A Production Function-Based Financial Feasibility Model (PFFM) and Social Return Assessment of Public Electric Bus Investment: Evidence from Thailand

Most public investment feasibility studies rely on the linear assumption model (LAM), which assumes constant growth in revenues and costs and may overlook the underlying production structure. This study develops a Production Function-Based Financial Feasibility Model (PFFM) by integrating a Cobb–Douglas production function into cash flow analysis. It also applies the model to a 15-year electric bus project operated by the Khon Kaen Provincial Administrative Organization, covering three routes and a total investment of THB 285.05 million. The analysis uses deterministic projections based on expert-validated growth assumptions. Ordinary least squares estimation yields an energy elasticity of 0.990; however, because energy consumption is derived from a fixed rate per kilometre, this coefficient primarily reflects the internal consistency of the projections rather than an independently estimated behavioural relationship. Returns to scale are statistically indistinguishable from unity (RTS = 1.006; p = 0.95). Based solely on farebox and advertising revenues, both the LAM and PFFM indicate that the project is financially infeasible, with base-case NPVs of −THB 271.74 million and −THB 271.61 million, respectively, B/C ratios of approximately 0.54, and unattainable IRRs. This conclusion remains unchanged under a 30% increase in electricity prices. Although the two models produce similar results because RTS is close to unity, the PFFM provides a more transparent decomposition of fixed and marginal costs and clearer diagnostic insights into production technology and cost risk. In addition, an SROI analysis covering environmental, health, safety, and time-saving benefits, together with net-impact adjustments, yields a ratio of 3.45, indicating that the project generates substantial social value despite its financial infeasibility. The proposed framework therefore provides public agencies with a more comprehensive basis for investment decisions, subsidy design, and public service obligation policies.