Socio-Economic Cost-Benefit Analysis L-P (THR, 2006.01)

7/31/2019 Socio-Economic Cost-Benefit Analysis L-P (THR, 2006.01)

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Socio-Economic Cost-Benefit Analysis

High Speed Rail Lisbon-Porto Pg.: 1 / 36


High Speed Rail Lisbon-Porto

N Documento: 00-GA-0-AF-NOT0052-0A

Cdigo na Origem: ---

Tipo de Documento: Nota Tcnica

Origem: THR

Pacote/Contrato n: C04020

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High Speed Rail Lisbon-PortoPg.: 2 / 36

INDEX

1 INTRODUCTION........................................................................................................................ 31.1 WHAT IS A SOCIO-ECONOMIC CBA? .....................................................................................................31.2 DESCRIPTION OF CBA APPROACH ........................................................................................................3 1.3 STRUCTURE OF THIS REPORT ...............................................................................................................3

2 PROJECT DESCRIPTION AND ALTERNATIVES .................................................................... 32.1 PROJECT OBJECTIVES..........................................................................................................................3 2.2 REFERENCE SCENARIO ........................................................................................................................3 2.3 PROJECT ALTERNATIVES ......................................................................................................................3 2.4 SCENARIOS .........................................................................................................................................3 2.5 OTHER ASSUMPTIONS ..........................................................................................................................3

3 DIRECT IMPACTS..................................................................................................................... 33.1 INTRODUCTION ....................................................................................................................................3 3.2 CAPITAL EXPENDITURES AND RESIDUAL VALUE ......................................................................................3 3.3 OPERATIONAL COSTS...........................................................................................................................3 3.4 TICKET REVENUES ...............................................................................................................................3 3.5 TRAVEL TIME BENEFITS ........................................................................................................................3 3.6 COMFORT AND RELIABILITY ..................................................................................................................3

4 WIDER ECONOMIC IMPACTS.................................................................................................. 34.1 INTRODUCTION ....................................................................................................................................3 4.2 THEORETICAL VIEW ON INDIRECT IMPACTS ............................................................................................3 4.3 IMPACTS OF IMPROVED ACCESSIBILITY ..................................................................................................3 4.4 IMPACTS ON GDP AND EMPLOYMENT....................................................................................................3 4.5 TRANSFERRING IMPACTS ON GDP INTO WIDER ECONOMIC IMPACTS .......................................................3

5 EXTERNAL IMPACTS............................................................................................................... 35.1 INTRODUCTION ....................................................................................................................................3 5.2 EMISSIONS..........................................................................................................................................3 5.3 TRAFFIC SAFETY..................................................................................................................................3


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6.3 QUALITATIVE IMPACTS AND OTHER EVALUATION CRITERIA ......................................................................3 6.4 CONCLUSIONS.....................................................................................................................................3

7 RSUM OF VERSIONS OF THIS REPORT............................................................................ 3ANNEX A LIST OF SOURCES...................................................................................................... 3ANNEX B CONCEPT OF USER BENEFITS ................................................................................. 3ANNEX C THEORETICAL VIEW ON WIDER ECONOMIC IMPACTS .......................................... 3ANNEX D EX-POST MEASURED WIDER ECONOMIC IMPACTS IN FRANCE........................... 3ANNEX E CBA CASH FLOWS 2006-2045.................................................................................... 3


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1 INTRODUCTION

1.1 What is a socio-economic CBA?

Transport infrastructure projects often appear not to be profitable from a financial point of view.Nevertheless, governments finance infrastructure sometimes from fully public funds, sometimespartly in Public Private Partnerships (PPP) constructions. The argumentation to spend public moneyfor infrastructure is broad and varies from stimulation of the economy to social or environmental

reasons.

Government budgets are limited and there are many plans for expanding or improvinginfrastructure. A main question is then when (public) investments in infrastructure are justified.Socio-economic cost-benefit analysis (CBA) is the economic tool to provide such an answer. CBAlooks to broad impacts of infrastructure to society as a whole, hence looking broader than thefinancial picture. Such impacts include economic user benefits, but also positive and negativeimpacts to for example green house gas emissions, traffic safety and noise levels.

A socio-economic Cost-Benefit Analysis answers the question if a public investment in a project isjustified taken all economic costs and benefits for society into account from a welfare economicspoint of view. The financial analysis investigates the projects cash flow in order to calculate suitablereturn rates.

It should be noted that a CBA is an important project appraisal method; however other appraisalmethod like for instance multi-criteria analysis, cost effectiveness and environmental impactassessment will also contribute to the justification about large-scale projects. One of thecharacteristics of the CBA method is the national level on which impacts are assessed. In case a

certain redistribution of labour, housing or other added value activities from one region to anotheroccurs, this does not result in an impact at the national level. However, it could be one of thearguments to justify a project.

The CBA for the HSL between Lisbon and Porto is conducted according to the guidelines as set inthe Guide to Cost-benefit analysis of investment projects, prepared by the Evaluation Unit of DGRegional Policy of the European Commission [1].


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o Direct economic impacts. These directly relate to the project and occur within the railtransport market.

o Indirect or wider economic impacts. These are a result of the better accessibility of regionsand relate to additional added value.

o External impacts. These are impacts on markets not directly related to the rail transportmarket (i.e. impacts on car transport, environmental issues and safety). These impacts arevalued by society nevertheless and are hence included in the socio-economic CBA.

Obviously the costs and benefits of the project occur at different periods in the project; constructiononly lasts for a couple of years, the operational period will take a much longer timeframe after theconstruction is completed. It is well-known that tomorrows money is of less value compared totodays money. Therefore all cost and benefit flows are discounted using a social discount rate of5%, in line with the recommendations made in the CBA guide of the European Commission [1] forregions lacking behind.

In the CBA the results of a series of other studies is taken as starting point for the calculations. Theparticularly holds for the demand forecast studies [4,5], capital expenditures, operational costs andeconomic impacts studies [9,10]. Consequently, when conducting the calculations, a wide range ofassumptions has been made. In order to test for the main assumptions and uncertainties, a numberof sensitivity analyses have been conducted.

1.3 Structure of this report

In chapter 2 of this report the project description and alternatives are presented. Chapter 3describes the direct economic impacts, followed by the wider economic impacts (chapter 4) and theexternal impacts (chapter 5). The results of the CBA and the conclusions are provided in chapter 6.


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2 PROJECT DESCRIPTION AND ALTERNATIVES

2.1 Project objectives

According to [2], the main objectives of the high speed rail network are:1. To strengthen links between Portugal and Spain, especially between neighbouring regions of

the two countries, and to contribute to the harmonious development of the EU, from the point ofview of strengthening its economic and social cohesion.

2. To ensure interoperability of European rail networks.3. To strengthen the structure of the Atlantic Axis and the related internal end external links withEurope, and in particular, with Spain, in connection with one of the most significant areas ofnational development.

4. To facilitate mobility, providing new opportunities for attracting investment.5. To improve the sustainability of the transport system by offering a competitive, quality rail

network in relation to the alternatives provided by air and road systems and with reducedimpacts in terms of energy consumption and atmospheric pollution.

6. To promote intermodal transport through more and improved connections with other transport

systems, especially with airports.

Although these objectives have been formulated for the whole high speed rail network including thelinks Lisbon-Madrid and Porto-Vigo, it is clear that the link Lisbon-Porto contributes to all objectives.

These objectives are also in line with general EU transport policy [3], notably: revitalizing therailways, increasing the railway market share and thereby contributing to a more balanced use oftransport modes, reducing road congestion and road accidents.

It is worthwhile to acknowledge that for a CBA these objectives need to be expressed in socio-economic variables and not just in physical indicators. The socio-economic objectives are generallyrelated to the improvement of travel conditions, the environment and well-being of the servedpopulation. In this case, improved accessibility is the key deliverable of the project, leading toconsumer, environmental and wider economic benefits that are all mostly related to the objective ofimproving the sustainability of the transport system and to provide new opportunities for attractinginvestment.


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The Reference or do-nothing alternative is an essential element since this forms the basis forcomparison. The Reference alternative represents the most likely situation without the project forthe whole time period to be considered. This means that the current transport networks (rail, road,airports) relevant for the study area are the basis, supplemented with infrastructure projects that arein the construction phase and projects for which financial commitment is agreed.

In recent years substantial investments have been made in the present Linha do Norte from Lisbonto Porto leading to a reduction in travel time to presently 2h50 for the fastest connection with theAlfa Pendular. In the coming years additional investments are planned to further upgrade the lineeventually leading to a travel time of 2h20. However, this further upgrading of the present line will bedisregarded in case of the construction of a new HSL.

Figure 2.1: Reference scenario ( left) and project alternative (right)

It is concluded that the alternative with a travel time of 2h20 on the Linha do Norte is the most likelyfuture situation without the project and consequently this represents the Reference alternative.

2.3 Project alternatives


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The third alternative has been elaborated in two studies [4,6] and comprises some interestingadvantages of which the substantial lower cost is the most important feature. However, someserious technical disadvantages occur that do not outweigh the advantages. The technical problemsrelate to the gauge difference between the present Linha do Norte (Iberian standard) and themandatory HSL gauge (European standard). It is concluded that because of these interoperabilityproblems this alternative does not comply with the objective of ensuring interoperability ofEuropean rail networks. Therefore this alternative has been disregarded.

The alignment of the North and South entrance in Lisbon is illustrated in the next figure.

Figure 2.2: South (left) and North (right) entrance alternatives

In the North entrance no third crossing across the Tagus River is needed; only when the lineLisbon-Madrid is constructed such a bridge is necessary. Another important difference between thetwo alternatives relates to the higher distance and travel time in the South entrance alternative.

The corresponding travel times and rail fares between all origin and destination stations for allalternatives, including the Reference alternative are presented in table 2.1.

Table 2.1: Travel times (minutes) and rail fares ( price level 2003) for all alternativesSection North entrance South entrance Reference

1

Time (min) Fare () Time (min) Fare () Time (min) Fare ()

Lisbon Porto 75 40 90 36 140 24Lisbon Aveiro 70 35 85 33 109 19Lisbon Coimbra 56 28 71 26 84 17Lisbon Leiria 36 18 51 18 67 14Porto Leiria 50 25 51 20 77 14Porto Coimbra 30 15 30 15 54 12Porto Aveiro 15 14 15 14 38 10


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The above table reveals that the average fare in the alternatives differs from 0,08 per kilometre inthe Reference alternative to respectively 0,11 in the South and 0,13 per kilometre in the Northentrance alternative. This means that a certain level of price discrimination (or yield management)has already been applied in the demand forecast study.

2.4 Scenarios

The use of different scenarios in which future development is captured is important. It is commonpractice to use a High and Low scenario. The scenarios in general will differ in assumptions for:

o Economic growth (on country level and region level)

o Population growth and other demographic trends (on country level and region level)o Transport policy (e.g. road pricing)

The demand forecast study for Lisbon Porto [4] contains only one scenario for the above-mentioned aspects. Consequently it is not possible to present a High and Low scenario; thepessimistic scenario is thus represented by the sensitivity analyses in chapter 6.

The most important assumptions in the demand forecast study are:o Economic growth Portugal: in the period 2003-2010: 2,0% per year; 2010-2020: 2,3% per

year and 2020-2030: 2,0% per yearo Transport policy:

o Fuel price increase of 10%o Increase of parking fees to 5/h in Lisbon and Porto and 3/h in other citieso Increase of bus fee of 5%o Avoidance of competition between HSL and Linha do Norte

2.5 Other assumptions

In order or calculate all costs and benefits, the following additional assumptions are needed:o Construction period: the period 2006-2007 is a preparatory period with some investment in

studies and project management, the actual construction period is 2008-2015o Operational period 2016-2045; an operational period of 30 years.o Economic growth 2030-2045: 2,0% per year.o The price level is 2005; in the CBA constant real prices are used meaning that inflation and


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3 DIRECT IMPACTS

3.1 Introduction

The direct impacts are those economic impacts that directly relate to the project and occur within therail transport market. The following impacts are distinguished: capital expenditures (investment),avoided capital expenditures on the Linha do Norte, operational costs and benefits, travel timebenefits, residual value of the infrastructure and non-priced impacts such as comfort and reliability.

3.2 Capital expenditures and residual value

The capital expenditures needed for the HSL construction are produced by THR. These includeinvestment in substructure, superstructure and stations. The rolling stock investment is not includingin the capital expenditures estimates; this is captured in the operational costs.

In the CBA all costs and benefits are expressed in real constant accounting prices. This means first

of all that costs need to be provided net of taxes (VAT) and also net of inflation. Secondly if marketdistortions occur, the costs are to be corrected using conversion factors. In the case of the HSL inPortugal it is assumed that there are no imperfect markets relevant to the HSL (e.g. construction,energy market etc.); the estimated capital expenditures thus reflect accounting prices.

Table 3.1: Capital expenditures for all alternatives excluding VAT (million , price level 2003, rounded figures)North entrance South entrance

Substructure 3.293 3.514Superstructure 890 1.005

Stations 559 502Total 4.742 5.020Source: THR

The actual period of investment is 2006-2015, whereas in the period 2006-2007 investments areneeded for preparatory studies and project management and in 2008 the actual construction isplanned to start.


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planned investments to further upgrade the line and to solve future capacity constraints are thendisregarded. The estimates for this avoided investment has been provided by REFER.

Table 3.3: Planned investment in Linha do Norte for future upgrade excluding VAT (million , price level 2003)

Section Reference North / South entranceAlverca Vila Franca de Xira 90 26,5Vale de Santarm Mato Miranda 173,4 104,04Mato Miranda Entroncamento 70,1 42,06Alfarelos Pampilhosa 175 90Alfarelos Coimbra B (20 km doubling of track) 193,68 -

Ovar Vila Nova de Gaia 88 88Ovar Gaia (32 km doubling of track) 524,16 -Total 1.314,34 350,60

Avoided investment - 963,74Source: REFER

The avoided investments are, according to REFER, attributed to the years 2006-2008; in 2006already 42% of the saving is realised, in 2007 an additional 48% is saved and the last 10% of thetotal amount is saved in the year 2008.

The residual value of the infrastructure after 30 years of operation is 30% of the initial investment.The results of all calculations, expressed in Net Present Values, are presented in table 3.4.

Table 3.4: NPV (million , price level 2005, discounted for the year 2006)North entrance South entrance

Capital expenditure HSLSubstructure 2.528 2.676

Superstructure 641 678Stations 404 428Total Capital expenditures HSL 3.572 3.781

Avoided capital expenditure Linha do Norte 935 935

Residual value infrastructure HSL 213 214

3.3 Operational costs

The operational costs for the HSL are based on two sources: the railway operational modeldeveloped by THR [7] and the operational unit costs provided by a separate study commissioned by


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o Marketing and saleso Others (10% of the above mentioned items)

A substantial part of the HSL passengers is substituted from the Linha do Norte. This results in areduction of vehicle-kilometres in the Linha do Norte and consequently in avoided operational costs.This benefit has been calculated based on the unit costs provided in the operational costs study [8].

The avoided construction of 52 kilometre doubling of track in the Reference alternative (see table3.3) also leads to avoided rail infrastructure maintenance costs.

The operational costs of the HSL, avoided operational costs of the Linha do Norte and the avoidedmaintenance on the Linha do Norte expressed in NPVs are provided in table 3.5.


Operational and maintenance costs HSL 1.130 1.281Avoided operational costs Linha do Norte 238 242

Avoided maintenance costs Linha do Norte 54 54

The estimated reduction of train services on the Linha do Norte will lead to additional capacity thatcan be used for freight services. In order to determine whether the additional capacity could solve afuture bottleneck, an analysis of the future freight transport market without the project is needed. If

such a bottleneck could be avoided, this free capacity indeed has added value. Such an analysishas not been carried out in the framework of this study.

3.4 Ticket revenues

The HSL ticket revenues are derived from the demand forecast study [4] taking 2016 as startingyear of operation. The forecasted demand in passengers and passenger-kilometres for allalternatives is as follows:

Table 3.6: Passengers and passenger-kilometres all alternatives2016 2025 2035 2045

Passengers (million)Reference 2,47 3,09 3,87 4,44

North entrance 3,75 8,37 11,79 13,70South entrance 3,92 8,68 12,14 14,10


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higher distance in the South entrance alternative. It is clear that ticket fares for the HSL that arehigher compared to the Linha do Norte can be justified. However, the exact amount of the pricedifference is subject to discussion; there will be a tension between commercial goals (revenuemaximization) and social goals (affordability of tickets).

Based on the above presented passenger-kilometres and average ticket price per kilometre, thefollowing net present values for the ticket revenues are calculated:


Ticket revenues HSL 2.575 2.435Avoided ticket revenues Linha do Norte 428 436

3.5 Travel time benefits

The improved accessibility due to the construction of the HSL results in consumer benefits.Travellers are confronted with at least two aspects that determine their choice of travel mode: theactual ticket price and the travel time multiplied by their value of time (VOT). The sum of bothterms is often referred to as the total generalised costs of a trip. The ticket price is already dealt within the previous section; therefore this section concentrates on the travel time benefits.

The high speed rail link will have an impact on both the ticket price (higher price for HSL comparedto conventional rail) and the travel time (lower compared to the Linha do Norte) multiplied by theVOT. This change in generalised costs results is one of the main reason for the forecasted numberof passengers, whereas some previously travelled by car, air, conventional rail, bus and some didnot travel before. It is important to make this distinction in previous travel mode since they need adifferent approach in terms of welfare impact. The passengers that previously travelled by rail willbenefit to the full extend of the travel time reduction. The newly generated passengers and thepassengers substituted from other modes, do account for only half of the benefits. The underlyingprinciple is explained in Annex B.

Furthermore in order to calculate the travel time benefits, the travel time saving on the differentsection between the high speed rail link and the conventional train in the Reference alternative arenecessary. Apart from the station-to-station travel time, the average time to and from the station(access and egress time) needs to be taken into account. The following table provides the totaltravel time savings.


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Table 3.8: Travel time savings between HSL and Reference alternative including access and egress time(minutes)Section North entrance South entrance

Time saving (min) Time saving (min)Lisbon Porto 70 55Lisbon Aveiro 24 9Lisbon Coimbra 23 8Lisbon Leiria 51 36Porto Leiria 52 52Porto Coimbra 24 24Porto Aveiro 13 13

Leiria Aveiro 7 7Coimbra Leiria 3 3

Aveiro Coimbra -2 -2

The next input needed relates to the actual value of the VOT expressed in per hour travel time. Ingeneral this VOT differs per travel purpose, for business travellers time is of more value comparedto a leisure trip to for instance family. Therefore business travellers do have a higher willingness topay for a reduction in travel time. The travel mode is also of influence on the VOT. Travel timesavings by private car is higher valued compared to bus transport. Unfortunately the demandforecast study [4] does not distinguish travel purposes and consequently also does not providedifferent VOTs. The average VOT used in the demand forecast studies is 8,50 per hour (price

level 2003).

There is empirical evidence of an increase of VOT in time. It appears that a correlation existsbetween real income growth and VOT. In general an income elasticity between 0,5 and 1,0 iscommon. In this CBA an income elasticity of 0,67 is applied.

The results in NPV for the travel time benefits are as follows:

Table 3.9: NPV (million , price level 2005, discounted for the year 2006)

North entrance South entranceTravel time benefits 526 406

3.6 Comfort and reliability

Th hi h d il li k ill h hi h f d d d i ll b li bili


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4 WIDER ECONOMIC IMPACTS

4.1 Introduction

This chapter pays attention to the wider economic (or indirect) impacts of the high speed rail linkbetween Lisbon and Porto. In general a lot of discussion exists about the size and the direction ofthe wider economic impacts of infrastructure; as a consequence section 4.2 deals with a shortintroduction to these impacts. In the following sections the wider economic impacts are described in

more detail. Firstly section 4.3 pays in a qualitative way attention to these impacts; subsequently insection 4.4 these impacts are quantified. Finally in section 4.5 the wider economic impacts aretransferred to impacts for the socio economic cost-benefit benefit analysis.

4.2 Theoretical view on indirect impacts

Indirect or wider economic impactsare the consequence of the continued effect of direct impacts onthe economy. For example, infrastructure projects result in a change in accessibility of regions and

will have impacts on production and productivity levels, changes and creation of jobs and onhousing prices and regional image. In the end the impacts on transport (i.e. the accessibilityimpacts) will also have impacts on the labour market, the housing market etc. In Annex C thisprocess is described in more detail.

As direct impacts are passed through the economy, this does not automatic result in a welfareincrease. As a consequence wider economic impacts may only be valuated if these impacts areadditional to direct impacts and can only occur under certain conditions:

If market imperfections(on for example the labour market) are cancelled or decreased. In aperfect working labour market no unemployment would occur as wages balance demand and

supply. In practice this is not the case; unemployment occurs and unemployment levels vary

between regions; so markets are not perfect. A better accessibility can reduce these

imperfections by bringing employees closer to jobs.

If economies of scalefor companiesoccur by decreasing transportation costs between regions.


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If non-rational psychological impactsoccur, in particular on the image of a region. If the image of

region improves due to a project, the impacts on markets may be higher than could be expected

from the accessibility gains.

Although these conditions are common sense in studies on the wider economic impacts ofinfrastructure projects, still many economists have the opinion that indirect welfare gains ofinfrastructure do not exist at all. All impacts are already part of the valuation of the direct impacts ofa project and may not be valuated. If quantified, indirect impacts most times account for at the most30 percent of the direct benefits of an infrastructure project. Consequently from a socio-economicpoint-of-view direct benefits are always the most important benefits of a project and do determine toa large extent the feasibility of a project.

In order to put the indirect impacts in perspective, an overview is provided of ex-post measuredindirect impacts of high speed rail projects in France in Annex D. The analysis shows that manycities and regions benefited from the high speed rail but that economic impacts were less thanexpected in advance. The analysis also shows that impacts are very often site-specific. Businesslocations near to a station do benefit partly at the expense of other locations in a city or a region. Inthe end the HSL mainly caused a redistribution of economic welfare and only a limited economicgrowth for the country as a whole.

4.3 Impacts of improved accessibility

Accessibility impactsThe size of the accessibility changes due to a project determines to a large extent the size of thewider economic impacts of an infrastructure investment. In general the smaller the accessibilitychanges, the smaller are the wider economic impacts and vice versa. To make an assessment ofthe wider economic impacts it is first of all important to make an assessment of the overallaccessibility impacts of the HSL as presented in table 2.1. The travel times with and without the HSLreveal that some stops are better served than others; e.g. Aveiro is an example of a station that is

not so well served by the HSL.

However, these impacts should not be exaggerated as the HSL is not the only accessibilityimprovement between Lisbon and Porto. Without the high speed rail link, travel times by trainbetween Porto and Lisbon will decrease as well. Compared with the present situation travel timesbetween Lisbon and Porto will already decrease from 2h50 to 2h20 as presented in table 2.1.


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Concluding, the high speed rail link will have a positive impact on the accessibility of the cities of thehigh speed rail link in Portugal. However, the total added value of the rail link seems to be partlyrestricted due to the accessibility improvement in competing modes like road transport.

Employment impactsThe high speed rail link between Lisbon and Porto will, to some extent, improve the accessibility ofthe cities with a high speed rail station. As a consequence the competitiveness and the investmentclimate of these cities will be improved as well which can result in more employment and a higherproductivity rates in those cities. The result would be a higher economic growth compared to thesituation without the high speed rail.

However, it should be noticed that many aspects determine the invest climate of a city and region.Besides accessibility also aspects like the quality of the labour market, fiscal policy, prices and

quality of business accommodation do influence the competitiveness of a region. It may beexpected that these aspects also apply to the cities and regions along the high speed rail linkbetween Lisbon and Porto. The experiences in France (see Annex D) show that the availability of ahigh speed rail station has been an important factor to attract companies but were not the one andonly decisive factor for companies to invest in a region served by a high speed rail.

In general the service sector in a country is the most sensitive economic sector for accessibility byhigh speed rail. The high speed rail link between Lisbon and Porto, but also the planned linkbetween Lisbon and Madrid, will be important especially for headquarters of Portuguese companies,

European headquarters of foreign companies, international organizations and international businessservice providers. In Portugal these companies are concentrated in Lisbon and Porto so these citiesmay benefit most from the high speed rail links.

The cities of Aveiro, Coimbra and Leiria may benefit from the high speed rail link between Lisbonand Porto by attracting back offices from Portuguese companies with headquarters in Lisbon andPorto. Besides, not only due to the improved accessibility but also due to the improved image, thesecities could strengthen their position as regional business centres.

As a consequence of the HSL prices of rail estate for locations close to the railway stations mayincrease. However these impacts may be small due to the relative restricted accessibilityimprovement. Like in France the business impacts around high speed rail station may also developat the cost of a lower development elsewhere in the city region. However, this does not imply thatthe cities with a high speed rail station will not be able to attract new companies and newemployment. In general the quality and availability of an office or industrial building, combined with alack of expansion space for a company at its present location are the most determining factors for a


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Portugal as a whole will result. As discussed before the high speed rail may create extraemployment in the service sector, this will mainly generate jobs for medium- and highly educatedemployees.

Besides the impacts on the service sector, also impacts for other economic sectors may beexpected. The impacts of the high speed rail link between Lisbon and Porto on tourism and leisureexpenditures seem to be small. The high speed rail link may increase leisure expenditures in citieswith a high speed rail link but this will mainly be regional redistribution of this kind of expenditures.At the same time it may not be expected that as a consequence of this rail link much more foreignpeople will visit Portugal.

Impacts on the housing marketThe high speed rail Lisbon-Porto will have an impact on the housing market. The rail link may attract

people to a city with a railway station. Just like in France it could be expected that cities like Aveiroand Leiria may become more attractive cities for commuters due to the reduced travel time for withworking in Porto and Lisbon. At the same it becomes more attractive to live in Porto and to work inLisbon or vice versa. The size of this impact will in particular be dependent of the level of service(frequency of trains per day) at the high speed rail link.

As a consequence of the increased employment and the decreased travel times with other majorcities in Portugal more people will be attracted to cities with a high speed rail station andsubsequently housing prices will rise too. However, these impacts are expected to be small.

Differences between project alternativesIn this study the project alternatives vary by having a North entrance in Lisbon or a South entrancein Lisbon, with a third river crossing across the Tagus. The North entrance solution will result inshorter travel times (e.g. Lisbon Porto 1h15 compared to 1h30 in the South entrance). As aconsequence this alternative will have a higher accessibility impact compared to the alternative witha south entrance, and will also result in higher wider economic impacts.

Impacts during the construction phase

The impacts above will take place after the high speed rail link has been completed and inoperation. It should be noted that also during the construction some wider economic impacts mayoccur. First of all the construction could lead to some negative accessibility impacts as aconsequence of the extra delays for rail and road traffic during the construction phase. In the endsome negative impacts on employment and expenditures could result. However, these impacts maybe countervailed by the positive employment impacts (resulting in more expenditures and a highereconomic production) during the construction phase


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to the airport decrease what will result in more passengers and in more employment. It should benoted that this development may happen at the cost of the development at Porto Airport. Theenlarged catchments area can contribute to the competitiveness of the Lisbon Airport in comparisonwith other competing European airports.

The high speed rail LisbonPorto and the high speed rail Lisbon-MadridPlans do also exist for a high speed rail connection between Lisbon and Madrid, along a high speedrail connection between Lisbon and Porto. The direct relations between both projects seem not toostrong, it could be expected that the link Lisbon-Madrid may only have a marginal impact on theamount of travellers on the high speed rail link Lisbon Porto. The added value of the link Lisbon-Madrid for the link Lisbon-Porto is expected to be marginal.

However, the rail link Lisbon-Madrid may increase the central position of Lisbon, having some more

positive employment impacts for Lisbon. Besides the high speed rail between Lisbon and Madridcould result in more visitors from Spain to Portugal and subsequently in more expenditures. Finallythe link could also increase the catchments area of the Lisbon Airport.

4.4 Impacts on GDP and employment

Economic impacts of the high speed rail link have been subject of two separate studies carried outby Universidade Catlica Portuguesa [9,10]. In this section the approach and results of thesestudies is presented in brief.

Construction phaseThe first study [9] provides as assessment of the impacts on employment and activity per economicsector during the construction phase of the high speed rail link. Obviously the construction sector isbenefiting the most of the HSL followed by the service sector.

As mentioned in the previous section, the positive (temporary) employment impacts and increase inproduction during construction will be countervailed by the negative accessibility impacts duringconstruction. Therefore the impacts during construction do not have an impact on national welfareand are not taken into account in the cost-benefit analysis.

Exploitation phaseIn the second study [10] the impact on Gross Domestic Product (GDP) has been assessed. Theintroduction of the HSL provides, though improved accessibility, a potential to increase productivity


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operation the increase in GDP amounts to 0,07%, in 2025 the increase is 0,13%, in 2035 theincrease in GDP is 0,16% and in the year 2045 an increase of 0,18% is estimated.

4.5 Transferring impacts on GDP into wider economic impacts

The impact of the high speed rail link on GDP needs to be taken into account in the cost-benefitanalysis. However, there is a clear risk of double counting since only welfare effects should beincluded.

The forecasted GDP growth due to the HSL is first of all a result of improved accessibility. Theaccessibility gain could eventually be translated into an increase of production and employment inPortugal (see Annex C). Through a decrease of transport cost for commuters, an increase ofproductivity per employee could occur. However, this increased productivity has already beencaptured in the calculation of the travel time benefits and ticket revenues. Therefore it is essential tocorrect the impact on GDP for these direct impacts, in order to avoid double counting of welfareeffects in the CBA.

The resulting indirect economic impacts are summarised in the following table.


3

Wider economic impacts 1.214 1.093

If compared to the travel time benefits and the (net) ticket revenues, the wider economic impactsamount to around 45% of these direct impacts, which is relatively high.


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5 EXTERNAL IMPACTS

5.1 Introduction

Obviously the high speed rail link will have, apart from the already described impacts, an impact onthe environment. In this respect a separate Environmental Impact Assessment (EIA) is conducted,taking into account all relevant effects on environment caused by to the project.

The impacts on environment are valued using social monetary unit costs. However, not allenvironmental impacts can be expressed in monetary terms. The study on environmental strategy[11] together with the respective demand forecast study [5] provides the basis for the calculations inthis section.

5.2 Emissions

Due to the environmental friendly character of high speed rail the negative impact of emissions ofgreen house gases will be decreased. This in this section relates to the substituted passengers fromcar, air and bus transport. Of course the generated passengers will have a negative impact,however overall a socio-economic benefit results. The emissions include SO2, NOx and CO2 gasesand particles (PM).

The monetary unit values, expressed in per passenger- or vehicle-kilometre per travel mode, arederived from the demand forecast study [5]. These values also include the future evolution ofproduction sources for energy in Portugal.

The NPVs for the emission benefits are presented in table 5.1.


Emissions 154 161


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Again the demand forecast study [5] is the base for the actual economic costs per transport modeand the resulting socio-economic benefits.

Table 5.2: NPV (million , price level 2005, discounted for the year 2006)

North entrance South entranceTraffic safety 313 327

5.4 Noise

The high speed rail link will generate more passengers and passenger-kilometres compared to theReference situation. This result in higher noise levels measured in dB (A) and this increased noisepollution is valued negatively by society. It should be noted that this negative impact is limited.

The negative noise impact in monetary terms is estimated by using the ratio between traffic safetybenefits and noise in 2025 as calculated by IDAD and University of Aveiro [12] for the whole HSLnetwork including the lines to Madrid, Faro, Salamanca and Vigo.


Noise -17 -17

5.5 Road congestion

Potentially the HSL could contribute to a reduction of road congestion along the corridor Lisbon Porto. This aspect has not been studied in detail in the demand forecast study [4]. However, basedon the origin-destination figures and the information on congestion, which is centralised in thegreater Lisbon and Porto area, it is concluded that the HSL does not contribute to decreasingcongestion levels in the corridor.

5.6 Other environmental aspects

In the context of the environmental strategy study [12] some other environmental aspects havebeen raised:

o Biodiversity


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6 RESULTS AND CONCLUSIONS

6.1 Total Net Present Value and Internal Rate of Return

In the previous chapters all relevant socio-economic impacts have been described and the netpresent values have been presented. The total cash flow also allows for the calculation of theEconomic Internal Rate of Return (eIRR) and the benefit-cost ratio. The figures are presented in thenext table:

Table 6.1: Total NPV (million , price level 2005, discounted for the year 2006) and eIRR (%)North entrance South entrance

Direct impacts

CostsCapital expenditures -3.572 -3.781Operational and maintenance costs -1.130 -1.281Avoided ticket revenues on Linha do Norte -428 -436

BenefitsTravel time benefits 526 406Ticket revenues 2.575 2.435

Avoided capital expenditures Linha do Norte 935 935Avoided operational costs Linha do Norte 238 242Avoided maintenance costs Linha do Norte 54 54

External impacts

Emissions 154 161Traffic safety 313 327Noise -17 -17

Wider economic impacts 1.214 1.093

Total 862 137Residual value 213 225

Total NPV 1.075 362Total eIRR 7,3% 5,7%Total benefit cost ratio 1 21 1 07


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costs. An important reason for this observation is the fact that a relatively high increase of 62,5% inticket fee compared to the Linha do Norte is introduced for the North entrance ( 0,13 compared to 0,08 per train-kilometre). In case the price increase is more modest, this would clearly attract morepassengers leading to an increase in travel time benefits and a decrease in ticket revenues.

The corresponding annual cash flow values of table 6.1 for the period 2006-2045 are presented inAnnex E.

6.2 Sensitivity analysis

In order to test the robustness of the results, several sensitivity analyses have been conducted. Thisincludes the following changes in parameters:

o Capital expenditure increase of 20%o Capital expenditure decrease of 10% as an assumed saving of a Public-Private Partnership

(PPP) approacho Demand decrease of 20%, which also leads to a decrease in operational costso Value of Time increase of 20%o Wider economic impact decrease of 100%, since the level of wider economic impacts are

subject to heavy debates, the consequences of no impact at all has been analyzed

Table 6.2 summarizes the results of the sensitivity analyses.

Table 6.2: Sensitivity analysis, total NPV (million , price level 2005, discounted for the year 2006) and eIRR (%)North entrance South entrance

NPV eIRR NPV eIRR

Base case 1.075 7,3 362 5,7

Capex +20% 403 5,7 -379 4,4

Capex -10% (estimated savings of PPP) 1.411 8,4 718 6,7Demand forecast -20% 473 6,1 -207 4,5

Value of Time +20% 1.180 7,5 444 5,9Wider economic impacts -100% -140 4,7 -731 3,4

Sensitivity analysis range 403 / 1.411 4,7 / 8,4 -731 / 362 3,4 / 6,7

It is concluded that the North entrance provides rather robust results; only if the wider economicimpacts are totally disregarded the eIRR drops below 5%. If the demand decreases with 20%, the


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account, the likelihood of a combination of +20% capital expenditures combined with a -20%demand forecast is significant. Therefore this combination has also been analyzed, leading to adecrease in eIRR for the North entrance to 4,6% and 3,4% for the South entrance.

6.3 Qualitative impacts and other evaluation criteria

In the previous sections a number of qualitative impacts have been raised. Although these could notbe quantified, they could play a role in decision-making. The qualitative impacts include:

o The value of free train capacity on the Linha do Norte. There is a potential added value incase a future bottleneck for freight services can be avoided or investment to solve thebottleneck could be postponed

o Urban and territorial development. These relate to second and third order impacts in terms ofadditional spending and productivity

o Biodiversity. This relates to a negative impact of the HSL on the biodiversity

In addition aspects which are on a national welfare scale in the CBA estimated to be negligiblecould be important for decision-making. This particularly relates to the (temporary) increase inemployment and productivity during the construction phase.

6.4 Conclusions

Both alternatives are feasible from an economic point of view.The North and South entrance alternatives have positive NPVs of respectively 1.075 million and362 million (price level 2005). The North entrance results in an eIRR of 7,3%, the South entrancehas an eIRR of 5,7%.

Ticket revenues are high, travel time benefits are relatively low.The beneficiaries of the project are the existing and induced train travellers (consumers), the train

operator and society in general due to the positive environmental impacts. It should be noted thatthe calculated ticket revenues are high compared to the travel time benefits; the train operatorrelatively benefits more that the travellers. If the ticket revenues are compared to the operationalcosts, a positive result remains meaning that the HSL train operation is profitable.

Significant wider economic benefits occur, which are however uncertain.The estimated wider economic benefits are around 45% of the direct ticket revenues and travel time


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Other evaluation criteria play a role in decision-making.It is important to acknowledge that the socio-economic cost-benefit analysis is one of the appraisalmethods for policy makers to build their decision upon. Other appraisal techniques like multi-criteria

analysis, cost effectiveness and environmental impact assessment will provide additionalinformation.


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ANNEX A LIST OF SOURCES

The following sources have been used in this report:

1. Guide to Cost-Benefit Analysis of investment projects, Evaluation Unit DG Regional PolicyEuropean Commission.

2. High speed plans for Portugal, article in European Railway Review, Jos Braamcamp Sobral.3. White Paper European transport policy for 2010: time to decide4. Estudo de mercado relativo a futura ligao ferroviria de alta velocidade entre Lisboa e Porto.

Previses de procura e de receitas para novos cenrios de desenvolvimento, VTM Consultores,

Junho 20055. Estudo de mercado relativo a futura ligao ferroviria de alta velocidade entre Lisboa e Porto.

Transferncias modais e avaliao de impactes, para o cenrio I1A e cenrio 3B, VTMConsultores, Agosto 2005

6. Principais concluses do estudo sobre solues articuladas RAVE/REFER, Canal FerrovirioLisboa-Porto, Ministrio das Obras Publicas, Transportes e Communicaoes, Janeiro 2005

7. Operational quantities and operational costs High Speed Lines Portugal, Nota Tecnica 0-GA-0AF-NOT0038-0C, THR, 21 September 2005

8. Analise de OPEX de Alta Velocidade e de Ferrovia Convencional na Linha Lisboa-Porto,

ATKearney, 2 de Junho 20059. Consequncias Econmicas da Investimento na Construo de Rede de Alta Velocidade,

Universidade Catlica Portuguesa, 2005.10. Consequncias Econmicas da Introduo da Rede de Alta Velocidade: O Impacto Sobre a

Eficincia (PIB), Universidade Catlica Portuguesa, 2005.11. Avaliao Ambiental Estratgica da Rede Ferroviria de Alta Velocidade em Portugal

Relatrio Ambiental, IDAD, October 200312. Estratgia Ambiental, IDAD e Universidade de Aveiro, Lisboa, 13 Dezembro 200513. Mega projects and Risk - An Anatomy of Ambition, Bent Flyvbjerg, Nils Bruzelius and Werner

Rothengatter, Cambridge University Press (February 13, 2003)14. Wider economic impacts of the Zuiderzeelijn-connection, based on TNO Inro, Rijksuniversiteit

Groningen, Vrije Universiteit Amsterdam, TU Dresden, 200015. Long term Impacts of the Channel tunnel: methodology and evidence, Vickerman, paper for

international research seminar on the regional development impacts of the Oresund Bridge,p11-12, 1999


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The surface of the coloured areas A, B and C is calculated as follows:

T0 X GC + X (T1-T0) X GC

A B + C

This calculation is known as the rule-of-half, which is a useful approximation to true user benefits.The CBA evaluation guide developed by DG Regional Policy recommends to use the rule-of-halfto calculate user benefits of transport projects.


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ANNEX C THEORETICAL VIEW ON WIDER ECONOMIC IMPACTS

Indirect or wider economic impacts are the consequence of the continued effect of direct impactson the economy. For example, infrastructure projects result in a change in accessibility of regionsand will have impacts on production and productivity levels, changes and creation of jobs and onhousing prices and regional image. In the end the impacts on the transport (i.e. the accessibilityimpacts) will also have impacts on the labour market, the housing market etc.

The figure below describes the impacts on the labour, housing and real estate market in more

detail.

Figure C1 Impacts of a public transport improvement

Accessibility improvement

Transportation costs of

commuters decrease

Transportation costs, like

freight transport andbusiness trips of companies,decrease

Price reduction ofcompany products, resulting

in an improvedcompetitiveness

Increased employerchoice

&Bigger labour pool

Increased market share ofcompanies in region

Increase of productivityper employee

company products

Transportation costs of

leisure trips decrease

Increased leisure choice

Different pattern ofleisure spending


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Impacts on transportation costs of companiesAn improvement of accessibility will result in lower transportation costs; as well for companies as forcommuters. Lower transportation costs will result in lower production costs and also in a price

reduction of the company products. Due to the improvement of accessibility, existing companies (orregions) are able to increase their competitiveness and will be able to increase their market share.At the same time the region becomes more attractive from companies from outside the region dueto its increased competitive advantages. Both will have a positive impact on the demand of servicesin this region and as a consequence also on the labour demand for labour.

Impacts on commuter tripsAn improvement of accessibility will also result in lower transportation costs for commuters (theseare not only lower costs, but could also include shorter travel times or an increased reliability of the

transportation system). As transportation costs decrease, it becomes easier for commuters to find ajob further away, assuming employees have a fixed travel budget. As a consequence lowertransportation costs make it possible for employees to look for a job in a larger area compared withthe situation without an improvement of accessibility. The opposite takes place too. A company canchoose from a bigger pool of employers and will be able to choose better employees resulting in anoverall increase of productivity per employee. Both impacts will contribute to the competitiveness ofthe region where the company is situated.

Impacts on leisure trips

Finally an accessibility improvement will also lower transportation costs for leisure trips. As aconsequence other destinations, most times further away situated, will come into reach for a leisuretrip compared with the situation without the improvement (also assuming a fixed budget for leisuretrips). At the same time a city or a region whose accessibility will be improved due to the publictransport investment may also be visited by people from further away compared with the situationwithout the improvement due to the lower transportation costs. In the end this may also have apositive impact on the production and employment in a region.

As a consequence of the increased competitiveness of a region, resulting in a positive impact on the

production and employment in a region, there may also be an impact on the housing and the realestate market in a region. Assuming a fixed amount of houses and an increased employment in aregion some labour and business migration may take place that would result in higher prices forhouses and real estate.

In this way a process arises in which different markets and impacts influence each other on and on.In the end a new spatial economic equilibrium arises in which the initial direct accessibility impacts


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account in the valuation of the direct benefits (like lower transportation and/or shorter travel times)of a project. As direct impacts are passed through the economy, this does not automatic result in awelfare increase.

As a consequence wider economic impacts may only be valuated if these impacts are additional todirect impacts and can only occur under certain conditions:

If market imperfections(on for example the labour market) are cancelled or decreased. In a

perfect working labour market no unemployment would occur as wages balance demand and

supply. In practice this is not the case; unemployment occurs and unemployment levels vary

between regions; so markets are not perfect. A better accessibility can reduce these

imperfections by bringing employees closer to jobs.

If economies of scalefor companiesoccur by decreasing transportation costs between regions.

Lower costs result in cluster and agglomeration advantages, what could for example result in

productivity gains.

If international4 redistribution of employmenttakes place. If a better accessibility results in the

establishment of companies from abroad, the total employment level will increase.

If non-rational psychological impactsoccur, in particular on the image of a region. If the image of

region improves due to a project, the impacts on market may be bigger than could be expected

form the accessibility gains.

Although these conditions are common sense in studies on the wider economic impacts ofinfrastructure projects, still many economists have the opinion there are no indirect welfare gains ofinfrastructure at all. All impacts are already part of the valuation of the direct impacts of a projectand may not be valuated. If quantified the indirect impacts most times are at the most 30 percent ofthe direct benefits of an infrastructure project, consequently from a socio-economic point-of-view thedirect benefits are always the most important benefits of a project and do determine to a largeextent the feasibility of a project.


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ANNEX D EX-POST MEASURED WIDER ECONOMIC IMPACTS IN FRANCE

Obviously Portugal is not the only European country with plans for high speed rail links. In manyEuropean countries high speed rail lines are already used for many years. Especially in France highspeed trains already operate between Lille, Paris, Lyon and other cities for many years. Impactsstudies have been carried out for many of these high speed rail links. In this annex ex-postexperiences with these links in France are described5. What were the indirect impacts of theselinks? What was the impact on employment, business development, the housing market etc?

The first high speed rail link (TGV) in France was opened between Paris and Lyon in 1981. Due tothis line the amount of passenger between both cities increased by 250 percent between 1980 and1984. This growth was 33 percent substitution for air traffic, 18 percent substitution for road trafficand 49 percent concerned new demand. Afterwards the high speed rail network was expanded tocities like Lille, Marseille, Marseille and Bordeaux. On average 25 percent of the trips in FrenchTGVs are business trips and on average 40 percent are tourism trips.

Impacts on residence choiceExperiences with the TGV show that households are sensitive to the realization of high speed rail

connections when deciding on their residence. As a consequence of the TGV people working inParis are able to live at an acceptable commuting distance. An example is the small village ofVendme6 between Tours and Paris. Before the TGV the commuting time to Paris was 2 hours and20 minutes, due to the TGV the travel time decreased to 42 minutes. The same has happened inthe cities of Amiens, Lille and Arras north of Paris and even in Lyon. Due to the higher level ofservice in these cities commuting developed stronger compared to Vendome.

In Lille the amount of inhabitants has increased as a consequence of the realization of a TGV-station. Although not fully clear it is expected that the city attracts people that are working in Paris,

London and Brussels and that are all connected by TGV from Lille.

The impacts for the prices of housing and real estate are different in studies. Figures differ a lot andvary between no increase and price increase of 35 percent.


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Impacts on employmentThe TGV-network had different impacts on employment

In France the TGV mainly caused relocation of companies within the region with a high speed rail

station. For example Lyon was able to attract companies from cities like Grenoble and Genve. Atthe same time companies concentrated close to the station. The station Part Dieu (TGV Station ofLyon) developed into one of the most important business parks of France. The amount of officespace increased by 43% between 1983 and 1990 due to arrival of the TGV.

It should however be noted that the location was already attractive before the TGV startedoperation. The TGV mainly increased the image of the location and stimulated the market positionof the location. Due to the increased image of the location, it became able to attract largecompanies that were able to attract other companies etc. The increased attractivity of the location

also resulted in rising real estate prices. However, the development at station Part Dieu was nottotally positive. The development in the old city centre of Lyon has come to a halt after the arrival ofthe TGV.

Experiences in France show that especially the regions that are connected with Paris havebenefited from the TGV. Especially with regard to the choice of the place of business of new backoffices the high speed rail links have been very important. For about 15 percent of the new officesthe TGV determines to some extent the place of business. For example in the region of Lyon thenumber of back-offices from companies, especially high-tech companies originating from Paris

has increased. However, these companies have indicated that the high speed rail station was animportant factor, but not the decisive factor for setting-up companies in Lyon. Plans did already existand the TGV subsequently acted as an incentive.

At the same time companies outside Paris have taken advantage from the shorter travel distancesto Paris due to the TGV and were able to increase their competitiveness.

The opposite impact took place as well. As a consequence of the TGV some French companiesdecided to close their back offices in surrounding cities and to extend their office in Paris. Before

the TGV products and services couldnt be supplied in Paris due to the high travel costs. The TGVresulted in lower travel costs, so back offices were not needed any more. The effect took forexample place in Le Mans (between Paris and Nantes) where employment decreased. Theincreased accessibility benefited Paris.

In the end the impact of the high speed rail network for the French cities with a high speed railstation have been lower as expected For example the city of Lille had high expectations from the


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At the same time attracting companies in cities surrounding Paris appeared to be more difficult thanexpected. Le Creusot, situated between Paris and Lyon, hoped to attract a lot of industrialcompanies with its TGV-station. However six years after opening only two companies were situated

around the TGV-station. The same took place in Vendme. It was tried to attract companies by therealization of a high-tech business park. This planned failed to a large extent. Until 2000 the parkwas still very empty.

Finally especially the regions outside Paris seem to benefit from increased tourism. The hotels nearLyon showed in the first years after opening an increase in the amount of staying over. The amountof hotels near the HSL-station of Part Dieu in Lyon increased as the number decreased in the oldcity centre of Lyon.

ConclusionsThe description above shows that the impacts of the TGV network in France varied a lot. Someeconomic sectors, cities and regions benefited, some did not. But in the end the TGV mainlyresulted in a redistribution of economic activities in France, with small overall impacts on nationalscale. This conclusion is shared in other studies. Vickerman7 for example concludes that even for agiant investment such as the Channel tunnel, 5 years after the opening: there are very few and verysmall impacts on the wider economy and it is difficult to identify major developments associated withthe tunnel.


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ANNEX E CBA CASH FLOWS 2006-2045

NORTH ENTRANCE

NPV [ mln 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

Direct impactsCosts

Capital expenditure -3.572 -0 -4 -43 -344 -629 -791 -1.305 -1.120 -600 -150 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Operational and maintenance costs -1.130 0 0 0 0 0 0 0 0 0 0 -66 -73 -77 -92 -106 -108 -110 -114 -116 -118 -125 -127 -129 -131 -133 -135 -140 -142 -145 -149 -151 -153 -155 -157 -159 -161 -163 -165 -168 -170

Avoided ticket revenues Linha do Norte -428 0 0 0 0 0 0 0 0 0 0 -24 -28 -31 -35 -37 -38 -39 -41 -42 -43 -44 -46 -48 -49 -51 -53 -54 -56 -57 -59 -61 -61 -62 -63 -64 -65 -66 -66 -67 -68

Benefits

Ticket revenues 2.575 0 0 0 0 0 0 0 0 0 0 114 146 163 201 213 222 231 240 250 260 270 280 290 300 311 322 334 346 358 371 385 390 395 400 405 410 416 421 427 432

Travel time benefits 526 0 0 0 0 0 0 0 0 0 0 29 31 33 36 38 40 42 44 46 48 50 53 57 60 63 66 69 72 75 79 82 84 86 88 91 93 96 98 101 103

Avoided capital expenditure Linha do Norte 935 431 485 98 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Avoided operational costs Linha do Norte 238 0 0 0 0 0 0 0 0 0 0 13 16 17 20 20 21 22 23 23 24 25 26 26 27 28 29 30 31 32 33 33 34 34 35 35 36 36 37 37 38

Avoided maintenance costs Linha do Norte 54 0 0 0 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

External impactsEmissions 154 0 0 0 0 0 0 0 0 0 0 12 12 12 13 13 14 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 22 22 23 23 23 24

Traffic safety 313 0 0 0 0 0 0 0 0 0 0 24 24 25 26 27 27 28 29 30 31 32 33 34 35 36 37 38 39 40 42 43 43 44 44 45 45 46 47 47 48

Noise -17 0 0 0 0 0 0 0 0 0 0 -1 -1 -1 -1 -1 -1 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -3 -3

Indirect impacts 1.214 0 0 0 0 0 0 0 0 0 0 94 73 99 102 108 104 121 120 116 112 135 131 128 123 119 139 136 132 128 151 146 150 154 187 192 197 202 238 244 250

Saldo 862 431 481 54 -340 -625 -788 -1.301 -1.116 -597 -147 198 203 246 271 278 284 311 317 324 331 361 368 376 384 392 425 434 444 453 489 500 509 519 558 569 579 591 633 646 658

Residual value 213 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.496

Total NPV 1.075 431 481 54 -340 -625 -788 -1.301 -1.116 -597 -147 198 203 246 271 278 284 311 317 324 331 361 368 376 384 392 425 434 444 453 489 500 509 519 558 569 579 591 633 646 2.154

eIRR 7,3%


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SOUTH ENTRANCE

NPV [ mln 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

Direct impactsCosts

Capital expenditure -3.781 -0 -4 -46 -364 -666 -838 -1.381 -1.186 -636 -159 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Operational and maintenance costs -1.281 0 0 0 0 0 0 0 0 0 0 -79 -88 -93 -110 -122 -125 -127 -130 -132 -135 -137 -140 -143 -145 -148 -151 -154 -159 -162 -165 -169 -171 -173 -175 -178 -180 -182 -185 -187 -190

Avoided ticket revenues Linha do Norte -436 0 0 0 0 0 0 0 0 0 0 -25 -29 -31 -36 -37 -39 -40 -41 -43 -44 -45 -47 -48 -50 -52 -53 -55 -57 -58 -60 -62 -63 -63 -64 -65 -66 -67 -68 -68 -69

Benefits

Ticket revenues 2.435 0 0 0 0 0 0 0 0 0 0 110 139 156 191 203 211 219 228 237 246 256 265 274 284 294 304 315 326 337 349 361 366 371 376 380 385 390 395 401 406

Travel time benefits 406 0 0 0 0 0 0 0 0 0 0 23 24 26 28 29 31 32 34 36 37 39 41 44 46 48 51 53 56 58 60 63 64 66 68 70 71 73 75 77 79

Avoided capital expenditure Linha do Norte 935 431 485 98 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Avoided operational costs Linha do Norte 242 0 0 0 0 0 0 0 0 0 0 14 16 17 20 21 22 22 23 24 24 25 26 27 28 29 30 30 31 32 33 34 35 35 35 36 36 37 37 38 38

Avoided maintenance costs Linha do Norte 54 0 0 0 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

External impactsEmissions 161 0 0 0 0 0 0 0 0 0 0 12 13 13 13 14 14 15 15 16 16 16 17 17 18 18 19 20 20 21 21 22 22 22 23 23 23 24 24 24 25

Traffic safety 327 0 0 0 0 0 0 0 0 0 0 25 25 26 27 28 29 30 31 32 33 33 35 36 37 38 39 40 41 42 43 45 45 46 46 47 48 48 49 49 50

Noise -17 0 0 0 0 0 0 0 0 0 0 -1 -1 -1 -1 -1 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -3 -3 -3 -3 -3 -3

Indirect impacts 1.093 0 0 0 0 0 0 0 0 0 0 84 66 90 93 98 95 110 109 105 101 122 119 115 111 107 124 122 118 115 135 131 134 138 167 171 175 180 212 217 222

Saldo 137 431 481 52 -360 -662 -834 -1.377 -1.182 -632 -156 166 169 207 229 235 240 263 271 276 281 312 317 323 329 335 364 373 378 386 418 426 434 442 477 486 495 504 542 552 563

Residual value 225 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.584

Total NPV 362 431 481 52 -360 -662 -834 -1.377 -1.182 -632 -156 166 169 207 229 235 240 263 271 276 281 312 317 323 329 335 364 373 378 386 418 426 434 442 477 486 495 504 542 552 2.147

eIRR 5,7%

Socio-Economic Cost-Benefit Analysis L-P (THR, 2006.01)

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