Highway investment planning: Why CBA scarcely affects the prioritization of projects in Norway

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It is well documented that the benefit/cost ratio is virtually uncorrelated to the likelihood of a Norwegian classified road project entering the list of projects selected for investment in the National Transport Plan. All candidate projects are cost-benefit analysed, so the parliamentarians have the information required to take social net benefits into account, should they want to. As the politicians have requested the cost-benefit analyses, their modest use of the results calls for an explanation. The paper describes the steps of the priority setting process, and for each step outlines procedural characteristics and political mechanisms that have the effect of pushing the results of cost-benefit analysis into the background. The points dealt with are of a general nature and do not pertain only to Norwegian conditions. For example: Perverse incentives: Local influence is not related to responsibility or cost coverage Agencies expected to give professional advice may be too keenly listening to political signals Equal allocation of projects to various counties trumps implementation of the economically best investments Choosing the project with the highest benefit/cost ratio is supplemented by so many other assessment criteria that the difference between professional and political judgment is dissolved The prioritization effect of the formidable revenues to the Norwegian state from oil and gas production, is also considered.
Book of proceedings: Annual AESOP Congress, Definite Space – Fuzzy Responsibility, Prague, 13-16th July, 2015
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