Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

3.1.1.6 Risk assessmentDue to their criticality, it is advisable to carry out a sensitivity analysis of the money values assigned to thegoods without any market, i.e. values of time and externalities. Other sensitivity tests may be focused oninvestment and operating costs or on the expected demand, in particular the generated traffic.Critical factors- Investment and operating cost overruns- Implementation time- Transport demand (optimism bias)- Competition with other existing infrastructureMainvariablesto consider- Assumption on GDP and- Other economic variables trend- Rate of increase of traffic over time- Value of time- Number of years necessary for the realization of the infrastructure- Number of years necessary for the full efficiency of the infrastructure- Investment costs (disaggregate)- Maintenance costs- Pricing policies- Regulatory policies3.1.2 CBA of High Speed Rail investment in Europe 12High Speed Rail (HSR) normally means rail technologies capable of speeds in the region of 300km/h on adedicated track. Such systems offer journey times that are more competitive with other modes, as opposedto traditional train services, and have very high capacity. However, their capital cost is also high.CostsHSR involves the construction of new lines, stations, etc. and the purchase of new rolling stock, additionaltrain operating costs and externalities (land take, visual intrusion, noise, air pollution and global warmingeffects). The first three externalities are likely to be much stronger where trains go through denselypopulated areas. Since high speed trains are invariably electrically powered, air pollution and globalwarming impacts depend on the primary fuel used to generate the electricity. As costs are high it followsthat the strongest case for High Speed Rail is where traffic volumes are high.BenefitsThe principal benefits from HSR are:- time savings- additional capacity- reduced externalities from other modes- increased reliability- generated traffic- wider economic benefits.12De Rus, G. and Nombela G. (2007). De Rus, G. and Nash C.A. (2007).80