Explain why it is necessary for the government to apply a cost-benefit approach to the appraisal of major new road schemes in the UK

Authors Avatar
Explain why it is necessary for the government to apply a cost-benefit approach to the appraisal of major new road schemes in the UK

A cost benefit analysis is the identification, measurement and weighing up of the costs and benefits of a project in order to decide whether or not it should go ahead.

It is necessary for the government to use this because it is important that they determine whether or not the project will be detrimental to the economy, society or both. If the costs to society are greater than the benefits to society, then society will end up suffering. This is very important to governments, because of the short term populist voting cycle in many modern democracies. Governments cannot make people unhappy or create problems in society because if they do so it is likely that the society will not vote for them in the next elections. One of the prime aims of government in a representative Democracy such As the Uk or America is to stay in office and in doing so have a greater influence on policy.
Join now!


It is also necessary because the well being of the economy is in the governments interest. If the economy becomes weak, and demand drops, firstly the government will collect less in tax revenues. Secondly stagflation in the economy may occur. Stagflation is stagnation in the economy, leading to inflation. The government does not want excessive inflation, because it will affect groups of voters adversely. People on fixed pensions (the majority and therefore a more powerful voting bloc) lose, whereas others in better positions (the minority, a less powerful voting bloc) gain. It also raises taxes though fiscal drag, ...

This is a preview of the whole essay