Spatial Incidence of Economic Benefit of Road-Network Investments: Case Studies under the Usual and Disaster Scenarios

Abstract

Road networks can be considered local public goods. Hence, if they are to be efficient social choices from an economic perspective, their spatial benefit incidence should be equal to their cost burden in each region. An analysis of benefit incidence should consider not only a usual scenario but also a disaster scenario because the redundancy effect is expected to reduce the amount of economic damage incurred during a disaster. The authors’ research group has developed a spatial computable general equilibrium model (RAEM-Light) that can be applied to small spatial regions. The RAEM-Light model was used to analyze the benefit incidence in the development and maintenance stages of proposed road networks under a usual and a disaster scenario. The spatial incidence of the economic effect of road investment differs between the usual and the disaster scenarios for both the development and maintenance stages. As Japan becomes more decentralized, it will become more important to determine the optimum allocation of the road-network cost burden among local governments, taking into account differences in the spatial benefit incidence at each stage and in each scenario. However, to minimize the economic losses incurred by a disaster such as the Tohoku earthquake (March 11, 2011), more centralized decision making may be necessary, although this is not efficient social choice from an economic perspective.