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Is CBA ranking of transport investments robust?

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Abstract

Cost-benefit analysis (CBA) is often used when many transport investments need to be ranked against each other, for example in national investment planning. However, results are often questioned on claims that the ranking depends crucially on uncertain assumptions about the future, and on methodologically or ethically contestable trade-offs of different types of benefits relative to each other. This paper explores the robustness of CBA rankings of transport investments with respect to two types of uncertainties: relative benefit valuations and scenario assumptions related to car ownership, characteristics and costs. The study is based on CBAs of 479 suggested road and rail investments in Sweden that have been shortlisted for possible inclusion in the national transport investment plan. The CBA ranking turns out to be robust to variations in the studied scenario assumptions. The CBA ranking also turns out to be robust to changes in the relative valuations of different types of benefits – person travel time savings, traffic safety, emissions and freight benefits. We also compare two sets of travel time valuations against each other, one of which differentiated with respect to mode and travel purpose and one which is not, again concluding that the investment ranking is robust.

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  • Börjesson, Maria & Eliasson, Jonas & Lundberg, Mattias, 2012. "Is CBA ranking of transport investments robust?," Working papers in Transport Economics 2012:30, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
  • Handle: RePEc:hhs:ctswps:2012_030
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    File URL: http://www.transportportal.se/SWoPEc/CTS2012-30.pdf
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    References listed on IDEAS

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    1. Parthasarathi, Pavithra & Levinson, David, 2010. "Post-construction evaluation of traffic forecast accuracy," Transport Policy, Elsevier, vol. 17(6), pages 428-443, November.
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    Cited by:

    1. Van Wee, Bert & Boarnet, Marlon, 2014. "Reaction to the paper Tempest in a Teapot: The exaggerated problem of transport-related residential self-selection as a source of error in empirical studies," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 7(3), pages 81-86.
    2. Mackie, Peter & Worsley, Tom & Eliasson, Jonas, 2014. "Transport appraisal revisited," Research in Transportation Economics, Elsevier, vol. 47(C), pages 3-18.
    3. Asplund, Disa & Eliasson, Jonas, 2016. "Does uncertainty make cost-benefit analyses pointless?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 195-205.
    4. Börjesson, Maria & Jonsson, R. Daniel & Berglund, Svante & Almström, Peter, 2014. "Land-use impacts in transport appraisal," Research in Transportation Economics, Elsevier, vol. 47(C), pages 82-91.

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    Keywords

    Cost benefit analysis; Appraisal; Robustness; Decision support.;

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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