Cost-benefit analysis

Summary

This text describes the use of cost-benefit analysis to assess the impacts of road safety measures. The main steps of a cost-benefit analysis are outlined. The main principles of cost-benefit analysis are explained and guidelines for the monetary valuation of impacts in cost-benefit analyses are provided.

A recent road safety impact assessment is used to illustrate the findings of cost-benefit analyses of road safety measures, showing which measures are found to be the most cost-effective. There is still a large potential for improving road safety by using cost-effective road safety measures. Analyses in Norway and Sweden – both of which are comparatively safe countries – suggest that fatality reductions of about 50 % can be realised by applying cost-effective measures. It is reasonable to believe that benefits of a similar magnitude can be attained in many European countries.

In practice, however, it will never be possible to base road safety policy fully on cost-benefit analyses. Some of the reasons for this are briefly discussed. Important considerations that may justify departing from the policy priorities implied by cost-benefit analyses include an objective of reducing disparities in risk, thus giving high priority to measures benefiting pedestrians and cyclists, and an objective of giving priority to those measures that provide the largest reductions of the number of road accident fatalities. These measures may not always be the most cost-effective.