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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About Jim Rose

Utopia - you are standing in it promotes a classical liberal view of the world and champion the mass flourishing of humanity through capitalism and the rule of law. The origin of the blog is explained in the first blog post at https://utopiayouarestandinginit.wordpress.com/2014/03/12/why-call-my-blog-utopia-you-are-standing-in-it/

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