Transport and Regional Integration: European Experience 

Stephen Perkins20 October 2011, Tokyo

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CrossrailRail13 m people€ 15 bn2017

Metro du Grand ParisExpress metro12 m people€ 20 bn + € 12 bn upgrades2025

OresundRoad / RailSea crossing4 m people€ 3 bnJuly 2000

Three Transformative Regional Projects

3.6 million people

40km

Metro Grand Paris

40km

40km

Do we know how to Measure the Impact of Transformative Projects on Jobs and Growth?

• CBA traditionally captures all impacts as users are willing to pay the full economic value of transport services used

• Are there GDP / productivity impacts not captured in direct user benefits?

– Time savings

– Congestion relief

• Macro studies find an infrastructure/growth link

• If increased infrastructure investment accelerates growth, this needs to be reflected in demand forecasts

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Forecasting is Difficult

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1967

1978

19871991

1999

Source: Tom Petersen 2011

Some factors- Oil crises- Downturns- Price competition

Induced Traffic

• Failure to anticipate it can result in project making congestion worse not better

• Over-estimating it results in optimism bias

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Two Key Potential Effects

• Competition and returns to economic density

• Non marginal nature of projects creates transport user behaviour change not captured in the model

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Competition

• New link in a network unlikely to affect competition in industrial or service industry markets

• New regional network or high quality link between regions can increase competition

• Poor transport can be a shield to competition

• Prices fall but peripheral or weaker end can suffer

Agglomeration

• Inter regional link: similar 2 way impact

• Intra-regional enhancement: reinforce agglomeration

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Agglomeration Studies

• Need a lot of data at a detailed level to make the transport productivity/economic output link

• Most look at industry, but service sector more important to many economies and shows bigger agglomeration impacts

• Impacts may be 10 to 20% on top of CBA, Dan Graham’s survery

• Plus Agglomeration -> productivity -> higher VoT for business travel and commuting

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Can we add a general multiplier?

• Transformative projects most likely to show agglomeration benefits

• Big projects can carry costs of agglomeration studies, and input/output modelling: LUTI and CGE

• But size is not everything– Small “unlocking projects” can have disproportionately large impacts

– Some large projects have little impact on key effects, and just result in large direct user benefits

– Infrastructure reaching service sector centres will have more agglomeration benefits than linking industrial centres

• Case by case according to nature of project

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Understand the nature of the project

• Point to point high speed rail ≠ Crossrail or SGP

• Oresund designed not to link two cities but create a region

• Evidence from French TGV studies not very conclusive– Smaller changes than expected, especially in feeder areas

– Major regional centres gain at expense of weaker ones

– Transfer from air

• Project boundaries– Relocation of benefits

– Tax revenues

– Transfers : Lyon to Paris ≠ New York to London?

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CBA+ or Alternative Model?

• Crossrail: CBA+ (incremental improvement on present network)

• SGP: model new network mobility pattern

• HSR: simple financial appraisal if majority of benefits users an no congestion relief

• Other issues:

–Jobs in the crisis,

–growth but when,

–post crisis demand different?

• Unlocking growth

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References • The Wider Economic Benefits of Transport, ITF 2008

– Roger Vickerman, Dan Graham

• The Future for Interurban Passenger Transport, ITF 2009

– Jacques Thisse, How Transport Costs Shape Economic Activity

• Crossrail Business Case, UK Department for Transport

– http://www.dft.gov.uk/topics/crossrail/

• Oresund Fixed Link Evaluation, TRANSTALK

• Oresund Before and After Study, Tom Petersen, KTH

• Oresund Evaluations, VINNOVA

• Major Transport Infrastructure Projects and Regional Economic Development, Roundtable 1-2 Dec 2011, Paris

• Les impacts Economiques et Sociaux du TGV, Yves Crozet

• EC EVATREN Evaluating the State of the Art in Investment for Transport and Energy Networks

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Thank youStephen Perkins T +33 (0)1 45 24 94 96E stephen.perkins@oecd.org

Postal address 2 rue Andre Pascal75775 Paris Cedex 16