Public Infrastructure

Refers to all government-owned, operated, and maintained infrastructure

Author: Manya Bhardwaj
Manya Bhardwaj
Manya Bhardwaj
Reviewed By: Andy Yan
Andy Yan
Andy Yan
Investment Banking | Corporate Development

Before deciding to pursue his MBA, Andy previously spent two years at Credit Suisse in Investment Banking, primarily working on M&A and IPO transactions. Prior to joining Credit Suisse, Andy was a Business Analyst Intern for Capital One and worked as an associate for Cambridge Realty Capital Companies.

Andy graduated from University of Chicago with a Bachelor of Arts in Economics and Statistics and is currently an MBA candidate at The University of Chicago Booth School of Business with a concentration in Analytical Finance.

Last Updated:February 25, 2024

What is Public Infrastructure?

Public Infrastructure refers to all government-owned, operated, and maintained infrastructure. It includes all facilities, systems, and structures available for the general use of the public. 

Public infrastructure is typically owned or regulated by the Central Government, State Government, other government bodies, public undertakings, or organizations.

The government is responsible for deciding whether a facility is to be provided, how it is to be provided, and the source of revenue to pay for it.

Such facilities are free or subsidized to include all members of society. When user charges are applied, the government must manage the market price to ensure affordability to all members of society. 

This includes all physical structures available to increase citizens' quality of life and improve economic activities in an area, region, or country. Examples include all basic facilities like water supply, sewage treatment, roads, etc. 

Infrastructure such as roads, hospitals, and highways stimulates economic growth in a developing and sustained economy. In addition, they serve as a support system to the production sector.

Public amenities such as parks, schools, universities, and essential infrastructure like water and telecom enhance the populace's well-being. These facilities improve the efficiency and productivity of citizens and promote social growth in economies. 

Water treatment and supply, electricity, healthcare, education, and transportation are among the most frequently utilized daily public services. All critical infrastructure, like disaster management facilities, is crucial to the nation.

It may also include public parks, green areas, and public safety systems to enhance social comfort.

    Key Takeaways

    • Public infrastructure, owned by government bodies, serves the general public, providing essential facilities like water supply and roads. It aims to enhance quality of life and economic activity, offering services either free or at subsidized rates for universal accessibility.
    • Infrastructure, including transportation networks and utilities, drives economic development and supports sectors like manufacturing and commerce.
    • Important and subject to government regulation, infrastructure is categorized as soft (service-oriented), hard (physical systems), and critical (essential for societal and economic functionality).
    • Infrastructure projects are financed through public funds, private investments, or partnerships. While offering benefits like resource management and employment generation, challenges include high costs, bureaucratic delays, and maintenance issues.

    Characteristics Of Public Infrastructure

    Some of the characteristics are:

    1. Vital Infrastructure: Public infrastructure comprises physical structures and services vital for a wide area. These assets are capital-intensive, requiring substantial costs for production and maintenance. However, the scale of production often demonstrates economies of scale.
    2. Market Dynamics: The public infrastructure market may evolve into a local or natural monopoly due to limited suppliers and significant demand. Government intervention, such as regulatory oversight, is common to manage such market structures.
    3. Government Provision: Governments typically oversee the provision of critical infrastructure such as water treatment and sewage control. These assets offer long-term revenue streams and have extended asset lifespans. However, their irreversible investment and high sunk costs often discourage private entry into the market.
    4. Economic Indicators: The level and quality of infrastructure within a country often serve as indicators of economic growth. They reflect a nation's development capacity and citizens' quality of life.
    5. Types of Goods: Infrastructure is often classified as non-excludable, meaning its usage cannot be restricted to specific groups. It can be categorized as public goods (e.g., roads, parks) or club goods (e.g., transportation systems). Public goods may be pure (both non-excludable and non-rivalrous) or impure, possessing only one of these properties.
    6. Excludability and Rivalry: Excludability refers to the degree to which access to a good can be restricted to those who pay for it. Rivalry occurs when one person's use of a good diminishes its availability to others. Most government-provided infrastructure qualifies as public goods, being non-excludable.
    7. Non-Rivalrous Nature: Public goods like roads and highways exhibit a non-rivalrous nature. One person's use of these facilities doesn't inhibit others from utilizing them simultaneously.

    Types of Public Infrastructure

    Public infrastructure includes various types, commonly categorized into different classifications:

    1. Soft: It typically focuses on facilities to improve economic, social, and cultural aspects, among others. These facilities are service-oriented and require extensive human capital. The aim is to deliver specialized services to citizens. It includes financial, health, educational, social security, and all such facilities essential for the well-being of people.
    2. Hard: It comprises physical systems necessary for various economic activities. These structures support production activities and connect producers, distributors, and consumers. Examples include- transport services, energy services, and communication services. 
    3. Critical: It includes facilities crucial for both societal and economic functionality, often vital for national security. It involves basic amenities of water, natural gas, heating and shelter, and public health.

    Examples of Public Infrastructure

    Infrastructure facilities are present in various sectors within the public domain. Some of the examples are:

    1. Transport: It includes all mediums of public transportation. Examples include roads, railways, bridges, bicycle paths, sidewalks, airways, and waterways.
    2. Water: It refers to water treatment facilities, water supply, water resource management, drainage and sewage solutions, and flood management
    3. Education: It includes public education and training institutions, universities, schools, and public libraries
    4. Health: It includes critical institutions like public hospitals, subsidized health clinics, pharmacies, etc
    5. Political: It includes government institutions responsible for governance, legislation, and legal frameworks. These administrative and regulatory bodies form the socio-economic environment in a country
    6. Telecom: Communication networks, which may include both government-owned and privately-owned services such as network services, broadband, and WiFi
    7. Power and energy: The government usually provides power grids, wind turbines, power stations, solar panels, and other renewable energy options
    8. Recreational: It contributes to social well-being and cultural enrichment. Examples include beaches, historical parks, museums, botanical gardens, and natural reserves

      Public health infrastructure

      It refers to all facilities and systems to safeguard and promote community health, including disaster risk management to prevent biological hazards. This includes all infrastructure to prevent diseases and promote health.

      It also facilitates prompt and efficient response to acute threats and chronic challenges to health. It greatly decreases a community's vulnerability to disasters.

      It includes infrastructure designed to prevent diseases, promote health, and address various health-related challenges. In addition, ensuring the supply of clean drinking water is an essential public health facility.

      Key components of public health infrastructure include:

      1. Monitoring the health status to identify health problems in a community
      2. Diagnosis and investigation of health problems and health hazards in the community
      3. Informing, educating, and empowering people about health issues
      4. Mobilizing community partnerships and resources for taking required action to solve health problems
      5. Development of guidelines, policies, and plans to give direction and support to individual and community health efforts
      6. Enforcement of laws and regulations that protect health and ensure safety
      7. Linking people to needed personal health services and assuring the provision of health care in lacking areas
      8. Ensuring the availability of competent public and personal healthcare workforces
      9. Evaluating the effectiveness, accessibility, and quality of personal and community-based health services
      10. Conducting adequate research for new insights and innovative solutions to health problems

      Financing Of Public Infrastructure

      Public facilities are not universally available; access and quality vary based on factors such as development and government policies. However, the quality of service varies among regions or countries based on factors like development, government policies, etc. 

      Governments in developed countries provide citizens with better welfare facilities and physical infrastructure than in developing countries. On the other hand, poverty and lack of public finance hinder the provision of public facilities in underdeveloped regions.

      Infrastructure entails high initial costs and heavy investments, typically financed through various means, including:

      1. Public finance 

      Public infrastructure financing comes from various sources like taxes, toll charges, and user fees. This method is used in essential sectors like national defense and public railways where the government wishes to retain control.

      2. Private Finance

      The returns on infrastructure investments can be extremely high and serve as a long-term source of revenue due to large-scale demands. This attracts private individuals to invest heavily in infrastructure projects.

      For example, an energy company investing in pipelines to transport oil to an oil refinery helps the area's local community. After the initial setup, the responsibility for the project is transferred to the private organization.

      The government regulates such structures to prevent the formation of a natural monopoly. It imposes rules, regulations, fees, and other restrictions to benefit the community.


        To improve efficiency in inefficient sectors, the government may provide subsidies and other incentives to private investors.

        3. Public-private partnership (PPP)

        It is an arrangement between the government and two or more private investors to provide for a facility. They agree to share the responsibility for an infrastructure project's provision, operation, and management.

        PPP contracts are used for the implementation of specific projects. Due to the increased risk and uncertainty involved, heavy infrastructure projects may not attract private investment. In some emerging countries, privately financed infrastructure may be limited.

        Through a Public-Private Partnership, the risk involved is divided between the private and the public sector. This creates better investment opportunities for private investors. 

        For the government, it reduces the burden of investment and increases the efficiency of an infrastructure project. This system is commonly seen in developing countries where the public sector cannot meet the growing demand for new and better infrastructure.


          While the primary goal of a PPP is to provide services to a large set of citizens, quality and performance standards are typically defined within the partnership agreement.

          Advantages and Disadvantages of Public Infrastructure

          Public infrastructure is necessary to improve the level of economic activities and promote the economic growth of a nation. 


          Some common advantages include:

          • It ensures better management of resources for the greater benefit of society
          • Public infrastructure projects aim to be cost-effective and accessible to all, promoting equity within a nation, although this may not always be the case
          • These projects provide large-scale employment to people at sustainable wages. This helps in reducing poverty and reducing income disparity
          • Transport and communication infrastructure, such as roads, railways, and the Internet, often contribute to expanding markets for producers
          • Waterways and airways infrastructure can facilitate access to foreign markets and enhance international trade for producers
          • It connects households to a global market with increased choices and competitive prices. This gives individual consumers access to varied goods and services across the world
          • Essential services like public health and education improve the productivity and efficiency of people
          • Facilities like law, public security, and recreational infrastructure enhance people's quality of life and standard of living. This provides social comfort


          Disadvantages include:

          • It is costly to implement public projects in terms of time and investment. In addition, it takes longer to implement such projects due to the administrative procedures, rules, and other necessary paperwork
          • While the primary objective of public infrastructure is universal provision, innovative solutions can still be incorporated into these projects
          • Incidences of corruption, mismanagement, or inefficiency in operations are often seen in provisions of public infrastructure. The funds allotted for a project may not be fully utilized or misused by various organizations involved
          • It isn't easy to maintain transparency in public projects
          • Without adequate maintenance, the quality of public infrastructure may decline over time. The provision for public infrastructure may not include quality or standards

          Public Infrastructure FAQs

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