ECONOMIC EFFICIENCY AND ROAD EXPENDITURES: THE CASE OF RURAL ARTERIALS

The paper reviews road evaluation methods in Australia, traces their evolution and then focuses on the cost benefit analyses which form the core of the present evaluation. Although some limitations of the analyses are recognised by the practitioners these are considered by them not to apply to the rural main road sector. Here the use of cost benefit analysis is justified normally on two grounds: first, that there are exceptional indivisibilities in road outputs and, secondly, that charges on road use are grossly inefficient. Both arguments are examined closely in the context of rural arterial roads and, on the basis of the evidence, both are firmly rejected. It is then argued that investment in this road sector should take place in terms of whether marginal revenues exceed long run marginal costs. One implication of this revised criterion, namely that improved roads should be provided by private enterprise, is considered. The success of this policy would depend upon whether roads were an increasing cost industry. For rural arterials the evidence available does indicate that this is so. However, the possibility that these findings would not apply to other road sectors or different ranges of output, or would be affected by developments in road technology, suggests that road infrastructure supplied, as now, by the public sector is probably more appropriate. (Author/TRRL)

• Corporate Authors:

  University of Adelaide

  Department of Economics, North Terrace
  Adelaide, South Australia  Australia  5005
• Authors:
  • STARKIE, DNM
• Publication Date: 1981

Media Info

• Features: References; Tables;
• Pagination: 40 p.

Subject/Index Terms

• TRT Terms: Arterial highways; Benefit cost analysis; Cost effectiveness; Costs; Economic efficiency; Evaluation and assessment; Finance; Highway planning; Highways; Investments; Level of service; Methodology; Private enterprise; Rural areas; Rural highways
• Uncontrolled Terms: Financial sources
• Geographic Terms: Australia
• ITRD Terms: 8006: Australia; 224: Cost; 226: Cost benefit analysis; 237: Economic efficiency; 9020: Evaluation (assessment); 2755: Highway; 227: Investment; 653: Level of service; 2748: Main road; 9102: Method; 328: Rural area
• Subject Areas: Economics; Finance; Highways; Society; I10: Economics and Administration;

Filing Info

• Accession Number: 00341837
• Record Type: Publication
• Source Agency: ARRB
• Report/Paper Numbers: No. 81-1 Monograph
• Files: ITRD, TRIS, ATRI
• Created Date: Dec 22 1981 12:00AM