Economic Assesement for South Santo Road (Canal to Tassiriki) Project (November 2013)
Executive Summary
The Agricultural potential along the southern part of Santo has been kept at bay for the past 33 years. The result of the analysis undertakes indicates that there are substantial advantages in the construction of the new road upgrade projects and the performance of most of the indicators collected during the economic assessment feedback indicates great potential still not utilize by the southern region of Santo. The economic assessment also considers the option of the free of charge user roads. Traffic on the new road projects is much higher and as consequences both users and societies are better off, as total savings are higher and externalities lower than the user fee option. With the introduction of a user fee system, basically to generate revenues for financing the loan or maintenance purposes, the new project roads would remain under-utilized during the initial years. This is can be attributed to the fact that congestions along the existing road networks not high enough to induce a significant proportion of the demand to pay for the increased speed advantages allowed by the new road projects. The Government on the hand if decided to introduce a pricing scheme only on some links of the road, it is expected to shifts traffic from the priced modes of the road network to the other non-priced links and therefore reduces the consumer surplus. From a social welfare point of view, this will lead to a less positive effect. In order to maximize the net benefits of the investment, the analysis shows that it is better to allow usage for the proposed new roads to be user free and to postpone the idea(if any) of an introduction of a user fee at a later stage,preferably,where traffic flow growth is sustained.
Download Report below