Project: Transports' Role in the Facilitation of Trade

Reference: R243

Last update: 19/11/2008 15:08:55

Objectives

To provide an approach to better appraise the international impacts of transport for specific transport scheme proposals.

Description

To provide an approach for considering the international impacts of transport appraisal. The international impacts were considered as important drivers of productivity and competitiveness in the Eddington report and the study recommeded carrying forward work in this area to better understand and appraise the impacts.

It is envisaged the project will provide a three stage report; defining the interantional impacts, reviewing the evidence and literature, and setting out options for appraising the international impacts.

Contractor(s)

NERA Economic Consulting
15 Stratford Place, LONDON, W1C 1BE
+44 (0)20 7659 8500

Contract details

Cost to the Department: £80,000.00

Actual start date: 22 May 2008

Actual completion date: 31 December 2008

Summary of results

  1. It is likely that the majority of international impacts from transport improvements could be captured through the traditional user benefits approach as time savings, cheaper transport costs, improved frequency or reliability, etc.

    However, it is not clear that the Department's existing modelling capability is able to capture user benefits to firms and consumers resulting from changes in international trade as a result of transport improvements, particularly for trade in goods.

    There are a number of significant gaps in the primary research and evidence base, meaning that it is not possible to quantify certain impacts in a robust way. In particular:
    - There is insufficient evidence to identify a robust relationship between transport provision and international trade or foreign direct investment (FDI).
    - There are insufficient data to robustly quantify the productivity benefits of international business, though illustrative estimates are provided. The productivity benefits of an airport scheme could be as much as five to ten per cent of passenger benefits from goods exports, and a similar amount from services exports. However, not all of this will be additional.
    - The study provides tentative estimates of the impact of international transport infrastructure on domestic structural unemployment. These impacts could be significant but are very uncertain (the case study estimates suggest a range of minus 18 per cent to plus 9 per cent of passenger benefits). In some cases, therefore, an airport intervention in the UK could lead to wider disbenefits as economic activity flows away from the UK.