Transport projects often increase the supply of public goods. Consequently,
it is difficult to measure their benefits in monetary terms. Although a
welldeveloped and straightforward conceptual framework for measuring the benefits
of transport projects is available, the data requirements are intensive and
sometimes daunting. This article illustrates the application of these
techniques to the assessment of transport projects in general, but pays particular
attention to road projects. As analysts can readily apply the tools developed
in the previous article to the measurement of the costs, we focus on measuring
the benefits.
The evaluation of transport projects requires comparing the situation with
and without the project, as well as comparing it with the next best alternative.
This exercise requires considerable imagination and good judgment. Evaluating
all the feasible alternatives is usually impractical. For example, if urban
buses are overcrowded, one solution may be to reduce demand by raising the
fare, another may be to increase supply by adding more buses, and a third may
be to shift demand by providing alternative modes of transport, such as a
subway or taxis.
An alternative to building an all-weather rural access road may be to invest
in crop storage facilities that hold produce until traveling conditions improve.
Evaluating all feasible alternatives may be prohibitively expensive or
time-consuming, making it necessary to specify clearly the project’s objective
to limit the number of alternatives to examine. Eliminating clearly undesirable
alternatives is also advisable.
The purpose of most transport projects is to lower transport costs. The most
common direct benefits of transport projects include
• Savings in vehicle operating costs
• Time savings
• Reduction in the frequency
and severity of accidents
• Increased comfort, convenience, and reliability of
service.
Transport projects also generate indirect benefits. The
most commonly cited include
• Stimulation of economic development
• Environmental improvements.
Not every transport project generates every one of these benefits. Not all
of these benefits are equally difficult to measure. Savings in vehicle
operating costs are the easiest to measure in monetary terms. The value of
environmental improvements, increased comfort, and convenience are the most
difficult.
Conceptual Framework
Most transport projects involve improving an existing service to lower transport
costs. Thus, governments usually resurface existing roads to lower the costs of
operating vehicles or widen them to relieve congestion. Ports and airports are
similarly improved to reduce congestion or to
lower usage costs. Figure 10.1 illustrates the conceptual framework for analyzing
projects that involve improving existing facilities.
Forecasting Demand
The most important step in estimating the benefits of transport projects is
estimating demand for the new service. Transport projects are often longlived, hence
the decision to undertake such investments rests on long-term forecasts. By
their very nature, then, transport projects involve considerable uncertainty.
Transport projects often also involve large and lumpy investments. If analysts
make a mistake concerning demand, society may be burdened with underused,
costly investments. Thus, estimating demand as accurately as possible should be
complemented with a thorough analysis of uncertainty to gauge the robustness of
the results.
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