External costs of transport infrastructure : Habitat damage

The implementation of infrastructure usually has a negative impact on nature, which in isolation reduces social welfare through degradation of ecosystem services, e.g., through damage to and fragmentation of habitats. Such effects are currently included as non-monetized impacts in cost-benefit analysis (CBA). We find that most countries treat habitat damage qualitatively in their analyses, while Switzerland and some other countries use cost factors based on restauration costs. This provides a practical approach for consistent assessment of habitat loss. The report proposes a supplementary framework for analysis based on environmental economic theory and cost factors derived from Norwegian nature goals: If a project does not compensate for nature loss, the analyst should estimate the cost of restoring the corresponding natural area in a cost-effective manner (potentially elsewhere in the country). The method is currently recommended to be used in sensitivity analyses and as support for assessments of non-monetized impacts in order to strengthen the CBA as a basis for decision-making.