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The use of CBA in public decisionmaking on infrastructure investments Johan Visser
Netherlands Institute for Transport Policy Analysis
Introduction • The making of an OEI (Overzicht Effecten Infrastructuur) is compulsory – Based on cost-benefit analysis – In the decisionmaking of an infra-project – When national government finances
• Presentation: – Why: a little history and public policymaking – How: application and daily practice – Future: new developments, such as MIRT and Elverding
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Ministerie van Verkeer en Waterstaat Basiscursus OEI bij MIRT 22 september 2009
Public decision making on infra projects National government • Responsible and finances: highways (RWS), waterways (RWS) and rail (Prorail) • Finances also larger projects of local governments, seaports and airports (f.i. MV II) • Role CBA: – To decide on projects: yes or no • To investigate consequences: social, economic, environmental, financially • balance different interests – To choose between project alternatives – Has to select and prioritize projects within infrastructure budget – To improve solutions
Ministerie van Verkeer en Waterstaat
Decision making • Created a national framework MIT/MIRTMeerjarenprogramma infrastructuur (Ruimte) and Transport – Uniform and clear decision-making process – Longterm budget – Fixed moments for consultation and decisionmaking – Clear rules for decision-making, like for CBA • Political decision-making! See f.i.: – HSL and Betuwe line – A4 Midden-Delfland – Maasvlakte II – uitbreiding Sluis bij IJmuiden – Zuiderzeelijn Ministerie van Verkeer en Waterstaat 4
14 september 2009
History OE(E)I Traditionally: design and impact studies ’70: public hearings for the interest of the people, first CBA’s (KOBA) ’80: environmental impact assessment (MER) but also EER ’90: one infrastructure fund for all transport modes (infrafonds) & one procedure for all projects (MIT) But problematic decisionmaking Betuwelijn and HSL – Discussion on need and urgence (nut en noodzaak) – Also on methodology 1998 Start of OEEI-research programme – Initiative of VenW and EZ – Projectteam CPB, Ecorys and others
Need for better decision making by cabinet Ministerie van Verkeer en Waterstaat
History (2) 2000 leidraad Overzicht (Economische) Effecten Infrastructuur – Uniform tool for analysis of infrastructure impacts on society – Based on CBA – compulsory for megaprojects 2002 Evaluation OEI – Positive: helpful and less methodological debates – Still some discussions. Like wider economic benefits, compatibility with MER – Additional research programme 2004 Aanvullingen OEI 2006 Compulsory to regular infra projects in MIT Ministerie van Verkeer en Waterstaat 6
14 september 2009
Why CBA CBA is a tool to help to decide on • Yes/no project • Alternatives • Prioritise projects
Because: • balance shows – social welfare gain – In terms of money • incorporates different sorts of information • in a structured and uniform way & scientific based • understandable and transparent Ministerie van Verkeer en Waterstaat 7
14 september 2009
Passing on benefits: CBA avoids double counting
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Ministerie van Verkeer en Waterstaat Basiscursus OEI bij MIRT 22 september 2009
Only additional indirect effects
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Ministerie van Verkeer en Waterstaat Basiscursus OEI bij MIRT 22 september 2009
OEI-CBA OEI = Overview Effects Infrastructure • Overview table based on social cost benefit analysis • In report all relevant information, including
- effects on economy, environment, safety etc. - distribution of effects - non-monetary, quantitative and qualitative information - uncertainties in costs and benefits
•
Independent judgement - by planning bureaus or expert committee
Ministerie van Verkeer en Waterstaat
Decisionmaking “conform Elverding” Initiatief
Verkenning
Planuitwerking
Realisatie
Beheer
OTB/MER
Startbeslissing
Voorkeursbeslissing
Tracébesluit
Opleverbesluit
“Zeef”
Scope Transitiedocument OEI bij MIRT-Verkenningen
Ministerie van Verkeer en Waterstaat
Two step Quick scan impact analysis • Infra budget decision: first filter of project alternatives • Based on available data • Indicators related to costs and effects (but not monetarised
CBA “conform OEI”: • To choose one alternative: the preferred alternative • For public decisionmaking: decision to realise • Based on more indepth research
Ministerie van Verkeer en Waterstaat
Steps in a CBA
1
Problem analysis
2
Definition projectalternative
3
Definition baseline
4
Costs calculation
5
impacts calculation
6
benefits calculation
7
Overview costs & benefits
8
Sensitivity & risks analysis Ministerie van Verkeer en Waterstaat
Approval but also confusion and dislike Approval: • Support for CBA/OEI • OEI more often applied than required • Supported by TCA, dept of Finance. • ‘you can’t be against it!’ • OEI helps to kill bad projects
Confusion: • ‘OEI is only economy’ • ‘All policy targets need to be in OEI’ • ‘at the end, only the CBArate counts’
Dislike: • ‘with OEI you calculate projects to death; we need vision, no mathematicians! • ‘OEI is too basic for complex decision making processes: econocratie’ • ‘OEI limits freedom of political decision making • ‘First other departments have to make CBA’s!’
OEI
Ministerie van Verkeer en Waterstaat 15 januari 2007
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Future for OEI • • • •
CBA in other policy areas, like land use development Research focus on monetarisation of difficult effects New general CBA-manual How to incorporate policy objectives (=effectiveness)
