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Improving the Efficiency of the U.S. Highway System. Clifford Winston The Brookings Institution. Overview. Summary comments on roads Raising revenue efficiently Reducing costs efficiently Spurring technical innovation. Highway Performance: Delays.

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improving the efficiency of the u s highway system

Improving the Efficiency of the U.S. Highway System

Clifford Winston

The Brookings Institution

overview
Overview
  • Summary comments on roads
  • Raising revenue efficiently
  • Reducing costs efficiently
  • Spurring technical innovation
highway performance delays
Highway Performance:Delays

Average Annual Traffic Delay in Major Metropolitan Areas, 1982-2001

highway performance finances
Highway Performance: Finances
  • The road system is always “balanced” but that is misleading
  • Revenue sources (the fuel tax) are volatile
  • Costs can be reduced by deferring maintenance and expansion
  • Innovation is rarely considered
revenues efficient pricing
Revenues: Efficient Pricing
  • Fuel tax is largely unrelated to motorists’ contributions to delay—doesn’t vary by time of day or location
  • Efficient tolls (road pricing):

mitigate delays

raise revenues efficiently (self financing)

improve land use (other effects)

  • Redistributive effects exaggerated
efficient pricing continued
Efficient pricing (continued)
  • Fuel tax provides wrong incentives for trucks to reduce weight per axle—the primary source of pavement damage
  • An axle-weight tax should be used to reduce maintenance costs
  • Generally, the fuel tax is an inefficient tax (emission, safety)
reducing costs x inefficiency
Reducing Costs: X-Inefficiency
  • Eliminate Davis Bacon (reduce labor costs)
  • Optimize capital/maintenance cost tradeoff with thicker pavement
  • Make contracting more flexible
  • Improve oversight to reduce cost overruns
reducing costs improve allocation of funds
Reducing Costs: Improve Allocation of Funds
  • Allocate highway expenditures to reduce total highway costs, accounting for users’ cost of congestion
  • $1 of spending reduces users’ congestion costs 11 cents; under optimal allocation $1 reduces costs 25 cents
  • Eliminate demonstration projects
  • Use prices as efficient signals of investment—cannot build our way out of congestion
innovation motivation of privatization
Innovation: Motivation of Privatization
  • Vast pricing and investment inefficiencies in highway
  • Efficient pricing and investment would produce billions of dollars in welfare gains
  • Objectives of privatization:

Reduce costs

Make suppliers more responsive to users

More rapid introduction of innovations

developing evidence to make the case for privatization
Developing Evidence to Make the Case for Privatization
  • The experience with deregulating intercity transportation in the United States
  • Foreign experience with privatization: private road builders
  • Experiments in the US to show competition can develop
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