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Managing the insolvable limitations of cost-benefit analysis: results of an interview based study

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  • Niek Mouter

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  • Jan Annema
  • Bert Wee

Abstract

Cost-benefit analysis (CBA) has been an important tool for transport planners for several decades. Despite its popularity it has often been criticized for several reasons, amongst other things, because the tool has some insolvable limitations when it is applied in practice. In this paper we examine and scrutinize the perceptions of 86 key actors in the Dutch appraisal practice for spatial-infrastructure projects with regard to three insolvable CBA limitations: (1) CBA is always incomplete; (2) Effect estimations are always uncertain; (3) Effects that are difficult to estimate have a relatively weak position. We conclude that Dutch key actors were not only able to point out these three CBA limitations and the bad management of these limitations, but they were also able to propose several (pragmatic) solutions to improve the management of CBA limitations. This paper discusses how the proposed solutions relate to solutions addressed in the literature. Moreover, we provide recommendations for further research and discuss policy recommendations that transpired from the results. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Niek Mouter & Jan Annema & Bert Wee, 2015. "Managing the insolvable limitations of cost-benefit analysis: results of an interview based study," Transportation, Springer, vol. 42(2), pages 277-302, March.
  • Handle: RePEc:kap:transp:v:42:y:2015:i:2:p:277-302
    DOI: 10.1007/s11116-014-9539-0
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    References listed on IDEAS

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    1. Nikolaos Thomopoulos & Susan Grant-Muller, 2013. "Incorporating equity as part of the wider impacts in transport infrastructure assessment: an application of the SUMINI approach," Transportation, Springer, vol. 40(2), pages 315-345, February.
    2. Campbell,Harry F. & Brown,Richard P. C., 2003. "Benefit-Cost Analysis," Cambridge Books, Cambridge University Press, number 9780521528986.
    3. Mackie, Peter & Preston, John, 1998. "Twenty-one sources of error and bias in transport project appraisal," Transport Policy, Elsevier, vol. 5(1), pages 1-7, January.
    4. Sen, Amartya, 2000. "The Discipline of Cost-Benefit Analysis," The Journal of Legal Studies, University of Chicago Press, vol. 29(2), pages 931-952, June.
    5. Thomopoulos, Nikolaos & Grant-Muller, Susan, 2013. "Incorporating equity as part of the wider impacts in transport infrastructure assessment: an application of the SUMINI approach," LSE Research Online Documents on Economics 60073, London School of Economics and Political Science, LSE Library.
    6. Gerard Jong & Andrew Daly & Marits Pieters & Stephen Miller & Ronald Plasmeijer & Frank Hofman, 2007. "Uncertainty in traffic forecasts: literature review and new results for The Netherlands," Transportation, Springer, vol. 34(4), pages 375-395, July.
    7. Robin Boadway, 2006. "Principles of Cost-Benefit Analysis," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 2(1), pages 1-44, January.
    8. Salling, Kim Bang & Banister, David, 2009. "Assessment of large transport infrastructure projects: The CBA-DK model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 800-813, November.
    9. Peter MacKie, 2010. "Cost-Benefit Analysis in Transport: A UK Perspective," OECD/ITF Joint Transport Research Centre Discussion Papers 2010/16, OECD Publishing.
    10. Hayashi, Y. & Morisugi, H., 2000. "International comparison of background concept and methodology of transportation project appraisal," Transport Policy, Elsevier, vol. 7(1), pages 73-88, January.
    11. Karel Martens, 2011. "Substance precedes methodology: on cost–benefit analysis and equity," Transportation, Springer, vol. 38(6), pages 959-974, November.
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    Cited by:

    1. repec:gam:jsusta:v:9:y:2017:i:10:p:1760-:d:113916 is not listed on IDEAS
    2. Mouter, Niek, 2017. "Dutch politicians’ attitudes towards Cost-Benefit Analysis," Transport Policy, Elsevier, vol. 54(C), pages 1-10.
    3. Yunqiang Xue & Hongzhi Guan & Jonathan Corey & Heng Wei & Hai Yan, 2017. "Quantifying a Financially Sustainable Strategy of Public Transport: Private Capital Investment Considering Passenger Value," Sustainability, MDPI, Open Access Journal, vol. 9(2), pages 1-20, February.

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