Eckhard Szimba

Spending Scarce Funds More Efficiently—Including the Pattern of Interdependence in Cost-Benefit Analysis

AbstractThe financial crisis has substantially aggravated shortages of public funds all over the world, particularly in many developed countries. After the expiration of investments made within the framework of public economic recovery plans, the availability of public funds for infrastructure investments will be subject to severe constraints. These conditions require that scarce available funds be spent in an efficient and effective manner. Evaluation methods to select and prioritize infrastructure projects of an investment package often presuppose that infrastructure projects are independent of one another. However, it is inherent in the nature of transport networks that links are interdependent and that changes in one link will affect other parts of the network. Some infrastructure projects might be characterized by substitutive interdependence, while others might interact in a synergistic context. Thus, the cost and benefits of a project are strongly dependent on the realization of other projects. Thi...