Transport cost-benefit analysis: critical evaluation and improvement

Source abstract

Cost–benefit analysis (CBA) remains the dominant framework for the ex ante evaluation of transport policies and infrastructure investments, grounded in welfare economics and aimed at maximizing aggregate social welfare. However, a growing body of literature questions whether CBA adequately captures the multidimensional objectives of contemporary transport policy, including effectiveness, efficiency, and equity. This paper addresses this debate by systematically identifying and structuring criticisms of CBA in transport, drawing on a scoping review of 75 publications and insights from two expert workshops involving 16 specialists from multiple disciplines. The analysis categorizes criticisms into four groups: (1) fundamental limitations of CBA; (2) shortcomings in practical application; (3) issues related to debatable policy questions; and (4) decision-making challenges. Building on these insights, the paper discusses potential avenues for improvement, including better integration of distributional and accessibility effects, refinement of valuation methods, and alternative approaches. The results suggest that many shortcomings attributed to CBA stem from how it is applied within policy processes. The continued use of CBA in transport policy contexts requires an understanding of inherent weaknesses, their improvement, and appropriate use.