1. Transport and Regional Integration: European Experience Stephen Perkins 20 October 2011, Tokyo

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3. 3 Crossrail Rail 13 m people € 15 bn 2017 Metro du Grand Paris Express metro 12 m people € 20 bn + € 12 bn upgrades 2025 Oresund Road / Rail Sea crossing 4 m people € 3 bn July 2000 Three Transformative Regional Projects

4. 3.6 million people 40km

6. Metro Grand Paris 40km

7. 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 7

8. Forecasting is Difficult 8 1967 1978 1987 1991 1999 Source: Tom Petersen 2011 Some factors - Oil crises - Downturns - Price competition

9. Induced Traffic Failure to anticipate it can result in project making congestion worse not better Over-estimating it results in optimism bias 9

10. 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 10

11. 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 11

12. 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 12

13. 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 13

14. 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? 14

15. 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 15

16. 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/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 16

17. Thank you Stephen Perkins T +33 (0)1 45 24 94 96 E stephen.perkins@oecd.org Postal address 2 rue Andre Pascal 75775 Paris Cedex 16