A review of cost–benefit analysis as applied to the evaluation of new road proposals in the UK

The UK Department of Transport's COBA program is used to evaluate proposed highway schemes. COBA compares construction and maintenance costs against the benefits (time savings plus fuel and non-fuel vehicle operating costs plus accident savings) of a highway proposal. COBA does not value environmental externalities of highways developments in monetary terms: externalities such as noise, visual intrusion, recreation loss, air pollution, wildlife, etc., are merely documented in terms of their physical impacts, leaving decision-makers to judge the overall merit of the highway scheme. The paper documents the extent to which various amenity values are incorporated or excluded under current procedures, and the need to incorporate consumer surplus values. The paper also illustrates how the market price of land can be adjusted to reflect its social opportunity cost. Amenity benefits lost as a consequence of new road schemes are seen to mainly comprise loss of amenity value to the general public rather than to the owners of land. The paper argues that these amenity values of lost access; wildlife; and landscape preservation, etc., can be successfully valued through stated preference (SP) and contingent ranking (CR) methods; and that they should be incorporated into a full cost–benefit analysis of alternative route proposals.