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Cost–Benefit Analysis of Transport Projects: Theoretical Framework and Practical Rules

In: Economic Evaluation of Transport Projects

Author

Listed:
  • Ginés de Rus

    (University of Las Palmas de Gran Canaria
    University Carlos III of Madrid
    FEDEA)

  • M. Pilar Socorro

    (University of Las Palmas de Gran Canaria)

  • Jorge Valido

    (University of Las Palmas de Gran Canaria)

  • Javier Campos

    (University of Las Palmas de Gran Canaria)

Abstract

Transport projects can be typically contemplated as exogenous interventions in transport markets, which move the economy from one equilibrium to another, commonly through the reduction of the generalized price (composed of monetary price, time, and other disutility components) borne by transport users. This chapter describes two methods for the assessment of the economic effects of any transport project. The first one is based on the aggregation of changes in surpluses. The second one is based on the measurement of the change in willingness to pay and the net social value of the resources used or saved. The analysis is based on a simple model to avoid the mechanical application of rules of thumb from different sources, helping to find some practical ways to avoid common pitfalls and double counting in the measurement of benefits and costs of transport projects. The narrative on how the transport sector works and how government intervention affects social welfare is supported by an analytical approach from which the rules and measurement criteria are derived, always explaining the assumptions and conditions under which they hold.

Suggested Citation

  • Ginés de Rus & M. Pilar Socorro & Jorge Valido & Javier Campos, 2023. "Cost–Benefit Analysis of Transport Projects: Theoretical Framework and Practical Rules," Springer Books, in: Economic Evaluation of Transport Projects, chapter 0, pages 11-42, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-35959-0_2
    DOI: 10.1007/978-3-031-35959-0_2
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    More about this item

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General

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