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Cost-Benefit Analysis for Investment Decisions: Chapter 17 (Appraisal of Upgrading a Gravel Road)

Author

Listed:
  • Glenn Jenkins

    (Queen's University, Canada and Eastern Mediterranean University, Cyprus)

  • Chun-Yan Kuo

    (Queen's University, Canada)

  • Arnold C. Harberger

    (University of California, Los Angeles, USA)

Abstract

The purpose of this chapter is to illustrate how a proposed investment in upgrading a gravel road to a tarred surface should be evaluated. The project is located in the Limpopo Province of South Africa. It involves upgrading of two existing, mainly gravel, roads into a tar surface road connecting Sekhukhune and Capricorn districts. The whole route has several sections starting from Flag Boshielo to Mafefe, Sekororo, Ga Seleka and finally to Mmatladi. It has been estimated that more than 98% of the sections of gravel road are considered in either poor or fair condition. The main users of the existing gravel road are mini-buses and private vehicles transporting people from local areas to Lebwakhomo and other towns. The predominant economic activity in the region is small-scale agriculture, carried out on a number of irrigation schemes. An lesson from this case is the importance of evaluating segments of a road separately if the traffic on the segments or the cost of upgrading are significantly different across segments.

Suggested Citation

  • Glenn Jenkins & Chun-Yan Kuo & Arnold C. Harberger, 2011. "Cost-Benefit Analysis for Investment Decisions: Chapter 17 (Appraisal of Upgrading a Gravel Road)," Development Discussion Papers 2011-17, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:210
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    More about this item

    Keywords

    Uncertainty; Risk; Investment Appraisal;
    All these keywords.

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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