This manual presents the Roads Economic Decision Model (RED) developed to improve the decision-making process for the development and maintenance of low-volume rural roads.
During the first period the Bank's main concern was to find ways of relieving urban traffic congestion. This mainly involved the prescription of traffic management, road rehabilitation and road construction. It also involved helping the formal public transport sector become more efficient and building local capabilities to plan, implementation and monitor traffic management schemes. This focus is reflected in the projects undertaken in the Cote d'Ivoire, Mali, Senegal, Cameroon and Zimbabwe.
This overview discusses the financial aspects of the four studies of urban transport microenterprises referred to in the Foreword. These studies covered far more than financial issues, since the objective was to understand how such enterprises operate, and to grasp all the factors which enter into play in this transport sub-sector, taking, if not a macroeconomic, then at least a meso-economic perspective.
Under a concession system the state grants a franchise the right to finance, build, own, operate, and maintain a public infrastructure for a given period, and to charge users for that service. Concessions are normally stand-alone, single-purpose entities that are expected to finance themselves eventually, if not initially, without recourse to their shareholders. They are independent corporate entities run by a dedicated staff that seeks career advancement within the concession company. Invariably, the successful concession has been created because of a compelling economic need.
This Note presents the Roads Economic Decision Model (RED) that performs an economic evaluation of road investments and maintenance options customized to the characteristics of low-volume roads such as: a) high uncertainty of the assessment of traffic, road condition, and future maintenance of unpaved roads; b) periods during a year with disrupted passability; c) levels of service and corresponding road user costs defined not lonely through roughness; d) high potential to influence economic development; and e) beneficiaries other than motorized road users.
In response to the deteriorating condition of the road network and the high associated economic costs, various stakeholder consultations were held during the 1980s under the umbrella of the Road Management Initiative (RMI), which set the broad outline of a new policy framework for the road sector.