Taxpayers Should Not Pay For Undersea Tunnels

Russia and former Alaskan governor Walter Hickel want to build a tunnel between Siberia and Alaska. The U.S. government does not appear to be very interested in paying for such a tunnel to be built, but the Russian government does and so do several Russian companies. A similar tunnel is proposed between Spain and Morocco, which would physically link Europe and Africa together. Spain and Morocco want the European Union to pay for building the tunnel.

Building such tunnels might be a good idea, or it might be a gigantic waste of money. The best way to tell if such tunnels are a good idea is to figure out if someone can make money from building a tunnel. Nothing would be gained by involving governments paying for tunnel building; there are no significant externalities, and there is no potential monopoly because private tunnels will compete with many other forms of transportation. Privately owned infrastructure is nothing new, some airports, including Auckland International Airport, are privately owned, and the English Channel tunnel (Chunnel) was the biggest infrastructure project ever to be wholly privately funded.

It is not clear that building large tunnels makes economic sense. Eurotunnel, who owns the Chunnel has not been able to make enough money to pay the interest on the 10 billion in loans it used to build the tunnel. It is encouraging that some private companies in Russia are interested in the Siberia-Alaska tunnel. I hope that governments leave tunnel building to private money, and leave taxpayers around the world out of it.