Financing Transportation Networks
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Financing Transportation Networks

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.
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Chapter 3: Costs

David M. Levinson


INTRODUCTION Highway transportation financing involves the costs of building and operating infrastructure, the private costs of owning and operating a vehicle, and other costs borne by society. While the public costs of infrastructure and the private costs of vehicle operations are generally understood, social or external costs are hidden to the users and operators of the transportation system. As such, they engender controversy as to their magnitude and significance. In particular, the debate over the existence and desirability of cross-subsidies in transportation centers in large part on the extent of environmental externalities - the dark matter of transportation economics. A growing line of research has attempted to unveil these costs, so that they can be used in a full accounting of transportation.' On the one hand, claims of environmental damage as well as environmental standards formulated without consideration of costs and benefits often result in the slowing or stopping of investment in new infrastructure. On the other hand, the real social costs of new infrastructure are typically not recovered when financing projects, and are rarely considered when charging for their use. A distinction between ozrtpt and ozrtcome is in order. An output is the desired end of the production process; an outcome is what actually results. Highway segments can be thought of as producing two outputs: trafic flow, which requires capacity in terms of the number of lanes, and standard axle loadings, which require durability in terms of the thickness of the pavement. Some outcomes of the use of highway...

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