Argues the case for road tolls becoming the preferred means of financing roads.

Urban transport systems are essential for economic development and improving citizens' quality of life. To establish high-quality and affordable transport systems, cities must ensure their financial sustainability to fund new investments in infrastructure while also funding maintenance and operation of existing facilities and services. However, many cities in developing countries are stuck in an "underfunding trap" for urban transport, in which large up-front investments are needed for new transport infrastructure that will improve the still small-scale, and perhaps, poor-quality systems, but revenue is insufficient to cover maintenance and operation expenses, let alone new investment projects. The urban transport financing gap in these cities is further widened by the implicit subsidies for the use of private cars, which represent a minority of trips but contribute huge costs in terms of congestion, sprawl, accidents, and pollution. Using an analytical framework based on the concept of "Who Benefits Pays," 24 types of financing instruments are assessed in terms of their social, economic and environmental impacts and their ability to fund urban transport capital investments, operational expenses, and maintenance. Urban transport financing needs to be based on an appropriate mix of complementary financing instruments. In particular for capital investments, a combination of grants †“from multiple levels of government†“ and loans together with investments through public private partnerships could finance large projects that benefit society. Moreover, the property tax emerges as a key financing instrument for capital, operation, and maintenance expenses. By choosing the most appropriate mix of financing instruments and focusing on wise investments, cities can design comprehensive financing for all types of urban transport projects, using multi-level innovative revenue sources that promote efficient pricing schemes, increase overall revenue, strengthen sustainable transport, and cover capital investments, operation, and maintenance for all parts of a public transport system, "from the sidewalk to the subway."

"As traditional sources of funding for the nation's surface transportation system fail to keep pace with demand, proposals for new sources have proliferated. New funding strategies, such as pricing the use of new and existing roads, and new institutional arrangements, such as public-private partnerships, have emerged over the past few years. As with all transportation policies, these strategies raise questions about equity. To address these concerns, the Transportation Research Board convened an expert committee to provide guidance to public officials about assessing the equity of evolving transportation finance mechanisms. The committee's findings are presented in this report. They are organized under the following chapter headings: (1) Equity and Transportation Finance; (2) How Transportation is Funded and Who Pays; (3) Equity Through Different Lenses; (4) Transportation Finance Equity: Evidence and Experience; (5) Equity and Decision Making: Experience with Road Pricing; and (6) Findings and Recommendations."--pub. desc.

The conference was organized as a national forum to provide information on new approaches to financing all modes of transportation, to share success stories, and to stimulate discussion on the merits and drawbacks of new techniques, which are known collectively as innovative finance. Innovative finance in transportation is a diversified set of public- and private-sector actions that move beyond the traditional federal-aid and state-aid funding processes. Nearly 500 federal, state, and local government officials and private-sector representatives attended the conference. Conference participants grappled with the growing inadequacy of traditional funding sources and how to find new means to finance the continued maintenance and improvement of the nation's transportation infrastructure.

This textbook provides a fundamental overview of the application of engineering economic principles to transportation infrastructure investments. Basic theory is presented and illustrated with examples specific to the transportation field. It also reviews the history of transportation finance, as well as current methods for funding transportation investments in the U.S. Future problems and potential solutions are also discussed and illustrated.