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Prioritizing infrastructure investment : a framework for government decision making (English)

Governments must decide how to allocate limited resources for infrastructure development, particularly since financing gaps have been projected for the coming decades. Social cost-benefit analysis provides sound project appraisal and, when systematically applied, a basis for prioritization. In some instances, however, capacity and resource limitations make extensive economic analyses across all projects unfeasible in the immediate term. This paper responds to a need for expanding the available set of tools for project selection by proposing an alternative prioritization approach that is systematic and feasible within the current resource means of government. The Infrastructure Prioritization Framework is a multi-criteria decision support tool that considers project outcomes along two dimensions, social-environmental and financial-economic. When large sets of small- to medium-sized projects are proposed, resources are limited, and basic project appraisal data (but not full social cost-benefit analysis) are available, the Infrastructure Prioritization Framework can inform project selection by combining selection criteria into social-environmental and financial-economic indexes. These indexes are used to plot projects on a Cartesian plane, and the sector budget is imposed to create a project map for comparison along each dimension. The Infrastructure Prioritization Framework is structured to accommodate multiple policy objectives, attend to social and environmental factors, provide an intuitive platform for displaying results, and take advantage of available data while promoting capacity building and data collection for more sophisticated appraisal methods and selection frameworks. Decision criteria, weighting, and sensitivity analysis should be decided and made transparent in advance of selection, and analysis should be made publicly available and open to third-party review.

Details

  • Author

    Marcelo Gordillo,Darwin, Mandri-Perrott,Xavier Cledan, House,Ruth Schuyler, Schwartz,Jordan Z.

  • Document Date

    2016/05/13

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS7674

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2016/05/13

  • Disclosure Status

    Disclosed

  • Doc Name

    Prioritizing infrastructure investment : a framework for government decision making

  • Keywords

    financial internal rate of return;Public Investment Management System;water supply and sanitation;Environmental and Social Safeguard;food and agriculture organization;degree of risk aversion;social cost-benefit analysis;social and environmental;net present value;number of beneficiaries;decision support tool;indirect economic effects;public infrastructure investment;number of jobs;international good practice;government policy goals;national development plan;wastewater treatment facility;lack of transparency;public investment program;effectiveness of investments;project feasibility studies;high poverty rate;investments in infrastructure;sanitation infrastructure projects;basis of knowledge;resources and capacity;budget constraint;project selection;composite index;budget limit;infrastructure planning;additive model;composite indicator;qualitative variable;statistical method;limited resources;qualitative information;sensitivity analysis;equal weight;multiple policy;infrastructure needs;expert judgment;data availability;linear combination;welfare economics;public resource;development policy;infrastructure policy;Social Welfare;economic appraisal;basic requirement;alternative investment;selection criterion;public budget;relative performance;qualitative data;principal component;carbon footprint;quantitative data;Proposed Investment;standard deviation;investment period;financial impact;transparent manner;index construction;insufficient funding;cumulative total;budget envelope;sample mean;numerical value;good performance;significant challenge;carbon emission;basic threshold;Public Services;poverty profile;environmental aims;common feature;fiscal plan;stakeholder consultation;statistical relationship;weighting system;deficit ceiling;statistical software;individual variable;quantitative variable;policy selection;income opportunity;selection system;financial efficiency;environmental indicator;regional disparity;capital value;index function;relative weight;democratic accountability;data transformation;data type;economic sector;inherent biases;urban sector;comparable data;clear rules;information base;alternative specification;continuous refinement;empirical issue;variable input;graphical interface;analytical tool;poverty ratio;common denominator;qualitative assessment;greenhouse emission;existing capacity;global estimate;irrigation plan;government units;consultation period;public health;project datum;audit trail;index value;primary focus;financial resource;finance agency;fund allocations;accessible data;analytical capacity;sector budget;appraisal method;open access;international aid;capacity limitation;investment appraisal;policy planning;classification code;public fund;consultative process;project indicator;financial return;private investment;broader investment;social value;political debate;social cohesion;Political Economy;standard indicator;political judgment;guiding principles;quantitative measure;feasibility analysis;project impact;private finance;negative effect;financial factor;institutional feature;budget line;minimum level;feasibility assessment;information asymmetry;informative value;multiplier effect;political interference;monetary benefit;natural environment;construction work;environmental index;weighting scheme;direct beneficiaries;composite social;indicator value;sustainable investment;budgetary framework;project size;public good;financial cost;environmental risk;base indicator;data limitation;budget allocation;sector specialist;policy preference;output model;clearing forest;Cultural Heritage;

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Citation

Marcelo Gordillo,Darwin Mandri-Perrott,Xavier Cledan House,Ruth Schuyler Schwartz,Jordan Z.

Prioritizing infrastructure investment : a framework for government decision making (English). Policy Research working paper,no. WPS 7674 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/805021467996728921/Prioritizing-infrastructure-investment-a-framework-for-government-decision-making