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E003492Governments regularly engage the private sector to help finance and deliver large infrastructure projects using a full complement of public-private partnership (PPP) approaches. These are already commonplace in the UK, Canada and Australia, and by 2020 more markets are reaching maturity. PPP deals go beyond traditional toll user-fee models and include variations such as shadow tolling (with fees based on the number of vehicles using the roadway) and availability payment options (payments based on particular project milestones or performance standards).  To increase public acceptance for newly priced roadways, investment PPPs (or IP3s) become common. Under an IP3, public entities divert a portion of the concession payment and toll revenue to a protected investment fund that pays households in the region an annual dividend to help offset the additional costs they incur from tolls. On the finance side, banks and institutional investors embrace a model in which institutions take on parts of the loan based on their risk appetite.

See: Closing America’s infrastructure gap

 

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