Springer Nature is making SARS-CoV-2 and COVID-19 research free. View research | View latest news | Sign up for updates

On the economic and budgetary effects of investments in SCUTS: the Portuguese toll-free highways

  • 146 Accesses

  • 1 Citations

Abstract

This paper provides empirical evidence on the economic and budgetary effects of the recent investments in toll-free highways in Portugal, the so-called SCUTS, in an effort to bring some clarity to the current policy debate on these highways. This debate is centered on the issue of the financial sustainability of these highways for the public sector and is derived from the fact that their financing through public–private partnerships and shadow tolls involves regular payments from the public budget to the private firms operating them. In this context, the introduction of tolls has been suggested as a mechanism to alleviate possible budgetary pressures. Our first main conclusion is that investments in SCUTS have positive economic effects in all regions of the country. Furthermore, we find that regional spillovers account for about three-quarters of the total effects of these investments. A paradigmatic case is Lisbon, a region that captures the greatest share of these effects without any investments having actually occurred in the region itself. Our second main conclusion is that investments in SCUTS do not seem to generate problems of financial sustainability for the public budget. We estimate that for all SCUTS, the equilibrium tax rate, i.e., the rate that would balance the tax revenues induced by these highways and the shadow tolls the government has to pay, is lower than the effective tax rate for the economy. As a corollary and from a policy standpoint, our results suggest that the introduction of tolls is questionable from a conceptual perspective due to the magnitude of spillovers and seems to be unnecessary from a financial perspective.

This is a preview of subscription content, log in to check access.

References

  1. Bowerman A (2007) The Costs and Benefits of Road Pricing, Institute of Economic Affairs, Working Paper No. 18

  2. Christiano L, Eichenbaum M, Evans C (1996) The effects of monetary policy shocks: evidence from the flow of funds. Rev Econ Stat 78(1): 16–34

  3. Christiano L, Eichenbaum M, Evans C (1998) Monetary policy shocks: what have we learned and to what end? NBER Working Paper 6400

  4. Engle C, Fischer R, Galetovic A (2008) The basic public finance of public–private partnerships. NBER Working Paper No. 13284

  5. Engle C, Fischer R, Galetovic A (2009) Public–private partnerships: when and how. Mimeo Yale University

  6. Gonzalo J, Lee T (1998) Pitfalls in testing for long-run relationships. J Econ 86: 129–154

  7. Gonzalo J, Pitarakis J (1999) Dimensionality effect in cointegration analysis. In: Engle R, White H (eds) Festschrift in honor of Clive Granger. Oxford University Press, Oxford, pp 212–229

  8. Pereira AM (2000) Is all public capital created equal? Rev Econ Stat 82(3): 513–518

  9. Pereira AM (2001) Public capital formation and private investment: what crowds in what? Public Finance Rev 29(1): 3–25

  10. Pereira AM, Andraz JM (2001) Investimento Público em Infra-estruturas de Transporte em Portugal Continental, Secretaria de Estado do Planeamento/Ministério do Planeamento

  11. Pereira AM, Andraz JM (2003) Public capital and growth in the US: a sector-specific analysis. Public Finance Rev 31(1): 66–90

  12. Pereira AM, Andraz JM (2004) Public highway spending and state spillovers in the US. Appl Econ Lett 11: 785–788

  13. Pereira AM, Andraz JM (2005) Public investment in transportation infrastructures and economic performance in Portugal. Rev Dev Econ 9: 177–196

  14. Pereira AM, Andraz JM (2006) Public investment in transportation infrastructures and regional asymmetries in Portugal. Ann Reg Sci 40: 803–817

  15. Rudebusch GD (1998) Do measures of monetary policy in a VAR make sense? Int Econ Rev 39(4): 907–931

  16. Tribunal de Contas (2003) Auditoria às Concessões Rodoviárias em Regime de Portagem Scut, Relatório de Auditoria no 14/2003—2a Secção. www.tcontas.pt

  17. Tribunal de Contas (2005) Auditoria às Concessões Rodoviárias em Regime de Portagem Scut—follow up, Relatório de Auditoria no 34/2005—2a Secção. www.tcontas.pt

Download references

Author information

Correspondence to Alfredo M. Pereira.

Additional information

This paper is part of a research project on the “The Economic and Budgetary Impact of Investments in SCUTS” sponsored by the Instituto de Estudos para o Desenvolvimento, Lisbon, Portugal.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Pereira, A.M., Andraz, J.M. On the economic and budgetary effects of investments in SCUTS: the Portuguese toll-free highways. Ann Reg Sci 48, 321–338 (2012). https://doi.org/10.1007/s00168-010-0404-6

Download citation

JEL Classification

  • C32
  • H54
  • R53