Michael Pickford examines the changing approach of the New Zealand Transport Agency towards assessing the economic efficiency of state highway projects. He emphasises that since 2003 there has been a gradual shift away from reliance on the benefit-cost ratio (BCR) in favour of ‘strategic fit’ and ‘effectiveness’ as favourable project attributes. He argues that this dilution of the BCR under the current approach has resulted in many hundreds of millions of dollars in prospective benefits being wasted annually. On this basis, he suggests significant policy changes.
Dr Michael Pickford, now an independent economic researcher, was previously the Chief Economist at the New Zealand Commerce Commission, and before that a Senior Lecturer in Economics at Massey University.