Effectiveness of safety-based incentives in Public Private Partnerships: Evidence from the case of Spain

Abstract

Many countries around the world are implementing Public-Private-Partnership (PPP) contacts to manage road infrastructure. In some of these contracts the public sector introduces economic incentives to the private operator to foster the accomplishment of social goals. One of the incentives that have been introduced in some PPP contracts is related to safety in such a way that the better the safety outcome the greater will be the economic reward to the contractor. The aim of this paper is at identify whether the incentives to improve road safety in highway PPPs are ultimately effective in improving safety ratios. To this end Poisson and negative binomial regression models have been applied using information from highway sections in Spain. The findings indicate that even though road safety is highly influenced by variables that are not much controllable by the contractor such as the Average Annual Daily Traffic and the percentage of heavy vehicles, the implementation of safety incentives in PPPs has a positive influence in the reduction of fatalities, injuries and accidents.

The influence of economic incentives linked to road safety indicators on accidents: The case of toll concessions in Spain

“…There are differences both in the variable adopted to measure the outcome and in the final formula employed. Most of the contracts include number of injuries, number of fatalities or a combination of number of light accidents, serious accidents and fatal accidents to build the indicator (Rangel, 2011).…”

“…The trunk network is mostly managed in two different ways: free highways, which are built, managed and operated by the central and regional governments (11,000 km); and toll highways (3,016 km), which are managed by private companies through concession contracts (Ministerio de Fomento de España, 2009a). In the last few years some governments in Spain, particularly regional governments, have started to develop PPP contracts based on shadow-toll (Vassallo and Pérez de Villar, 2010;Rangel, 2011) and availability payment approaches (Harding et al, 2010). However, these highways-some of them not yet operational-still represent a small percentage of the trunk network.…”

“…Second, road alignments and maintenance requirements are fairly similar across toll highway concessions. Third, previous research (Rangel, et al 2012) has already focused on evaluating the influence of road management (toll vs. free highways) on different safety ratios in Spain. And fourth, in this paper we want to focus on the effect of incentives, which at the time of writing were only implemented in some toll highway concessions.…”

“…Incentives related to performance-based indicators in PPPs are defined in such a way that if the contractor performs below a certain quality threshold, the contractor will be penalized while if the contractor does it above a certain quality threshold, it will be rewarded (Rangel, 2011;Vassallo, 2007). Some of the most common performance-based indicators introduced in toll highway concession have to do with congestion, road accidents, pavement surface conditions, impact on the environment, and availability.…”

Public Private Partnership Management Effects on Road Safety Outcomes

“…By using a dataset with public and private highways in a cross-section setting for the year 2006, Rangel et al (2012) found that there are more fatalities, injuries and accidents on highways without road safety incentives than on highways with incentives. Also, Rangel et al (2013) evaluated incentive schemes by using data only from private highways between 2007 and 2009, finding that road incentives are significant factors reducing the number of accidents and injuries but not decreasing the number of fatalities.…”