When and How to Use Public-Private Partnerships in Infrastructure: Lessons from the International Experience
This chapter is a preliminary draft unless otherwise noted. It may not have been subjected to the formal review process of the NBER. This page will be updated as the chapter is revised.
Chapter in forthcoming NBER book Economics of Infrastructure Investment, Edward L. Glaeser and James M. Poterba, editors
Public-private partnerships (PPPs) have emerged as a new organizational form to provide public infrastructure over the last 30 years. Governments find them attractive because PPPs can be used to avoid fiscal check-and-balances and increase spending. At the same time, PPPs can lead to important efficiency gains, especially for transportation infrastructure. These gains include better maintenance, reduced bureaucratic costs, and filtering white elephants. For these gains to materialize, it is necessary to deal with the governance of PPPs, which is more demanding than for the public provision of infrastructure. The governance can be improved by the use of contracts with appropriate risk allocation and by avoiding opportunistic renegotiations, which have been pervasive. The good news is that, based on the experience with PPPs over the last three decades, we have learnt how to address these challenges.
When and How to Use Public-Private Partnerships in Infrastructure: Lessons From the International Experience, Eduardo Engel, Ronald D. Fischer, Alexander Galetovic
Commentary on this chapter: Comment, Keith Hennessey