day 1 - sustainability and economic development(1)

8/12/2019 Day 1 - Sustainability and Economic Development(1)

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CEG8413

Economic and Environmental Appraisal ofTransport Activities

Sustainability andEconomic Development

Dr Anil [email protected]


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Economic and Environmental Appraisal of Transport Activities

Economics

Oikonomia: Greek root word of economics.Refers to the management of the householdso as to increase its use value to all

members of the household over the long run.

Can be interpreted to mean economics ofcommunity.

Takes a longer-term perspective. Focuses on use value (concrete, satiable)rather than exchange value.


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Economic Development

The goal of economic development is toimprove the wellbeing of members of society. Narrow focus on real GDP growth that

characterised economic development in thepostwar period often failed:

to screen out projects and policies that harmed

the environment,

to address poverty and empowerment, and

to sustain local communities and indigenous

peoples.


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Earth Charter

At the conclusion of the Rio+5 Forum in Riode Janeiro in 1997, the Earth CharterCommission issued the Benchmark Draft

Earth Charter.

After considerable feedback a secondBenchmark Draft was issued in 1999, and a

final version was issued in 2000.

The 2000 Earth Charter has sixteen mainprinciples, various supporting principles, and

a conclusion.


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Earth Charter Principles

Respect and care for the community Ecological integrity Social and economic justice, and

Democracy, nonviolence, and peace.


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Sustainability

Dictionary meaning: sustainable practicesare practices that can be kept in existence ormaintained.

Sustainability the property of being sustainable,

the condition where human activity may be

continued indefinitely without damaging the

environment, and

where the needs of all peoples are met equally.


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Sustainable Development

SD implies a broad view of human welfare, a long term perspective about the consequences

of today's activities, and

the full involvement of civil society to reach

viable solutions.

Environmental, economic and social well-being for today and tomorrow


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Sustainable Development (SD)

SD defined in many ways Most frequently quoted definition is from OurCommon Future, also known as the

Brundtland Report (1987)

Sustainable development is development

that meets the needs of the present withoutcompromising the ability of future generations

to meet their own needs


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SDKey Concepts

the concept of needs, in particular theessential needs of the world's poor, to whichoverriding priority should be given; and

the idea of limitationsimposed by the stateof technology and social organization on the

environment's ability to meet present and

future needs.


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Viedermans

Sustainability Principles

Sustainability is a community's control andprudent use of all forms of capital. nature's capital

human capital

human-created capital

social capital, and

cultural capital


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Viedermans

sustainability principles

Present and future generations can attain ahigh degree of economic security whilemaintaining the integrity of the ecological

systems upon which all life and production

depends

ViedermansThree Pillars of SD


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Sustainability
http://localhost/var/www/apps/conversion/tmp/scratch_7//upload.wikimedia.org/wikipedia/commons/7/70/Sustainable_development.svg


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Seven strategic imperatives for SD

Reviving growth; Changing the quality of growth; Meeting essential needs for jobs, food, energy,

water, and sanitation;

Ensuring a sustainable level of population; Conserving and enhancing the resource base; Reorienting technology and managing risk;

Merging environment and economics in decision-making.


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Reading Resources

DEFRA - www.defra.gov.uk The International Institute for Sustainable Development (IISD)-

www.iisd.org

UN Division for Sustainable Development -www.un.org/esa/sustdev/index.html

United Nations Environment Programme (UNEP) www.unep.org OECD Directorate of the Environment - research on environment and

economic linkages- www.oecd.org

SD Gateway - http://sdgateway.net/introsd/default.htm Earth Charter www.earthcharter.org

Viederman, S. (1996) "Sustainability's Five Capitals and Three Pillars,"chapter 3 of D. Pirages, ed., Building Sustainable Societies: A Blueprint for a

Post-Industrial World . Armonk, NY: M.E. Sharpe
http://www.defra.gov.uk/http://www.iisd.org/http://www.un.org/esa/sustdev/index.htmlhttp://www.unep.org/http://www.oecd.org/http://sdgateway.net/introsd/default.htmhttp://www.earthcharter.org/http://www.earthcharter.org/http://sdgateway.net/introsd/default.htmhttp://www.oecd.org/http://www.unep.org/http://www.un.org/esa/sustdev/index.htmlhttp://www.iisd.org/http://www.defra.gov.uk/


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APPRAISAL & EVALUATION


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What is investment?

Using resources to create an addition to thepresent facilitieswhether public or private In economic terms, it is a diversion from current

consumption to uses which will improve the

efficiency of the production process in future

Benefits > Costs for investment to be worthwhile Time is involved in judgement so B>C over time

This is the foundation of appraisal/evaluation


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Road Investment

Many road investment projects have longgestation periods and high capital costs. Infrastructure provided is immobile, difficult to

move, difficult to modify capacity significantly. Technical and political constraints make itdifficult to use pricing mechanisms alter

demand.

Transport is derived demand: parametersconditioned by social, political and economic

events (highly unpredictable)


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Road Investment (2)

Infrastructure investment is very pervasive influencing as well as being influenced by

circumstances in which they operate

This suggests that transport schemes require

careful long-term planning and appraisal

Wide range of uncertainty about possiblefuture circumstances in which scheme would

operate

Appraisal/evaluation difficult


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Appraisal and Evaluation

Terms often confused in relation to theassessment of transport projects.Appraisal refers to ex ante assessment.

Evaluation refers to ex post assessment.


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Appraisal

General aim is to improve the quality of thechoices made between alternativeinvestments and policies

Improving the quality of the choices? Course of actions which are chosen tend to havea more desirable effects than those which are

rejected

Private firms - maximising profits

Appraisal system should be able to improveabilities to chose better options


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Appraisal Process

Normally the starting point for any proposal

An ordered, but flexible, general approach to theanalysis of proposals with implications for

expenditure / use of resources.

No two appraisals are exactly alike. Scale variesdepending on the size and complexity of the

proposed project.

Does not always point to a clear-cutrecommendation. There may be risks anduncertainties attached to costs, benefits or both.


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Evaluation

Evaluation examines the output of a project,programme or policy against its objectives. Enables decision makers to understand

whether the benefits and costs that wereestimated in the appraisal materialised.

Evaluation should be planned from the outsetof the project

Necessary data need to be specified inadvance for successful evaluation.


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Appraisal and Evaluation

to compare scheme proposals in order to make the

best choice

to make a decision as to whether a proposedscheme should go ahead at all

to check detailed design options during theimplementation process

to monitor implemented projects in order to

optimise operational regimes to evaluate past schemes in order to improve futureimplementations


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Transport Appraisal (1)

Appraisal of changes in the transport network One of the most important applications of

transport economics

Earlier applicationsfocus on CBA to decide if a project is financially viable


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Travel time savings are key benefit oftransport projects.A primary difficulty in project appraisal is the

valuation of time.Appraisal schemes started including thevaluation of time; differed between social

classes and occupations.

Land value and consumer benefit added;though process difficult to carry out.


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Many transport projects have impacts thatcannot be expressed in monetary terms. Local air quality, biodiversity, heritage,

community severance etc.

These impact can be included inenvironmental impact assessment

A key issue has been how to present theseassessments alongside estimates of those

costs and benefits that can be expressed in

monetary terms.


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Reading Resources

Button, K.J and Pearman, A.D. (1983) The Practice ofTransport Investment Appraisal. Gower Publishing.

Harrison, A.J. (1974) The Economics of TransportAppraisal. Halsted Press Book, John Wiley and Sons.

Roe, M. (1987) Evaluation Methodologies for TransportInvestment. Avebury, Aldershot.

www.dft.gov.uk/pgr/economics/sactra/ www.dft.gov.uk
http://www.dft.gov.uk/pgr/economics/sactra/http://www.dft.gov.uk/http://www.dft.gov.uk/http://www.dft.gov.uk/pgr/economics/sactra/

day 1 - sustainability and economic development(1)

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