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Recognising the complementary contributions of cost benefit analysis and economic impact analysis to an understanding of the worth of public transport investment: A case study of bus rapid transit in Sydney, Australia

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  • Weisbrod, Glen
  • Mulley, Corinne
  • Hensher, David

Abstract

With competing demands for scarce resources, governments need to demonstrate the value for money of new infrastructures. Cost Benefit Analysis (CBA) is the traditional welfare approach to demonstrate the value of using public funds. CBA captures the tangible costs and benefits for users, the benefits and costs of externalities and some of the wider economic benefits. However, this welfare approach does not distinguish the distribution of activity impacts in terms of spatial locations, timing, or economic sectors, nor does it capture all impacts on the economy of a region. Economic Impact Analysis (EIA) shows such changes in terms of jobs, compensation and business output. Economic impact changes are very much the language used by politicians in explaining the benefits of an investment and making the points better understood by the electorate. This paper provides the rationale for using an extended analysis EIA as a complement to the welfare based CBA. The approach is illustrated by a case study of a bus rapid transit (BRT) proposal in Sydney. It shows how these approaches are complementary, answers different questions, and can be used together to provide a more holistic evaluation of the value of a public transport infrastructure change.

Suggested Citation

  • Weisbrod, Glen & Mulley, Corinne & Hensher, David, 2016. "Recognising the complementary contributions of cost benefit analysis and economic impact analysis to an understanding of the worth of public transport investment: A case study of bus rapid transit in ," Research in Transportation Economics, Elsevier, vol. 59(C), pages 450-461.
  • Handle: RePEc:eee:retrec:v:59:y:2016:i:c:p:450-461
    DOI: 10.1016/j.retrec.2016.06.007
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    References listed on IDEAS

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    1. Hensher, David A. & Truong, Truong P. & Mulley, Corinne & Ellison, Richard, 2012. "Assessing the wider economy impacts of transport infrastructure investment with an illustrative application to the North-West Rail Link project in Sydney, Australia," Journal of Transport Geography, Elsevier, vol. 24(C), pages 292-305.
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    Cited by:

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    2. Jędrzej Charłampowicz, 2018. "Supply Chain Efficiency On The Maritime Container Shipping Markets – Selected Issues," Business Logistics in Modern Management, Josip Juraj Strossmayer University of Osijek, Faculty of Economics, Croatia, vol. 18, pages 357-368.
    3. Hafiz Suliman Munawar & Sara Imran Khan & Zakria Qadir & Yusra Sajid Kiani & Abbas Z. Kouzani & M. A. Parvez Mahmud, 2021. "Insights into the Mobility Pattern of Australians during COVID-19," Sustainability, MDPI, vol. 13(17), pages 1-19, August.

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    More about this item

    Keywords

    Wider economic impacts; Benefit-cost analysis; Economic impact; Bus rapid transit; Sydney; Case study;
    All these keywords.

    JEL classification:

    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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