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How much to invest in the Sofia traffic?
submited on 02.12.2007 in category Political stability | Fiscal affairs | Monetary policy | Regulated markets | Privatisation | Macroeconomic developments
submited on 02.12.2007 in category Political stability | Fiscal affairs | Monetary policy | Regulated markets | Privatisation | Macroeconomic developments
The Sofia municipality is planning to invest BGN 3 billion in order to improve the traffic in the city. However, it did not clarify what particular benefits these investments of public resources will pursue.
Invested resources are taken from the taxpayers’ money. In order for them to make sense, they must raise public benefits. Spending BGN X million must be motivated with the public benefit Y, which measured in money, should be larger than X.
Investing in certain assets of the Sofia infrastructure obviously has some positive outcome. As any asset, the infrastructure has a certain life. In the period of time through which new and improved assets are being used their price has to be compared to the benefits, raised bu the corresponding assets throughout the same period.
Probably the most obvious approach to measuring efficiency is via determining the average speed in the traffic. The second question is how much money the increase in the average speed will save.
In order to evaluate the benefits of such an investment we have to use or have available certain data – about the average speed, average time spent commuting and also the number of people, using automobiles to reach their working place. We must also add municipality’s expectations, in order to calculate the efficiency of the investment.
It turned out that the Sofia municipality does not have this important data, although it is considered necessary.
If the municipality has made calculations they must be presented in public. If it has not, they must be made before the municipality spends BGN 3 billion without a clear effect.
Invested resources are taken from the taxpayers’ money. In order for them to make sense, they must raise public benefits. Spending BGN X million must be motivated with the public benefit Y, which measured in money, should be larger than X.
Investing in certain assets of the Sofia infrastructure obviously has some positive outcome. As any asset, the infrastructure has a certain life. In the period of time through which new and improved assets are being used their price has to be compared to the benefits, raised bu the corresponding assets throughout the same period.
Probably the most obvious approach to measuring efficiency is via determining the average speed in the traffic. The second question is how much money the increase in the average speed will save.
In order to evaluate the benefits of such an investment we have to use or have available certain data – about the average speed, average time spent commuting and also the number of people, using automobiles to reach their working place. We must also add municipality’s expectations, in order to calculate the efficiency of the investment.
It turned out that the Sofia municipality does not have this important data, although it is considered necessary.
If the municipality has made calculations they must be presented in public. If it has not, they must be made before the municipality spends BGN 3 billion without a clear effect.
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