ECONOMIC BENEFITS OF ROAD TRANSPORT PROJECTS

THE ECONOMIC EVALUATION OF A PROJECT IN ANY SECTOR ENTAILS THE MEASUREMENT AND COMPARISON OF COST AND BENEFIT STREAMS EXPECTED FROM ALTERNATIVE INVESTMENTS. AN EXPOSITION OF THE SOCIAL SURPLUS METHOD OF MEASURING BENEFITS IS PRESENTED. IN THIS METHOD, BENEFITS ARE MEASURED IN TERMS OF THE CONCEPTS OF CONSUMERS' AND PRODUCERS' SURPLUSES. THE EXPOSITION IS INTENDED TO SHED LIGHT ON THE NATURE OF BENEFITS TO BE EXPECTED FROM ROAD TRANSPORT PROJECTS, BOTH WITH AND WITHOUT VARIOUS TYPES OF MARKET IMPERFECTIONS, AND IN PARTICULAR, TO SHOW HOW THESE BENEFITS RELATE TO CHANGES IN THE SUPPLY AND DEMAND OF TRANSPORTED COMMODITIES. THE METHOD IS DESIGNED FOR ANALYZING ROAD PROJECTS IN ISOLATION FROM OTHER INVESTMENTS. IN SOME CASES THE BENEFITS FROM A ROAD TRANSPORT PROJECT IN ANY YEAR CAN SIMPLY BE MEASURED BY THE PRODUCT OF THE PROJECT-INDUCED DECREASE IN UNIT ROAD USER COSTS AND THE NORMAL VOLUME OF TRAFFIC. THIS MEASURE WILL BE VALID ONLY WHEN THE VOLUME OF TRAFFIC ON THE IMPROVED ROAD IS NOT RESPONSIVE TO CHANGES IN THE UNIT TRANSPORT COST. IN GENERAL, HOWEVER, TRAFFIC VOLUME WILL INCREASE WITH ROAD IMPROVEMENT (AS WHEN A NEW ROAD OPENS UP AN ISOLATED REGION) AND MEASURING BENEFITS ONLY IN TERMS OF NORMAL TRAFFIC WILL UNDERESTIMATE THE BENEFITS. /AUTHOR/

  • Supplemental Notes:
    • Occas Ppr NO 13, 42 PP
  • Corporate Authors:

    World Bank

    1818 H Street, NW
    Washington, DC  United States  20433
  • Authors:
    • Van der Tak, H G
    • Ray, A
  • Publication Date: 1971

Subject/Index Terms

Filing Info

  • Accession Number: 00202020
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Dec 13 1971 12:00AM