Managing environmental initiatives with PPP
August 9, 2016

PPP in public transportation

Public-private partnerships (PPPs) can be an effective way to build and implement new infrastructure or to renovate, operate, maintain or manage existing transport infrastructure facilities. In both areas PPPs can be a mutually beneficial way to solve critical transportation problems. This strain is especially great for countries, whose economies are undergoing rapid development and urbanization and have a great need for expanded infrastructure.

Growing demand for mobility has created serious traffic congestion and deteriorating air quality in urban areas. This has encouraged huge investments in the viable public transport infrastructure, such as subway systems, as alternatives to car travel. Many large transport infrastructure projects used to be financed by the government directly, but the financial burden far exceeds the availability of public funds.

Since transportation is the major application of PPP all over the world, China and the United States have huge potentials for exploring cooperation opportunities on transportation infrastructure projects:  Beijing No. 4 subway line is a 17.4-mile project and  is the first project adopting PPP delivery approach in Chinese metropolitan railway system. This line is regarded as the “Golden Line” by Beijing municipal government. And the Las Vegas Monorail is a 3.9-mile rail transit system located in Clark County, Nevada, connecting major hotels and casinos along the world famous Las Vegas Strip. The tourist growth stimulated the expansion from the original 1-mile system to the current Las Vegas Monorail to satisfy the increasing transportation demand.

PPPs  are considered beneficial instruments to the infrastructure development of any country. Their aim is to deliver better quality services by bringing in new investment, which cannot be provided by the Government alone due to the scarce sources to fully finance big infrastructure projects:

The objectives of a PPP in infrastructure are to: 1) Increase the availability of infrastructure services; 2) To do so with greater efficiency (lower cost for the level of services provided) than could be achieved using the traditional public sector approach

PPPs make this possible because: 1) PPPs allow access to the substantial financial resources of the private sector; 2) PPPs enable the public sector to benefit from private sector technical expertise, experience and efficiency; 3) PPPs enable the public sector to transfer project-related risks to the private sector

After first experiments in the U.K., PPPs have been growing in popularity as an effective alternative instrument for the provision of goods and services by governments, especially in the infrastructure industry for both developed and developing countries, such as Greece, Poland, Indian, and Ghana.