Why don’t cost-benefit results count for more? The case of Norwegian road investment priorities

Abstract

The starting point is that the benefit/cost ratio is virtually uncorrelated to the likelihood of a Norwegian classified road project entering the list of investments selected for the National Transport Plan. The purpose of the article is to explain what pushes cost-benefit results into the background in the prioritization process. The reasons for their downgrading point to mechanisms that are at work not only in Norway. Explanatory factors are searched for in incentives for cost-ineffective action among planners, bureaucrats and national politicians, respectively, as well as in features of the planning process and the political system. New data are used to show that the road experts' list of prioritized projects changes little after submission to the national politicians, suggesting that the Norwegian Public Roads Administration puts little emphasis on its own cost-benefit calculations. Besides, it is shown that the petroleum revenues of the state do not provide a strong reason for neglecting costbenefit accounts. The overall contribution of the article is to offer a comprehensive explanation why professional and political authorities in Norway set road-building priorities diverging massively from those suggested by cost-benefit analysis.

How to improve Norway’s Transport-Infrastructure Investment

“…This has been confirmed in research. Sager (2016), for instance, illustrates that costs exceed benefits for most of the major road projects reports initiated in the period 2014-17 (Table 3). Analysis by Eliasson et al (2015) of projects selected for the National Transport Plan 2014-23 confirm there is little consideration of project efficiency ( Figure 6).…”

“…While these steps almost certainly will have some positive impact on infrastructure decisions, they are unlikely to resolve the problems entirely. Therefore, this strengthening of procedures should be accompanied by other steps that raise awareness and concern for economic efficiency, and the desirability of speedy implementation, by policymakers at all levels of government (Sager, 2016).…”

Including negative externalities during transport infrastructure construction in assessment of investment projects

“…Rational and reliable methods are necessary to compare the advantages and disadvantages of the projects and to establish the financing priorities. Therefore, assessment methods have been established at European or national level [1][2][3][4][5][6][7][8][9]. Various methods of transport investment assessment and planning have been compared in several studies [10][11][12][13][14][15].…”

Dutch politicians’ attitudes towards Cost-Benefit Analysis

“…Politicians must be able to show the public that the output of expert analysis was available to them when they made their decisions, so it can be credibly statedshould the need arisethat expert advice was considered as part of the policy-making (Sager and Sørensen, 2011). Sager (2016) outlines a variety of procedural characteristics and political mechanisms that might explain the lack of correlation between CBA results and politicians' investment decisions.…”