Task 4
Contribution to the GRACE Research Program (october 2007)
Decentralising transport policy
Andr de Palma *
*Thma (UMR 8184)
Universit de Cergy-Pontoise
33 Bd du Port, F-95011;
Ecole Nationale des Ponts et Chausses;
Institut Universitaire de France;
CORE, Louvain-la-Neuve.
e-mail: [email protected] discuss decentralisation in the domain of transport infrastructure financing policy. We propose an institutional approach, mixing political science and economy, mostly based on situations typical of the recent French evolution. We describe first the budgetary evolution of EU member states over the recent years. We discuss the relations between local decision-making and earmarking; we then propose some considerations about the principle of subsidiarity among political levels and its implications for the decision-making process. We examine functional and juridical questions related to so-called denationalisation. We will have there to discuss the problem of risk transfer. Next, we evoke some relevant recent innovations relating to money management (financing, paying, funding). In conclusion, we develop some considerations about what could be a decomposition of the state in the context of the expression of local concerns in transport policy, and a discussion of some remarks by Seabright about the applicability of the London congestion charge in France. Finally, we propose some remarks on some ongoing recomposition of the state at the EU level.
TABLE OF CONTENTS
31INTRODUCTION: FORECASTING AND INVESTING
1.1Investments, deficits and a growing demand41.2Problems adressed and useful definitions112PUBLIC INTEREST AND PARTICULAR DEMANDS132.1Earmarking and budgeting: classical positions142.2Local responsibilities and national interest173RISK TRANSFER AND RISK REPARTITION203.1Integrating operative and speculative risks213.2Public Debt and financial market244CONCLUSIONS254.1Decomposition of the state and local concerns254.2Recomposition of the state at various levels275ANNEXES315.1References315.2Abbreviations, Acronyms and Conventions34
1 INTRODUCTION: FORECASTING AND INVESTING
In this paper we address various problems pertaining to the policy of transport, especially the ones related to decentralisation of decision-making and policy implementation.
This introduction will first present briefly the state of EU member states decentralisation in transport policy, after decades of post-WWII evolution. We show how the present situation is paradoxical, as governments have less money while the needs for investments continue to grow. We will then introduce some useful definitions.
In section 2 we discuss the relations between local decision-making and earmarking; we then propose some considerations about the principle of subsidiarity among political levels and its implications for the decision-making process.
In section 3 we examine functional and juridical questions related to so-called denationalisation, being the devolution of technical (non-sovereign) functions to private actors in order to achieve more efficient policy implementation. We will have there to discuss the problem of risk transfer. Next, we evoke some relevant recent innovations relating to money management (financing, paying, funding). We will have there to discuss the problem of risk repartition.
In conclusion, we develop some considerations about what could be a decomposition of the state in the context of the expression of local concerns in transport policy, and a discussion of some remarks by Seabright (2007) about the applicability of the London congestion charge in France. Finally, we propose some remarks on some ongoing recomposition of the state at the EU level.
In order to avoid international overgeneralising where the work of comparison is almost impossible, we will often illustrate the points we have to discuss by giving reference to the evolution of the institutional dimension of transport policy in France, as, being for centuries a most centralized state (until very recent times), this country offers presently internal contrasts that will lead to remarks we hope the reader will consider as relevant. The effective tensions and intimate relationships that we will have to understand: among the state and regional power on the on hand, among the state and the private contractors on the other hand, are specially visible in a country with a strong centralized governance tradition. Nevertheless, we will refer to significant developments in other large countries.
This paper may be read as a mix of political science and economics, as it will refer, somewhat heavily perhaps, to descriptions of processes well-known to economists in terms that are perhaps less familiar to them as institutional and legal constraints. We here hope only to show how this subject is worth of our attention; our somewhat sketchy style will perhaps stimulate the readers imagination.
1.1 Investments, deficits and a growing demand
Economies of scale are a decisive factor in transport infrastructure investments. For the next decades, we could conceive a simple evolution, where the EU would assume or coordinate a larger part of very large transport investments by the member states. The actual story is not so. There is no conservation relation among the EU budget and the member states budgets. What is true about transport funding is that its share in the member states public budgets has been diminishing over the last decades. Some comments proposed about this recent regression try to explain it by a decoupling of GDP and the transport demand. We think that this decoupling model, although it does make sense for the long-term future, is not yet relevant in a context of continuing transport demand growth.
Let us consider briefly the present state of French transportation demand. Everybody knows that various events had negatively affected the growth of transport demand after 2000-2001. But the global trend remains clear for all sectors: the growth of demand resumed its pace since 2004 (MT 2007). This evolution has to be contrasted according to the various modes of transportation.
Let us first mention the exceptional, negative evolution of fret transport by train since 1997, which is related to management: in a different context, the SNCF could benefit from a more aggressive policy in fret transport, as it does in the case of high-speed lines a French parliamentary commission concluded that the charging of railway fret transportation made this mode less attractive over the recent years.
The case of roads is quite contrasted. For private cars, we are perhaps on the verge of a new era, marked by a correction of gas prices: the number of cars is still growing, but the km per vehicle is slightly lower (MT 2007). The elasticity of car transport to gas prices has for long been low; but this parameter could perhaps change over the years. On the other hand, the international transit fret by trucks on highways is growing steadily (MT 2007, p. 23) and is a major factor for the investment policy we are speaking about.
Inland Water Transport is growing enough to justify more attention from the authorities: much remains to be done is this mode is to enter in effective competition/cooperation with the road and the rail: professionalisation of the operators, regulation of the market.
Air transportation industry presents a healthy evolution with 4% growth expected for 2008; 150 airports were transferred from the national state to territorial collectivities, and the new airport companies created in 2005 are replacing the chambres de commerce et dindustrie. But the fiscal pressure remains quite heavy, and the low cost companies have only a share of 17% of the French market (the average value for EU is 25%), due to blocking strategy by the French authorities.
What about investing under such constraints? Many recent discussions and studies explore already alternative ways of financing transport infrastructures. Whatever the structure of the national economy, every government is under pressure: it is true that the member states are managing less and less money. We will have to examine some implications of this withdrawal of a classical carrier of modernity, namely the national state. There are many reasons for this negative evolution, a major one being the high level of international traffic as compared to domestic traffic: as we are reminded by the authors of the EU FUNDING research program (Dunkerley, Mackie and Proost, p. 7): if the share of foreign users is important and the share of user charging limited, some interesting projects may never be undertaken by the member states. In many cases, when they try to face their mission, it would seem that the state governments seek to debutgetize transport investments. For example, they allow regional authorities, national agencies or private companies to collect money for these large investments. In some cases this leads to complex financial engineering designed in order to impute to such institutional instances the debts related to major national transportation investments, in order to be able to invest and face the demand. We have to mention here the creation of the French AFITF (which follows the suppression of the FITTVN), with a stable financing coming from the highways responsible for toll highways (see the remarks by Raux, Mercier and Souche 2007).
This agency will be responsible for major infrastructure investments over the coming years; we will discuss the perspectives in our conclusions: it could happen that with this decomposition of some crucial lines of the national budget, the possibility of political discussion would be exposed to institutional attrition.
Is there some optimal share of national authorities in the management of financial resources? Every country has its own history here. For example, it may be said that US decision-makers have a specific political culture. To give a relevant example, let us note that while discussing his Decentralisation theorem thirty years after it was first proposed, Oates (2006, p. 22) mentions a historical remark by Inman (2003): in 1840, nine local states were in a difficult situation resulting from large public investments in transportation projects. The federal government and the US Congress rejected any prospect of bailout. Oates concludes The point here is that a refusal to provide such assistance can build upon itself and create a setting where expectations of bailouts no longer have much foundation. History, in short, matters.
In these times of general dedication to efficiency, it is rather tempting to speak about transport investments as useless programs: after all, almost new, such projects are often already considered as decadent things of the past and more so because there is often not enough budgeting for their maintenance.
The very idea of a justified investment is not all technical. Let us propose some introductory remarks on this problem. Indeed, for any large transport infrastructure we could find experts explaining that it would be more efficient not to build it, at least at the time it is planned. The truth is, such projects need financing just because they cannot become self-financed some day without firstly receiving an extra shot of investment; and the various uncertainties of the financial dimension can make a sound project irrational according to the indicators and the time scale used for the computation. As says Seabright (2007, p. 227) about urban traffic tarification: it is not a technical answer to some societal problem: it is a political solution that requires political dedication, and political know-how if it is to succeed. The political decision-making process is still largely national; this is why up till now large transportation infrastructure projects coordinated by the CEC are better considered as juxtapositions of voluntaristic national projects, later imputed to international programs in a less than transparent way. Public, contradictory cost-benefit analysis is difficult with such variation in the scale of assessment criteria, as we will see in our conclusions.
A well-known case of a recent very large investment is the Channel Tunnel under the Strait of Dover. Let us remember that losses related to overcosts in building and overestimation of demand have open the way to bankruptcy (forecasting mistakes were in this case imputable to private entrepreneurship). Solutions were designed, of course, and we all know that this situation is not exceptional: optimistic (some observers would say: too voluntaristic) estimations of the cost (almost always underestimated) and of future traffic (almost always overestimated) seem to be the rule, a fact we have to remember.
But in order to think about things to come, we must refer to the Trans European NetworksTransport (TEN-T) priority projects (for a general presentation of the philosophy of this policy, see CEC 2005).
Many projects relate to highways, and are interesting for our discussion. As they are open to local lobbying, highways projects are the place for confronting different local interests. We will discuss this point later when presenting the Logic of collective action analysed by Olson (1965). Also, the ill-famed problem of highways congestion is open to the discussion about implementability of a multimodal transport policy.
As everybody knows, five major railway axes were chosen in TEN-T: One large North-South (Berlin-Palermo); two East-West connections, going North and South of the Alps (Paris-Bratislava and Lyon-Budapest); the high-speed southwest Europe axis (connecting the Iberian Peninsula); and the Nordic connection Rail Baltica (Helsinki-Warsaw).
We have also the upgrades to waterways, for example the Rhine/Meuse, Main, Danube connection, from the North Sea to the Black Sea; and the Seine-Escaut connection; the so-called motorways of the sea, a new open way to bypass land bottlenecks., etc. Moreover, in the hinterland of large ports (due to technical progress in the use of containers, and more generally in logistics), Inland water transport (IWT) has already conquered a significant modal share (in the Netherlands, more than 40%).
Let us also mention the demands formulated by the air industry. They are not very much represented in the TEN-T projects (presently only 5% of the TEN-T budget). But they constitute a very active and sensible sector, and they are surely considered as such by the public certainly more than IWT. According to their representatives, more has been done to overcome air control problems and to enhance air traffic liberalisation than to develop airport facilities. Also, they say that the EC commission should abandon its bias towards railways, in order to build a more global, coherent legal framework for transport in Europe. What about the future of this industry? As we know that a large part of all air transport trips is currently related to leisure, predictions are becoming very difficult, with the strong elasticity implied by this characteristic. One could naturally think that an environment-conscious EU would perhaps put a ban on the polluting development of air industry; but actually it is currently an active part of economy and it is also such stuff as dreams are made off: namely an industry driven by strong demand.
We may mention here two cases of infrastructure investments from the monarchist, centralised French 17th century. Indeed, some of these road or waterways projects evoked here refer to such dreams that entrepreneurs had formulated many years ago.
When the French mathematician Pascal succeeded in building in 1662 his Parisian "Carrosses 5 sous", (the first public transportation system in the modern sense), one could call his project a dream, and actually it was eventually contradicted by the established order of social privileges. It is to be noted that the entrepreneur did not wait for state money: Pascal and his wealthy associates asked privilege letters to the King, and invested private money. Other people had naturally attempted to build transportation systems for cities; but Pascal had his risk evaluations computed well.
The other case from the same time (1681) is the Canal du Midi, or Canal des deux mers: from the Atlantic Ocean to the Mediterranean sea, which required digging from Toulouse on the Garonne to Agde on the mediterranean shore. The most difficult problem was to ensure a stable water flux for this canal when summer fluctuations menace the continuity of service; it was solved by injecting at the Naurouze threshold water from a large dam. Here also public money was not the only source. The entrepreneur Riquet, was also collector of taxes for Languedoc, and he was able to invest part of his as a supplement to the parts invested by the Trsor Royal and the tats du Languedoc. This waterway was only killed by the late competition of rail and road transport.
In these two projects of our 17th century, the part of the daring spirit is large. The TEN-T projects for the 21st century are presented in terms of rational necessity or costs-benefits equilibrium: roads can simply not sustain the demand anymore. If we are to face this necessity, we will have to be able to transform investment dreams into budgetary reality. This is part of the mission of the Commission.
In 2004, the total cost of TEN-T to 2020 was estimated at 225 billion euros. This investment represents about 0.16% of European GDP, whereas it is estimated that completing these transport axes would bring additional economic growth of 0.23 % of GDP. Some projects have benefited from financial support of the Community budget (through the TEN-budget line as well as the Structural Funds and the Cohesion Fund); the European Investment Bank (EIB) has contributed through important loans (about 36 billions euros for 2002-2006). But the actual political decision making process is, as often, deceptive. It appears presently that the real expenditure on the trans-European networks in the EUwill perhaps be only 8 billion euros for the next step (2007-2013), two thirds lower than the 20 billion euros the EC asked for when designing the project.
This very short summary of EU projects reminds us how the eventual sanction of money decides of the presumable rationality of transport projects. The constructive answer to this situation is to design funding strategies, which are to combine grants and loans.
1.2 Problems addressed and useful definitions
First we have to propose some basic questions and remarks about the evaluation of infrastructure cost. The critical stance often present when talking about useless infrastructures (the so-called white elephants) is not enough.
The term decentralisation may relate to deconcentration reforms inside the national government; devolution to local governments; delegation to parastatals, agencies, etc. (Humplick and Moini-Araghi 1996, p. 2). These processes may affect the content of operations or the control and decision-making.
How to assess the present value of an infrastructure? Preliminary question: how are we to define infrastructures? A transport infrastructure is a capital good (meaning that the services provided are very much capital-intensive). It is often a lumpy good (build in a 0/1 process: a bridge nine/tenth build is zero bridge). Its life is measured in terms of decades, or more; and it provides a space-specific service (a bridge has to be somewhere), which means that implementation decisions will configure a whole territory over a long time.
It is often assumed that public interventions are to compensate some market failure, as transport infrastructures can seldom be left to pure market forces only, and provide a presumption for the need of some (at least regulatory) public intervention. The service provided is often a final consumption item for households and an intermediate production factor for enterprises. The weight of infrastructure capital in the economy is not easy to compute. First of all, the value of existing infrastructures does often not correspond to immediately available data. In national accounting procedures, it appears that these data are subjected to revision for various policy reasons. The face value of a given dam, bridge, or road could be the cost of building it, if this cost is known, and if we know how to compute its depreciation rate, and the cost of the repairs it has undergone. This value could also be the price to pay if we are to build it anew.
Let us now situate the decentralisation problem from this point of view. Before comparing decentralisation schemes, we have indeed to formulate it. Let us consider it first from the point of view of what is, for some authors, the solution: the blow-up of the state advocated by anarchists and ultra-liberals. We could indeed conceive transportation services as if no state were necessary for financing. Let us present the blueprint of this utopia: a transport service or mode of transport is self-financing when user charges cover all costs. Self-financing systems are defined on the basis of the user pay principle. We also know that where charging users fail to cover these full costs, the difference will eventually be paid by taxpayers or by various victims of external costs.
Transport pricing refers today not only to access charges, tolls and fares levied by the transportation service provider, but also to taxes and additional levies or subsidies introduced by some public authority. Taxes may be imposed to generate revenues for maintaining and expanding the infrastructure. They may also be used to cover social costs that are disregarded by the user and service provider, such as pollution and congestion. The sum of all these costs is the Marginal Social Cost, which is often higher than the Private Marginal Cost that the user is prepared to take into account when assessing the advantages and the drawbacks of a trip. These definitions introduce the Pigouvian idea of externalities: economic costs not taken into account in markets and in the decisions made by market players, i.e. costs borne by others. Internalisation is the incorporation of an externality into the market through various mechanisms: pricing, taxation or regulatory intervention. For example, internalisation of pollution costs is implemented by charging the polluters with the damage costs of the pollution generated by them: this is the "polluter-payer" principle.
Now that we have reminded this doctrine, let us remark that the average transport infrastructure user is often at odds when having to face this unexpected sum of costs including infrastructure costs and external costs related to the service. How is she to define a tax? From her point of view, a tax would be a levy that must be paid with either no discernible service required from the government, or a service that is not in proportion to the payments. Taxes include income taxes, property taxes, corporate taxes, etc. To speak roughly, according to this perspective, a tax is a charge only a poorly evaluated and assessed one. This is why we speak of pricing when we discuss MSC. According to this approach, the state has to justify its existence by presenting the accountable services he offers. Now, if the reasons for the intervention of the state are always present, it could be an oversimplification to reduce it to external costs or market failures only. But in the classical view we try to remember and discuss here, the state has not to justify its existence by services that people could not afford to pay without its intervention. As we shall see from the fuel taxes case, taxes are often related to the sovereign functions of the state. One speaks of the leonine contract between the citizens and the state: Quia ego nominor leo (just because I am the lion). In this sense, taxes are not prices, even if we may compute their effects in the determination of prices for the user.
2 PUBLIC INTEREST AND PARTICULAR DEMANDS
As the ultra-liberal definition of tax negates the state, the internationalist definition of subsidiarity poses that the upper level (say, the EU Commission) has to justify every and any intervention by some flagrant necessity: superior affairs do not exist, there is only permission for the EU level to act in case of deficient action on the lower level. Let we see how this may coexist with classical traditions about state policy. A clear symptom of this problematics is the vexed earmarking question. Abuse of earmarking could open the way to a crisis of the state, whose very legitimacy would appear as questionable.
2.1 Earmarking and budgeting: classical positions
By definition, earmarking or hypothecation entails dedication of money raised by user charges, taxes or other state revenues to a specific use (be it the health system, religious schools, pensions or roads), rather than adding this money to the national Treasury.
As a traditional rule, in modern states, public revenues were not to be hypothecated to any particular purposes: they remained open for the public decision-making process, and they were to deny their respective origins: money does not smell (pecunia non olet). Earmarking is therefore often resisted by political scientists which are attached to the transcendence of the state.Notwithstanding, there is little doubt that transportation policy is a good place to observe deviations from the general fiscal principle of non-allocation of revenue. We will here present very briefly a very clear example of the intolerance of traditional politics to this direct way of allocating money. This standard example is the British Development and Road Improvement Fund. As a rule, it was first (1909) posed that the Treasury would not have access to the revenues produced by a new tax on motor vehicles: all would be spent on roads. It was not long before various political moves intervened to upset plans for the Fund. The Finance Act of 1915 allowed the Chancellor of the Exchequer to retain the whole tax revenue of the Road Fund for the war budget. Later, Winston Churchill did raid the Fund twice (in 1926 and 1927); and eventually, the Finance Act of 1936 wound it up. It is significative that during the 1936 debate, Churchill pleaded for the abolition, arguing that continuation would lead car users to pretend they had some ownership of the roads on the grounds that they had paid.
As we may see, the modern state does not like to mark the origin of money it collects in order to reaffect it to the same sector or region. Nor does it want to share this revenue. To the contrary, it allows grants to various entities. This model of despotic generosity is now put into question.
Do we need states after all? is perhaps a silly question, as after all, states are not born out of popular demand. One could ask why the state would have to have a budget, if every of its functions could in principle be devoluted to private entities. What if there had been no active state in our modern politics since about three centuries? We all know it quite well: every twelve miles the very definition of your mileage might vary, and local authorities would compete to impose more and more non-standard units and arbitrary fees for crossing any and every village. This is not a gothic allegory. These practices are not far from us, as we can see everyday how committees for standardisation cannot always hinder companies from imposing their own proprietary norms in order to lock some niche market while pretending to free competition in the mainstream market. To put it simply, the state is not required to justify its existence; but it helped a lot to get modern societies out of feudal corporative dubious games. We should think twice before concluding we do no more need one. Moreover, we have to remember that this (positive) effect of the state was not negotiated by contract: the classical state just does not like corporative law making, taxes managing by the private, etc.
After all, whatever the excessive implications of some general declarations, nobody thinks seriously about suppressing the state. As we are witnessing a period of fast, irreversible transformation, it is essential to take notice of what actually happened to the state in the domain of transport policy. Because the state, and only the state, is actually able to impose arbitrary taxes.
It is possible to discuss local receipts of earmarking in this policy. This does not make sense while very general principles are not settled on the table for discussion. The most illustrative case (too big to be only an example) is the TIPP (taxe intrieure sur les produits ptroliers). It was said that this tax would be used for railway investments; actually almost all of this revenue was until recently in the hands of the Treasury. The law of 2004 has transmitted a large part of the TIPP revenue to the regions, with freedom to fix the level of the tax. Following this seemingly good reform, regions are now in difficult situations, as the fluctuations of hydrocarbures use affects their resources for public transportations systems.
In a paper that should have attracted more attention, Boiteux analyses the TIPP as a way to charge the effective use of the road (Boiteux 2004). He evokes the critics who speak of fiscal perversity, but concludes that the TIPP is a toll which can be use to make the user pay better for the services he gets. He reminds that currently, for interurban traffic, individual cars pay their share of the cost they cause, while trucks pay about 2/3 of their share. In the same vein, some political circles suggest to tax the client of truck transportation, as they benefit of the under-pricing of road fret transport.
See Dunn (1978) and Walker (1956) for a historical and institutional analysis of political decision-making with respect to earmarking in transport policy. The French case study provides another story of a short-lived transport fund, the. There is an unwritten rule in France that when a fund is liquidated, any extra taxes that are used to finance it are not terminated; rather, the money is directed to the general Budget of the state. The so-called stable resources for the fund were gradually reduced to insignificant levels through the influence of the Ministre des Finances.
The debate over hypothecation of transport revenue to specific expenditures is thus a classical one, and it has a history in the field of transport. But curiously, it has not, until very recently, received explicit treatment in EU-funded studies on transportation policy. Current EU policy tends towards rather loose earmarking for the transport budget of revenue from infrastructure charging. It allows revenue rose from one mode to be spent on infrastructure associated with another mode, and also for revenue collected in one region to be spent in another region. However, this hypothecation policy is only one option regarding the use of revenue; other, more inclusive options are, for example, using this revenue for general taxation purposes such as reducing labour taxes. One could also consider more restrictive options such as directing revenue towards transport projects within the specific region or the specific mode from which it was raised.
As a matter of fact, many recent EU projects on transport pricing have focused on the optimal design of charging schemes. More generally, existing cost benefit policy guidelines for transport charging emphasize the importance of deriving accurate estimates of costs and benefits of transport investments. In contrast, the REVENUE research project focused on the role of interactions between the transport sector and the rest of the economy, and the equity and acceptability aspects of user charges and revenue use. This project originated from a growing realisation that the long-term effects of any pricing reform would depend not only on price levels, but also on how the revenues are used (Laird et al. 2004, 2).
We see how, by necessity, any discussion of transport revenue earmarking leads to considerations of general policy problems, and that means: political problems, requiring political competence in order to formulate in a suitable fashion questions requiring political answer. If we are to loose this level of formulation, EU civil society could perhaps enjoy, sooner than we may suppose, delicacies characteristic of the life of an international society without diplomatic language, without diplomatic formulations and without diplomatic solutions.
2.2 Local responsibilities and national interest
Let us now consider two contrasting local situations confronted to national transport policy. First, the case of some regional politician unable to defend some local interest of some large transportation project. Second, the case of a successful local politician using strong demand to compensate a risky move.
The first case is the one of poorly connected regions. Is transport a local concern? A road is designed to distribute valuable goods and persons among notable points through some region, which is considered less important by construction. For this reason, local demand for transport infrastructures are seldom taken into account when discussing things at the scale of the Union, just as they were before at the scale of nations.
People may well consider some local advantages of a large highway passing through some poorly deserved area (mountains, forests, grazing grounds, marshes); but when the project is achieved, it often appears that a very few local accesses are present, a fact that has its budgetary justification, but is nevertheless deeply deceptive for local voters, and for the elected political personal.
There are two families of reasons for this. First, local politics is very often of no interest for national-level politics. We may mention here the comments by Oates (2006, p. 28) to a conclusion proposed by Seabright (1996): The crucial variable for each local jurisdiction in this approach is the probability that the jurisdiction is decisive (or pivotal) in determining the election of the central government. In other terms, local politicians are not all equally important for the politicians of central government. Second, historical traditions of national state may affect the negotiations among local and national politicians.
For this very structural reason, we can see that presently highways make distance decrease among large centres, and do not the same, often to the contrary, among small centres. If the EU has something to do in order to gain more acceptability for transportation policy, here is an open opportunity. All things equal (which they are not), problems of traditional politics remain: what about local demand for such-and-such highway whose existence could boost local economy? As usual, state promises for large projects favour more cross-border projects, which would boost already dynamical sectors and regions of the national economy.
Be it allowed to ask if real decision-making is sensitive to local interests, namely: do non-affluent regions, which contribute less to national wealth, have better financial and political control on stimulation of their economies through transport investments? The answer is a flat no. The French government, in a colbertist tradition, keeps control of moneymaking high-speed ways (roads and rail) and gives to the local authorities what remains of the traditional tools of transport policy.
It remains to be seen if regional trains for persons, fret transport or local interest roads will benefit of these reforms. It would seem to the contrary that they would be treated as remnants of optimistic investments of the affluent state of yesterday. Exporting, affluent regions and sectors will benefit from this so-called decentralisation. The others will loose what the arbitrary power of the state did ensure to them. This could ironically be called responsibilisation. We may consider other options.
We should not be surprised to see local politicians taking attitudes so squarely opposed to the standards of national policy. A regional politician is not a politician at another scale: she has to consider variables that were taken into account on the wrong side of the sheet.
Quite different is our other case, let us take a realistic one, namely the first elected Mayor in UK (2000), re-elected in 2004, Livingstone, who introduced the London congestion charging scheme in 2003. Nothing in common with a frustrated aristocrat, a leftist urban politician, achieving during his first mandate a goal proposed during his campaign: internalising the congestion externality using tarification means. As exposed by Seabright (2007), both quantitative and qualitative results are interesting: the composition of traffic changed, and not only its volume, including more bus and more bicycle traffic; considerable investment in public transport system, and considerable benefit to bus users and for businessmen (shorter trip times, delivering of goods easier).
Should the system be transposed as is to other cities? Four reasons, says Seabright, suggest that no:
-Collecting money process is presently quite costly;
-Cost-benefit analysis is still difficult to assess;
-Flexible charging rates are yet to be defined;
-The charging scheme is sensitive to the size of the charging area.
Finally, other criteria than time and value of time should be considered, including welfare and urban environment quality. Seabright insists on the fact that redistributive effects are also achieved: while some people say that the charging chases the poor from using the road, we have actually a transfer from car drivers them to public transport users.
There is no such thing as generally local interests. Some regions are not in a good position to achieve their goals in the negotiation of resources transfer, while others are. This dissymmetry is worth studying. This illustrate Olson thesis in his Logic of collective action (1965): There are vast numbers who have a common interest in preventing inflation and depression, but they have no organization to express that interest. As we shall see, the discussion of public finance aspects of transport investing (Proost, De Borger and Koskenoja) invites us to read more attentively these prophetic views on collective decision.
3 RISK TRANSFER AND RISK REPARTITION
Denationalisation is a large problem, not only related to large industries or railways management. We all know for example that von Hayek proposed to denationalise the control of money (Hayek 1978). Other sovereign functions may be subcontracted to various operators. Political democracy requires that all critical decisions be taken by persons who are responsible before national parliaments. It is evident that there is no clear-cut solution, as many infrastructure problems imply time range of decades, longer than any government. This difficulty is already classical in political science; let us consider our problems from this point of view.
We have mentioned above (cf. In section 1.1 the comments by Oates about US institutional traditions) the existence of various political cultures regarding the intervention of the national state. In some countries (Canada, USA), the value added by railway transportation to valuable minerals allows for moneymaking fret rail companies not asking one penny from the government. Economists familiar with those countries could perhaps help rethinking our rail subsidisations policy. After all, why a state, if not for war? This radical philosophy has today many resonances, a fact that calls for attention. If we are to believe a rumour that comes from some discussions, the state would better leave the goals of policy to local authorities, and the means to private companies. We should perhaps assume the idea that this evolution does correspond to the ideal of economics per se. In his Nobel lecture (1991), Coase reminds us that many economists are living Adam Smiths dream: A principal theme of The Wealth of Nations was that government regulation or centralised planning were not necessary to make an economic system function in an orderly way what this theory analyses is a system of extreme decentralization.
But we all know that any transport investing and managing scheme will have to face a classical contradiction: to serve a global policy determined by the general interest, while being open to the legitimate interests of stakeholders (including infrastructure users of the different modes, transport service operators, and the transport infrastructure construction industry). The mark-up charge is defined as that which goes beyond infrastructure costs. Deciding this supplementary charge is a sovereign function, typical of the responsibilities of the state.
In EU countries, it often happens that the state takes a large part of fuel taxes, while in other parts of the world this revenue is hypothecated to roads, so that it is spontaneously considered as some user charge. We should perhaps try to compare these various political traditions, an exercise that could lead to more conclusive reasoning than asking which is the better.
3.1 Integrating operative and speculative risks
The concept of PPP (Public Private Partnership) refers to contractual arrangement over a long time (typically more than 20 years) for the fulfilment of some public interest mission devoluted by public authorities to private operators. It may sometimes be arranged that for road infrastructures, the government pays shadow tolls to the manager, on behalf of the road users. The standard procedure is the following. A private group of interest (consortium) builds up a legal person, so-called special purpose vehicle (SPV) that will have as mission to build, maintain and operate the assets. The consortium is for example made up of a building company, a maintenance operator and a group of financial lenders. The SPV is entitled to sign contracts with governments and other contractors or subcontractors.
The distinction that we consider here (outsourcing some part of a given program to building and exploitation companies, vs. financing global projects through negotiations with financial partners) is somewhat artificial, as many programs in the UK use an integrative scheme, according to the DBFO (Design, Build, Finance, Operate) method.
PPPs have to be discriminated according to two very different criteria: More or less inclusive missions may be devoluted to some agency; and this agency may be more or less independent from the state. The first criterion opens the way to the so-called principal-agent problem: what incomplete and asymmetric information when a principal hires an agent? The second criterion is more familiar to the average reader, as it is more often discussed in the media.
The very nature of some transport infrastructures implies that they are not convenient for material privatisation: a road is a non-rivalrous good (most often a public one). The market characteristics of such goods do not attract private investors. Sometimes a road may be excludable (a club good, such as a toll highway: some people may be excluded from benefiting the service). But it also happens that a large transport investment cannot be tolled. This type of investment is called a specific public good. What about a decision whether to build a specific road or public transport investment that cannot be tolled? This can be a bridge or a metro to a remote location: taxpayer will finance a minority of users. The national state, via the Parliament where local politicians are present, is exposed to minority efficient lobbying alla Olson (1965). As a consequence of this weakness, as it has been observed material privatisation is almost nil in the roads sector. To the contrary, it is often present in airports, seaports and railways (Alfen and Barckhahn 2006, p. 8).
Let us add that the transport industry contains subsectors that are not always taken into account, while they are efficient, large scale, and relevant for the present discussion. Hydrocarbures and electric energy are transported through pipelines and high voltage lines. The value of transport infrastructures is open to various accounting revision procedures, to the effect that the user thinks of arbitrary decisions. Local interests are sometimes well represented in this industry through the control of agencies by various political bodies. We have already mentioned the remarkable study by Raux, Mercier, and Souche (2007), who show how this may correspond to the interest of right-wing politicians, which are by position more sensitive to the objectives of regional development.
In France, the state has sold in 2005 his shares in the Socits autoroutires, in order to mobilise financial resources, part of which was affected to the Agence de financement des infrastructures de transport (AFITF). The remaining private groups managing the operations on the highway network are presently very large companies (AREVA, VINCI, EIFFAGE). This means that some part of the negotiation on transport policy will take into account through the complex strategies of competing firms, and perhaps escape the attention of Parliamentary commissions.
The list of profitable public infrastructures is short (water and energy production and supply, rubbish collection, large waterports and airports) To the contrary, unprofitable public infrastructure are numerous. Some charge the user for part of their cost (public transport, libraries, higher education, old peoples homes, hospitals, sport and cultural facilities). Some do not usually charge for the service (roads and bridges, public buildings, elementary schools, social facilities, prisons).
Governments find in PPP a way to ensure long-term financing for programs they cannot put into their annual budget procedures. Dozens of large public programs in the EU member states are designed according to PPP schemes: urban public transport systems, highways, hospitals, public buildings This new financial engineering opens the way to relevant initiatives of educating public institutions about risk management (in the domain of transport infrastructures or in other) in other countries.
3.2 Public Debt and financial market
The private sector may also help the public authorities to raise money. This is not exclusively a banker job. Indeed, complex entrepreneurial approaches developed recently in the UK: companies helping public interest institutions to build projects and to plan the successive money injections to collect or to raise, possibly on different money markets. This financial engineering specializing in public projects is a new, specific competence, and has proven useful for schools, hospitals, Highways, public buildings. The assessment of financial risk is of the essence of these new competences.
In traditional state philosophy, the state has direct access to financial resources, possibly through money printing (inflationary money spending). We have already mentioned a report to the French Senate (Oudin 2003) showing that budgetary considerations affect the setting of a coherent policy for the financing of transport investments. The same is true for the management of the public debts. The educative role of the EU Commission will perhaps over the next years help responsible circles to obtain better, simpler, safer accounting procedures in the member states. The Oudin report evokes the now famous case of the French Service annexe damortissement de la dette ferroviaire (SAAD) in very remarkable terms: SAAD is, it has to be reminded, an Unidentified Financial Object.
Why speak about an UFO? Indeed, this debt was not affiliated in the national budgets, nor in those of SNCF and RFF. This opaque disposition was put to an end in 2007, when Eurostat required that the French budget incorporate this sum (8 bn euros debt more for, 2006, a drop from -63,7% to -64,2% of the GNP. A good reason for this correction is that the French state does pay every year for the reimbursement of this debt: as it must be somebodys debts, it appears then to be his. This revision is only good news, but it remains surprising that we need Eurostat to correct such distortions. The magnitude of national budget and the expected transparency of democratic control at the parliament level make uncomfortable when having to comment such practices of disguised inflation. This is the place to mention a terse remark coined by Detuf: "There are three kind of people speaking a mysterious language: most easy to understand are the fools, then we have the polytechnicians, and last the accountants."
4 CONCLUSIONS
4.1 Decomposition of the state and local concerns
Finally, we discuss the political concerns related to stakes that are locally defined; as a matter of fact, environment and quality of life are local-related externalities.
Is transport a local concern? For one part it appears that more transport infrastructure contradicts the demand for environmental (always local by definition) preservation. Do we really need more transport after all? This is a serious question. Even more seriously, what transport are we supposed to speak about? Will our habits have to really change?
The current political landscape is rather chaotic. Speaking in terms of economic rationality, experts are discussing ways to escape the huge bottlenecks of tomorrow. But while they are discussing about less pressures, a seemingly demand-driven economics is pushing vacation transport traffic on the highways, suburban residential traffic on the penetration axes of large cities and fresh fruit and vegetables on the same two networks flowing from seaports and airports. At the same time, our representative parliaments are under populist pressures speaking of saving virtual bears and cutting actual transport infrastructure budgets. There must be at least one mistake in the global plot. It is conceivable that environment-conscious policy introduce more and more coercitive measures in order to reduce the demand for transport. This supposes that we have political discussions at the relevant level: the European Parliament.
It is too late to hinder the process of decentralizing in transport infrastructure management. More than the effectiveness of German or Austrian transport agencies, which manage money and projects, it will be interesting to see what happened in France. The Raffarin government (2002-2005) gave practical content to the decentralisation motto that was introduced since some decades. Before the law of 13/08/2004 relative aux liberts et responsabilits locales, the central state managed 38000km of highways and national roads, to keep only 18000 km after the implementation of the institutional aspects of this law, 28000 km being devoluted to departments. This transfer of competences was sustained by transfer of revenue (for example the TIPP on hydrocarbures), and of manpower to local authorities. In the same direction, the French reform of 2002 disposes that regions are responsible for regional railway services definition and organisation. The division of responsibilities among (Rseau ferr de France) (RFF) and the Socit nationale des chemins de fer (SNCF) is at the same time defined.
Let us mention here some remarks by Didier and Prudhomme (2007, p. 34 sq.) Local authorities have now the charge of urban transport (almost one half of all transport industry in France, in terms of value), of local roads and regional railways. The versement transport collected from private companies hiring more than 10 employees, the transfers of managing state budget for communal and departmental roads and for local railways are considered as too low. The state has still to open its purse if it is to persuade local authorities that they share their part of the budget. The TIPP was, and still is a very large part of public financing, and it is not shared with local authorities. It would suffice to add that the money collected by other large EU member states is about the same as in France: fuel taxes correspond to about 2/3 of the fuel price in Germany, France and Germany.
Actually, we could argue, and we will see here, that local management of some transport infrastructure albeit related to far-reaching journey is a rather traditional idea. We have just to accept it and enjoy it. At the same time, if we are to put local subcontractors operating with or for large companies where we had civil servants twenty years before, why not? This decomposition of the state privileges is far from effective, as national budget keeps control of large parts of resources collected from transport sector.
But we know that alternative schemes do exist. The private formula called Turnpike trusts developed efficiently in the UK of 17th century, and became later a generalized scheme for roads repairs and managing, charging tolls from the user for financing needs. After all, we should not forget that it was everywhere a well established local habit to try to make profit from large scale traffic, and that since the competition among boat maintenance and bridge building (boats were cheap and under easy local control, to the contrary of bridges), local and global interest do compete in transport infrastructure design. This political discussion is far from being over.
4.2 Recomposition of the state at various levels
As we have shown in our introduction, so-called external pressures reduce the freedom of the national states to raise money for large projects. What we have to think here is a complex process of recomposition where some functions of the state are transmitted to regions, some contracted to private companies, and some are left to the European and international spheres. Everybody knows that a large part of national legal corpus is coming from outer space: the various international bodies habilitated to do so by the states, and in our case the European Parliament and the Commission. This process is perhaps the sign of a very general evolution of our societies, and the mix of decomposition and recomposition that we face is perhaps just a case of Schumpeter creative destruction. But it would be wise not to be too sure of such a bold conclusion. States are still very active protagonists of present history, if even under complex strategies. The executive branch of the state may develop more negotiations in PPP than in responsible presentation of the policy to the national Parliament.
Let us quote here some recent remarks by members of the French Senate. They say plainly that answers given by the government attest such an absence of dialog among Directories of the Ministry that one could smile if this absence had not as a consequence that the Senate receives no answer to its questions.
The making of Europe has consequences that were favourably considered by the founding fathers, but which cause grievous fight among the decision makers. First, the building of the Eurozone monetary region imposed constraints of the member states budgets; and we have seen that these constraints affect the evolution of national transport investment budgets.
It can never be overemphasized that the very nature of political discussion about the financing of transport has been dramatically affected by the recent establishment of the euro in almost all EU member states. In order to ensure a substantial stability for the promised currency (ne ECU in the 70s, and christened euro under the auspices of the Maastricht Treaty), convergence criteria were defined, according to which in every member state the government debt should remain under 60% of the GDP, and yearly the government deficit should be less than 3%. It has to be reminded that as the keeper of Treatises, the EU has a right to impose financial penalties to infractors. It has yet to be established whether in so doing the member states have designed a new political entity or a monetary zone, the so-called Eurozone.
Do we have an European transport policy? The fact that the rule of unanimity prevails for transport decisions at the level of the Council of Ministers shows at best the hesitations of the member states. And part of the public perception of the Commission policy as being more interested in (de)regulation and liberalisation is related to the fact that, after all, the Commission has few opportunities of effective intervention in the sector of transport.
Let we propose some very brief remarks about some aspects of this policy.
Regulation. Liberalisation is an ancient tradition in maritime transport, the sea being open to all. The same approach was easy to propose for IWT as it was traditional on the waters of the Rhine (more than half the volume of this sector in the EU). It was more delicate for road transport, and more than delicate for air transport; and we all remember that the open sky policy was introduced following pressures by the US government. It remains quite difficult for railways companies, endowed with national traditions, and budgets.
Investments. Europe will exist through its achievements. European politics, by the magic of large numbers, introduces us to new problem. Transport infrastructure management is actually a new problem. It has to be reminded here that the very term infrastructure was scarcely used in the literature before the 1980s. Let us mention some historical remarks by Prudhomme, who stresses the fact that after Adam Smith, who gave transport infrastructure a key role in development, economists did not take it into account, preferring to discuss the respective roles of labour and capital as production factors, leaving aside the large infrastructures build by 19th century governments. He concludes, Until the 1970s, infrastructure, even under a different name, hardly existed as an analytic concept or category in economic theory and policy. The author mentions pioneers such as Rosenstein-Rodan, with a significant quote of the former summarizing in 1984 his views during WWII: [a] new idea was that before building consumer goods factories, a major indivisible block of social overhead capital or infrastructure must be built and sponsored because private market initiatives will not create it in time.
The stubborn optimism of the Commission could give the impression that these projects, giving a practical complement to the Green and White Books defining the economic doctrine, constitute an European transport policy. Some day, perhaps, we will have an European transport policy. After all, the Maastricht Treaty did explicitly ask for trans-European transport projects. It is perhaps presumptuous to speak in terms of network. Of course, all axes being de facto connected, we may for sure say that there do exist European networks for trains, trucks, boats and airplanes. But actually, every country has over the last decades attempted winning moves from the singular position given to him by the providence, and to this date the EU discussions are not really interfering with these national strategies. As a matter of fact, the selection and an often-decisive part of funding of such infrastructure projects have been left to the individual member states (Didier and Prudhomme 2007). European policy in the domain of transport infrastructure corresponds to a juxtaposition of loosely defined projects, not assessed in terms of cost-benefit analysis, but technically more or less mature. Let us be optimistic: this leaves wide highways open to innovative EU assessment and decision-making initiatives. Acknowledgements. We acknowledge helping support from the Institut de France. We are grateful to Serge Pahaut for useful comments.
5 ANNEXES
5.1 References
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Alfen H.W. and Barckhahn S. (2006), A systematic approach to the comparison of Management and Financing models in the European toll road sector, TU Infradays, Berlin.
Blanchard, A. and Adg, M. (1985) Les Ingnieurs du Roy et le Canal de Communication des Mers, in Jean-Denis Bergasse (ed.) (19851986) Le Canal du Midi (Vol. 3), pp. 18194, Cessenon: J.-D. Bergasse.
Boiteux M. (2004), Taxer lessence ou le kilomtre ?, Les Echos, 27 octobre 2004.
Bourguignon Fr. and Pleskovic B. (2005) Lessons of experience, World Bank and Oxford University Press.
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Cerniglia F. (2003), Decentralization in the public sector: quantitative aspects in federal and unitary countries, Journal of Policy Modeling 25 (2003) 749776.
CCE (2005), TEN-T priority axes and projects 2005, European Commission, Directorate-General for Energy and Transport.
Coase, R. H. (1991), Nobel Prize lecture, December 9, 1991, http://nobelprize.org.
de Palma A., Lindsey R. and Proost St. (eds); (2007), Investment and the Use of Tax and Toll Revenues in the Transport Sector, Elsevier.
de Palma A., Lindsey R. and Proost St. (eds); (2007a), Investment and the Use of Tax and Toll Revenues in the Transport Sector: The Research Agenda, Chapter 1 in de Palma, Lindsey and Proost 2007.
de Palma A. and Pahaut S. (to appear), La surestimation des risques propres loprateur. Reflexions sur quelques dmons de la classification dAarne-Thompson, Anthropologie et socits.
Detuf, A. (1937), Propos de Oscar-Louis Barenton, confiseur, ancien lve de lcole Polytechnique, Paris, ditions du Tambourinaire.
Didier M. and Prudhomme R. (2007), Infrastructures de transport, mobilit et croissance, rapport au Conseil d'analyse conomique auprs du premier ministre, Paris, la Documentation franaise.
Dunkerley F., Mackie P. and Proost St. (2006), Consortium Funding Scenarios for EU Infrastructure Fund and Markups, FUNDING research project Deliverable 2.
Dunn J. A Jr. (1978),. The Importance of Being Earmarked, Comparative Studies in Society and History, 20, 1, 29-53.
Dunoyer Ch. (1842), "Du systme de la centralisation, de sa nature, de son influence, de ses limites et des rductions utiles qu'il est destin subir", Journal des conomistes, I, 353-389..
Ghnemann A., Whiteing A., Mackie P., Smith N. (2006), Transport infrastructure funding systems- A review of european experience, 6th Conference on Applied Infrastructure Research, Berlin TU, 6-7 October, 2006.
Hayek, F. A. von (1978), Denationalisation of Money, Hobart Special Paper 70. London: Institute of Economic Affairs (3d rev. ed. 1990).
Inman, R. P. (2003) Transfers and bailouts: Enforcing local fiscal discipline with lessons from U.S. Federalism, In: Fiscal decentralization and the challenge of hard budget constraints, eds. J. Rodden et al. Cambridge, MA: MIT Press: 35-83.
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Livet G. (2003), Histoire des routes et des transports en Europe, Presses Universitaires de Strasbourg, 2003
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Olson, M. (1965) The Logic of Collective Action: Public Goods and the Theory of Groups, Harvard University Press, 2nd ed. 1971.
Oudin J. (2001), Rapport dinformation fait au nom de la dlgation du Snat pour lUnion europenne sur la politique commune des transports. Sance du 3 mai 2001, Snat franais.
Oudin J. (2003), Rapport dinformation fait au nom de la commissions des finances, du contrle budgtaire et des comptes conomiques de la nation sur le financement des infrastructures de transport lhorizon 2020. Sance du 21 mai 2003, Snat franais.
Pahaut S. (to appear), Regularity and Probability: some remarks on the prehistory of probability, Mathematical Population Studies.
Proost St., De Borger Br. and Koskenoja P., (2007), Public Finance aspects of transport charging and investments, chapter 3 in de Palma, Lindsey and Proost 2007.
Prudhomme R. (2005), Infrastructure and development, in: Bourguignon Fr. and Pleskovic B. (2005) Lessons of experience, World Bank and Oxford University Press.
Raux, Ch., Mercier, A., and Souche, St., 2007, Case study multi-modal funds in France, chapter 11 in de Palma, Lindsey and Proost 2007.
Rosenstein-Rodan P. N. (1944), "Problems of Industrialisation of Eastern and South-Eastern Europe, The Economic Journal, 53, No. 210/211, p. 202-211.
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5.2 Abbreviations, Acronyms and Conventions
AFITFAgence de financement des infrastructures de transport de FranceDBDeutsche Bahn
DfTUK Department for Transport
ECMTEuropean Conference of Ministers of Transport
EIB European Investment Bank
FITTVNFonds d'Investissement pour les Transports Terrestres et les Voies Navigables
FP EU Framework Programme
IWTInland water transport
JTRCJoint Transport Research Centre of OECD and ECMT
MSCMarginal Social Cost
PFIPrivate Finance Initiative
PPP Public Private Partnership
PT Public Transport
RFFRseau ferr de France
SAAD Service annexe damortissement de la dette ferroviaire
SNCFSocit nationale des chemins de fer
TEN Trans European Networks
TfLTransport for London
WWIIWorld War II
The reader would perhaps remember here an old series of jokes where France was figuring as the most advanced of Europe eastern democratic republics. There are few historical studies about transport in Europe and its societal and political correlates; we owe to the interest for social sciences manifest in the research program designed since the 1930s by the Ecole des annales the existence of an excellent book by Livet (2003).
The reader may consult the recent and well-informed description by Ghnemann et al. (2006) for european comparison; more generally, see the exercise by Humplick and Moini-Araghi (1996), which proposes some interesting definitions. A good discussion of the literature about the Decentralisation Theorem proposed in 1972 by Oates and its applicability for international comparison is given in Cerniglia (2003). Our discussion will follow some balanced views presented by de Palma, Lindsey and Proost (2007a). We will also rely on some observations by Raux, Mercier and Souche (2007).
See the description of this evolution by Ghnemann et al. (2006). Let us mention here the concerns expressed in a report to the French Senate (Oudin 2003): the part of public investments in the GDP dropped from 8% to 3% over the period 1978-2002 (p. 25). The most severe questions are posed in this report about the railway investments at the beginning of the new century.
See Oudin 2003; in these times of multimodal transport policy, this simple indicator shows how actual policy diverges from the themes debated among decision-makers and their counselors
Assemble nationale, Comptes-rendus de la Commission des finances, de lconomie gnrale et du plan,10 october 2007.
We refer here to academic work: see the recent FUNDING research papers ( HYPERLINK "http://www.econ.kuleuven.be/funding/" www.econ.kuleuven.be/funding/), which do mention and discuss the literature. But the theme is politically sensible enough to deserve discussions among decision-makers; see for example the review formulated from the point of view of the OECD/ECMT JTRC (Joint Transport research centre) by C. Stacey (2007).
The American Society of Civil Engineers has declared the chunnel to be one of the Seven Wonders of the modern world. During our discussion, we shall be led to consider the part of dream in large transportation projects.
The somewhat robust answer of sea ferries and low-cost air companies, formulated in terms of prices, is naturally also part of the explanation of the accounting crisis. It remains remarkable that investmentors had proposed an evaluation of demand which eventually turned out to be false by a factor three. We shall discuss the structural optimism of investors in our section 3.
A positive evolution is the current development of the AFA project (autoroutes ferroviaires alpines), which is currently approaching real-world scale.
Many innovations envisaged by the prospective literature proposed by the industry establishment are born out of engineers fantasy: huge aircrafts used as flying airports, personal air transport mini-vehicles, all with an unmistakable flavour of 20th century modernity. Such technological visionary achievements are for sure opium for the people.
More prosaic performances are already with us: the 3-liter airplane (3 liters of kerosene per passenger over 100km), and the Worldliner airplane (joining every pair of cities in the world in one fly).
A decision issued by the Parlement de Paris (organ of the Men of Law) introduced an exclusion against lower-class users: this was a decisive factor when the whole Carrosses program collapsed in 1679 by lack of customers.
In the scheme designed by Pascal, the user is to pay only for his place; no gold piece would be accepted as paiement, in order to save time. The company was taking calculated risks a car is to take departure at the scheduled time, even if there is only one passenger; and in this case the price paid would not cover the actual cost of this trip, but only its average cost. Other general principles of management were similar to the ones we are now accustomed to: high frequency of cars (every demi quart d'heure) and affordable prices; see Pahaut (to appear).
While discussing the idea, scholars of 17th century evoked dreams considered by the Roman army, Charlemagne and Franois 1er (let us also mention here that a Rhine-Danube connection was evoked by Pytheas of Marseille at the time of Alexander the Great).
Other risks had to be managed, and they were: financial instabilites related to accidents of relief (for example the Tunnel du Malpas); or to the manpower (Riquet paid well, and innovated in including social security mechanisms in order to balance the fluctuations of manpower), etc. See Blanchard and Adg (1985).
When discussing the tensions among local interest and the non-local character of all transport industry, we will not forget that Riquet could not persuade his compatriots of Carcassonne to pay their part of the bill in order to get the canal throught their city. This mistake was to be corrected only many decades later.
We follow here some indications by Prudhomme (2005).
Market failures invoked are sometimes related to economies of scale. But decreasing costs, which often lead to natural monopolies, are not necessarily present in all sector of a service industry. For example, decreasing costs may evolve over the time in different ways for production and for transportation.
As Dunn aptly says: Earmarking is more than just a finance mechanism. It is a political issue, and for some a political credo. It has its roots in a Lockean sense of social contract between the citizen as taxpayer and his government (Dunn 1978, 33).
Indeed, these scholars would maintain that the state is not an agent among others, with whom anybody would be free to pass contractual relationship. Their model of the state poses a substantial difference between the universe of social relations build on the base of private contracts and such specifically political events as war, the law, or political decisions. In this perspective, the state is not the representant of any particular interests, as it has to claim the monopoly on violence, which is clearly no an economic function.
The Road Board did not actually undertake itself the construction or the maintenance of roads; it only allowed grants to local authorities.
From then onwards, the Ministry of Transport was to bid for money from the Treasury just as any other government department.
See for example Oudin (2003).
An exception was the TRENEN II program (1998-2001), that pleaded explicitly to use the revenues of external cost pricing for other uses, such as a reduction of existing labour taxes. This suggestion assumes that we may rely on an open institutional space where public discussion of global decisions make sense (Proost, De Borger and Koskenoja 2007).
Didier and Prudhomme (2007, p. 31) insist of the fact that actually international frontiers are generally, with well known exceptions, zones where the needs for transport infrastructure is not very high. They add that there are no available cost-benefit analysis of TEN-T projects.
In this sense the story told by Raux, Mercier, and Souche (2007) is the tragedy of regional development.
Regional interest may be represented by variables that are not even opposed to the one that are maximized in the mainstream model. Sometimes they are only considered as variables in another space. This is the process of alienation, where the provincial politician considers the variables describing the life of metropolitan cities as devilish parameters of his own life. Hence the fatal divergences of Tocqueville and Gobineau, all explicit and militant advocates of decentralisation in 18th century France (see Dunoyer 1842).
He does thank our colleague G. Santos for discussions and advice.
Charging rates could be modulated according to the hours of use, and to the type of vehicle, for example replacing the unique rate by two: 3 pounds for the cars, 9 or more for the HGV.
The development of PFI received an explicit denomination in the UK during the 1990s: the Major government had to follow the Maastricht rules and to continue the good practice established by Thatcher. Following him, and in order to face huge financing needs in schools, hospitals, transport and public buildings, the Blair Government used largely the PPP scheme. To put it plainly, the problem was to put an end to chronic under-funding in public services after two decades of Conservative policy.
The PFI (Public Finance Initiative) is a PPP where everything, from conception to management through funding, is devoluted to a single operator (company or consortium). The public authority is assumed to keep more direct regulatory control in a PPP; but the two formula, PFI and PPP, are currently used equivalently by many people.
We leave for the meditation of the reader the contrasted, paradoxical evolution of production and distribution for energy: part of the production could be decentralized over the next decades, if we develop some technologies that allow local production, while distribution is by function global problem.
As everybody knows, Bouygues was eventually not interested in 2005 by what it considered as more a financial scheme than a work corresponding to its mtier.
Officially this modifications is just a technical demand of Eurostat to the INSEE.
. Il y a trois sortes d'tres au langage mystrieux : les plus aiss comprendre sont les Fous, puis viennent les Polytechniciens, et enfin les Comptables (Detuf 1937, p. 142). Before going industrialist, Detuf was Ingnieur des Ponts et Chausses. His book was published due to the pious zeal of de Lassus Saint-Genis, who succeeded him at Thompson.
Global stakes such as CO2 concentration in planetary atmosphere are up till now means of actually local concerns: people fear for their own environments, in virtual conflict with emerging countries or less environment conscious governments.
Ghnemann et al. (2006) give a clear discussion of decentralisaton in Germany and UK, providing a relevant and original comparative analysis. The role of German agencies and federal government, and the critical discussion related to road management, is based on first-hand knowledge.
The dispositions of the law of 2/3/1982 transferred some prerogatives of the prefect (the very hand of the national state) to the regional presidence.
A toll is a special charge levied at a particular point where vehicles pass (e.g. tunnel, motorway, etc.). It would be malevolent to evoke only the highwaymen here. The ferryman did help in minimizing the risk of crossing. This transit operator is a classical figure of mythology (see Hermes, Charon, or the touchy frontier runner by Lvi-Strauss 1968 p. 366 sq.). Budget is never locally balanced, requiring the intervention of some alien entrepreneurship, able to raise money somewhere, as attested by the corpus of so-called Devil's Bridge folktales, affine to Faustian Devils contract (Aarne-Thompson folkloristic classification types 756B, 1005, 1191; see De Palma and Pahaut (to appear).
It would be a mistake to think that the French revolution did put an end to toll bridges. This was only done by the law of juillet 1880.
I would also add that this kind of process remind me of the profound remarks proposed by my teacher Ilya Prigogine about order out of chaos.
Avis n80(2006-2007) fait au nom de la commission des affaires conomiques, dpos le 23 novembre 2006.
See the discussion of the management and financing of transport policies by Alfen and Barckhahn (2006, p. 9).
See the summary of liberalisation policy by Oudin (2001).
Prudhomme 2005, p. 9; the different name was often social overhead capital.
In fact, Rosenstein-Rodan did not only advocate for infrastructure building; he also suggested that the training of workers, being not necessarily of interest for the employeur, would be for the state (Rosenstein-Rodan, in: Meiers and Seers 1984 p. 208; Rosenstein-Rodan 1944).
Indeed, would we have Europeans projects of heavy rail transportation with China, or European high speed trains, or European management tools for regional airports negotiations with low-cost air companies, the situation of transport policy would be totally different from what is is presently. Nevertheless, the incitative and regulatory dimensions of EU policy are not to be despised. Also, as the new member states are in strong need of European help, there is a window of opportunity open for more affirmative EU commission initiatives.
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