Exploring Cost-Benefit Analysis of Research, Development and Innovation Infrastructures: An Evaluation Framework

86 Pages Posted: 16 Jul 2018

See all articles by Massimo Florio

Massimo Florio

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

Stefano Forte

University of Milan - Faculty of Science and Technology

Chiara Pancotti

CSIL Centre for Industrial Studies

Emanuela Sirtori

CSIL Centre for Industrial Studies

Silvia Vignetti

CSIL - Centro Studi Industria Leggera

Date Written: February 2016

Abstract

Governments, funding agencies and policy makers have high expectations on research, development and innovation (RDI) infrastructures in the context of science and innovation policies aimed at sustaining economic growth in the long term. The stakes associated with their selection and evaluation are therefore high.

Cost-benefit analysis of RDI infrastructures is a new field. The intangible nature of some benefits and the uncertainty associated to the achievement of research results have often discouraged the use of a proper CBA for RDI infrastructures. Recently, some attempts to develop a CBA theoretical framework for RDI infrastructures have been made in the context of the use of Structural Funds by the Czech government and JASPERS. Moreover, the new Guide for the CBA of investment projects in the context of Cohesion Policy, recently adopted by the European Commission (2014) provides guidelines to appraise RDI projects, but also admits that – due to lack of experience and best practices – further steps are needed to improve the evaluation framework.

This paper presents the results and the lessons learned on how to apply ex-ante CBA for major RDI infrastructures by a team of economists and scientists at the University of Milan and CSIL during a three-year research project supported by a EIBURS grant of the European Investment Bank Institute. Albeit the comprehensive conceptual framework presented in the paper builds on principles firmly rooted in CBA tradition, their application to the RDI sector is still in its infancy. So far, the model has been applied on two cases in physics involving particle accelerators (the Large Hadron Collider (LHC) at CERN and the National Centre for Oncological Treatment (CNAO) in Italy)).

In a nutshell, the model presented break down benefits into two broad classes: i) use benefits, held by different categories of infrastructure’s users such as scientists, firms, students and general public visitors, and ii) non-use benefits, denoting the social value for the discovery potential of the RDI infrastructure regardless of its actual or future use. We argue that the social value of discovery can be estimated with contingent valuation techniques. Another significant feature of our approach is the stochastic nature of the CBA model, intended to deal with the uncertainty and risk of optimism bias in the estimates.

Keywords: Research infrastructures, Cost-benefit analysis, Public good, Knowledge

Suggested Citation

Florio, Massimo and Forte, Stefano and Pancotti, Chiara and Sirtori, Emanuela and Vignetti, Silvia, Exploring Cost-Benefit Analysis of Research, Development and Innovation Infrastructures: An Evaluation Framework (February 2016). Available at SSRN: https://ssrn.com/abstract=3202170

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

Stefano Forte

University of Milan - Faculty of Science and Technology

Via Festa del Perdono, 7
Milan
Italy

Chiara Pancotti

CSIL Centre for Industrial Studies ( email )

Corso Monforte 15
Milano, 20122
Italy

Emanuela Sirtori

CSIL Centre for Industrial Studies

Corso Monforte 15
Milano, 20122
Italy

Silvia Vignetti

CSIL - Centro Studi Industria Leggera ( email )

Via P. Amedeo 34
10123 Torino, 20122
Italy

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