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Risk in Transport Investments

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  • André Palma
  • Nathalie Picard
  • Laetitia Andrieu

Abstract

We discuss how the standard Cost-Benefit Analysis should be modified in order to take risk (and uncertainty) into account. We propose different approaches used in finance (Value at Risk, Conditional Value at Risk, Downside Risk Measures, and Efficiency Ratio) as useful tools to model the impact of risk in project evaluation. After introducing the concepts, we show how they could be used in CBA and provide some simple examples to illustrate how such concepts can be applied to evaluate the desirability of a new project infrastructure.
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Suggested Citation

  • André Palma & Nathalie Picard & Laetitia Andrieu, 2012. "Risk in Transport Investments," Networks and Spatial Economics, Springer, vol. 12(2), pages 187-204, June.
    • Handle: RePEc:kap:netspa:v:12:y:2012:i:2:p:187-204
    DOI: 10.1007/s11067-009-9109-8
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    Cited by:

    1. André Palma & Robin Lindsey & Stef Proost, 2012. "Introduction to the Special Issue on Funding Transportation Infrastructure," Networks and Spatial Economics, Springer, vol. 12(2), pages 183-185, June.
    2. Yingying Kang & Rajan Batta & Changhyun Kwon, 2014. "Value-at-Risk model for hazardous material transportation," Annals of Operations Research, Springer, vol. 222(1), pages 361-387, November.
    3. Omid M. Rouhani & H. Oliver Gao, 2016. "Evaluating Various Road Ownership Structures and Potential Competition on an Urban Road Network," Networks and Spatial Economics, Springer, vol. 16(4), pages 1019-1042, December.
    4. David Watling & Giulio Cantarella, 2015. "Model Representation & Decision-Making in an Ever-Changing World: The Role of Stochastic Process Models of Transportation Systems," Networks and Spatial Economics, Springer, vol. 15(3), pages 843-882, September.
    5. Aleksandr Saprykin & Ndaona Chokani & Reza S. Abhari, 2021. "Uncertainties of Sub-Scaled Supply and Demand in Agent-Based Mobility Simulations with Queuing Traffic Model," Networks and Spatial Economics, Springer, vol. 21(2), pages 261-290, June.
    6. Turró, Mateu & Penyalver, Domingo, 2019. "Hunting white elephants on the road. A practical procedure to detect harmful projects of transport infrastructure," Research in Transportation Economics, Elsevier, vol. 75(C), pages 3-20.
    7. Katarina Buganova & Maria Luskova & Jozef Kubas & Michal Brutovsky & Jaroslav Slepecky, 2021. "Sustainability of Business through Project Risk Identification with Use of Expert Estimates," Sustainability, MDPI, vol. 13(11), pages 1-17, June.
    8. Raphael Konde Kazungu & Ayyoob Sharifi, 2023. "Investigating Risks to the Implementation of the Great Equatorial Landbridge (GELB) Highway Project across Africa," Sustainability, MDPI, vol. 15(14), pages 1-22, July.
    9. Laurino, Antonio & Beria, Paolo & Grimaldi, Raffaele, 2010. "Financing transport infrastrucure projects in Italy: a critical analysis of the main approaches," MPRA Paper 29140, University Library of Munich, Germany.

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