Why Benefit-cost analyses matter less and how it can be improved for decision making in the transport sector - Experiences from the Norwegian National Transport Plan 2010 -2019.

Abstract

This paper examines the planning processes of long term transport plans in the context of Norway to reveal factors that may hinder Benefit Cost Analyses (BCA) as an appropriate tool for decision making. The objective is to explain why BCA matter less for decision making and to suggest improvements that can be made to make BCA more useful as a tool for decision making. The case study is that of the Norwegian National Transport Plan (NTP) for period 2010-2019 which was approved by the Parliament in the autumn of 2009. We find that: (i) BCA is mandatory for all projects being assessed for investments but there is no clear-cut demand that they should be used in decision making; this means that decision makers are not obliged to use BCA in their decision making (ii) The BCA conducted includes important factor that are necessary for decision making but are short for distributional impacts that decision makers care so much about; hence decision tend to deviate from the principals of BCA, (iii) The decision making process undergoes several stages from the Public Roads Administration to the Ministry of Transport and Communication and finally to the Parliament for debate and sanctioning. This means that the different actors may have different priorities and hence, the use of BCA should not be expected and finally, (iii) the decision makers at various stages do not fully understand the workings of BCA and therefore BCA is of less relevance as compared to other objectives. Finally, this paper gives recommendation on how the use of BCA in decision making can be improved.

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