Scandinavian Working Papers in Economics

Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

No 2012:30: Is CBA ranking of transport investments robust?

Maria Börjesson (), Jonas Eliasson () and Mattias Lundberg
Additional contact information
Maria Börjesson: KTH, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Jonas Eliasson: KTH, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

Abstract: Cost-benefit analysis (CBA) is often used when many transport investments need to be ranked against each other, for example in national investment planning. However, results are often questioned on claims that the ranking depends crucially on uncertain assumptions about the future, and on methodologically or ethically contestable trade-offs of different types of benefits relative to each other. This paper explores the robustness of CBA rankings of transport investments with respect to two types of uncertainties: relative benefit valuations and scenario assumptions related to car ownership, characteristics and costs. The study is based on CBAs of 479 suggested road and rail investments in Sweden that have been shortlisted for possible inclusion in the national transport investment plan. The CBA ranking turns out to be robust to variations in the studied scenario assumptions. The CBA ranking also turns out to be robust to changes in the relative valuations of different types of benefits – person travel time savings, traffic safety, emissions and freight benefits. We also compare two sets of travel time valuations against each other, one of which differentiated with respect to mode and travel purpose and one which is not, again concluding that the investment ranking is robust.

Keywords: Cost benefit analysis; Appraisal; Robustness; Decision support.

JEL-codes: R41; R48

14 pages, December 21, 2012

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Published as
Maria Börjesson, Jonas Eliasson and Mattias Lundberg, (2014), 'Is CBA ranking of transport investments robust?', Journal of Transport Economics and Policy, vol 48, no 2, pages 189-204

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