Thomas Murphy (p), John Hicks

Jérôme Massiani

Local, State and Federal governments in Australia sometimes provide financial assistance for the staging of events in regional centres to enrich the cultural experience in these centres and to stimulate the local economy in terms of economic growth, employment and household income. The economic efficacy of this government support is usually assessed by two separate techniques Cost Benefit Analysis (CBA) and Economic Impact Analysis (EIA). Some argue that the two approaches are complementary while others argue strongly for the primacy of CBA over EIA. It is argued in this paper that integrating the two approaches is the most appropriate technique for evaluating government assistance for regional events. The approach is illustrated using the case of the Mount Panorama Motor Racing Circuit at Bathurst Australia.

Chiara Pancotti (p)

Jérôme Massiani

A retrospective exercise is an opportunity to learn and improve. This is recognised by the European Commission and it reflected in the regulatory obligation to systematically carry out ex-post evaluation of Cohesion Policy Programmes. A specific evaluation effort concerns major infrastructure investments which represent an important part of the Cohesion Policy expenditures. Recently, the DG REGIO has launched a round of ex-post evaluation studies addressing major projects in four different sectors: transport, environment, energy, ICT and RDI. The scope of this effort is to look retrospectively at 10 of major projects co-financed by the Commission over the period 2000 to 2013 under each of the four above-mentioned sectors with a consistent evaluation framework.
This paper draws from the first two studies which involved the evaluation of 20 projects (ten in the transport sector and 10 in the environment sector) carried out by an international consortium led by CSIL. In particular, the paper focus on the discussion of the evaluation framework developed to consistently assess a set of infrastructures. The original contribution of such framework is that it combines retrospective CBA with qualitative evaluation of the factors that can influence a project’s performance. The approach involved extensive field work and interaction with stakeholders to collect data and information used to prepare the retrospective CBA. This information was also used to reconstruct the project history and to assess effects that, although observable from an ex post perspective, are difficult to translate into monetary terms as well as to identify the key drivers of observed project performance.
In fact, the objective of this evaluation exercise was not limited to verifying the correctness of the ex ante CBA and/or discovering deviations from the ex ante results. Rather the goal was also to analyze the long-term contribution of major projects to economic development and well-being. Therefore, the methodology goes beyond a simple update of the ex ante CBA with observed data. Rather, the added value comes from performing a new CBA from today’s standpoint and understanding the reasons why some deviations occurred.
The paper argues that retrospective or intermediate CBA (when appropriately implemented and integrated with qualitative evidence) is a valuable tool for policy learning. If this exercise is part of the project cycle and feeds into the decision-making process, the lessons learned can be used to improve the ex ante appraisal process by taking corrective action to counteract forecasting errors and spur result-oriented behavior.

Jerome Massiani (p)

Jérôme Massiani

Abstract :
- We explore the reasons for the limited consideration of employment impacts in most CBA until the last decade.
- We look at the several modelling techniques that can be used for inclusion of employment in CBA.
- We examine a few applications in Italy, mostly related to road or sea transport investment. These examples show a large heterogeneity in the way practitioners proceed.
- Our analysis suggests that the issue is not handled consistently. The use of shadow costs did not reach the objective of insuring more consistent and homogenous assessment. We observe that shadow costs are usually applied axiomatically, are not aligned with the methodological features stated in guidelines.
- Unless more discipline is not implemented, introducing employment benefits in the Cost Benefit Evaluation can increase the errors and thus decrease the relevance of the recommendation resulting from CBA.