2. Bridge which carries rail traffic, vehicular traffic, electric cables for three different
agencies.
3. A pole which is used to carry telephone cables and electric cables (two different
user departments). A third user would be the Municipality which has installed
electric lamps on the poles, while a fourth user is the department which has fixed
traffic cameras on them.
The BPP is useful in addressing the funding of public goods. Generally, if goods
provide benefits to more than one user or if their use cannot be prohibited by
payment (Yamauchi 2000), they are deemed to be public. (see also Chap. 17). Traffic
signals provide an example: while there is no fee for traffic signals, motorists benefit
from them. When one driver is making use of the signals, this does not prevent other
possible users from doing so. It is often hard to finance public infrastructure projects
because users do not appreciate their full opportunity cost, and this entails undervaluation. BPP tries to decrease this gap. Project examples related to public infrastructure that have made use of BPP comprise health care, transportation and urban
land use development.
Means-based user charges, which depend on the ability of individuals to pay,
considering their personal finances, are sometimes used in health care to diminish
government contributions to health care systems (Gargett 2010).
Common user-pays approaches to finance transport projects, whereby users of a
public infrastructure are charged for its function, comprise fuel taxes, congestion
charges, tolls, and emissions taxes (OECD 2002).
In urban development, residents contribute to the cost of construction of infrastructure (i.e. roads and water mains, electric lighting, etc.). The conditions imposed
by municipalities require the developer to build or contribute to the municipal
infrastructure before obtaining the necessary permits (Azizi 2000). Consequently,
the developer will transmit these expenses onto the property purchase price and fees.
The common objective behind applying the BPP is to decrease the contribution of
government funds for public infrastructure when the service offered can be selffinanced, at least partly.
19.2 Criteria for Cost Allocation Method
A cost-sharing agreement can only be successful if the different parties agree that:
(1) all the principles and assumptions used are well explained,
(2) everything is open to review by all parties,
(3) all the steps in the calculation process are clear,
(4) the agreement is transparent and understandable,
(5) it is equitable,
(6) it is acceptable.
Water users include potable water distributors, agricultural users or others from
the industry. Any of them will accept the agreement only if they perceive obtaining
538
19 Cost Allocation for Infrastructure Implementation
agencies.
3. A pole which is used to carry telephone cables and electric cables (two different
user departments). A third user would be the Municipality which has installed
electric lamps on the poles, while a fourth user is the department which has fixed
traffic cameras on them.
The BPP is useful in addressing the funding of public goods. Generally, if goods
provide benefits to more than one user or if their use cannot be prohibited by
payment (Yamauchi 2000), they are deemed to be public. (see also Chap. 17). Traffic
signals provide an example: while there is no fee for traffic signals, motorists benefit
from them. When one driver is making use of the signals, this does not prevent other
possible users from doing so. It is often hard to finance public infrastructure projects
because users do not appreciate their full opportunity cost, and this entails undervaluation. BPP tries to decrease this gap. Project examples related to public infrastructure that have made use of BPP comprise health care, transportation and urban
land use development.
Means-based user charges, which depend on the ability of individuals to pay,
considering their personal finances, are sometimes used in health care to diminish
government contributions to health care systems (Gargett 2010).
Common user-pays approaches to finance transport projects, whereby users of a
public infrastructure are charged for its function, comprise fuel taxes, congestion
charges, tolls, and emissions taxes (OECD 2002).
In urban development, residents contribute to the cost of construction of infrastructure (i.e. roads and water mains, electric lighting, etc.). The conditions imposed
by municipalities require the developer to build or contribute to the municipal
infrastructure before obtaining the necessary permits (Azizi 2000). Consequently,
the developer will transmit these expenses onto the property purchase price and fees.
The common objective behind applying the BPP is to decrease the contribution of
government funds for public infrastructure when the service offered can be selffinanced, at least partly.
19.2 Criteria for Cost Allocation Method
A cost-sharing agreement can only be successful if the different parties agree that:
(1) all the principles and assumptions used are well explained,
(2) everything is open to review by all parties,
(3) all the steps in the calculation process are clear,
(4) the agreement is transparent and understandable,
(5) it is equitable,
(6) it is acceptable.
Water users include potable water distributors, agricultural users or others from
the industry. Any of them will accept the agreement only if they perceive obtaining
538
19 Cost Allocation for Infrastructure Implementation