ASi" kUCTURE FlOR DEVELOPMENT

Roads are not private goods, although for rea- Infrastructure activities that create extenalities or
sons that differ with the type of road. Rural roads (a produce essential services to captive uses may also
typical public good) and uncongested interurban warrant some regulation, but this can be narrowly
roads are not completely rival because an additional fooused on these market imperfections while perdrver
does not reduce the value of anyone else's mitting wide scope for competition in other compouse
of the road. Access to some interurban roads nents of the sector.
can be prevented by making them toll roads (a das- Certain characteristics of infrastructure also cresic
"dub" good, i.e., a good tthat is excludable but ate challenges in financing. Where a minimum level
nonrival). By contrast, urban roads are congested of consumption of a particular service (such as
during peak perods, but until recently it has been water, heating, or power) can be identified as a lifedifficult
to exclude users from urban roads or to line' for some users, society may judge that they
charge users different amounts durngpeak and off- should not be excluded if they cannot afford to pay.
peak periods. New electronic techniques of moni- Financing strategies also have to be designed to take
toring road use may eventually make it technically account of the risk that arises because many infrafeasible
to treat many urban roads almost as private structure investmnents are large and long-lived,
goods.
while the revenue stream is often slow to develop.
Water outside of piped networks is often-in. Such characteristics can justify some public financpractice
and in principle-a xcommon property' ing of infrastructure from general revenues, but to
resource. While water consumption is rival between supplement-not entirely substitute for-the revusers,
monitoring the use of groundwater from un- enues obtained from users and conmunercial sources
derground aquifers or from other natural sources is of finance.
difficult and costly, and therefore groundwater use
is rarely exdudable. By the same tokeni, controlling Public sector dominanice
infrzstructure
the consumption of common property resources is
also difficult How mudc the extraction of water hifrastructure dearly represents a strong public in-
(from aquifers or natural flows) affects other poten- terest, and so merits the attention of governments.
tial users depends on location-specific hydrological However, the special characteristics of infrastrucfeatures
that are important in water policy.
ture do not explain or justify the fact that govern-
Although most infrastructure goods are private, ments and public sector agencies have dominated
they produce spillovers or external effects-mnany almost all aspects rf this sector in developing counof
which (as shown earlier) affect the environment tries in recent i .ddes. Private participation was
Ignoring the important negative externality of emis- important in the nineteenth century and the first
sions from fossil fuel power generation could lead half of the twentieth century in many countriesto
excess power being produced with the wrong and some pockets of private provision still renix
of fuels. By contrast,some cities have neglected main-but the overwhelming trend until the early
to develop a well-designed public transport system, 1980s was government or parastatal provision,
even though such a system can have positive envi- largely through verticaiiy integrated, monolithic enronmental
effects and also promote social equity. To tities. By then, only a small percentage of the power
ensure that society obtains positive benefits-such sector was in private hands. Virtually no private
as public health benefits from water and sanita- telecomznunications firms existe-i, and most early
tion-the private goods must also be delivered ef- private railways had disappeared with nationalizafectively.
tion. Although toll roads played a part in the early
Thus, although infrastucture services differ from history of many countries, they also became rare,
other goods, they also differ among themselves and road construction (and especially maintenance)
(Fgure 1.3). The characteristics of various infra- was executed largely by government employees, or
strucure activities have important implications for force account. Other services-water, sewerage,
how services should be provided. To the extent that waste disposal-alsa tended to be both owned and
specific infrastructure activities entail natural mo- operated by govemments at either the national or
nopoly or depend on a network characterized by the local leveL
natural monopoly, they will not be provided effi- The dominant public sector role in ifrastructure
ciently by an unfettered market. The network com- has arisen for a number of reasons: recognition of
ponent can, however, be separated (unbundled) ifrastruchtre's economic and political importance;
from the more competitive activities of the sector, a belief that problems with the supply technology
with regulation to ensure fair access to the network required a highly activist response by governments;
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