used to help subsidize the costs associated with building the necessary corridors for the toll road, and the cash flow from the burgeoning highway system can be used to finance increasingly larger parts of the nation's highways, which reduces the need for external funds. Private funds are more readily available for the creation of a comprehensive national highway system (as opposed to a single highway) because lenders can expect future revenues from the larger system to offset the costs of construction, whereas a single highway will generate far fewer receipts.
Another benefit to the TRC option is that it distributes the cost of construction across all users of the national highway system rather than across only those users of a small portion of the system. The result is that tolls may be lower under the TRC plan than with the concession plan since the highway system benefits from economies of scale, which benefits the nation's drivers. This is in contrast to those systems that use a concession option where the cost of construction for each corridor must be reaped primarily from the drivers using that corridor. In this instance, local drivers may find the tolls on the local roads excessive for everyday use.
Regardless of whether highway systems are operated by concession or by TRC, they have several characteristics in common. For example, projects that would not be viable with short-term or medium-term financing can become profitable with long-term financing. Highways are often financed using these long-term finance options with the bulk of the loan due several years after the highway has been in operation. Long-term loans not only offer greater financial incentive to builders, they also reduce user fees, which brings the greatest amount of benefit to drivers, and which keeps the use of local roads (which do not generate revenue) to a minimum.
Long-term loans are not without their risks, however. While the financial ris...