The impact of the European Development Fund and European Bank as financing sources on traffic estimation biases

Abstract

This paper aims to model and understand the traffic estimation biases in European transportation infrastructure projects in the light of data from 55 projects developed between 1992 and 2012 in 17 European Union countries. Specifically, we investigate the correlation between overestimated traffic volumes and the presence of either the European Regional Development Policies or the European Investment Bank among the financing sources. We argue that such a correlation may indicate an undesirable selection bias favouring projects that use overestimated traffic volumes, leading to misled strategic decisions with long-term social and economic impacts. We innovate concerning previous studies by introducing a more general model based on classification trees, which accounts for non-linear relationships among the explanatory variables. The findings demonstrate that, in addition to the traditional influencing factors cited in the literature, e.g., contract year and investment value, both the European Regional Development Policies Funds and the European Investment Bank investments are also associated with the traffic estimation bias, albeit with distinct trends.