Cost Benefit Analysis, Development Planning and the EU Cohesion Fund: Learning from Experience

UNIMI Economics Working Paper No. 16.2005

35 Pages Posted: 8 Dec 2004

See all articles by Massimo Florio

Massimo Florio

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM)

Silvia Vignetti

CSIL - Centro Studi Industria Leggera

Date Written: October 2004

Abstract

In this paper we consider the experience of transport and environmental evaluation in the framework of the Cohesion Fund, established by the EU in 1993 to co-finance through grants infrastructure projects in Spain, Portugal, Ireland and Greece, and more recently in the new Member States. We focus on the regulatory requirement to provide the Commission a cost-benefit analysis of the investment projects. We assess some recurrent conceptual issues in project appraisal for the Cohesion Fund. In particular we discuss typical omissions and errors we have observed in our reading of large samples of project applications and ex-post evaluations. We propose theoretically consistent and feasible solutions in the most critical areas for the CBA of Cohesion Funds projects: The choice of time horizon and the calculation of the residual value, the adoption of financial versus social discount rates, shadow pricing and the shadow wage, sensitivity and risk analysis.

Keywords: Cost-benefit analysis, transport, environment, Cohesion Fund, EU Regional Policy

JEL Classification: H43, O22, R42

Suggested Citation

Florio, Massimo and Vignetti, Silvia, Cost Benefit Analysis, Development Planning and the EU Cohesion Fund: Learning from Experience (October 2004). UNIMI Economics Working Paper No. 16.2005, Available at SSRN: https://ssrn.com/abstract=627982 or http://dx.doi.org/10.2139/ssrn.627982

Massimo Florio (Contact Author)

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM) ( email )

Via Conservatorio 7
I-20122 Milano, 20122
Italy
+39 02 50321510 (Phone)
+39 02 50321505 (Fax)

HOME PAGE: http://www.demm.unimi.it/ecm/home

Silvia Vignetti

CSIL - Centro Studi Industria Leggera ( email )

Via P. Amedeo 34
10123 Torino, 20122
Italy

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
368
Abstract Views
2,429
rank
104,090
PlumX Metrics