Workshop 3B: Governance,ownership and competition issues in deregulated (free market) public transport: Lessons that can be learnt from developed and developing economies

The past emphasis in this conference series has been on the best ways to deregulate regulated public transport markets. This workshop reverses this process by examining the best ways to regulate deregulated public transport markets. A hierarchy of regulatory needs is identified and three hybrid models examined, based loosely on experience from Great Britain, New Zealand and Sweden. It is argued that deregulated public transport markets are a global phenomenon but regulatory measures should reflect local requirements. The resultant process of glocalisation might result in regulatory measures that focus on the rules of law and their enforcement in emerging public transport markets (such as urban transport in Sub Saharan Africa and for the soon to be competitive inter urban market in Germany) but that focus on guidance for network integration and incentivisation for welfare maximisation in more mature public transport markets (as in Great Britain, New Zealand and Sweden).     

Public goods and the public financing of major European seaports

Seaports are recognized for their importance in facilitating trade growth and associated economic development. These attributes often give rise to the notion that seaports, or infrastructure elements of seaports, are public goods. Public goods are regarded as goods or services which a market acting in isolation might have difficulty in providing, or at least providing in sufficient quantity and/or at a competitive price. An important element of a public good relates to its non-rival consumption, the implication being that it is impossible to exclude anyone, whether they pay or not. Key questions this paper seeks to address are, what constitutes public goods in seaports, to what extent is it necessary for the public sector to provide these goods, and can such intervention lead to market distortion in respect of competing ports? The paper describes the more common examples of public goods in seaports. This is followed by discussion of public and private sector investment at major north European seaports. The paper considers the potential for market distortion due to public sector expenditure on so-called public goods in seaports, and proposes that a more cohesive policy for major ports, particularly those very large containerports serving a common European hinterland, is necessary in order to deliver a sustainable transport system in the long term.     

The Quiet Revolution in Visual Resource Management: A view from the coast

Abstract

This introductory piece traces the growth of knowledge and activity associated with visual resource management in general. A specific framework of questions regarding methods of coastal zone visual resource management is presented. The state‐of‐the‐art in methodological studies is listed for each question, and the methodological questions are related to the major articles with the special issue of the Coastal Zone Management Journal. Major legal federal statutes, state statutes, and court cases are reviewed in light of visual resource management in the coastal zone. The remaining articles within the special issue that deal with integration of VRM into decision‐making are then arrayed against a management framework. This framework includes regulatory situations for (1) public land management and planning, (2) public projects involving private lands, and (3) public regulation of private projects.     

Recreational Use of Developed Norwegian Shorelines: How Ambiguous Regulations Influence User Experiences

In principle, public rights of access to “outfield” along the Norwegian shoreline are protected by law. A case study from the village of Saltnes indicates that it is difficult for people to stay or walk along a populated shoreline area without feeling that they are violating privacy norms. Such “mental” barriers and subjective perceptions are not formally addressed in Norwegian regulations concerning legal rights of public access, but appear to affect the extent of recreational use. Interviews with property owners and visitors in Saltnes indicated that two key elements help to improve the situation. First, physical markers demarcating public land (“outfield”) and private land (“infield”) such as vegetation, small fences, signs, boulder walls, paths, and so on seem to reduce discomfort both for visitors and residents. Second, property owners and visitors value polite behavior highly, and communication between different groups of interests seems to clarify the challenging public/private divide. A main impression was that people find present rules and regulations unclear and diffuse and difficult to practice. It is relevant to ask whether the public accessible parts of developed and populated coastal zones are identifiable through the infield–outfield divide; more specific and adapted regulation of public traffic is needed on private shoreline properties.     

Legal battles on the California coast: A review of the rules

Abstract

Notions of private property have both legal and political importance. In California, as elsewhere in the United States, these ideas are changing. The rate and direction of this evolution is not different on the coast. But the intense heat generated by competing coastal interests does tend to illuminate these issues more clearly on the coast. The full range of these issues has been raised in California, where an historic attempt is now being made to plan and manage the use of coastal resources. In January 1976 the California Legislature will be presented with a coastal plan which promises to inflame the passions of traditional property rights advocates and environmental zealots alike. Much of the rhetoric surrounding this political struggle is already being couched in legal terms. In an effort to delineate a few of the genuine legal issues raised in this planning process, this article summarizes the law of California which is relevant in defining the permitted scope of public regulatory power over private land use.     

How much can public private partnership really do for urban transport in developing countries?

A few cities in some of the larger developing countries in Latin America and Asia have made increasing use of multi-year concessions or franchises, competitively awarded to private companies, for construction and operation of urban transport infrastructure and for provision of public transport services. In view of the strong prospective growth of developing-country cities with large transport needs, and the rise in the emerging economies of potential new sources of private capital, it is important to see how effective PPP has so far been in this area. The experience is analyzed principally by thorough comparative review of what has actually happened for some of the main users to date: Bogotá, Santiago, São Paulo, Seoul, and several cities in both China and India. Despite delays and mistakes that have been made in development of most of the projects, the overall results, already delivered and in prospect, are very positive and urban public transport is benefiting substantially, with significant side effects on poorer people's access to work and to services, air pollution levels and road accident rates. The widest and most important advantage of the PPP arrangements, as compared with more conventional short-term contracting, is found to be the innovations, technical and managerial, developed, and, in particular, the mutual capacity building of the countries' private and public sectors and their more effective interaction. The experience in the six countries covered suggests that other developing-country cities may be best assisted to develop sound urban transport PPPs more rapidly through provision of help on chosen items among 7 elements that have proved particularly crucial but sometimes weak in the projects reviewed: Civic consultation systems, Land-use/Transport strategic planning, Land/property market management, Monitoring systems, Progressive policies, Economic regulation, and Public institutional framework for PPPs.     

The potential role of public–private partnerships in the upgrade of port infrastructure: normative and positive considerations

There is a broad consensus on the need for the major expansion of many ports. Traditionally, ports and related facilities have involved significant levels of direct or indirect government ownership or some degree of government financing. Most governments, however, are reluctant to either borrow money to fund the needed additional capital infrastructure or to fund it directly. Public–private partnerships (P3s) are thus an attractive potential option. But are they the answer? This article examines the normative rationales for P3s and presents a positive theory perspective that focuses on the conflicting goals of public and private partners. It argues that the major government impetus for P3s is likely to be for physical port infrastructure with moderate levels of market failure, such as small to medium sized ports, and not for intangible port activities. Furthermore, small to medium sized port P3s are likely to be successful in terms of having relatively low transaction costs and lower total social costs than alternative provision mechanisms. Nonetheless, even in this situation, the different goals of public and private partners may give rise to conflict. Drawing on the global empirical evidence on P3s, this article proposes some institutional design features that will help to ensure P3 success.     

Shipper's councils: role and responsibility—a western view

This paper first presents arguments for having public sector port authorities. They can deal, flexibly and permanently, with property rights within their own areas. They can plan and regulate port areas comprehensively. They can provide ‘public goods’. They can deal, in various ways, with externalities. They can promote efficiency, whether their own (if they operate as a comprehensive port) or that of the private sector (if they are largely landlords). For example, if their policy is to rely on the private sector to produce efficiency through competition then they can see to it that there actually is competition and not any kind of cartel or monopoly. Examples are cited where this last function has not been performed. The exception for single-user ports is noted.

Against them are the general disadvantages of public authorities (or bureaucracies)—though examples are cited where port authorities had very small staffs. The common instances of ‘market failure’ may thus be contrasted with those of ‘government failure’. Finally, a pragmatic approach is advocated, tailored to the needs and resources of the country in question. The increasing effect of the economies of scale in port technology, and its limitation on competition, is, however, noted and to be discussed in the next paper.     

The regulatory function in public-private partnerships for the provision of transport infrastructure

A wide range of contractual arrangements are increasingly being used by the public sector to materialise the delegation of transport infrastructure provision tasks to the private sector, over long periods of time. This paper addresses the issue of transport infrastructure regulation in the specific context of public-private settings. Starting by the discussion on the concept of Public-Private Partnership (PPP) it is stressed that, despite the different meanings that can be found in the literature, it is possible to define a PPP by using a core group of characteristics, such as the bundling of services and the transference of a relevant part of the risks to the private sector on a long term basis. Regarding the action of the regulator, we look at three dimensions of efficiency that are expected to be pursued at the strategic level of regulatory action. However, it is acknowledged that the regulatory function is in practice rather complex since it requires balancing a multiplicity of other objectives or goals, which may vary according to specific economic conditions. In the domain of pricing, the review carried out suggests that since “first best” assumptions are not met in the “real world” it hardly seems possible that the short run marginal cost pricing “canon” could be directly used to shape pricing policies. Consequently, when considering the application of the standard neoclassical marginal cost pricing approach it is pertinent to ask whether the second best solutions can lead to efficient outcomes that might be accepted by the stakeholders. Bundling construction and maintenance tasks into a single long term contract, which is a typical characteristic of “standard” PPPs, could theoretically bring cost benefits since it allows for the possible internalization of any positive externalities that may be generated during the whole project life cycle. The economic rationale for the bundling of construction/maintenance with financing services is that it enhances the likelihood of submission of realistic bids at the procurement stage. In addition, the chances of the contractor sticking to the agreed contractual terms, after contract award, are potentially increased given the higher exposure to financial risk.     

Book Reviews

The ever-changing environment in which ports operate has put strong pressure on the traditional role of public port authorities. Market developments have created the need for ports to be part of wider logistics networks and to provide value-added services. Powerful private players who are organised on a global scale, such as carriers, terminal operators and logistics service providers, struggle to gain control over port-oriented logistics networks whereas port authorities very often seem to remain local spectators with limited influence on these market-driven processes. Port authorities are on the other hand, the focal point of criticism from societal interests such as local government, NGOs and citizens for negative externalities related to port development and port operations even if these do not always fall within their direct responsibility. In 1990, Richard Goss questioned, albeit rather rhetorically, the need to have public sector port authorities. Since then scholars have demonstrated a true renaissance or renewed interest in the role of port authorities, recommending repositioning and development of new strategies. Parallel to the concept of the ‘renaissance man’, which is defined as a person who is well educated and excels in a wide variety of subjects or fields, a kind of ‘renaissance port authority’ is emerging from literature which may take on a variety of facilitating and even entrepreneurial tasks. The purpose of this article is to develop a conceptual framework for the various options at hand, based on an extensive literature review of port authority functions. The framework also identifies the principal governance-related factors that may in practice enable or prevent port authorities, particularly in Europe, from assuming the renaissance ambitions advocated by scholars. The hypotheses developed in this article form the basis of a wider empirical research agenda into reform of port governance in Europe and elsewhere in the world.     

Hybrid urban transport systems in developing countries: Portents and prospects

Some South African cities have initiated public transport transformation projects which, in most cases, ultimately envisage the in toto replacement of paratransit operations with formalised BRT systems. There are two likely outcomes: (1) complex negotiations with existing operators and budget constraints will result in the in toto transformation occurring over an extended period of time; or (2) in toto transformation will simply not occur. In either case, cities will depend, for decades, on a ‘hybrid’ public transport system that combines both formal and paratransit operators. This paper presents a case for policy recognition of hybrid systems, and explores how such systems might best be managed. The following categories of hybrid public transport systems are explored through case studies: (1) transformative processes in which paratransit operators are to form or assimilate into companies to operate new services, but this incorporation has proved difficult to complete and the operational and regulatory frameworks remain unchanged; and (2) transformative processes that, from the outset, anticipated a hybrid system and designed the outcome accordingly. A third category of hybrid transport systems, defined as transformative processes that have been amended following a realisation that in toto transformation is unattainable, is also introduced and discussed. The paper concludes by tentatively drawing lessons for appropriate public transport regulation, particularly with respect to Cape Town's transformation project. It is argued that a review of the current national regulatory framework is required to enable possible project modifications that acknowledge system hybridity. It is suggested that regulatory frameworks that accommodate the likely hybrid nature of public transport system outcomes have greater prospects of success than frameworks that do not. Furthermore, it is argued that contextually appropriate and successful public transport transformation projects do not necessarily require the in toto substitution of incumbent paratransit operators, and that they can be integrated with, and complement, formal services.     

A simulation approach for estimating value at risk in transportation infrastructure investment decisions

Traditional economic analysis techniques used in the assessment of Public Private Partnership (PPP) projects are based upon the assumption that future cash flows are fully deterministic in nature and are not designed to account for risks involved in the assessment of future returns. In reality, many of these infrastructure projects are associated with significant risks stemming from the lack of knowledge about future cost and benefit streams. The fundamental premise of the PPP concept is to efficiently allocate risks between the public and the private partner. The return based on deterministic analysis may not depict a true picture of future economic outcomes of a PPP project for the multiple agencies involved. This deficiency underscores the importance of risk-based economic analysis for such projects. In this paper, the authors present the concept of Value-at-Risk (VaR) as a measure of effectiveness (MOE) to assess the risk share for the public and private entity in a PPP project. Bootstrap simulation is used to generate the risk profile savings in vehicle operating cost, and in travel time resulting from demand-responsive traffic. The VaR for Internal Rate of Return (IRR) is determined for public and private entity. The methodology is applied to a case study involving such a joint venture in India, the Mumbai Pune Expressway/National Highway 4 (MPEW/NH4), and fiscal implications from the perspective of the public and the private entities are examined. A comparison between deterministic and risk based economic analysis for MPEW/NH4 is presented. Risk analysis provides insightful results on the economic and financial implications from each participant's viewpoint.     

Ad Hoc网络中基于身份的密钥管理及认证

提出了在AdHoe网络中一种分布式基于身份的密钥管理及认证方法。每个节点使用其身份作为公钥,主密钥由各节点的私钥分享,从而形成基于身份的门限分布式密钥管理。该方法不仅提供了点对点的认证,而且节省了网络带宽和节点的能量消耗,具有很高的效率和鲁棒性。     

Providing Public Access to the Shore: The Role of Coastal Zone Management Programs

In many coastal states and territories, coastal zone management (CZM) programs have been the prime catalyst in leveraging public access initiatives among state and federal agencies, public organizations, and the private sector. A wide range of tools are used, including acquisition, regulations, technical assistance, and public education. The diversity of approaches is illustrated through a variety of case examples. Although hard numbers for measuring outcomes were not uniformly available, between 1985 and 1988, when federal and state CZM funding dedicated to public access was tracked, $141.5 million (unadjusted 1988 dollars) were spent on 455 public access-related projects. A policy shift occurred in the 1990s away from reliance on acquisition and regulation as the most effective means of providing access and toward technical assistance and public outreach-a response to the overall decrease in funds available for access. CZM programs have been able to balance the contradictory goals of the federal Coastal Zone Management Act of 1972 (CZMA), such as protecting coastal resources while providing for increased public access to those resources. It is recommended that CZM programs conduct assessments to determine the kind of access needed in the future and where it should be located. And, due to the creativity and innovation that states and territory coastal programs use to achieve access, it is recommended that a national clearinghouse be established for documenting and sharing information on innovative tools and programs.     

Lessons in ownership, regulation and management from 100 years of bus transport in Sri Lanka

Sri Lanka observes 100 years of bus passenger transport in 2007. During this period the country has seen different forms of service providers ranging from private sector monopolies to state sector monopolies. It also has seen several changes in state policy ranging from welfare orientated service provision to entire market determined without any regulation. The existing regulated mixed competition is also characterized by poorly equipped regulators. In conclusion, the paper traces the different stages of failure that have led to the poor quality of bus transport services existing at present.     

The Indian dry ports sector, pricing policies and opportunities for public-private partnerships

At the time of writing (2010), the world is witnessing the aftermath of the most severe financial sector meltdown in modern economic history caused by the real estate bubble in the United States. Its consequences on the real economy, especially in Europe, are yet to be fathomed, and this of course includes the longer-term impacts on international ocean transportation, ports and the distribution of global production.The economic recession has left the international shipping and port sectors with substantial overcapacity. This has resulted in drastic cost cutting measures on the one hand, and voluntary, often consensual, and coordinated reduction of supply on the other. These measures, together with a noticeable recovery in demand, are gradually leading again to improvement in prices charged by carriers and other transport service providers.In view of the country’s expanse; size of population; and regional inequalities, India’s dry ports (inland cargo consolidation and distribution centres) are seen by the government as a pivot of export-led growth and economic development (Haralambides & Gujar, 2011). Moreover, public and private sectors alike see the coordinated development of dry ports as the only way forward in terms of easing pressures at congested coastal ports, thus improving supply chain efficiency. In spite of this, dry port development and operations are still dominated by the public sector, under prices, capacity, land acquisition policies and other conditions that make private sector participation risky and comparatively unattractive. In order to rationalize dry port capacity and prices, this paper argues in favour of greater devolution through competition-enhancing Public-Private Partnerships (PPPs). The paper puts forward recommendations for the necessary legal, regulatory and general economic policy interventions based on international best practice, while keeping Indian specificities in the right perspective.     

Urban transport lending by the World Bank: The last decade

Over the preceding decade, the World Bank committed about US$7.5bn in loans for urban transport projects in its client countries, involving total project costs of nearly US$13bn. Projects are designed by the client city/national governments and the World Bank in an interactive, give-and-take process. As is common in development finance, urban transport projects entail an investment program and a set of policy and institutional initiatives. A majority of Bank-funded operations in this period focused on public transport modes. A clear and overarching strategic thrust is evident, favoring private delivery of services with a strong public role through city-specific regulatory agencies. Depending on the context, projects involved efforts to introduce private operators and competition into an all-public set-up, or tighten up weakly regulated, “informal” public transport markets. A notable feature of many projects in the latter context is the use of investments in bus rapid transit infrastructure to reach multiple goals: improve transport services, maintain affordability for low-income passengers, attract new passengers, reduce negative environmental impacts, and leverage complementary reforms of policies and institutions. The Bank’s program in China, unique in its local context of a dynamic urban society moving away from a near-universal reliance on bicycles, initially did not focus on public transport but on urban roads and traffic management. Towards the end of the last decade, the motorization process and the outlook of decision makers entering a more mature stage, projects in China started to converge towards what the rest of the Bank’s program was doing – searching for a more sustainable path to urban transport development.     

Aquaculture Parks in the Coastal Zone: A Review of Legal and Policy Issues in the Gulf of Mexico State Waters

The goal of this study is to apply industrial park concepts to the development of aquaculture parks in public waters. The objectives are to identify the permitting process, relevant agencies, and legislation needed to facilitate development. Gulf of Mexico states are surveyed: private parks exist in Florida, but no public parks have developed yet; plans for parks exist in Mississippi, but lack of funding prevents development; no regulations prohibit parks in Alabama, although none currently exist; Texas regulations hinder development of parks; and an experimental park has been proposed in Louisiana, but regulatory gaps have delayed permit issuance.     

Workshop report - Public policy and transport

This workshop considered the wider public policy goals of a range of transport interventions. Particular attention was paid to assessing the role of integration of the different components of the transport system and of the integration of transport with other economic sectors. This assessment was informed by Ray Pawson’s realist evaluation approach, with its emphasis on the inter-relationships between context, process and outcome. The context was provided by case studies covering small urban areas, large urban areas and inter-urban corridors. The three key processes identified related to a regulated system with public ownership and control, a deregulated system with private sector ownership (‘competition in the market’) and a system in which there was public planning of the transport system but private provision (‘competition for the market’). Outcomes can be assessed using cost-benefit analysis tools to determine impacts on economic welfare or more qualitative approaches can be used to determine the extent to which accessibility or sustainability goals have been achieved. The evidence provided suggests that wider public policy goals are more important for urban than for inter-urban transport and it thus in urban areas where integration should be pursued with most vigour. The most relevant process for achieving this would seem to be variants of the competition for the market model. Some policy recommendations are made and implications for further research and for future conferences assessed.     

Sustainability and national policy in UK port development

Given the private sector character of the UK port system it might well be thought that, so far as port development is concerned, the market ruled. There are of course permissions to be obtained, including planning consent under the Town and Country Planning Acts; but this process has not so far been considered to interfere with market function. Ports are already well used to the process of obtaining approval, to negotiations with objectors and environmental interests, and to mitigating the effects of development when defining projects and seeking approval.

However, as ports policy is being brought into line with transport policy generally, and in particular with Government policy for sustainable development, ports are being faced with a more challenging regulatory framework. The search for sustainable transport is leading Government towards a broader based approach to the approval of development applications in which market need and commercial viability are simply two of a number of considerations which ports must take into account in designing projects which also meet environmental concerns.

There has been a long standing requirement for developers of major projects to carry out Environmental Impact Assessments. In addition Government policy is set out in a number of publications, applying sustainability and the associated “New Approach to Transport Assessment” (NATA) to the ports sector. In a separate and broader initiative it has also considered a radical reform of the planning system and the establishment of national priorities for infrastructure combined with a simplification of the Public Inquiry process. In the event it has been decided not to establish national priorities in the ports sector, although the aim of simplification of the Inquiry process remains.

The aim of this paper is to explore the emerging theoretical and practical issues arising within the development approval process. These are of most concern in the development of major projects for cargoes which have broad hinterlands, and where there are competing locations for new facilities. The most important example of this is in the deep sea container sector where there is a demand for new capacity and a choice of widely spaced locations in the south east of the UK. Some comment will be made on this sector and on the issues arising at the Public Inquiries for the proposed container port developments at Dibden Bay (Southampton) and the London Gateway at Shellhaven on the north bank of the Thames.