Efficiency of European Funds in the Accession Countries: The Case of Transport Infrastructure Investments in Latvia

ABSTRACT

A transport initiative, like any kind of public action, has an impact on the monetary cost, time cost, efficiency and comfort of the transportation of goods and people, in particular transport infrastructure investments. All such initiatives are subject to cost benefit analyses at the national and EU level to know whether the present value of total net benefits including environmental impacts exceeds their cost. However, several important policy issues remain unresolved in standard evaluation procedures. One issue is whether the so-called direct measurement of user benefit, which consists of quantifying changes in surplus of the users of the transport system, captures all welfare generated in the economy. Another issue is how the gains (or possibly losses) of a transport initiative are distributed among regions. The aim of this article is to perform a systematic and quantitative analysis of the socio-economic and spatial impacts of alternative transport investments by carrying out scenario simulations in order to improve the understanding of the impact of transportation policies on the short- and long-term spatial development in Latvia. The general result from the scenario simulations is that rail projects seem to be more effective in terms of promoting regional economic activity than road projects.     

A review of guidelines for including wider economic impacts in transport appraisal

In this paper we examine how 23 industrialised countries treat wider economic impacts (WEIs) in transport appraisals. We identify 12 different types of impacts based on these countries’ appraisal guidelines. Agglomeration impacts and Production changes in imperfect markets are the most widely accepted, being recognised by 14 and 10 countries, respectively. However, about half of the impacts are mentioned by only one country, and few recommend including the impacts directly in cost–benefit analyses. Several countries provide provisos or criteria that must be met before WEIs can be assessed in the first place. We found method recommendations for quantifying WEIs in 10 countries. However, with the exception of the UK Department for Transport’s (DfT) methodological framework, there is very little international consensus on the choice of appropriate methods. Our findings thus supplement and reinforce the conclusions from the Norwegian Official Report of the Hagen Committee [NOU 2012:16. (2012). Samfunnsøkonomiske analyser. Oslo: Departementenes servicesenter] that there is currently no established consensus on the magnitude and relevance of WEIs, or on how and which of these impacts should be taken into account in transport appraisals. Recommendations for further research and appraisal practices are provided.     

Transport integration of Slovenia with the European Union

Today, the extended transport infrastructure along with the communications and information technologies are to a large extent the generator of integration processes all over Europe. Novelties in this area have brought about important changes in the production conditions, distribution and consumption, which exert influence on the changing of economic structure, including similar changes in social, cultural and political relations. In the future, the social and economic development of Slovenia will depend on proportionate development of regions and on the embodiment of Slovenia in a wider European space. The transport infrastructure of Slovenia, along with its transport system, should be integrated in the European transport system in such a way that the developmental interest of Slovenia is fully highlighted and included to an optimum extent in the course of Slovenia's integration to the EU.     

Economic appraisal of European transport projects: The state-of-the-art revisited

Substantial investment has been made at national and European level in transport infrastructure over the past 50 years and is likely to continue in the future. The need to appraise transport projects in economic and social terms has developed alongside this in both scope and complexity. The state-of-the-art in the economic appraisal of transport projects is reviewed, progress is assessed and future challenges are identified. The review addresses the general framework, treatment of major impacts, presentation of outputs and issues such as uncertainty. It draws on national practice in Western European countries, which varies substantially reflecting a range of cultural and economic differences. Some points of commonality exist and the principle of monetizing direct transport impacts is generally accepted. Progress has been made towards the measurement of environmental impacts, but the assessment of the wider impacts remains under-developed. Increased sophistication and complexity has brought increasing data and presentation requirements, where computerized decision support methods have potential. Many challenges exist for the future of appraisal and the review is concluded with a discussion of some key issues. At the heart of these is the continuing debate over the relative roles of national and European government in decision-making and resource allocation.     

The digital revolution and worthwhile use of travel time: implications for appraisal and forecasting

Savings in travel time and more specifically their monetary value typically constitute the main benefit to justify major investment in transport schemes. However, worthwhile use of travel time is an increasingly prominent phenomenon of the digital age. Accordingly, questions are increasingly being asked regarding whether values of time used by countries around the world based on their appraisal approaches are too high. This paper offers the most comprehensive examination of our theoretical and empirical understandings of international appraisal approaches and how they account for worthwhile use of travel time. It combines the economics perspective with wider social science insight and reaches the conclusion that past revolutions in transport that have made longer and quicker journeys possible are now joined by a digital revolution that is reducing the disutility of travel time. This revolution offers potential economic benefit that comes at a fraction of the cost of major investments in transport that are predicated on saving travel time. The paper highlights the challenges faced in both current and indeed potential alternative future appraisal approaches. Such challenges are rooted in the difficulty of measuring time use and productivity with sufficient accuracy and over time to credibly account for how travel time factors into the economic outcomes from social and working practices in the knowledge economy. There is a need for further research to: establish how improvements in the opportunities for and the quality of worthwhile use of travel time impact on the valuation of travel time savings for non-business travel; improve our understanding of how productive use of time impacts on the valuation of time savings for business travellers; and estimate how these factors have impacted on the demand for different modes of travel.     

Transport in developing and emerging nations

One perspective on the allocation of transport investments by public authorities is offered by the so‐called ‘pork barrel’ model, whereby politicians and political parties allocate public investment spatially in such a way as to gain electoral support from localities so benefited. The paper introduces this model and discusses its attractions and problems in the case of the transport sector. A review of the modest number of published examples of this approach is offered before a detailed case study considers the case of railway investment in Nelson, New Zealand.     

A new composite decision support framework for strategic and sustainable transport appraisals

This paper concerns the development of a new decision support framework for the appraisal of transport infrastructure projects. In such appraisals there will often be a need for including both conventional transport impacts as well as criteria of a more strategic and/or sustainable character. The proposed framework is based on the use of cost-benefit analysis featuring feasibility risk assessment in combination with multi-criteria decision analysis and is supported by the concept of decision conferencing. The framework is applied for a transport related case study dealing with the complex decision problem of determining the most attractive alternative for a new fixed link between Denmark and Sweden – the so-called HH-connection. Applying the framework to the case study made it possible to address the decision problem from an economic, a strategic, and a sustainable point of view simultaneously. The outcome of the case study demonstrates the decision making framework as a valuable decision support system (DSS), and it is concluded that appraisals of transport projects can be effectively supported by the use of the DSS. Finally, perspectives of the future modelling work are given.     

Transport policy evaluation in metropolitan areas: The role of modelling in decision-making

The adoption of Integrated Urban Models (IUMs) is increasingly being recognized as a tool to support transport policy appraisals in metropolitan areas. In Canada, the ILUTE (Integrated Land Use Transportation Environment) project is an IUM framework currently under development. While model development is undertaken by academics, the implementation of ILUTE is meant to occur within planning organizations thus rendering the success of model application dependent on available resources for modelling and planners’ attitudes towards the role of models. In an attempt to render the ILUTE modelling framework more “policy-sensitive”, a survey was conducted with planners and policy-makers pertaining to the three levels of government (municipal, provincial, and federal) in Canada. The survey collects information with respect to the current evaluation process of transport policy and its associated pitfalls as well as the desired state of policy appraisal and the need for more formal evaluation tools. Results show the presence of numerous challenges working against the proper development, adoption, and refining of models. The most notable of which include a general disbelief in the usefulness of models for decision-making, lack of resources for large-scale modelling exercises, and poor institutional integration among government departments. While local and national planning goals reflect the recent challenges of promoting environmental preservation, reducing social inequities, and improving the quality of life, modelling tools that can assess the impacts of proposed policies on these goals have lagged behind.     

Role of transport in rural development in Africa

Rural Africa is starved of transport services. The transport routes run towards the export enclaves and the coast.

The political, social and developmental rural transport benefits are discussed. Rural transport will help (i) integrate the country and ease its governance; (ii) widen markets; (iii) induce increased agricultural output, through new technologies, reduced transport costs, etc. The transport cost savings should be passed on to rural firms and producers. The paper warns against their accruing only to middlemen — agricultural parastatals inclusive, thereby stifling the benefits to production. This could happen under some forms of pan‐territorial pricing. Negative aspects of road development, e.g. the substitution of local goods by imports, increased migration and noise, are noted.

The place and role of project appraisal in rural road planning is acknowledged. The broad‐based development packages approach associated with Integrated Rural Development Projects has, despite its attractions, some pitfalls. It favours well established villages and ignores distribution benefits within villages.

Project appraisal can be used to justify socially uneconomic transport developments. However, rural road investment projects with immediate negative returns are unlikely to be funded. Given clear priorities, short of elaborate cost/benefit analysis, obvious road investments choices can be made by the local community. Greater public accountability of transport planners and peoples’ participation in determining rural transport needs and priorities is emphasized. Increased rural road maintenance especially through self‐help schemes and increased use of traditional modes of transport, e.g. walking, animal and water transport, is recommended.     

The demand for public transport. part II. supply and demand factors of public transport

Abstract

This two‐part article, concerned with the way public transport ridership is affected by the various relevant factors, is based on the Executive Summary of The Demand for Public Transport (Webster and Bly 1980), the report of the TRRL‐sponsored International Collaborative Study on Factors Affecting Public Transport Patronage. Part I of the article, which was concerned with the social and economic conditions in which public transport operates, showed the importance of the background factors such as income, car ownership and land use on public transport usage: it also indicated how the longer‐term impacts of the more direct demand factors (fares, service levels) often show themselves in changes in car ownership levels, activity patterns (i.e. where people live, work, shop, socialize, etc) and land‐use development.

Part II reviews the current state of knowledge on the effects of changes in fare levels and quality of service and of the introduction of various traffic and transport measures (traffic restraint, bus priority, etc): it outlines current methodology on costing public transport services and draws the supply and demand sides together in a consideration of particular strategies which are at the disposal of the operator, the planner and the policy maker.     

Decision Support Systems for Public Transport Management: The Athens Public Transport Authority Project

This article reports on an implementation study of a computerised decision support system for public transport management for the Athens Public Transport Authority (APTA). The study analysed the current situation, specified user requirements, determined system functionality, designed the system architecture, organised the project and, finally, planned dissemination activities. The decision support system covers the main public transport management activities of APTA - transport service provision, economic and financial planning, passenger complaints and suggestions, and personnel management - offering its users the possibility to study the potential effects of their decisions before implementation. To achieve this, the system will consist of a data warehousing system, for the integrated management of a wide variety of data sources, and of online analytical processing tools, for information analysis and scenario testing. The system architecture has been designed to offer robustness, flexibility, rich functionality and open connectivity. The system aims to help APTA reduce operational costs and provide a better transport service, attracting more passengers to public transport and reducing, in the process, congestion and pollution.     

Incorporating equity as part of the wider impacts in transport infrastructure assessment: an application of the SUMINI approach

The state of the art in appraisal of transport infrastructure (particularly for developed countries) is moving towards inclusivity of a set of wider impacts than has traditionally been the case. In appraisal frameworks generally Multi-Criteria Analysis (MCA), features as either an alternative to, or complementary with, Cost Benefit Analysis (CBA) particularly when assessing a wider set of distributional and other impacts. In that respect it goes some way towards addressing an identified weakness in conventional CBA. This paper proposes a new method to incorporate the wider impacts into the appraisal framework (SUMINI) based upon a composite indicator and MCA. The method is illustrated for a particular example of the wider set of impacts, i.e. equity, through the ex-post assessment of two large EU transport infrastructure (TEN-T) case studies. The results suggest that SUMINI assesses equity impacts well and the case studies highlight the flexibility of the approach in reflecting different policy or project objectives. The research concludes that this method should not be viewed as being in competition with traditional CBA, but that it could be an easily adopted and complementary approach. The value in the research is in providing a new and significant methodological advance to the historically difficult question of how to evaluate equity and other wider impacts. The research is of strong international significance due to the publication of the TEN-Ts review by the European Commission, as well as the transnational nature of large scale interurban transport schemes, the involvement of national and transnational stakeholder groups in the approval and funding of those schemes, the large numbers of population potentially subject to equity and other wider impacts and the degree of variation in the regional objectives and priorities for transport decision makers.     

Impacts of Transport Infrastructure on Productivity and Economic Growth: Recent Advances and Research Challenges

ABSTRACT

The paper provides an update of the survey focusing on estimating the contribution of transport infrastructure to productivity and economic growth. The central questions addressed are possible reasons behind the conflicting results reported in the literature on the elasticity of economic output with respect to transport infrastructure investment. After providing a systematic review of recent empirical studies on the effects of transport infrastructure on productivity and economic growth, the paper notes that controversial results can be attributed to ten causes (grouped into three categories for distinguishing): (1) related to different contexts: research period, geographical scales, and country's capability in enabling economic development; (2) related to different phenomena that are being measured: different economic sectors, different types of transport infrastructure, and different quality levels of transport infrastructure; and (3) related to distinct ways of measuring a similar phenomenon: measures used to describe the dependent variable and explanatory variable, functional specification, and estimation method of the econometric model. Strong network externalities of transport infrastructure may result in nonlinearity of the relationship between transport infrastructure and economic growth. Moreover, the absence of spatial concerns in infrastructure's impacts is another important source of inconclusive results. Finally, building on recent literature, the paper has discussed policy implications and identified several research avenues for further research.     

Impact of Everyday Weather on Individual Daily Travel Behaviours in Perspective: A Literature Review

Despite the hundreds of billions of dollars being spent on infrastructure development -- from roads, rail and airports to energy extraction and power networks to the Internet -- surprisingly little reliable knowledge exists about the performance of these investments in terms of actual costs, benefits and risks. This paper presents results from the first statistically significant study of cost performance in transport infrastructure projects. The sample used is the largest of its kind, covering 258 projects in 20 nations worth approximately US$90 billion (constant 1995 prices). The paper shows with overwhelming statistical significance that in terms of costs transport infrastructure projects do not perform as promised. The conclusion is tested for different project types, different geographical regions and different historical periods. Substantial cost escalation is the rule rather than the exception. For rail, average cost escalation is 45% (SD=38), for fixed links (tunnels and bridges) it is 34% (62) and for roads 20% (30). Cost escalation appears a global phenomenon, existing across 20 nations on five continents. Cost estimates have not improved and cost escalation not decreased over the past 70 years. Cost estimates used in decision-making for transport infrastructure development are highly, systematically and significantly misleading. Large cost escalations combined with large standard deviations translate into large financial risks. However, such risks are typically ignored or underplayed in decision-making, to the detriment of social and economic welfare.     

A survey of Hungarian transport policy

Abstract

In its introductory part this article discusses the principles of the transport policy approved in 1968, followed by the reasons behind the advances on this policy approved in 1978.

It then goes on to review the Hungarian transport pattern and organization, including the roles played by the railways, the road transport companies, the state‐owned enterprises as well as cooperatives, urban transport, shipping, air transport, pipelines, and private transport.

In discussing the division of labour (or market sharing) in transport it concludes that passenger transport is increasing slowly, while the proportion of private transport is continuing to rise. A moderate increase is expected in goods transport with a decline in the share of the railways and a rise in that of the other transport branches. This division of labour is being influenced by economic, not administrative, means.

The main target of the advanced transport policy is to shape a transport system which corresponds to socioeconomic requirements. This means that goods transport capacities must be put to more efficient use, which involves improving development, organizational and planning operations. In passenger transport priority must go to public transport while the proportion of private transport must be defined in keeping with demand and economic possibilities.

In the development of the infrastructure and investments, the need to improve energy use and protect the environment must be stressed.

The rest of the article presents the detailed reasoning behind the measures already taken and scheduled to be taken to achieve these main targets.     

Investigating Links between Social Capital and Public Transport

Abstract

Social capital (SC) describes the advantage individuals and communities can gain from social participation, mutual assistance and trust. The provision of travel options for those who are socially disadvantaged is a major rationale for providing public transport. While there has been recent work on how transport can address social exclusion, SC has been overlooked. This article describes the theoretical basis of SC and suggests ways in which the concept might relate to public transport planning, research and practice. Disadvantaged groups can lack SC, mobility and accessibility. Public transport can provide mobility for this group and, in doing so, provide a greater opportunity to create social networks, trust and reciprocity. Although these concepts are abstract, plausible links are identified between the concepts of enhanced positive social interaction associated with the ‘livable city’ concept and those engendered in SC theory. Public transport by definition involves travelling with others and hence provides opportunities for social interaction while travelling. While a series of possible links between SC and public transport are theorized, it is unlikely these are necessarily strong since other mobility options are available and a range of land‐use and non‐transport alternatives can address social needs. Aspects of the SC concept are already covered by the social mobility and accessibility literature, although it does offer a wider insight into the potential advantages of improving access and mobility for disadvantaged communities. The concept of SC is complex and suffers from a ‘fuzzy’ definition. There is a lack of quantitative primary research associated with measuring SC. Measuring the influence of improved mobility options on SC in disadvantaged communities would be a worthwhile research area. Despite the challenges associated with researching SC, the links between SC and travel present an opportunity to understand how public transport acts to address social disadvantage through the provision of mobility to disadvantaged communities.     

An assessment of advanced transport telematics evaluation procedures

This paper reviews and critically assesses procedures which have been adopted to evaluate Advanced Transport Telematics (ATT) projects. The importance of such a review at this juncture stems from the changing position of ATT in transport planning. ATT is no longer simply a field for experimentation, where technical feasibility and user acceptance are dominant concerns. Rather it is a potential mainstream contributor to the functioning of road transport systems. For this reason, ATT project appraisal needs to be developed to the same form, level of sophistication and consistency as the appraisal of conventional transport infrastructure investment. Based on the review set out here, we argue that appropriate methods have not yet been established which, in turn, poses a number of challenging questions, since current socio‐economic evaluation procedures are not directly suited to either measuring or evaluating many of the impacts which ATT schemes are implemented to achieve.     

Transport infrastructure and regional economic growth: evidence from China

This article develops a multi-dimensions measurement of transport infrastructure and examines the linkage between transport infrastructure and regional economic growth. A panel data model is estimated using data from a sample of 31 Chinese provinces from 1998 to 2007. The results provide strong evidence that transport infrastructure plays an important role in economic growth. Both land transport and water transport infrastructure have strong and significant impacts, while the contribution of airway transport infrastructure is weak. Furthermore, land transport infrastructure contributes more to economic growth in locations with poor land transport infrastructure, while the investment in water transport infrastructure contribute positively to economic growth only after the investment scale exceeds a threshold level. These results are robust to a variety of alternative methods, the exclusion of possible outliers, and consideration of endogeneity. A retrospective analysis shows that uneven distribution of transport infrastructure is an important reason behind economic disparities across Chinese regions.     

Valuing Freight Transport Time using Transport Demand Modelling: A Bibliographical Review

The value of time for freight transport is of major importance in infrastructure-related cost–benefit analysis and yet its study has been largely neglected when compared with its passenger counterpart. In fact, one of the attributes that could decide the profitability of a project is how much can be saved if freight vehicles use new infrastructure. Despite being the primary benefit of most investments in transport infrastructure, researchers have not yet reached agreement over either the size or the nature of the values of time that should be used when evaluating projects. This article provides a review of the estimation of freight value of time through transport demand modelling and extant empirical evidence on this topic. Similarly, the bibliographic review of studies undertaken has allowed us to pinpoint the most critical issues when modelling freight transport demand and the position of various research teams regarding these aspects. Such issues include identifying the decision-maker, heterogeneity in the transport flows and transport attributes considered by decision-makers.     

Framing the Nexus of Globalisation,Logistics and Manufacturing in Europe

Abstract

Under the ongoing influence of globalisation, supply chains have changed significantly. New logistics and manufacturing systems have emerged, causing longer transport distances and increasing transport emissions. The existing research into the sustainability impacts of freight transport has largely viewed it as being a macro-level economic and political phenomenon and has ignored the interdependencies amongst micro-level economic actors, including firms and businesses in the private sector. In this paper, we presume that the lack of conceptualisation of freight transport in relation to wider institutional contexts and firm behaviour results in the lack of a holistic approach to understanding freight governance in the face of globalisation. We argue for the use of institutional economic geography lenses to elucidate the distribution networks of emerging logistics and manufacturing practices and its implications for freight transport. We illustrate our argument through a broad look at the European logistics and manufacturing practices and global production.