Cost–Benefit Analysis and the Rates of Return of Infrastructure Projects: Evidence from International Organizations

2010 ◽  
Vol 17 (3) ◽  
pp. 587-610 ◽  
Author(s):  
Chiara Del Bo ◽  
Massimo Florio
Keyword(s):  
International Organizations ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Benefit Analysis ◽  
Infrastructure Projects ◽  
Rates Of Return

Cost — Benefit Analysis and Large-Scale Infrastructure Projects: State of the Art and Challenges

2007 ◽  
Vol 34 (4) ◽  
pp. 598-610 ◽  
Author(s):  
Roger Vickerman
Keyword(s):  
Computable General Equilibrium ◽  
Imperfect Competition ◽  
Large Scale ◽  
Best Practice ◽  
Network Effects ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Benefit Analysis ◽  
Infrastructure Projects ◽  
Long Time

In this paper I review the problems surrounding the use of cost-benefit analysis (CBA) in the appraisal of large-scale infrastructure projects. I define the requirements of a best-practice transport CBA and show the difficulties in achieving these for large-scale projects. The main difficulties discussed are those of forecasting over long time periods, dealing with imperfect competition in transport-using sectors to obtain estimations of wider transport benefits, introducing private finance and appraising network effects. I conclude that CBA can remain a valuable tool as part of the appraisal process but that the inputs to a CBA have to be carefully assessed, and complementary approaches, such as computable general equilibrium modelling, have a useful role to play for very large or network projects.

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