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Infrastructure investment long term contribution: Economic development and wellbeing

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Abstract

EThis paper builds on the empirical research carried out for the Ex post evaluation of investment projects co-financed by the European Regional Development Fund (ERDF) or Cohesion Fund (CF) in the period 1994-1999, recently finalized by the European Commission. The study evaluated the long term contribution, direct and indirect, expected and unexpected, of ten selected environment and transport infrastructure investments to economic development as well as to quality of life and well-being of society. In fact, investment projects can foster economic development, which is generally quantifiable by economic welfare metrics, as e.g. reflected in the cost-benefit analysis. Although the concept of economic development is not disconnected from the wellbeing of society, it is acknowledged that there are a number of other factors that may affect public welfare, which are not usually captured by the traditional economic indicators. Social cohesion, environmental effects, territorial cohesion, institutional learning and social happiness are for instance factors that affect the level of social satisfaction, the perception of social reality and other dimensions which are outside the conventional economic dimension. An innovative methodology was therefore applied for the context of this study to integrate traditional quantitative tools, such as ex-post cost-benefit analysis, with analysis of qualitative evidence. This allowed to study, in a structured way, project effects on economic development together with the determinants of wellbeing to society. The results showed that effects on wellbeing vary from project to project to a high extent. In particular, social satisfaction or dissatisfaction can take place in reference to expectations and, when this is the case, effects (either positive or negative) are of a large magnitude. When social (dis)satisfaction is related to “objective†factors, the intensity of the effects is lower. For example, the introduction of tolls in the motorways reviewed had negative impacts on social happiness, partially counterbalancing general satisfaction arising from factors such as increased leisure opportunities, civic pride, etc. In other cases, delays in implementation generated widespread feelings of frustration among the public, thus limiting the satisfaction regarding the new infrastructure. In the case of the waste water treatment plants reviewed, satisfaction was rather limited by shortcomings intrinsic to the projects’ operations (odours, under-capacity, etc.). On the contrary, when specific measures are taken to purposely alter the perception of projects by the population, effects are magnified. In this respect, the two solid waste treatment projects in Galicia and Portugal are interesting to contrast the role played by awareness-raising campaigns. Both projects “objectively†contributed to citizen’s quality of life through the elimination of landfills and their replacement with green areas, but they both also had to deal with the necessity of selling the choice of the incinerator technology. While awareness-raising activities positively contributed to the satisfaction associated with the latter project, they were (at least initially) a negative factor in the former case. Pressure from environmental organizations also played a role in limiting the positive perception of the project. Finally, it is worth stressing that the level of satisfaction is important not only because it contributes to determining overall project performance in static terms, but also because it can have an influence on project functioning and achievements in dynamic terms. For example, in the solid waste field, social acceptance is an important issue since it may have an influence on the functioning of the projects by making possible better waste separation with regard to recycling and composting.

Suggested Citation

  • Gelsomina Catalano & Davide Sartori, 2013. "Infrastructure investment long term contribution: Economic development and wellbeing," Working Papers 201301, CSIL Centre for Industrial Studies.
  • Handle: RePEc:mst:wpaper:201301
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    File URL: https://www.csilmilano.com/docs/WP2013_01.pdf
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    References listed on IDEAS

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    1. Checchi, Daniele & Florio, Massimo & Carrera, Jorge, 2005. "Privatization Discontent and Its Determinants: Evidence from Latin America," IZA Discussion Papers 1587, Institute of Labor Economics (IZA).
    2. Daniele CHECCHI & Massimo FLORIO & Jorge CARRERA, 2004. "Privatization discontent and its determinants: evidence from Latin America," Departmental Working Papers 2004-23, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    3. Gabriel Leite Mota & Paulo Trigo Pereira, 2008. "Happiness, Economic Well-being, Social Capital and the Quality of Institutions," Working Papers Department of Economics 2008/40, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    4. Dasgupta, Partha, 2001. "Human Well-Being and the Natural Environment," OUP Catalogue, Oxford University Press, number 9780199247882.
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    Cited by:

    1. Ha T.T. Vu & Robert D. Ebel, 2014. "Rural Roads: Multi-Tier Monitoring of Infrastructure: Top Down and Bottom Up," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1415, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

    More about this item

    Keywords

    infrastructure investment; economic development; wellbeing; social satisfaction;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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