The need for infrastructure modernization, in connection with severe restrictions in public spending, has forced many governments to adopt complex financing schemes involving the private sector in traditionally publicly funded sectors. The effective management of public funds is at the heart of political and social acceptance of the scheme. In this respect, the financial evaluation of projects and their respective Social Discount Rate (SDR) proves to be of crucial importance, especially, when the advantages of private financing must be demonstrated ¾through the use of the so called Public Sector Comparator (PSC). Moreover, the methodology used to calculate the SDR varies within the European Union (EU) leading to significant discrepancies between member states and, consequently, influencing the EU funding of projects, EU policies and, ultimately, sustainable development.
The aim of the presented paper is, firstly, to analyze the rationale of declining rates adopted recently by the member states to be applied in cost-benefit analyses (see, for example, Instruction-cadre relative aux méthodes d'évaluation économique des grands projets d'infrastructure de transport, Μinistère de l’Équipement, des Τransports, du Logement, du Tourisme et de la Mer, 25-03-2004, Paris; Procedures for dealing with optimism bias in transport planning, Guidance document, The British Department for Transport, June 2004 ) and its expression of sustainability. Secondly, to investigate the impact these smaller and declining SDR have on the selection of the project procurement method. Finally, a framework is proposed to this effect.
The modelled framework will assist central and local governments in assessing projects while establishing a comparison with other EU member states and respective funding policies.
Keywords: Sustainability, PPP/PFI, Cost-Benefit Analysis, Transport projects, Social Discount Rate