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Do the selected Trans European transport investments pass the cost benefit test?

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  • Stef Proost

    ()

  • Fay Dunkerley
  • Saskia Loo
  • Nicole Adler
  • Johannes Bröcker
  • Artem Korzhenevych

Abstract

This paper assesses the economic justification for the selection of priority projects defined under the auspices of the Trans-European transport network. Three different transport models are used to analyse the costs and benefits associated with the current list of 30 priority projects. Most of these projects fail the cost-benefit test and few of the economically justifiable projects would need European subsidies to ensure their viability. Two remedies are proposed to minimise the inefficiencies surrounding project selection. The first remedy would oblige each member state or group of states to perform a cost-benefit analysis, followed by peer review and ensure that the results were published publicly prior to the ranking of federally funded priority projects. The second remedy would require federal funding to be made available only for projects with important spillovers to other countries in order to avoid pork barrel political behaviour. Copyright Springer Science+Business Media New York 2014

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Bibliographic Info

Article provided by Springer in its journal Transportation.

Volume (Year): 41 (2014)
Issue (Month): 1 (January)
Pages: 107-132

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Handle: RePEc:kap:transp:v:41:y:2014:i:1:p:107-132

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Web page: http://www.springerlink.com/link.asp?id=103007

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Keywords: Transport infrastructure; Cost benefit analysis; Europe;

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References

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  1. Edward Calthrop & Bruno De Borger & Stef Proost, 2008. "Cost-benefit analysis of transport investments in distorted economies," Center for Economic Studies - Discussion papers ces0818, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  2. Brian Knight, 2003. "Parochial Interests and the Centralized Provision of Local Public Goods: Evidence from Congressional Voting on Transportation Projects," NBER Working Papers 9748, National Bureau of Economic Research, Inc.
  3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  4. Inge Mayeres & Stef Proost, 1998. "Marginal Tax Reform, Externalities and Income Distribution," Center for Economic Studies - Discussion papers ces9832, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  5. Adler, Nicole & Pels, Eric & Nash, Chris, 2010. "High-speed rail and air transport competition: Game engineering as tool for cost-benefit analysis," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 812-833, August.
  6. De Borger Bruno & Dunkerley Fay & Proost Stef, 2006. "Strategic investment and pricing decisions in a congested transport corridor," Energy, Transport and Environment Working Papers Series ete0602, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  7. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  8. Persson, Torsten, 1998. "Economic Policy and Special Interest Politics," Economic Journal, Royal Economic Society, vol. 108(447), pages 310-27, March.
  9. Baron, David P & Ferejohn, John, 1987. "Bargaining and Agenda Formation in Legislatures," American Economic Review, American Economic Association, vol. 77(2), pages 303-09, May.
  10. Yukihiro Kidokoro, 2004. "Cost-Benefit Analysis for Transport Networks: Theory and Application," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 38(2), pages 275-307, May.
  11. de Palma, André & Proost, Stef & van der Loo, Saskia, 2010. "Assessing transport investments - Towards a multi-purpose tool," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 834-849, August.
  12. Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 2000. "Airport and Airline Competition for Passengers Departing from a Large Metropolitan Area," Journal of Urban Economics, Elsevier, vol. 48(1), pages 29-45, July.
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