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Do the selected Trans European transport investments pass the Cost Benefit test?

Author

Listed:
  • Stef PROOST
  • Fay DUNKERLEY
  • Saskia VAN DER LOO
  • Nicole ADLER
  • Johannes BRÖCKER
  • Artem KORZHENEVYCH

Abstract

This 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.

Suggested Citation

  • Stef PROOST & Fay DUNKERLEY & Saskia VAN DER LOO & Nicole ADLER & Johannes BRÖCKER & Artem KORZHENEVYCH, 2010. "Do the selected Trans European transport investments pass the Cost Benefit test?," Working Papers Department of Economics ces10.02, KU Leuven, Faculty of Economics and Business, Department of Economics.
  • Handle: RePEc:ete:ceswps:ces10.02
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:retrec:v:66:y:2017:i:c:p:78-90 is not listed on IDEAS
    2. Bruno Borger & Stef Proost, 2016. "The political economy of pricing and capacity decisions for congestible local public goods in a federal state," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(5), pages 934-959, October.
    3. Bruno De Borger & Stef Proost, 2015. " Tax and regulatory policies for European Transport – getting there, but in the slow lane," Working Papers Department of Economics 497597, KU Leuven, Faculty of Economics and Business, Department of Economics.
    4. 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.
    5. Wenjie Wu & Yutian Liang & Di Wu, 2016. "Evaluating the Impact of China’s Rail Network Expansions on Local Accessibility: A Market Potential Approach," Sustainability, MDPI, Open Access Journal, vol. 8(6), pages 1-11, May.
    6. Castillo-Manzano, José I. & Pedregal, Diego J. & Pozo-Barajas, Rafael, 2016. "An econometric evaluation of the management of large-scale transport infrastructure in Spain during the great recession: Lessons for infrastructure bubbles," Economic Modelling, Elsevier, vol. 53(C), pages 302-313.
    7. Stef Proost & Jacques-Francois Thisse, 2017. "What Can Be Learned from Spatial Economics?," HSE Working papers WP BRP 167/EC/2017, National Research University Higher School of Economics.
    8. Jan Anne Annema, 2013. "The use of CBA in decision-making on mega-projects: empirical evidence," Chapters,in: International Handbook on Mega-Projects, chapter 13, pages 291-312 Edward Elgar Publishing.
    9. 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.
    10. 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.

    More about this item

    Keywords

    transport infrastructure; cost benefit analysis; Europe Union;

    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

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