Relating cost-benefit analysis results with transport project decisions in the Netherlands

Jan Anne Annema,Koen Frenken,Maarten Kroesen,Carl Koopmans

doi:10.1007/s12076-016-0175-5

Abstract

This paper relates the cost-benefit analysis (CBA) results of transportation policy proposals in the Netherlands with the decision to implement or abandon the proposal. The aim of this study is to explore the relation between the CBA results and decision-making. Multinomial logit regression models and Latent Class Analysis are used in this paper as the statistical tools to identify associations between CBA results and decisions and to reveal unobservable classes underlying the CBA results and the decisions for projects. Analysis was carried out on 106 Netherlands CBA reports (2000–2012) containing 454 observations. Each observation is a CBA result of a transport project variant. In line with most of the international literature, this study cannot find a significant association between Net Present Values (NPVs) and the variants chosen in political decisions (after controlling for other relevant variables). However, a positive NPV does keep variants ‘pending’, preventing a negative decision.

Highlights

In many countries, cost-benefit analysis (CBA) of transport projects has become common practice over the last two decades (Willis et al 1998; Lee 2000; Hayashi and Morisugi 2000; Nakamura 2000; Odgaard et al 2005; Annema et al 2007; Mackie and Kelly 2007; World Bank 2010)
The relationship between Net Present Values (NPVs) and the decision To gain an initial sense of whether and to what extent there is a relationship between the NPV and the final project decision, we dichotomized the NPV into two categories and cross-tabulated the distribution with the decision (‘go’ and ‘no go’)
We can see that in the Dutch practice non-pricing project variants with a negative NPV are associated with a higher percentage (83 %) no go decisions compared to non-pricing variants with a positive NPV (70 % no go decision)

Summary

Introduction

Cost-benefit analysis (CBA) of transport projects has become common practice over the last two decades (Willis et al 1998; Lee 2000; Hayashi and Morisugi 2000; Nakamura 2000; Odgaard et al 2005; Annema et al 2007; Mackie and Kelly 2007; World Bank 2010). The role of the CBA in political decisionmaking processes is a complex one. As our literature review shows, there is an increasing amount of evidence that CBA outcomes have only a limited impact on political decision-making. Our study analyses the CBA’s for transport projects in The Netherlands between 2000 and 2012. In contrast to most earlier studies (Table 1), which focused on road projects, we include all types of transport projects. Our study is the first large-scale, systematic statistical analysis on the impact of a CBA outcome on political decisionmaking

Objectives

Methods

Results

Conclusion