Policy Study

The Market for Private Toll Projects in the United States

Executive Summary

This report surveys the market for privately financed and operated toll highways, bridges, and tunnels. This market is developing because traditional public-sector funding is inadequate for the level of investment needed over the next decade or more; the Federal Highway Administration (FHwA) puts the shortfall at between $13 and $42 billion per year.

Three principal market opportunities exist: new urban congestion-relief tollways, new or rebuilt intercity toll roads, and new or rebuilt bridges and tunnels. The urban market is driven primarily by the potential of offsetting the $34 billion per year in time and fuel wasted by current levels of traffic congestion. The intercity market is driven primarily by the need of trucking firms for time and cost savings, and access for over-100,000-lb. truck-trailer combinations. The primary bridge opportunity lies in rebuilding some of this nation’s thousands of deficient bridges.

This report identifies and quantifies those urban areas with the greatest traffic congestion costs, and those states with the highest fractions of deficient highway and bridge conditions. It also identifies those states where legislation to facilitate private toll projects has been enacted or is being considered.

Prior to enactment of the 1991 federal surface transportation act, private tollway projects worth $10-15 billion were already being envisioned at the state level. The total value of toll projects being considered prior to the 1991 act’s passage was some $28 billion. Now that the 1991 act has opened up the market for rebuilding existing highways, bridges, and tunnels as private toll projects, the potential market is much larger. If states took full advantage of the new act’s provisions, an additional $19 billion per year of private investment could be generated, closing the basic funding gap identified by FHwA. Over a decade, this would put an upper bound on the size of the private tollway market at $190 billion.

At least nine engineering, construction, and development firms are pursuing the private tollway market, along with at least 11 major investment banking firms. In surveys carried out for this project, these firms identified as key success factors for private tollway projects (1) local political support, (2) minimal environmental problems, and (3) state enabling legislation. Since privatization of transportation infrastructure is still a novel idea to most people, there is a need for significant public-information and lobbying efforts to create a favorable climate of opinion and political environment for such projects.