IIRSA and Public Private Partnerships

   
   
 
Cuadernos del CEDLA no. 20

Troublesome Construction
IIRSA and Public-Private Partnerships in Road Infrastructure

Pitou van Dijck and Simon den Haak

CEDLA, October 2006, 83 pp.
ISBN 90 70280 90 6. € 10.

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This study analyses the potential contribution of public-private partnerships (PPPs) in the innovative and ambitious Initiative for Regional Infrastructure Integration in South America, IIRSA. As a region-wide plan, IIRSA is unique in its size and concept in support of the deepening of economic integration and the insertion of the region in world markets. The potential impact of IIRSA on the region's economic geography may be significant through its stimulus to investment, production and trade. At the same time, road infrastructure may threaten ecosystems and the public goods they provide for the local and world community.

Among the distinctive features of IIRSA is its ambition to make innovative financial mechanisms such as PPPs contribute to its implementation and financing. So far, experience is limited. Lessons are to be learned from sizeable PPP projects in Brazil, such as the Programa Estradeiro in Mato Grosso and the programme for paving the BR-163 Cuiabá-Santarém highway. As shown, a PPP is certainly not a trouble-free mission, and financial, regulatory and environmental risks may be substantial. Nevertheless, with financial risks distributed more adequately, the use of more realistic cost-benefit

analyses and comprehensive environmental assessments and related implementation procedures, PPPs may produce substantial rewards for society at large.

Pitou van Dijck is Associate Professor of Economics at Cedla, Amsterdam. Simon den Haak has received a masters degree with distinction of Cedla, and works as a policy officer at the Dutch Lower House of Parliament.