11 April 2017

Economic Development Benefits of Transport Investment

11 April 2017

This report reviews the major approaches for assessing national and regional economic benefits, as well as the potential distributional implications of transport induced benefits. The paper assesses whether transport influences national and regional economic development, and if so, how this is role is best asserted.

The primary economic assessment methods considered include: Social Cost Benefit Analysis (SCBA), Input-Output Analysis (I-O), and Computable General Equilibrim (CGE). SCBA is most effective for determining the value of project objectives and outcomes from a social welfare perspective. I-O and CGE take macroeconomic perspectives of system wide effects of transport investment including employment, GDP and taxes.

The link between transport improvement and economic development depends on complementary regional infrastructure and specific contextual considerations. I-O poses a risk of over-stating results. CGE may be effective at a national level, but faces scaling issues for regional or local effects. Neither is particularly useful for assessing distributional affects of investment.

The findings supports SCBA as a policy assessment methods that quantifies, in monetary terms, the value of policy consequences to society with recommendations for accommodating non-market and qualitative consideration into value propositions.

You can access the report here.