Bureau of Business Research
Date of this Version
4-2008
Abstract
Kansas and neighboring states spend billions of dollars on roads. Do the huge expenditures represent good investments? The taxpaying public will never know because public decision makers rarely analyze road projects as investments. A disciplined use of benefit-cost analysis can close this knowledge gap.
Roadways constitute an economically vital form of transportation infrastructure that have the potential to contribute to the productivity and economic growth of state economies—if the economic benefits of the roadways exceed their cost. Benefit-cost analysis totals the annual user benefits derived from road projects and compares these benefits with the total costs related to construction. The analysis, therefore, identifies road projects that have an acceptable or unacceptable return on investment. Consistent and appropriate use of benefit-cost analysis could allow states to allocate road spending to only the highest valued projects, thereby helping to assure that taxpayers’ money generates an acceptable return on investment.
Comments
Kansas University TECHNICAL REPORT 08-0425, April 2008. Used by permission.