Determining the Reasonable Scale of a Toll Highway Network in China

Abstract

This research aims to determine the reasonable scale of toll highways in China by considering factors including effects of non-debt investments; agency costs of construction, maintenance, and system operations; user travel time costs; debt repayment; and toll revenue generation. A bilevel optimization model is proposed, in which the lower-level optimization uses origin-destination (O-D) travel demand for network traffic assignments and the upper-level optimization uses data on link-based traffic volumes generated from the lower-level model and other influencing factors as inputs to determine a reasonable scale of toll highway network. The model is applied to determine the reasonable scales of expressways in provinces of Hebei, Jiangsu, Jilin, and Shaanxi located in the central, eastern, northeastern, and western economic regions that form a predominant portion of toll highways in China. It is revealed that the current expressway network scales in all four provinces are higher than the reasonable scales by 22–38%. The provinces are faced with extremely high asset–debt risks that are likely to get worse in the future if the toll highways continue to be constructed using the same financing and investment scheme. It is recommended to seek alternative financial resources such as private capitals for expressway construction and management to reduce the risks of highway financial affordability.