Do Cost-Benefit Analyses Influence Transport Investment
Decisions?
Experiences from the Swedish Transport Investment Plan
2010-2021
Jonas Eliasson – CTS
Mattias Lundberg – CTS
CTS Working Paper 2011:X
Abstract
Cost-benefit analysis (CBA) for transport investments is particularly useful for
situations where a large number of investments have to be ranked against each
other. This study draws on experiences from the development of the Swedish
National Transport Investment Plan 2010-2021. We study how CBA results were
used in the process of shaping the investment plan and what influence they had
on investment decisions. In particular, we compare the planners’ rankings versus
the politicians’ rankings. We find that planners’ rankings of investments are
influenced by benefit-cost ratios, in particular for low and moderate benefit-cost
ratios, while the politicians’ rankings are not. By interviewing planners about
how CBA was used in the process, we clarify what role CBA actually played in the
planning process. We find that not only did the CBAs play a role in investment
selection; they also forced investment design to be more cost-efficient.
Furthermore, we explore planners’ implicit valuations, as revealed by their
investment selection, finding that freight benefits were implicitly valued higher
and traffic safety lower than the officially recommended CBA weights. Finally …
Keywords: Cost-Benefit Analysis, Transport plans, Decision-making, Cost
efficiency, implicit valuations
JEL Codes: R41, R42, R48
These can be found at:
http://www.aeaweb.org/jel/jel_class_system.php#Y
Centre for Transport Studies
SE-100 44 Stockholm
Sweden
www.cts.kth.se
Do Cost-Benefit Analyses Influence Transport Investment Decisions?
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INTRODUCTION
Cost-benefit analysis (CBA) has been an important tool for transport planners
for several decades, in particular for evaluating and ranking transport
investments. While CBA is also an important and useful tool for evaluating
transport policy measures (and indeed should probably be used even more for
this than currently), it is for transport investments that CBA is routinely and
widely used and where the methodology is most developed. While CBA is useful
and enlightening for evaluating a single investment, CBA really comes into its
own when the relative merits of many alternative investments are compared
against each other. An extreme example of such a situation is the construction of
a national transport investment plan. During such a process, planners need to
quickly sift through several hundreds of proposed investments, evaluating and
ranking them relative to each other. The sheer number of investments makes
standardized and semi-automatic evaluation tools such as CBA virtually
indispensable.
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METHOD
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