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Discounting transport infrastructure investments

Author

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  • Asplund, Disa

    (CTS - Centre for Transport Studies Stockholm (KTH and VTI))

Abstract

The main aim of the study is to advice the Swedish national guidelines on cost-benefit analysis (CBA) of transport infrastructure investments, ASEK about the appropriate set of discount-rates (currently 3.5% for all investments). To this end, first a literature review with a theoretical focus along with some new perspectives are provided. Second the conclusions are applied to Swedish infrastructure transport CBA, using the current proposition of a new HSR line as a case. Based on empirical research concerning parameter values new discount rates are estimated, and sensitivity analysis performed. The best estimate of the social discount rate in the present study, for land transport infrastructure investment in Sweden, is about 5.1%.

Suggested Citation

  • Asplund, Disa, 2018. "Discounting transport infrastructure investments," Working papers in Transport Economics 2018:23, CTS - Centre for Transport Studies Stockholm (KTH and VTI), revised 05 Dec 2019.
    • Handle: RePEc:hhs:ctswps:2018_023
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    File URL: https://www.cts.kth.se/polopoly_fs/1.865213.1575555444!/Asplund%20Discount%20CBA5%20updated%20WP.pdf
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    Cited by:

    1. Ait-Ali , Abderrahman & Odolinski, Kristofer & Pålsson, Björn & Torstensson, Peter, 2023. "Evaluating the mix of maintenance activities on railway crossings with respect to life-cycle costs," Working Papers 2023:6, Swedish National Road & Transport Research Institute (VTI).

    More about this item

    Keywords

    Discount rate; Cost-benefit analysis; Social time preference; Social opportunity cost; Risk;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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