Cost–Benefit Analysis and Incentives in Evaluation

Cost–Benefit Analysis and Incentives in Evaluation

The Structural Funds of the European Union

Edited by Massimo Florio

This book provides an authoritative contribution to applied cost–benefit analysis (CBA) and other evaluation methods in the context of the regional policy of the European Union. Through the use of Structural Funds and other financial and regulatory mechanisms, the EU will help to promote thousands of infrastructure projects in the next decade. CBA will be a key ingredient in the investment decision process and the authors provide important insights from their international experiences in project appraisal and evaluation and point to some valuable lessons to be learnt for the future.

Chapter 2: Cost–Benefit Analysis and EU Cohesion Policy

Andrea Mairate and Francesco Angelini

Subjects: economics and finance, public sector economics, valuation, environment, transport, valuation


2. Cost–benefit analysis and EU cohesion policy Andrea Mairate and Francesco Angelini INTRODUCTION As part of the European Union budgetary package for the 2007–13 period, €308 billion have been allocated to support the cohesion policy in the EU. More than 80 per cent of the available funds are targeted at the least developed areas of the Union. In the recently acceded Member States, the financial allocations are capped at about 4 per cent of their GDP. This represents the biggest transfer of resources to promote growth and convergence in Europe since the Marshall Plan. There are strong and legitimate expectations that cohesion policy will create a positive economic shock that will stimulate investment and would help the recipient economies to achieve real convergence and economic take off. The Structural Funds and the Cohesion Fund (hereinafter, ‘the Funds’) are the main financial instruments used to promote cohesion, that is to reduce socio-economic disparities between the level of development of the various regions of the Union. In the context of the renewed ‘Lisbon agenda’, EU cohesion policy is also targeted to increasing growth, competitiveness and employment and contributing to sustainable development. The purpose of this chapter is to review the role of cost–benefit analysis (CBA) in assisting policymakers’ public investment decisions in the framework of EU cohesion policy. The purpose for requiring ex ante (that is prior to the adoption of any public commitment to a project) a CBA is twofold: on the one hand, the results...

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