Research 350 - NZ Transport Agency

ECONOMIC DEVELOPMENT BENEFITS OF TRANSPORT INVESTMENT
Table 2.2 Comparison of SCBA, I-O analysis and CGE modelling
SCBA I-O Analysis CGE Modelling
Major Inputs Project costs and benefits, assessed at market
prices or market equivalents (e.g. WTP measures
for externalities).
Various, -e.g. initial project expenditure,
productivity benefits/‘output shock’ from
project operation.
Various, – e.g. initial project expenditure,
productivity benefits/‘output shock’ from project
operation.
Major Outputs Project NPV, BCR – i.e. net benefits (costs) to
society of project.
Range of macroeconomic variables, generally
employment, outputs and GDP (or regional
equivalent) impacts.
Range of macroeconomic variables, including
employment, consumption, investment, taxes,
exports and imports, industry output impacts and
GDP (or regional equivalent) impacts.
Major
Advantages
Transparent measure of project benefits (and
costs) and provides clear basis for decisionmaking.
Provides measure of macro-economic impacts of
interest to policymakers; complements SCBA.
Provides measure of macro-economic impacts of
interest to policymakers; complements SCBA.
Relatively easy/inexpensive to construct. May be more practical for modelling small
regions than CGE analysis.
Allowance for constraints potentially provides for
more realistic modelling of outputs than I-O.
Provides measure of economic efficiency.
Can allow for an indication of ‘non-market’ costs
and benefits (e.g. non-work travel time savings
devoted to leisure, accident cost impacts on
lives lost, environmental externalities).
Major Limits Does not provide macro-economic outputs
detailing impacts on employment, consumption,
GDP etc.
Does not provide clear and direct measure of net
project benefits (costs).
Does not provide clear and direct measure of net
project benefits (costs); benefit measures may be
derived however still questionable if these allow for
all ‘costs’ and contingent upon ‘correct’ modelling
in the first instance.
Simplistic assumptions mean that some
economic effects may not be captured in the
analysis (e.g. imperfect competition), though
materiality of this is debatable.
Does not provide clear ‘decision rule’ as to
whether to proceed with the project or not akin
to NPV or BCR.
Does not provide clear ‘decision rule’ as to whether
to proceed with the project or not akin to NPV or
BCR.
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