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THE ECONOMIC EVALUATION OF INVESTMENT IN AIRPORTS

Evaluating public investment projects involves the kinds of information and criteria that can be used to decide (a) whether or not a project should be undertaken and (b) which of a set of alternative projects should be chosen. The basic criterion is the maximization of gain on the part of society or the agency or department: the level at which the decision is made makes some difference in the way they are used. A formula is used to express the basic relationships in the present net worth of a project, and certain items are considered in detail; revenue stream, benefits, realistic values placed on benefits, the expense stream, dealing with uncertainity, the cutoff period, and the rate of discount. Indirect benefits and costs (spillovers) are discussed, as well as such aspects as the value of human life, and inflation. The question of the conditions under which secondary benefits should be included in the revenue stream is considered as well as the comparison of projects within the same region and in different regions. A set of rules is suggested for choosing a rate of discount, and suggestions are made for handling uncertainity. The problem of deciding how much money to spend on uncertain prospects, and the problem of investing a fixed budget in the best way are also discussed. Comments are made on the importance of the re-investment rate.

  • Supplemental Notes:
    • From Airport Economic Planning by G.P. Howard.
  • Corporate Authors:

    Massachusetts Institute of Technology Press

    55 Haywood Street
    Cambridge, MA  United States  02142-1493
  • Authors:
    • Break, G F
  • Publication Date: 1974

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Filing Info

  • Accession Number: 00155735
  • Record Type: Publication
  • Source Agency: Massachusetts Institute of Technology
  • Files: TRIS
  • Created Date: Aug 31 1977 12:00AM