High Speed Rail and PPPs: Between Optimization and Opportunism

Yves Crozet (yves.crozet@let.ish-lyon.cnrs.fr)
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Yves Crozet: LAET - Laboratoire Aménagement Économie Transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique, IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon

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Abstract: INTRODUCTION - A large number of public-private partnerships (PPPs) have been awarded in the rail sector during recent decades, especially to develop new high-speed lines. However, a lot of these PPPs have failed. The main reason for the failures is well known: strategic behaviours that create an incentive for concessionaires or, more precisely, some members of the consortium acting as the concessionaire in order to make over-optimistic ridership forecasts. Such over-optimistic forecasting is often performed at the instigation of the local public authorities that support the project. The larger the project, the higher the risks that traffic will be overestimated (Flyvbjerg et al., 2006). In this chapter, we begin by presenting the reasons for PPPs, describing the curse that seems a characteristic of rail PPPs, after which we will present a detailed analysis of the four ongoing projects. How have RFF (the publicly owned rail infrastructure manager) and the French public authorities tried to address the curse that affects rail sector PPPs? Why did the government recommend a concession for the largest project and PPPs (in the strictest sense of the term) for two of the others? We shall see that this decision is the outcome of an attempt to achieve an optimal distribution of the risks. The commercial risks are only borne by the private partner, via a concession, in cases where there is potential for a large increase in traffic. PPPs are used when the anticipated increase in traffic is small. PPPs are thus principally a way of speeding up the construction of the lines by delaying the burden on public budgets. In a rnanner of speaking, the public decision-maker shows its private sector partners that it wants to build the high-speed railway (HSR) "at any price". In terms of behaviour with regard to risk, this means the State is a risk lover. The result is a situation in which risk analysis dictates that the State should protect itself against its own taste for risk. We shall see in the case of the Tours-Bordeaux concession that even when the State attempts to transfer the maximum amount of risk to the concessionaire, it is the State which, in the last resort, bears the greatest risks, quite simply because it is the source of these risks!

Keywords: effects of introducing on-track competition; France; High-speed Rail (HSR); characteristic of rail PPPs; economic appraisal; evaluation of High-Speed Rail projects; indirect effects of High-Speed; direct effects of High-Speed; public-private partnerships (PPPs) (search for similar items in EconPapers)
Date: 2017
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Published in Daniel Albalate; Germà Bel. Evaluating High-Speed Rail. Interdisciplinary perspectives, 7, Routledge; Taylor & Francis Group, pp.175-186, 2017, Routledge studies in transport analysis, 9781138123595

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