The following article is an excerpt from a series of articles appearing in i3 from the report by Georg Inderst, Social Infrastructure Finance and Institutional Investors: A Global Perspective. The report with footnotes and references is available at www.georginderst.com or http://papers.ssrn.com/sol3/papers.cfm?abstract_id=3556473.
There is an academic view that P3 works best with user fees. The link between asset quality and service quality is typically stronger in roads and ports, for example, than in hospitals and schools, which makes the social infrastructure less contractible and renegotiable (Välilä 2020b). “[P3] works less well where returns need to be enhanced by a public subsidy, the 13 terms of which are liable to change,” (The Economist, April, 22 2017). Such issues tend to be even stronger in developing countries with weaker institutions and governance (Estache 2010).
In practice, availability payments from public a