Agglomeration Benefits of Crossrail



Agglomeration Benefits of Crossrail

Authors

P Buchanan, K Arter, Colin Buchanan, UK; R Meeks, Cross London Rail Links, UK

Description

This paper summarises the work done for on the agglomeration impacts of Crossrail. This has led to a significant change to the UK scheme appraisal guidelines and dramatically improved the economic and financial case for Crossrail.

Abstract

This paper summarises the work done for Cross London Rail Links (CLRL) on agglomeration impacts of Crossrail. This work has led to a significant change to the UK Department for Transport?s appraisal guidelines and dramatically improved the economic and financial case for Crossrail.

Urban rail systems do not tend to perform well against standard appraisal methods. Whilst a scheme may well have a Benefit-Cost Ratio (BCR) in excess of 1.5 when the appraisal is first carried out, increases in costs, delays to opening and falls in benefits often worsen the case. Despite that cities continue to clamour for more metros, which made us wonder whether we were measuring the wrong things.

The theory of agglomeration is shows how by carrying out economic activity in a dense area, production is more efficient. This occurs for a number of reasons:

? a deeper labour market
? greater specialisation in supply
? knowledge spillovers to occur, with expertise being more widely shared.

As a result, agglomeration theory explains why firms desire to locate in a city centre. Despite the fact that rents are higher, commuting times for workers are longer and there is more overcrowding on the transport network in the city centre, firms are willing to incur these costs because they are outweighed by the productivity benefits of agglomeration.

Colin Buchanan (CB) has developed and applied a methodology for the inclusion of agglomeration benefits in scheme appraisal for CLRL. Crossrail is a new railway linking east and west London. It will connect Maidenhead and Heathrow Airport in the west with Shenfield and Abbey Wood in the east via a common tunnel section across central London, operating fast and modern trains with a metro-style service. Seven new stations will be constructed between Paddington and the Isle of Dogs with step-free access and modern facilities.

Crossrail is a very expensive project and although the standard transport appraisal gives a strong case, it has not been sufficient to deliver the funding required to make the scheme happen. However, it is very clear to us that Crossrail is not being built merely to deliver lots of small time savings, Crossrail is really about enabling further employment growth in central London and the economic growth that entails.

There are three steps to the process of calculating the agglomeration effects of Crossrail:

1. Quantification of the increase in central London employment as a result of Crossrail.
2. Valuation of the increase in GDP due to the extra employment ? this is based on the productivity differential between central London and elsewhere.
3. Determination of the impact on the BCR and funding of the scheme.

The paper describes in more detail the methodology that was developed for these stages of the agglomeration calculations. Including agglomeration in the appraisal of Crossrail improves the economic and financial case considerably. The paper will consider the applicability of this approach to other urban rail schemes.

Publisher

Association for European Transport