Paper presented at 57th Annual North American Meetings of the Regional Science Association International Denver, Colorado, 10-13 November 2010

European transport policy: methodology to assess impact on accessibility

Panayotis CHRISTIDIS1, Nicolás IBAÑEZ RIVAS

European Commission, Joint Research Centre (JRC), Institute for Prospective Technological Studies (IPTS). Edificio Expo, C/ Inca Garcilaso 3. 41092 Seville,

Spain.

1. Introduction

The European Commission is preparing an update on its transport policy to be summarised in the forthcoming White Paper on Decarbonisation of Transport. Apart from the objective of reducing CO2 emissions drastically, the proposed policy measures also aim at improving the efficiency of the European transport system and improve accessibility at regional level. This paper presents the methodology applied during the preparation of the White Paper for the evaluation of trends in transport and accessibility with a year 2030 horizon and the assessment of the impact of the measures related to accessibility.

The analysis is based on the TRANSTOOLS model, a multi-modal transport network model covering all 27 European Union member states. The model is the standard tool used by the European Commission services in policy impact assessments for transport. A reference scenario to 2030 was developed, taking into account the expected socio-economic and demographic trends. A set of indicators to measure transport costs, congestion and accessibility was developed. These indicators were used to compare alternative policy intervention scenarios to the reference scenario.

2. Policy context The European transport policy aims at creating a competitive and user-friendly transport system that is sustainable in the long term. While opening markets to competition and integrating the various national transport systems in a single European one, EU transport policy also focuses on reducing the negative effects from transport, i.e. accidents, congestion or emissions of air pollutants, CO2 and noise. An efficient and competitive transport system helps creating jobs and wealth, moving goods to where they are needed and bringing people together. An additional challenge for transport policy is the expected increase in costs due to expensive oil, higher congestion levels, scarcity of labour skills and wider application of the ‘user-pays’ principle for infrastructure use. Such trends may lead to negative impact as regards social and territorial cohesion or the competitiveness of EU industry. The main goal of European transport policy is to help establishing a system that offers high quality mobility services while using fewer resources. This will require a radical

1 Disclaimer: The views expressed are purely those of the authors and may not in any circumstances

be regarded as stating an official position of the European Commission.

2

transformation of the transport sector, which cannot be achieved with few, selected, interventions. Transport is a complex system that is based on the interaction of infrastructure, vehicles, information technology, rules and behaviour. All these elements must be part of a common vision and designed to work effectively together. A major part of the new EU transport policy will focus on eliminating all residual barriers between modes and national systems, easing the process of integration and the emergence of multinational and multimodal operators. There are of different kinds of remaining obstacles. Existing legislation, or poor implementation and enforcement of new rules, prevent access to market in certain segments of the transport industry (notably rail domestic passengers services, road cabotage, port services, groundhandling in airports). Different technical specifications and lack of interoperability hinder the creation of multimodal intelligent transport systems and the operation of cross-border services (particularly in rail). Different administrative requirements (different liability regimes, multiple transport documents) increase the cost of international and multimodal operations. Infrastructure and improved networks are important elements of the EU transport policy. The idea of Trans-European Networks (TEN) emerged by the end of the 1980s in conjunction with the proposed Single Market. It made little sense to talk of a big market, with freedom of movement within it for goods, persons and services, unless the various regions and national networks making up that market were properly linked by modern and efficient infrastructure. The construction of Trans-European Networks is also an important element for economic growth and the creation of employment. The Treaty establishing the European Union provides a sound legal basis for the TENs. Under the terms of Chapter XV of the Treaty (Articles 154, 155 and 156), the European Union must aim to promote the development of Trans -European Networks as a key element for the creation of the Internal Market and the reinforcement of Economic and Social Cohesion. This development includes the interconnection and interoperability of national networks as well as access to such networks. According with these objectives, the Community is developing guidelines covering the objectives, priorities, identification of projects of common interest and broad lines of measures for the three sectors concerned (Transports, Energy and Telecommunications). The European Parliament and the Council approve these guidelines after consultation of the Economic and Social Committee and the Committee of the Regions. A large number of projects of common interest have benefited from financial support of the Community budget through the TEN-budget line as well as the Structural Funds and Cohesion Fund. The European Investment Bank (EIB) has also greatly contributed to the financing of these projects through loans. The TEN-T policy review started on 4 February 2009 by publishing a Commission Green Paper (COM(2009) 44 final), which developed possible approaches for the further TEN-T policy in the light of global challenges, in particular climate change. TEN-T policy review is linked with the preparation of the Transport White Paper for the period 2011-2020. 3. Impact assessment in the European Commission Before the European Commission proposes new initiatives it assesses the potential economic, social and environmental consequences that they may have. Impact assessment is a set of logical steps which helps the Commission to do this. It is a process that prepares evidence for political decision-makers on the advantages and disadvantages of possible policy options by assessing their potential impact. The Commission believes that the most effective way of

3

improving the quality of new policy proposals is by making those people who are responsible for policy development also responsible for assessing the impact of what they propose. To this end, the Commission has rolled out a wide-ranging impact assessment system. It is based on an integrated approach which analyses both benefits and costs, and addresses all significant economic, social and environmental impacts of possible new initiatives. This approach ensures that all relevant expertise within the Commission is used, together with inputs from stakeholders. In doing so, it also enhances the coherence of initiatives across policy areas. The Commission's system is both accountable and transparent. It strives for full involvement of stakeholders. All impact assessments and all opinions of the Impact Assessment Board on their quality are published online once the Commission has adopted the relevant proposal. Impact assessment also helps to explain why an action is necessary at the EU level and why the proposed response is an appropriate choice. It may of course also demonstrate why no action at the EU level should be taken. The Commission Guidelines give general guidance to the Commission services for assessing potential impacts of different policy options. The Guidelines were revised in 2009 based on:

• experience of the Commission services in preparing impact assessments • experience of the independent Impact Assessment Board since it was created in late

2006 • inputs from the High Level Group of National Experts on Better Regulation • external evaluation of the Commission's impact assessment system in 2006/2007, and • public consultation on the Impact Assessment Guidelines held in mid-2008.

The analysis of impacts consists of three major steps:

• Identification of economic, social and environmental impacts • Qualitative assessment of the more significant impacts • In-depth qualitative and quantitative analysis of the most significant impacts

From a regional analysis point of view, the main questions that the impact assessment is required to answer are the following:

• Does the option have significant effects on certain sectors? • Will it have a specific impact on certain regions, for instance in terms of jobs created

or lost? • Is there a single Member State, region or sector which is disproportionately affected

(so-called ‘outlier’ impact)? 4. Using TRANSTOOLS for transport impact assessments

TRANSTOOLS is the EU-wide transport network model that is the reference tool for impact assessment by the European Commission. The model was developed by a multinational research team in the context of a 6th Framework Programme research project. It allows the simulation of the behaviour of the transport system for all main modes. The model covers both passengers and freight, as well as intermodal transport. It combines advanced modelling techniques in transport generation and assignment, economic activity, trade, logistics, regional development and environmental impacts.

4

The aim has been to develop a European network-based transport model starting from the state of the art. Another main issue for the development of TRANS-TOOLS was the need to construct an IPR-free instrument, with open architecture in order to facilitate access by potential users and developers. All model components are integrated into ArcGIS (from ESRI) which allow the user to edit, operate and illustrate results from the same common GIS-based platform. The platform links all the models using the ArcGIS model builder and ArcGIS Geoprocessing framework. Using the ArcGIS as a model interface makes it much easier to illustrate, analyse and process data than in most transport models. Furthermore, the Model Builder interface can be used to run calculations as well as different scenarios.

The TRANS-TOOLS version 1 model is a merger of modified existing European level models. It includes: • An economic model based on a modified and simplified version of CGEurope, • A freight trade and freight mode choice model developed from the NEAC model system, • A freight logistic model based on SLAM, a module that can be appended to the SCENES

model, • A passenger demand model based on ASTRA and VACLAV, • Assignment models for road, rail, inland waterways and air transport designed to the

specific modelling based on a general framework developed by CTT. TRANSTOOLS v.2 was released in 2009 and introduced a number of improvements. The model was calibrated to year 2005 data and the spatial reference system was updated to include 1441 regions. The passenger model now covers car drivers, car passengers, train, air and busses, while the freight model covers road, rail, inland waterways and short-sea shipping. The demand modules were integrated with the economic model, while the assignment algorithms were significantly improved.

5

Figure 1: Structure of the TRANSTOOLS model Source: [TEN-Connect] TRANSTOOLS is in principle a modified classic 4 step model. The model estimates transport demand for each region (NUTS 3 zone) in Europe and distributes it on the networks of the various modes available.

Figure 2: Schematic representation of multimodal modelling concept in TRANSTOOLS The main steps of the classic approach include the estimation of:

i

j

t rA

rB

Generation

Distribution

Modal split

Assignment

Four stage model

Production / Consumption

Location of household / work places

Trade patterns Commuter patterns

Modal split

Assignment

Economic model/traffic model link

Economic model

6

• Trip generation (Ti, Tj): the transport demand that each zone generates or attracts. It depends on the socio-economic characteristics of each zone, as well as on the economic and industrial structure.

• Trip distribution (Tij): the demand for transport between each pair of zones in the system. It depends on trade and travel patterns, as well as on the availability and costs of transport between the zones.

• Mode choice (Tijr, Tijt): the part of the demand for each pair of zones that will use each available mode. It depends on the relative costs, speeds and capacities of the various alternatives.

• Route assignment (TijrA, TijrB): Within each mode, the links of the network where transport demand will be distributed. It depends on costs, speeds and capacities of the available route options.

The model was initially calibrated based on year 2005 data. The simulation of additional policy measures is done by changing specific elements of the modelled system, in particular costs, speeds, capacities and connections, either at link level or at zone level. The reference scenario was developed by updating the assumptions that the model uses for year 2030 that are relevant to the parameters affecting the various stages of the model. The starting point is represented by assumptions on the expected economic growth. The macro projections reflect the recent economic downturn, followed by sustained economic growth resuming after 2010. Growth projections for the short term (2009-2010) mirror economic forecasts from DG ECFIN (European Economy, May 2009), while the long term growth projections follow the 2009 Ageing Report (European Economy, April 2009). The 2009 Ageing report has been established by the European Commission (DG ECFIN) and the Economic Policy Committee, with the support of Member States experts, and has been endorsed by the ECOFIN Council. The projections used correspond to a slower future economic growth compared to the past (on average, 1.7% pa compared to 2.4% in the last decade). Both passenger and freight transport are highly correlated with GDP growth and –as a result- introducing these economic forecasts significantly modified the original projections by TRANSTOOLS. Projections on population mainly influence passenger transport demand since they affect the number of trips generated. The change in the ageing structure is not however properly taken into account by TRANSTOOLS for the lack of different trip generation rates per age group. The reference scenario reflects policies in place before the end of 2009. Obviously, many measures will be implemented in the future that will directly or indirectly influence transport demand, including infrastructure and pricing measures. It is not however the aim of such a model to predict the formulation of new policies, or to define the precise picture in the future. Assuming a "policy freeze" for the reference scenario allows the comparison with what would have happened without any policy intervention. Policy measures that should form part of the reference scenario -but were not included in the original calibration of the model- were introduced by modifying (mainly) cost parameters in the model. A third element that influences the results relates to oil prices. The evolution of the oil price is difficult to predict, especially in view of its recent volatility. Furthermore, it leads to an additional complication regarding its relationship with economic growth and with transport demand. The TRANSTOOLS reference scenario does not examine the impacts of oil prices on GDP (or vice versa), but is limited to simulating –to the extent possible- the impact of oil prices on transport demand. Neither is the impact of EU transport demand on oil prices

7

examined here, which is expected to be rather limited (i.e. EU oil consumption currently represents about 16% of the world oil demand). An exogenous assumption for the evolution of the oil prices is used, common with the PRIMES reference scenario to 2030, in order to ensure consistency in assumptions between the Commission services. Table 1: Oil price projection used in the reference scenario (consistent with PRIMES reference scenario)2 $'2008/boe 2005 2010 2015 2020 2025 2030

Oil 59.4 71.9 72.6 88.4 101.6 105.9 5. Reference scenario projections Total transport activity is expected to continue to grow in line with economic activity in the Reference scenario. Even though a decrease is visible for 2008-2009 as a result of the recent economic crisis, the recovery foreseen starting with 2010 is reflected by transport activity returning to its long term trends. Road transport is expected to maintain its dominant role in both passenger and freight transport. Air and rail would grow significantly but still represent a small share of overall transport demand. Total passenger transport activity is expected to grow by 34% between 2005 and 2030 in a “no-policy change” scenario, equivalent to an average growth of 1.2% per year. However, growth is not distributed proportionally among transport modes, with air transport activity almost doubling by 2030. The weaker growth in passenger transport compared to GDP per capita (1.4% per year) is explained by the passenger car activity that in some EU-15 Members States is close to saturation levels.

Rail competes with both road and air, but the results on its performance differ considerably between EU-15 and EU-12. In EU-15, given the expected saturation of passenger car demand, a large share of potential demand is covered by (high speed in most cases) rail, at least in the Member States where investments in rail are foreseen. At the same time, high speed rail attracts traffic from air transport. In Central and Eastern Europe, rail may worsen its competitive position against air transport and road and is expected to grow slower than the other two main modes. After 2030 the slight decline in population combined with a slowdown in GDP growth and the saturation of passenger car demand leads to somewhat lower growth rates in passenger transport activity.

The various modes are in general expected to maintain their relative importance at EU level. Passenger cars would represent almost 70% of total passenger activity in 2030 and 67% in 2050, although this would correspond to a decrease of 6 percentage points by 2050 compared to 2005. Air transport on the contrary is expected to increase its share, reaching almost 15% of total activity in 2050 and consolidating its position as the second most important passenger mode. The increase in air transport demand is a result of the expected increase in: the number

2 The reference price assumptions for EU27 in PRIMES are the result of world energy modelling

(PROMETHEUS stochastic world energy model) that derives price trajectories for oil, gas and coal under a conventional wisdom view of the development of the world energy system.

8

of trips per person/year and the average distance per trip. Rail would improve its share moderately, gaining less the 1 percentage point by 2050, up to 8% of passenger transport.

Passenger transport

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Road Rail Aviation Inlandnavigation

'90-'05 '05-'30 '30-'50

Freight transport

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Road Rail Inland navigation

'90-'05 '05-'30 '30-'50

Figure 3: Passenger and freight transport projections (average growth rate per year)

Several factors influencing the freight transport sector, including the restructuring of logistics systems, the realignment of supply chains and the rescheduling of product flows, are expected to change gradually during the period 2005-2050 but without a visible disruptive change in the overall trends. The developments in production and consumption patterns would lead to an increase in the average transport distances and a larger share of unitized /non-bulk goods.

Total freight transport volumes are expected to grow by about 38% by 2030, with road and rail growing at comparable rates. The developments in rail freight are sustained by a slower increase in fuel costs and the positive impacts of the rail markets opening. Road transport would maintain its dominant role in freight transport, contributing 73% in 2030, followed by rail (with 17%). Both road and rail slightly increase their shares between 2005 and 2030 to the expense of inland navigation and short-sea shipping, which grow at lower pace.

The geographic distribution of freight transport growth is not uniform. In absolute terms, road transport in Western Europe will attract most of the growth in demand. However, in relative terms Central and Eastern Europe will increase the transport volumes much faster. Growth is expected to be high for all modes in the new Member States, with road being the fastest growing one. Inland waterways traffic, especially in the Danube, is also expected to grow by more than 80% by 2030.

9

RO 108%

CY 126%

PL 111%

LT 74%

SI 77%

SK 139%

EU-27 52%

ES 80%

BG 93%

IE 76%

MT 73%

0%

50%

100%

150%

200%

0% 50% 100% 150%

passenger

freig

ht

Source: TRANSTOOLS model projections

Note: Bubble size corresponds to GDP growth between 2005 and 2030.

Figure 4: Correlation of growth in passenger and freight transport activity with GDP growth per Member State (2005-2030)

Beyond 2030, a certain weakening in the freight transport activity is expected relative to 2005-2030. Several factors contribute to this outcome: the weaker growth prospects after 2030, the shifts in GDP composition towards service and information activities, the shifts in value-to-weight ratios, the limits to distant sourcing and off-shoring.

6. Measuring accessibility

Transport infrastructure determines accessibility to a large extent. It can reduce transport costs and provide an area with a relative advantage compared to the rest. Better access to input factors and markets would allow an area to become more productive and competitive and may affect spatial development patterns. This is however something that is difficult to verify empirically. There is a clear positive correlation between transport infrastructure and economic development, but it is difficult to establish a causal relationship between the two. Nevertheless, accessibility indicators are useful in order to identify regional differences and can to a certain extent explain some inequalities. In general terms, accessibility indicators are a combination of two functions, one representing the activities or opportunities to be reached and one representing the effort, time, distance or cost needed to reach them:

( )=∑i jA g Wj F cij( )

where Ai is the accessibility of area i, Wj is the activity W to be reached in area j, and cij is the generalised cost of reaching area j from area i.

10

Accessibility indicators may be sensitive to the following dimensions: origins, destinations, impedance, constraints, barriers, type of transport, modes, spatial scale, equity and dynamics. Three possible combinations of these dimensions were tested in this analysis, using different formulations to accommodate different dimensions:

( )

∈Ω∈Ω

∈Ω∈Ω

∈Ω∈Ω

∈Ω ∈Ω

⎛ ⎞⎜ ⎟= ∈Ω⎜ ⎟⎝ ⎠⎛ ⎞⎜ ⎟= ∈Ω⎜ ⎟⎝ ⎠⎛ ⎞⋅⎜ ⎟= ∈Ω⎜ ⎟⎝ ⎠

⎛ ⋅⎜=⎝

∑ ∑

∑ ∑

∑ ∑

∑

nuts3

segm

nuts3

segm

nuts3

segm

nuts3 segm

ti nuts3r tj

ijr

tjt

i nuts3r tjijr

t ti jt

i nuts3r tjijr

r t r tij ijt

i r tijj r

A ic

GDPB i

c

GDP GDPD i

c

T cE

T

,

,

1 2

,

, ,

,

,

1,

,

,

∈Ω ∈Ω

⎞⎟ ∈Ω

⎜ ⎟⎠

∑nuts3 segm

nuts3j r i

,,

Where:

nuts3Ω is the set of all NUTS3 zones (1441 in total). Ωsegm is the set of all NSTR commodity groups (11 in total) for freight transport and the set of

all trip purposes (4 in total) for passenger transport. t is the year the results refer to.

iGDP is the total GDP for zone i in scenario year t.

,r tijc is the generalised cost from zone i to zone j for segment r (commodity group or trip

purpose) in scenario year t.

r tijT , is the number of trips for passenger transport and the number of tonnes for freight

transport for segment r (commodity group or trip purpose) that take place from zone i to zone j in scenario year t.

For freight transport the generalised cost ,r t

ijc is measured in monetary units per tonnes of

commodity type r moved from zone i to zone j. For passenger transport the generalised cost ,r t

ijc is measured in monetary units per trips completed

for trip purpose r from zone i to zone j.

The following maps summarise the change in accessibility between 2005 and 2030 for each indicator used. Different maps are produced for passenger and freight transport.

11

12

13

14

15

16

17

18

19

The current situation in terms of accessibility in the EU suggests that there is a marked division between central and peripheral areas as regards their transport connectivity and costs as a result of geography and patterns of economic activity. Peripheral areas require longer average trips for the rest of the EU using, in most cases, more expensive modes and networks than the central areas do. As a result, their average cost per long distance trip is significantly higher.

Fuel costs and congestion levels are expected to rise significantly by year 2030, leading to further divergences in accessibility. Peripheral areas with a high share of road transport are expected to worsen their situation, facing higher average transport cost increases than central areas. Given that without intervention economic activity is expected to continue demonstrating signs of centralisation at EU level, an improvement of accessibility through the reduction of transport costs is necessary. In several cases it may even be a prerequisite for a more decentralised distribution of trade patterns and economic activity.

20

High congestion levels are expected to seriously affect road transport in several member states by 2030. While urban congestion will mainly depend on car ownership levels, urban sprawl and the availability of public transport alternatives, congestion on the inter-urban network will be the result of a growing freight demand across specific corridors at their points of intersection with links serving local traffic. The largest part of congestion will be concentrated near densely populated zones with high economic activity such as Belgium and the Netherlands –to a certain extent as a result of port and transhipment operations- and in large parts of Germany, the United Kingdom and northern Italy. Congestion patterns differ significantly among member states though, since their hourly, daily and seasonal variation depends on local conditions. In principle a combination of demand management, capacity improvement and investment in alternative modes would be required. Measures that aim at channelling traffic to other modes, links or time periods- such as congestion charging- can improve the use of capacity and reduce peak time congestion levels. Developing improved road networks can remove the capacity limitations that may cause congestion, especially in Eastern Europe. In Member States where few alternatives to road exist, improving the rail or inland navigation networks and services can remove a significant part of road traffic.

7. Assessing the impact of the improved infrastructure policy package

As part of the preparation of the White Paper, a possible policy package for improved transport infrastructure in Europe was tested. The main element of the package would be the following:

• A core network consisting of nodes and links relying primarily on the efficient use of existing infrastructure via ITS solutions and aiming at bridging missing links, facilitating multimodality and creating links to 3rd countries.

• A firm long-term infrastructure plan for the completion of the core network together with EU Member States detailing the projects to be completed as well as the modalities.

• Definition of a number of Green Corridors, including technical specifications and standards, alongside major high volumes freight axis’ in the EU

• Demonstration projects to promote the building and the use of infrastructure, which contributes to the greening of transport while adhering to the EU strategy for Green Infrastructure

Box 1 summarises the implementation of this scenario in the TRANSTOOLS model.

21

Box 1: Infrastructure implementation scenario in TRANSTOOLS

Infrastructure scenario 2030

UPDATED_NETWORKS

GDP, POP GROWTH, FUEL GROWTH as given by PRIMES, WORLDBANK

Changes affect equally to All NSTR and All Trip Purposes.

FREIGHT:

F1. Road Freight LOS:

\Matrices\scenarioName\FreightLOSCosts.mdb\RoadFreightLOSCosts

AvgLoadTonnes: 16%

LengthCost: -6%

TimeCost: -12% The change will be reflected in the DrivingCost column of the output cost matrix:

\Matrices\[ScenarioName]\N2Matrices.mdb\N2FreightRoadCostMatrix.

Free Flow speed in links: 15%

F2. Rail Freight LOS:

\Matrices\scenarioName\FreightLOSCosts.mdb\RailFreightLOSCosts

LengthCost: -20%

TimeCost: -15% The change will be reflected in the Cost column of the output cost matrix:

\Matrices\[ScenarioName]\N2Matrices.mdb\N2FreightRailCostMatrix.

Free Flow speed in links: 25%

F3. Waterways LOS:

\Matrices\scenarioName\FreightLOSCosts.mdb\WaterwaysLOSCosts

LengthCost: -20%

TimeCost: -15% A change would be reflected in the Cost column of the output cost matrix:

\Data\Matrices\[ScenarioName]\N2Matrices.mdb\N2FreightWaterwaysCostMatrix.

Free Flow speed in links: 25%

F4. Maritime LOS:

\Matrices\scenarioName\N2Matrices.mdb\N2FreightSeaCostMatrix

Price: -5%

TravelTime: -5%

PASSENGER:

P1. Air LOS:

\Network\scenarioName\Network.mdb\AirLink

CostP, CostH, CostB: No change

No changes to AirNetwork.

P2. Road Passenger LOS:

\Zones\scenarioName\Zones.mdb\CountryFuelCost

FuelCostPerKMPC: Growth given in PRIMES Baseline.

Free Flow speed in links: 15%

P3. Rail Passenger LOS:

\Passengers\scenarioName\tc_passenger_input.mdb

Val: -20%

Free Flow speed in links: 15%

22

23

24

8. Closing remarks

Recent evidence on agglomeration economics suggests that economic growth, labour migration and accessibility are closely interrelated [World Bank]. High accessibility to raw materials, suppliers and markets is positive for the competitiveness of the regions [ESPON]. Accessibility is however a necessary but not a sufficient prerequisite for the positive economic development of regions. Furthermore, by capitalising on current strengths in relation to research, ICT, educational and environmental opportunities, more than 1/8 of the European regions (Nordic countries, north-east of Spain, Scotland, Ireland and northern Italy) are performing low on accessibility but high on GDP per capita.

Improving accessibility by reducing transport costs does not seem sufficient on its own to drive economic growth. Higher accessibility may lead to increased specialization, thus facilitating increased efficiency and growth, but other factors are of relevance to explain economic growth. New economic geography models indicate that improving cross-border infrastructure can contribute to increased regional inequalities when immobility between regions combines with wage inflexibility, since the benefits of lower transport costs for industries in lagging regions may be overcompensated by the costs of higher exposure to competition from the more developed areas. This suggests that investment in cross-border infrastructure has to be sufficiently accompanied by other measures targeted at, for instance, improving the endowment of labour skills in the lagging regions, increasing mobility, and favouring wage flexibility.

25

References [Cohen]: Cohen, J. The broader effects of transportation infrastructure: Spatial econometrics and productivity approaches, Transportation Research Part E 46 (2010) 317–326 [EC, 2009]: European Commission, Impact Assessment Guidelines, SEC (2009) 92, 2009. [ESPON]: ESPON project, Territorial Dynamics in Europe: Trends in Accessibility, Territorial Observation No. 2, 2009. [Gutierrez]: Gutierrez J., The broader effects of transportation infrastructure: Spatial econometrics and productivity approaches, Transportation Research Part E 46 (2010) 317–326 [Lopez et al]: Lopez E, Monzon A, Christidis P. Effects of Transport Infrastructure Plans on Climate Change. Application to the Spanish Strategic Transport and Infrastructure Plan 2005¿2020 (PEIT). In: S. Rauch, G.M. Morrison and Andrés Monzón, editors. Highway and Urban Environment - Proceedings of the 9th Highway and Urban Environment Symposium. Springer; 2010. p. 359-365. [TEN-Connect]: Rich J., Bröcker J., Hansen C.O., Korchenewych A., Nielsen O.A., Vuk G. (2009): Report on Scenario, Traffic Forecast and Analysis of Traffic on the TEN-T, taking into Consideration the External Dimension of the Union – TRANS-TOOLS version 2; Model and Data Improvements, Funded by European Commission DG TREN, Copenhagen, Denmark. [World Bank]: World Bank, World Development Report 2009: Reshaping economic geography.