Towards harmonisation of indirect effects in transport project appraisal Guidelines and current practice in Europe - miles apart

The paper deals with the appropriate treatment of indirect socio-economic effects of transport investments and policies. A central question is how assessment of indirect effects can be improved and harmonised in a European context. First, the paper describes state of the art in assessment (identifying types of indirect socio-economic effects, modelling). Secondly, an overview is presented on current practice in EU-countries. Market imperfections and cross-border effects appear as key conditions for the existence of indirect effects. The proposed starting point for analysis is therefore the total absence of market disturbances. This point of reference, however, is used in no country. The paper concludes by stressing the importance of harmonisation of transport initiative assessment, as well as elaboration on the distinction of types of effects as well as market imperfections. A very clear advantage of harmonisation in Europe would be the inclusion of cross-border effects as direct socio-economic effects in CBA where they concern national borders and not EU-borders, instead of viewing them as welfare effects ‘leaking away’ to other member countries. Especially the market imperfections characterising land markets (external effects, replacement value) and the disturbances and rigidities specific for European labour markets offer great perspectives for better analysis of transport projects and hence better decision making.