Title: The Cochabamba-Santa Cruz highway in Bolivia.

POPLINE Document Number: 018182

Author(s):

Bergmann BR

Source citation:

In: Wilson GW, Bergmann BR, Hirsch LV, Klein MS. The impact of highway investment on development. Washington, D.C., Brookings Institution, Transport Research Program, 1966 Apr. :17-54.

Abstract:

In Bolivia geographic facts must dominate any discussion of possible strategies for development and the place of transportation in that development. The country is divided between the cold, highly populated, poverty stricken Andean highland region in the western third of the country and the flat eastern lowlands, mainly lush, unpopulated jungles, in the remaining two thirds. Clearly, this geography limits the choice of development policies which are feasible and makes problematical the success of those attempted. The geography makes transportation between regions difficult, and it also makes the provision of better transportation facilities very expensive. It is a prime objective of Bolivian policymakers to open up the lowlands to exploitation by Bolivians. The exploitation of the lowlands by Bolivians has and will require transportation linkage with the highlands. An attempt is made to evaluate the costs and benefits of 1 such linkage, the Cochabamba-Santa Cruz highway, which was opened to traffic in 1954. The hope is that the methodology illustrated by this computation will have applications in other contexts, particularly cases in which the purpose of a facility is to open up an undeveloped and underpopulated area. The internal rate of return is used as a measure of benefit over costs. In this method a discount rate (internal rate of return) is chosen which equates the present value of the stream of costs with the present value of the stream of benefits. In calculating the costs it is necessary to take account of the fact that the benefits of the Cochabamba-Santa Cruz highway would have been smaller had it not been for the investment in feeder roads, in sugar mills, rice mills, and so on, which have been made in the area surrounding the Santa Cruz end of the highway. As it is impossible to separate out the benefits due to the highway alone, it is best to consider all of the investments as a cost "package." Th cost of the highway and associated investment in Santa Cruz (without discounting) is estimated to be between $73-83 million. Benefits, present and future, can be expected under the following categories: net increase in production for which the highway was a condition; higher standard of living available to those remaining in highlands because of higher average (and marginal) productivity; benefits from colonization, excluding present production of agricultural goods; stimulation of manufacturing because of higher demand and raw material supply; and balance of payments benefits. The net benefits have been calculated as currently running at US$11.3-11.8 million /annum.

Keywords:

Bolivia
Latin America
South America
Development Planning
Transportation
Cost Benefit Analysis
Geographic Factors
Industry
Economic Development
Agricultural Development
Socioeconomic Factors
Developing Countries
South America, Central
Americas
Economic Factors
Quantitative Evaluation
Evaluation
Population
Macroeconomic Factors
Rural Development