Evaluation of the economic and environmental impacts from the addition of new railways to the brazilian's transportation network: An application of a network equilibrium model

Abstract

Transport policies and infrastructure investments diverge across countries, but the actions to improve transportation performance and simultaneously to reduce its CO2 emissions have gained importance around the world. In Brazil, the infrastructure bottlenecks and the low productivity of transport have increasing freight costs and simultaneously the CO2 emissions. Aiming to reduce the impacts of the transport sector inefficiency the Federal Government announced a public-private partnership program to increase investment in new railways. We propose a dual-step procedure to evaluate the expected economic and environmental impacts lead to the inclusion of new railways to the transportation network: i) apply a Network Equilibrium Model to simulate the interregional transportation flows of Brazilian soybean and corn production and evaluate the benefits, measured in terms of reduced transportation costs and CO2 emissions, caused by the new railways; ii) use a cost-effective analysis to rank the investments in the railways according to their economic and environmental contributions. We found that the implementation of the Brazilian planned railways could reduce 17% the total freight cost and 20% the total CO2 emissions of corn and soybean transportation. Three railway projects presented important economic and environmental gains and showed be attractive to private funding.