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Incorporating Wider Economic Impacts within Cost-Benefit Appraisal

This paper analyses three main mechanisms through which transport improvements have impacts that deliver real income gain over and above user-benefits. One is economic density and productivity, a second is induced private investment and associated land-use change, and a third is employment effects. There are relatively well-established methodologies for incorporating the first and third of these in cost-benefit appraisal, and these methodologies are reviewed in the paper. For the second, the paper outlines how transport induced investments can create consumer surplus, and describes a method for quantifying this in cost-benefit appraisal. Data issues encountered in implementing these methods are discussed.