Current Issues in Project Analysis for Development

Current Issues in Project Analysis for Development

Elgar original reference

Edited by John Weiss and David Potts

This major work brings together authors with experience of both academic and operational project work to focus on issues such as the shadow exchange rate, the shadow wage, the discount rate and assessment of poverty impact and risk, as well as problems relating to specific sectors covering environmental projects, transport, education and health. There are also general chapters on the experience of semi-input–output-based estimation of shadow prices and the relevance of shadow pricing techniques to the context of developed economies in the EU. An overview by the editors sets out the evolution of the literature and highlights current issues. The general conclusion is that project analysis techniques remain relevant, albeit within a very different development context to that in which they were originally envisaged to be applied.

Chapter 9: Assessing the Benefits of New or Improved Roads

Chris Nash

Subjects: development studies, development economics, economics and finance, development economics


Chris Nash INTRODUCTION Economic appraisal of new roads or improved roads (see for example, Coburn et al., 1960) first came into common use in the 1960s, as a relatively simplistic comparison of capital costs with road maintenance, vehicle operating costs, journey time and accident savings. This already required estimation of road maintenance and vehicle operating costs, and valuation of journey time and accident savings, and as the core of economic appraisal in the sector in the development context, these issues will be considered in the next three sections. From an early stage, there was a recognition of the importance of external costs of road schemes, both of the scheme itself and in terms of reduced external costs of traffic on alternative roads, but methods to value these costs have only more recently been regarded as sufficiently robust for this to become a part of everyday appraisal. This is the subject of the next section. We then turn to the subject of induced traffic and wider economic benefits. There has long been a belief that such benefits must exist, but again it is only recently that research has succeeded in pinpointing their nature and providing the basis for their measurement. Finally we discuss the distributive impact of road schemes, before reaching our conclusions. VEHICLE OPERATING AND ROAD MAINTENANCE COSTS In a developed country with a well-built and well-maintained road system, changes in vehicle operating and road maintenance costs are not usually a major part of the benefits of road projects. In...

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