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 5: Is Development Evaluation Relevant to the European Project?

Robert Picciotto

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


Robert Picciotto INTRODUCTION If the development evaluation experience has relevance to the European project it is because of the unique characteristics of its infrastructure challenge. The founders of the European Union understood that Jean Monnet’s vision would not be realized without infrastructure modernization designed to tap the rewards of economic integration. This is the overarching rationale of Europe’s Structural Funds. They are designed to enhance social cohesion and to adapt the region’s aging infrastructure to the challenges of an increasingly interconnected and competitive world. Consequently, the economic justification of regional investments hinges on the judicious selection of projects and the accountability for results embedded in the Structural Funds principles calls for systematic evaluation. For half a century, the agencies that specialize in financial aid to poor countries have struggled with the methodological challenges associated with screening investment projects, improving their development impact and drawing the lessons of experience for future operations. Indeed, it is arguably in the zones of turmoil of developing countries and transition economies that cost benefit analysis has had its greatest impact. Hence, the history of cost benefit analysis viewed through the prism of the development experience may have implications for the future role of the Structural Funds. THE INFRASTRUCTURE CHALLENGE European leaders have long aimed to turn the enlarged Union into the most competitive and dynamic knowledge-based economy in the world. But without increased investment in high quality infrastructure, dynamic growth (the missing ingredient of the European model) will not materialize. While infrastructure...

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