Why the U.S. Should Adopt the Nordic Approach to Private Roads

By Giovanna da Silva

Many view the United States as a free market capitalist state and Nordic countries such as Sweden and Finland as socialist due to their extensive welfare system. Yet, in the United States, most roads, highways, and other transportation infrastructure are publicly owned and operated. Meanwhile, the vast majority of roads in Sweden and Finland are operated by the private sector and maintained by local communities. Examining Sweden and Finland’s public-private road model may give us insight into how private roads can operate in the United States.

Two-thirds of roads in Sweden are privately operated and managed by local Private Road Associations (PRAs). These road associations are composed of homeowners who live along private roads. An estimated 140,000 kilometers (about 87,000 miles) of roads are the responsibility of 60,000 PRAs. While most Swedish private roads do not experience a high level of traffic, the delegation of roads to the private sector helps the government offset costs. Government works in conjunction with road owners and associations to subsidize the costs of repair and maintenance. Around 24,000 PRAs receive government subsidies.

The costs of upkeep are divided among members of the association. PRAs that do not accept government subsidies can prohibit traffic at their discretion. Those that receive subsidies must allow all vehicles to travel on their roads. Regardless of whether they receive funding, however, the associations may not ban horses, bicycles, and pedestrians from using the roads.

Private ownership by PRAs has proven to be a cost-effective measure for operating roads according to the the Swedish government. In 2001, a government-commissioned evaluation found PRAs could run their roads at about half the cost as for the national.

Finland employs a similar system. Many private roads are managed by local cooperatives. Finland has 78,000 kilometers (about 48,500 miles) of public roads and 280,000 kilometers (about 174,000 miles) of private roads. Of the 5 million people who live in Finland, around 700,000 of them reside near a private road. Like Swedish PRAs, Finnish cooperatives are made up of homeowners who live proximate to private roads. These homeowners collectively maintain their local roads and are eligible to receive subsidies from the federal government to cover a portion of their expenses.

The Finnish government determines the subsidy amount based on the amount of traffic that a road bears and the number of houses it serves. The geographic location and average income of the area also figure into its consideration. The shift in road management to the community ensures that roads are taken care of on a regular basis. This makes for a more efficient and democratic system of road maintenance because community members, unlike government officials from far away, are distinctly aware of the needs of their roads.

The private sector can be engaged to provide transportation services through several different approaches. Depending on population size, certain frameworks may produce more favorable outcomes than others. For instance, toll roads operated by private companies, as is the case with the Dulles Greenway in Northern Virginia, are preferable to local associations composed of community residents due to high volume of vehicular traffic.

On the other hand, sparsely populated regions of the United States may benefit greatly from implementing the Swedish model of privatization and establishing local private road associations. The government could help subsidize the operation costs to avoid imposing toll fees on outsiders who use the roads. This may also decrease operation costs and improve the quality of rural roads that are often neglected due to lack of state and federal funding.

Different models of public-private partnerships ought to be experimented upon in order to determine what works best for different cities and localities.

About DeVoe Moore Center

The DeVoe L. Moore Center's economic research and policy analysis addresses the role of the private sector in the economy with primary interests in state and local policy issues. The DMC is located in the College of Social Sciences and Public Policy at Florida State University on the main campus in Tallahassee. As an educational institution the DMC provides professional research experiences to undergraduate and master’s students through an extensive program of internships and independent study to prepare them for the professional workplace or further graduate study in economics, public policy, urban planning, public finance, or entrepreneurship.
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