Exploratory analysis of public perceptions of innovative financing for infrastructure systems in the U.S.

Abstract

While traditional financing approaches such as federal and state grants funded by taxation are insufficient to address the existing need, innovative financing such as novel public private partnership models, credit enhancement tools, and new bonding instruments has emerged to expand the fiscal space of public agencies for infrastructure development. Formulating innovative financing approaches is one of the challenges faced by policymakers to address the ever growing need for restoring the failing civil infrastructure in the U.S. Public support/opposition is one of the major drivers/disruptors of innovative financing. Assessment of public perceptions is a major component towards gaining public support and developing sustainable infrastructure financing policies. The objective of this study is to investigate the determinants of public perceptions of innovative financing. Data obtained from public survey of 616 individuals from 50 states in the U.S. is analyzed to investigate the effects of: (a) economic factors, (b) infrastructure conditions, and (c) personal characteristics of the public on the knowledge, awareness, perceptions, and attitudes of the public towards innovative financing. The findings reveal that the likelihood of public support of innovative financing is insensitive to economic conditions and is affected by the factors related to infrastructure condition such as the level of need for infrastructure renewal, the ability to protect the public against natural disasters, and the history of using innovative financing for infrastructure renewal. The findings also show that 57% of the sample population in the U.S. were not knowledgeable about different methods for financing infrastructure projects and 77% of the sample population in the U.S. were not aware of the activities of public organizations for finding innovative financing solutions for infrastructure projects. Based on the findings, two main strategies have been proposed for infrastructure agencies to enhance their efforts towards gaining public acceptance of innovative financing: (i) enhance strategies to facilitate learning for the public about innovative financing in infrastructure projects and (ii) improve marketing and citizen involvement strategies to get the public to buy-in to innovative financing methods. The findings can enhance the current efforts of public agencies related to educating the public and citizen involvement strategies by incorporating public preferences in policy development to enhance the likelihood of public support of innovative financing methods. Potential improvements can be made in changing the key messages in educating the public, using more effective strategies for communicating complicated financing concepts, and highlighting the success stories and benefits of innovative financing in other states and countries.