Wider economic impacts of transport infrastructure investments: Relevant or negligible?

Wider economic impacts (WEI) comprise all effects that are not assessed appropriately in conventional cost-benefit analysis (CBA). These effects are generated by market imperfections, in the view of neo-classical equilibrium theory. In real economies such imperfections are not exemptions but frequent phenomena, e.g. stemming from increasing returns to scale or scope, or structural changes of products and industrial processes. Although the existence of WEI is not in question, they are usually not considered in practical assessments of transport infrastructure investments because they can only be estimated with high uncertainty and - in industrialised countries in particular - they are assumed to be of negligible magnitude. This paper presents approaches to WEI measurement based on GDP and on welfare, analyses the feasibility for combining WEI with conventional CBA, and discusses issues related to decision-making in situations where consideration of WEI appears to be relevant.