A REVIEW OF COST-BENEFIT-ANALYSIS AS APPLIED TO THE EVALUATION OF NEWROAD PROPOSALS IN THE UK

The U.K. Department of Transport's COBA program is used to evaluate pr oposed highway schemes. COBA compares construction and maintenance cos ts against the benefits (time savings plus fuel and non-fuel vehicle o perating costs plus accident savings) of a highway proposal. COBA does not value environmental externalities of highways developments in mon etary terms: externalities such as noise, visual intrusion, recreation loss, air pollution, wildlife, etc., are merely documented in terms i f their physical impacts, leaving decisionmakers to judge the overall merit of the highway scheme. The paper documents the extent to which v arious amenity values are incorporated or excluded under current proce dures, and the need to incorporate consumer surplus values. The paper also illustrates how the market price of land can be adjusted to refle ct its social opportunity cost. Amenity benefits lost as a consequence of new road schemes are seen to mainly comprise loss of amenity value to the general public rather than to the owners of land. The paper ar gues that these amenity values of lost access; wildlife; and landscape preservation, etc., can be successfully valued through stated prefere nce (SP) and contingent ranking (CR) methods; and that they should be incorporated into a full cost-benefit analysis of alternative route pr oposals. (C) 1998 Elsevier Science Ltd. All rights reserved.