The Economics of Infrastructure Investment: Beyond Simple Cost Benefit Analysis
This non-technical ‘think-piece’ examines aspects of infrastructure project evaluation, concentrating on circumstances that may render a standard cost benefit analysis (CBA) inappropriate. It is designed to make infrastructure investors and planners think deeply about their assumptions and to broaden the range of issues that are taken into account. Issues considered include: the role of CBA; network effects (increasing returns to scale) and the endogeneity of resources within an economy; the valuation of productive versus consumptive benefits; the value of traded versus non-traded sector production; the role and choice of the discount rate; and the importance of considering option values when making infrastructure investment and disinvestment decisions.
|Date of creation:||Aug 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Level 1, 97 Cuba Street, P.O. Box 24390, Wellington|
Web page: http://www.motu.org.nz
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- Edward L. Glaeser & Joshua D. Gottlieb, 2009.
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NBER Working Papers
14806, National Bureau of Economic Research, Inc.
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Discussion Paper / Institute for Empirical Macroeconomics
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"Public infrastructure investments, productivity and welfare in fixed geographic areas,"
Journal of Public Economics,
Elsevier, vol. 83(3), pages 405-428, March.
- Andrew F. Haughwout, 2000. "Public infrastructure investments, productivity and welfare in fixed geographic areas," Staff Reports 104, Federal Reserve Bank of New York.
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- Arthur Grimes, 2009. "Capital intensity and welfare: traded and non-trade sector determinants," New Zealand Economic Papers, Taylor & Francis Journals, vol. 43(1), pages 21-39.
- Weitzman, Martin L., 1998. "Why the Far-Distant Future Should Be Discounted at Its Lowest Possible Rate," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 201-208, November.
- Arthur Grimes & Yun Liang, 2010. "Bridge to Somewhere: Valuing Auckland's Northern Motorway Extensions," Journal of Transport Economics and Policy, University of Bath, vol. 44(3), pages 287-315, September.
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