WIT Press


Ways To Deal With The ‘temporary’ Value Of Cost Benefit Analysis

Price

Free (open access)

Paper DOI

10.2495/EEIA080171

Volume

108

Pages

10

Page Range

171 - 180

Published

2008

Size

755 kb

Author(s)

J. M. Vleugel & E. J. Bos

Abstract

A key problem with social cost benefit analysis (CBA) is that ex ante and ex post analyses of the same (infrastructure) project in many cases have different outcomes. Ex ante analyses are used to decide whether new infrastructure has sufficient net benefits for society, provided that a set of assumptions has been met. If this is the case, and sufficient budget is available, it is likely that a project to build this infrastructure is initiated. Ex post analyses are used to evaluate the real impact of the new infrastructure. This divergence between mentioned outcomes may lead to serious debates in politics and society, especially in cases where the ex post impact of a project is much lower than the ex ante calculations predicted. This is frequently the case for railway projects. In this paper we deal with this issue by discussing the main causes of this divergence and suggest some practical solutions. The main conclusion is that the way infrastructure projects are planned and developed may need reconsideration, looking at, in particular, environmental effects. This paper is based on ongoing studies. Keywords: cost benefit analysis, environment, transport, decision-making. 1 Introduction Cost-benefit analysis (CBA) \“is a practical and rigorous means of identifying, targeting and checking the impacts of regulatory measures on the underlying causes of the ills with which regulators need to deal, those causes being the market failures that in turn may justify regulatory intervention” [1]. Intervention in this paper is restricted to public investments in infrastructure. Infrastructure is in most cases supplied as a public good, although it can also be supplied by private companies (in case of toll roads or privatized railway lines).

Keywords

cost benefit analysis, environment, transport, decision-making.