Risk Allocation in Toll Highway Concessions in Spain: Lessons from Economic Recession

Spain has a long tradition of encouraging toll highways by granting concessions to private companies. Concessions in Spain have been characterized by a willingness to transfer considerable risk to the private sector. Traffic demand, acquisition of the right-of-way, and financial risk have often been allocated to the private sector. From 1996 to 2011, 16 toll highway concessions, covering a total distance of 835 km, were awarded by the central government of Spain with this approach. Some of those highways started their operations just before the economic recession began. The recession had negative consequences for Spain's economy. The gross domestic product per capita plummeted, and the unemployment rate increased from 9% to 20% of the working population in just 2 years. The recession also had severe consequences for the economic performance of toll highway concessions. Traffic levels declined at a much greater rate than did the gross domestic product. In addition, the conditions imposed by the financial markets on borrowers became much stricter because of the liquidity crisis. This study analyzes the impact that the economic recession ultimately had on the performance of toll highway concessions in Spain and the actions that the government adopted to avoid the bankruptcy of the concessionaires. It was found that the economic recession helped identify some deficiencies in how risk had been allocated in Spain. The measures that both Spain and the European Union are adopting so as to improve risk allocation are discussed.

Energy consumption and intensity of toll highway transport in Spain

We estimate the energy consumption of toll highway transport on a number of Spanish roads. Regression parameters are balanced according to coefficients from an empirical analysis based on survey data by vehicle type. The mean energy consumption and subsequent CO2 emissions on the toll highway sections are estimated as 1895 MJ/h/lane-km and 0.15 tCO2 eq./h/lane-km, values that increase to 2644 and 0.22 when energy and carbon emissions of transport infrastructure are considered based on the life cycle energy consumption for toll highway construction and use. If the energy intensity of infrastructure construction is allocated to the users according to traffic, it is much higher for motorcycles than for cars, and is significantly lower for articulated trucks than for vans.

A random utility based multiregional input-output approach to estimate the impact of a new highway on the regional distribution of jobs

This paper addresses the economic impact assessment of the construction of a new road on the regional distribution of jobs. The paper summarizes different existing model approaches considered to assess economic impacts through a literature review. Afterwards, we present the development of a comprehensive approach for analyzing the interaction of new transport infrastructure and the economic impact through an integrated model. This model has been applied to the construction of the motorway A-40 in Spain (497 Km.) which runs across three regions without passing though Madrid City. This may in turn lead to the relocation of labor and capital due to the improvement of accessibility of markets or inputs. The result suggests the existence of direct and indirect effects in other regions derived from the improvement of the transportation infrastructure, and confirms the relevance of road freight transport in some regions. We found that the changes in regional employment are substantial for some regions (increasing or decreasing jobs), but a t the same time negligible in other regions. As a result,the approach provides broad guidance to national governments and other transport-related parties about the impacts of this transport policy.

Empirical analysis of traffic volume for the application of the options theory to highway concessions

*************************************************************************************** EL WCTR es un Congreso de reconocido prestigio internacional en el ámbito de la investigación del transporte que hasta el 2010 publicaba sus libros de abstracts con ISBN. Por ello consideramos que debería seguir teníendose en cuenta para los indicadores de calidad ******************************************************************************************* Investment projects in the field of transportation infrastructures have a high degree of uncertainty and require an important amount of resources. In highway concessions in particular, the calculation of the Net Present Value (NPV) of the project by means of the discount of cash flows, may lead to erroneous results when the project incorporates certain flexibility. In these cases, the theory of real options is an alternative tool for the valuation of concessions. When the variable that generates uncertainty (in our case, the traffic) follows a random walk (or Geometric Brownian Motion), we can calculate the value of the options embedded in the contract starting directly from the process followed by that variable. This procedure notably simplifies the calculation method. In order to test the hypothesis of the evolution of traffic as a Geometric Brownian Motion, we have used the available series of traffic in Spanish highways, and we have applied the Augmented Dickey-Fuller approach, which is the most widely used test for this kind of study. The main result of the analysis is that we cannot reject the hypothesis that traffic follows a Geometric Brownian Motion in the majority of both toll highways and free highways in Spain.