Economic appraisal of road projects in countries with developing and transition economies

Abstract

Road investments in developing and transition economies constitute a large proportion of public investment programmes. It is therefore important that decisions about investments in roads are made on the basis of objective indicators estimated for the proposed road projects. Economic appraisal models provide an objective framework for the assessment of the benefits derived from investments in road infrastructure. These models incorporate an economic appraisal framework based on the concept of life-cycle cost analysis, in which the annual costs of construction and maintenance of one or more road investment alternatives are compared against a base case (without project) alternative in order to estimate the corresponding reduction in vehicle operation costs. Other benefits or costs can be included within the economic appraisal framework if they can be externally quantified. The results from the economic appraisal of road projects in developing and transition economies often show that benefits to be derived from investments in maintenance and rehabilitation of existing roads far exceed those from construction of new roads. The models also show that where there is significant traffic congestion, investments in capacity expansion can produce high economic returns provided the value assigned to travel time is realistic.

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