BENEFIT-COST ANALYSIS IN TRANSPORTATION: THE ECONOMIC RATIONALE OF RESOURCE ALLOCATION

TRANSPORTATION IS THE KEY FACTOR IN ECONOMIC GROWTH AND NATIONAL SECURITY. THE TRANSPORTATION SYSTEM ACCOUNTS FOR ONE DOLLAR IN EVERY SIX IN THE AMERICAN ECONOMY. THE KEY TO RATIONAL ANALYSIS AS THE BASIS FOR IMPORTANT DECISIONS CONCERNING TRANSPORTATION IS A COMPARISON OF COSTS AND BENEFITS FROM PROPOSED PROGRAMS. SOME OF THE DIFFERENCES BETWEEN DECISIONS ON PRIVATE INVESTMENTS AND ON GOVERNMENT EXPENDITURES FOR TRANSPORTATION ARE LISTED. COST-BENEFIT ANALYSIS IS RECOMMENDED AS THE FRAMEWORK FOR TAKING INTO ACCOUNT: (1) ALL THE RELEVANT COST AND BENEFITS, BOTH DIRECT AND INDIRECT, FINANCIAL AND NONFINANCIAL, (2) IDENTIFYING THOSE WHO BENEFIT AND THE EXTENT OF THEIR BENEFIT, AND THOSE WHO BEAR COST AND HOW MUCH THEY BEAR, (3) MEASURING COSTS & BENEFITS OVER THE REASONABLY EXPECTED LIFE OF THE PROJECT, AND (4) PERMITING THE SAME TYPE OF DATA AND ANALYSIS TO BE EMPLOYED FOR ALTERNATIVE SOLUTIONS TO A TRANSPORTATION PROBLEM SO THAT VALID COMPARISONS OF ALTERNATIVES CAN BE MADE.