The Paradox of Transparency

The key to good infrastructure policy is transparency, because transparency is the foundation of good governance.

In one of the last articles of my blog (Spanish only) I wrote about the important difference between infrastructure financing and infrastructure funding. This issue is increasingly relevant, given the poor levels popularity that “pay per use” (like toll) infrastructure enjoys these days.

Let me give you an example to illustrate what I mean: on December 31 2019 the concession contract of AUMAR -a company of the Abertis group- expired. Up until then, AUMAR operated and maintained 373km of the AP-7 motorway between Tarragona and Alicante and 94km of the AP-4 between Seville and Cádiz. The socialist government -following the same policy that had been established by the previous popular government of Rajoy- chose to eliminate tolls, meaning that users of these highways will no longer have to pay to use them. The revenues of the concessionary company were approximately EUR 380 million per year, and the operation and maintenance expenses were around EUR 145 million.

Without entering into the debate of what is a reasonable level of profitability for a private company that operates a public infrastructure or service, the political decision to lift toll barriers has an inescapable consequence: As of January 1 2020, Spanish taxpayers will bear the cost of maintaining these 467km of highways through national taxes, whether we use them or not. Think about it: overnight, the state budget will have an additional expense item of one hundred and forty million euros whilst giving up the toll revenues that would be collected if users continued paying for the use of the roads.

Whether we engineers like it or not, the decision on who should fund infrastructure costs is -and must be- fundamentally political, not technical, because infrastructure is a collective good that supports the economic and social well-being of a territory, a matter that goes well beyond the technical parameters or financial balances of a highway. Having said that, the decision should be based on rigorous, duly informed and consulted analysis.

And then I wonder: What information do we taxpayers have to judge whether the government's decision (current and previous) to waive tolls is appropriate or not, other than some news in the press with vague figures about estimated maintenance costs or the labor dispute arising from the carryover of previous AUMAR employees?

How much is estimated that traffic will increase as these roads become free, especially in heavy vehicles, which have the greatest impact on the deterioration of the infrastructure? Precisely how much will it cost to keep those highways as traffic fluctuates, and why has the government given up the option of charging users, at least partially with cheaper toll rates? Where can we find official information from the responsible Ministry about the data, studies and conclusions that led to this decision, so relevant to our taxes?

Unfortunately, this information is not available on the Ministry's website, or on the unbearable national official gazette (BOE), or on the transparency portal of the State, or anywhere else of easy access to Spanish taxpayers, who are going to bear the cost of that decision. I invite you to check this sad reality for yourself. In some cases, such as the radiales toll roads, the Ministry even refuses to share the studies that justify decisions of great relevance, without any national security reasons preventing it.

Picture above: Ministry or Public Works' Transparency Portal. Do not bother, the information that is so relevant to your taxes is not there.

The key to good infrastructure policy is transparency, because transparency is the foundation of good governance. Transparency allows for proper assessment of needs and a clear definition of objectives. It allows you to make well-informed decisions about the optimal way to finance, pay for and operate infrastructure that is strategic for us and also for generations to come. Being more transparent in the analysis forces us to focus more on the real problem, and less on ourselves.

Transparency helps measure results, give feedback, compare planned and actual outcomes, assess the impact of public policies, and make the necessary adjustments so we can move in the right direction. It also unlocks enormous potential for collaboration and innovation, bringing viability to better ways of doing things.

For the private sector - investors, funders, supply chain companies, etc. - it means greater confidence in the baseline conditions, better planning, access to more sources of financing channels that otherwise would be unaffordable due to lack of information, greater competitiveness and wider availability of cost-efficient resources.

Last but not least, transparency allows all stakeholders to have an opinion and participate, or at least feel informed and respected, which reinforces the legitimacy of the territorial and public administration model.

But, it turns out, there is a problem with transparency: what I come to call "the paradox of transparency." In our mind, consciously and subconsciously, the issue of transparency produces an ambiguous reaction of attraction and aversion in us. A kind of suspicion that cries: “Yes, yes, transparency is very good, it is a very noble ideal, but… should others know this information that I consider so valuable? Am I not risking something in revealing this information? Will someone use this knowledge to take advantage of me, or even harm me? Does revealing information make me more vulnerable?”

There is no easy answer to these questions. Because transparency is not a universal truth or a physical law, it is a way of doing things in a certain context, towards a certain end. Transparency is not a simple solution to a problem. It is a transforming force. There is no one-size-fits-all transparency: there are transparency mechanisms that help us achieve specific objectives. And yes, good planning requires strategically planned transparency.

Of course, if your goal is not aligned with the common good, or if you are in the business of opportunism, short-termism or illicit gain, then transparency is not for you. Public infrastructure policy and management are clearly outside any of these categories.

My personal tendency is to share information, because I strongly believe that if some information is useful to me, sharing it will benefit me and others in the long run. This does not mean that I wish to become a totally transparent being: I appreciate and respect my privacy and the confidentiality commitments I have with my loved ones - including those with my clients.

But I do have a clear criterion for sharing information: if I share it, I will increase the possibility of generating ideas and learn. The uncertainty about where that information will end up forces me to reflect and strive to understand problems better, which makes me less fragile (paradoxically). It does not make my life easier, but it makes it richer and more sustainable. For me, sharing information is one of the ingredients of my resilience as a person.

Picture above: Does transparency make me weaker? It depends on how I use it, and for what purpose.

Beyond my personal convictions and philosophy, there are powerful examples of how well-managed transparency makes companies, institutions and communities more capable and robust.

An example that I mentioned in my monographic series on PPPs is that of Transport for London (TfL), which in 2016 decided to publish, in real time, all the data about the service it manages, whilst guaranteeing the anonymity and security of the users. This initiative has triggered a multitude of software applications developed by private companies, NGOs and individuals who offer services -for profit, leisure or social purposes- that bring value to users and society as a whole. I insist: transparency, even when well planned, does not make life easier for those who exercise it. As a matter of fact, that should not be the goal of transparency. It does, however, facilitate dynamism, continuing improvement and adaptability.

Open source software, which anyone can use, modify or share -under the particular conditions established in the licenses- found great skepticism and resistance at firs, mainly because it was thought to be more vulnerable and less profitable than proprietary software. Paradoxically, the opposite is true: Precisely because it is open to scrutiny and experimentation, any flaws are detected and corrected quickly, and the software is more reliable, more flexible to change and more secure. It may well be that the key to the cybersecurity problem is in open source computing.

In Spain we have many government bodies committed to open data publishing, although the lack of standards prevents most of these data from actually being used by the public. There are also institutions such as AIReF that devote great efforts to publish data about public management -mainly economic- in Spain, although it still represents a tiny fraction of the data that technically could -and should- be accessible to anyone.

If we travel further back to the basics of infrastructure data, we find that in Spain -as it happens in many other countries- we do not know precisely what infrastructure we have. We do have coarse estimates, such as the IMF's public investment database or the high-level studies carried out by IVIE in partnership with the BBVA Foundation since 1995, but we do not have an up-to-date, homogeneous inventory of our country's infrastructure, its condition or their level of service, i.e. to what extent they fulfill their function of bringing a positive impact to our lives. In these circumstances, can we expect our infrastructure to be financed and managed properly? I think not.

Furthermore, and contrary to what we might conventionally think, a public-private roundtable organized by my firm Solvere to discuss data, climate change and sustainable financing on the occasion of COP25 revealed that it is the private sector that holds the largest amount of undisclosed data, which could unlock great economic and social impact if they were shared. The current business culture is to regard the data we hold as valuable per se, when the reality is that value only realises when the data is used, i.e. exchanged in some form. The inhibitor of the potential of private sector data is the lack of standards to properly define what are private, open or shared data, and what pre-emptive licenses and business models can be assigned for their use and distribution, so that we do not have to negotiate case-by-case.

A good illustration of the power of open standards is in Creative Commons, which offers a set of preemptive licenses that authors can choose from to safeguard the use and distribution of their intellectual creations. In the specific case of climate risk and sustainable infrastructure financing, the IcebreakerOne initiative is developing an open standard to enable the exchange of relevant data for analysis and decision-making, leveraging on the successful experience of the Open Banking Standard.

The fear of losing competitive advantage when information is shared is actually justified. Currently, we private businesses do not have sufficient guarantees to share our valuable data safely and profitably. In the absence of proven business models, sharing data is perceived as a leap of faith, with notable legal and commercial risks. The key is develop a culture where data is treated as infrastructure itself, building the resources and standards that support an ecosystem where potential gains exceed potential losses.

Picture above: Smart cities? No thanks. I'd rather have open and transparently managed cities.

As mobility and communication increase and more data are generated, the complexity and difficulty of being up to speed -understanding what is happening and how reality is changing- are increasing. This is especially true for infrastructure systems, which are very complex. The risks associated with sharing data are nothing compared to the risks associated with not sharing them. The main risk faced by companies and institutions in the infrastructure sector is uncontrolled disruption. That is why it is essential to develop the mechanisms and rules that make important infrastructure information accessible, usable and exchangeable.

At a time when we constantly fantasize about smart cities, which in actual fact are far from being technically viable, we should rather be concerned about making our cities and our communities more open, and managed with transparency. In doing so, we will gain a clearer understanding of the different dimensions of the sustainability challenge, allowing us to focus on the real underlying problems, which are social and environmental, not technological. Ultimately, not only we will be able to align technology with our key goals, but also reinforce the governance instruments that help us accomplish them.

Let's be brave, overcome the paradox of transparency and focus on the real problems. Our sustainability is at stake.

This article is an English adaptation of a post originally published by Jose Cordovilla in his Spanish-language blog Infraestructuras y Gobernanza, where he writes about infrastructure governance.