Do the selected Trans European transport investments pass the Cost Benefit test?
AbstractThis paper assesses the economic justification for the selection of priority projects defined under the auspices of the Trans-European transport network. In analyzing the current list of 30 priority projects, we apply three different transport models to undertake a cost-benefit comparison. We find that many projects do not pass the cost-benefit test and only a few of the economically justifiable projects would need European subsidies to make them happen. Two remedies are proposed to minimize the inefficiencies in future project selection. The first remedy obliges each member state or group of states to perform a cost-benefit analysis (followed by a peer review) and to make the results public prior to ranking priority projects. The second remedy would require federal funding to be available only for projects with important spillovers to other countries, in order to avoid pork barrel behaviour.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces10.02.
Date of creation: Jan 2010
Date of revision:
transport infrastructure; cost benefit analysis; Europe Union;
Find related papers by JEL classification:
- R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-23 (All new papers)
- NEP-ENE-2010-12-23 (Energy Economics)
- NEP-EUR-2010-12-23 (Microeconomic European Issues)
- NEP-PPM-2010-12-23 (Project, Program & Portfolio Management)
- NEP-URE-2010-12-23 (Urban & Real Estate Economics)
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