EDI SERIES IN ECONOMIC DEVELOPMFNT /0/0 7' ECONYOMIC APPRAISAL OF TiRASPORT PROJECTS Report No. li007 F-ILE CopY1 A MANYUIAL WITH CA SE STUDIES REVISED AND EXPANDED EDITION HANS A. ADLER mo Public Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure Authorized [...]... efficiently Appraisal provides a comprehensive reviewof all aspects of the project and lays the foundation for its implementation after it has been approved and for its evaluation after it has been completed PROJECT APPRAISAL Aspects of Project Appraisal Appraisal involves the investigation of six different aspects of a project: * Economic appraisal has to do with the identification and measure- ment of the economic. .. among the modes of transport or between transport and investments in other fields The systematic economic appraisal of transport projects, based on greatly improved statistics, is therefore becoming increasingly urgent Notes 1 See "Economic versus Financial Appraisal" in chapter 5 for a discussion of what should be the guiding criterion when projects are justified financially but not economically, or... might be undertaken where road transport would serve more economically, or vice versa The purpose of this manual is to serve as a guide to all agencies responsible for the planning of investments in the transport sector The manual deals with the appraisal of transport projects in developing countries Although there are many similarities between appraisal in developed and appraisal in developing countries,... this manual is on the practical application of economic analysis, and for this reason Part II contains fifteen case studies for the principle modes of transport Since there are many types of transport investments and the range of their benefits is very wide, not every situation could be covered But Part I provides background on the methodology of economic appraisal so that it can be applied to the many... lessons of experience accumulated with the prior edition, the literature of the past fifteen years on more sophisticated methodologies (shadow pricing, for example), and empirical work on measuring some of the benefits of transport improvements In addition, the revised edition puts greater emphasis on transport sector planning as a prerequisite to the appraisal of individual projects, on the analysis of. .. mean that more economic resources are required to produce a given volume of gasoline Similarly, license fees and import duties should be excluded from the calculation of economic costs Wages Because of minimum wage laws, regulations, and other inflexibilities, wages actually paid may not be a correct measure of the real costs of labor-the value of the marginal output of labor forgone else- ECONOMIC COSTS... (1977)finds that the economic cost of unskilled agricultural labor is about 75percent of the money wageof industrial labor in Taiwan and about 60percent in the Philippines The difference reflects Taiwan's lower level of unemployment, more rapid economic growth,and greater mobility of labor Page (1982)puts the economic cost of unskilled labor in Egypt at about one-half the relevant money wage; that of skilled... understanding of the broad transport policies which a government plans to pursue Wasteful policies are prevalent, and a transport survey needs to address the following: * The rationalityof the criteriaused in decidingon new investments The systematic application of cost-benefit techniques is essential to minimize poor investments 8 APPRAISAL METHODOLOGY * The relationof transporttariffsto the costsof services... Relevance of Transport Prices If the economic benefits and costs of transport projects are to be measured and compared with other investment opportunities, they INTRODUCTION 9 must be expressed in monetary terms-the only practical common denominator This presents a problem since market prices do not reflect economic costs to the country in the absence of workable competition in major sectors of the economy... primarily on the degree of a country's industrialization and the type of investment, but foreign exchange components ranging from 30 to 60 percent of transport investments are not uncommon In addition, operating costs often require continuing foreign exchange expenditures for spare parts, maintenance equipment, tires, and fuel In view of the strategic role of transport in a country's economic development, . - ~~~ - I- Economic Appraisal of Transport Projects 11WOR&MMANO EDI Series in Economic Development