ECONOMIC DEVELOPMENT QUARTERLY
Generally , a project will deliver savings in these cost areas and these are the main benefits to road users . In addition to these direct costs and benefits there are potential costs and benefits to external parties termed ‘ externalities ’. Externalities that are often included in a transport project CBA include :
• Air pollution ;
• Greenhouse gas emissions ;
• Noise ;
• Water ;
• Nature and landscape impacts ;
• Urban separation ; and
• Downstream effects .
A number of manuals provide guidance on monetising these costs and benefits ( for example : Austroads ( 2014 ), Updating Environmental Externalities Unit Values ).
It is often argued that there are benefits of road projects that are seldom given sufficient weight , such as benefits that flow from greater choice in access to housing and to jobs and recreational opportunities . But it can be argued that these are to a large extent captured in the travel cost savings that are a measure of ‘ willingness to pay ’ for the new road or road upgrade .
EVALUATING WIDER ECONOMIC BENEFITS ( WEBS )
To capture the true value that a major road infrastructure investment will have for a regional economy and community , it is necessary to consider the wider economic benefits ( WEBs ). Examples of WEBs include : ( 1 ) benefits to firms ; and ( 2 ) benefits to consumers . in an economy to produce a given level of output . Productivity is considered a key source of economic growth and competitiveness , and one of the most widely used measures of productivity is Gross Domestic Product ( GDP ), or at the regional level , Gross Regional Product ( GRP ) per hour worked . To take account of the role of capital inputs , a measure is the flow of productive services that can be drawn from the cumulative stock of past investments ( such as machinery and equipment ).
After computing the contributions of labour and capital to output , the so-called ‘ multi-factor productivity ’ ( MFP ) effect can be derived . MFP measures the residual growth that cannot be explained by the rate of change in the services of labour , capital and intermediate outputs , and is often interpreted as the contribution to economic growth made by factors such as technical and organisational innovation .
When a road in a regional or remote area is built , or upgraded ( e . g . sealed ) the various industries that operate in the area receive a productivity dividend due to :
• Reduced travel times and vehicle operating costs ( including fuel , emissions and maintenance costs ), particularly for heavy vehicles ;
• Improved travel time reliability for freight ( including , for example , gas , beef and cattle ), by reducing the frequency and duration of road closures and providing safer opportunities for overtaking slower moving vehicles ;
Benefits to firms :
• Agglomeration benefits in cities ( e . g . proximity enhanced communications ).
• Enhanced competition between firms .
• Increased output in the economy .
• Enhanced labour supply .
Benefits to Consumers :
• Improved access to jobs .
• Improved education outcomes .
• Improved community health outcomes .
• Improved access to cultural , social and recreational development activities .
Taken together these benefits all relate to the concept of ‘ productivity ’.
Productivity measures how efficiently production inputs , such as labour and capital , are being used
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