Ranking Transport Projects by their Socioeconomic Value or Financial Interest rate of return?

This paper discusses the choice by the public authority of the most efficient programme of infrastructure investments. More specifically, it studies the optimal ranking of the projects implementations when these projects are partially self-financed by their own revenues such as tolled highways. In this case, the optimal investment programme must be defines under a constraint of annual subsidies. This paper demonstrates that the optimal ranking is not necessarily the ranking of decreasing socio-economic IRR. This counter-intuitive result can be demonstrated by a general approach. Analytical calculations are not useful in the discrete problems because each programme is an ordered subset of projects. Therefore, there is no continuous variation linking the various programmes and the usual tools of optimisation are useless, such as differential calculus. Thus, we adopt here a discrete optimisation analysis based on standard techniques in the physics area, such as Monte Carlo sampling.