concept of whether roads are public or private good (Ian Haggie, 2008). However, there is a clear distinction in the context of whether some roads would remain public. It addresses the argument in two perspectives considering that all roads use in the economy provide benefits, be it economic or social.

The idea of privatisation is not claiming or proposing government’s removal from the road management processes, but rather, to be involved as a regulator instead of a supplier. As it is already the case, many governments are using public-private-partnership to create a platform that allows private sector to finance many infrastructure projects (Vickram Cuttaree et al, 2009) This approach, I must mention, comes from the reality of governments inability to meet up with the demand of its citizens for infrastructure development, improvement and maintenance etc.

Considering that economic and social benefits are unarguably led by transport and in most cases enhanced by transport connectivity, the management and financing of such pivotal asset without doubt is vital. Because of its vitality, it should be prioritised, and such prioritisation should not follow the public management path singularly, as it is evident that public sector approach to financing, managing and operating of the assets has caused tremendous loss of important road assets in many countries. (The World Bank, 2014). It is in fact due to the inefficiency and ineffectiveness of the public sector management of infrastructure assets (particularly roads) that has fuelled the idea of privatisation.

The concept of de-socialising roads to incorporate private sector management approach is the central thesis of this article. The concept of privatisation is interchangeably used to mean commercialisation of road assets, considering that the government a public entity cannot fully commercialised any or parts of its functions as understood, unless given over to a private companies or a public sector corporation that is established for such purpose. Therefore, the charging of roads or commercialisation can be done by private entities, who will in agreement with the government use the charging fees collected directly for operation, maintenance and possibly capital works on designated highway assets.

Finally, the concept presented here is thoroughly intriguing idea with many dimensions of analysis rotating in both academic and transport policy space. Therefore, this article has considered the below areas as the key points of reference through which the readers should view this concept:

1. The concept of economic and social roads
2. The problems of traditional financing mechanisms
3. User perception towards road pricing
4. The effective financing mechanism of private sector

The Concept of Economic and Social Roads.

Improvement in transport infrastructure are frequently propose as a strategy for economic growth, integration and local economic development (Economic Intelligent Unit, 2009). This is evident due to the numeral increase in productivities of cities around the world due to their connections to economically vibrant regions, to seaports, airports, industrial complexes etc. The traffic accumulating on those major roads are significant and the region they connect are vastly diverse that, the roads connecting these regions are labelled as economic corridors in several countries (International Transport Forum, 2010).

Henceforth, it is necessary to understand the importance of these corridors and the demands for their use. The demand for the strategic road network or urban network can be examined by the traffic composition and the traffic origin and destination. In most cases, the traffic has exceeded the projection and the road origin and destination are highly diverse economic hubs. Under these circumstances, the economic viability of the road is undebatable. For example, a survey conducted by Department of Transport in the UK, gathered that 93% of the population agreed that the strategic road network (SRN) is very important to England’s economy and 3 in 5 person surveyed think is important to invest in the SRN for economic reasons. (Depart of Transport, 2014) 

As the economic importance of SRN has been explained, then we need to ask ourselves, is it necessary to consider the use of the economic corridor (SRN) as public good? Is it economically prudent for a factory in the northern part of a country that delivers its chemical latex to pay no charge? Even though it has been technically proven that the deteriorations cause by heavy goods vehicles (HGVs) are higher compare to other commuter vehicles and that the road being used is an economic corridor henceforth it should be maintained?

With further examination of the concept, it becomes unequivocally clear that this does not match up compare to other modes of transport. If the factory in the example mentioned above, is a private entity operation in a developing country, especially in sub-Saharan Africa, it will have to build a railway at its own expense, maintain it at its own expense to deliver this chemical latex from seaport to the factory. More so, if the entity wishes to airlift the chemical, (which I must say is a very dangerous choice) the cost will be as twice or three times more than the cost for transporting it via road.

If SRN are continually treated as public good how does over average users, (typical scenario mentioned above) accounts for the additional deterioration imposed on the road? How publicly good is the use of the road if the benefits are higher for one person but the effects of the deterioration affect everyone equally? It is at this point that roads should be view as a private good.  It usage can be maximized differently depending on individual preferences. If users are charge for use, the money can be used to properly maintain the corridor to keep up to the comfort, safety, accessibility, timely and traffic free movement.

On the opposite of the economic corridor (long distance roads) lies the short-distance roads. Roads that connect communities to hospital, to religious places of worship, to schools and other social facilities can be term public good. Especially considering that, they serve designated communities, do not accumulate excessive traffic, and do not extend beyond residential communities. Moreover, there can be public service agreement in respect to social inclusion mentioned in every road pricing feasibility studies that must guarantee that any road-pricing scheme should promote social inclusion and accessibility through the these principle approaches:

1. Freeing up road space to improve bus journey time and reliability
2. Minimizing the impact of traffic and new infrastructure provision through better use of the existing network
3. Reducing the relatively highway cost of motoring in less congested areas. Example some rural areas.
4. Using any revenue raised to provide demand responsive transport systems and improve local amenities.

The Problems with Traditional Financing Mechanism

Roads have been considered public good with a very confusing concept as explained above, but there are many other examples that rendered our traditional approach not just confusing but mismatched and requires urgent shift in approach.  Consider the financing mechanism used for road construction, rehabilitation and maintenance all over the world or more importantly the mechanisms used for the collection of vehicle related taxes. In the former, resources(financial) from a general poll of revenue is allocated to road projects based on politicians, lobbyists and/or the road agencies request through budget presentation. Very often States or Counties road agencies get little to nothing to maintain their network. This is so because they are competing with other potential societal needs from the general poll of revenue. This system is not based on allocation by demand or condition of road assets, it is based on politician’s gut feelings or on some lobbyists appeal. (US Department of Transport)

When such money is barely allocated for maintenance or rehabilitation, especially for long distance roads and the traffic on it increase significantly, the rate of deterioration increases dramatically, and in no time, users suffer generally without discrimination. This is often the case in many countries as they struggle to maintain their infrastructure. The United States has a terribly aging infrastructure with maintenance deficit of approximately 300 billion (U.S Department of Transport). The United Kingdom despite it robust approach to restructuring of infrastructure management and particularly road asset management still lacks efficiency and effectiveness in funding its road sector. Despite opinion poll 30 years ago in the UK has reported a 29% of road users would be willing to pay for improved roads (Financial Times). Most recently the user charging system survey was conducted by a think-tank group and reported by the Independent Transport Commission confirmed that 65% of the 2,250 individuals surveyed overwhelmingly agreed to user charging system. A detail into user perception has been expanded upon in the section below.  However, the willingness for many governments to establish such a user pay system through legislation is lacking. And this is obvious, because the power to collect road taxes is a political leverage that politicians can use in their favour.

While the financing of road projects had not improved, the collection of the vehicle taxes as well has not improved to match up with the changes ongoing in the sector. In 1993/1994 fiscal year in the U.K, the total taxes collected from road user amounted to £ 21 billion, but less than 30% was spent on roads (Gabriel Roth, 2013). The biggest argument created by treasury in the UK as evident and presented by Roth in his book Roads in a Market Economy, is that earmarking won’t allow the efficiency in fiscal policy in which funds must be centrally collected and allocated. However, fast forward to today, it’s not clear how such a policy is helping the growing traffic problem and ageing road network. Even though the road sector generated revenues of over £ 18 billion in 1993/1994 – where in railways did nothing similar in line to meeting such revenue generation but was allocated more subsidies.

For 16 years in the U.K, the road industry revenue has amounted to over £ 38 billion, but has received far less in allocation compare to the railway industry. Thereby, holding back the tremendous progress in modern road provision that could have been possible. The same can be said for France, Germany and other countries in Europe.

In developing countries, where the quest for building new infrastructures have taken centre stage, the competition between road funding and other basic social services is a tussle that parliaments and the governments in general are faced with every year. The frustrating part for developing countries is that, they take loans from the world Bank or other multilateral entities to construct new roads and in little over two decades these very countries are needing nearly the same amount for rehabilitation because they couldn’t afford to maintain their roads. Almost £ 13 billion worth of roads – one third of those built in the last twenty years – have eroded due to the lack of maintenance (World Bank, 2004). There are limited capacity and data systems available to road agencies in developing countries to convince their politicians to allocate money for maintenance, but moreover the competing financing system is not allowing politician to do so either.

In summary, the funding allocated to road authorities and agencies for maintenance does not match up to the cost imposed on the road or deterioration cause by the users. This form of indirect funding which has been used since the day the Roman’s road building methodologies spread over to other parts of the world is old and presents much more difficulties considering the improvement in motor vehicles, its usage and traffic systems.

On the contrary of the traditional financing mechanism, which grouped everyone in one tax collection box and does not segregate based on impact and externalities cause by the levels of travel, lies the road pricing system. It is reasonable argument to put forward that, it is not necessarily inequitable to make a payment from the use of service out of choices you’ve made. On the opposite, as these costs have been paid by everyone, it can be argued that it is squarely inequitable to require others to pay for service they didn’t request or choice they never made. What kind of equity is it that does not require individuals to pay for the direct consequences of their actions? Now, it is clear that even without mentioning the externalities (congestion, pollution, accidents etc), to create equity, everyone should be given the right to paid for what they use, instead of indirect payments made by general tax payers who may have no contact with such road or asset. This calls for a whole new approach that allows the payment mechanism to be revised to suit the changes ongoing in the road transport sector. It must give users the freedom, where individual users is able to decide whether to buy the service of a highway asset or not.

I must mention that there have been several approaches piloted to understand user behaviour in the new approach roads pricing. A detail of users’ perception about road pricing is discussed below.

User Perception towards Roads Pricing

The perception around road pricing as observed of recent is gaining huge momentum, especially now, due to the conversations being propelled by many academics and transport practitioners. But this wasn’t the case few decades ago. There were many cities and countries, example London, Hong Kong, Netherland, Kuala Lumpur etc. and as well as the many attempts to increase petroleum taxes in the United States that met huge opposition to such a proposal (John Walker, 2011). To make sure the momentum translates into tangible results, there is a need to dive deeper into the understanding of the perception of road users on the pricing of roads.

There are two concepts under which the perceptions as gathered from the conversations ongoing in the transport academic and policy field can be grouped:

1. Traditional understanding that roads should be free and must be provided by government.
2. The lack of adequate understand of the road pricing approach and its merits

The traditional understanding for the provision of road infrastructure has guaranteed over the years that roads must be free and financed by government. Even though by further examination, it is clear that the very users are the ones paying for the construction and maintenance of these roads through taxes distributed by government as revenues. Therefore, there is a need to reshape the traditional myth about government financing of the road infrastructure. It is often asserted that government is the sole owner and manager of the road infrastructure and is better positioned to provide the needed resources to better operate and manage services that will keep the road open and as well free from security risk and economic hazard. This concept has made many people to perceive road asset as public good provided through the generosity of the governments to which they do not pay a price. (William Vickery, 2006)

Moreover, and unlike private sector many people view the government as a legitimate source, financially to handle the burden of the road infrastructure because of its incapability of bankruptcy. However, reading from recent survey conducted, it is seen that many people, over 60% especially in big cities complained about the externalities (congestion, pollution, accidents, potholes etc) of road. Even though, it is according to the popular believe being managed by the financially potent entity (the government), but when asked whether they could support private management of road through a user pay system there was an overwhelming 65% approval (Independent Transport Commission, 2016).

The second perception as observed is the public lack of understanding of the road pricing and the merits of it. The vast majority of people who perceive no price for the road and who may not support road charging system do not understand fully the cost associated with their use of the road and the merit of the road charging system.

Therefore, it is important to provide more information that may help in broadening the public understanding about the cost they inflict on the road.

The increase in congestion, pollution, the noise and many accidents etc, are costs imposed by users as well as decrease investment in public transport and planning decisions due to misleading or rise in demand. Without consideration as per who should bear the real costs being produced by the sector and we continue with the traditional model, the transport sector will continue to impose higher and growing costs on the natural environment, human health and the economies. At the root of these problems lies the notion of road being public good, which give motorist the leverage to impose costs on others which they do not bear themselves. So, the understanding that they are responsible for all these costs impose on society and therefore they should pay must be a burning part of the conversation on privatisation of roads.

Effective Private Sector Financing Mechanism

There are several reasons for finding an alternative to the current financing system and just by reading the comment of the Director of Finance, Swedish National Road Administration, will give us pretty much a basis for while it is important to effectively finance roads. He said “Road expenditures which on the rise due to our modern way life and everyday improvement in our reasons for movement should be fully financed with revenues consisting of fees from the use of the road. The same way we pay for our telephone services could serve as an example of such payment system. Increasing income for increasing traffic, improvement of services and long-term loan for capital market”. (Dan Nasman, Director of Finance, Swedish National Road Administration, 1991)

In piecing together the effective financing objective, let’s start with the basis in economics that explains the objective of why de-socialization of roads makes more rational sense in a market economy.

Pricing in the market economies serve two purposes, 1) it shares the service available among consumers and 2) indicate to producers whether supplies need to be increased to meet the changing demands. This is one fundamental reasons for an effective road financing. It helps us understand where demand is needed due to consumption and appropriately supply such service. But unlike the current government monopolistic supply of road service system, there is demand driven by individual politicians which if examine thoroughly will not yield any return and may not receive future resources for maintenance or improvement. If the market economic principle is use we will not have so many road assets languishing in poor condition.

Secondly, effective financing of roads in many ways help to deal with the age-old problem experienced from the increase in road transport. The damage cost imposed on the road by the users. The accumulated deterioration on highway impose a serious constraint to the traditional system of financing. Moreover, the construction or expansion cost in case of increase in the demand is barely available in the current system, hence, effective financing using the private financing approach is effective in covering the cost for maintenance, improvement and/or expansion. But considering if the cost can be repaid or generated through users pricing system. (Farideh Ramjerdi, 1995)

To have roads available to users, it has to be designed, financed and constructed. However, as soon as it is completed, deterioration starts due to the effect of weathering, traffic loads and the materials used and must be placed under continuous maintenance to keep it open to traffic for as long as possible. On top of the maintenance cost are operating expenditures such as traffic lights, or other control devices, management, policing etc.

It has been proven, over the years that, governments revenue distribution systems are ineffective in covering the cost of road maintenance. That’s why the objective of private management system as mentioned above will be to meet up with the maintenance financing which will keep roads in good condition.

There is also an objective to reduce the level of congestion experienced on many roads. The imposition of charging especially congestion charging in city areas decreases the number of users in the designated areas. Example is the London congestion charging. It has yield significant results not just in the reduction of traffic but in the collection of revenue which is now being spent on other form of traffic improvement within the city. (U K Department of Transport, 2017)

Moreover, the charging of roads significantly reduces accidents. The world Health organization estimates that, about 1.3 million people are killed on the world’s road every year and over 75% occur in developing countries. Road accident poses a bigger problem due to the loss of useful years of individuals that most often caught in accidents as 65% are reported to be young people (World Health Organisation Road Accident Report, 2018). If the road charging through private management system is constituted its objective will as well include cost of accident be bore by those who cause accidents, or who make them more likely. Private road providers should have legal liability for accidents occurring on their roads and of course, road users should also be able to meet claims against them arising out of road accidents.

Very important and final in this discussion is the objective of reducing air pollution. As it is established that CO2 emission caused by traffic is overwhelming and contribute a lot to poor health and shorter life expectancy in many countries (European Federation of Transport and Environment, 2018). However, if a charge targeting the manufacturer of vehicles and the user is properly put in place and penalty levy against violator, it will contribute significantly in strengthening the transport sector.

In conclusion, the objective of introducing private financing is to deal with these problems which are fundamentally hampering the road transport industry, the environment, the economies and our health.

Private management of roads when instituted properly can cover all road cost (construction, improvement or expansion and maintenance), congestion cost (cost impose by slow movement of vehicles and road users), accident costs (those not covered by insurance) and pollution costs (imposed by vehicle emission and other environmental effects)

CONCLUSION

The major theme of this article is that deficiencies in the present system of planning and paying for highways, particularly the strategic or primary highways are an example of the general inferiority of socialistic governmental enterprise to free private market enterprise. As it is, the provision of highway services is a socialised industry removed from the rest of the market. The result has been limited investment in highways, leaving the highway assets in deplorable conditions.  The expenditures for roads have been improperly distributed among different kinds of roads, and that we have too little strategic highway network service per dollar spent.

Unfortunately, special peculiarities attached to the provision of road services make it impossible to provide such services completely through competitive private enterprise: the road industry cannot well be completely de-socialized. Yet, much can be done in this direction. Adequate improvement in highway services requires that we de-socialized as much of the industry as we can, and that we try to bring private entities to tests to bear as fully as possible on the rest of the industry.

Long-distance turnpikes can be fully de-socialised; and the maintenance and operation of inter-city Highways can be largely commercialised, especially now that there has been adequate technical improvements in the means of direct charging developed in the road industry and the vehicles manufacturing industry. Basic community roads probably will have to continue to be almost entirely provided by governmental bodies, but private enterprise tests suggest that a much larger fraction of total receipts from gasoline and motor-vehicles tax should be made available for their maintenance and construction. A change toward this direction would radically shift the sums available and permit fast and striking progress reducing some of the defects in every highway system.

If these suggestions seem strange, it is at least partly because we seem have become so accustomed to regarding the provision of highway service as a governmental function; what seems strange when suggested for highways seems natural when suggested for railroads. But in this and in other areas we must be ready to think about problems afresh, to re-examine out ingrained notions, if we are to succeed in maintaining the vitality of our free enterprise society, protect it from the encroachment of government, and maintain it as a bulwark of personal freedom.

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