Toll-road partnerships: What works, what doesn't, and why?

Successful toll-road ventures satisfy the interests of government, road users, and concessionaires. Government guarantees have proven costly for taxpayers, making other cost-sharing arrangements attractive, Users require acceptable tolls and service levels, while concessionaires operate under a competitive combination of expected return and risk, This article quantifies these interests and simulates break-even tolls for major projects, The high cost of private sector capital-the norm without government or multilateral guarantees-makes it difficult to fund major toll-road investments using only private sources, Turnpike commission projects and hybrid funding schemes have a better track record and prospects for commercial success, The commissions obtain low-interest, long-term funding; the hybrids permit governments to pay only known costs up front, Exclusively private funding can be obtained for niche markets on short "congestion relievers" in metropolitan areas that sustain high tolls, and on low-cost rehabilitation projects. Dedicated road funds are needed for full commercialization of roads.