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An inconsistency in the European Union Guidelines for Cost-Benefit Analysis of investment projects

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  • Jerome Massiani

Abstract

European Union Guidelines have been for long the cornerstone of the evaluation of European funding for projects. An important aspect of this method is the general exclusion of taxation from computation. We argue that when applied on projects that shift demand from a highly taxed mode to a slightly less taxed one, the modus operandi described by the guidelines and used by analysts in documented papers, actually violates the principle of net of taxes computation. In most cases this inconsistency will be hardly visible to the analyst. However, when the procedure deals with projects where mode shift is important, in absolute or relative terms, the inconsistency will create important distortions in the results.

Suggested Citation

  • Jerome Massiani, 2021. "An inconsistency in the European Union Guidelines for Cost-Benefit Analysis of investment projects," Working Papers 470, University of Milano-Bicocca, Department of Economics.
    • Handle: RePEc:mib:wpaper:470
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    File URL: http://repec.dems.unimib.it/repec/pdf/mibwpaper470.pdf
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    Cited by:

    1. 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).
    2. Jérôme Massiani, 2023. "Economic Expertise and Large Infrastructures Projects: The 2019 Cost Benefit Analysis of the Lyon Turin Project [Expertise économique et grandes infrastructures : l’analyse coûts- avantages du Lyon," Post-Print hal-04159527, HAL.

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    Keywords

    Cost-Benefit Analysis; European Union Guidelines; fuel duties; taxation; rail project; multimodal evaluation.;
    All these keywords.

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