Transport finance is the subject that explores how

transport Transport (in British English) or transportation (in American English) is the intentional Motion, movement of humans, animals, and cargo, goods from one location to another. Mode of transport, Modes of transport include aviation, air, land tr ...

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 A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers ...

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 fee A user fee is a fee, tax, or impost payment paid to a facility owner or operator by a facility user as a necessary condition for using the facility. People pay user fees for the use of many public services and facilities. At the federal level ...

s, such as gas taxes, and tolls. 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 cost In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone where, given limited resources, a choice needs to be made between several mutually exclusive alternatives. Assuming the best choice is made, i ...

s), which are paid for by people's time, by clean air, by peace and quiet, etc. See the discussion of

externalities In economics, an externality is an indirect cost (external cost) or indirect benefit (external benefit) to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced ...

for a fuller explication of non-monetary costs.

References

Fields of finance Transport economics {{Transport-stub

See also

References