Cost-Benefit Analysis of Infrastructure Projects in an Enlarged European Union: An Incentive-Oriented Approach

Universita degli Studi di Milano DEPA Working Paper No. 13.2003

32 Pages Posted: 8 Nov 2003

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: May 2003

Abstract

The purpose of the paper is to analyse some results of cost-benefit analysis in a sample of ISPA (Structural Instrument for pre-accession countries) projects. The focus is particularly on the variability of financial and economic rates of return and how to integrate this information in the EU co-financing mechanism. We investigate, through the analysis of variance of co-financing rate, to which extent variability of rates is due to structural characteristics (sectors, countries) or to the existence of a residual variance due both to specificity of the project and discretional element of the appraisal method, which may constitute an information noise. We find that the variance of co-financing rate across countries is poorly explained by different composition of sectors of investment. This suggests the need to reinforce a more consistent approach to evaluation and co-financing. We suggest some possible solutions.

Keywords: Cost-benefit analysis, Project Evaluation, Structural Funds, European Regional Policy

JEL Classification: D61, H43, R58

Suggested Citation

Florio, Massimo and Vignetti, Silvia, Cost-Benefit Analysis of Infrastructure Projects in an Enlarged European Union: An Incentive-Oriented Approach (May 2003). Universita degli Studi di Milano DEPA Working Paper No. 13.2003. Available at SSRN: https://ssrn.com/abstract=455680 or http://dx.doi.org/10.2139/ssrn.455680

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

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