Scandinavian Working Papers in Economics

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

No 2017:12: The role of economic analysis for investment priorities in Sweden’s transport sector

Henrik Andersson (), Lars Hultkrantz (), Gunnar Lindberg () and Jan-Eric Nilsson ()
Additional contact information
Henrik Andersson: Toulouse School of Economics, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Lars Hultkrantz: Örebro University, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Gunnar Lindberg: The Institute of Transport Economics, Norway, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Jan-Eric Nilsson: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

Abstract: Beginning as a planning tool within the national road administration in the early 1970s, benefit-cost analysis (BCA) became a pillar of national transport policy because of strategic choices made by the national parliament. The Transport Policy Act of 1979 established marginal instead of average cost as the overarching principle for pricing of transport. The subsequent 1988 Act separated rail infrastructure from train-service provision. Both policy updates made it necessary to widen the analysis of costs to include also externalities and a foregone conclusion was that efficient investment priorities should be made based on BCA. But no one asked whether the political decision makers or the BCA models were apt to that task. This paper reviews the current state of BCA for transport infrastructure investment and considers design issues that have been and still are debated, also providing a benchmark description of how these issues have been addressed elsewhere. Moreover, the role of BCA as a platform for prioritization of investment project is reviewed.

Keywords: Benefit-cost analysis; Rail; Road; Sweden; Transport

JEL-codes: H43; H54; R42

28 pages, First version: October 20, 2017. Revised: May 23, 2018.

Note: This paper is published as: "Economic Analysis and Investment Priorities in Sweden’s Transport Sector" in Journal of Benefit-Cost Analysis, Vol. 9 (1) pp. 120-146, Spring 2018

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