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Does benefit/cost-efficiency influence transport investment decisions?

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We explore how benefit-cost efficiency and electoral support affect road investment decisions in Sweden and Norway. In Norway, neither benefits nor costs seem to affect project selection. In Sweden, civil servants’ decisions are strongly affected by projects’ benefit-cost ratios, with a stronger effect for more expensive projects, while politicians’ decisions are only weakly affected, and only for small projects. In both countries, governments tend to favour investments in regions where they enjoy strong local electoral support. Using cost efficiency as a final selection criterion seems to filter out many inefficient projects already at an early stage of the planning process. We argue that even if political decisionmakers are apparently mostly governed by other concerns than cost efficiency, civil servants at the administrations should not shy away from preparing efficient project suggestions for decisionmakers to choose from.

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  • Eliasson, Jonas & Börjesson, Maria & Odeck, James & Welde, Morten, 2014. "Does benefit/cost-efficiency influence transport investment decisions?," Working papers in Transport Economics 2014:6, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    • Handle: RePEc:hhs:ctswps:2014_006
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    1. Fridstrom, Lasse & Elvik, Rune, 1997. "The Barely Revealed Preference behind Road Investment Priorities," Public Choice, Springer, vol. 92(1-2), pages 145-168, July.
    2. Jan Anne Annema & Carl Koopmans & Bert Van Wee, 2006. "Evaluating Transport Infrastructure Investments: The Dutch Experience with a Standardized Approach," Transport Reviews, Taylor & Francis Journals, vol. 27(2), pages 125-150, June.
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    1. Volden, Gro Holst, 2018. "Public project success as seen in a broad perspective," Evaluation and Program Planning, Elsevier, vol. 69(C), pages 109-117.
    2. Andersson, Henrik & Hultkrantz, Lars & Lindberg, Gunnar & Nilsson, Jan-Eric, 2017. "The role of economic analysis for investment priorities in Sweden’s transport sector," Working papers in Transport Economics 2017:12, CTS - Centre for Transport Studies Stockholm (KTH and VTI), revised 23 May 2018.
    3. Eliasson, Jonas & Savemark, Christian & Franklin, Joel, 2020. "The impact of land use effects in infrastructure appraisal," Transportation Research Part A: Policy and Practice, Elsevier, vol. 141(C), pages 262-276.
    4. Odeck, James & Kjerkreit, Anne, 2019. "The accuracy of benefit-cost analyses (BCAs) in transportation: An ex-post evaluation of road projects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 120(C), pages 277-294.
    5. Bondemark, Anders & Sundbergh, Pia & Tornberg, Patrik & Brundell-Freij, Karin, 2020. "Do impact assessments influence transport plans? The case of Sweden," Transportation Research Part A: Policy and Practice, Elsevier, vol. 134(C), pages 52-64.
    6. Niek Mouter, 2017. "Dutch politicians’ use of cost–benefit analysis," Transportation, Springer, vol. 44(5), pages 1127-1145, September.
    7. Welde, Morten & Bråthen, Svein & Rekdal, Jens & Zhang, Wei, 2020. "Road investments and the trade-off between private and public funding," Research in Transportation Economics, Elsevier, vol. 82(C).
    8. Vargas, Andrés & Sarmiento Erazo, Juan Pablo & Diaz, David, 2020. "Has Cost Benefit Analysis Improved Decisions in Colombia? Evidence from the Environmental Licensing Process," Ecological Economics, Elsevier, vol. 178(C).
    9. Beria, Paolo & Debernardi, Andrea & Ferrara, Emanuele, 2017. "Measuring the long-distance accessibility of Italian cities," Journal of Transport Geography, Elsevier, vol. 62(C), pages 66-79.
    10. Welde, Morten & Tveter, Eivind, 2022. "The wider local impacts of new roads: A case study of 10 projects," Transport Policy, Elsevier, vol. 115(C), pages 164-180.
    11. Kenneth Løvold Rødseth & Rasmus Bøgh Holmen & Timo Kuosmanen & Halvor Schøyen, 2023. "Market access and seaport efficiency: the case of container handling in Norway," Journal of Shipping and Trade, Springer, vol. 8(1), pages 1-25, December.
    12. 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.
    13. Mouter, Niek, 2017. "Dutch politicians’ attitudes towards Cost-Benefit Analysis," Transport Policy, Elsevier, vol. 54(C), pages 1-10.
    14. Cohen-Blankshtain, Galit, 2021. "On another track: Differing views of experts and politicians on rail investments in peripheral localities," Journal of Transport Geography, Elsevier, vol. 95(C).
    15. Mouter, Niek & van Cranenburgh, Sander & van Wee, Bert, 2017. "An empirical assessment of Dutch citizens' preferences for spatial equality in the context of a national transport investment plan," Journal of Transport Geography, Elsevier, vol. 60(C), pages 217-230.
    16. Shahirari, Siroos & Rashidi, Taha & Dixit, Vinayak & Robson, Edward, 2021. "Assessing economic benefits of transport projects using an integrated transport-CGE approach," Research in Transportation Economics, Elsevier, vol. 90(C).
    17. Bondemark, Anders & Andersson, Henrik & Brundell-Freij, Karin, 2023. "Do the distributional preferences of national infrastructure planners diverge from those of the public?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 170(C).
    18. Halse, Askill Harkjerr & Fridstrøm, Lasse, 2019. "Explaining low economic return on road investments. New evidence from Norway," MPRA Paper 94389, University Library of Munich, Germany.
    19. Schubert, Daniel & Sys, Christa & Vanelslander, Thierry & Roumboutsos, Athena, 2022. "No-queue road pricing: A comprehensive policy instrument for Europe?," Utilities Policy, Elsevier, vol. 78(C).
    20. Iain Docherty & Jon Shaw & Greg Marsden & Jillian Anable, 2018. "The curious death – and life? – of British transport policy," Environment and Planning C, , vol. 36(8), pages 1458-1479, December.
    21. Robson, Edward N. & Wijayaratna, Kasun P. & Dixit, Vinayak V., 2018. "A review of computable general equilibrium models for transport and their applications in appraisal," Transportation Research Part A: Policy and Practice, Elsevier, vol. 116(C), pages 31-53.
    22. Jussila Hammes, Johanna & Volden, Gro Holst & Welde, Morten & Börjesson, Maria & Odeck, James, 2021. "Finding transport projects with high value for money : what are the socio-geographic determinants?," Working Papers 2021:4, Swedish National Road & Transport Research Institute (VTI).
    23. Eliasson, Jonas, 2023. "Tillbaka till framtiden: en nygammal planprocess [Back to the future: a renewed infrastructure planning process]," MPRA Paper 118658, University Library of Munich, Germany.

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    More about this item

    Keywords

    Cost benefit analysis; Project appraisal; Public decision making; Transport investments;
    All these keywords.

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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