Note about socio-economic calculations

This note gives a short introduction of how to make socio-economic evaluations in connection with the teaching at the Centre for Traffic and Transport (CTT). It is not a manual for making socio-economic calculations in transport infrastructure projects – in this context we refer to the guidelines for socio-economic calculations within the transportation area (Ministry of Traffic, 2003). The note also explains the theory of socio-economic calculations – reference is here made to ”Road Infrastructure Planning – a Decision-oriented approach” (Leleur, 2000). Socio-economic evaluations of infrastructure projects are common and can be made at different levels of detail depending on the type of project and the decision making phase. A common feature of the different levels of detail of the socio-economic analysis is that the planned project(s) is compared with a basic; the basic alternative or a null alternative. In socio-economic evaluations it is intended to describe the effects in economic terms whenever possible (”+” is used when it is positive for the society, and ”–” when it is negative for the society). However, not all the effects for the society can be described in economic terms, and instead these effects must be described qualitatively. This note describes the socio-economic evaluation based on market prices and not factor prices which has been the tradition in Denmark till now. This is due to the recommendation from the Ministry of Transport to start using calculations based on market prices (Ministry of Transport, 2003). However, when following courses at CTT, it is recommended to use the factor price method which will be described in further details in a later chapter.