Massimo FLORIO

Publications (4)0 Total impact

• Source

  Available from: csilmilano.com

  Article: Building a bridge across CBA traditions: the contribution of EU Regional Policy

  Massimo FLORIO, Silvia VIGNETTI
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  ABSTRACT: This paper presents the basic principles of the EU approach to cost-benefit analysis (CBA) of infrastructure projects, as embodied in the recently issued CBA Guide. After an introduction about the objectives and instruments of the 2007-2013 EU Cohesion Policy, and in particular the legal framework for co-financing environmental and transport projects, the paper illustrates and discusses some methodological choices which have been made by the team authoring the EC Guide. Some 'rules of the game' (i.e. the use of shadow prices, the calculation of a proper shadow wage, the monetisation of non-market impacts, the choice of a social discount rate and the use of welfare weights) have been proposed in the Guide, in the light of regional differences in market conditions and welfare objectives of the EU regional development policy. The analysis shows that, differently from well-known national traditions of Cba in Europe (an explicit comparison is made with the British 'Green Book') the EU perspective calls for a general framework which is not so different from the project appraisal practice in less developed countries.
  Department of Economics University of Milan Italy, Departemental Working Papers. 01/2009;
• Article: Cost-benefit Analysis of Infrastructure Projects in an Enlarged European Union: Returns and Incentives

  Massimo Florio, Silvia Vignetti
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  ABSTRACT: We consider results of cost-benefit analysis (CBA) in a large sample of ISPA (Structural Instrument for Pre-Accession countries) projects co-financed by the European Union to support investment in transport and environment. The research focus is on the empirical analysis of the variability of financial and economic rates of return and how to integrate this information in the EU co-financing mechanism. We investigate to what extent the variability of expected returns and of EU co-financing rates is due to structural project characteristics (sectors, countries) or to other unexplained factors, including errors in the appraisal. We find that while the absolute level of grants is related to sectors, the EU co-financing rate depends on countries. There is no justification in economic analysis of such a country bias, because the variability of economic rate of returns is unrelated either to sector or country factors. These findings points to the need of a more consistent approach to evaluation and EU co-financing of infrastructure supported by the EU funds. We suggest possible improvements, based on the idea to offer an incentive to projects with high-expected economic␣rates of return relative to a benchmark and showing ex-post the realism of the initial analysis. Copyright Springer Science+Business Media, LLC 2005
  Economic Change and Restructuring 02/2005; 38(3):179-210.
• Source

  Available from: SSRN

  Article: Cost benefit analysis, developing planning and the EU cohesion fund: learning from experience

  Massimo FLORIO, Silvia VIGNETTI
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  ABSTRACT: In this paper we consider the experience of transport and environmental evaluation in the framework of the Cohesion Fund, established by the EU in 1993 to co-finance through grants infrastructure projects in Spain, Portugal, Ireland and Greece, and more recently in the new Member States. We focus on the regulatory requirement to provide the Commission a cost-benefit analysis of the investment projects. We assess some recurrent conceptual issues in project appraisal for the Cohesion Fund. In particular we discuss typical omissions and errors we have observed in our reading of large samples of project applications and ex-post evaluations. We propose theoretically consistent and feasible solutions in the most critical areas for the CBA of Cohesion Funds projects: The choice of time horizon and the calculation of the residual value, the adoption of financial versus social discount rates, shadow pricing and the shadow wage, sensitivity and risk analysis
  02/2004;
• Source

  Available from: SSRN

  Article: Cost-benefit analysis of infrastructure projects in an enlarged European Union: an incentive-oriented approach

  Massimo FLORIO, Silvia VIGNETTI
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  ABSTRACT: The purpose of the paper is to analyse some results of cost-benefit analysis in a sample of ISPA (Structural Instrument for pre-accession countries) projects. The focus is particularly on the variability of financial and economic rates of return and how to integrate this information in the EU co-financing mechanism. We investigate, through the analysis of variance of co-financing rate, to which extent variability of rates is due to structural characteristics (sectors, countries) or to the existence of a residual variance due both to specificity of the project and discretional element of the appraisal method, which may constitute an information noise.We find that the variance of co-financing rate across countries is poorly explained by different composition of sectors of investment. This suggests the need to reinforce a more consistent approach to evaluation and co-financing. We suggest some possible solutions.
  02/2003;