Private Funding of Intermodal Exchange Stations in Urban Areas: Case of Madrid, Spain

Many municipal governments are seeking ways to promote the use of public transportation in urban areas through investments in new infrastructure. However, budgetary constraints are often an important obstacle to these undertakings. This paper describes the case in Madrid, Spain, of funding intermodal exchange stations with private capital through the concession approach. It is possible to fund urban transport infrastructure in such a way that private profit and social benefit converge. This paper shows that the construction of intermodal exchange stations in Madrid yields important social benefits to all the stakeholders: commuters save travel time, bus companies diminish their costs of operation, abutters gain in quality of life, and society benefits from a reduction of emissions. Simultaneously, the government is able to promote these infrastructure facilities without spending more of scarce budgetary resources. In recognition of these advantages, this paper makes some suggestions for improving upon the present approach.