A comparison of innovative financing and general fiscal investment strategies for second-class highways: Perspectives for building a sustainable financing strategy

• Published in: Transport policy Vol. 35; pp. 193 - 201
• Main Authors: Sun, Zhentian, Li, Xuhong, Xie, Yuanchang
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.09.2014
• Subjects: China; China (People's Republic); Equality; General fiscal investment strategy; Highways; Innovative financing strategy; Investments; Local government; Sustainability; Time-series analysis; Transportation; United States; Innovative financing strategy; General fiscal investment strategy; Time-series analysis; Sustainability; China
• ISSN: 0967-070X; 1879-310X
• DOI: 10.1016/j.tranpol.2014.05.022

A long-term sustainable financing strategy is critical for highway development and maintenance; however, the effects of two major financing strategies—general fiscal investment, strategy (GFIS) and innovative financing strategy (IFS)—are still unclear to transportation decision, and policymakers. Based on the current financing practices for the second-class highways in China, (equivalent to U.S. or state highways in the United States connecting major cities in a state), this paper developed an integrated method to assess the long-term sustainability of IFS and GFIS in terms of the following widely accepted criteria: adequacy, stability, efficiency, equity, ease of implementation, and political acceptability. These criteria were further classified into quantifiable efficiency criteria (QEC) and non-quantifiable social-institutional criteria (NQSIC) categories. In this research, time-series analysis and telephone-interview methods were used for accessing QEC and NQSIC, respectively. It was found that the IFS in general has more advantage in providing sufficient, stable, and effective funds than the GFIS, and it is considered more favorable and acceptable than GFIS by both provincial and local governments. The results of this research can help decision makers at various levels in China to develop sustainable and effective funding strategies for the second-class highways. In addition, this study provides an international perspective for solving the second-class-highway financing issues and is a useful reference to researchers and policymakers in other countries. •An integrated approach was presented for two financing strategies evaluation.•Time series analysis was used for quantifiable efficiency criteria measurement.•Telephone survey was used for social-institutional criteria measurement.