Die uitbreiding van kostevoordeelontleding met sosiale evaluering in die beplanning van openbare padbouprojekte : voorstel ter ondersteuning van die skep van n ontwikkelingstaat
Date
2014-12
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Suid-Afrikaanse Akademie vir Wetenskap en Kuns
Abstract
In hierdie artikel word die groei- en ontwikkelingsvoordele wat uit ekonomies geregverdigde padbouprojekte kan spruit, geïdentifiseer. Die streeksekonomiese voordele wat paaie kan bied, word uiteengesit. Die groepe niepadgebruikers wat by ’n padbouprojek kan baat, word uitgewys. Die bedryfseienskappe van padvervoer wat heilsaam is vir die stimulering van ekonomiese aktiwiteite word aangedui. Die huidige ongelyke inkomsteverdeling in Suid-Afrika word kortliks toegelig. ʼn Uiteensetting word gebied van hoe die kostevoordeelontleding en keuse van padbouprojekte met die gebruik van billikheidsgewigte in sosiale evaluering gekomplementeer kan word om ʼn meer aanvaarbare welvaartsverdeling in Suid-Afrika te bewerkstellig. Daar word aangevoer dat kostevoordeelontleding met sosiale evaluering gekoördineer moet word sodat
besluitnemers ingelig word oor watter padbouprojekte sowel toewysingsdoelmatigheid as verdelingsdoeltreffendheid sal bevorder. Die bespreking word aangevul met ʼn voorbeeld wat
aantoon hoe padbouprojekte op grond van welvaartverdelingsoorwegings geprioriseer kan word.
This article provides an outline of how the cost–benefit analysis of road construction projects can be complemented by social evaluation in the compilation of a road building programme with a view to achieving a more equitable welfare distribution within a developing country like South Africa. The article commences by elaborating on the general economic benefits that can arise from investment in economically justified road infrastructure. These are summarised as follows: expenditure on road construction projects injects funds into the private sector and promotes production. This, together with an increased demand for transport, can stimulate the economy. The stimulation of economic activities is associated with higher profits and personal incomes, and the resultant increase in taxes boosts government income. In this way, non-users also help to “repay” the capital amount invested in transport facilities that originally helped stimulate economic activity. New and improved roads supply access to property, and facilitate mobility and interaction within and between areas which might possess economic growth and development potential, thereby giving rise to more economical land-use patterns and the acceleration of business activities. This increases financial returns to investors and fixed-property owners, which in turn boost land values. Through the increase of taxable land values, the revenue of local authorities from property tax can consequently also increase. Local authorities may as a result have more funds available to maintain the local road networks that stimulated the taxable revenue within their jurisdictions. The following five classes of non-road-user beneficiaries are distinguished and discussed: • The general public • Landowners and users • Roadside enterprises and advertisers • Utility enterprises • Goods consignors and consignees. The operational characteristics of road transport that are conducive to the stimulation of economic activity are identified and described. The investigation found that road transport infrastructure and services can (a) serve as mechanisms to gain access to economic activities; (b) trigger economic development; (c) accelerate economic growth; and (d) serve as a catalyst to equalise the distribution of wealth in their areas of influence. The present inequality of wealth distribution in South Africa is dealt with. An outline is provided of how the cost–benefit analysis of road construction projects can be supplemented by the application of equity weighting in social evaluation, with a view to achieving a more equitable welfare distribution within the country. It is argued that the application of cost–benefit analysis should be coordinated with the use of social evaluation to inform decision makers in the selection process of the road projects that best demonstrate the potential to enhance both allocative efficiency and distributive effectiveness. This can be done by weighting the benefits of a proposed project according to weights calculated for specific consumer expenditure groups. In transport economic terms, the inclusion of equity in economic evaluation is geared towards creating, in terms of marginal utility of consumption, equal accessibility and increased mobility for lower-income groups. In general economic terms, it is geared towards allocating potential economic activities and returns to lower-income communities. The findings and recommendations with respect to both the analyses must be represented in the decision-making authority. If the decision maker is intent on paying due regard to both economic and social analysis in investment decisions, all independent projects within the limits of the available budget should go ahead if they are shown to be viable both with and without the application of equity weights. Although such weighting usually depends on political decision making, economically inefficient projects should go ahead only if their positive effects on welfare distribution are regarded as essential and cannot be achieved at lower cost through alternative forms of social grants or subsidies. The discussion is supplemented by an example that illustrates a ranking of road construction projects based on equitable welfare distribution consideration.
This article provides an outline of how the cost–benefit analysis of road construction projects can be complemented by social evaluation in the compilation of a road building programme with a view to achieving a more equitable welfare distribution within a developing country like South Africa. The article commences by elaborating on the general economic benefits that can arise from investment in economically justified road infrastructure. These are summarised as follows: expenditure on road construction projects injects funds into the private sector and promotes production. This, together with an increased demand for transport, can stimulate the economy. The stimulation of economic activities is associated with higher profits and personal incomes, and the resultant increase in taxes boosts government income. In this way, non-users also help to “repay” the capital amount invested in transport facilities that originally helped stimulate economic activity. New and improved roads supply access to property, and facilitate mobility and interaction within and between areas which might possess economic growth and development potential, thereby giving rise to more economical land-use patterns and the acceleration of business activities. This increases financial returns to investors and fixed-property owners, which in turn boost land values. Through the increase of taxable land values, the revenue of local authorities from property tax can consequently also increase. Local authorities may as a result have more funds available to maintain the local road networks that stimulated the taxable revenue within their jurisdictions. The following five classes of non-road-user beneficiaries are distinguished and discussed: • The general public • Landowners and users • Roadside enterprises and advertisers • Utility enterprises • Goods consignors and consignees. The operational characteristics of road transport that are conducive to the stimulation of economic activity are identified and described. The investigation found that road transport infrastructure and services can (a) serve as mechanisms to gain access to economic activities; (b) trigger economic development; (c) accelerate economic growth; and (d) serve as a catalyst to equalise the distribution of wealth in their areas of influence. The present inequality of wealth distribution in South Africa is dealt with. An outline is provided of how the cost–benefit analysis of road construction projects can be supplemented by the application of equity weighting in social evaluation, with a view to achieving a more equitable welfare distribution within the country. It is argued that the application of cost–benefit analysis should be coordinated with the use of social evaluation to inform decision makers in the selection process of the road projects that best demonstrate the potential to enhance both allocative efficiency and distributive effectiveness. This can be done by weighting the benefits of a proposed project according to weights calculated for specific consumer expenditure groups. In transport economic terms, the inclusion of equity in economic evaluation is geared towards creating, in terms of marginal utility of consumption, equal accessibility and increased mobility for lower-income groups. In general economic terms, it is geared towards allocating potential economic activities and returns to lower-income communities. The findings and recommendations with respect to both the analyses must be represented in the decision-making authority. If the decision maker is intent on paying due regard to both economic and social analysis in investment decisions, all independent projects within the limits of the available budget should go ahead if they are shown to be viable both with and without the application of equity weights. Although such weighting usually depends on political decision making, economically inefficient projects should go ahead only if their positive effects on welfare distribution are regarded as essential and cannot be achieved at lower cost through alternative forms of social grants or subsidies. The discussion is supplemented by an example that illustrates a ranking of road construction projects based on equitable welfare distribution consideration.
Description
CITATION: Pienaar, W. 2014. Die uitbreiding van kostevoordeelontleding met sosiale evaluering in die beplanning van openbare padbouprojekte : voorstel ter ondersteuning van die skep van n ontwikkelingstaat. Tydskrif vir Geesteswetenskappe, 54(4):753-770.
The original publication is available at http://www.scielo.org.za/scielo.php?script=sci_issuetoc&pid=0041-475120140004&lng=en&nrm=iso
The original publication is available at http://www.scielo.org.za/scielo.php?script=sci_issuetoc&pid=0041-475120140004&lng=en&nrm=iso
Keywords
Roads -- South Africa -- Design and construction -- Planning, Roads -- Design and contruction -- Economic aspects -- South Africa, Roads -- South Africa -- Design and construction -- Cost effectiveness, Social analysis
Citation
Pienaar, W. 2014. Die uitbreiding van kostevoordeelontleding met sosiale evaluering in die beplanning van openbare padbouprojekte : voorstel ter ondersteuning van die skep van n ontwikkelingstaat. Tydskrif vir Geesteswetenskappe, 54(4):753-770.