Economic Sustainability | Report

Running head: ECONOMIC SUSTAINABILITY
ECONOMIC SUSTAINABILITY
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ECONOMIC SUSTAINABILITY
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Introduction
Excise tax on diesel and gasoline served as the main source of funding for highways and
roads in United States. The introduction of fuel efficient vehicles, electric vehicles and hybrids
has lowered the revenue generated by the government. The Orange County Transportation
Authority (OCTA) faced the problems of financing as they wanted to build high occupancy
vehicle lanes that connects jobs centers in Orange Country and Riverside Country. Investment
from private sector has helped to finance the project and led the success of SR-91 lanes in
California. The aim of the paper is to study the impact of private funding in the creation of SR-
91 lanes in California and application of such practices in areas of sustainability.
Success of SR-91 lanes in California
There were major funding problems due to the widening of the gap between gasoline tax
revenues and highway construction projects. During 1989, there were only a few privately
financed highways in US and getting private investment was difficult. It is highly favored to
expand the gasoline tax in the Democrat controlled state legislature (Lee, Thomas, & Alleman,
2018). A transportation summit was held that enabled two parties in executive branches and
legislative to increase the gas tax rate by nine cent and led to allowance of four private highway
demonstration projects. The legislation preferred private enterprises to be more innovative,
instead of designating para projects as potential private franchises. The California Private
Transportation Company (CPTC) proposed private toll lanes for the construction of SR-91 lanes
in California by forming subsidiaries of three corporations (CHUNG, 2013). A private company
was granted to construct toll lanes along the Route 91freeway in Orange country that is densely
populated with the heaviest tragic inflows globally.

ECONOMIC SUSTAINABILITY
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After the SR91 lanes were opened, they were viewed as a net public benefit. A large
number of drivers supported the peak pricing schemes. However, huge reductions happened
during peak period travel times (Du et al., 2013). The average peal period travel increased in the
eastbound free lanes due to a diversion in traffic in the toll lanes. A non-compete cause was
introduced that restricted public agencies to increase highway capacity within a one-and-a-half-
mile-wide corridor on either side of toll lanes. CPTC was given the assurance that there would
not be any competition from future highway projects that will affect their investment (Gordon et
al., 2015). Several controversies related to the topic went on for years until in 2003 when OCTA
purchased the toll roads from CPTC. The lanes charged peak off tolls, although the non-compete
clause was totally demolished (Göçmen, Phillips & Ryzin, 2015). The issue regarding the public
mobility in competition with the profit making interest of the private sectors significantly
reduced. Thus, the privately owned toll was then used and operated by a public agency.
Sustainable issues in transportation
The issue raised several sustainable issues which will be effectively discussed in the next
sections. The finding by private sector may work effectively only under public private highway
financing partnership. This method has effectively led to improvement of transportation sector
which is sufficient for the provision of newer roads (Jang, Chung, & Yeo, 2014). Therefore,
private financing should not be used as a substitute for public financing, rather it should be
foreseen as a supplement source of investment. On the other hand, private and public investment
is combined to lower the gap for projects that are very expensive for public sector to build them
with limited funds (Göçmen, Phillips & Ryzin, 2015). However, sharing reward and risk
between the two sectors can be complicated and balancing both the interests will be difficult than