Traffic and transport budgets, national ones as well as regional ones, should be spent as optimally as possible. It is therefore essential to be able to make a good assessment of a variety of measures and compare them with each other. This is possible when a cost-benefit analysis is used. This method provides support when, for example, deciding on policy plans and budgets, or prioritizing and phasing investment options. Cost-benefit analyses have already been used frequently in the Netherlands and in other countries. However, the experiences with using them on road safety measures are still limited.
Summary
Traffic and transport budgets, national ones as well as regional ones, should be spent as optimally as possible. It is therefore essential to be able to make a good assessment of a variety of measures and compare them with each other. This is possible when a cost-benefit analysis is used. This method provides support when, for example, deciding on policy plans and budgets, or prioritizing and phasing investment options. Cost-benefit analyses have already been used frequently in the Netherlands and in other countries. However, the experiences with using them on road safety measures are still limited.
Background and content
During the last few years, many measures to improve road safety have been studied. To choose between them it is advisable to assess them unambiguously. Besides taking the road safety effects into account, the mobility (i.e. exposure) and environmental effects must also be examined. As government budgets have generally been reduced and regional budgets have increased, a choice between various investments must often be made: for example between safety, accessibility, or liveability. There is, therefore, a need for a clear framework for integrally assessing a variety of measures. The method that is suitable for this purpose is the social cost-benefit analysis (CBA). This fact sheet indicates when and for whom a CBA can be useful. The different parts of a CBA are described as well as the application of the method to road safety measures.
What is a cost-benefit analysis used for?
In a CBA the welfare effects of an investment, for example in road safety, are determined. This means that a CBA answers the question of whether an investment’s benefits exceed the costs. Not only are the financial aspects studied, but also issues like safety, emissions, and congestion. This way, a CBA allows making statements about the social return on an investment. An overview of social costs and benefits can serve as basis for prioritizing separate measures or measure packages (combinations of measures). In addition, a CBA is used to weigh off investments in various policy areas. Such choices are necessary when making policy plans, fixing the national budgets, and prioritizing or phasing investment options.
A CBA is useful here because it summarizes a great deal of information in a rational framework. However, this leaves the responsibility of the decision maker unimpeded. Other considerations than those included in the CBA can also play a role in the eventual choice. Examples are ethical and legal considerations. A CBA can be used for a variety of purposes. These determine the amount of detail needed. What is known as a simplified CBA is suitable for exploring a problem and formulating alternative investment options.
A simplified CBA provides an indication of the costs and benefits based on already available information. The likely alternatives can then be subjected to a thorough CBA in which additional and more detailed information is gathered. The thorough CBA is needed to make a final choice of alternatives. A cost-effectiveness analysis (CEA) can sometimes be sufficient for prioritizing road safety measures. This analysis only examines the road safety effects (e.g. casualty saving) and investment costs. A CEA is thus only suitable if no important side effects are anticipated. Measures can be ranked with it, based on the costs that are required to save one casualty.
Who is a cost-benefit analysis useful for?
A CBA can be carried out at various levels. The social effects can for instance be determined for a municipality, region, or country. It is also possible to attribute social effects to the actors involved. In this way, a picture emerges of the costs and benefits for each actor. This can be important for support of measures and any budgetary consequences. It can, therefore, be a useful instrument for all parties involved in deciding about investments, especially national and regional governments.