Controversies surrounding private highways

There are many controversies surrounding private highways.

Arguments for and against private highways
Arguments for private highways
Privatization will encourage infrastructure construction and reduce congestion

Since traffic congestion is caused by there being more traffic than the highway can handle, one way to look at congestion is simply a shortage of roads, lanes, exits, or other infrastructure. Libertarian economists frequently cite the free market's pricing mechanism as a superior means of avoiding shortages than government planning. Peter Samuel's Highway Aggravation: The Case For Privatizing The Highways makes a provocative comparison between American traffic jams and Soviet grocery store lines:
:In Russia communism's failure was epitomized by constant shortages in stores. Empty shelves in supermarkets and department stores and customers in line, wasting hours each week, became the face of the system's failure, as well as a source of huge personal frustration, even rage. Communism failed because prices were not flexible to match supply and demand; because stores were bureaucracies, not businesses; and because revenues went into a central treasury and did not fuel increased capacity and improved service. We in supposedly capitalistic America suffer communism--an unpriced service provided by an unresponsive monopolistic bureaucracy--on most of our highways. Our manifestation of shortage, our equivalent of Russian lines at stores, is daily highway backups. There is no price on rush-hour travel to clear the market. There is no revenue stream directly from road users to road managers to provide incentives either to manage existing capacity to maximum consumer advantage or to adjust capacity to demand.
Ronald F. Kirby, transportation director for the Metropolitan Washington Council of Governments, opined that private companies have more of an incentive to invest in infrastructure early, before a public outcry prompts construction. He noted, "Too often in the public sector, the easiest thing to do is let things sit unresolved. The private sector is motivated by self-interest to resolve things quickly".

A company that owns a private road will typically want to at least recoup its earlier investment to construct the road. Furthermore, when construction is complete, the company wants to keep investing in the road to keep up its initial value, because roads deteriorate over time. Road maintenance needs to be quick and of high quality, to keep the road from becoming idle again in the future resulting in a capital loss for the company; road traffic needs to be maximized, because that will result in the most revenues to the company. A government does not seek to maximize traffic or reduce road maintenance, because it has no incentive to do so, claim supporters of private roads. These supporters also claim that road safety is increased by companies that own private roads. Those companies do not want to see people getting injured on their roads, as it will tarnish a company's reputation. The companies will seek active removal of unfit, drunk and other reckless drivers, if allowed to discriminate so by the state, and will want to see increased mechanical standards of vehicles, because a stalled vehicle means an idle road. The company itself needs to pay for its removal, or passes this cost on to the owner of the stalled vehicle, inciting the owner to upkeep the quality of one's property.

B. H. Meyer stated, "It is evident that the turnpike movement resulted in a very general betterment of roads."

Voters prefer tolls to taxes

Voters frequently support tolls over taxes:
*Washington, DC (60% / 30%): A randomized telephone survey conducted by TNS of Horsham, Pennsylvania of 1,003 adults for the Washington Post conducted in the last days of January, 2005 had Washingtonians saying tolls are a "better way to pay for highway expansion or new highways" locally than taxes by a 60/30 split. 9% said neither and 1% no opinion[http://www.tollroadsnews.com/cgi-bin/a.cgi/7ul4UoB!EdmcEIJ61nsxIA].
*Minnesota (69% / 23%): An opinion survey for the STAR TRIBUNE between January 15-20, 2004, showed 69% of people there favored tolled express lanes against 23% who wanted the gas tax raised to pay for extra free highway capacity.

Private highways facilitate internalisation of external costs

A private company can more easily be held accountable for negative effects of the highway than that if it is publicly owned. For example, residents living next to urban highways will benefit from noise reduction walls. However, campaigning for the city council to erect the walls is often ineffective and the process can take years, since the council needs to divert funding from other more pressing projects. A private highway will try to avoid court action and feel more obliged to cater for residents. The cost of erecting the walls will be passed on directly to the drivers (who are causing the noise), rather than the general public.

Arguments against private highways
Highway owners will overcharge users

A common argument against privatization of public highways is that the companies will charge exorbitant tolls. According to the Growth Management Institute, Mexican highway privatization was a costly failure:
:Over the last decade, the government licensed companies and banks to construct and manage 43 highways and 9 toll bridges. On several of these facilities, the tolls are the highest in the world, the prime example being a 13 mile (21 km) stretch outside Mexico City that costs $6 to use, twice the daily minimum wage in Mexico.

However "overcharging" may lead to several results: if price-elasticity is high it will lead to less traffic and loss of revenue. If demand is rigid and other private roads can be created as needed it will increase profits, spurring competition and signalling to the business to reinvest in more road construction.

:The total investment of $12 billion is at risk, causing the government to propose a $7.5 billion bailout to renationalize 23 highways and 2 bridges, most of which carry little traffic and require expensive maintenance. Many of the facilities, it seems, were built in areas needing little additional capacity and priced at a level that dissuaded potential users. Some road-building companies, however, recouped part of their investments through lucrative fees paid during construction, and at least one road was built mainly to benefit a developer's ocean-front property. According to the Times, one prominent political scientist called it "a dumb idea that didn't work."
Private industry cannot plan road locations as well as governments

Another argument against privatized roads is the companies' construction plans will not be in the public interest. For instance, in May 1996, the Growth Management Institute criticized the Greenway builders for building a road to nowhere:
:Despite optimistic predictions by all involved, the road failed to attract anything close to the 33,000 vehicles a day required for the company to make loan payments, let alone the 68,000 vehicles a day needed to turn a profit. In early 1996, the road was averaging 10,500 vehicles daily.
Of course if the company lost money out of a bad investment its stock price would reflect it, such a huge blunder would result in the company going under or at the very least the management being replaced, whereas a government building useless roads is usually rewarded for its pork barrel spending.

Highways are natural monopolies

In many parts of the world land use patterns mean that building two or more highways in parallel isn't practicable. Kroeger claims, "This would result in an incredibly inefficient use of land resources." When there is only one highway connecting A to B, the main advantage of privatization, competition, disappears. In absence of regulation a private highway operator is likely to charge an exorbitant monopoly price, resulting in huge profit margins and few benefits for drivers. The initial franchise fee and/or savings public capital costs can offset the resulting monopoly profits in terms of societal costs, however there are distribution issues in that the income is spread over an entire region while the burden falls on a small subset of that region's population who actually need to use the road. Also, it is difficult to predict the long term present value of a road, for example for 407 ETR was leased for 3 billion CDN and was subsequently valued at nearly 10 billion CDN. While alternate local roads and other forms of transportation may provde some competition, it is often impractical, especially for goods.

Private highways divert needed funds from the government
A Mother Jones article notes that toll revenues from privatized highways go to private corporate profits and shareholders, rather than the government. It quotes a study by NW Financial as saying, "If road users are willing to pay higher tolls, these funds should be captured for the public good."

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