Challenges in the application of spatial computable general equilibrium models for transport appraisal

The use of spatial computable general equilibrium (SCGE) models for assessing the economic impacts of transport projects is one of the key items on the research agenda for project appraisal in the Netherlands. These models are particularly suitable for analysing indirect effects of transport projects through linkages between the transport sector and the wider economy. Potentially, according to the literature, indirect effects that are additional to first-order direct cost reductions can turn out to be up to almost 80% in magnitude of the direct impacts. Given the relevance of these models for policy appraisal, experiences with this new modelling approach are important to report. After two years of development and application of SCGE models for transport appraisal, we found that the translation of theory behind the spatial equilibrium models into practical model specifications and empirical applications is a challenging task, and may lead to problems in project appraisal in terms of inaccuracies in the assessment of impacts. This paper discusses some key challenges we encountered with the specification of the Dutch SCGE model RAEM. This chapter is especially useful for researchers developing SCGE applications for use in transport appraisal and those who want to get a better understanding of differences between theoretical and computable SCGE modelling.     

SCGE modelling in cost-benefit analysis: The Dutch experience

Spatial computable general equilibrium (SCGE) models offer opportunities for computing wider economic effects in cost-benefit analysis (CBA) in a theoretically satisfactory way. This is important for the correct estimation of additional economic benefits and international relocation impacts. In the Netherlands, this potential has only been reached partly. Many different types of models are actually used, none of which yet covers all relevant markets. In CBAs carried out in recent years, ad hoc methods were used more often than models, let alone SCGE models. Moreover, the usual presentation of the model outcomes appears as a ‘black box’ to policy makers. There is much work to be done, in extending SCGE models to strengthen their empirical basis, and in improving the presentation of the outcomes.     

Hybrid steering cultures in the governance of public transport: A successful way to meet demands?

This paper concerns steering aspects in the governance context of public transport. Various theoretical views of steering have been presented over the years, and it has been argued that a multiple-principal context often leads to fragmented steering. The paper aims to identify steering culture models found among principals operating in the same public transport context, and to explain how a successful procurement outcome is possible, despite the hybrid of steering cultures. The paper is based on an empirical analysis of a Swedish county's planning process that resulted in a very successful procurement outcome that met high environmental and safety standards at a relatively low cost. This procurement was seen as a triumph by principals. The findings presents the existence of various steering cultures among the principals, leading to the conclusion that a “metagovernor,” in this case the PTA, is central to achieving successful outcomes. The metagovernor designed the planning process and formulated a procurement document that satisfied the principals. In this process, the metagovernor negotiated separately with each principal, focusing on the particular characteristics of each principal.     

The role of inland terminal development in the hinterland access strategies of Spanish ports

The aim of this paper is to understand how inland terminals are developed in relation both to ports and to other inland terminals within a national system.The paper builds on previous work developing inland terminal taxonomies and applies them to the Spanish case, with supplementary focus on the relations between the “dry port” and “extended gate” concepts. Theoretical contributions include both the importance of development direction (land-driven vs sea-driven) and the identification of an emerging spatial disparity in port development strategies between coastal and inland nodes.In Spain, ports retain an interest in inland terminals through minority shareholdings but they are not the primary investors. The principal ports using Spanish inland terminals are Barcelona and Valencia, both of which are also developing logistics zones within their ports. Furthermore, while the ports are developing closer IT links with these inland locations, this does not necessarily indicate greater than normal levels of cooperation. A study of the Spanish system thus raises questions about whether the increasing academic focus on “dry ports” actually signals any change in strategies of port development or intermodal terminal operation. Therefore the final aim of this paper is to question the use of the “dry port” terminology.     

GIS-Based Coastal Behavior Modeling and Simulation of Potential Land and Property Loss: Implications of Sea-Level Rise at Collaroy/Narrabeen Beach,Sydney (Australia)

Rising sea level potentially poses a threat to many coastal areas, thereby possibly affecting coastal environments, including human assets. Taking into account the precau--tionary principle demanded at the Framework Convention for Climate Change in Rio de Janeiro in 1992, coastal managers and planners are required to evaluate the possibility of both physical and economic impacts of sea-level rise. However, long-term and cost-intensive data capture is often not affordable for a first estimation of general trends. To determine physical and economic impacts on a spatial scale of less than 10 km, a rapid and low-cost method is required. A Geographic Information System (GIS), in combination with readily available data and two coastal behaviour models (the Bruun-GIS Model and the Aggradation Model) was applied to simulate shoreline recession caused by a rise in sea level. In addition, the potential impacts of a 50-year design storm were considered in conjunction with sea-level rise. The monetary vulnerability was assessed and combined with the simulated recession rates. This procedure provides a first estimate on the potential risk a locality (here Collaroy/Narrabeen Beach) may face due to the impacts of sea-level rise and/or coastal storms. Overall, the modelling outcome suggests that long-term erosion problems associated with rising sea level are less significant in comparison with those impacts associated with short-term coastal storm events for Collaroy/Narrabeen Beach.     

Urban transport lending by the World Bank: The last decade

Over the preceding decade, the World Bank committed about US$7.5bn in loans for urban transport projects in its client countries, involving total project costs of nearly US$13bn. Projects are designed by the client city/national governments and the World Bank in an interactive, give-and-take process. As is common in development finance, urban transport projects entail an investment program and a set of policy and institutional initiatives. A majority of Bank-funded operations in this period focused on public transport modes. A clear and overarching strategic thrust is evident, favoring private delivery of services with a strong public role through city-specific regulatory agencies. Depending on the context, projects involved efforts to introduce private operators and competition into an all-public set-up, or tighten up weakly regulated, “informal” public transport markets. A notable feature of many projects in the latter context is the use of investments in bus rapid transit infrastructure to reach multiple goals: improve transport services, maintain affordability for low-income passengers, attract new passengers, reduce negative environmental impacts, and leverage complementary reforms of policies and institutions. The Bank’s program in China, unique in its local context of a dynamic urban society moving away from a near-universal reliance on bicycles, initially did not focus on public transport but on urban roads and traffic management. Towards the end of the last decade, the motorization process and the outlook of decision makers entering a more mature stage, projects in China started to converge towards what the rest of the Bank’s program was doing – searching for a more sustainable path to urban transport development.     

The regulatory function in public-private partnerships for the provision of transport infrastructure

A wide range of contractual arrangements are increasingly being used by the public sector to materialise the delegation of transport infrastructure provision tasks to the private sector, over long periods of time. This paper addresses the issue of transport infrastructure regulation in the specific context of public-private settings. Starting by the discussion on the concept of Public-Private Partnership (PPP) it is stressed that, despite the different meanings that can be found in the literature, it is possible to define a PPP by using a core group of characteristics, such as the bundling of services and the transference of a relevant part of the risks to the private sector on a long term basis. Regarding the action of the regulator, we look at three dimensions of efficiency that are expected to be pursued at the strategic level of regulatory action. However, it is acknowledged that the regulatory function is in practice rather complex since it requires balancing a multiplicity of other objectives or goals, which may vary according to specific economic conditions. In the domain of pricing, the review carried out suggests that since “first best” assumptions are not met in the “real world” it hardly seems possible that the short run marginal cost pricing “canon” could be directly used to shape pricing policies. Consequently, when considering the application of the standard neoclassical marginal cost pricing approach it is pertinent to ask whether the second best solutions can lead to efficient outcomes that might be accepted by the stakeholders. Bundling construction and maintenance tasks into a single long term contract, which is a typical characteristic of “standard” PPPs, could theoretically bring cost benefits since it allows for the possible internalization of any positive externalities that may be generated during the whole project life cycle. The economic rationale for the bundling of construction/maintenance with financing services is that it enhances the likelihood of submission of realistic bids at the procurement stage. In addition, the chances of the contractor sticking to the agreed contractual terms, after contract award, are potentially increased given the higher exposure to financial risk.     

Financial and environmental impacts of hypothetical Finnish dry port structure

One main theme of European Union’s in transport policy statements has been the increased role of railways in the reducing environmental impacts and costs of transport activity. One option to increase the modal share of rail transport is to utilize the dry port concept, particularly applicable to general cargo. At the Port of Gothenburg (Sweden) use of this concept in combination with rail transport has led to a reduction of CO₂ emissions, and lower transport energy costs. The main objective and motivation of this research work are to examine through analytical models, how this same dry port concept could be implemented in the Finnish transportation network, with estimates of the benefits being gained.The research method of this study is macro gravitational models of distribution. Main input data for the models are distances and population in the area. The approach aims to research, how relative transport costs behave by increasing the number of dry port distribution locations. For the actual computation work the authors apply linear integer programming. Based on the results, the authors argue that relative transport costs can decrease considerably by increasing the number of dry ports, up to the level of six locations. This is considerably less than what is the current situation in Sweden. The found solution also differs from Sweden as the fragmented Finnish seaport system enables using numerous seaports instead of one, which further decreases inland transportation distances and volumes considerably. At the same time forthcoming sulphur emission reduction regulation (for sea transports) might impact the transportation network structure by decreasing sea transport and the number of seaports used. This might lead to a further increase in land-based hinterland transport.     

Two- or three-layered box-models versus fine 3D models for coastal ecological modelling? A comparative study in the English Channel (Western Europe)

The general trend in ecosystem modelling is to improve the spatial resolution by shifting from rough box-models to fine 3D models. Despite the continuous speeding-up of computing, 3D models involving numerous state variables may remain intractable, especially for parameter calibration, when processes with long half-life periods (i.e, from years to decades) are introduced, such as the behaviour of organic matter in sediment and population dynamics of benthic species. In these cases, a first approach can be provided by fast-running box-models, if they take into account the most crucial hydrodynamic properties of the system. In a macrotidal shelf sea such as the English Channel, the long-term horizontal transport can be summarized by the tidal residual circulation, and the vertical stratification can be sketched by a two- or three-layered integral model.This paper compares the results obtained in the English Channel area by the same biogeochemical equations of pelagic primary production, coupled to 1) a two-layered box-model 2) a three-layered box-model (i.e., with an intermediate cline layer between surface and bottom ones) and 3) a fine-gridded 3D model. Comparison is focused firstly on thermal stratification and summer dinoflagellate blooms in the north-western Channel and secondly on the haline stratification and the sequence of blooms obtained in the eutrophicated Seine river plume. Comparison shows that box-models act as low-pass filters which reproduce correctly the weekly mean time-course, but greatly reduce the variance locally observed in a tide-oscillating plume region. As far as global characteristics are concerned, such as the annual primary production, or the percentage of variation in annual production after reducing the nutrient loadings, the box and 3D models gave very similar results. This conclusion reinforces the usefulness of using box-models as a first approach in long-term processes, for which a long transient phase is expected before reaching the annual periodic solution.     

Changing accessibility, dwelling price and the spatial distribution of socio-economic activities

In this paper we present an activities-location choice model with endogenous price which simulates, based on Expected Random Utility principle, the behaviour of several agents of the urban system (e.g. the workers distinguished by income, the firms by economic sector) to estimate the spatial distribution of socio-economic activities within the study area as well as the impact of differential changes in accessibility on the dwelling price. The study area for this research is the metropolitan area of Napoli (South Italy), for which we show the results of the model estimation and the results of a “backcasting” analysis.     

Activity based travel demand models as a tool for evaluating sustainable transportation policies

India is in the course of an economic transition. The economic growth nurtured the life in the cities and cities have become a major livelihood destination for everyone. This migration of people contributed to the increased urbanization of Indian cities. The booming economy fostered the well-being and shaped the lifestyle of people in such a way that the dependency on private vehicle has become an unavoidable affair. Along with population growth, the increased vehicle ownership gave rise to overall spurt in travel demand. But the supply side lagged behind the demand adding to many of the transport related externalities such as accidents, congestion, pollution, inequity etc. The importance of sustainability is understood in the current urban transport scenario leading to the development and promotion of sustainable transport polices. The core agenda of these polices is to target the travel behavior of people and change the way they travel by creating a different travel environment. However, the impacts of many such policies are either unknown or complex. Hence, before adopting and implementing such policies, it is important for the decision makers to be aware of the impacts of them. The role of travel demand models comes here as they predict the future travel demand under different policy scenarios. This paper reviews the ability of travel demand models applied in India in analyzing the sustainable transport policies. The study found that the conventional model system in India, which is trip based four step aggregate methodology, is inadequate in analyzing the sustainable transport policies. A review of alternative approach, known as activity based travel demand modeling found that they are capable of handling such policies better than conventional models and are assistive to the decision makers in arriving at right mix of polices specific to the situations. Since there is no operational activity based travel demand model system developed in India, the study at the end envisaged a conceptual framework of an integrated activity based travel demand model based on the requirements identified from the review. This can potentially replace the existing travel demand models and can be used for planning applications once the modification & validation have been done according to the existing activity-travel behavior of individuals.     

Analysis of thirty years evolution of urban growth,transport demand and supply,energy consumption,greenhouse and pollutants emissions in Greater Cairo

The objective of the paper is to analyze evolution of urbanization, transport demand and supply in Greater Cairo (GC) over the last three decades of the 20th century. This is in addition to investigating the impact of city growth on energy consumption and emissions from transport. It utilizes results of 1971, 1978, 1987, 1998 and 2001 travel demand surveys, undertaken during the corresponding GC transport studies; each was published a year or two later. No further transport studies have been carried out in GC over the past decade and in view of the current political situation, it is not envisaged that similar studies will be undertaken in the near future. The analysis includes the evolution of daily trips, trip purpose share, modal share and number of cars. More recent trends for 2006/2007 vehicle registration by type and size are given. The evolution of transport supply covers projects until early 2012. In parallel estimates of the evolution of energy consumption and cost, emissions of greenhouse gases (CO₂) and pollutants (CO, HC and NO_x) are given for 1971/2001. The adopted estimation methodology is summarized. Comparative analysis of relevant evolution indexes and trends of growth between 1971 and 2001, taking the former as base year, is given. Land use and transport policies and projects that in some cases helped, directly or indirectly, to reduce traffic congestion, or at least prevented an increase, are addressed, commenting on their outcomes. Thus, transferable experience are useful to sister cities benefiting from successes and avoiding drawbacks. The evolution of the impact of GC metro on energy consumption and cost, and GHG emissions is given for 1987/2001, assuming the scenario “metro did not exist”. More recent impact analysis is given for 2007/2008, as the data allowed estimating traffic volumes that would have been added to the congested metro corridors under the above scenario; and the related fuel consumption and cost and GHGs. The paper ends with conclusions on GC evolution, learned lessons and suggests repeating similar work in other mega cities of the developing countries. Further research is emphasized, e.g., modeling the relationship between land use, transport, energy and emissions; modeling emission factors by vehicle type; and studying fuel-subsidy-reduction scenarios and their socio-economic effects.     

Regulation,trust and contractual incentives around transport contracts – Is there anything bus operators can learn from public air service contracts?

This paper compares recent experiences in contract negotiation and subsequent commitment in public air services with the bus industry. The heart of the paper is a survey of European and Australian regional airlines, which we mirror with revealed experiences of bus operators. We aim to identify a number of elements in the contracting regimes that have exposed ambiguity and significant gaps in what the principal (e.g., transport department) expected, and what the agent (airline or bus operator) believed they were obliged to deliver. Ultimately airline and bus services are similar in that public authorities procure transport services that are desirable for the society but would be unprofitable without government involvement. In both sectors (theoretically fairly similar) public transport contracts are used, and those usually include obligations and performance measurements. In terms of similarities, one of the surveyed contract details that had a perceived high clarity in both industries was “payment procedures” and amongst those with rather poor clarity was also in both industries “incentives to improve performance and grow patronage”. We also show differences between regional air services and bus operations with regard to performance measurement and pre-specified obligations. Because of the strong safety culture around air services we find that regulation and trusting partnerships are even more important to aviation than to the bus sector. Because of the high level of trust but also because of simpler and more complete contracts in aviation, there is much less (re-)negotiation going on compared to the bus operations.     

The impact of the application of new technology on public transport service provision and the passenger experience: A focus on implementation in Australia

The emergence of Intelligent Transport Systems (ITS) has been recognised with many initiatives during the last 20 years. In Europe, the “ITS Action Plan” identifies a number of applications as key elements contributing to the efficient co-ordination of the overall transport chain. The context and experience surrounding the recent widespread development of technological tools and ICT platforms to support the emergence of ITS are notable for the way in which they permeate the transport and logistics chain. But a key question remains: to what extent is the public transport sector able to exploit the wider benefits of ITS?     

Evaluating economic and environmental value of liner vessel sharing along the maritime silk road

The Belt and Road initiative is a novel exploration of China towards strategic collaboration with Eurasia countries to an extent of a larger scale with higher and deeper level of cooperation. To meet the growing global demand of transportation, increasing numbers of liner shipping companies collaborate and form alliances to share vessel capacity and reduce capital costs. Effective liner shipping vessel sharing is essential for the Belt and Road initiative in terms of building efficient maritime transport networks. In promoting environmental development, shipping companies are required to attain higher environmental standards. However, limited literature relates vessel sharing to environmental performance. This paper studies the impacts of liner vessel sharing from the economic and environmental perspectives. Two container allocation models are developed for the two scenarios: with and without vessel sharing. The carbon emissions in transportation are calculated under both scenarios. Numerical studies are carried out using services along the China-Indochina Peninsula Economic (CIPE) Corridor. Liner shipping companies could benefit from vessel sharing in terms of significant profit improvement. Vessel sharing could also benefit the environment by reducing the CO₂ emissions dramatically.     

The development of the TIGRIS XL model: A bottom-up approach to transport, land-use and the economy

The project appraisal method in the Netherlands distinguishes direct effects, indirect distribution effects and indirect generative effects. Transport models are generally available for calculating the benefits of transport projects to travellers as part of the direct effects. The TIGRIS XL model, a Land-Use and Transport Interaction model, adds indirect distribution effects for the housing and labour market, by modelling changes in the spatial distribution of jobs and residents. This paper describes the current TIGRIS XL model and how it can be applied in the evaluation of transport projects. It refers to work done with the TIGRIS XL model to improve the calculation of the direct benefits by applying the so-called ‘logsum’ method. Finally it discusses ideas on how to extend the TIGRIS XL model to address indirect generative effects as well.The current TIGRIS XL model, its integration with the National Model System (the standard tool for the Dutch government to analyse the effects on passenger transport) and basic design principles are the starting point of such an exploration. These design principles include:

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an emphasis on detail, both spatial as well as in socio-economic segments, to account for differences in the availability of choice alternatives and in choice behaviour, and to provide impacts by region and socio-economic group;

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the requirement that the relationships used rest on an empirical foundation.

The post-processing methods proposed on this paper for the calculation of the direct benefits and indirect generative effects are consistent with these design principles. To calculate the indirect generative effects, a post-processing module is proposed which transforms changes in travel times and land-use into agglomeration effects. These agglomeration effects combine several of the generative effects, like scale economies, an increasing variety of products, labour market matches and knowledge spill-over. The effects of changes in the agglomeration indicator on productivity can be estimated with existing data sources, as was demonstrated in the UK (Graham, 2005).     

Development of ocean carriers' behaviour model focusing on their 'cost and tariff' based on the spatial general equilibrium

Spatial computable general equilibrium (SCGE) theory has been applied to an international trade model to evaluate tariff and fiscal policies of a country. Those models can not be applied for the evaluation of transport policies such as port development and tax/subsidy policy against transportation sectors, since they do not deal with ocean freight and ocean carriers explicitly in the model. Ocean freight often varies with the changes of competitive conditions and/or demand/ supply balances in the short run, while it should reflect the actual expenditure of the carriers in the long run. The model proposed here considers the profit maximization behaviour of ocean carriers, and deals with ocean freight explicitly. The model is applied to four major economic regions; Japan, USA, EU and Asia. A multi-level function composed of the Cobb-Douglas function is adopted to produce reliable parameters of the production function for many industries.     

Development of ocean carriers' behaviour model focusing on their 'cost and tariff' based on the spatial general equilibrium

Spatial computable general equilibrium (SCGE) theory has been applied to an international trade model to evaluate tariff and fiscal policies of a country. Those models can not be applied for the evaluation of transport policies such as port development and tax/subsidy policy against transportation sectors, since they do not deal with ocean freight and ocean carriers explicitly in the model. Ocean freight often varies with the changes of competitive conditions and/or demand/ supply balances in the short run, while it should reflect the actual expenditure of the carriers in the long run. The model proposed here considers the profit maximization behaviour of ocean carriers, and deals with ocean freight explicitly. The model is applied to four major economic regions; Japan, USA, EU and Asia. A multi-level function composed of the Cobb-Douglas function is adopted to produce reliable parameters of the production function for many industries.     

Making Computer Models Useful: An Exploration of Expectations by Experts and Local Officials

Recent trends indicate increasing use of computer modeling in support of local environmental policy making. The ability of such models to improve local environmental decision making will depend not only on the characteristics of the models but also on those who will draw on them in making local policy: local government officials. In this study we examine the views of town officials concerned about nitrogen levels in local estuaries about computer models developed to inform their understandings and decisions regarding nitrogen loading. We also compare the views of the town officials with a sample of modelers. We find that town officials are supportive of models and the scientists who build them. However, town officials seek more information about the impacts of changes at small spatial scales (e.g., house building lots) than current models provide or than modelers believe that they can accurately provide, while recognizing the inability of current models to support such analysis. Town officials are also interested in more distant endpoints in the causal chain (e.g., effects on fish populations) than the modelers feel comfortable providing. Finally, our findings suggest that town officials are not supportive of broad public use of the models.