The role of economic analysis for investment priorities in Sweden’s transport sector

Beginning as a planning tool within the national road administration in the early 1970s, benefit-cost analysis (BCA) became a pillar of national transport policy because of strategic choices made by the national parliament. The Transport Policy Act of 1979 established marginal instead of average cost as the overarching principle for pricing of transport. The subsequent 1988 Act separated rail infrastructure from train-service provision. Both policy updates made it necessary to widen the analysis of costs to include also externalities and a foregone conclusion was that efficient investment priorities should be made based on BCA. But no one asked whether the political decision makers or the BCA models were apt to that task. This paper reviews the current state of BCA for transport infrastructure investment and considers design issues that have been and still are debated, also providing a benchmark description of how these issues have been addressed elsewhere. Moreover, the role of BCA as a platform for prioritization of investment project is reviewed.