EXTERNAL EFFECTS AND SECONDARY BENEFITS IN ROAD INVESTMENT APPRAISAL

THIS PAPER IS CONCERNED WITH THE BENEFITS WHICH ARE LIKELY TO FLOW FROM A ROAD INVESTMENT PROJECT, OVER AND ABOVE THE DIRECT BENEFITS TO THE IMMEDIATE PASSENGER AND COMMERCIAL FREIGHT USERS OF THE ROAD. IT IS THEREFORE CONCERNED WITH THE CLASSES OF BENEFITS OFTEN SUBSUMED UNDER THE HEADINGS OF EXTERNAL ECONOMIES AND SECONDARY BENEFITS. UNDER THE FIRST HEADING THE MAIN CONCLUSION IS THAT, IF WE DEFINE "EXTERNAL" IN THE CASE OF ROAD INVESTMENTAS MEANING EXTERNAL TO ALL ROAD USERS, THERE WILL IN A DEVELOPED ECONOMY BE RELATIVELY FEW EXTERNAL EFFECTS WHICH OUGHT TO BE MEASURED AS BENEFITS. THE SECOND PART OF THE PAPER CONSIDERS SECONDARY BENEFITS, WHICH IN THE CASE OF TRANSPORT INVESTMENTS ARE USUALLY CONSIDERED TO BE DUE EITHER TO A MULTIPLIER EFFECT OF THE INVESTMENT ON AN UNDEREMPLOYED ECONOMY, OR TO THE FACT THAT TRANSPORT IS AN INTERMEDIATE GOOD, SO THAT THERE WILL BE ADDITIONAL BENEFITS TO FINAL CONSUMERS OF THE TRANSPORTED GOODS AND TO OTHER MEMBERS OF THE AFFECTED ECONOMY. FOUR PREVIOUS ATTEMPTS TO CONSIDER THESE SECONDARY BENEFITS ARE OUTLINED, BUT ARE FOUND TO PRESENT SOMEWHAT UNSATISFACTORY CONCLUSIONS. IT IS THEN ARGUED THAT (A) WHERE TRANSPORT IS AN INTERMEDIATE GOOD THE BENEFITS TO TRAFFIC WILL CORRECTLY MEASURE THE "TRUE" BENEFITS TO FINAL CONSUMERS OF TRANSPORTED GOODS IN A PERFECTLY COMPETITIVE WORLD, BUT THAT THE "TRUE" FINAL BENEFITS WILL BE UNMEASURABLE IN A WORLD OF MONOPOLY, AND (B) FOR MULTIPLIER EFFECTS EXISTING APPRAISAL METHODS BASED ON WELFARE ECONOMICS WOULD BE INADEQUATE TO THE TASK OF PRECISE MEASUREMENT, BUT IN ANY CASE THERE DOES NOT APPEAR TO BE MUCH EVIDENCE FOR THE EXISTENCE OF SUCH BENEFITS IN DEVELOPED ECONOMIES WITH NEARFULL EMPLOYMENT. /AUTHOR/

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  • Corporate Authors:

    London School of Economics and Political Science

    Houghton Street, Aldwych
    London WC2A 2AE,   England 
  • Authors:
    • DODGSON, J S
  • Publication Date: 1973-5

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  • Accession Number: 00202352
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Aug 5 1973 12:00AM