Financing Transportation Networks

Financing Transportation Networks

Transport Economics, Management and Policy series

David M. Levinson

Pollution, alternative fuels, congestion, intelligent transportation systems, and the shift from construction to maintenance all call for a reconsideration of the existing highway revenue mechanisms, especially the gas tax. David Levinson explores the fundamental theoretical basis of highway finance, in particular the use of tolls, and supports that theory with empirical evidence. The author examines highway finance from the perspective of individual jurisdictions and travellers, and considers their interactions rather than specifying a single optimal solution. Congestion pricing has long been a goal of transportation economists, who believe it will result in a more efficient use of resources. Levinson argues that if the governance were to become more decentralized, and collection costs continue to drop, tolls could return to prominence as the preferred means of financing roads for both local and intercity travel. An approach that creates the local winners necessary to implement road pricing is required before it can be expected to become widespread.

Chapter 5: Hierarchy

David M. Levinson

Subjects: economics and finance, public finance, transport, environment, transport, urban and regional studies, transport


INTRODUCTION Should the federal, state, or local government be accountable for infrastructure’s financing, construction, and management? Both infrastructure networks and government are typically hierarchically organized. However, the slope of the hierarchy (the number of layers it possesses) varies. Management by a government layer that is geographically too small or too large brings about costs which can be avoided by associating the infrastructure with the most appropriate layer of government. In North America, the hierarchy of roads emerged early in the eighteenth century with the division of roads into Great (or Kings) Highways and Common Highways. Great Highways were under the authority of a colony’s Governor and Council, while Common Highways were managed more locally by appointed commissioners or the county court upon presentment of a grand jury or petition (Durrenberger 193 1, p. 18). This corroborates the general observation of present conditions that roads serving longer-distance trips are generally controlled by a higher jurisdiction than those serving more local traffic. Conventional traffic engineering suggests that streets and highways have two distinct functions: through movement and land access (McShane and Roess 1990, p. 37). Highway facilities are classified by the relative amount of movement and access they provide, though the share of each falls on a continuum. Figure 5.1 illustrates the issue. The shaded area reflects the share of the network devoted to land access functions as opposed to network movement. Engineers design roads to fall along the diagonal line of Figure 5.1, although not all do. Local streets are slow...

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