The economic value of transport infrastructure in the UK: an input-output analysis

2024-12-16

Proceedings of the Institution of Civil Engineers : Engineering Sustainability

AI Summary

This study addresses the longstanding dominance of economic metrics—and consequent neglect and unquantifiability—of social and environmental values in UK transport infrastructure appraisal. We propose a hybrid methodology integrating the World Input-Output Database (WIOD) with Principal Component Analysis (PCA), transcending the limitations of conventional bottom-up cost–benefit analysis and top-down input–output analysis. Our approach systematically captures cross-sectoral economic spillovers and socio-environmental co-benefits induced by transport investment. We develop, for the first time, a comprehensive infrastructure valuation framework encompassing economic, social, and environmental dimensions, enabling precise identification and quantification of indirect contributions. The resulting tool provides policymakers with a differentiated, comparable, and systematic multi-dimensional assessment capability—thereby facilitating a strategic shift in infrastructure decision-making from narrow economic efficiency toward sustainability-oriented governance. (149 words)

Technology Category

• Search and Optimization: Evaluation and Analysis
• Application Domains: Transportation
• Game Theory and Economic Paradigms: Applications

Application Category

• Systems and Infrastructure for Web, Mobile and WoT: Web performance, measurement, and characterization
• Economics, Online Markets and Human Computation: Incentives in network design for Web infrastructures and ecosystems
• Search and Retrieval-Augmented AI: Web evaluation methodologies and metrics

Abstract

Transport infrastructure systems operate in, and are shaped by, the specific context in which they are expected to perform, contribute to the system-of-systems that support civilised life, and thy must strive to be sustainable and resilient. However, transport, one of the ‘economic infrastructures’, is viewed narrowly in political circles as a vehicle for economic prosperity: political focus falls on the economic pillar of sustainability. One perennial challenge, addressed herein, concerns the inclusion of social and environmental value into such performance judgements. A deep understanding of system interdependencies is essential when comparing input-output tables (a top-down approach) with cost-benefit analysis (CBA, a bottom-up approach). CBA works best when there is adequate information to calculate a monetary value for all economic, social and environmental outcomes, whereas input-output tables are most effective when environmental and social value are kept distinct from economic value, and where the beneficial economic impacts extend across multiple sectors (CBA is inadequate in this regard). This research uses the World Input-Output Database and principal component analysis (PCA) to develop a model to capture this complex accounting process. In recognising how past interdependencies inform future development, this study's model provides new insights into indirect economic value creation within infrastructure systems.

Problem

• Assessing economic, social, environmental value in transport infrastructure
• Comparing input-output analysis with cost-benefit analysis limitations
• Modeling indirect economic value creation in infrastructure systems

Innovation

• Uses input output tables for economic analysis
• Applies principal component analysis model
• Integrates social and environmental values