How large are the non-travel time effects of urban highway tunneling? Evidence from Maastricht, the Netherlands

Abstract

Infrastructure projects increasing aim at to improve the quality of life and public space, in particular in urban areas. We analyse a Dutch case in which an existing highway in an urban area was moved underground in order to improve intercity traffic flows and to reduce the negative effects associated with an open urban highway. Travel times within the city hardly changed, which allows for a relatively clean identification of the other benefits via a hedonic pricing model. We find that the non-travel time benefits of such integrated infrastructure are substantial relative to the construction costs. A halving of distance to the tunneled segment is associated with a 3.4% appreciation in house prices since the start of the project. Taken together, the non-travel time effects add up to a quarter the construction costs.