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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. 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.
    2. Fridstrom, Lasse & Elvik, Rune, 1997. "The Barely Revealed Preference behind Road Investment Priorities," Public Choice, Springer, vol. 92(1-2), pages 145-168, July.
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    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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