Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

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The following tables show some reference monetary values for freight and passenger time savings, CO 2emissions and accidents derived from the HEATCO study. The study provides estimates for the EU25;the following tables include also values that have been estimated by JASPERS for Bulgaria and Romaniaby applying a simplified approach using linear extrapolation of GDP per capita to values of time andvalues of accident casualties in Eastern European countries.Table 3.1 Estimated values of travel time savingsCountryBusinessFreightAIR BUS CAR, TRAIN ROAD RAILAustria 39.11 22.79 28.40 3.37 1.38Belgium 37.79 22.03 27.44 3.29 1.35Bulgaria 15.96 9.93 11.58 1.80 0.73Cyprus 29.04 16.92 21.08 2.73 1.12Czech Republic 19.65 11.45 14.27 2.06 0.84Denmark 43.43 25.31 31.54 3.63 1.49Estonia 17.66 10.30 12.82 1.90 0.78Finland 38.77 22.59 28.15 3.34 1.37France 38.14 22.23 27.70 3.32 1.36Germany 38.37 22.35 27.86 3.34 1.37Greece 26.74 15.59 19.42 2.55 1.05Hungary 18.62 10.85 13.52 1.99 0.82Ireland 41.14 23.97 29.87 3.48 1.43Italy 35.29 20.57 25.63 3.14 1.30Latvia 16.15 9.41 11.73 1.78 0.73Lithuania 15.95 9.29 11.58 1.76 0.72Luxembourg 52.36 30.51 38.02 4.14 1.70Malta 25.67 14.96 18.64 2.52 1.04Netherlands 38.56 22.47 28.00 3.35 1.38Poland 17.72 10.33 12.87 1.92 0.78Portugal 26.63 15.52 19.34 2.58 1.06Romania 17.36 10.12 12.60 1.90 0.78Slovakia 17.02 9.92 12.36 1.86 0.77Slovenia 25.88 15.08 18.80 2.51 1.03Spain 30.77 17.93 22.34 2.84 1.17Sweden 41.72 24.32 30.30 3.53 1.45United Kingdom 39.97 23.29 29.02 3.42 1.40EU (25) 32.80 19.11 23.82 2.98 1.22Switzerland 45.41 26.47 32.97 3.75 1.54Source: HEATCO, Deliverable 5, 2004, Business passenger trips (€ 2002 per passenger per hour, factor prices) - Freight trips (€ 2002 per freight tonneper hour, factor prices). JASPER for Bulgaria and Romania.Table 3.2 Recommended values for CO 2 emissionsYear of applicationCentral value (€/ton CO 2 )Lower value Central value Upper value2010 7 25 452020 17 40 702030 22 55 1002040 22 70 1352050 20 85 180Source: Impact Handbook on estimation of external costs in the transport sector78
Table 3.3Estimated Values for casualties avoided (€ 2002 Purchasing Power Parity, factor prices)Country Fatality Severe Injury Slight InjuryAustria 1,685,000 230,100 18,200Belgium 1,603,000 243,200 15,700Bulgaria 573,646 78,951 5,670Cyprus 798,000 105,500 7,700Czech Republic 932,000 125,200 9,100Denmark 1,672,000 206,900 13,200Estonia 630,000 84,400 6,100Finland 1,548,000 205,900 15,400France 1,548,000 216,300 16,200Germany 1,493,000 206,500 16,700Greece 1,069,000 139,700 10,700Hungary 808,000 108,400 7,900Ireland 1,836,000 232,600 17,800Italy 1,493,000 191,900 14,700Latvia 534,000 72,300 5,200Lithuania 575,000 78,500 5,700Luxembourg 2,055,000 320,200 19,300Malta 1,445,000 183,500 13,700Netherlands 1,672,000 221,500 17,900Norway 2,055,000 288,300 20,700Poland 630,000 84,500 6,100Portugal 1,055,000 141,000 9,700Romania 641,083 87,150 6,289Slovakia 699,000 96,400 6,900Slovenia 1,028,000 133,500 9,800Spain 1,302,000 161,800 12,200Sweden 1,576,000 231,300 16,600Switzerland 1,809,000 248,000 19,100United Kingdom 1,617,000 208,900 16,600Source: HEATCO, Deliverable 5, 2004. JASPER for Bulgaria and Romania.Economic impact assessmentTransportation projects may have an impact on the economic structure of the regions. This is acontroversial issue from the theoretical viewpoint and the only conclusions that seem to be universallyacknowledged are that the impacts can be both positive and negative. In the presence of marketdistortions, the increased accessibility of a suburban area or region may result in a competitive advantage,but also in a loss of competitiveness if the industry is less efficient than in the central regions. In this case,the increased accessibility may force the local industry to go out of business. It is therefore necessary toproceed with great caution when assigning these kinds of benefits to the project and, in any case, theyshould be excluded from the calculation of profitability indicators.The routine procedure for evaluating these benefits in terms of an income multiplier/accelerator might beseriously biased. Actually, these multipliers may be applied for any public expenditure. It is thereforenecessary to calculate the differential between the multiplier for the investments in the transportationsector and the multiplier for other sectors. This is a method that does not appear to be advisable, exceptfor some special cases.In any case, if there are no major distortions in the transport-using sectors, i.e. markets are reasonablycompetitive, the use of transport costs and benefits (time savings, externalities, etc.) could be consideredan acceptable approximation of the final economic impact of the transport projects.79
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ACRONYMS AND ABBREVIATIONSBAUB/CCBA
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TABLESTable 2.1 Financial analysis
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FIGURESFigure 1.1 Project cost spre
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Cohesion Fund, and through the leve
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or the plant will not reveal excess
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CHAPTER ONEPROJECT APPRAISAL IN THE
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Some specifications for financial t
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FOCUS: INFORMATION REQUIREDGeneral
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In particular, CBA results should p
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CHAPTER TWOAN AGENDA FOR THE PROJEC
Page 27 and 28: objectives, are, as far as possible
Page 29 and 30: considered the appropriate shadow p
Page 31 and 32: 2.3.2 Feasibility analysisFeasibili
Page 34 and 35: This approach will be presented in
Page 36 and 37: Current assets include:- receivable
Page 38 and 39: The following items are usually not
Page 40 and 41: Mainly, the examiner uses the FRR(C
Page 42 and 43: The dynamics of the incoming flows
Page 44 and 45: eturn on their own capital (Kp). Th
Page 46 and 47: While the approach presented in thi
Page 48 and 49: 2.5.1 Conversion of market to accou
Page 50 and 51: Table 2.9 Electricity price dispers
Page 52 and 53: 2.5.1.2 Fiscal correctionsSome item
Page 54 and 55: previously estimated in projects wi
Page 56 and 57: FOCUS: ENPV VS. FNPVThe difference
Page 58 and 59: 2.6 Risk assessmentProject appraisa
Page 60 and 61: Table 2.14 Impact analysis of criti
Page 62 and 63: Figure 2.6 Probability distribution
Page 64 and 65: eneficiary. The project proposer sh
Page 66 and 67: There are many ways to design an MC
Page 68 and 69: PROJECT APPRAISAL CHECK-LISTCONTEXT
Page 70 and 71: - reduction of congestion by elimin
Page 72 and 73: - the methods applied to estimate e
Page 74 and 75: - the marginal external costs: cong
Page 76 and 77: - the benefits for the existing tra
Page 80 and 81: 3.1.1.6 Risk assessmentDue to their
Page 82 and 83: As shown in Figure 3.1, only under
Page 84 and 85: 3.1.3.7 Other project evaluation ap
Page 87 and 88: - Waste Management Hierarchy rules
Page 89 and 90: The time horizon for a project anal
Page 93 and 94: every user support the total costs
Page 95 and 96: Territorial reference frameworkIf t
Page 97 and 98: Cycle and phases of the projectGrea
Page 99 and 100: One of the most important aims of t
Page 101 and 102: projects, as in other sectors in wh
Page 103 and 104: 3.2.3.2 Project identificationBasic
Page 107 and 108: In order to evaluate the overall im
Page 109 and 110: for regassification plants, number
Page 111 and 112: Examples of objectives are:- change
Page 113 and 114: decontamination if any;- the techni
Page 115 and 116: 3.3.3.6 Risk AnalysisCritical facto
Page 117 and 118: 3.3.4.6 Risk assessmentCritical fac
Page 119 and 120: 3.4.1.5 Economic analysisThe follow
Page 121 and 122: Financial inflows• Admission fees
Page 123 and 124: expectancy suitably adjusted by the
Page 125 and 126: The time horizon for project analys
Page 127 and 128: A Cost-Benefit Analysis should cons
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CHAPTER FOURCASE STUDIESOverviewThi
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- finally, there is the traffic tha
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c) Road users producer’s surplus:
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4.1.5 Scenario analysisTwo scenario
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The financial performance indicator
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Table 4.10 Economic analysis (Milli
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Table 4.12 Financial return on capi
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4.2 Case Study: investment in a rai
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4.2.4 Economic analysisThe benefits
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Financial investment costs have bee
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Figure 4.6 Results of the risk anal
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Table 4.22 Economic analysis (Milli
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4.3 Case Study: investment in an in
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ate of 0.6% per year is assumed for
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The shadow price of the CO 2 avoide
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As a result, the probability distri
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16 17 18 19 20 21 22 23 24 25 26 27
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4.4 Case Study: investment in a was
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4.4.2 Financial analysisAlthough in
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THE CALCULATION OF REVENUESReferrin
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0.15 m 3 /m 2 a depreciation of 20%
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As result, the probability distribu
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Figure 4.13 Probability distributio
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Table 4.48 Financial return on nati
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Table 4.50 Financial return on priv
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16 17 18 19 20 21 22 23 24 25 26 27
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4.5 Case Study: industrial investme
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4.5.4.1 Investment costsThe total i
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Finally, a residual value was estim
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This analysis shows the need to pay
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Table 4.62 Financial return on inve
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Table 4.64 Return on private equity
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Table 4.66 Economic analysis (thous
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ANNEX ADEMAND ANALYSISDemand foreca
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The method applied for the forecast
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Furthermore, travel demand depends
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This Guide supports a unique refere
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A higher discount rate for countrie
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Figure C.1 Project ranking by NPV v
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The main problems with this indicat
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EXAMPLE OF SHADOW WAGE IN DUAL MARK
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Another exhaustive way to include d
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Figure E.2 Percentage of low income
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ANNEX FEVALUATION OF HEALTH &ENVIRO
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Figure F.1 Main evaluation methodsS
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- expenditure on capital equipment
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due to air pollution or water conta
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BENEFIT TRANSFER - SELECTED REFEREN
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ANNEX GEVALUATION OF PPP PROJECTSIt
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adjustments for Competitive Neutral
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ANNEX HRISK ASSESSMENTIn ex-ante pr
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Reference ForecastingThe question o
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Figure H.5 Levels of risks in diffe
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ANNEX IDETERMINATION OF THE EU GRAN
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A.4. Technological Alternatives and
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GLOSSARYAccounting period: the inte
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Market price: the price at which a
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BIBLIOGRAPHY1. ReferencesBelli, P.,
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Ray, A. 1984, Cost-benefit analysis
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EnvironmentGeneralAtkinson, G., 200
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European Commission, DG Tren, 2003,
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Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

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