PPPs are not likely to significantly reduce the infrastructure funding gap because they change the timing with which funds become available, but generally do not increase overall funding levels. Only to the extent that a PPP achieves efficiencies that the public sector cannot achieve does the PPP provide funding greater than the amount the public sector could receive through traditional financing. The fact that PPPs have limited roles in the growth of infrastructure investment funding is illustrated by our examples. In only two of the seven, Project Examples 1 and 2, did we determine that PPP financing would directly deliver a superior net financial contribution to the public sector entity than traditional financing methods. We show how Project Example 7 could do so, but only with the addition of innovative financing.
When a PPP pays funds up front to the public sector, the payments are in exchange for future revenues associated with the asset, usually in the form of tolls.13 In these instances, States and other project sponsors must obtain the legal authority to levy tolls for the PPP. However, if tolling or toll rates are not politically expedient, the PPP is less attractive. Furthermore, despite their functioning as important system links, many components of the national transportation system will never fully self-fund from users and direct beneficiaries because the traffic on them is too low-density.
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13 Such PPPs differ from arrangements found in other countries. In Canada, for example, some PPPs incorporate provisions, such as availability payments or shadow tolls, that require the government to pay the private entity for its operation and maintenance of a facility on the basis of the facility's meeting certain usage standards or levels.