The indirect effects of public investments generally play an important part in discussions on their desirability. What is clearly apparent is that the estimations of these effects – made with the help of partial models that are sometimes based on quite varied presumptions – tend to be rather divergent. In this article the example of the Zuiderzee line will be taken to illustrate the fact that some of that lack of clarity stems from insufficient insight into the nature of the indirect effects and their relationship to the direct effects. A number of the effects regarded as indirect in the studies conducted for this purpose may be traced back to direct effects. Indeed, that is how they should be seen and they should only be viewed as having additional indirect effects if the extent of the effects change as they permeate the economy. Furthermore, when determining the various possibly occurring indirect effects, one should be wary of estimations based on mutually exclusive assumptions: such effects can never be simultaneous and so they should not be collated. Ultimately this leads to a number of practical rules when it comes to dealing with the indirect effects of the cost and benefit analyses carried out in conjunction with major infrastructure projects. (Author/publisher)
Abstract