Transport finance
Encyclopedia
Transport finance is the subject that explores how transport
networks are paid for.
The timing of the money required to finance transport is a principal issue. Many projects are "pay-as-you-go
", that is infrastructure, which lasts many years, is expected to be paid out of ongoing cash flow. Other projects are financed with bonds
raised in capital market
s. Bonds must be secured with an expected future cash flow.
The cash flow, required for either pay-as-you-go or for bonds, must be raised. Common sources are user fees, such as gas taxes, and toll
s. Other sources are general revenue
. This issue is related to who bears the burden: users or the general public. Even if users bear the burden, that class must be subdivided, e.g. users during peak times or off-peak, freight or passenger traffic, urban or rural users, residents or non-residents (many toll plazas are located on the state line to maximize revenue from non-residents).
A third issue concerns the full costs of transportation. There are monetary costs, which are financed with money, as considered above, but there are also non-monetary costs (sometimes called hidden costs), which are paid for by people's time, by clean air, by peace and quiet, etc. See the discussion of externalities for a fuller explication of non-monetary costs.
Transport
Transport or transportation is the movement of people, cattle, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline, and space. The field can be divided into infrastructure, vehicles, and operations...
networks are paid for.
The timing of the money required to finance transport is a principal issue. Many projects are "pay-as-you-go
PAYGO
PAYGO is the practice in the United States of financing expenditures with funds that are currently available rather than borrowed.-Budgeting:The PAYGO compels new spending or tax changes not to add to the federal deficit. Not to be confused with pay-as-you-go financing, which is when a government...
", that is infrastructure, which lasts many years, is expected to be paid out of ongoing cash flow. Other projects are financed with bonds
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
raised in capital market
Capital market
A capital market is a market for securities , where business enterprises and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets...
s. Bonds must be secured with an expected future cash flow.
The cash flow, required for either pay-as-you-go or for bonds, must be raised. Common sources are user fees, such as gas taxes, and toll
Toll road
A toll road is a privately or publicly built road for which a driver pays a toll for use. Structures for which tolls are charged include toll bridges and toll tunnels. Non-toll roads are financed using other sources of revenue, most typically fuel tax or general tax funds...
s. Other sources are general revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
. This issue is related to who bears the burden: users or the general public. Even if users bear the burden, that class must be subdivided, e.g. users during peak times or off-peak, freight or passenger traffic, urban or rural users, residents or non-residents (many toll plazas are located on the state line to maximize revenue from non-residents).
A third issue concerns the full costs of transportation. There are monetary costs, which are financed with money, as considered above, but there are also non-monetary costs (sometimes called hidden costs), which are paid for by people's time, by clean air, by peace and quiet, etc. See the discussion of externalities for a fuller explication of non-monetary costs.