Relating cost-benefit analysis results with transport project decisions in the Netherlands

Annema, Jan Anne; Frenken, Koen; Koopmans, C.C.; Kroesen, Maarten

doi:10.1007/s12076-016-0175-5

Cited by 31 publications

(26 citation statements)

References 24 publications

(23 reference statements)

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“…Several researchers tried to uncover the extent to which CBA actually impacts decision-making by investigating the statistical relation between the results of CBA studies and political decisions on investments in transport infrastructure using quantitative analyses (e.g. Annema et al, 2017;Eliasson and Lundberg, 2012;Eliasson et al, 2015;Fridstrøm and Elvik, 1997;Nellthorp and Mackie, 2000;Odeck, 1996Odeck, , 2010. The broad picture is that these studies show that there is no significant statistical relation between the monetized effect estimations in CBA studies and political decisions.…”

Section: The Use Of Cost-benefit Analysis In a Political Environmentmentioning

confidence: 99%

“…Another argument that has been raised in the literature for explaining why politicians hardly use CBA results for ranking projects concerns politicians' lack of understanding of the methodology (e.g. Annema et al, 2017). However, both the studies of Nyborg and Mouter (2017a) do not provide confirming evidence for this potential explanation.…”

Section: The Use Of Cost-benefit Analysis In a Political Environmentmentioning

confidence: 99%

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The Politics of Cost–Benefit Analysis

Mouter¹

2019

Oxford Research Encyclopedia of Politics

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Cost-benefit analysis (CBA) is a widely used economic appraisal method that aims to support politicians in making decisions about projects and policies. Several researchers have tried to uncover the extent to which CBA actually impacts decision-making by investigating the statistical relation between the results of CBA studies and political decisions. Although these studies show that there is no significant statistical relation between the outcomes of CBA studies and political decisions, there is clear evidence that the institutionalization of CBA affects the planning and decision-making process within the bureaucracy. Civil servants, for instance, use CBAs to government projects in the early phases of the planning process. The literature identifies various barriers that hamper politicians’ use of CBA when forming their opinion. First, politicians often receive results of CBA studies too late in the process. When politicians receive a CBA after they already made up their mind and communicated their viewpoint, the chance is low that the results of the CBA will (substantially) influence their decision. A second important barrier that limits the use of CBA by politicians is that they do not have enough trust in CBA’s impartiality. A third barrier is that politicians contest value judgments implicit in CBA. The literature distinguishes six ideological value judgments that inevitably need to be made when conducting a CBA: (a) Which individuals have standing in a CBA? (b) Which preferences have standing in a CBA? (c) Which procedure is used to value impacts? (d) On which dimensions are standard numbers differentiated? (e) Which weight is assigned to preferences of individuals in the social welfare function? (f) Which approach is adopted to select the social discount rate? The implication of the fact that CBA analysts cannot escape from making value judgments when conducing the study is that CBA is currently a problematic tool for democratic decision-making because, when applied in practice, the analysis is based on a specific set of politically loaded premises that fosters (damages) the interests of politicians (not) endorsing these premises. It is possible to overcome this problem through informing politicians about the extent to which switching value judgements leads to different CBA outcomes. The introduction of so-called normative sensitivity analyses safeguards that politicians with different belief systems are equally equipped to use the results of a CBA to arrive at a well-founded evaluation of a government project.

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Section: The Use Of Cost-benefit Analysis In a Political Environmentmentioning

confidence: 99%

Section: The Use Of Cost-benefit Analysis In a Political Environmentmentioning

confidence: 99%

The Politics of Cost–Benefit Analysis

Mouter¹

2019

Oxford Research Encyclopedia of Politics

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“…Regarding the macro-micro economy, Mohring [23] considers CBA in the contexts of a closed and open economy. Furthermore, scholars then focused on specific aspects of transport infrastructure projects such as using cost-benefit ratios to rank road project priorities [24], the relationship between political attitudes and changes in analytic results [25], and the influences of CBA results on investment decisions [26,27]. Although CBA has brought many benefits to policy-decision makers, the Transit Co-operative Research Program found that there are major limitations related to the use of CBA in evaluating project impacts on the local community [28].…”

Section: Literature Reviewmentioning

confidence: 99%

Application of System Dynamics to Evaluate the Social and Economic Benefits of Infrastructure Projects

Nguyen

Cook

Ireland

2017

Systems

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Cost-Benefit Analysis (CBA) is often employed to inform decision makers about the desirability of transport infrastructure investment options. One of the main limitations of traditional CBA approaches is that they do not provide a dynamic view that explicitly illustrates the cost and benefit relationships between component entities over time. This paper addresses this issue by describing a System Dynamics (SD) approach that can perform transport infrastructure CBA through the application of systems thinking to develop a causal-loop model that can subsequently be operationalised into an executable stock-and-flow model. Execution of this model readily enables sensitivity analysis of infrastructure investment options and visualisation of the cost-benefit behaviour of each variant over time. The utility of the approach is illustrated through a case study, the Co Chien Bridge project in Vietnam, using a model that incorporates conventional economic metrics and factors that measure indirect project benefits, such as impact on gross domestic product, unemployment rate, and total taxes gained from affected economic sectors.

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“…Rational and reliable methods are necessary to compare the advantages and disadvantages of the projects and to establish the financing priorities. Therefore, assessment methods have been established at European or national level [1][2][3][4][5][6][7][8][9]. Various methods of transport investment assessment and planning have been compared in several studies [10][11][12][13][14][15].…”

Section: Introductionmentioning

confidence: 99%

Including negative externalities during transport infrastructure construction in assessment of investment projects

Raicu

Costescu

Popa

et al. 2019

Eur. Transp. Res. Rev.

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The paper presents a method for optimizing the financing option for transport infrastructure project. The execution time for large project is substantial and the social costs generated during the construction phase are insufficient included in the assessment models. These are the main reasons for starting the research to extend the project evaluation methods with procedures that consider also social costs during the implementation of the project, besides the social costs after work completion. The proposed method aims to enhance the solution given by the current applied methods for investment assessment. Starting from the results of the present procedures of transport investment assessment, two approaches are presented. The first one assumes that the work starts at the reference year and different construction schemes can be applied. The optimal time of project implementation is determined considering the social costs during construction and after project implementation. In the second approach, the purpose is to determine the moments of the starting and the completion of the works for minimum of the losses caused by the social costs before and during the project implementation. The paper emphasizes that social cost during transport infrastructure work must be considered in investment timing. In this regard, supplementary procedures can be added to the current method used for ranking of the transport infrastructure investments. For an investment measure identified as opportune, the proposed method aim to minimize the total social cost.

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Relating cost-benefit analysis results with transport project decisions in the Netherlands

Cited by 31 publications

References 24 publications

The Politics of Cost–Benefit Analysis

The Politics of Cost–Benefit Analysis

Application of System Dynamics to Evaluate the Social and Economic Benefits of Infrastructure Projects

Including negative externalities during transport infrastructure construction in assessment of investment projects

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