Managing the insolvable limitations of cost-benefit analysis: results of an interview based study

Abstract

Cost-benefit analysis (CBA) has been an important tool for transport planners for several decades. Despite its popularity it has often been criticized for several reasons, amongst other things, because the tool has some insolvable limitations when it is applied in practice. In this paper we examine and scrutinize the perceptions of 86 key actors in the Dutch appraisal practice for spatial-infrastructure projects with regard to three insolvable CBA limitations: (1) CBA is always incomplete; (2) Effect estimations are always uncertain; (3) Effects that are difficult to estimate have a relatively weak position. We conclude that Dutch key actors were not only able to point out these three CBA limitations and the bad management of these limitations, but they were also able to propose several (pragmatic) solutions to improve the management of CBA limitations. This paper discusses how the proposed solutions relate to solutions addressed in the literature. Moreover, we provide recommendations for further research and discuss policy recommendations that transpired from the results.