Prioritizing Infrastructure Investment

Governments must decide how to allocate
limited resources for infrastructure development,
particularly since financing gaps have been projected for
the coming decades. Social cost-benefit analysis provides
sound project appraisal and, when systematically applied, a
basis for prioritization. In some instances, however,
capacity and resource limitations make extensive economic
analyses across all projects unfeasible in the immediate
term. This paper responds to a need for expanding the
available set of tools for project selection by proposing an
alternative prioritization approach that is systematic and
feasible within the current resource means of government.
The Infrastructure Prioritization Framework is a
multi-criteria decision support tool that considers project
outcomes along two dimensions, social-environmental and
financial-economic. When large sets of small- to
medium-sized projects are proposed, resources are limited,
and basic project appraisal data (but not full social
cost-benefit analysis) are available, the Infrastructure
Prioritization Framework can inform project selection by
combining selection criteria into social-environmental and
financial-economic indexes. These indexes are used to plot
projects on a Cartesian plane, and the sector budget is
imposed to create a project map for comparison along each
dimension. The Infrastructure Prioritization Framework is
structured to accommodate multiple policy objectives, attend
to social and environmental factors, provide an intuitive
platform for displaying results, and take advantage of
available data while promoting capacity building and data
collection for more sophisticated appraisal methods and
selection frameworks. Decision criteria, weighting, and
sensitivity analysis should be decided and made transparent
in advance of selection, and analysis should be made
publicly available and open to third-party review.