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Do the selected Trans European transport investments pass the Cost Benefit test?

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Listed:
  • Stef PROOST
  • Fay DUNKERLEY
  • Saskia VAN DER LOO
  • Nicole ADLER
  • Johannes BRÖCKER
  • Artem KORZHENEVYCH

Abstract

This paper assesses the economic justification for the selection of priority projects defined under the auspices of the Trans-European transport network. In analyzing the current list of 30 priority projects, we apply three different transport models to undertake a cost-benefit comparison. We find that many projects do not pass the cost-benefit test and only a few of the economically justifiable projects would need European subsidies to make them happen. Two remedies are proposed to minimize the inefficiencies in future project selection. The first remedy obliges each member state or group of states to perform a cost-benefit analysis (followed by a peer review) and to make the results public prior to ranking priority projects. The second remedy would require federal funding to be available only for projects with important spillovers to other countries, in order to avoid pork barrel behaviour.

Suggested Citation

  • Stef PROOST & Fay DUNKERLEY & Saskia VAN DER LOO & Nicole ADLER & Johannes BRÖCKER & Artem KORZHENEVYCH, 2010. "Do the selected Trans European transport investments pass the Cost Benefit test?," Working Papers of Department of Economics, Leuven ces10.02, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:ces10.02
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    1. Nikolaos Thomopoulos & Susan Grant-Muller, 2013. "Incorporating equity as part of the wider impacts in transport infrastructure assessment: an application of the SUMINI approach," Transportation, Springer, vol. 40(2), pages 315-345, February.
    2. Jérôme Massiani, 2024. "Lost in Taxation," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 10(1), pages 81-124, March.
    3. Yunqiang Xue & Hongzhi Guan & Jonathan Corey & Heng Wei & Hai Yan, 2017. "Quantifying a Financially Sustainable Strategy of Public Transport: Private Capital Investment Considering Passenger Value," Sustainability, MDPI, vol. 9(2), pages 1-20, February.
    4. Hans R A Koster & Takatoshi Tabuchi & Jacques-François Thisse, 2022. "To be connected or not to be connected? The role of long-haul economies [Do rural roads create pathways out of poverty? Evidence from India]," Journal of Economic Geography, Oxford University Press, vol. 22(4), pages 711-753.
    5. Wenjie Wu & Yutian Liang & Di Wu, 2016. "Evaluating the Impact of China’s Rail Network Expansions on Local Accessibility: A Market Potential Approach," Sustainability, MDPI, vol. 8(6), pages 1-11, May.
    6. Castillo-Manzano, José I. & Pedregal, Diego J. & Pozo-Barajas, Rafael, 2016. "An econometric evaluation of the management of large-scale transport infrastructure in Spain during the great recession: Lessons for infrastructure bubbles," Economic Modelling, Elsevier, vol. 53(C), pages 302-313.
    7. Massiani, Jérôme & Maltese, Ila, 2022. "Thirty years of socio-economic evaluation of the Lyon–Turin High–Speed rail project," Research in Transportation Economics, Elsevier, vol. 94(C).
    8. Stef Proost & Jacques-François Thisse, 2019. "What Can Be Learned from Spatial Economics?," Journal of Economic Literature, American Economic Association, vol. 57(3), pages 575-643, September.
    9. Catalão, Francisco Pinheiro & Cruz, Carlos Oliveira & Sarmento, Joaquim Miranda, 2019. "The determinants of cost deviations and overruns in transport projects, an endogenous models approach," Transport Policy, Elsevier, vol. 74(C), pages 224-238.
    10. Wubeshet Woldemariam, 2021. "Prioritization of Low-Volume Road Projects Considering Project Cost and Network Accessibility: An Incremental Benefit–Cost Analysis Framework," Sustainability, MDPI, vol. 13(23), pages 1-15, December.
    11. Mononen, Petri & Leviäkangas, Pekka & Haapasalo, Harri, 2017. "From internal efficiency to societal benefits – Multi modal transport safety agency's socio-economic impact analysis," Research in Transportation Economics, Elsevier, vol. 66(C), pages 78-90.
    12. Jan Anne Annema, 2013. "The use of CBA in decision-making on mega-projects: empirical evidence," Chapters, in: Hugo Priemus & Bert van Wee (ed.), International Handbook on Mega-Projects, chapter 13, pages 291-312, Edward Elgar Publishing.
    13. Thomopoulos, Nikolaos & Grant-Muller, Susan, 2013. "Incorporating equity as part of the wider impacts in transport infrastructure assessment: an application of the SUMINI approach," LSE Research Online Documents on Economics 60073, London School of Economics and Political Science, LSE Library.
    14. Bruno Borger & Stef Proost, 2016. "The political economy of pricing and capacity decisions for congestible local public goods in a federal state," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(5), pages 934-959, October.
    15. Jerome Massiani, 2022. "Lost in taxation," Working Papers 501, University of Milano-Bicocca, Department of Economics.
    16. Euijune Kim & Seung‐Woon Moon & Yoojin Yi, 2021. "Analyzing spillover effects of development of Asian highway on regional growth of Northeast Asian countries," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1243-1266, August.
    17. DE BORGER, Bruno & PROOST, Stef, 2015. "Tax and regulatory policies for European transport - getting there, but in the slow lane," Working Papers 2015009, University of Antwerp, Faculty of Business and Economics.

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    More about this item

    Keywords

    transport infrastructure; cost benefit analysis; Europe Union;
    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
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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