with regions that are simply not viable, but their tools to sort out what is feasible and then implement policy are bounded. Identifying “doable” combinations of policies becomes as important as designing policies that, if perfectly implemented, would yield the highest returns.
Dealing with Challenges in Fully Appraising Policies: Using the Framework as a Heuristic Tool Ideally, even the simplest road project would have a full appraisal that would allow a solid ranking of projects by their social value added. This would offer some disciplining of the often-formidable pressures to “do something” to either reverse the declining fortunes of an area or kick-start a long-standing laggard. However, while the direct effects can often be quantified, doing the same for the indirect effects is expensive, time consuming, and and it may be too complex a challenge even for the governments in advanced economies. Often simpler rules of thumb are employed, sometimes based more on the symptoms than a careful diagnosis of the underlying disease. For example, to be eligible for the local economic growth initiative in the United Kingdom, a local area had to rank fiftieth or worse against any of six indexes of multiple deprivation in 2000 or 2004. Likewise, the French urban enterprise zones program also selects lagging areas based on an “index” measuring socioeconomic conditions in the area (Mayer, Mayneris, and Py 2017). But none of these focus on viability per se or any attempt to quantify and value overall effects; by both measures, Kolmanskop might be a good target for revitalization efforts. Given the challenges facing even well-established and competent bureaucracies such as those in the United Kingdom and France, it is probably better to view the above framework less as a mechanical valuation device and more as a heuristic tool that informs the dimensions that should be taken into account, that disciplines debate, and that surfaces some policy guidelines. In particular, the framework suggests eight guidelines for policy makers. 1. Clearly identify the relevant market failures and distortions. Even if the benefit of remedying market failures cannot be fully valued, identifying those failures is critical to designing an appropriate place-based policy. For instance, asking why capital and knowledge are not already flowing to a lagging region is a first step toward evaluating viability and likely returns to investment. If failures such as transport costs or policy distortions can be identified clearly, as in the cases of Kenya or Buenos Aires discussed in chapter 2, then the remedies may be straightforward. But if after objectively looking at the situation, the problems are more in the intrinsic viability of the region that could not be remedied through intervention, such as was the case in Bannack, Kolmanskop, and arguably many of today’s coal regions, then that should be a cautionary sign that policy makers should be looking at alternatives to place-based policies.
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