Transport Project Evaluation: Extending the Social Cost Benefit Approach
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BOOK REVIEW Transport Project Evaluation: Extending the Social Cost Benefit Approach. Elvira Haezendonck (ed.), Edward Elgar, 2007, US price: $115.00; UK price: £65.00, UK. ISBN 978 1 84720 379 3 Maritime Economics & Logistics (2008) 10, 322–324. doi:10.1057/mel.2008.7
As society evolved over time, it has increasingly become more complex. This complexity affects all aspects of society and has a particular relevance for public decision making, especially regarding decisions with a substantial budgetary impact. For example, with respect to large transport infrastructure investments, stakeholders are also evaluating the economic and social return expected to arise from these investments and, as a result, stakeholders are becoming a more demanding and active group. Hence, transport project appraisal is becoming more complex as well. Incomplete information on, for example, the environmental impact of certain investments, uncertainty of exact traffic evolutions and pay-offs, an increasing set of regulations and regulatory bodies and controversy on the methodology to be used for the valuation of environmental and social impacts are just a few of the aspects that complicate the investment decision-making process for transport infrastructure. Decision makers are confronted with the difficult problem of evaluating potential outcomes and choosing policies to achieve the desired outcomes in the presence of this intense complexity. Decisions that are well intended can lead to losses in social welfare as a result of unexpected outcomes or, in case, outcomes with unexpected consequences. Decision makers therefore have a great need for a framework that structures information in such a way that the complexity is more manageable, but still takes into account the implications of the complexity and the need for incorporating the different views of stakeholders involved in a particular transport investment project. This book describes how transport project evaluation has recently evolved towards a comprehensive evaluation framework. This framework takes into account the complex institutional environment and views of multiple and diversified stakeholders involved in, for example, transport infrastructure investment decision making. Given the ever increasing demand for transport, the search for sustainable mobility and green transport solutions and the limited means governments are able to invest in transport (infrastructure) projects, traditional evaluation methods, such as cost–benefit analysis (CBA), are reconsidered and extended in this volume.
Book Review
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In fact, decision-making on transport infrastructure projects in the EU and the methods used to underpin these decisions have changed remarkably in recent years. In the 1980s, CBA was used most frequently for transport project evaluation. The instrument is based upon perfect markets in which market prices reflect the marginal willingness-to-pay of society for a certain good or service. In reality, however, substantial market failures do exist a
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