Transport Infrastructure Appraisal: How Could Social and Economic Benefits Be Incorporated in Road Investment Appraisal in Developing Countries

The conventional CBA in highway appraisal as conducted in developing countries using HDM-4 Model assumes VOC as sole benefits to justify road infrastructure investments. VOC in this case depends on the traffic volume available and/or using a particular road. However, for the road to attract traffic the road has to be in fairly good condition. In developing countries most of the potential roads are rural in nature and in fairy bad condition. Traffic volume in these roads are very low. These roads are vital in terms of transport of farm produce to market, improving farm gate prices, and community access to schools, health,trade and social networks. The conventional appraisal methodology therefore underestimates benefits and/or value for money that would have been realised if rural roads were improved. Similarly,the approach deprives development right of rural community who are the key in improving cities livelihood. This paper therefore presents ways of incorporating socio-economic benefits in road investment appraisal using the World Bank recommended appraisal tool (HDM-4) for developing countries.