Recognising the complementary contributions of cost benefit analysis and economic impact analysis to an understanding of the worth of public transport investment: A case study of bus rapid transit in Sydney, Australia

With competing demands for scarce resources, governments need to demonstrate the value for money of new infrastructures. Cost Benefit Analysis (CBA) is the traditional welfare approach to demonstrate the value of using public funds. CBA captures the tangible costs and benefits for users, the benefits and costs of externalities and some of the wider economic benefits. However, this welfare approach does not distinguish the distribution of activity impacts in terms of spatial locations, timing, or economic sectors, nor does it capture all impacts on the economy of a region. Economic Impact Analysis (EIA) shows such changes in terms of jobs, compensation and business output. Economic impact changes are very much the language used by politicians in explaining the benefits of an investment and making the points better understood by the electorate. This paper provides the rationale for using an extended analysis EIA as a complement to the welfare based CBA. The approach is illustrated by a case study of a bus rapid transit (BRT) proposal in Sydney. It shows how these approaches are complementary, answers different questions, and can be used together to provide a more holistic evaluation of the value of a public transport infrastructure change.