Environmental Engineering Reference
In-Depth Information
and losses (financial and other) which might arise for other businesses and the wider
public are not a factor in the investment decision. Subject to the availability of funds
a project which is consistent with the company's strategy and offers a satisfactory rate
of return can be expected to proceed and not otherwise.
Public agencies on the other hand have to submit their major proposals to a
standardised and publicly visible appraisal process (Chapter 21). This consists of a
financial and economic assessment of the project's costs and benefits plus an analysis
of all other types of impact, positive and negative. A decision is made on the basis of all
these factors. This can mean that a road scheme designed on the basis of the benefits
it brings to motorists (and which in theory they would be prepared to pay for) may not
be approved because of the disbenefit it brings to others. Conversely a scheme which
would not be justified on the basis of its user benefits may nevertheless win approval
if it delivers other gains.
Private companies - a train or bus operator for example - may seek some element
of public funding for an investment which is not viable commercially but which
brings wider public benefits (e.g. by attracting car users and hence improving traffic
conditions). Alternatively companies may promote a scheme in partnership with one
or more public agencies and jointly seek government funding. Either way the project
will be subject to the public appraisal process and the wider impacts of the proposal will
influence whether it is approved.
Regional policy
As a general principle the rationale for public investment in transport is the same
irrespective of where it happens to be located. (Spatial and other distributional impacts
are considered in the appraisal process, but as ancillary factors.) In theory, investment
is allocated where it brings greatest benefit. In practice however the balance of
expenditure between regions is influenced both by a degree of political expediency
(so that each region receives its 'fair share') and by overarching Government and EU
policy concerning regional economic development.
In the 1960s and 70s transport investment was deliberately targeted at areas such
as Tyneside and Merseyside in the belief that this would promote their economic
development. Subsequent research has demonstrated that the benefits of this were
exaggerated - transport was only influential where a broader range of conditions
necessary for regeneration were satisfied (Banister and Berechman 2000). In terms of
the workings of the economy as a whole the effect of transport improvements is in any
case a two-way affair. Investment which improves the relative accessibility of a city or
region opens up a wider market for its goods and services, but at the same time makes
it more vulnerable to competition from businesses in other areas who may be operating
at a higher level of efficiency. Branch offices, factories and distribution outlets may be
closed in remoter areas and served from main centres of population instead.
Similar arguments apply at the European level even though it has long been a
feature of EU policy that a significant element of its budget should be directed to
transport and other forms of investment in the relatively poor peripheral regions of
the continent. Some of this is disbursed under a 'cohesion' or 'convergence' heading.
However these mainly political and distributional considerations can be seen to
conflict with other policy aspirations concerning the economic performance of the EU
as a whole which would be better served by directing investment to the most populated
and economically successful regions.
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