Research 350 - NZ Transport Agency

2. APPROACHES TO ASSESSING NATIONAL ECONOMIC BENEFITS
• Considerable time and expense is needed to develop and maintain such models, and
they are limited by the detail and quality of the available data. Hence, they are likely to
be useful only for very large projects. For smaller projects, typical average data on the
number of jobs and other macroeconomic indicators for a given level of project
expenditure could be used, recognising the general limitation that this provides no
guidance on the opportunity cost of the expenditure.
• There is no direct linkage between the outputs of SCBA and changes in macroeconomic
indicators, such as GDP. Projects which record a negative NPV (BCR below 1.0) may still
produce increases in GDP. It is somewhat likely that projects which produce a positive
NPV (BCR above 1.0) will be associated with GDP growth, though this will depend on
the extent of non-market impacts of projects.
• SCBA can be used in combination with these alternative approaches to provide decision
makers with a broader view of the overall impacts of projects but care is needed to
avoid double-counting of project impacts. It is recommended that SCBA be viewed as
the primary decision-making tool in such cases.
2.9 Recommendations on practice
2.9.1 Role of SCBA
In general, there seems little doubt that an appropriately specified SCBA represents the best
approach to measuring the economic efficiency effects of transport investment.
As suggested above, the two major grounds for supporting the use of SCBA include:
• Economic efficiency measure – Unlike I-O and CGE modelling, SCBA provides a measure
of the economic efficiency of a given transport improvement.
• Parsimony – SCBA is a powerful tool for capturing most of the economic effects of a
transport improvement. Other methodologies such as I-O and CGE typically require far
more information then SCBA.
Based on the above discussions, in theory, a ‘best practice’ New Zealand SCBA is suggested in
Table 2.5, below.
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