Stochastic Socio-economic Ex-ante Evaluation of Road Transport Infrastructure Projects

Dimitrios Kantianis ()

A chapter in Global, Regional and Local Perspectives on the Economies of Southeastern Europe, 2021, pp 315-326 from Springer

Abstract: Abstract The successful delivery of major infrastructure projects to meet social needs is at the core of European Union (EU) 2020 strategy aiming at the enhancement of territorial cohesion and economic development. Selecting the “most valued” public infrastructure investments is obviously crucial, especially during economic recession periods. Cost-benefit analysis (CBA) has long been accepted as the leading analytical technique to assist decision-making in the appraisal of public mega projects by assessing their “discounted” whole-life cycle socio-economic benefits and costs. Nonetheless, the uncertain nature of the critical variables involved in the analysis is endemic in any ex-ante project evaluation process and, therefore, an appropriate quantitative (stochastic) risk assessment (QRA) is indispensable. According to relevant EU regulations, the inclusion of QRA in CBA is a prerequisite for the approval of major projects. The herein presented paper aims at investigating the level of significance of adopting a stochastic approach to the socio-economic evaluation of public road transport infrastructure projects through the application of QRA within the traditional CBA framework. Both CBA and QRA methodologies are presented and an illustrative numerical example for a road transport infrastructure project is demonstrated: a practical probabilistic CBA implementation concerning the decision whether to proceed with the construction of a new peripheral motorway for improving the existing local road traffic conditions in the connection of two urban areas. From the results of the analysis, the advantages of stochastic appraisal and selection of major capital investment projects are vindicated.

Keywords: Transport infrastructure; Public decision-making; Cost-benefit analysis; Monte Carlo simulation; R58; D81; L91 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-57953-1_20

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DOI: 10.1007/978-3-030-57953-1_20

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