Estimating the Incidence of Accidents

It is common practice to estimate the incidence of accidents based on road type and traffic conditions. Analysts first estimate the impact of projects on expected traffic levels and conditions. With this estimate as a basis, they forecast the rate and severity of accidents. The incidence of accidents, however, is often sensitive to local conditions and road design, both of which are difficult to incorporate into the forecasting procedure. As a result, forecasts of accident rates are usually unreliable. Therefore, we recommend careful risk analysis for infrastructure investment projects that rely substantially on accident savings for their justification. Most developing countries lack documentation on the impact of safety measures on accident reduction. Consequently, estimating the benefits of projects usually entails comparing the baseline figures with accident rates in conditions similar to the ones prevailing with the project elsewhere in the country or in other countries.

Producer Surplus or Net National Income Approach

Transport projects sometimes break new ground. Workers occasionally construct new rural roads, for example, in areas where no conventional roads exist. In these cases, analysts have extreme difficulty obtaining baseline data as well as predicting future traffic flows. For these reasons, estimating the benefits of penetration roads uses alternative approaches, such as national income increments.

The problems that arise as one estimates the benefits of penetration roads can be illustrated as follows. When a road is built into an area where motor vehicles cannot enter, the initial traffic volume is zero. As a result, the benefits of the project will stem solely from the traffic generated by the new road, that is, from the increase in consumer surplus.

As can be seen from older article, in road improvement projects the benefits from cost reduction are likely to be larger than the benefits from increased consumer surplus Moreover, the estimates of actual costs and actual traffic are usually reliable, whereas the estimates of consumer surplus  which depend on traffic projections, are subject to larger margins of error. The estimated benefits of penetration roads, however, are based solely on projections of traffic and costs. In summary, analysts can estimate benefits of road improvements more accurately than benefits of penetration roads. As can be seen from older article, in road improvement projects the benefits from cost reduction  area C1C2da  are likely to be larger than the benefits from increased consumer surplus  Moreover, the estimates of actual costs and actual traffic  are usually reliable, whereas the estimates of consumer surplus  which depend on traffic projections, are subject to larger margins of error. The estimated benefits of penetration roads, however, are based solely on projections of traffic and costs. In summary, analysts can estimate benefits of road improvements more accurately than benefits of penetration roads.