The most interesting suggestion of the article by prof. Andrea Gilardoni who on 20 June opened the debate on the future of infrastructures in Italy on Firstonline lies in the identification in cost-benefit analysis techniques (CBA) of a feature that can no longer be renounced in the analysis, design and implementation of any concept of sustainability: the "diffusion" and transversality of infrastructural choices in terms of economic, social and environmental impacts.
Every infrastructural decision or plan, with particular regard to "large" infrastructures, has widespread effects on the environment, on the territory and on production activities which cannot be reduced to a mere examination of the internal profitability and efficiency of the work. Although inevitably subject to method choices with some degree of subjectivity, CBA lends itself to grasping the growing complexity of the relationship between infrastructure and the "surrounding environment", also with reference to the analysis of "competing choices".
Therefore, any proposal tending to promote CBA in assessing the efficiency and feasibility of infrastructures should find favor with the industry; indeed, we would like to take a step forward, in proposing (with the necessary progressiveness and flexibility) its compulsory adoption, at every level of public administration responsible for the choices and authorisations, provided that this does not involve lengthening the decision-making processes but represents on the contrary, the "guide" and legitimization of choices which, once taken, should be implemented without delay.
With one caveat: it is necessary to distinguish between infrastructures "necessarily publicly financed" (properly public works, although created with private finance schemes, which due to the externality content cannot be financed by direct users) and infrastructures which, although with a high "social" content and high environmental impact, have the characteristics of "private goods", typically aimed at the production of market goods even when heavily regulated.
For the first category, which does not exhaustively include large infrastructure works for transport, reclamation and enhancement of the territory and natural resources and "non-market" communication infrastructures (cabling and wireless diffusion for broadband transfer), there is no doubt that the adoption (even mandatory) of the CBA at every level is advisable and acceptable; the same difficulty of understanding and assessing externalities requires an "organic" and overall approach that only the CBA is able to provide.
For the second category (energy infrastructures, for the management of waste, at least partly water, those for which, very briefly, individual "tariff" use is assumed) the adoption of CBA techniques must be suitably clarified and delimited: in this class of works it is legitimate, or at least desirable, that the financeability is ensured and guaranteed, net of the inevitable industrial risk, by the revenue flows corresponding to the payment of the "final product" having the economic characteristics of a private good (energy , water, environmental hygiene within certain limits). These are infrastructures whose cost, in other words, must be "self-sustained" by the consumption of the connected good or by the use of the infrastructure.
The CBA here is in principle overabundant: investment choices are made by private and rational agents capable of appreciating costs and benefits with the classic tools of company valuation.
The "sustainability" and social and public coherence of investments in water, energy and environmental infrastructure should be guaranteed by the internalisation, in the cost and price signals available to companies, of the external effects of the installation of the work and its production .
A necessary condition for deeming CBA overabundant is, of course, that externalities are correctly considered: here we can say that the reference framework, at least in theory, tends to effectively assist choices through two well-established community (and global) key principles:
• on the supply side, the integration of external costs (eg, schemes for including the social cost of greenhouse gases in the cost of production, and in the final price, of energy)
• on the demand side, the "user and polluter pays".
In other words, if all measurable costs are included in the price of the service or final good, CBA is "implicitly achieved" with maximum efficiency through informed business choices. Of course, another thing is the verification of the tightness and application of the aforementioned preconditions (it is known that, in Italy, the price - or the tariff - of water does not reflect environmental costs, nor do they contain long-term signals for the support of investments) , but here it is worth emphasizing the principle.
Is the use of the CBA therefore superfluous in "market" sectors or, better to say, in sectors where the need for the contribution of private capital recommends its orientation to the market on condition that the investments are recoverable? Naturally not, the CBA helps and assists in these cases too, but if used at a "global" level, of overall policy choice, rather than discriminating between "doing and not doing" at the level of a single plant or single infrastructure.
To clarify, the "waste case" is illuminating: given the current and continuing lack of infrastructure that causes so much damage to the country and to the citizens, it is natural, right and advisable for the authorities to "ask themselves" what is the best mix of technologies and policies to be adopted to solve the problem and eliminate the shortage. Once this reflection has been carried out, which certainly can be conducted globally with CBA techniques and which can (should) produce indications and incentives towards the socially preferred solution, the choices are "borne" by the industry, which has its tools for evaluating the convenience of the investment and decides it autonomously, given the structure of constraints and incentives.
We can state with good confidence, to bring the reasoning into the concreteness of the numbers quoted in the article, that the tens of billions needed to resolve current and future environmental emergencies, in the most exposed local public service sectors (water and waste) would hardly be mobilized by the application of CBA in the assessment of infrastructure projects; this mobilization can only take place starting from rational investment choices of entrepreneurial subjects who can move within a framework of clear and certain rules, functional to the achievement of the objectives that a "global analysis" of needs can initially set and then leave to the market mechanism the realization of the design.
We would like to clarify that the "private" dimension of the choice does not, of course, prohibit "mixed" (public-private) forms of financing the work. The boundary between the two large classes of infrastructure examined does not exactly lie in the public or private nature of the capital, although this nature offers a good identification rule: the first class "calls" public finance (which constitutes its prerequisites in terms of economic logic), while in the second case private finance "logically prevails", without excluding public finance. In short, public finance is a necessary and sufficient condition for having public infrastructures, while private finance is a sufficient but not necessary condition for being in the second class.
In addition to the global evaluation of the policies, the CBA in energy and environmental infrastructure also has another role, perhaps even more important: "set" in the context of the individual plant engineering choice, without having characteristics of necessity or obligation, it can accompany the acceptance process social work. In other words, in the necessary sharing of the need and goodness of the infrastructure between the entity that builds it, the authorities and the public, the CBA option can be one of the decisive tools to support the acceptability of works that are often discussed and contested "by definition", without anyone, including the authorities authorized by those works, to examine and disseminate quantitative analyzes on the actual benefits commensurate with the costs.
We are also talking about social and political costs that must, of course, be evaluated, with what this entails in terms of rationalization and quantification of elements and "drives" often conveyed by mutually incomprehensible languages (that of business, that of "politics", that of the "committee people"). And here lies the challenge for the operators who must not question the "internal" technical-economic assessment tools, but must accept a complication by including costs and disadvantages "external" to the sphere of the enterprise; a challenge that is even more valid for scholars, who are called to include dimensions that are difficult to read in the CBA.
* President of Hera
