THE PRODUCTION BENEFITS FROM INVESTMENT IN ROAD CONSTRUCTION IN RURAL AUSTRALIA, WITH DISCUSSION

THE MAJOR BENEFITS THAT ARE GENERALLY EXPECTED TO RESULT FROM INVESTMENT IN ROAD IMPROVEMENTS ARE ROAD USER COST SAVINGS; I.E., VEHICLE OPERATING COSTS, TRAVEL TIME AND ACCIDENTS. HOWEVER, IN RURAL AREAS, ROADS ARE OFTEN CONSTRUCTED OR IMPROVED TO ENHANCE THE PRODUCTION POSSIBILITIES OF THE AREA IN QUESTION. IN SUCH CASES, ECONOMIC EVALUATION OF ROAD INVESTMENT PROPOSALS SHOULD COMPREHEND THE PRODUCTION EFFECTS OF THE PROJECT TO THE NATION, IN ADDITION TO THE BENEFITS TO ROAD USERS. THIS PAPER DISCUSSES THE THEORETICAL ISSUES WHICH SHOULD GUIDE THE DEVELOPMENT AND APPLICATION OF ECONOMIC EVALUATION PROCEDURES IN SUCH CIRCUMSTANCES. THE MODEL DEVELOPED BY WALTERS IS THEN USED TO OBTAIN AN OVERALL ASSESSMENT OF THE LIKELY IMPACT OF ROAD INVESTMENT ON AUSTRALIAN RURAL PRODUCTION. FINALLY, THE PROBLEM OF PARTICULAR AREAS ARE CONSIDERED, WITH SPECIAL ATTENTION TO THE CASES WHERE PRODUCTION, FACILITATED BY ROAD IMPROVEMENTS, IS FOR EXPORT MARKETS. /AUTHOR/