Coastal Highway Route E39Economic impacts of E39New economic models

Kjetil StrandNorwegian Public Roads Administration

22.09.2015

Subproject: Society impacts

● Focus on possible impacts of significantly improvedtransport infrastructure

● Common criticism of current transport economicassessments of road infrastructure projects:– There must be other benefits than just time savings for

the road users (and accident costs, operator costs and the othercomponents of a traditional CBA)

– Transport economics vs social economics

R&D Project: Ferry Free E39

22.09.2015

E39

● Coastal Highway from Kristiansand in south to Trondheim in north.

● A lot of fjords along the west coastof Norway

● 7 Ferry connections● Poor road quality● Total road length 1100 km● Total travel time 20 hours (⇒ 13)

● Political ambition:– Improved and ferry free E39 in

20 years– Expressed by two consecutive

governments

Society impacts

22.09.2015

Some key figuresE39 Strait Crossings

Halsafjorden, 2 km wide, 5-600 m deep

Romsdalsfjorden, 13 km subsea tunnel + 2 km suspension bridge (1,6 km span),

Storfjorden/Sulafjorden, 3,4 km wide, 500 m deep

Nordfjorden, 1,7 km wide, 3-500 m deep

Sognefjorden, 3,7 km wide, 1250 m deep

Bjørnafjorden, 6 km wide, 5-600 m deep

Boknafjorden, Rogfast subsea tunnels, 27 km, - 390 m deep

22.09.2015

The mandateFerry free E39

• Minister of Transport and Communication, Magnhild M Kleppa, gave us a mandate late 2010:Study/analyse:a) The potential for increased regional labour and settlement marketb) Technological possibilitiesc) Energy from the constructionsd) Implementation and contract strategies

Project: Ferry Free E39 a) Societyb) Crossing the fjords / Technologyc) Energyd) Implementation

22.09.2015

Creating the futureFerry free E39

«There is a reason why God created the English Channel»A young Margaret Thatcher

«Every generation has to make something exciting that affects thefuture!»

A somewhat older (and wiser) Margaret Thatcher whenthe tunnel across the Channel opened in May 1994

22.09.2015

Wider economic benefitsFerry free E39

«Ferry Free E39 must be seen as an investment, not an expense»Minister of Transport and Communication Ketil Solvik-Olsen

22.09.2015

So: why this project and focus?

Even though you don’t get this impression, people live here!

Ferry Free E39 – Wider Economic Benefits

We make «a lot of money» alongside the E39…

And …

Ferry Free E39 – Wider Economic Benefits

● Local road

● Regional road

● Domestic «highway»

And of course: E39 is the «life line»

Ferry Free E39 – Wider Economic Benefits

Society impactsFerry free E39

• Ferry Free E39 is something fundamentally different than«a normal road project»

• It is a «Game Changer» – the traffic itself is not necessarily the main effect

• Significant changes:• Ordinary small road project: the typical benefit is a

few minutes saved (improving road curves, increasing width) and improved traffic safety.

• Ferry Free E39 includes changes in time, distance and predictability in a completely different league!

22.09.2015

Strait Crossings changes trafficFerry free E39

22.09.2015

CBAFerry free E39

22.09.2015

1+1≠2Ferry free E39

International studies regarding «game changer» projects: ● «The domestic economic benefits from a coherent build of a long

corridor can be as much as 6 times bigger than the sum of each projectitself»

● «A trip made more predictable with better regularity has just as largecontribution to the total benefit as the saved time and cost of travel»

Domestic study (Prof. Victor Norman) confirms:● The effects of Molde-Ålesund-Ørsta/Volda show a larger benefit to the

society than the sum of each Molde-Ålesund and Ålesund-Ørsta/Voldaas single projects

Also confirmed by traditional models for transport and CBA● Complete models for E39● All projects together vs single projects

22.09.2015

Studies

● Data collection– Surveys

• Ferries• Freight transport

– Transport models● Impact on Air Transport

– Møreforskning / Institute of Transport Economics (TØI)• Ferry free E39 will significantly reduce traffic on local

routes• Bergen – Haugesund: Out in the long run• Bergen – Stavanger: reduced traffic

● Climate– Preliminary results CO2– Reduced emission due to removing ferries and less air

transport– Despite traffic growth on roads

Ferry free E39

22.09.2015

Studies….

● Wider Economic Benefits– Institute of Transport Economics (TØI)

• Freight transport• Macro economics

– Menon Business Economics• Agglomeration / labour market• Macro economics

– Norwegian Business School (BI)• Industrial economics

– Norwegian School of Economics (NHH) / Centre for applied research (SNF)

• Settlement and labour market• Regional integration

Ferry free E39

22.09.2015

Some results

● Improved and ferry free E39 will give:– Benefits for domestic freight

• Not just in the area along E39– Growth in GDP (Gross Domestic Product)

• Not just in the area along E39 – Growth in business profitability / productivity

• Better expertise and accessability• Increased competition• Well functioning markets

– Growth in labour earning due to larger integrated labourmarkets

– Possibly reduced emissions of CO2– Less local air transport along the coast

Ferry free E39

22.09.2015

Some results

● No experts are able to calculate a total economic benefit ofa gigantic project like Ferry Free E39

● So far analyses done indicates benefits somewhere between6 – 15 billion NOK per year

● The sections of E39 close to and between larger cities / towns appears to be most profitable– Bergen – Haugesund – Stavanger– Ulsteinvik – Ålesund - Molde

Ferry free E39

22.09.2015

DAD, what’s on the other side?

Over there the Southerners live – son, youdon’t want to go there!