Do Cost-benefit Analyses Really Influence Transport Investment Decisions? Experiences from the Swedish National Transport Investment Plan 2010-2021.



Do Cost-benefit Analyses Really Influence Transport Investment Decisions? Experiences from the Swedish National Transport Investment Plan 2010-2021.

Authors

J Eliasson, M Lundberg, Centre for Transport Studies KTH, SE

Description

We explore the impact of CBA on transport decisions through statistical analysis, the role of CBA in planning practice, and the robustness of CBA results with respect to scnario assumptions and relative benefit valuations.

Abstract

Cost-benefit analysis (CBA) has been used for evaluating proposed transport investments for several decades. Considerable efforts have been spent on developing forecasting and valuation methodology. Swedish transport planning puts a strong emphasis on CBA, and standard Swedish methodology can reasonably be described as state-of-the-art. While CBA is useful and enlightening for evaluating single investments and policy measure, CBA really becomes indispensible when it becomes necessary to compare the relative merits of many alternative investments against each other. An extreme example is the construction of a national transport investment plan, where several hundred investments must be compared and ranked against each other. This study builds on the experiences from the making of the Swedish national Transport Investment Plan 2010-2021. Starting from nearly 700 suggested rail and road investments, 479 became subject to complete cost-benefit analyses, and 239 of those were chosen for inclusion in the plan. Beforehand, the Government had emphasized the importance of cost-efficiency in general and CBA in particular. We are now in a position to evaluate to what extent CBA played a role for the final choices of investments in the Investment Plan. Specifically, we investigate the following issues:

1. To what extent do CBA results affect the choices of which transport investments that are built? Through statistical analysis, we explore how the benefit-cost ratio of an investment affects its probability to be included in the plan, and show that there is a strong correlation ? especially for low and moderate benefit-cost ratios. However, the correlation is much stronger for the investments selected by the planning adminstrations than for those pointed out directly by politicians.
2. What are the likely explanations of discrepancies between CBA results and eventual investment decisions? We explore whether considerations such as geographical fairness and methodological deficits explain discrepancies between CBA ranking and what is eventually included in the plan, and show that this cannot explain to any large extent.
3. How do planners use CBA results in their professional practice? By interviewing planners and decision-makers about how CBA was used in the process, we are able to pinpoint the role of CBA. It turns out that CBA has played a rather important role, both for ranking investments and also for ?trimming? investments to reduce costs while still achieving mpst of the benefits.
4. How robust are CBA outcomes, in terms of scenario assumptions and relative valuations of different types of benefits? We show that the CBA ranking is very robust to most reasonable variations of scenario assumptions, and also to large variations of relative valuations (e.g. time vs. traffic safety vs. emissions).
5. What are the most important areas for improvement of the CBA state-of-practice? Going through the list of 479 CBAs, we identify the most important areas for improvement of CBA methdology, where lack of reliable methodology means that the CBA misses major costs and/or benefits in a large number of cases.

Publisher

Association for European Transport