Ways To Deal With The ‘temporary’
Value Of Cost Benefit Analysis
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.
Related Book
Other papers in this volume
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