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Aspects of infrastructure project assessment in the Netherlands

Aspects of infrastructure project assessment in the Netherlands. And the use of international CBA standards Dutch Ministry of Transport, Public Works and Water Management. Presentation outline. Why focus on economic evaluation?

hermione-mendez
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Aspects of infrastructure project assessment in the Netherlands

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  1. Aspects of infrastructure project assessment in the Netherlands And the use of international CBA standards Dutch Ministry of Transport, Public Works and Water Management

  2. Presentation outline • Why focus on economic evaluation? • Dutch framework for infrastructure investment evaluation: OEI and cost benefit analysis • Bridging the gap between guideline and project practice: Support desk for Economic Evaluation • HEATCO international guidelines

  3. How to evaluate economic effects of roads/infrastructure in general? • Cost benefit analysis most accepted or even obligatory tool for funds • Regional development (window 8) is usually measured in economic units (monetary) • Regional development is an indirect impact of infrastructure development

  4. Dutch framework for infrastructure evaluation

  5. OEI??? • OEI = Overview Effects Infrastructure • Abbreviation for: Research Project on Economic Effects of Infrastructure • Initiative of Ministries of Transport and Ministry of Economic Affairs

  6. OEI history • 1990’s: difficulties with evaluation of large infrastructure projects • 1998: Development of Guideline • 2002: Evaluation of Guideline • 2003: Action programme Guideline for implementation of improvements • 2004: Additions to the Guideline • 2005: ‘OEI bij MIT’ simplified guideline for smaller projects (first phase towards decision) • 2008: ‘OEI bij MIT’ simplified guideline for smaller projects (second phase towards decision)

  7. Why was OEI developed ? • Political choices based on limited CBA • Limited consensus about contents of integral assessments • No explicit procedural arrangements

  8. Main elements of OEI • Survey of Effects: • definition effects/methods • broad list of all effects • discussion indirect effects • Nine structured steps of CBA • Procedural structure: • applied to all national infrastructure projects • 2-stage Survey of Effects • optimising neutrality of information

  9. OEI segmentation of effects

  10. OEI based on CBA: nine steps • Problem analysis: what do we want to solve • Project definition: design and alternatives, base case • Identifying project effects • Forecast relevant exogenous developments • Estimate and value project effects • Estimate investment and development costs • Producing a cost-benefit set-up • Alternatives and risk analysis • Additional tasks (PPP, ex post evaluation)

  11. Procedural structure Quick Scan Survey of Effects Survey of Effects selection of alternatives start: definition of project alternatives second opinion environmental survey phase 1 exploration phase 2 study phase 3 realisation

  12. CBA calculation results with OEI

  13. Guideline for smaller projects: ‘OEI bij MIT’

  14. Other proposed guidelines • ‘OEI bij MIT’ for the study phase: more detail • OEI for water management projects • Application of OEI for maintenance decisions

  15. Bridging the gap between guidelines and individual projects

  16. Steunpunt Economische Evaluatie (SEE) • SEE: Support desk for Economic Evaluation • Helps with questions about economic evaluation of infrastructure • Objective: • Support for small questions about economic evaluation (max. 8 hours) • Information exchange, also on international level • WWW.rws.nl/SEE

  17. International standards: HEATCO

  18. Scope of HEATCO • EU (DG TREN) project on guidelines for cost benefit analysis • Objective: consistent standards and use of it throughout EU countries, and providing a common basis for transnational projects • http://heatco.ier.uni-stuttgart.de/

  19. 11 main recommendations (1) • Decision criteria: use of NPV, etc. • Treatment of non-monetised impacts (presentation in qualitative terms • Project appraisal evaluation period (40 years for TEN-T projects) • Treatment of future risk and uncertainty (sensitivity analysis) • Discounting (use common rate of 3%) • Intra-generational equity issues (table of losers and winners)

  20. 11 main recommendations (2) • Non-market valuation techniques (willingness to pay, standard values) • Value transfer method (copy-paste) • Treatment of indirect effects (if they are significant, use a model to calculate them) • Marginal cost of public funds (no shadow price for public funds) • Producer surplus (f.I. Transport pricing, to be calculated)

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