FRAMEWORK FOR AN ECONOMIC EVALUATION OF TRANSPORTATION INVESTMENTS. IN: ECONOMIC IMPACTS OF INTELLIGENT TRANSPORTATION SYSTEMS: INNOVATIONS AND CASE STUDIES

Benefit-cost analysis is a framework developed by economists and policy analysts to rigorously and fairly compare policy and investment decisions. This paper describes this framework and how it can be applied specifically to transportation investments. Some of the key technical issues relevant to the application of benefit-cost analysis to the evaluation of public investments in transportation include measuring the direct transportation benefits and cost to users of transportation facilities, measuring the secondary benefits and cost to non-users of transportation facilities, and measuring direct costs and estimating values when benefits and costs cannot be easily quantified. Another complicating factor in evaluating transportation investments is the choice of an appropriate discount rate for discounting future costs and benefits. These analysis concepts can all be applied to the evaluation of intelligent transportation system (ITS) projects. The evaluation must include project scenarios and ITS. Once the with and without ITS project scenarios are defined, the analysts can identify the costs and benefits that need to be included and determine how these benefits and costs will be estimated.