On Benefit / Cost Analysis and Project Selection in Transport

David Levinson, Transportist

Before I left Minnesota I was asked by a Representative in the Legislature how to improve Department of Transportation project selection (following up on this presentation in February). I wrote back this (I revised and extended my remarks for the blog):

What are transport “needs”? It’s simple, a project is a “need” when the full benefits exceed the full costs. [Clearly very few projects are a “need” in an existential sense, but what we are talking about are more than “wants” in that they are net benefits for society, by definition.]

Measuring benefits and costs can be tricky, but it is not impossible to get a first order estimate, and the general principle is straight-forward. Sadly almost no agency requires actual benefit/cost analysis.

So I would suggest rules something like:

  1. All highway, transit, airport, and port projects that are considered in project-selection processes involving expenditure of state or federal funds above $5 million…

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