Transport Infrastructure Investment Research Articles

Capturing Land Value Increment to Finance Infrastructure Investment—Possibilities for South Africa

In the globalisation age, cities are the drivers of economic growth. However, sustainable economic growth demands considerable investment in infrastructure. South African cities face a triple challenge of eradicating historical infrastructure backlogs inherited from the Apartheid era, servicing and maintaining existing infrastructure and providing new infrastructure to stimulate economic growth. In the South African context, the provision of municipal infrastructure plays a critical role in eradicating sociospatial inequalities as part of an overall poverty reduction strategy. This places a huge burden on local governments in South Africa in particular as they face capacity constraints and challenges in terms of raising sufficient own revenue in order to finance infrastructure projects. This paper argues that in light of the South African government’s current infrastructure drive and the significant amount of public resources being spent on transport infrastructure upgrades, it is an opportune time to consider the impact of transport infrastructure investment in particular on land value and how this value can be captured to finance the provision of infrastructure at local level. The paper cautions though that any programme aimed at capturing betterment needs to be based on sound research and needs to take cognisance of the legislative, policy and economic context in South Africa.

COALMOD-World: A Model to Assess International Coal Markets Until 2030

Coal continues to be an important fuel in many countries' energy mix and, despite the climate change concerns, it is likely to maintain this position for the next decades. In this paper a numerical model is developed to investigate the evolution of the international market for steam coal, the coal type used for electricity generation. The main focus is on future trade flows and investments in production and transport infrastructure until 2030. COALMOD-World is an equilibrium model, formulated in the complementarity format. It includes all major steam coal exporting and importing countries and represents the international trade as one globalized market. Some suppliers of coal are at the same time major consumers, such as the USA and China. Therefore, domestic markets are also included in the model to analyze their interaction with the international market. Because of the different qualities of steam coal, we include different heating values depending on the origin of the coal. At the same time we observe the mass-specific constraints on production, transport and export capacity. The time horizon of our analysis is until 2030, in 5-year steps. Production costs change endogenously over time. Moreover, endogenous investments are included based on a net present value optimization approach and the shadow prices of capacities constraints. Investments can be carried out in production, inland freight capacities (rail in most countries), and export terminals. The paper finishes with an application of the model to a base case scenario and suggestions for alternative scenarios.

Assessment of Two Modes of Financing Land Transport Infrastructure Investment in the Philippines

Assessment of Two Modes of Financing Land Transport Infrastructure Investment in the Philippines

Transport Infrastructure Investment and Demand Uncertainty

In transportation planning, there can be long lead times to adapt capacity. This article addresses two questions. First, in a one mode world (e.g., rail or road), what is the optimal capacity choice when faced with uncertain demand, long lead times, and congestion. Using a simple analytical model, it is shown that when demand is inelastic, it is socially optimal to invest more than if only the expected level of demand is taken into account. In this case, it may be beneficial to overinvest in capacity because congestion costs are an increasing function of relative use. This result holds with or without optimal tolling. The second question deals with 2 competing modes in which only one mode has long lead times for capacity, whereas the other has flexible capacity. This is typical for the competition between high-speed rail and air for the medium distance trips (500–1,000 km), or for the competition between inland waterways and trucks for freight. We find that overinvestment is less justified because the substitute mode can more easily absorb the high-demand outcomes.

Socioeconomic Impacts of Cross-Border Transport Infrastructure Development in South Asia

Although the overall economic performance of economies in South Asia in recent years has been impressive, there is concern that an aging and increasingly inadequate infrastructure may limit the potential for further growth and economic development. A critical infrastructure component is the transportation network, and there are currently several transportation infrastructure projects in the South Asia Subregional Economic Cooperation (SASEC) region, connecting Nepal, eastern India, Bangladesh, and Bhutan. This paper uses computable general equilibrium (CGE) methods to address how these infrastructure developments might affect the broader economy in SASEC, and in particular impact on income distribution and poverty. The paper describes a new CGE model for South Asia, covering India, Sri Lanka, Bangladesh, Nepal, and Pakistan, which incorporates modifications to household structure in order to capture the implications of reform for changes in intra-household income. The scenarios that are considered reflect proposed investments in land transport infrastructure in the SASEC region. These should result in reductions in the land transport component of international transport margins, which vary bilaterally by commodity. We found that all SASEC economies would benefit from the reductions in terms of aggregate welfare, with the largest gains accruing to India in absolute terms, but the largest relative gains to Nepal, followed by Bangladesh and Sri Lanka when the margin reduction is prorated to intra-South Asian trade rather than just SASEC. In terms of household level distribution, the picture was mixed, with clearly pro-poor outcomes in some countries, such as Nepal, but more ambiguous impacts in others. In terms of potential adjustment costs, examination of the extent of predicted structural changes suggests that these would be minor, although somewhat more significant for the smaller economies in the region.

Causal linkages between highways and sector-level employment

While transport infrastructure investments have usually been viewed to have long-term impacts on employment, what is perhaps not immediately clear is the direction of causality. This paper has sought to disentangle the causal relationship between highway infrastructure and employment, using panel data for the 48 contiguous US states from 1984 to 1997. Of particular emphasis in this analysis is the sectoral differences in the causal and spatial effects of highway capacity expansions for employment growth in alternative sectors of the economy. The results indicate that lane-mile additions of own-state major highways could increase state employment growth in the services sector while reducing growth in manufacturing. However, the causal relationship is also found to work the other way around. That is, both the rapid growth in services employment and the slowdown in manufacturing jobs temporally lead to increases in roadway capacity of non-interstate major roads. Our analysis also shows that highway infrastructure could produce both positive and negative employment spillovers across states. We find that improvements in non-interstate major roads outside the state border are beneficial to the manufacturing sector which generally serves regional and national markets. For the services sector, however, employment gains from interstate highways in the same state may come at the expense of other states as there is clear evidence of negative employment spillovers from interstate lane-mile additions.

Mechanisms for Transportation Infrastructure Investment in Developing Countries

In this paper, the writers examine different investment mechanisms for transportation infrastructure projects involving the private enterprise in developing countries. Roles identified vary from those of a financier to an operator for successful public-private ventures. A case study involving such a joint venture in India, the Mumbai-Pune Expressway/National Highway 4 is presented, and fiscal implications of the program, both from the perspective of the public and the private enterprise, are examined. The study concludes that if properly planned, joint ventures can be mutually beneficial. A joint public-private program may enable the public agency to use the resources saved for other public projects. It also provides the private agency an opportunity to invest funds in a profitable enterprise that yields social benefits, (e.g., improving mobility, promoting economic development, etc.). Careful analysis must be conducted before the project is undertaken to assess the financial and economic implications of the project from each participant’s viewpoint, with due regard to risks and uncertainties associated with such long-term investments.

The broader economic consequences of transport infrastructure investments

A major question in Economic Geography relates to the scale and nature of transport infrastructure’s contribution to the broader economy. While Cost-Benefit Analysis (CBA) is the most widely used of the three potential approaches, the recent interest in the wider economic benefits of transport infrastructure has spawned a variety of macroeconomic models. However, the estimates of magnitudes and direction of economic impacts of infrastructure by various macroeconomic models are sharply different, and these models shed little light on causal mechanisms linking transport and the economy. This paper has two aims: first, to highlight the wider economic benefits of transport infrastructure from the observed role of railroads and waterways in economic development, and two by reviewing recent theoretical developments to identify the multiple causal mechanisms which link transport and economic growth such as : market expansion, gains from trade, technological shifts, processes of spatial agglomeration and processes of innovation and commercialization of new knowledge in urban clusters (made possible by transport improvements). Hence the need for developing general equilibrium analyses of transport-economy linkages.

Cost-benefit analysis of transport investments in distorted economies

This paper deals with cost-benefit analysis of investment in transport infrastructure. Its contribution is twofold. Firstly, we develop a general equilibrium model to explore the impact of a small budgetary-neutral investment in transport infrastructure in a second-best setting, where other markets in the economy are distorted by taxes or external costs. The model incorporates different transport modes that are used both for intermediate inputs (freight) and for final consumption (passenger travel). An intuitive operational expression for the net economic benefit of an investment is derived that depends on the way the investment is financed. This expression generalizes recent findings in the literature. Secondly, we illustrate the results numerically using a small example. Our findings show that both the specific financing instrument used and the labour market consequences may have large implications for the net benefits of transport investments. Significant errors may be made in limiting cost-benefit analysis to transport markets only.

Assessing spatial equity and efficiency impacts of transport infrastructure projects

Policy decisions on transport infrastructure investments often require knowledge of welfare effects generated from using these infrastructures on a detailed regional level. This is in particular true for the EU initiative promoting the development of the trans-European transport (TEN-T) networks. As projects within this initiative affect regions in different countries, incentive compatible financing schemes cannot be designed without knowing where the benefits accrue. Furthermore, this initiative is also intended to contribute to the cohesion objective on a community scale, and only with regional impact studies one can assess to which extent these objectives are attained. As standard cost-benefit analysis is unable to assign benefits to eventual beneficiaries in the economy, we develop and apply a spatial computable general equilibrium (SCGE) model as a suitable alternative. The model has a household sector and a production sector with two industries, one producing local goods, the other producing tradables. Regions interact through costly trade, with trade costs depending, among others, on the state of the infrastructure. New links reduce trade costs, which changes trade flows, production, goods prices and factor prices and thus eventually the welfare of households in different regions. We present the formal structure of the model, the calibration procedure and the data sources for calibrating the model and estimating the trade cost reductions stemming from new transport links. As the model is only able to quantify effects related to trade in goods we also suggest a simplified approach to add effects stemming from passenger transport. We apply the methods to a policy experiment related to the TEN-T priority list of projects. We quantify project by project the social return, check whether significant benefit spillovers to countries not involved in financing might prevent realization of projects in spite of their respective profitability from European wide point of view, and finally we evaluate the contribution of each project to the spatial cohesion objective. Our results confirm sceptical views on EU involvement in infrastructure policy that have been expressed in the literature.

Trade Policy and “Natural” Barrier-Induced Incidence of Protection and Aggregate Demand for Imports: Evidence from Malawi

This study investigated the relative importance of trade policy and “natural” barrier-induced incidence of protection and its effects on trade for a landlocked Sub-Saharan African economy. The results showed that policy-induced protection has diminished with trade reforms whilst non-policy-induced protection remained high mainly because of high transport costs. An import demand system estimated using Johansen cointegration technique showed that natural barriers-induced incidence of protection has had strong disincentive effects on importing. Thus, Malawi needed to diversify and increase investment in strategic transport infrastructure to reduce “natural” barrier-induced trade costs for improved trade competitiveness. Key words : Trade policy; Trade barriers; Transport costs; Demand for imports; Incidence of protection

Core Periphery Relations and Urban Transport Infrastructure Investment

Core Periphery Relations and Urban Transport Infrastructure Investment

Core-Periphery Relations and Urban Transport Infrastructure Investment

This paper attempts to test empirically whether a five percent additional capital infusion to land transport services sector in the National Capital Region reinforces center- periphery spatial configuration in a developing economy like the Philippines. The study captures the impact of such capacity build-up in terms of changes in interregional flows, regional welfare and output. The financing of such transport capacity enhancement is through an equivalent amount of government expenditure which is funded by foreign transfer payments like official development assistance funds. A transport-oriented spatial general equilibrium model is presented based on a five region social accounting matrix. Results indicate that while absolute gains in welfare and output still go to National Capital Region, the enhanced interregional flow of goods and services creates significant spillover effects in periphery regions which are located in Southern Philippines namely, Visayas and Mindanao.

City carbon budgets: A proposal to align incentives for climate-friendly communities

Local governments can have a large effect on carbon emissions through land use zoning, building codes, transport infrastructure investments, and support for transportation alternatives. This paper proposes a climate policy instrument – city carbon budgets – that provides a durable framework for local governments to reduce greenhouse gas emissions. Local governments would be assigned an emissions “budget”, and would be required to keep annual local transport and buildings emissions within this budget. This policy framework could be implemented and managed by a higher-level government, or might be used in awarding funds to developing country cities from international climate funds. The state of California has enacted a version of this policy. In this paper, we identify and evaluate options for creating an effective and acceptable institutional structure, allocating emission targets to localities, measuring emissions, providing flexibility and incentives to local governments, and assuring compliance. We also discuss the likely costs of such a policy.

Improving customer experience in tourism: A framework for stakeholder collaboration

Tourism represents a service industry replete with unique complexities since a tourist's overall experience is modulated by multiple stakeholders, e.g., immigration officials at airports, policy makers responsible for investment in transportation infrastructure and managers at various tourist attractions. Effective management of customer satisfaction in this service sector entails cross-functional collaboration and a transparent measurement scheme that clearly delineates the impact of each stakeholder's actions on overall customer experience. In this paper, we propose a simple conceptual framework for stakeholder collaboration in tourism. A four-phase customer experience measurement process is developed to prioritize resource allocation and to increase tourists' advocacy levels for a destination. The proposed measurement framework has wide applicability and can also be exercised in the context of other public sector services, e.g., mass transit systems. We illustrate the process using an empirical case study at Chennai, a tourist destination in India and provide a number of substantive insights that are valid for this destination.

Transportation Infrastructure Planning, Management, and Finance

Participants at the business meeting of the Special Interest Group 5—Transportation Infrastructure Systems—of the World Conference on Transport Research Society WCTRS that took place in Berkeley, Calif., in June of 2007, suggested that we invite authors who presented papers at the conference to submit their work for a special issue of the Journal of Infrastructure Systems. With support from the journal’s editor-in-chief, Samer Madanat, we therefore set out to edit a special issue that would: 1. Highlight relevant to the Journal’s readership and interesting work that was presented at the 11th World Conference on Transport Research, and to disseminate it in archival form; 2. Showcase diverse research being conducted around the world at different types of institutions; and finally, 3. Contribute to the international exposure and growth of the Journal. Authors received our invitations enthusiastically, and ultimately we received 10 manuscripts from researchers located in six countries. Seven of these 10 papers are included in the current special issue. We feel that not only are the papers representative of research taking place around the world, but significantly, that they are representative of emerging research areas relevant to the Journal’s readership, and which have not yet appeared in the Journal extensively. In particular, five of the seven papers constitute applied economics studies related to assessment, financing, and evaluation of investments in transport infrastructure. The other two papers document the development of state-of-the-art tools to improve the management and operation of infrastructure, and thus are closely-tied to work appearing frequently in the Journal. Since we started working at this special issue shortly after the most recent WCTR in 2007, the transport sector has undergone dramatic changes as a consequence of the global economic crises. In 2007 capacity shortage at major international and transnational infrastructures was one of the dominating issues in transport policy. Now we face a period of massive overcapacities in all freight transport systems, causing severe economic problems to major shipping and vehicle manufacturing industries. While no one can give reliable forecasts for when and how the major global

Influence of regional development policies and clean technology adoption on future air pollution exposure

Future air pollution emissions in the year 2030 were estimated for the San Joaquin Valley (SJV) in central California using a combined system of land use, mobile, off-road, stationary, area, and biogenic emissions models. Four scenarios were developed that use different assumptions about the density of development and level of investment in transportation infrastructure to accommodate the expected doubling of the SJV population in the next 20 years. Scenario 1 reflects current land-use patterns and infrastructure while scenario 2 encouraged compact urban footprints including redevelopment of existing urban centers and investments in transit. Scenario 3 allowed sprawling development in the SJV with reduced population density in existing urban centers and construction of all planned freeways. Scenario 4 followed currently adopted land use and transportation plans for the SJV. The air quality resulting from these urban development scenarios was evaluated using meteorology from a winter stagnation event that occurred on December 15th, 2000 to January 7th 2001. Predicted base-case PM2.5 mass concentrations within the region exceeded 35 μg m −3 over the 22-day episode. Compact growth reduced the PM2.5 concentrations by ∼1 μg m −3 relative to the base-case over most of the SJV with the exception of increases (∼1 μg m −3) in urban centers driven by increased concentrations of elemental carbon (EC) and organic carbon (OC). Low-density development increased the PM2.5 concentrations by 1–4 μg m −3 over most of the region, with decreases (0.5–2 μg m −3) around urban areas. Population-weighted average PM2.5 concentrations were very similar for all development scenarios ranging between 16 and 17.4 μg m −3. Exposure to primary PM components such as EC and OC increased 10–15% for high density development scenarios and decreased by 11–19% for low-density scenarios. Patterns for secondary PM components such as nitrate and ammonium ion were almost exactly reversed, with a 10% increase under low-density development and a 5% decrease under high density development. The increased human exposure to primary pollutants such as EC and OC could be predicted using a simplified analysis of population-weighted primary emissions. Regional planning agencies should develop thresholds of population-weighted primary emissions exposure to guide the development of growth plans. This metric will allow them to actively reduce the potential negative impacts of compact growth while preserving the benefits.

Investment in transport infrastructure, regulation, and gas–gas competition

This paper develops a simple model in which a regulated (upstream) transporter provides capacity to a marketer competing in output with an incumbent in the (downstream) gas commodity market. The equilibrium outcome of the firms' interaction in the downstream market is explicitly taken into account by the regulator when setting the transport charge. We consider various forms of competition in this market and derive the corresponding optimal transport charge policies. We then run simulations that allow us to perform a comparative welfare analysis of these transport infrastructure investment policies based on different assumptions about the intensity of the competition that prevails in the gas commodity market.

Transport infrastructure investment: implications for growth and productivity

Theory and evidence on the effects of public investment on growth and productivity are reviewed. It is concluded that, on average, public capital has positive impacts on output and private investment, partly offset by the effects of the taxation needed to finance it. A possible future shortfall in public capital in the UK is highlighted. The paper also reviews the contribution of transport infrastructure to productivity and considers implications for cost-benefit analysis. It is suggested that there is a case for greater UK investment in roads but, ideally, this should be implemented along with an efficient national road-pricing scheme.

A Dynamic Transportation Model for the Stockholm Area: Implementation Issues Regarding Departure Time Choice and OD-pair Reduction

Road traffic congestion is an increasing problem in urban areas. Building new roads often attracts latent demand and turns parts of the city into building sites for several years. Policy measures that stimulate more effective use of the existing network, such as variable road pricing, are therefore becoming increasingly popular among policy makers and citizens. These measures are often aimed at changing the temporal distribution of traffic. Yet transportation models taking departure time choice into account are rare. This paper describes the implementation of an urban transportation application for Stockholm, which includes departure time choice, mode choice and time dependent network assignment. Through iterations between demand and supply the objective of the transportation model is to forecast effects of congestion charges, intelligent transport systems and infrastructure investments on departure time choice. The complexity of large-scale departure time choice modelling and dynamic traffic assignment is high, which results in very long run times. Therefore, research on how to increase model efficiency is needed. This paper describes choices made in the implementation for a more efficient model.