Ways to deal with the 'temporary' value of cost benefit analysis

Abstract

A key problem with social cost benefit analysis (CBA) is that ex ante and ex post analyses of the same (infrastructure) project in many cases have different outcomes. Ex ante analyses are used to decide whether new infrastructure has sufficient net benefits for society, provided that a set of assumptions has been met. If this is the case, and sufficient budget is available, it is likely that a project to build this infrastructure is initiated. Ex post analyses are used to evaluate the real impact of the new infrastructure. This divergence between mentioned outcomes may lead to serious debates in politics and society, especially in cases where the ex post impact of a project is much lower than the ex ante calculations predicted. This is frequently the case for railway projects. In this paper we deal with this issue by discussing the main causes of this divergence and suggest some practical solutions. The main conclusion is that the way infrastructure projects are planned and developed may need reconsideration, looking at, in particular, environmental effects. This paper is based on ongoing studies. © 2008 WIT Press.