Ex Post Evaluation of Major Projects Supported by the European Regional Development Fund (ERDF) and Cohesion Fund Between 2000 and 2013

Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Pilot case studies Poland Germany

Written by CSIL, Centre for Industrial Studies (Italy) - In partnership with Ramboll Management Consulting A/S (Denmark) - In association with Significance BV (The Netherlands) - TPLAN Consulting (Italy) January – 2018

EUROPEAN COMMISSION

Directorate-General and Urban Policy Directorate Directorate-General for Regional and Urban Policy Unit Evaluation and European Semester Contact: Jan Marek Ziółkowski

E-mail: [email protected]

European Commission B-1049 Brussel

EUROPEAN COMMISSION

Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Pilot case studies

Gdańsk Urban Transport Project phase IIIA. Poland New construction of the motorway A14, section Schwerin-Nord – Jesendorf. Germany

Directorate-General for Regional and Urban Policy

2020 EN

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Luxembourg: Publications Office of the European Union, 2020

ISBN 978-92-76-17421-9 doi: 10.2776/081712

Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Gdańsk Urban Transport Project phase IIIA

Poland

Project Manager: Silvia Vignetti (CSIL); Scientific Committee: Ginés de Rus, John Nellthorp, Emilie Quinet;

Task managers: Silvia Vignetti (CSIL), Gerard de Yong (Significance), Roberto Zani (Tplan), Emanuela Sirtori (CSIL), Xavier Le Den (Ramboll), Julie Pellegrin (CSIL);

Thematic Experts: Gianni Carbonaro (CSIL), Enrico Bernardis (Tplan), Mario Genco (CSIL), Eric Kroes (Significance), Kim Ruijs (Significance), Barry Zondag (Significance).

A network of National Correspondents provides the geographical coverage for the field analysis.

The authors of this report are Izabela Kaczmarzyk and Chiara Pancotti. The authors are grateful to all the project managers, stakeholders and beneficiaries who provided data, information and opinions during the field work.

The authors are grateful for the very helpful insights from the EC staff and particularly to Mariana Hristcheva, Jan Marek Ziółkowski, Jerome Glantenay, Witold Willak and other members of the Steering Group. They also express their gratitude to all stakeholders who agreed to respond to the team’s questions and contributed to the realisation of the case study. The authors are responsible for any remaining errors or omissions. Quotation is authorised as long as the source is acknowledged along with the fact that the results are provisional. Cover picture source: Authors’ own picture taken on 03/10/2017

Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

TABLE OF CONTENTS EXECUTIVE SUMMARY ...... 5 1. PROJECT DESCRIPTION ...... 11 1.1 CONTEXT ...... 11 1.2 PROJECT OBJECTIVES...... 19 1.3 STRUCTURAL FEATURES ...... 20 2 ORIGIN AND HISTORY ...... 24 2.1 BACKGROUND ...... 24 2.2 FINANCING DECISION AND PROJECT IMPLEMENTATION ...... 25 2.3 CURRENT PERFORMANCE AND OTHER INVESTMENT NEEDS ...... 28 3 DESCRIPTION OF LONG-TERM EFFECTS ...... 32 3.1 KEY FINDINGS ...... 32 3.2 EFFECTS RELATED TO THE ECONOMIC GROWTH ...... 34 3.3 EFFECTS ON QUALITY OF LIFE AND WELL-BEING ...... 35 3.4 EFFECTS ON THE ENVIRONMENTAL SUSTAINABILITY ...... 38 3.5 EFFECTS RELATED TO DISTRIBUTIONAL ISSUES ...... 41 3.6 TIME-SCALE AND NATURE OF THE EFFECTS ...... 41 4 MECHANISMS AND DETERMINANTS OF THE OBSERVED PERFORMANCE . 43 4.1 RELATION WITH THE CONTEXT ...... 43 4.2 SELECTION PROCESS ...... 45 4.3 PROJECT DESIGN ...... 46 4.4 FORECASTING CAPACITY ...... 46 4.5 PROJECT GOVERNANCE ...... 48 4.6 MANAGERIAL CAPACITY ...... 50 4.7 PROJECT BEHAVIORAL PATTERN ...... 52 5 FINAL ASSESSMENT ...... 55 5.1 PROJECT RELEVANCE AND COHERENCE ...... 55 5.2 PROJECT EFFECTIVENESS ...... 55 5.3 PROJECT EFFICIENCY ...... 57 5.4 EU ADDED VALUE ...... 57 5.5 FINAL ASSESSMENT ...... 58 6 CONCLUSIONS AND LESSONS LEARNED ...... 60 ANNEX I. METHODOLOGY OF EVALUATION ...... 61 ANNEX II. EX-POST COST-BENEFIT ANALYSIS REPORT ...... 68 ANNEX III. LIST OF INTERVIEWEES ...... 86 REFERENCES ...... 88

3 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

LIST OF ABBREVIATIONS B/C Benefit/Cost ratio

CBA Cost-benefit analysis DG REGIO Directorate-General for Regional and Urban Policy

EC European Commission EIA Environmental Impact Assessment ENPV Economic Net Present Value

ERDF European Regional Development Fund ESIF European Structural and Investment Funds

ERR Economic Rate of Return EU European Union

EUR Euro FNPV/C Financial Net Present Value of the investment

FNPV/K Financial Net Present Value of national capital FRR/C Financial Rate of Return on investment

FRR/K Financial Rate of Return on national capital FS Feasibility Study

GAiT Municipal Transport Company of Gdańsk Inc. GDP Gross Domestic Product

GHG Greenhouse Gas GPKM Gdańsk Urban Transport Project JASPERS Joint Assistance to Support Projects in European Regions

NPV Net Present Value MZKZG Metropolitan Communication Association of Gdańsk Bay

NUTS2 Nomenclature of Territorial Units for Statistics

O&M Operating & Maintenance

PKM Pomeranian Metropolitan Railway PLN Polish Zloty

SKM Fast Urban Railway TEN-T Trans-European transport networks

ToRs Terms of References VAT Value Added Tax

VOC Vehicle Operating Cost

VOT Value of Time

ZKM Zakład Komunikacji Miejskiej in Gdańsk, currently GAiT

4 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

EXECUTIVE SUMMARY

This case study illustrates the story of the Gdańsk Urban Transport Project – phase IIIA (further called GPKM IIIA or major project), a major infrastructure investment co-financed by the EU over the programming period 2007-2013. More specifically, this is an ex-post evaluation assessing the long-term effects produced by the project and disentangling the mechanisms and determinant factors that have contributed to producing these effects. The analysis draws from an ex-post Cost-Benefit Analysis (CBA)1 and from an extensive set of qualitative evidence, both secondary (technical reports, official reports, press articles, books and research papers) and primary (interviews with key stakeholders and experts have been carried out in the period from September to November 20172).

OVERALL APPROACH AND METHODOLOGY

The overall approach and methodology followed in the evaluation study is briefly recalled hereafter and more extensively in Annex I.

The Conceptual Framework delivered in the First Intermediate Report has been developed to answer the evaluation questions included in the ToR, and further specified and organised in accordance with the study team’s understanding. In particular, there are three relevant dimensions of the analysis:

 The ‘WHAT’: this relates to the typologies of long-term contributions that can be observed. The Team classified all the possible effects generated by transport projects (including road, rail, and urban transport projects) under the four following categories: ‘Economic growth’; ‘Quality of life and well-being’ (i.e. factors that affect the social development, the level of social satisfaction, the perceptions of users and the whole population); ‘Effects related to environmental sustainability’ and ‘Distributional impacts’.  The ‘WHEN’: this dimension relates to the point in the project’s lifetime at which the effects materialise for the first time (short-term dimension) and stabilise (long-term dimension). The proper timing of an evaluation and the role it can have in relation to the project’s implementation is also discussed here.  The ‘HOW’: this dimension entails reasoning on the elements, both external and internal to the project, which have determined the observed causal chain of effects to take place and influenced the observed project performance. To do this the Team identified six stylised determinants of projects’ outcomes (relation with the context; selection process; project design; forecasting capacity; project governance; managerial capacity). The interplay of such determinants and their influence on the project’s effects is crucial to understand the project’s final performance.

The methodology developed to answer the evaluation questions consists of ex- post Cost Benefit Analysis complemented by qualitative techniques (interviews, surveys, searches of government and newspaper archives, etc.), combined in such a way as to produce a project history. CBA is an appropriate analytical approach for the ex-post evaluation because it can provide quantification and monetisation of some of the long-term effects produced by the project (at least those also considered in the ex- ante CBA). However, the most important contribution of the CBA exercise is to provide a

1 Data, hypotheses and results are discussed in Annex II. 2 See Annex III for a detailed list of interviewees.

5 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 framework of analysis to identify the most crucial aspects of the projects’ ex-post performance and final outcome. Qualitative analysis on the other hand is more focussed on understanding the determinants and causal chains of the delivery process as well as to assess effects that may be difficult to translate in monetary terms.

MAIN PROJECT FEATURES

The project is located in the northern part of Poland, Pomerania Voivodship, in the city of Gdańsk, which is an important Baltic Sea port and TEN-T Core Network Urban Node. The Gdańsk Urban Transport Project – phase IIIA concerns the construction of 3.35 kilometres of a new tram line in the Gdańsk city district of Chełm. The new tram line is a continuation of the tram connection between the city centre and the Southern districts of Gdańsk, which were previously served by bus transport only. Further to the extension of the line, the project also includes the construction of Park-and-Ride and Park-and-Bike facilities, the reconstruction of 12.06 km of existing dual track tram network as well as purchase of 35 new tram cars and reconstruction of the old tram depot. It is therefore a major investment affecting the entire public tram system and with benefits spreading over the entire network of the municipal public transport system. The project involved a total initial investment of EUR 134.3 million, in nominal prices, 61% of which co-financed through the ERDF. The remaining investment cost was covered by local public contribution (38.84%, including 20.19% covered by the city budget and 18.65% by the Municipal Transport Company of Gdańsk). The preparatory works were undertaken between 2007 and 2009 and the construction phase took place between 2009 and 2012, while the operational phase started in 2013.

In the last century and beginning of the present one, an unsatisfactory quality of public transport infrastructure and service has led to a decline in its use, with effects on traffic congestion leading to negative effects on level of emissions, noise and safety level. To improve such unsatisfactory situation, since the late Nineties the City administration developed a wide urban transport programme ─ the Gdańsk Urban Transport Project (GPKM) ─ with the ultimate aim of reversing this trend. However, it was not until the Polish accession to the EU that an intensive investment programme was put in place to implement the GPKM.

The implementation of such programme is being carried out in phases, reflecting the evolution of the needs and objectives of the city. The first phase (2002-2003) included diagnostics of transport, set task for future years and rebuilt of five sections of the tram track infrastructure in the city. Under Phase II (2004-2008) the tram line to Chełm district was constructed together with modernisation of some parts of the network as well as purchase of the rolling stock suitable for different gradients. In 2007 Phase IIIA was launched. This case study focuses specifically on this phase as a self- sufficient unit of analysis. After the implementation of Phase III, the City of Gdańsk continued its public transport development policy and further initiatives were planned to address the spatial development of the city.

PROJECT PERFORMANCE

Based on the different findings produced by the project analysis, the final assessment of the project performance is presented hereafter, along a set of evaluation criteria.

6 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Project relevance and coherence The project was relevant in the context where it was implemented and is in line with the relevant policy goals reflected in strategic documents at different institutional levels (European, national, regional and local). To face an increasing urban road traffic congestion, in synergy with other parallel initiatives, the activities covered by the project under assessment were expected to contribute to encourage the residents of Gdańsk to shift from individual vehicles and buses to tramway. Although this effect cannot be precisely measured in quantitative terms due to lack of data on modal split, it shall be recognised that the total number of passengers using public transport service (bus and tram) has increased in the last years at a faster pace than the population growth. Considering that the supply of public transport services has shifted in favour of more tram lines, and since no bus congestion is observed, it is reasonable to think that a shift of demand from bus to tram did materialise.

The project components are coherent with the stated project objectives, i.e. providing more efficient, comfortable and environmentally friendly public transport connection for Gdańsk’s residents ─ especially those located in the southern districts. Also, the project is consistent with the other phases of GPKM, in line with a structured prioritisation system underpinning the implementation of the entire investment strategy. Project effectiveness

Overall, the project achieved the expected objectives. The different effects generated by the project are briefly presented in what follows:

 The project generated a positive economic return due to cost savings for passengers, reduction in accidents, including injuries and fatalities, reduction in externalities due to the change to a cleaner mode of transport. All these benefits have been quantified in the ex-post CBA. The analysis indicates the Economic Net Present Value of the project in the baseline case amounts to EUR 408.2 million, with an internal rate of return of 17.7%. The risk analysis indicates that there is an almost nil probability for the ENPV to be less than zero and a probability of nearly 50% that the ENPV is less than the reference one. Such results confirm that the project has a positive socio-economic impact and it is not subject to high risk as future evolution. In fact, even with variations of critical variables in a negative direction, the economic performance of the project remains positive in 99.7% of the cases.  A positive effect on the service quality is also recognised, as evidenced by the results of the satisfaction surveys3 undertaken by the Economic Policy Unit of the City administration amongst Gdańsk citizens and the interviews with the stakeholders. As a matter of fact, the combined effect of the modernisation of some sections of the network with the purchase of new modern tram cars increased the journey comfort, allowing for smoother movement of vehicles, more comfortable seats and display of passenger information system.  Some negative effects in terms of noise and vibrations were reported by nearly 200 inhabitants living close to the newly constructed tram loop.

3 A number of surveys undertaken by the City of Gdańsk, or on its request, are worth mentioning including the report Postrzeganie miasta oraz zmian rozwojowych zachodzących w mieście przez mieszkańców Gdańska (Perception of the city and occurring development changes by the Gdańsk inhabitants) dated 2014; the survey Barometr opinii mieszkańców Gdańska na temat wybranych problemów miasta i polityki lokalnej (Gdańsk citizens opinion barometer on selected city issues and local policy) dated 2015; the surveys Quality of living in Gdańsk carried out annually between 2009 and 2016.

7 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Although overall satisfied with the investment and confirming its relevance, some inhabitants are annoyed ─ especially at night ─ by noise and vibrations caused by the tram loop which is just few meters from their apartments. These negative effects are anyway limited as compared to the previous mentioned effect on cost saving for passengers having a wider reach.  The expansion of the network towards the southern part of Gdańsk represented a considerable improvement in connectivity and territorial cohesion, which also resulted in an overall increase in the real estate offer in the areas adjacent to the newly constructed tram section.  Due to the replacement of old trams with new low-floor rolling stock facilitating elderly people and disabled to use the service, the project has also had a positive impact on social cohesion by enabling disadvantaged groups to more easily access the tram service.

Project efficiency Thanks to the good planning capacity and project design, the project’s construction was completed on time and within budget. The financial sustainability has been assessed for both the city – on the basis of the city of Gdańsk financial forecast for 2017-2045 – and the operator – GAiT (former ZKM) – by adjusting the ex-ante financial projections on the basis of 2009-2016 data. The financial sustainability is guaranteed by compensation payments from the City to GAiT, which are part of the existing public service contract valid till 2030 for trams. As a matter of fact, the ticket revenues, representing 54% of public transport expenditures in 2014-2015 ─ significantly higher coverage than other European cities ─ are not enough to cover all the costs. The ticket revenues are however expected to increase over the year and in 2034, close to the last year of the project, they will represent 74% of ZTM expenses. This means that the financial burden on taxpayers will progressively decrease in the future. EU added value

The inclusion of the Gdańsk Urban Transport Project – phase IIIA in the ‘Infrastructure and Environment Operational Programme (2007-2013)’ ensured the necessary financial resources to implement the project. Without such support the project would have been probably delayed and reduced in its scope. More generally, it can be stated that the implementation of an intensive transport investment programme such as the GPKM was not considered possible without the financial support of the European Commission. In order to ensure continuity in the implementation of the subsequent phases of GPKM, envisaging further modernization of the network as well as its expansion towards the periphery, the EU support is considered still needed and essential to provide a quality and affordable public transport service not only in the city center but also in Gdańsk peripheral districts. Moreover, it is worth noting that the project benefitted from JASPERS assistance which helped the City of Gdańsk in the preparatory phase, especially in relation to the demand analysis. Hence, the role of JASPERS is also part of the EU added value as it helped the beneficiary to streamline the forecasting process by introducing more realistic expectations on demand, and to suggest good practices drawing from existing EU projects of similar nature. In particular, JASPERS' experts provided a recommendation related to the service operation, i.e. the introduction of tariff integration, which was seriously taken into account by the city administration to improve the existing ticketing system. Nowadays, passes are available which allow passengers to use one ticket for

8 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 services managed by SKM, PKM and ZTM in the city of Gdańsk and ZKM in Gdynia and Sopot, which are two cities in the metropolitan area of Gdańsk.

MECHANISMS AND DETERMINANTS

In terms of mechanisms and determinants explaining the project performance, a number of findings can be drawn from the project assessment.

 The first finding is that the institutional, socio-economic and cultural context played a relevant role in the project’s success. The context characterized by a significant residential growth in the southern districts, leading to an increase in centre-periphery transport flows, was highly positive for the project. The steady growth of tourists and the planned European Football Championships EURO 2012 were additional context factors which supported the project need. Finally, the project benefited from a favourable institutional context. As a matter of fact, the stability at the managerial level of the City administration facilitated good decision-making capacity, long-term vision, and enabled the completion of projects such as the GPKM, which are planned in different stages.  The success of the project was also largely due to its accurate planning. The City of Gdańsk uses a prioritisation mechanism ─ based on constant monitoring of the technical status of the network vis-à-vis city development directions and citizen’s needs ─ to define each phase of a wide GPKM programme. This together with the involvement of skilled professionals played a key role in the definition of the project.  The well-defined roles and responsibilities of the different transport and government institutions and their experience in the transport sector within the Gdańsk municipality also influenced positively the project’s outcome.  Finally, a minor negative aspect of the project performance can be seen in a small group of citizens' claims which remained largely unheard, despite the public consultation process, which took place as required by the law. At the time of design and environmental impact assessment proceeding, nearly 200 citizens living close to the newly constructed tram loop asked to move the tram tracks a bit further from the noise barriers so that the inconvenience resulting from the noise made by trams would substantially be reduced. However, due to the advanced stage of the project application process, the design of the tram loop was not changed but noise barriers and constant monitoring of the noise level were assured as mitigation measures.

CONCLUSIONS

In conclusion, the Gdańsk Urban Transport Project – phase IIIA represents a good example of infrastructural project which managed to deliver all the expected benefits at the expected time and costs. Actually, the project was efficiently implemented, the service is operated as expected and the users are overall satisfied with the project. Just minor remarks were pointed out by some stakeholders for inconvenience related to noise and the level of maintenance of the tram network and stops which is to some extend considered less than what they would have expected. The positive performance of the project was achieved mainly thanks to the adoption of a wide and long-term plan, ensuring a joint analysis of local transport needs and good inter- modality, which in turn led to an efficient solution. The local authorities played a crucial role in this respect, by undertaking a broader view in the project definition, thus ensuring the maximisation of the project’s impact. That said, it must be acknowledged that the

9 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 future performance of the project is subject to possible changes due to external factors. For instance, a positive push could arrive from the full integration of the ticketing system in the metropolitan area of Gdańsk. On the contrary, the introduction of new services such as the new PKM railway service to the Gdańsk airport and the hinterland might undermine the effectiveness of GPKM IIIA in the future as some passengers will be able to reach the city centre directly, without using the tram.

10 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

1. PROJECT DESCRIPTION

The project ‘Gdańsk Urban Transport Project – phase IIIA’ (CCI2012PL161PR007) is a stage of the development and implementation of a wider initiative named Gdańsk Urban Transport Project. This was defined and planned late 1990’s early 2000’s to modernise the existing public transport system, focussing on the tramway network as a backbone of the transit route network and services. The initiative was overall conceived to rehabilitate the existing infrastructure and rolling stock and support integrated transport and land use developments to keep public transportation competitive in a fast growing socio-economic context dominated by the increase in the motorisation index. The implementation of the Gdańsk Urban Transport Project started in 2002 with the works relating to its first phase and continued until 2015 with the completion of the third phase. A fourth phase is currently at the development stage. The GPKM IIIA concerns the construction of a 3.35 km new tram line, interconnecting the Gdańsk city district of Chełm with the interchange node "Nowa Łodzka" (currently Łostowice - Świętokrzyska) at the intersection between Nowa Łódzka (currently Havla) and Świętokrzysta streets. The new tram line is a continuation of the tram connection between the city centre and the Southern districts of Gdańsk, which were previously served by bus transport only. Further to the extension of the line, the project also includes the construction of Park-and-Ride and Bike-and-Ride facilities, the reconstruction of 12.06 km of existing dual track tram network as well as purchase of 35 new low floor tram cars and reconstruction of the tram depot. The project cost amounts to EUR 134.3 million in nominal term.

This section contains a brief description of the project. The socio-economic context, the target population and key structural features of the infrastructure and service delivered are outlined in order to give a general description of the project context and objectives.

1.1 CONTEXT The project is located in the city of Gdańsk, capital city of the Pomerania Voivodship (northern Poland) and an important Baltic Sea port and TEN-T Core Network Urban Node. Gdańsk is part of the Trójmiasto - Tricity metropolitan area, also including the cities of Gdynia and Sopot. The area has a total population of about 750,000 inhabitants (mid-2017). Gdańsk metropolitan area is considered to be a gateway to Eastern and Central Europe. Due to its location on the crossing of international road, railway and maritime transport networks and thanks to an increasing volume of infrastructure investments the city has become a relevant European multimodal node4.

4 Gdańsk / Tri-city is located at the crossing of the following maritime, land and air routes of international and national importance:  Motorways of the Sea: Gdynia – Karlskona and Gdańsk – Stockholm;  A1 motorway (E75) leading from Gdańsk through Tczew, Toruń, Łódź, Pyrzowice and Gliwice towards Czech Republic through the border in Gorzyczki and links with Czech D1;  Express road S7 (E77) from Gdańsk through Elbląg, Warsaw, Katowice and Rabka towards border with Slovakia;  Express road S6 (E28) from Gdańsk, through Słupsk, Koszalin to Szczecin and German border;  Railway lines E65/CE65: eastern branch running from Gdynia, through Gdańsk, Warszawa, Zawiercie, Katowice to the border with Czech Republic in Zebrzydowice and the central branch running from Gdynia through Gdańsk, to Katowice;  Gdańsk Lech Wałęsa Airpot of domestic and international relevance.

11 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 1. Polish regions and Transport network in Tri-city

Source: www.AnnaMap.com and http://www.staypoland.com/ The population of the city of Gdańsk as of December 2016 amounted to 463,754 inhabitants, making it the largest city in the Pomerania region. Gdańsk has historically been and still is an important economic, science, historical, cultural centre and popular tourist destination. As an example, Gdańsk is today the largest academic centre in northern Poland, with 23 higher education institutions totalling 100,000 students and over 26,000 graduates per year. As of 2015 Pomorskie Voivodship produced approximately 5.8% of the national Polish GDP. The figure below shows the trend in the GDP growth between 2010 and 2015. In line with the national trend the region has registered a constant increase of the GDP value since 2013.

Figure 2. GDP in Poland and Pomorskie Voivodship (in mln euro)

Source: own based on data from GUS (Central Office of Statistics) The increasing number of registered economic entities shows that Gdańsk is one of the most dynamic economic districts in Poland.

12 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 3. Economic activity in Gdańsk (number of registered economic entities in the whole city of Gdańsk)

Source: own based on data from GUS (Central Office of Statistics) The city’s growing economy mainly relates to the pillars of the regional industry, namely maritime, refineries and food sectors, and high technologies, the latter segment covering electronic, Information Technologies, pharmaceutical and biotechnology activities. Tourism is also a relevant economic activity in the area, due to the historical character of the city, which is over 1,000 years old. The city territory presents many second World War memorials; it hosts the Gdańsk shipyard and European Solidarity Centre and it is also home of prominent scientific and cultural institutions; all these attracting visitors from the country, Europe and worldwide.

The following figure shows the annual number of overnight stays in Gdańsk from 2005 to 2016. It is noticeable that in 2012 the number of tourists visiting the city increased substantially, which is an effect of European Football Championships Euro 2012.

Figure 4. Overnight stays in Gdańsk

Source: own based on data from GUS (Central Office of Statistics) The overall positive economic conditions are also reflected in the monthly average salary of the city employees, which has also constantly increased between 2010 and 2015. This was equal to 4,992 pln/1,188 euro (in 2015) representing the highest in Poland.

13 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

All these elements make Gdańsk an attractive place to live, which is proved by the statistic indicators relating to population and migration.

Figure 5. Percentage change in population of Gdańsk in the context of other selected Polish cities, Pomorskie region and the whole country

Source: Authors based on data from GUS (Central Office of Statistics) Actually, Gdańsk is experiencing slight population growth, with both a natural increase and a net migration from Poland and other countries yielding a positive value in the region, especially in the last 4 years.

Figure 6. Natural demographic growth rate and migration rate in Gdańsk between 1998-2016

Source: Authors based on the data from GUS (Central Office of Statistics) It shall be noticed that the city inner migration scale between 1998 and 2016 confirms that the southern districts of Gdańsk are the ones with highest newcomers. The green area presented in the figure below represents the district directly affected by the highest population growth, where also the Gdańsk Urban Transport Project, GPKM III has been implemented and is nowadays in operation.

14 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 7. Statistics on Gdańsk districts’ population growth in 1998-2016

Source: Socio-economic trends of Gdańsk Compared to the rest of the country, Pomorskie and Gdańsk in particular have a relatively young age structure and a low dependency ratio. However, there is a growing share of elderly people in the social structure of the city and the number of people at the pre-working age is decreasing.

In terms of spatial and socio-economic context, the configuration of Gdańsk reflects the dominant socio-economic functions of the city. The North-Eastern part includes the port and industrial area. The Northern segment is dominated by housing and service activities. The Western side is dedicated to green areas and forests; the city airport is also located in this area. The Southern part of the city, where the major project is in operation, presents typically residential functions. An overview of the city of Gdańsk showing its territorial specialisation and planned growth poles is presented in the figure below. The planned developments are in line with the current functional patterns.

Figure 8. Gdańsk growth poles

Source: http://www.brg.gda.pl/aktualnosci/studium/51-projekt-uwarunkowan-i-kierunkow-zagospodarowania- przestrzennego/411-funkcje-dominujace-w-nowym-studium Note: green: forests and parks; Pink: housing and services areas; Light brown: real estate areas; Violet: port and industry and service areas; Yellow: agriculture areas

15 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

A relevant geomorphologic feature of the city is its distinction between two land terraces: the lower terrace on the North-Eastern side of the city with the access to the maritime port and the upper terrace on the South-Eastern side including the residential areas in the South. They are characterised by a 5-6% difference in the gradients which affects the public transport system, especially the tramway network, as appropriate technical solutions are required to operate the vehicles on such inclinations.

At the time the feasibility studies for the Gdańsk Urban Transport Project were prepared in early 2000, the city of Gdańsk was experiencing significant economic growth (in line with the overall development of the whole Polish economy), associated with a sustained growth in the motorisation index. This was gradually causing a decline in the patronage of the public transport system consisting of tram and bus services (see figure below).

Figure 9. Socio-economic and operational context of the GPKM (1998 and 2016)

Source: Authors based on data from GUS (Central Office of Statistics) and ZTM. Notes: * lines refer to the scale on the left; columns refer to the scale on the right; ** data on GDP for Gdańsk region as well as the tram and bus service operations are available only from year 2000, the number of public transport passengers is only available for 1998 and then from 2005 onwards.

In 1998 the yearly passengers of the public transport system in Gdańsk were about 180 million. In 2016 after the implementation of three phases of the Gdańsk Urban Transport Project5 the total number of passengers (about 174.5 million, i.e. -4.7%) is below the level of 1998. However, the gradual modernisation of the tramway network, accompanied by a restructuring of the public transport system with a gradual replacement of bus operations with tramway services, has significantly counterbalanced the negative impact on patronage due to the economic growth and motorization. This consideration is of particular relevance if compared to an overall constrained growth in the population of the city, passed from 458,998 in 1998 to 463,754 in 2016 (i.e. 1% increase). Public transport in the city of Gdańsk is nowadays organised and managed by the City Transportation Office (ZTM - Zarząd Transportu Miejskiego w Gdańsku). The

5 Namely: phase I; phase II and phase III (including IIIA, IIIB and IIIC).

16 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 public transport in Gdańsk includes buses, trams, water trams, urban railway - Szybka Kolej Miejska (SKM) and metropolitan railway - Pomorska Kolej Metropilitalna (PKM)6.

Figure 10. Public transport in Gdańsk

Buses Water tram Tram RAIL Public Private Public Private Public Public Arriva Bus, P.A. Gryf, Gdańsk Fast Pomeranian PKS Roki-Trans, Waterway Urban Metropolitan Gdańsk Angelus, (Żegluga Railway Railway JurexBus and Gdańska) (SKM) (PKM) other Source: Authors The sector is dominated by ZTM Gdańsk. ZTM operates 11 tram lines and 83 bus lines including 11 night bus lines. The fleet is composed of both standard and low floor vehicles. 75% of the tram cars are low floor, whereas all buses are low floor. In 2012, 464.5 km of public transport routes were in operation, comprising 408.7 km of bus routes and 56.2 km of tram tracks (including the newly constructed tram section part of this project; on these routes and tracks a total of 1,106.2 km of bus service lines and 156 km of tram service lines were operated).

The section constructed as part of the project under assessment is currently served by 4 tram lines7. Services are operated every 2-3 minutes in the peak hours and every 6-10 minutes in the remaining hours. The lines are directly interconnected to the main train station (Gdańsk Główny), as well as to the North- Eastern part of the city (Jelitkowo, Oliwa), and to the North-Western side of Gdańsk (Nowy Port). The tram also allows interchanging with the Fast-Urban Railway (SKM) and metropolitan railway line (PKM), both serving traffic in the metropolitan area. The latter system is also interconnected to the Gdańsk airport. The scheme of the tram services is presented below. The section between Łostowice Świętokrzyska and Chełm Witosa loops, newly constructed as part of the major project under assessment, is marked with light red colour.

6 Gdańsk is served by an extensive public transport system, articulated around the following backbones: 1) the SKM Fast Urban Railway, linking Ustka to Kościerzyna though 84 stations (of which 16 in Gdańsk) with at least 6 trains at peak hour; 2) the Gdańsk tram network; and 3) the Pomeranian Metropolitan Railway (PKM) linking Kościerzyna - Kartuzy - Gdynia Główna - Gdańsk Główny through 33 stations (of which 11 in Gdańsk). SKM, PKM and the Gdańsk tram network are connected in Gdańsk Główny, Gdańsk Wrzeszcz and Gdańsk Oliwa. All three are complemented by a dense bus system service network. 7 Lines number 2, 4, 6 and 7 – (between Łostowice Świętokrzyska – Chełm Witosa loops)

17 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 11. Tram network in Gdańsk

Source: ZTM website

18 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

1.2 PROJECT OBJECTIVES As previously mentioned, at the time the project was implemented, the City of Gdańsk was suffering from increasing urban road traffic congestion due to a growing motorisation rate and a low quality and effective public transport system. Gdańsk was one of the most congested cities in Poland, registering an overall decline in the use of public transport since already a decade, with negative effects on the level of emissions, noise and safety. Whilst the increase in the motorization rate was mostly a consequence of the economic development, several problems were affecting the public transport system in Gdańsk, which made this transport mode not enough attractive and competitive to contrast the increase of individual motorised transport. The main problems affecting public transport in Gdańsk, and particularly the tramway system were the following:

 The tramway network was not segregated from the road, which represented, particularly in the most congested roads, a critical safety risk as well as a capacity bottleneck limiting the possibility to increase tram operations due to the numerous interferences between private road traffic and trams;  The rolling stock was outdated, which affected the overall attractiveness of the service. Before GPKM IIIA was implemented only 8% of the tramway cars in operation were low floor which represented an accessibility barrier for passengers with reduced mobility and elderly people8.  The largest part of the tramway fleet was not suitable to be used on lines presenting 5%-6% inclination. This represented a critical element for the expansion of the tramway network in the Southern part of the city, where residential areas were under development. At the end of April 2010, among the 120 tram cars owned by the operator, only 16% could run on the tram lines in the so-called "Upper terrace" of Gdańsk. Without the purchase of new tram cars the tram operator would not have had suitable rolling stock to operate on the extension of the line from Chełm to Nowa Łódzka (Havla), subject of the major project under assessment.  The public transport system in the city was finally suffering from the lack of intermodal solutions including poor integration with other transport modes (i.e. lack of bike & ride and park & ride facilities) and no integrated tariffs with other public transport systems (i.e. suburban and regional railways).

In continuity with the previous phases, GPKM IIIA was conceived to contribute addressing the above needs in order to help achieve the strategic objective of enhancing the attractiveness and the degree of utilisation of the public transport services in Gdańsk, which in turn produces positive effects in terms of environmental sustainability and traffic safety. As such the project includes different components ranging from extension of the existing network to restructuring works of the lines already in operation as well as procurement of rolling stock to be used on all the lines. The different project components are further discussed in the following section. With respect to the project objectives, it shall be underlined that the project was expected to improve the overall accessibility to the city not just for the residents but also for visitors. At the time when the project was implemented, the

8 Data collected by the Municipal Transport Chamber of Commerce and published in the report "City Communication in Figures”.

19 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 flow of tourists was expected to boost with Gdańsk being one of the venues of the 2012 European Football Championship.

Given the project objectives, it is noticeable that the major project and the wider public transport development programme in which it is included, are coherent with the EU urban transport policy at the time of project implementation. This policy in fact aimed at shifting the road transport (cars and buses) towards more environmentally friendly modes, such as trams and reducing the air pollutions9. The project is also in line with strategic documents relevant at national, regional and local levels10 and consistent with other interventions carried out in the same field such as the other phases of GPKM and other urban transport projects listed in box 2 of Chapter 2.

Albeit representing a phase of a broader, multi-annual investment scheme, the major project was deemed an independent functional, technical and financial unit of analysis by the entities involved in its preparation, including the City of Gdańsk, ZKM (Zakład Komunikacji Miejskiej in Gdańsk, currently GAiT), and JASPERS (the role JASPERS is further discussed in the below sections). Among the other phases, the GPKM IIIA represents the most relevant one in terms of impact on the public transport system.

On the top of that, it is important to clarify two elements that underpin the present analysis. First, there are no disaggregated data distinguishing between bus and tramway services. Indeed, the public transport system is covered by one ticketing system which prevents collecting separate data on the different types of services. Nevertheless, the yearly total number of passengers using public transport services manged by ZTM (bus and tram) is available. Hence, some assumptions, validated by the infrastructure operator, have been adopted to estimate the modal split. Second, given the scope of the project, which includes not only the 3.35 km of line extension but also the purchase of new rolling stock and the rehabilitation of several lines (12.06 km), a network approach has been adopted as done in the ex-ante assessment. In the view of the complex and articulated structure of travel behaviour and demand patterns in urban areas, this approach is considered correct. The available historical data and statistics on the public transport operations have been used in this ex-post assessment to adjust the assumptions from the previous ex-ante studies and analysis in order to elaborate the best reliable estimates for the ex-post CBA (see Annex II for more details on assumptions of specific items).

1.3 STRUCTURAL FEATURES The figure below shows the location of the works implemented as part of the Gdańsk Urban Transport Project - Phase IIIA.

The total scope of the project includes five components also represented in the map at Figure 15.

9 See for example the European Commission White Paper Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system, COM/2011/0144 final 10 At national level, the project is in line with the Transport Development Strategy (2007–2013) which includes an objective of “Territorial integration” intending to create an integrated transport system, particularly through the development of urban tramway networks. At regional level, the project is fully coherent with the Voivodeship of Pomerania Regional Development Strategy for Transport for the years 2007-2020 which focuses on improving the public transport attractivity and safety, through the use of environmentally-friendly solutions. This means, in particular, the development of the share of rail transport in Gdańsk. Finally, at local level, the project is in line with the Gdańsk Development Strategy to 2015 which includes the following objectives: improving the street network, improving the traffic flow conditions, improving connections with the hinterland of the city, improving the traffic safety, improving the impact on environment, increasing the efficiency of public transport.

20 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

 Component A1 (red --- on the map): Infrastructure - construction of a tram line in the Southern district of Gdańsk from Chełm to „Nowa Łódzka” (currently Łostowice - Świętokrzyska), of total length of 3.35 km, including 6 new stations (at about ~450 m interval on average), as well as Park&Ride (P&R) and Bike&Ride (B&R) facilities. The tramway tracks were constructed adopting the ballast surface method with the crossings made of asphalt concrete and rubber slabs, on concrete sleepers with vibroacoustic separators and mixed profile tracks: rail and tram (to extend their use resistance). All the six tram stops constructed on the route are roofed and equipped with the passengers’ information boards and protectors of proper pedestrian traffic against collisions with vehicles. The P&R and B&R facilities have been developed in line with the specifications defined for people with reduced mobility. The owner of the infrastructure (including parking facilities) is the City of Gdańsk;

Figure 12. New tram line and integration node at Łostowice-Świętokrzyska loop

Source: Authors  Component A2: Rolling stock - purchase of 35 new trams. The most relevant aspect was to allow the rolling stock to operate on lines presenting a 5-6% inclination. Low floor vehicles have been procured to serve the needs of the people with reduced mobility. Each vehicle has a total number of 254 seats. Trams are equipped with heating and air-conditioning facilities, and with induction engines of alternating current power. The owner of the rolling stock is GAiT (former ZKM w Gdańsku Sp. z.o.o.), the in-house public transport operator, 100% owned by the City of Gdańsk;

21 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 13. New rolling stock

Source: Authors  Component B (red circle on the map): Rolling stock maintenance – modernisation of the Wrzeszcz tram depot. The modernisation of the depot included reconstruction of the existing track infrastructure, extension of the parking space, reconstruction of the traction system, demolition of one building, reconstruction of the depot building, tramway wash system (equipped with environmentally friendly water circulation), replacement of entrance gates, modernization of the public spaces, reconstruction of the heating and ventilation systems, reconstruction of the tram channel system and construction of foundations for the track. The owner of the depot is GAiT (former ZKM w Gdańsku Sp. z o.o.);

Figure 14. Wrzeszcz tram depot

Source: Authors

 Components C and D (red ——— on the map): Infrastructure - rebuilding the tram tracks and overhead line (12.1 km, component C) and construction and reconstruction of the traction power (component D). The owner of the infrastructure is the City of Gdańsk.

The investment cost of the project with reference to the main project elements is depicted in the table below: the most relevant share of the budget is allocated to the purchase of new rolling stock (EUR 62 million out of approx. 134 million, corresponding to 46% of the total project cost) and the reconstruction of the tram network (30% of the total project cost); the remaining project components, including the construction of the extension of the tramway line to “Nowa Łódzka” correspond to 23% of the entire investment value.

22 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 1. Investment cost breakdown by project component NOMINAL VALUE % ON PROJECT ITEM PLN EUR TOTAL Construction of the tram line to “Nowa Łódzka” 77,004,875 19,174,521 14% (A1) Purchase of the rolling stock (A2) 250,426,800 62,357,271 46% Reconstruction of the „Wrzeszcz” tram depot (B) 29,999,999 7,470,119 6% Reconstruction of the tram network (C&D) 163,296,363 40,661,445 30% Other 18,540,426 4,616,640 3% Total 539,268,463 134,279,996 Source: Authors based on information provided by the City of Gdańsk

Figure 15. Location of tramway lines in Gdańsk and GPKM IIIA

Source: Application dossier

23 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

2 ORIGIN AND HISTORY

2.1 BACKGROUND In the second half of the 1990’s the City public administration started considering improving and developing the public transport system in Gdańsk. At that time very limited financial resources were available to this purpose and only small- scale undertakings were possible. An operational plan for the modernisation and development of the public transport system focusing on the improvement and expansion of its tramway network – through the GPKM project – was defined and adopted early 2000’s. The first phase of this wide programme started in 2002, co-financed by the European Bank for Reconstruction and Development (EBRD), which also contributed to the definition of the GPKM initiative financing the feasibility study. Each phase of the GPKM (see table below) constitutes a package of activities aiming at existing tram network improvements, construction of a new section (interconnecting a specific city district) and purchase of the rolling stock. The programme implementation was and is still based on a prioritisation system of network sections based on the technical analysis of tram network quality and the needs of the inhabitants.

The following table provides details on the main milestones and events occurred since the inception of the GPKM wider initiative.

Table 2. Milestones of the Gdańsk Urban Transport Project

YEARS MILESTONES 1998 Strategy of Gdańsk 2010, underlying the need to modernise and improve the public transport system under the wider initiative GPKM 2000 Feasibility study supported by EBRD for the definition of the GPKM

2001 Adoption by the City of Gdańsk of the Operational plan for the development and implementation of the GPKM based on the feasibility study by the EBRD and Strategy of Gdańsk 2010 2002-2003 GPKM phase I (co-financed by the EBRD) including diagnosis of public transport system and definition of its development strategy, modernization of 29.1 km of tram lines in five locations, purchase of 33 buses and rehabilitation of 7 trams 2004-2008 GPKM phase II (co-financed by the ERDF) concerned modernization of 19.9 km of tram network, construction of 2.9 km of new tram line, purchase of 3 trams and 28 buses 2007-2012 GPKM phase IIIA - project in subject

2011-2015 GPKM phase IIIB (major project co-financed by the Cohesion Fund) consisting of the construction of 4.3 km tram line between Piecki and Migowo, modernization of 2 km of tram lines and purchase of 5 low-floor tram cars 2014-2015 GPKM phase IIIC (co-financed by the ERDF) comprised construction of access infrastructure to the Pomeranian Metropolitan Railway and reconstruction of tram lines in two locations 2014-2020 GPKM phase IVA - under preparation; construction of new tram line in Nowa Bulońska Północna Str. and in southern Gdańsk, purchase of 15 tram cars and modernisation of tram network Source: Authors Among the long-list of events affecting GPKM, two are worth mentioning. The first one is the accession of Poland to the European Union in 2004. The possibility to use funds from the European Union made the implementation of the subsequent phases of the GPKM possible (the EBRD only financed the first phase). Second, the inclusion of

24 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 the GPKM phase IIIA in the Resolution on EURO 2012 dated 2008 defining the list of investments to be implemented in view of the 2012 European Football Championship. The latter, albeit not determining the need for the project, has contributed to its timely implementation.

Box 1. EURO 2012 and Gdańsk

On 27 November 2003 the Polish Football Association and the Ukrainian Football Association signed an agreement on joint efforts to organise the 2012 European Football Championship. In December 2004, Gdańsk as the first Polish city reported readiness to co-organise the EURO 2012. In April 2007, twelve UEFA members voted for Poland and Ukraine as the organiser of the 2012 European Football Championship. In October 2007 the Council of Ministers (Dz.U. 2007 No 192 item 1385) specified the list of Euro 2012 projects adopted by UEFA and covered by the commitments and guaranties of the Republic of Poland and territorial self-government administration, as well as other necessary measures to host the final 20 12 UEFA EURO Championship games. In July 2008, more projects were introduced by the Ordinance of the Council of Ministers, amending the list of Euro 2012 related projects. Among the added projects there is the implementation of the Gdańsk Urban Transport Project - phase IIIA. Source: Authors based on Kopeć (2012) The GPKM initiative is still today under development with the preparation of a fourth phase, which in line with the previous phases aims at support the development of a sustainable transport system integrated with the land use developments and other transport modes.

Moreover, several additional local and regional transport projects are complementary to the phases of the GPKM wider project. These are recalled in the following box.

Box 2. Complementary projects

 Pomeranian Metropolitan Railway Stage I – revitalisation of „Kokoszkowska Railway” Phase I preparatory works (co-financed by the ERDF under the Operational Programme Infrastructure & Environment 2007-2013);  Pomeranian Metropolitan Railway Stage I – revitalisation of „Kokoszkowska Railway” Phase II construction works (2007-2015, major project co-financed by the Cohesion Fund under the Operational Programme Infrastructure & Environment 2007-2013);  Purchase of 10 trains for the Pomeranian Metropolitan Railway in Tri-City (co-financed by the ERDF under the Operational Programme Infrastructure & Environment 2007- 2013);  Integrated Traffic Management System TRISTAR (co-financed by the ERDF under the Operational Programme Infrastructure & Environment 2007-2013) creating a single system for the Tri-City covering 141 crossroads;  Development of Fast Urban Rail in Tri-City (co-financed by the ERDF under the Operational Programme Infrastructure & Environment 2007-2013);  A number of road modernisation projects and projects related to development of biking infrastructure in the city of Gdańsk listed in the Feasibility Study as well as implemented afterwards (including construction of the Havla street, construction of W- Z route, section Kartuska – Otomińska and construction of Słowackiego route).

2.2 FINANCING DECISION AND PROJECT IMPLEMENTATION The project GPKM IIIA was prepared by the City of Gdańsk in cooperation with the City’s dependant units dealing with public transport, in particular the project partner – ZKM (Zakład Komunikacji Miejskiej in Gdańsk, currently GAiT), responsible for the operations and owner of the rolling stock. JASPERS was also

25 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 involved in the project preparatory phase, assessing all the investment’ aspects, in particular demand, financial and economic analysis. As further explained in section 4.2 some recommendations were provided by JASPERS to the demand analysis which were incorporated in the final version of the feasibility study. Overall the project was positively evaluated by JASPERS. Overall, the proposed project is technically and environmentally sound, economically justified and operational arrangements proposed should provide for its sustainability (Source: JASPERS Action Completion Note)

During the preparatory phase, a public consultation process for the development of the project was also undertaken in line with the regulations binding at that time. Two technical options were considered for the construction of the new section of the tram network: whether to support a fast tram with random stops or a standard one with more frequent stops (every 400-500m) assuring more accessibility, especially to elderly and disabled people. The letter option was selected taking into consideration the gradual ageing of the population of Gdańsk.

Furthermore, two different alignments of the new tram section were analysed (see figure below), the first one located along the Witosa avenue – Nowa Warszawska street – Nowa Łódzka street together with the construction of a tram loop at the intersection of Łódzka and Świętokrzyska streets; and the second one located along Witosa avenue – Nowa Warszawska street – Jabłoniowa street with a tram loop situated at Jabłoniowa street.

Figure 16. Alternative alignments of the new tram section

Source: Feasibility study Both options were examined under the technical and environmental perspectives, taking into account the impact of the two alternatives on the territory and environment along with the considered alignments. The cost-benefit analyses performed for both options proved that the first solution was more economically effective because it yielded a larger benefit in terms of time savings.

The technical feasibility assessment also considered the possibility of constructing the tram tracks embedded with or separated from the road infrastructure. The latter solution was finally chosen predominantly for safety improvements. Some stakeholders perceive this solution as positive for drivers (with

26 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 lower collision probability), but negative from the perspective of land management. Wide green areas were indeed developed, which are however difficult to maintain and which are not used for recreational activities. Regarding the tram network upgrade, out of 16 preliminary selected sections of the network, 12 were finally included in the project, which have been selected on the basis of their technical characteristics, level of degradation and urgency for restoration. The four sections not included in the project scope were those located outside the main axis of the network. These were renovated in the following phases of the GPKM. According to the local press, after completion of the modernisation works some complains were made by the citizens for the demolition of a pedestrian overpass in Wrzeszcz, preplaced by a narrower street level crossing and shift of the tram stop Jaśkowa Dolina. These complains were noted by the City and the one related to the pedestrian crossing is nowadays being addressed; a wider pedestrian passage is under construction financed from the city budget. Another complain was expressed about the stops along Nowe Ogrody street, which could have been better positioned in front of the City hall. As for the depot, at first the modernisation of the existing facilities was considered in comparison to the construction of a brand new depot; the latter solution was rejected as too expensive. Some technical options for depot modernisation were subsequently considered and analysed, including a) demolition and re-construction of a new depot building, b) revitalisation of the existing building, c) reconstruction of the depot halls and washing hall with new equipment including reconstruction of track. Finally, the latter option c) was selected because more beneficial under the functional stand point. With respect to the modernised depot, an opinion was expressed by one of the stakeholders contacted claiming about a loss in the city heritage, due to the demolition of the existing building constructed before the Second World War. The implementation phase started in 2008, when the first construction permits were obtained. Over the whole implementation period, the construction works were followed by the designer’s supervision. Additionally, dedicated supervision contracts were signed aiming at monitoring the construction works contracts, which is a standard procedure applied in Poland for this kind of infrastructure investments. The selection of all the contractors, including the construction works, supply and supervision was done on the basis of binding public procurement law and was accomplished without delays.

The project implementation and the operation of the tramway system was, and currently still is, entrusted to a number of entities. The City of Gdańsk was responsible for the preparation and implementation of the public infrastructure investments, including the phase IIIA of the GPKM. The municipal entity - Roads and Greenery Authority of Gdańsk (ZDiZ, Zarząd Dróg i Zieleni w Gdańsku) was, and still is responsible for managing and maintaining the infrastructure. The Municipal Transport Company of Gdańsk Inc. (GAiT, former ZKM, Zakład Komunikacji Miejskiej in Gdańsk), which is a public company providing transport services, was responsible for the purchase of rolling stock and modernisation of the Wrzeszcz depot. Furthermore, the City Transportation Office (ZTM – Zarząd Transportu Miejskiego w Gdańsku) was and still is responsible for the organisation and management of public transport in the city, including the selection of the transport operators. More details about the role of each of the entities involved in the project are provided in the chapter 4. Despite the number of entities involved in the implementation and operation of the project, the investment under assessment has been implemented without any delays and cost overruns. It was put into operation just before the European

27 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Football Championships Euro 2012 ─ held between 8 June and 1 July 2012 ─ hence 2013 is the first full year of operation.

Concerning the project financing, a first project financing decision was taken in 201311 which was modified in 2015 by a Commission Decision12 increasing the co- financing rate up to 80% of the eligible costs. Overall the EU support amounted to 61.2% of the total project costs, the city contribution amounted to 21.2% and the remaining 18.6% was provided by ZKM. From the financial stand point, the ex-post profitability of the project is negative. The Financial Net Present Value (NPV) on investment is equal to nearly EUR -158 million (at a discount rate of 4%, real), with an internal rate of return of -6.9%. Also, the Financial Net Present Value on capital is negative with the level of EUR -113 million and with the internal rate of return for capital of -10.3%. These negative values confirm that the project was in need of EU funding since no private investor would have been motivated to implement it without an appropriate financial incentive.

2.3 CURRENT PERFORMANCE AND OTHER INVESTMENT NEEDS Thanks to the project, the tram network currently offers a comfortable, regular and reliable public transport connection for residents located near its stations in the Southern part of Gdańsk. Furthermore, the modern rolling stock purchased as part of the phase IIIA of the GPKM provides the possibility to undertake more comfortable journeys on all the lines if compared to the past. The new more friendly tram cars are also more accessible to passengers with reduced mobility and elderly people. Before the project implementation, the available options for passengers were bus or car, or older and less comfortable tram cars respectively. Thanks to the project and other investments and measures in the urban area such as for example the promotional campaign “Change your City”13, the number of passengers using public transport has grown over recent years as demonstrated by the trend in the figure below. Considering that the total number of public transport passengers in 1998 was about 183 million which declined to less than 150 million in 2005, the modernisation of the tramway system seems to have contributed to a reversion in the declining trend. As the following graph shows, the annual number of passengers using public transport managed by ZTM is increasing since 2009 in spite of a constant growth rate of the population.

11 C(2013) 3471 final dated 12.06.2013. 12 C(2015) 8573 final dated 30.11.2015. 13 The promotional campaign, with the slogan “Change your City”, served the purpose of stimulating Gdańsk inhabitants' awareness of sustainable transport and participation in the development of new sustainable transport habits and behavior. It was implemented in 2011-2012.

28 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 17. Public transport in Gdańsk (number of passengers of ZTM Gdańsk in all public transport and annual growth rate) vs annual growth rate of population in Gdańsk

Source: Authors on the basis of ZTM data In terms of modal split, due to the integrated ticketing system it is not possible to collect the actual data on passengers for the two different public transport services managed by ZTM. Nevertheless, it can be observed that whilst the overall offer of public transport services expressed in vehicle – kms between 2000 and 2016 has not increased, a significant portion of the services offered shifted from buses to tramway. If we read the graph below in combination with the one above, we can conclude that in spite of an almost constant offer of public transport services, the increased number of passengers has gone hand-in-hand with an increased share of vehicle – kms of tramway, which seems to have effectively augmented the attractiveness of the service.

Figure 18. Transport operation in v/km in Gdańsk in 2000-2016

Source: Authors on the basis of data from ZTM These results overall confirm the effectiveness of the strategy developed by the City of Gdańsk to promote public transport use focusing on the modernisation and expansion of the tramway network and services, integrating the system with the spatial development of the city.

Notwithstanding the overall positive impact of GPKM IIIA on the tram service, some stakeholders reported maintenance shortages, i.e. poor visibility of passenger

29 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 information display, lack of timely lightning replacement at the stops, and rare cleaning of the tracks (especially after winter, where the sand accumulates) or poor maintenance of the grass along the alignment of the tramway tracks. In terms of traffic flows, the figures below reflect the results of the traffic measurement undertaken in 2016 in terms of Origins and Destinations of the trips. The dark blue region located in the South is the Chełm area where the new tram line is in operation. This area is the one originating more trips in the city.

Figure 19. Location Gdańsk by regions where the journey starts (home) towards different travel motivations (left figure) and where the journey ends (right figure)

Source: Traffic measurement in Gdańsk, 2016 Considering that Southern districts generate the largest amount of traffic, the frequency of tram operations is addressing this need, thus assuring services every 2-3 minutes in the peak hours. Currently this seems satisfactory, although looking at the growing number of passengers and observed effects of crowded vehicles, some further actions are also being considered by the city for the future, aiming at extending the dimension of tram cars (from 30 to 40 m) and stops.

Regarding the integration of the service with the other transport modes, it must be noticed that as part of the project an interchange node was developed at the Łostowice – Świętokrzyska loop. This was the first time that such a technical solution was implemented in Gdańsk integrating the trams not only with cars and bikes but also with buses operations14. At the time the tram line to Chełm (GPKM phase II) and Łostowice – Świętokrzyska (phase IIIA) opened for traffic, the bus lines have been adjusted – shortened to cover the areas not connected by the tram network and to enhance citizens to use the tram loop. This experience served as a pilot case for further implementation of other nodes in different parts of the city.

In this regard, the local stakeholders reported that an increase in the utilisation of the new P&R facilities was observed at the time the project was completed, in concomitance with the start of the EURO 2012 Football Championship, followed by a decline in its use after this event. The service started to be used gradually again and was fully utilised after two years’ time. It thus appears that a ramp up period of one to two years was needed for a full exploitation of these facilities.

The works planned for realisation after the completion of GPKM IIIA include the extension of the line between Piecki and Migowo (constructed under phase IIIB of the Gdańsk Urban Transport Project) as well as the construction of access infrastructure to

14 As part of another investment (co-financed from the Regional Operational Programme), bike paths and pedestrian paths were developed to interconnect this interchange node with the housing estates located nearby the station and other parts of the city.

30 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 the Pomeranian Metropolitan Railway (implemented as part of phase IIIC of the GPKM). As these two were opened for traffic in 2015, the effects have only recently materialized.

For the future, new tram lines are planned to further expand the services in the city:

 In the South of the Gdańsk (GPKM IVA) aiming at constructing a new tram line in Nowa Bulońska Północna and Nowa Warszawska streets, together with purchase of 15 modern tram cars and modernization of other sections of the tram network;  In the North of the city (following phases of GPKM IV).

These planned expansions are represented in the figure below.

Figure 20. Development directions of Gdańsk public transport

Source: City of Gdańsk, Gdańsk Development Department

31 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

3 DESCRIPTION OF LONG-TERM EFFECTS

In this chapter the main long-term effects produced by the project are presented and discussed. First, a summary of the effects produced along the four categories identified in Volume I of the First Interim Report is briefly described. Then, the most significant ones are discussed and supported by available evidence.

3.1 KEY FINDINGS The long-term contribution of this project shall be considered under the following four main categories: economic development as well as quality of life and well-being, environmental sustainability and distributional effects. The economic growth aspect includes the quantifiable benefits derived from faster and more reliable connection to the city centre of Gdańsk increasing the accessibility of the districts which were originally connected by road transport only. These effects are incorporated in the CBA in the form of travel time savings as well as vehicle operating costs savings.

Under the heading of social well-being and quality of life the increased journey comfort, safety and security are considered together with controversial effects related to the noise level. The increase in travel safety and the reduction of noise are confirmed by the ex-post CBA, whereas the effect on security was proved to be positively perceived in a qualitative way. Among the environmental sustainability effects, reduction of air pollution and greenhouse gas emissions together with improved energy efficiency can be observed. All the three effects quantitatively measured as part of the CBA are positive. As for the distributional effects, a positive effect on territorial cohesion is visible with the network extension and associated development of adjacent districts. Also, the project facilitated the accessibility of elderly and disable people to public transport services.

The results of Cost-Benefit Analysis, as included in the Annex II to this report indicate that the project adds value to the European society under the social and economic points of view. In the baseline case, the Socio-Economic Net Present Value (ENPV) equals EUR 408.3 million, whereas the Economic Internal Rate of Return is at the level of 17.7% with the applied discount rates of 4.19% backwards and 4.83% forwards, referring to the time of completion of the project. Also, the risk analysis indicates that there is an almost nil probability for the ENPV to be less than zero and a probability of nearly 50% that the expected ENPV is less than the reference one. These results show that the project yields positive socio-economic net benefits and it has a low level of risk. The distribution of benefits in the CBA is presented in the figure below.

Before introducing the results of the ex-post CBA is worth underling that costs and benefits have been estimated in relation to the evolution of passengers on the whole City tramway network (not only alongside the new tram line extension). This approach which was also adopted in the ex-ante assessment of the project is considered correct, as it allows taking into consideration that the project scope extends beyond the 3.35 km extension, but it also includes the purchase of new rolling stock and the rehabilitation of several lines (12.06 km). Another import point that shall be noticed is that due to lack of actual data on modal split between tram and bus passengers ─ which in turn is the result of an integrated ticketing system ─ the split was assumed as estimated in the model for the ex-ante CBA, which according to the city administration and the service operator is realistic.

32 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 21. Main socioeconomic benefits (% on the total benefits)

Source: Authors In addition to these measurable impacts, there are also other effects difficult to be captured in monetary terms, but relevant for the comprehensive assessment of the project, which are discussed in the following sub-chapters. The table below summarises the nature and strength of the project’s effects classified under the above referred four categories (economic growth, quality of life and well-being, environmental sustainability and distributional issues), as well as the territorial levels where these are visible, and the time-horizon of their materialisation.

Table 3. Summary of nature and strength of effects (the effects highlighted in green are those included in the ex-post CBA) CATEGORY EFFECT STRENGTH LEVEL Travel time +5 Local – regional Vehicle operating cost +4 Local – regional Reliability of journey time +2 Local - regional Economic growth Income for the service provider N.R Wider economic impacts +2 Local - regional (development of southern districts) Learning effect** +2 Local – regional Safety +3 Local Service quality +3 Local Security +2 Local Quality of life Noise +1 Local and well-being Crowding N.R Aesthetic value N.R Urban renewal N.R Local air pollution +2 Local – regional Environmental Climate change +1 Local – regional – global sustainability Biodiversity N.R. Water pollution N.R. Distributional Social cohesion +3 Local issues Territorial cohesion +4 Local – regional Note: * the strength score reflects the weight that each effect has with respect to the final judgment of the project. In particular: -5 = the effect is responsible of the negative performance of the project; -4 = the effect has provided a negative contribution to the overall performance of the project; -3 = the effect has contributed in a negative way to the performance but it was outweighed by other positive effects; -2 = the effect has a slightly negative contribution to the project performance; -1 = the effect is negative but almost negligible within the overall project performance;

33 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

0 = the effect has no impact on the project performance; +1= the effect is positive but almost negligible within the overall project performance; +2 = the effect has a slightly positive contribution to the project performance; +3 = the effect has contributed in a positive way to the performance but it was outweighed by other positive effects; +4 = the effect has provided a positive contribution to the overall performance of the project; +5 = the effect is responsible of the positive performance of the project; N.R. = The effect is not relevant for the specific project; No data = The effect is potentially relevant, but no evidence on impacts is available. This shall be used only for relatively low significant effects whose inclusion would in no case dramatically affect the overall assessment.

Note: ** Learning effect here has been distinguished by ‘institutional learning’ identified in the First Intermediate Report since it refers to the learning-by-doing process related to the implementation of new technical solutions.

The following sub-chapters include some more detailed description of the effects incorporated in the ex-post CBA and/or supported by available qualitative evidence either from documental sources or interviews.

3.2 EFFECTS RELATED TO THE ECONOMIC GROWTH Measurable effects With regard to the socio-economic consequences of the investment, the most significant effects are the reduction of travel time for all the tram and bus users and to a more limited extent savings in operating costs for passengers diverted from cars and buses, i.e. the inhabitants of the neighbourhoods along the new tram section. These two effects are incorporated in the Cost-Benefit Analysis (see Annex II) in which, respectively, 92.9% of total benefits arise from savings in travel time and 4.1% arise from saving in operating costs (fuel consumption, car usage, parking) for diverted passengers. To obtain the value of benefits in time savings, it has been assumed that 7% of the total traffic on the tram is for business travellers, 80% are commuters and 13% are other passengers. Non measurable effects Another remarkable effect which has been observed after completion of the project is the increased reliability of journey time, especially for passengers coming from the districts where the new tram section was constructed. Previously this part of the city was served by bus and car transport and faced congestion, especially during the peak hours. The trams on the routes covered by GPKM IIIA are operating every 2-3 minutes in the peak hours. This effect is additionally supported by the fact that 90% of tram tracks in Gdańsk are separated from the road – which is also a result of the modernisation of the tramway lines. This increases the reliability of the services and mitigates road congestion.

As part of the economic benefits the learning effect is also worth mentioning as the project includes the development of an interchange node at the Łostowice – Świętokrzyska loop. As already mentioned above, this was the first infrastructure in the city to provide intermodal transport solutions, involving both tramway, buses, bikes, cars and pedestrian transport modes. This marked a sea-change in the way of conceiving the design of interchanges: in the past, stations were simple engineering works, where the users’ behaviour was given a rather residual importance. The aim in Łostowice – Świętokrzyska loop was to create a spacious and easy connection node for transfers, functional and user-friendly. This solution was considered a successful example to be replicated in other parts of the urban transport network. It stimulated the improvement of existing technical know-how as well as policy making on how to plan, develop, implement and operate intermodal interchanges in the city of Gdańsk. Nowadays there are 7 interchange nodes in operation in Gdańsk.

34 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

3.3 EFFECTS ON QUALITY OF LIFE AND WELL-BEING Measurable effects Under the heading of quality of life and well-being, some measurable effects including safety improvement and noise are considered together with effects on attitudes and perceptions of the project impacts not expressed in monetary terms.

The realisation of the project has increased safety, thanks to the modernization of the network reconstructing collision free lines, and the increase in the number of tram users instead of private cars. This has brought about some benefits not only related to reductions in vehicle operating costs but also in the reduction of accidents, including injuries and fatalities.

The reduction of accident is reflected in the table below which provides recent statistics on the reduction of accidents in the City of Gdańsk. Overall the number of accidents is decreasing and in particular the reduction in the number of mortalities is noticeable.

Table 4. Accidents in the city of Gdańsk 2013-2015 NO. OF % NO. OF % NO. OF % YEAR ACCIDENTS CHANGE INJURIES CHANGE MORTALITIES CHANGE 2013 555 657 17 2014 506 -8.8% 581 -11.6% 14 -17.6% 2015 493 -2.6% 574 -1.2% 11 -21.4% Source: Authors on the basis on data from the City of Gdańsk Although the data are not only associated to the implementation of the GPKM IIIA, it is a reasonable assumption to consider that the realisation of the project has significantly contributed to sustain the positive trend presented in the figure above. In line with this trend, which was also confirmed by the representative of the city administration, and in lack of project-specific data, the assumptions in the ex-ante CBA have been reviewed (see Annex II). The safety benefit which is incorporated in the Cost-Benefit Analysis (see Annex II) is valued at maximum EUR 2 million per year. Overall, it constitutes 0.7% of total project socio-economic effects. Another effect included in the ex-post Cost-Benefit Analysis (see Annex II) is the noise reduction effect, equalling EUR 2.38 million at present level. This minor effect is mainly driven by the reduced level of congestion in the streets around the newly constructed tram section. It is worth mentioning that despite an overall positive project assessment by the citizens there were some protests reported by some inhabitants living close to the newly constructed Łostowice – Świętokrzyska tram loop. During the project preparation, intensive discussion with the inhabitants of buildings located nearby the Łostowice – Świętokrzyska loop took place. Some of them were complaining about possible negative noise effects coming from the close vicinity of their houses to the tram loop. The design of the loop was not adjusted as required by some citizens who suggested to move the tram tracks just few meters further from the existing housing estates and to build the parking between their houses and the tram tracks. This request was appropriately discussed with the city and the construction company. The proposed solution was considered technically viable but not feasible under the administrative standpoint as it required developing the infrastructure outside the land already designated to the construction of the tram loop. Furthermore, the solution proposed by the citizens was commented by experts from the construction company as not being entirely effective to

35 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 minimise noise. According to the experts, the changes in the track curves to locate the tracks further from the noise barriers would have increased the noise associated to the operation of the trams. However, two agreements were signed between the representatives of two housing communities and the city, committing to implementation of some mitigation measures aiming at reduction of noise. As a result, noise barriers were constructed separating the tram loop from the surrounding housing estates. The landscape was furthermore improved by means of greenery solutions.

Figure 22. Noise barriers at the Łostowice – Świętokrzyska loop

Source: Authors Despite the implemented measures and the fact that ex-post noise measurement performed on-site confirmed that the level of noise is consistent with binding requirements, some inhabitants, especially those living near to the noise barriers, are still complaining about the noise. Although overall satisfied with the investment and confirming its relevance, these inhabitants reported that noises are sensibly high, especially during the night, due to trams entering the loop and then parking (with the pantographs sticking to the catenary making noise). In their view, the noise problem is worsened by the unsatisfactory level of maintenance (i.e. low frequency of grease disposal, tram crossing with partially damaged surface levels causing noises during vehicles passages).

Non measurable effects It is widely agreed among Gdańsk inhabitants that the construction of new tram greatly improved living conditions of residents in the tramway surrounding areas, by increasing accessibility and connectivity to the city centre. Moreover, a positive effect on the service quality is also recognised. In fact, modernization of some parts of the network as well as purchase of new modern tram cars altogether increased the journey comfort, allowing for smoother movement of vehicles, more comfortable seats and display of passenger information system.

Reading a book sitting in tram was almost impossible before the project implementation due to vibrations caused by the tram movement (Source: interviewed citizen)

Evidence of these effects comes from a number of satisfaction surveys undertaken by the City of Gdańsk amongst its citizens but also from interviews with the stakeholders. One of the survey dated 2015, measured the users’ opinions barometer on selected aspects of city’ issues and local policy, including the tram system. Furthermore, as part of the survey dated 2014, perception of changes in public transport was measured together with largest successes of tram lines developed as part of GPKM. Additionally, the quality of living in Gdańsk was measured in 2016 and commented against the results of the same investigation undertaken in previous years since 2007. As shown in the figure

36 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 below, the results of the surveys confirm an increasing and high-level of satisfaction for the entire tram system over the years.

Figure 23. Assessment of satisfaction level from the tram communication in districts Chełm, Jasień, Ujeścisko-Łostowice in 2009-2016

Source: Authors on the basis of the Research “Quality of living in Gdańsk” (where 6 is the highest rank) Additionally, GPKM Phase III was ranked among the most successful initiatives concerning the public transport developments in the city. The figure below shows the ranking of the successful implemented projects in the period 2012-2016. The initiative was always ranking in the first three positions by a considerable share of the population.

Figure 24. GPKM phase III (IIIA, IIIB and IIIC) among the largest successes of public communication developments in period 2012-2016

Source: Authors on the basis of the Research “Gdańsk citizens opinion barometer on selected city issues and local policy″ Another relevant aspect, which is not monitored within the satisfaction surveys promoted by the municipality of Gdańsk nor included in the ex-post CBA due to lack of quantitative data, but indicated during the stakeholders’ interviews is the increased perceived security of travellers in the vehicles and at stops. This is to a high extent due to the monitoring system installed in the vehicles as well as at the tram stops, although one voice regarding inadequate maintenance of lighting at the tram stops occurred as well.

As a final remark, it can be observed that although some inhabitants located in the nearest vicinity of the Łostowice – Świętokrzyska tram loop claim a decrease in their apartments’ prices due this noise effect, the three districts adjacent to the newly constructed tram section (Chełm, Jasień and Ujeścisko – Łostowice) ranked among

37 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 the most dynamically growing housing estates areas of the city (see figure below) and overall a slight real estate price increase is observed in these districts.

Figure 25. Number of newly constructed housing estates in 2008-2016 (right side) and dynamic of population growth (left side) by district *

Source: figure on the left hand side: City of Gdańsk, Gdańsk Development Department; graph on the right- hand side: data from the Economic Policy Division, City of Gdańsk (* other 19 districts registered values between 0 and 543)

3.4 EFFECTS ON THE ENVIRONMENTAL SUSTAINABILITY Measurable effects

The project is contributing to the reduction of road traffic. By offering passengers a reliable and effective alternative to buses, private vehicles and taxis, the project contributes to a reduction of air pollution and GHG emissions. These effects are incorporated in the Cost-Benefit Analysis (see Annex II) and constitute, respectively, 2.3% and 0.01% (EUR 12.9 billion and EUR 69.5 million each) of total socio-economic benefits.

About air pollution, measurements are periodically undertaken in the city and the results confirm improvement of air quality over the past 16 years in the whole city with reference to the level of air dust (PM10) and gas pollutions (SO2 and NOx) in Gdańsk. Cleary, this effect cannot only be attributed to the improvements in the transport system and to the development of the tramway network. Other factors such as improvement of energy efficiency in industrial entities, cleaner sources of energy for heating and electricity generation, contribute to the reduction of emissions. Although there is no measurable detailed evidence about the impact of transport and more specifically public transport among the other sources of pollution, on the basis of the correlation between the trends in the emissions levels and public transport patronage following the development of GPKM IIIA it is sensible to consider that the project has and still is positively affecting the air quality to some extent.

38 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 26. Level of air dust and gas pollution in Gdańsk between 2000 and 2016

Source: Authors on the basis of City’ Environmental Department data It is in any case worth specifying that according to the measurements in the surrounding of the newly constructed tram line, benefits are registered for air quality improvements, particularly for PM10 with the standard of 40 µg/m3 (annual average daily standard)15 16 and the measured level of 16-24; SO2 with the standard of 125 µg/m3 daily and the measured level of 2-6 and NOx with the standard of 40 µg/m3 (annual average daily standard)17 and the measured level of 14-21.

As regards to the greenhouse gases emission, the measurements indicate that although the total amount of CO2 is still growing in Gdańsk as a result of increasing number of cars, a decline has been observed between 2012 and 2013, i.e. soon after the project implementation. Although there is no measurable evidence supporting the consideration that the registered decrease in the CO2 emissions can be attributed exclusively to the usage of public transport, it is still possible to observe a correlation between the decline in the emissions and the trend in the public transport patronage. In line with this it is sensible to assume that the project has to some small extent contributed to the improvement of the environment, also with respect of CO2 emissions reduction.

15 As set by the national and EU standards; http://www.gios.gov.pl/pl/aktualnosci/294-normy-dla-pylow- drobnych-w-polsce; http://powietrze.gios.gov.pl/pjp/content/annual_assessment_air_acceptable_level 16 Ibidem. 17 Ibidem.

39 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 27. CO2 emissions (in tonnes) in Gdańsk between 2000 and 2016

Source: Authors on the basis of City’ Environmental Department data Additionally, the tram energy effectiveness has improved, which can be reflected by the number of km of route performed per 1 MWh of energy used. This is mainly the result of replacing the old, more energy consuming rolling stock with the new ones, which allow for energy recuperation. The energy effectiveness of trams and buses purchased within all the investments implemented in the City of Gdańsk between 2000 and 2016 is presented in the figure below. As can be observed from the graph, the trend for trams is declining since 2001 and this is due to the increasing number of new trams equipped with an energy recovery system. Conversely, the trend for buses has been growing since 2010. This is explained by the fact that despite the intensive investment programme implemented by the City to replace the old fleet with modern buses, the new buses equipped with air conditioning are more energy consuming than the old ones.

Figure 28. Energy effectiveness measured in number of km travelled with the use of 1 MWh

Source: Authors on the basis of ZTM data An additional environmental aspect shall be commented, which is biodiversity. The project in subject has no effect on biodiversity, as there are no environmental or protected areas which fall under the environmental protection law. Also, the NATURA 2000 areas are located at least 10 km away from the project location, therefore no relevant impact is expected.

40 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

3.5 EFFECTS RELATED TO DISTRIBUTIONAL ISSUES Social cohesion is understood here as the capacity to minimise disparities among social groups in terms of public transport access. Thanks to the fact that the tram stops were designed in a way to allow easier access to people with disabilities and due to the replacement of old trams with new rolling stock facilitating elderly people and disabled persons to use the service, the project has positively contributed to social cohesion.

One of the implicit objectives of the long term urban transport development plan GPKM, in which GPKM IIIA was included, is certainly to improve spatial cohesion in the urban area. In this regard the GPKM project can be reasonably considered the backbone not only of the public transport system in Gdańsk but also of the land use development, towards the development of a more accessible and cohere urban territory. The expansion of the network towards the periphery is aimed at reducing disparities caused by unequal distribution of resources and opportunities among districts. Regarding the specific impact of GPKM IIIA, as already mentioned, it enabled an increased connectivity of the southern parts of Gdańsk, in particular Chełm, but also Jasień and Ujeścisko – Łostowice districts serving as “city bedroom” to the city centre. Also, as a result of the project a change in the transport behaviour was observed in a way that inhabitants located outside Gdańsk are more attracted to use the regional and public transport to come to the city. In particular, this is due to the implementation of “park & ride” facilities which allow the inhabitants of suburban regions to travel by their own cars to points where public transport lines are focused, and then commute further to their workplaces in the city centre. Furthermore, as a result of interconnecting new city districts by tram, creating the interchange nodes (tram/bus/bike/rail) and especially by interconnecting public bus and tram transport with the metropolitan railway (phase IIIB), wider spread of these effects is possible and in place, attracting the users coming from outer regions.

3.6 TIME-SCALE AND NATURE OF THE EFFECTS The project was completed in May 2012, therefore the discussed observed effects materialised in the short-run, although they are expected to be maintained in the long- run but possibly diluting their magnitude due to the evolving context. With reference to the spatial scale of the effects all of them are of local nature, however affecting also the region. As a result of wider GPKM, a change in the transport behaviour was observed in a way that inhabitants located outside Gdańsk are more attracted to use the regional and public transport to come to the city. Some of the effects related to economic growth, like time savings may also have wider impact, even at the national level, especially when combined with the complementary investments. Furthermore, the environmental sustainability effect resulting from GHG emission reduction, contributes to a small extent, but in a positive way to the global effect.

41 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 5. Temporal dynamics of the effects SHORT RUN LONG RUN CATEGORIES FUTURE (1-5 (6-10 COMMENT OF EFFECTS YEARS YEARS) YEARS) Relevant time savings, reduced congestion, increased reliability; Stable Economic +++ ++ + and effective cooperation of growth institutions: city, ZTM, GAiT and inhabitants. Good level of satisfaction of inhabitants Quality of life ++ ++ ++ directly located along the network as and well-being well as all citizens. Reduction in level of air pollution due to Environmental + + + more extensive use of public transport; sustainability no impact on biodiversity. Improved accessibility to public transport network for the whole society Distributional ++ ++ ++ due to extended network as well as issues interchange nodes despite age/disabilities. Note: + = slight positive, ++ = positive, +++ = strongly positive, +/- = mixed effect.

42 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

4 MECHANISMS AND DETERMINANTS OF THE OBSERVED PERFORMANCE

In this section the key mechanisms and determinants of the long-term effects discussed in the previous chapter are illustrated and discussed along the different phases of the project cycle. Finally, the importance of each determinant for the project’s final performance and the interplay between them and the observed outcomes is discussed.

Table 6. Determinants of project outcomes DETERMINANT STRENGTH* Relation with the context +4 Selection process +5 Project design +3 Forecasting capacity +4 Project governance +5 Managerial capacity +4 Note: * the strength score reflects the weight of the role that each determinant played with respect to the final judgment of the project. In particular: -5 = the determinant is responsible of the negative performance of the project; -4 = the determinant provides a negative contribution to the overall performance of the project; -3 = the determinant contributes in a moderate negative way to the overall performance of the project; -2 = the determinant has a slightly negative contribution to the project performance; -1 = the determinant plays a negative but almost negligible role to explain the overall project performance; 0 = the determinant does not play a role on the project performance; +1= the determinant plays a positive but almost negligible role to explain the overall project performance; +2 = the determinant has a slightly positive contribution to the project performance; +3 = the determinant contributes in a moderate positive way to the performance; +4 = the determinant provides a positive contribution to the overall performance of the project; +5 = the determinant is responsible of the positive performance of the project.

4.1 RELATION WITH THE CONTEXT As already discussed this project constitutes a phase of an extensive public transport enhancement investment programme implemented by the city over the past 20 years. Since mid of the Nineties, far before Poland became a Member State of the European Union, some public transport initiatives were initiated, although on limited scale considering the limited availability of resources.

Then, with the adoption of the Gdańsk Urban Transport Project in 2001 the city made public transport one of its development priorities. Actually, the improvement of public transport services primarily by modernising and developing trams ─ an environment friendly and sustainable form of transport ─ was considered an effective option to enable the City’s development in the age of rapid increase in the level of motorisation. Tram systems were expected to reduce congestion in the city determined by a dynamic economic growth leading to an increase in car travel and bus transport. The adoption of GPKM also reflects the aspirations of Gdańsk to become a modern European city, and conforms to the strategic plans for regional development. We promote public urban transport, we would like to see people switching from private to public transport modes (source: City of Gdańsk)

The accession to the EU of Poland in 2004 made it possible to implement the phases of the GPKM wider initiative, thanks to the availability of European financial support. In line with the scope of the first phase each subsequent phase of the GPKM initiative included a package of tasks comprising improvements of existing tram network, construction of a new section (interconnecting a specific city district) and purchase of the modern rolling stock that is slowly replacing the old one.

43 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

In particular, GPKM IIIA was specifically conceived to address the need to supply the developing city districts in the South of Gdańsk with an efficient and environmentally friendly public transport. As a matter of fact, over the last decade many Gdańsk citizens have decided to move towards the outskirts of the city. Among the reasons of this choice are the perspectives of a better quality of life as well as the availability of relatively lower apartments’ or rental prices than in the city centre. The dynamic extension of the Southern part of Gdańsk is visible in the figure below.

Figure 29. Evolution of the spatial development in Gdańsk in the area of new tram line construction over last 8 years (Chełm district)

Source: http://gdansk.retromapy.pl/ Consequently, daily mobility between the “city bedrooms” and other parts of the city increased significantly. Travelling between the Upper and Lower Terrace of Gdańsk represents 24.1% of the whole traffic as of 2016. Construction of the tram section interconnecting the Southern part of Gdańsk supported this demand. With the Lower Terrace progressively fully occupied and the City’s development shifting towards its Upper Terrace, the tram network also required an increasing number of vehicles able to handle the differences in elevation between the terraces (nearly 80 - 100 m). GPKM IIIA was thus foreseen to replace a considerable number of old, not effective trams with 35 pieces of new rolling stock that can handle differences in the ground level. The purchase of new rolling stock together with the modernisation of various sections of the old tram network infrastructure as well as the introduction of the first interchange node (tram/bus/car/bike) were in line with the need of improving the tram travel quality within the City. This need was not only advocated by the City administration but also strongly supported by the inhabitants. As a matter of fact during the information campaign conducted by the Department of Development Programmes of the Gdańsk City Hall there were no citizens opposing the planned investment. Another important driver of the GPKM IIIA was the selection of Gdańsk by UEFA as one of the eight venues of the 2012 UEFA European Championship. This provided the City administration with an additional reason to commit to develop and implement the project in time for the start of this event. The inclusion of the GPKM initiative and particularly of its phase IIIA in the priority list of projects for Euro 2012, represented an opportunity to improve the image of the City not only for citizens but also for visitors.

44 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Therefore, it shall be concluded that the context in which GPKM IIIA was conceived was favourable. The lack of a modern and efficient public transport system linking all the parts of the city ─ especially the peripheral ones ─ was a real problem perceived by both the citizens and the public administration. Both the spatial development of the city and the chance offered by EURO 2012 were two important context elements supporting the project and its timely implementation.

4.2 SELECTION PROCESS Selection process is understood as the institutional and legislative framework that determines how public investment decisions are taken, i.e. which is the process in place and the tools used to select among alternative projects.

The implementation of the wide GPKM programme, including the definition of each phase, is supported by a prioritisation mechanism based on constant monitoring of the technical status of the tram network vis-à-vis demographic, economic and spatial development of the City and citizen’s needs collected through public consultations. The ranking resulting from such mechanism guides the realisation of the investments ensuring that no random implementation is carried out. This modus operandi plays a key role in the planning activity of the City and proves to be a very good long- lasting practice applied by Gdańsk authorities contributing to sound, positive effects.

In particular, the Gdańsk Urban Transport Project – phase IIIA was supported by the “Study of Conditions and Directions of Spatial Development of Gdańsk”18 showing that the daily mobility between the “city bedrooms” and other parts of the city would have increased significantly over the years, thereby creating a demand of passengers travelling from the Southern part of Gdańsk to the city centre. According to the recognised project needs and targets several options were considered for all the project components, all of them analysed from the technical- technological, location, environmental and social point of view. In particular two different tram routings were considered for the extension of the tram network in Południe (south) district and the most economically effective one and more beneficial to the inhabitants was chosen. The option selection process was managed by the project promoter – the City of Gdańsk in close cooperation and coordination with the project partner – ZKM – providing transport services (the owner of the rolling stock) as well as the ZTM – responsible for organisation and management of public transport including service operations.

The process also involved an information campaign, which was performed at the environmental decision stage. The public consultation ─ which is a standard procedure applied to all investment projects in Poland ─ revealed that all the opinions collected expressed a preference for the larger number of parking places by the planned “Nowa Łódzka” loop, which would enable the implementation of the “park & ride” concept which assumes that the inhabitants of suburban regions would travel by their own cars to points where public transport lines are placed, and then commute further to their workplaces in the city centre. Another recurrent theme pointed out by citizens was the problem of transit-generated noise in places of residence and the need to accompany the construction of noise barriers.

The whole project definition and option selection process were undertaken without major issues, as the targets were clearly defined, the stakeholders involved at

18 Adopted by the Gdańsk City Council in resolution no. XVIII/431/07 of 20 December 2007.

45 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 the managerial level were already experienced after implementation of previous phases of GPKM and proved to work effectively together. JASPERS has also been involved in project preparation and confirmed the correctness of project’ option analysis.

4.3 PROJECT DESIGN Project design refers to the technical capacity to properly design the infrastructure project. Once the most advantageous option had been selected, the detailed design for project GPKM IIIA was carried out in 2010. In this regard, an issue arose related to the design of the Łostowice-Świętokrzyska tram loop. As already described in chapter 3.3 above, some inconveniences were reported by some of the inhabitants living close to the noise barriers separating the buildings from the loop. These inhabitants confirmed their participation in exhaustive negotiation process with the City, which nevertheless is perceived by them as not entirely successful. According to their interpretation at the time of design and environmental impact assessment proceeding, locating the tram tracks a bit further from the noise barriers should have been considered and implemented, and this would have substantially reduced the inconvenience resulting from the noise made by trams. While such situation might be considered a missed opportunity to amend the design in order to meet the inhabitants’ expectations, the possibility to move the tram loop was not confirmed by the project constructor. The latter asserted that considering the ownership of the ground, the most optimal solution was implemented. Although all the administrative procedures were followed ensuring correctness in the public consultation process, with hindsight the City administration could have shared with citizens the ideas about the project design of the loop at an earlier stage during the formulation stage, i.e. before land designation.

No other substantial issues occurred with reference to the project design. Therefore, it can be concluded that the project planning and design was properly done. As a matter of fact, the inconveniences reported by inhabitants living close to the loop did not change the overall positive assessment of the projects, which was also confirmed by those inhabitants.

4.4 FORECASTING CAPACITY Forecasting capacity is understood as the possibility and capacity to predict future trends and forecast the demand level and estimate the technical challenges, thus estimating correctly the required resources (e.g. looking at the dangers of over-predicting demand and under-predicting construction costs).

With regard to the traffic forecasts, although the results of the ex-post analysis indicate slightly lower numbers of passengers achieved in 2011-2016 than the ones forecasted in the ex-ante analysis (by approximately 1%), the expected demand of passengers using the public transport in the first year of operation (equalled 168 million) was achieved already in 2013. This is an evidence of the reliability of the forecasts and capacity of the team and experts involved in the elaboration of the feasibility studies. This is the result of the experience gained through the implementation of the previous phases of the GPKM initiative and of the support of the EBRD in the initial phases of the GPKM and subsequently of JASPERS. The support of JASPERS during the project preparatory phase was, among others, aimed at assessing the quality and reliability of the results of the demand analysis. In particular,

46 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

JASPERS’ experts provided some comments and suggestions to improve the results of the traffic forecast. As a matter of fact, the initial version of the forecast indicated a decrease of car pass-kms at the end of the projection period, significantly greater than the public transport passenger increase. These predictions were in fact considered un-realistic by JASPERS’ experts. In absence of actual traffic data and information to produce ad hoc estimates of modal split and its evolution over the project time period JASPERS suggested to identify and adopt parameters based on benchmarking analysis referring to other cases in Europe. This led to the adoption of more conservative estimates for modal split. Thanks to this correction, the transport annual growth forecasts and ex-ante CBA results were more realistic.

JASPERS would like to note the excellent cooperation achieved for this project, and to commend the flexible approach of the City of Gdańsk to take on board JASPERS’ comments and recommendations throughout the project preparation period (Source: JASPERS Action Completion Note) JASPERS also recommended the introduction of tariff integration between urban transport SKM and PKM services as a way of further increasing the attractiveness of the services and their quality. Over the years, the Gdańsk administration put effort to develop integrated ticketing, and since 2017 passes are available which allow passengers to use one ticket for services managed by SKM, PKM and ZTM in the city of Gdańsk and ZKM in Gdynia and Sopot. The entity responsible for the implementation of integrated ticketing in the area of Try-city (Gdańsk, Gdynia and Sopot) is the Metropolitan Communication Association of Gdańsk Bay (MZKZG - Metropolitalny Związek Komunikacyjny Zatoki Gdańskiej). The purchase of integrated tickets (passes) is today available both at traditional distributional channels, as well as through internet and mobile applications. In addition to integrated ticketing an integrated passenger information system is also available in the city, which covers all the SKM, PKM, ZTM and TKT services, including the GPKM. This system is also operated by the MZKZG.

The purpose of integrated ticketing is to encourage people to use public transport by simplifying switching between transport modes and by increasing the efficiency of the services. However, a drawback of the progressive introduction of integrated ticketing is the difficulty in counting passengers as they do not need to validate their ticket when changing from one to another vehicle. Hence, ticket integration makes difficult distinguishing the modal split among different public transport services as the system only allows to know how many passengers have validated their ticket on the entire network. Turning to resources estimate, it must be noticed that the total project costs were not exceeded, which can also be deemed an effect resulting from the management team forecasting capacity coming from their experience and prudency in the preliminary cost estimations, additionally supported by the price competition on the construction works and supply market. The project was examined at the preparatory phase and monitored during its implementation and after completion by CUPT (Centre for European Transport Projects)19. The involvement of CUPT assured correctness in the public funds spending, as all the eligible and non-eligible costs were examined by CUPT together with the appropriateness of the procedures and forms related to the application for EU financial support.

19 The EU Transport Projects Centre was established by the Polish Ministry of Transport and was assigned with the responsibility of disbursing European Union grants towards proposed transport projects.

47 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

The good forecasting capacity of Gdańsk administration, which benefitted from the previous experience in similar projects and the JASPERS advice, is the main driver of the smooth planning process.

4.5 PROJECT GOVERNANCE The project governance concerns the number and type of actors involved during the project cycle and how responsibilities are attributed and shared. In this respect, GPKM IIIA was a project with a high number of stakeholders involved during the entire project cycle.

During the implementation phase, the project was directly managed by GiK (Spółka Gdańskie Inwestycje Komunalne Sp. z o.o.), which was acting as PIU (Project Implementation Unit) in the name and for the benefit of the City of Gdańsk and by the project Partner - ZKM w Gdańsku Sp. z o.o. (currently under the name of GAiT) for the purchase of 35 pieces of rolling stock and the rebuilding of the "Wrzeszcz" tram depot.

Figure 30. Project implementation structure

Source: Authors GiK Sp. z o.o. was a commercial code company, fully owned by the City of Gdańsk. It was established by the City of Gdańsk under the Law of 07/09/2007 for the preparation of the European Football Championship EURO 201220. Under the agreement of 01/03/2011 between the Municipality of Gdańsk and GiK Sp. z o.o., the former authorised the latter to act for and on behalf of the Municipality for different projects, all of them aimed at improving the image of the City before EURO 2012, especially in the field of road and public transport21. The ultimate target of the company was to timely complete the selected investments to prepare the city of Gdańsk for the European football event.

20 Journal of Laws N° 173, item. 1219 with subsequent amendments and the Resolution N° XXV/721/08 of the Gdańsk City Council of 24/07/2008 21 Sucharski Avenue; Construction of East-West avenue in Gdańsk (section Kartuska – Otomańska); GPKM III; Interconnection between the airport and Maritime Port – Słowackiego avenue; Construction of European Solidarity Centre in Gdańsk; Integrated Traffic Management System TRISTAR; Drainage of the area under the football stadium in Gdańsk – Letnica; Reconstruction of integrated node Gdańsk Śródmieście.

48 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Box 3. Role of the Project Implementation Unit

What regards the Project Implementation Unit, it is worth adding that it performed the role of the substitute investor, including preparation and application for all the necessary administrative permits, acquiring all the necessary property rights, concluding the construction works and supervision contracts, the supervision of the works covered by the project, as well as the project financial settlement. The PIU staff consisted of all the necessary professional profiles, including the legal, administrative, financial and technical competences. The setup of such a unit is a requirement of the national procedures related to all major project implementation. It aims at maximising efficiency and efficacy in project implementation, also assuring appropriate EU funds absorption and achievement of the project functional objectives. Source: Authors The second actor playing a role during the implementation phase is ZKM w Gdańsku Sp. z o.o. (Zakład Komunikacji Miejskiej w Gdańsku Sp. z o.o. – currently GAiT), a commercial company fully owned by the City of Gdańsk. It was established in 1945 by the City of Gdańsk to perform its own tasks related to public transport. In particular, under project GPKM IIIA, the company was responsible for the purchase of the rolling stock as well as for the reconstruction of the "Wrzeszcz" tram depot. After the project implementation all these assets remained under the ownership of ZKM w Gdańsku Sp. z o.o. (GAiT).

The fruitful institutional relationship between the project’s stakeholders (the project team, the city administration, the Transport Authority and the operator) which resulted in a timely definition of the project idea, selection of the most appropriate project option and design, is certainly another important factor which had a positive influence both on the planning process and the implementation phase. Turning to the operational phase, four different stakeholders are involved in O&M activities:

 the City of Gdańsk, being the owner of the tram infrastructure that is managed by ZDiZ (Zarząd Dróg i Zieleni w Gdańsku), the Road and Green Area Management department of the City;  the transport Authority – ZTM Gdańsk which is a budgetary unit of the City of Gdańsk (without legal personality) established in 200522. Although ZTM Gdańsk is a relatively young institution, its employees have for many years been involved in public transport, and they use their experience gained at previous workplaces to effectively organize public transport with the available means. The main role and task of ZTM is to organize public transport in Gdańsk and – under an agreement – in neighbouring communes;  the service operator – ZKM w Gdańsku Sp. z o.o. (GAiT) which is the City public transport operator (tram and bus), 100% owned by the City of Gdańsk. It operates on a commercial basis and is in charge of operation and rolling stock maintenance;  ZDiZ (Zarząd Dróg i Zieleni w Gdańsku) is in charge of the tram infrastructure maintenance (except depot).

22 Its creation resulted from the need to separate the functions of the organization and control of the traffic from current operational activities. The aim of the City authorities was to create an institution that will analyze both the needs of residents, as well as the costs of operators and rationalize them in terms of the capability of the City budget.

49 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

The necessary funding for ensuring operation and maintenance of the project will be secured by both the City of Gdańsk and ZKM. The financial sustainability of operations relies mainly on compensation payments under a Public Service Contract between the City Transport Authority (ZTM Gdańsk) and ZKM (the operator). Instead, funds for asset renewals will be provided by the City of Gdańsk. The existing PSC, valid till 2030 between the City of Gdańsk and ZKM, requires the City to allocate adequate funds in every annual budgets for compensation payments. The Public Service Contract, which entails the annual review of all costs by an auditor who also verifies the correctness of the calculation of compensation from the state-aid point of view, provides an efficient mechanism reducing both the risks of over- compensation for ZKM and financial unsustainability.

Figure 31. Operation management structure

Source: Authors There is a long lasting experience and stability in the management team including the project managers and coordinators, which gained experience during the previous phases of this wide Gdańsk urban transport development scheme. This positively affected the whole investment process and allowed for its further application in other programme components. Also, very high level of cooperation between the involved units was reported. These positive features were in turn reflected by reliable service operations and confirmed by the high satisfaction level of users. Sound institutional arrangements and effective share of responsibilities between the institutions involved as well as experience of the beneficiary were also positively commented by JASPERS.

4.6 MANAGERIAL CAPACITY The managerial capacity refers to the professional ability to react to changes in the context/needs as well to unforeseen events during the project implementation and afterwards as well as to the professional capability to manage the project ensuring the expected level of service in the operational phase.

In spite of the complexity of tasks under GPKM IIIA, no substantial technical changes occurred during the project implementation. However, some additional works were required, mainly at the Wrzeszcz depot, which were not possible to foresee at the planning stage. In fact, once the demolition of this old infrastructure dated 1935 (and never modernized since that time) started, some technical issues occurred which were not foreseen at the technical design stage due to lack of old depot plans. This led to some additional expenses. However, considering some savings coming

50 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 from the procurement procedures, the final investment cost amounted to EUR 134.3 million23, which is nearly 20% less than the planned investment cost of EUR 167.1 million24, so no cost overruns occurred. Such unexpected technical issues were promptly and timely addressed by GAiT together with the support of technical engineers and designers involved in the execution of the works, that amended the project design adjusting its scope.

Regarding the operation of the tramway system, following the implementation of the project the traffic management system was optimised by means of signalling and traffic light improvements which reduce interferences between tramway and road traffic. This had a positive impact on road traffic flow and reliability of tramway operations and services.

The newly constructed tram line together with the interchange node contributes to the new travelling patterns generation in the southern parts of Gdańsk. These have not been measured as there are no data supporting quantitative analysis, nevertheless a rough estimation can be provided of at least 60 thousand inhabitants of Southern part of Gdańsk who directly benefit from the new tram section. The new traveling behaviour is also confirmed by qualitative analysis, interviews with the stakeholders and observations including the Łostowice – Świętokrzyska tram loop with the interchange node.

Figure 32. Łostwice - Świętokrzyska tram loop (Wednesday, 5:00 p.m.)

Source: Authors Based on the above, it can be concluded that the project has significantly contributed to reduce the decline in the use of public transport due its improved quality, reliability gains and time savings.

In spite of the overall positive impact of the project in the transport system of the city and metropolitan area of Gdańsk, some issues about the lack of proper maintenance were reported by journalists and citizens during interviews. These related to frequency of maintenance of grass beds on the tramway alignment, and disposal of grease on the tracks for the abatement of noise, as well as replacement of lights at tram stops and poor visibility of display devices for service information to passengers. Nonetheless the social perception of the whole GPKM initiative is very positive, with high ranks allocated by citizens during the public measurements (see Figures 24 and 25 above), but also resulting from other interviews with the stakeholders.

The cleanliness of the vehicles together with well-functioning heating and air conditioning are two strengths of the tramway service (source: journalist).

23 PLN 539.3 million with the exchange rate of 4.016. 24 PLN 671.2 million with the exchange rate of 4.016.

51 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

4.7 PROJECT BEHAVIORAL PATTERN Following the identification of the typical determinants of project performance and the main project outcomes, the final step entails describing the chain of interlinked causes and effect determining the project performance over time. The behavioural pattern of the project under assessment is provided in the following figure. The round boxes in light blue indicate the projects’ determinants, the rectangular boxes in light grey refer to the observed events, the ‘+’ signs next to the green arrows indicate that the factor has positively influenced the project performance. In particular, arrows in dark green indicate factors that had a stronger influence on the project, arrows in light green instead indicate factors that had a positive but less strong influence.

Figure 33. Behavioral pattern of GPKM IIIA: star25

Source: Authors GPKM IIIA is an example of satisfactory project ─ although not particularly ambitious as it mainly concerns the purchase of 35 new trams to be used on the entire city network and the rebuilding of the tram tracks and overhead line. The project overall positive performance is the result of a combination of factors: a good start, good planning for future trends, a transparent and well-grounded selection process, a profitable involvement and commitment from all the relevant stakeholders, the capacity to fit and adapt to the environment and the capacity to promptly react to unpredicted events. Notwithstanding, the project results are affected by some working assumptions (i.e. the fact that costs and benefits have been estimated in relation to the evolution of passengers on the whole tramway network as well as the assumptions of modal split between tram and bus passengers due to lack of actual data) which although being considered reliable cannot be disregarded when the positive results of the ex-post CBA are discussed.

In terms of project determinants, context is without doubt one the most important pre-requisite of the project’s performance. GPKM IIIA was in fact perfectly in line with the context needs and the objectives of the previous and subsequent phases of GPKM which ensured adequate demand for the service. On the face of it, good managerial capacity and effective project governance were able to promptly

25 The project is classified as “star” as it does not fully match any of the stylized patterns identified in the First Interim Report. The stylized patterns must anyway be intended as a theoretical classification which needs be adjusted to real cases. In this case, the investment is an example of a satisfactory project which is however affected by some working assumptions, which although being considered reliable cannot be disregarded when the positive results of the ex-post CBA are discussed. Therefore, the project cannot be considered a “bright star” but due to its overall positive performance, it can be labeled as a “star” project.

52 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 provide an adequate response and make financial and technical capacity available for the initiation of the project.

The whole project definition and option selection process managed by the City of Gdańsk have also been crucial for the project’s final performance. The process was based on sound feasibility studies and analyses which have seen the involvement of JASPERS for the demand and operational elements of the tramway system, as well as the involvement of the citizens through public consultation activities. Forecasting capacity and managerial capacity goes hand in hand in several ways with the project design and works implementation. The involvement of experienced professionals, familiar with previous phases of GPKM, yielded a smooth tendering process for the selection of the contractors and work supervision as well as allowed the project to promptly react to some unpredicted issues related to the implementation of the depot. Marginal costs increases due to these issues have been nevertheless supplemented by means of savings in the construction of other works. As a matter of facts, the total costs for the construction of the project is slightly lower than originally estimated in the ex- ante analysis. Unfortunately, there is also some evidence of complains raised during the project's application process from a small group of inhabitants living near the new tram loop. Even in this case, the project promoter promptly reacted to this unfavourable situation signing an agreement with the representatives of housing communities, with the commitment of implementing some mitigation measures aimed at reduction of noise. During the operational phase, such minor complains are still there together with those on the level of maintenance of the tram network and stops which is to some extend considered less than what they would have expected. Finally, project governance was an important driver because of the structure of the organisations responsible for the development of the public transport network, with allocation of clear responsibilities and close cooperation and coordination between the city administration (beneficiary), the project partner – ZKM (tramway operator), and ZTM (regulatory body) – responsible for organisation and management of public transport. Concerning the governance of the project implementation, it must be acknowledged the important role played by the dedicated Project Implementation Unit composed of specialists able to deal with all the administrative aspects of the project and supervise the project implementation up to its financial closure. The experience of the management team combined with good cooperation with the City’s departments resulted in an overall effective and timely project implementation. Hence, the European Football Championship EURO 2012 – underpinning the PIU - turned out to be a powerful context aspect providing strong incentives to complete the investment beforehand. On the top of that, the external factors which may affect the project performance in the future should be mentioned. As a matter of fact, it would be ineffective to promote public transport in this project whereas, at the same time, the private transport (cars) is systematically privileged by other investments and policies. In this respect, the effort of the Gdańsk administration to develop an integrated ticketing shall be highlighted as an example of action which keeps encouraging people to use public transport by simplifying switching between transport modes and by increasing the efficiency of the services. Also, the increasing competition with other public transport services should be mentioned. For instance, the development of the new railway station in the centre of Gdańsk or the implementation of the PKM new railway service to the Gdańsk airport and the hinterland, may generate a loss of traffic on some tram/bus sections as some

53 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 passengers will be able to reach the city centre directly, without changing in main railway station serving the city of Gdańsk (Gdańsk-Główny). While the introduction of new services might undermine the effectiveness of GPKM IIIA in the future, they will contribute anyway to enhance the attractiveness of public transport service.

54 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

5 FINAL ASSESSMENT

Based on the different findings produced by the project analysis both in terms of effects generated and measured through the CBA or qualitatively discussed as well as of factors affecting the generation of those effects, the final assessment of the project performance is presented here after along a set of evaluation criteria.

5.1 PROJECT RELEVANCE AND COHERENCE The project was relevant in the context where it was implemented, as it was the right initiative to implement in order to enhance the attractiveness of transit services and retain utilisation of public transport in Gdańsk. Actually, the activities covered by the project aimed at encouraging the residents of Gdańsk to keep using public transport, hence reducing congestion due to constant growth in motorisation which was one of the main problems affecting the municipality of Gdańsk in an overall context of economic growth. This strategic goal of the project is fully in line with the priorities set in number of strategic documents at local, regional and national levels.

The investments implemented under the Gdańsk Urban Transport Project – phase IIIA are not only coherent with the project objectives, i.e. providing more efficient, comfortable and environmentally friendly public transport connection for Gdańsk’s residents ─ especially those located in the Southern districts ─ but also consistent with the other phases of GPKM. Actually, the GPKM implementation was and still is based on a prioritisation system of network sections based on the technical analysis of tram network quality and the needs of inhabitants. The resulting ranking guides the realisation of the investment plan, ensuring that no random implementation is carried out. At the time studies were performed for the development and financing of the GPKM phase IIIA (e.g. “Study of Conditions and Directions of Spatial Development of Gdańsk”) basic assumptions supporting the project implementation were related to the future increase in the daily mobility between the “city bedrooms” and other parts of the city, thereby creating a demand for passengers travelling from the southern part of Gdańsk to the city centre. Moreover the use of whole tramway network was also assumed to increase due to the tourist flows expected to be generated by the EURO 2012 Football Championship event. Today punctual data are not available with respect to these assumptions however the implementation of the phase IIIA of the GPKM initiative, in line with previous and subsequent phases, seems to have significantly contributed to make the service more attractive thus avoiding public transport in the city to revert the declining trend registered in the past. As a matter of fact the, number of passengers using public transport has grown over recent years.

5.2 PROJECT EFFECTIVENESS The project was worthwhile because, while costing EUR 134.3 million (in nominal value), the socio-economic NPV of the project is equal to EUR 408.3 million, with an EIRR of 17.7%. Benefits in terms of cost savings and externalities clearly outweigh the investment and operating costs, so the performance indicators confirm that the project was desirable for Gdańsk’s society and increased welfare. This is the result of the combination of two main drivers: firstly, cost savings in the construction phase, secondly, a considerable reduction in the social costs – time savings, VOC reductions, accident cost, air pollution, GHG emissions, noise - of the trips served by the tram. Additionally, the risk analysis shows that under the socio-economic perspective the project has a negligible risk level, i.e. with negative variations from the reference case of the values of critical variables, there is only a probability of 0.3% that the ENPV of the

55 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 project become negative and a probability of nearly 50% that the expected ENPV is less than the reference one.

Moreover, a positive effect on the service quality is also recognised according to the results of the satisfaction surveys undertaken amongst Gdańsk citizens and the interviews with the stakeholders. In fact, modernization of some parts of the network as well as the purchase of new modern tram cars altogether increased the journey comfort, allowing for smoother movement of vehicles, more comfortable seats and display of passenger information system.

It is worth mentioning that along with overall very positive project assessment by citizens there are some inconveniences in terms of noise and maintenance. The former were reported by some inhabitants living close to the newly constructed tram loop. Although overall satisfied with the investment and confirming its relevance, such inhabitants are annoyed ─ especially at night ─ by noises coming from the trams entering the loop and the ones parking at the loop (with the pantographs sticking to the catenary making noise). The latter were reported by journalists and citizens during interviews.

The expansion of the network towards the periphery represented a considerable improvement in connectivity and territorial cohesion as it contributed to reduce the unequal distribution of resources and opportunities among districts. More specifically, the project not only enabled an increased connectivity of the southern parts of Gdańsk, in particular Chełm, but also Jasień and Ujeścisko – Łostowice districts to the city centre but have also contributed to an overall real estate offer enhancement in such districts adjacent to the newly constructed tram section. Due to the replacement of a considerable number of old trams with low-floor tram fleet facilitating elderly people and disabled to use the service, the project has also had a positive impact on social cohesion by enabling such disadvantaged groups to more easily access the tram service. No data are available regarding the number of passengers with reduced mobility or elderly people using the services; however thanks to the implementation of the GPKM wider initiative including its phase IIIA, the system today includes 75% of low-floor tramway cars. In respect to the time frame of effects, it is reasonable to consider that most of the benefits are likely to have already materialised and stabilised. Further effects may be however expected upon full integration of the tariffs among the different public transport systems.

In terms of mechanisms and determinants explaining the project outcomes, the first finding is that the institutional, economic and social context played a relevant role in the project’s success. As mentioned before, the southern districts of Gdańsk were experiencing significant residential growth, leading to an increase in centre- periphery transport flows. The context was highly positive for the project also considering the steady growth of tourists, together with the planned European Football Championships EURO 2012. In addition, the project benefited from the long term, stable institutional arrangements. This has facilitated good decision-making capacity, with long-term vision, and enabled the completion of projects such as the GPKM, which are planned in different stages.

The success of the project was also largely due to its accurate planning and selection process. Actually, the prioritisation mechanism ─ based on constant monitoring of the technical status of the network vis-à-vis city development directions and citizen’s needs ─ used by the City of Gdańsk to define each phase of a wide GPKM programme together with the involvement of skilled professionals play a key role in the definition of the project.

56 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

In spite of the fact that the public consultation process was done in line with the regulations binding at that time, the exhaustive negotiation set up by the city to overcome some claims on noise effect is not perceived ─ in retrospect ─ as fully satisfactory by citizens living close to the newly constructed tram loop. According to their interpretation at the time of design and environmental impact assessment proceeding, locating the tram tracks bit further from the noise barriers might have been considered and implemented, that would substantially reduce the inconvenience resulting from the noise made by trams. Such a situation might be considered a missed opportunity to amend the design in order to meet the inhabitants’ expectations. But in practical terms it was not possible to fulfil those requirements, due to technical constraints resulting from limitations of ground available for the tram loop construction. These claims do not however change the overall very positive assessment of the projects, which is also confirmed by those inhabitants.

Finally, another factor which has positively influenced the project’s outcome is the well- defined roles and responsibilities of the different transport and government institutions and their experience in the transport sector within the Gdańsk municipality.

5.3 PROJECT EFFICIENCY Thanks to the good planning capacity and construction supervision, the project’s construction was completed within schedule and budget. More specifically, the project was completed with a budget slightly lower (667,016,238 PLN) than the originally assumed under the Financial Agreement (671,205,349 PLN). Also the results of the ex- post CBA ─ with ENPV at the level of EUR 408.3 million and ERR equal 17.7% ─ confirm that the project was desirable form the point of view of society and that all the expected effects have been materialised. The financial sustainability has been assessed for both the city – on the basis of the city of Gdańsk financial forecast for 2017-2045 – and the operator – GAiT (former ZKM) – by adjusting the ex-ante financial projections on the basis of 2009-2016 data. The financial sustainability is guaranteed by compensation payments from the City to GAiT, which are part of the existing Public Service Contract valid till 2030 for trams.

5.4 EU ADDED VALUE The project as part of the wider GPKM initiative contributed to the retaining of the patronage of the public transport system in Gdańsk. It has led to a significant reduction in the decline of public transport passengers, with positive impacts on the environment. The development of the tramway system and its integration in the wider metropolitan and regional network of transit services, is also increasing the interconnection of the local and regional traffic flows with the long distance traffic along the core network corridors (which is a target and priority of the TEN-T Regulation EU 1315/2013 and of the Baltic- Adriatic Corridor work plan). Overall, the analysis of the performance of the public transport system in Gdańsk within the socio-economic and operational context of the transport system in the city, show that the implementation of the GPKM wider initiative and phase III A is worth generating positive effects and impacts which could not be achieved without the support from the EU. As a matter of fact, the City of Gdańsk would not have the financial capacity to support a set of unprofitable (see the financial indicators of the ex-post financial analysis ─ FNPV and FRR ─ both below zero) but socially desirable projects such as GPKM IIIA. Therefore, without the EU support the project would have been delayed and reduced in its scope.

57 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

With respect to the future, in order to implement the further phases of GPMK and related planned investments in the public transport sector, the EU support continues to remain crucial in order to pursue the same level of ambition of interventions implemented so far. As a matter of fact, the local authorities lack the financial capacity to implement intensive infrastructural investment aimed at targeting EU policies on urban transport and mobility without the support of the EU funds.

As a final remark, it is worth noting that the role of JASPERS can be considered an additional element of the EU added value. As a matter of facts, it helped the project beneficiary (i.e. the City of Gdańsk) to streamline the forecasting process in the preparatory phase, which resulted in a more accurate and realistic demand analysis underpinning the project appraisal.

5.5 FINAL ASSESSMENT In conclusion, the Gdańsk Urban Transport Project – phase IIIA represents a good example of infrastructural project in the urban transport sector which managed to deliver all the expected benefits at the expected time and costs. This achievement is due in primis by the adoption of a wide and long-term plan, ensuring a joint analysis of local transport needs and good inter-modality, which in turn led to an efficient solution. This. in turn, is the result of good managerial capacity and effective project governance. The local authorities were in fact able to promptly provide an adequate response to the local needs and make financial and technical capacity available for the initiation and the implementation of the project. The fact that the service operation is adequately provided by the operator is another key factor explaining the positive performance of the project. As a matter of fact, the tram service is reliable and the new vehicles are maintained in good conditions. The positive performance of the project, although it is expected to be maintained in the long-run would possibly be diluted in its magnitude due to the evolving context. For instance, the project could be affected by the full integration of the ticketing system in the metropolitan area of Gdańsk as well as by the introduction of new competing services which might undermine the effectiveness of GPKM IIIA.

58 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 7. Evaluation matrix CRITERION EQ ASSESSMENT SCORE To what extent the original objectives of the examined major project The project was and over the years remained fully in matched: line with the development needs and the priorities Relevance  the existing development needs, established at various levels 5  the priorities established at the programme, national, and/or EU level.  Are the project components in line with the stated project objectives?  To what extent the examined the project were consistent with other Coherence Fully consistent 5 national and/or EU interventions carried out in the same field and in the same area?  Has the examined major project achieved the objectives stated in the applications for Cohesion policy support?  Was the actual implementation in line with the foreseen time schedule?  What factors, including the availability and the form of finance and to what extent influenced the implementation time and the achievement observed?  What has changed in the long run as a result of the project (for The project has achieved the expected objectives in example, is there evidence showing contribution of the project to the line with the foreseen time schedule. It turned out to Effectiveness private sector investments)? 4 be the best option among all feasible alternatives.  Were these changes expected (already planned at the project design

stage, e.g., in terms of pre-defined objectives) or unexpected (emerged, for instance, as a result of changes in the socio-economic environment)?  How have these changes matched the objectives set and addressed the existing development needs, the priorities established at the programme, national and/or EU level?  Did the selected project turn out to be the best option among all feasible alternatives?  Are there any significant differences between the costs and benefits in the original cost-benefit analysis (CBA) and what can be observed Efficiency Nil differences 4 once the project has been finalised?  To what extent have the interventions been cost effective? What is the EU added value resulting from the examined major project (in particular, could any of the major projects examined, due to its risk profile, complexity or scope, have not been carried out if not for the EU support)? High EU added value, i.e. the project achieved EU added value  Did the examined major projects achieve EU-wide effects (e.g. for positive effects which would have been hardly 4 preserving the environment, building trans-European transport achieved without the EU support networks, broadband coverage etc.)?  To what extent do the issues addressed by the examined interventions continue to require action at EU level? Source: Authors

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6 CONCLUSIONS AND LESSONS LEARNED

The ex-post assessment of the major project relating to the implementation of the Phase IIIA of the Gdańsk Urban Transport Project supports the conclusion that the project was overall technically sound under both the infrastructural and functional stand points, contributing to the main targets and objectives of the EU transport and cohesion policies. The results of the ex-post CBA are positive also confirming that the project is adding value to the EU society. The scope of the Gdańsk UrbanTransport Project and specifically of Phase IIIA was about the modernisation of the tramway system in the Gdańsk urban area. Whilst the project only marginally changed the layout of the tramway system, it significantly affected the operational capacity of the network and of the whole public transport system, increasing the quality of the services towards a more integrated sustainable urban transport system.

Several lessons can be learned from the ex-post assessment of this major project:

 First, the project allows to understand to what extent the institutional context’s characteristics, may positively influence the development of a project. The whole Gdańsk Urban Transport Project and its different phases were carefully prepared also involving the support of the EBRD and JASPERS. The good preparation of the project resulted in no cost overruns and overall confirmation of the results of the ex-ante assessment.  Second, the project demonstrates that coordinated investment strategy aimed at maximising the benefits generated by a set of different but related projects is key to reach ambitious goals such as improving the performance of the public transport system to keep it competitive in face of a growing motorization rate supported by economic growth. The major projects represent in fact a good example of a project generating positive effects thanks to its inclusion in coherent transport and land use planning processes.  Third, by replacing the rolling stock with new low-floor vehicles allowing operation of services on lines with inclination higher than 5% the tramway system can become also an instrument to promote social and territorial cohesion in the city. The tramway system is nowadays assumed to follow and accompany the expansion of the city, providing sustainable transport accessibility.  Finally, this case study points to the fact that major project can have a pivotal role in promoting new solutions. Actually, as part of the project the first interchange node was developed at the Łostowice – Świętokrzyska loop. This allowed for the first time in Gdańsk to have the tram service integrated not only with bikes and cars but also with buses. As a result of this experience, the realization of other nodes in different parts of the city took place over the years as part of other projects.

The above elements resulted in the capacity of the project to generate significant benefits for society despite its scope being predominantly limited to modernisation activities, with an overall limited impact on the infrastructure elements of the urban transport system.

60 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

ANNEX I. METHODOLOGY OF EVALUATION

This Annex summarises the methodological approach undertaken for carrying out the project case studies and presented in the First Intermediate Report of this evaluation study. The main objective is to provide the reader a concise account of the evaluation framework in order to better understand the value and reach of the results of the analysis as well as to enable him/her, if interested, to replicate this methodology26.

The Annex is divided into four parts, following the four building blocks of the methodological approach (mapping of effects; measuring the effects; understanding effects; synthesis and conclusions) laid down in the First Intermediate Report. Three evaluation questions, included in the ToR, guided the methodological design. They are:

 What kind of long term contribution can be identified for different types of investment in the transport field?  How is this long term contribution generated for different types of investments, i.e., what is the causal chain between certain short term and log- term socio-economic returns from investments?  What is the minimum and average time needed for a given long term contribution to materialise and stabilise? What are these time spans for different types of investments in the transport field?

A I.1 Mapping the effects The Team developed a classification of long-term effects, with the aim of identifying all the possible impacts of transport investments on social welfare. Under four broad categories, a taxonomy of more specific long-term development effects of investment projects has been developed. The definition of each type of effect is provided in the Table below.

Far from being exhaustive, this list is intended to guide the evaluators in identifying, in a consistent and comparable way, the most relevant effects that are expected to be identified and included in the analysis. Additional effects could possibly be relevant in specific cases and, if this is the case, they can be added in the analysis. In researching all the possible long-term effects of project investments, it is acknowledged that there could be a risk of duplication. In addition, the allocation of some effects under different categories is to some extent arbitrary and thus it may happen that categories overlap. That said, caution will be paid in order to avoid double counting when performing the ex-post CBA.

26 Specific recommendations which may enable application of the same evaluation methodology to future projects are discussed in the Final Report of this evaluation study.

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Table 8. Taxonomy of effects DIRECT EFFECTS DESCRIPTION Reduction in travel time for business travellers, shippers and carriers (including the hours gained Travel time because of a reduction of congestion) is a typical positive outcome of transport project, except those that specifically aim at environmental or safety benefits. Vehicle operating cost savings for the travellers (fuel costs, fares) and for transporters of goods (this Vehicle operating cost refers to the distance-dependent transport costs) are relevant if the project aims at reducing congestion and/or the journey distances. It means reduced variation in journey times. Reliability benefits are potentially important for many Reliability of journey time projects, unless journey times are already quite reliable. However, often forecasting models or other information for the impacts on and through reliability are missing (de Jong and Bliemer, 2015) It includes the revenues (e.g. rail ticket income increase) accrued by the producer (i.e. owner and operators together) as well as the operational cost savings. To some extent it can reflect the Income for the service previous aspects (i.e. the service fare is increased to reflect a better service allowing for significant EFFECTS ON provider time saving for the users) so double counting shall be avoided. This aspect might be particularly ECONOMIC relevant for public transport projects or toll road projects, especially if the project is expected to GROWTH feature significant traffic (generated or induced) or a substantial change in fares. ADDITIONAL EFFECTS DESCRIPTION It refers to the agglomeration effect on productivity (the productivity of the economy is increased because the project leads to a clustering of economic activities together in a core city which makes these sectors produce more or better goods and services together than before). Agglomeration effects are unlikely to occur for small projects and even for large projects there are specific pre- Wider economic impacts conditions (see for instance Chen and Vickerman, 2017). Wider economic impacts (agglomeration effects) depend on whether the project makes a potential economic cluster location substantially more accessible. This is only possible if the infrastructure network before the project had important missing links which the project effectively removes. It refers to wider spillover effects that any investment project may bring to the Public Administration and other institutions at national or regional levels in terms of expertise gained by working on large Institutional learning scale projects. Learning may lead to productivity gains by stimulating the improvement of existing technical know-how, improved policy-making, competitive tendering and divert resources towards the most growth enhancing projects.

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DIRECT EFFECT DESCRIPTION Leisure time saving relates to projects that provide a reduction in travel time for non-business Travel time travellers. It relates to the amount of fatalities, serious and slight injuries, damage-only accidents. Safety Safety (accident savings) impacts should possibly be included in all project evaluation. Safety of travellers in the vehicle and at stations, platforms and stops, safety of the goods Security transported (often damaged or stolen). Security impacts are often neglected in project evaluation, but for public transport projects (both urban and intercity) they can be of considerable importance. EFFECTS RELATED Noise It refers to the exposure of population to noise measured in dB TO QUALITY OF LIFE AND WELL- ADDITIONAL EFFECT DESCRIPTION A reduction of crowding in public transport is mainly relevant for projects that provide significant BEING Crowding additional capacity in public transport. Service quality (other It refers mainly to the availability of specific service features increasing the journey comfort e.g. than crowding) smoother movement of the vehicles, more comfortable seats, provision of electricity, Wi-Fi, catering. This relates to projects that provide infrastructure with positive visual effects (e.g. a beautifully Aesthetic value constructed bridge) or when public transport provide a better image in the eye of the public. Also, it refers to projects that lead to a less attractively looking landscape (e.g. constructing high walls). It refers to the spillover effects of urban transport projects on residents (not necessarily users of the Urban renewal project) due to an improved local context and possibly reflected in an increase in real estate values. DIRECT EFFECT DESCRIPTION Local air pollutants are typically small particles, NO , VOCs and SO The increased/decreased volume Local air pollution x 2. of local air emissions is a typical effect of transport projects. Climate change refers to the volume of greenhouse gases (GHG) emitted by transport infrastructure. Climate change EFFECTS ON THE The increased/decreased volume of GHG emissions is a typical effect of transport projects. ENVIRONMENT ADDITIONAL EFFECTS DESCRIPTION This refers to the reduction of biodiversity through the extinction of species in a specific area. It is Biodiversity not a common effect but it can be relevant in selected cases. Emissions of substances, e.g. from the road, into watercourses, that are harmful for people (as Water pollution drinking water) or for life in the water EFFECTS RELATED ADDITIONAL EFFECTS DESCRIPTION TO Social cohesion It encompasses the allocation of the main benefits over income and social groups DISTRIBUTIONAL ISSUES Territorial cohesion It encompasses the allocation of the main benefits over central (core) and peripheral areas Source: Authors

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A I.2 Measuring of effects Because of the variety of effects to be accounted for, a methodological approach firmly rooted on CBA (complemented by qualitative analysis when necessary) is adopted in order to grasp the overall long-term contribution of each project.

B. Effects that are quantitative, but not in money units, and that can be converted into money units in a reasonably reliable way (e.g. transport time savings, accidents, air pollution)27. These effects can also be included in the CBA.

C. Effects that are quantitative, but not in money units, for which there are no reasonably reliable conversion factors to money. We propose not to try to include such effects in the CBA, but to discuss them in a qualitative way together with the overall outcome of the CBA.

D. Effects that are difficult to measure in quantitative (cardinal) terms, but do lend themselves for ordinal measurement (a ranking of the impact of different projects on such a criterion can be provided, such as very good, good, neutral, bad, very bad). We propose to discuss these effects in qualitative terms.

E. Effects that might occur but that are subject to a high degree of uncertainty: these will be treated as part of the risks/scenario analysis that will be included in the CBA.

F. Effects that might occur but that we cannot even express in an ordinal (ranking) manner: they are residual effects that can be mentioned in qualitative description in case study report.

In short, all the projects’ effects in A and B are evaluated by doing an ex-post cost-benefit analysis (CBA)28. Reasonably, these represent the most significant share of long-term effects. Then the outcome of the CBA (e.g. the net present value or benefit-costs ratio) is complemented by evidence from C and D, while E is used for descriptive purposes. Moreover, qualitative techniques are used to determine why certain effects are generated, along what dimensions, and underlying causes and courses of action of the delivery process (see below).

Section 3 of each case study includes a standardised table in which scores are assigned to each type of long-term effect. Scores ranging from -5 to +5 (5 = very strong negative effect; 0 = no effect; 5 = very strong positive effect) are given in order to intuitively highlight which are the most important effects generated for each case study.

A I.3 Understanding the effects Once the project effects have been identified and measured, and the causal chain linking different categories of short-term and long-term effects has been investigated, the third building block of the methodological approach entails reasoning on the elements, both

27 Methods to establish such conversion factors include: stated preference surveys (asking respondents about hypothetical choice alternatives), hedonic pricing or equating the external cost with the cost of repair, avoidance or prevention or with the costs to achieve pre-determined targets 28 More details on the approach adopted to carry out the ex-post CBA exercise and, in particular, indications on project identification, time horizon, conversion factors and other features are extensively described in the First Intermediate Report of this evaluation study.

64 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 external and internal to the project, which have determined the observed causal chain of effects to take place and influenced the observed project performance.

Taking inspiration from the literature on the success and failure of projects, and particularly on costs overruns and demand shortfalls, and on the basis of the empirical evidence which develops from European Commission (2012) six stylised determinants of projects’ outcomes and their development over time have been identified (see table below).

The interplay of such determinants may reinforce or dilute one effect over the other. Moreover, each determinant may contribute, either positively or negatively to the generation/speed up/slow-down of certain short-term or long-term effects. For this reason it is important not only to understand the role that each determinants has on the observed project outcome, but also their interplay in a dynamic perspective.

In doing this, it is useful to refer to stylised, typical “paths” of project behaviours outlined in the following table. Such patterns capture common stories and reveal recurring patterns of performance, as well as typical problems that may arise and influence the chronicle of events. Case studies test the validity of such archetypes and are used to specify in better nuances or suggest possible variations or additions. Section 4 of each case study includes standardised tables in which scores are assigned to each determinant. Scores ranging from -5 to +5 are given in order to intuitively highlight which are the most relevant determinants explaining the project outcomes (5 = very strong negative effect; 0 = no effect; 5 = very strong positive effect). Moreover, section 4 of each case study includes a graph describing the project’s behavioural pattern, i.e. describing the chain of interlinked causes and effect determining the project performance over time.

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Table 9. Stylised determinants of projects’ outcomes DETERMINANT DESCRIPTION It includes the considerations of institutional, cultural, social and economic environment into Relation with which the project is inserted, was the project appropriate to this context?; is there a problem the context that the project can solve?; does the project remain relevant over the years? It refers to the institutional and legislative framework that determines how public investment decisions (and especially those co-financed by ESIF) are taken, i.e. which is the process in place Selection and the tools used to select among alternative projects. The selection process is influenced by process incentive systems that can lead politicians and public institutions to either take transparent decisions or strategically misrepresent costs and/or benefits at the ex-ante stage. it refers to the technical capacity (including engineering and financial expertise) to properly design the infrastructure project. Under a general standpoint, we can distinguish: the technical capacity to identify the most appropriate conceptual design, which best suits the need of a specific context. Even when a region really is in need of the project, it usually requires a well-designed project to solve the observed problems. This, in turn, involves that different alternatives are considered and the best option in terms of technical features and strategical Project design considerations is identified; the technical capacity to develop the more detailed level of design (preliminary and detailed), thus identifying most effective and efficient detailed infrastructure solutions and construction techniques, thus avoiding common pitfalls in the construction stage (such as introducing variants that are not consistent with the original conceptual design) and the risk of cost overruns during the construction phase by choosing inappropriate technical solutions. It regards the possibility and capacity to predict future trends and forecast the demand level and estimate the technical challenges, thus estimating correctly the required resources (e.g. looking at the dangers of over-predicting demand and under-predicting construction costs). In Forecasting particular, technical forecasting capacity is related to the quality of data used and capacity forecasting/planning techniques adopted. At the same time, forecasting capacity includes the ability of the project promoter and technical experts not to incur in the planning fallacy (the tendency to underestimate the time or cost needed to complete certain tasks) and optimism bias (the systematic tendency to be overly optimistic about the outcomes of actions). It concerns the number and type of stakeholders involved during the project cycle and how responsibilities are attributed and shared. This is influenced by the incentive mechanisms. If bad Project incentives exist, this can lead different actors involved in the project management to provide governance benefits for their members, thus diverting the funds away from their optimal use, or forcing them to delegate responsibilities according to a non-transparent procedure. It refers to the: professional ability to react to changes in the context/needs as well as to unforeseen; Managerial professional capability to manage the project ensuring the expected level of service in the capacity operational phase. To ensure a project success, it is not enough that it is well planned and designed, but also that the organizations in charge of the management and operations provide a good service to the end users (e.g. ensuring a good maintenance of the infrastructure). Source: Authors

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Table 10. Behavioural patterns archetypes. Behavioural patterns are illustrated by use of diagrams linking determinants and project outcomes in a dynamic way TYPE DESCRIPTION This pattern is typical of projects where the good predictions made ex-ante (both on the cost side and demand side) turn out to be accurate. Proper incentive systems are in place so that Bright star the project actually delivers value for money and success. Even in the event of exogenous

negative events, the managerial capacity ensures that proper corrective actions are taken and a positive situation is restored. This pattern is typical of projects which, soon after their implementation, are affected by under capacity issues because of a combination of low demand forecasting capacity, weak Rising sun appropriateness to the context, and weak technical capacity to design the infrastructure.

However, due to changed circumstances or thanks to responsible management and good governance the project turns around to reap new benefits. This pattern is typical of projects for which the good predictions made ex-ante (both on the Supernova cost and demand side) turn out to be accurate. However, due to changed circumstances or because of weak management capacity and/or governance the project eventually turns out to be unsuccessful. This pattern is typical of projects starting from an intermediate situation and resulting in a failure. This outcome can be explained by a low forecasting capacity affected by optimism bias Shooting which yields a cost overrun. Then during project implementation, because of low managerial star capacity and/or poor governance (also due to distorted incentives) corrective actions are not

implemented, this leading to project failure. The situation is exacerbated if unexpected negative events materialise during the project implementation. This pattern is typical of projects that since the beginning of their life fail to deliver net benefits. This is a result of a combination of ex-ante bad factors (i.e. low technical capacity for Black-hole demand forecasting, optimism bias, inappropriateness to the local context and bad incentives affecting both the selection process and the project governance) and careless management during the project implementation or bad project governance (e.g. unclear division of responsibilities, bad incentive schemes). Source: Authors

A I.4 Synthesis and conclusions Qualitative and quantitative findings are integrated in a narrative way, in order to develop ten project ‘histories’ and to isolate and depict the main aspects behind the project’s long-term performance. A final judgment on each project is then conveyed in the case studies with an assessment structured along a set of evaluation criteria, as suggested in the ToRs. Evaluation criteria are the following:

 Relevance (were the project objectives in line with the existing development needs and the priorities at the programme, national and/or EU level?);  Coherence (with other national and/or EU interventions in the same sector or region);  Effectiveness (were the stated objectives achieved, and in time? Did other effects materialise? Were other possible options considered?);  Efficiency (costs and benefits relative to each other and to their ex-ante values);  EU added value (was EU support necessary, EU-wide effects, further EU action required?).

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ANNEX II. EX-POST COST-BENEFIT ANALYSIS REPORT

This Annex illustrates the ex-post CBA of the project under consideration, undertaken to quantitatively assess the performance of the project. The methodology applied is in line with the First Interim Report and, more generally, with the EC Guide (European Commission, 2014). This annex aims to present in more detail the assumptions, results of the CBA and the scenario analysis for the project under consideration.

A II.1 Methodology, assumption and data gathering In what follows, the main assumptions and the procedure of data gathering are described in detail.

 Project identification The unit of analysis of this CBA is the project Gdańsk Urban Transport Project - phase IIIA. As explained in Section 1 of the main report, the project was included in the long-term urban transport development plan named GPKM with the aim of providing a fast and safe public transport connection to the city of Gdańsk. The project under assessment is composed of four main components: o construction of a tram line in the south district of Gdańsk from Chełm to “Nowa Łódzka”, (3.35 km, with 6 new stations, a station every ~450 m), including the construction of a Park&Ride and a Bike&Ride facilities; o purchase of 35 new trams; o modernisation of the rolling stock and improvement of the Wrzeszcz tram depot; o rebuilding of the tram tracks and overhead line (12.06 km) and construction and reconstruction of the traction power;

The project was implemented from 2007 to 2012 as detailed below.

Table 11. Synthesis of the interventions ACTIVITY IMPLEMENTATION PERIOD Preparatory phase (design, documentation, FS) 2007-2011 Land acquisition 2010-2011 Construction Works 2008-2012 Supply of rolling stock and other equipment 2009-2012 Source: Authors  Time horizon In line with the First Interim Report, the time horizon for the CBA of the project is set at 30 years (incl. 6 years of construction). Accordingly, the timeframe for the project’s evaluation runs from 2007, when the first capital expenditure occurred, to 2036. A mix of historical data from 2007 to 2016 (covering 10 years) and forecasts from 2018 to 2036 (covering 19 years) is used. The 30-years’ time horizon almost matches the technical life of the rolling stock, which is assumed to last 30 years and it is the main component of the investment (46%). On this basis, no replacement cost is included in the analysis for the rolling stock, and the residual value only include the value proportional to the residual life. Replacement costs are instead included for the tracks and the depot, also near the end of the time horizon, as these components have a much longer technical life, but they require period renewals to preserve their functionality.

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 Constant prices and discount rates In line with the guidelines of the First Interim Report, the CBA was performed using constant prices. Historical data have been adjusted and converted into Euro at 2017 prices by using the yearly average percentage variation of consumer prices provided by the International Monetary Fund. As for data from 2017 onwards, they have been estimated in real terms (no inflation is considered). Consistent with the choice of using constant prices, financial and social discount rates have been adopted in real terms. Specifically, inflows and outflows of financial analysis - for both the backward and forward periods of analysis – have been discounted and capitalised using a 4% real rate, as suggested in the EC CBA Guide (2014). With regard to the economic analysis, a real backward social discount rate of 4.83% and a real forward social discount rate of 4.19%, specifically calculated for Poland (see the First Interim Report for the calculation), have been adopted.

 Without the project scenario As explained in Section 2 of the main report, before its implementation, taxi, bus and private car were the transport modes connecting the southern district of Nowa Łódzka with the city of Gdańsk. On that basis, the reference scenario for the CBA (Without the project scenario) is a “Business as usual” scenario, which means that no action are implemented to significantly improve (infrastructure refurbishment), extend (line construction) or modernise (rolling stock and depot improvement) the existing tram network. Maintenance is only ensured in order to avoid collapse of the system.

 Data sources The analysis relied on data provided by the City of Gdańsk, GAiT (former ZKM) and ZTM, and on the opinions of the experts interviewed. Moreover, information has been gathered from a review of documents available online and on the local press.

 Technical features The project includes a total of six stations, currently operational along the new section of the tram network from Chełm to Łostowice-Świętokrzyska loop. The total length of the line amounts to 3.35 km. In addition, the project includes the purchase of 35 new trams to be used on the entire city network, the modernisation of the rolling stock and improvement of the Wrzeszcz tram depot and the rebuilding of the tram tracks and overhead line (12.06 km) and construction and reconstruction of the traction power.

The traffic forecasts for the ex-ante analysis were prepared for years 2013 to 2034 with the VISUM software (the base year was 2009) at the City level (not only alongside the new tram line extension). This approach is correct, as it allows taking into consideration

69 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 that the project scope extends beyond the 3.35 km extension, but it also includes the purchase of new rolling stock and the rehabilitation of several lines (12.06 km). Therefore, in the ex-post assessment, the same approach was retained, and hence demand assumptions were developed at the city level, based on the following assumptions:  For the with-project scenario: o The total demand of public transport services (bus+tram) was adjusted to the observed values as provided by the City up to 2016; o The split between tram and bus passenger was assumed as estimated in the model for the ex-ante CBA, as no real data were made available; o The growth after 2016 was based on the ex-ante assumptions, which were considered overall realistic.  For the without-project scenario, for which no data can be directly observed after 2012 (i.e. the actual project opening): o The total demand of public transport services (bus+tram) was projected from the 2012 observed values (before the project opening) based on the minimum of the annual growth rates assumed in the ex-ante CBA and the observed growth rates till 2016; o The split between tram and bus passenger was assumed as estimated in the model for the ex-ante CBA; o The growth after 2016 was based on the ex-ante assumptions, which were considered overall realistic.

The trip purpose distribution is usually done in three groups (business, home- work/study-home, others), with a different distribution per mode. The methodology applied in this CBA model is slightly different as all car and public transport trips have been considered as nonprofessional, whereas the time of all van, truck and public transport drivers has been considered as professional. This approach is in line with the one adopted in the ex-ante CBA and is considered conservative.

The historical and future trend in tram users for the with-project and without-project scenarios resulting from the above assumptions is shown in the Figure overleaf.

Figure 34. Demand – historical data (2007-2016) and forecasts (2017-2036). passenger trips.

Source: Authors The traffic forecast does not consider any generated demand, but only demand diverted from alternative modes. The table below show the assumptions concerning the incremental passenger diverted from other public transport modes (bus) and private car.

70 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 12. Incremental demand split by previous mode of travel INCREMENTAL PAX PASSENGER DIVERTED PASSENGER DIVERTED YEAR ON TRAM (MILLION) FROM BUS FROM CAR 2012 0.0 0.0 0.0 2013 1.7 0.8 0.9 2014 1.8 0.8 0.9 2015 1.8 0.9 1.0 2016 1.9 0.9 1.0 2020 2.2 1.1 1.1 2025 2.5 1.4 1.2 2030 2.9 1.6 1.3 2035 3.3 1.9 1.4 2040 3.7 2.2 1.5 Source: Authors Supply On the supply side, the information about the changes in the total annual km of service operated by bus and tram was based on the ex-ante analysis, as this is in line with what was implemented.

A II.3 Financial Analysis Investment cost The investment cost of the project with reference of the main element of the project is depicted in the table below: the most relevant share of the budget is allocated to the purchase of new rolling stock (62 € million out of approx. 134 million, corresponding to 46%) and the reconstruction of the tram network (30%); the remaining project components, including the construction of the extension to “Nowa Łódzka” all together correspond to 23% of the entire investment.

The information on the investment cost was provided by the City of Gdańsk.

Table 13. Investment cost breakdown by project component net NOMINAL VALUE PROJECT ITEM PLN EUR Construction of the tram line to the “Nowa Łódzka” 77,004,875 19,174,521 Purchase of the rolling stock 250,426,800 62,357,271 Reconstruction of the tram network 163,296,363 40,661,445 Reconstruction of the “Wrzeszcz” tram depot 29,999,999 7,470,119 Other 18,540,426 4,616,640 Total 539,268,463 134,279,996 Source: Authors The table below summarizes the breakdown of the investment according to the main cost categories and shows the financial cost of the investment updated to 2017 values.

71 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 14. Investment cost breakdown by work component PRESENT VALUE (€ 2017) COST ITEM PLN EUR Preparatory phase (design, documentation, FS) 15,669,226 3,695,572 Land acquisition 24,991,090 5,894,125 Construction works 331,336,477 78,145,396 Supply of rolling stock and other equipment 356,783,335 84,147,013 Supervision, project management, information and 25,085,432 5,916,375 other costs Total 753,865,561 177,798,481 Source: Authors Residual value The income methodology was applied to the residual value calculation and was based on the assessment of net present value of financial flows at the end of project reference period.

Operating & Maintenance costs The O&M costs carried by the public transport operator (tram and bus) have been calculated according to the same methodology used in the ex-ante assessment, updating the price base to 2017. The unit operating costs of bus and tram services were provided for the ex-ante analysis by ZKM w Gdańsku Sp. z o.o and have been assessed at the same level for the reference option and for the investment option. Therefore, the incremental operating costs of the project consider changes in the vehicle kilometres in bus and tram services and additional necessary asset renewal and repair needs over the reference period.

Cost for maintenance and renewal of the infrastructure is estimated on the basis of the maintenance plans as provided for the ex-ante analysis.

Operating revenues Project revenues constitute the incremental ticket revenues collected by ZTM Gdańsk from passengers after the project is implemented. In 2011, an average revenue per passenger of 0.69 PLN net of VAT (0.17 EUR). A 45% fare increase in real terms is being considered during the project duration in order to maintain and increase the fare box ratio (from ca. 50% presently up to 75% in 2034). The tariff increase is assumed for both W0 and W1 scenario, so the incremental project revenues are explained only by growth in urban transport passenger-kilometres in the investment option.

Project’s Financial Performance On a financial basis, the profitability of the project is negative. The Financial Net Present Value (NPV) on investment is equal to nearly EUR -158 million (at a discount rate of 4%, real), with an internal rate of return of -6.9%. Also, the Financial Net Present Value on capital is negative with the level of EUR -112 million and with the internal rate of return for capital of -10.3%. These negative values confirm that the project was in need of EU funding since no private investor would have been motivated to implement it without an appropriate financial incentive. The results of the project financial performance are presented in Tables overleaf.

72 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 15. Financial performance indicators of the project INDICATOR PLN EUR FNPV/C - 671,209,857 - 158,304,211 FRR/C -6.9% FNPV/K - 479,108,291 - 112,997,238 FRR/K -10.3% Source: Authors

73 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 16. Financial return on investment (EUR)

IT. PROJECT FINANCIAL EFFECTIVENESS PRESENT VALUE 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

1 Operational income 0 0 0 108,871 105,013 0 -49,820 -50,972 -58,784 -55,040 134,365 142,910 151,557 160,916 138,536 148,585

1.1 Income from tickets 0 0 0 0 0 0 -49,820 -50,972 -58,784 -55,040 134,365 142,910 151,557 160,916 138,536 148,585

1.2 Income from scrap metal sale 0 0 0 108,871 105,013 0 0 0 0 0 0 0 0 0 0 0

2 CAPEX -74,909 -3,067,045 -3,143,717 -36,179,876 -77,485,226 -19,205,203 0 0 0 0 0 0 0 0 0 0 2.1 preparatory phase (design, -3,695,572 documentation, expertiese, FS) -74,909 -5,194 -295,284 -2,136,331 -286,027 0 0 0 0 0 0 0 0 0 0 0

2.2 land acquisition -5,894,125 0 0 0 -489 -4,657,704 0 0 0 0 0 0 0 0 0 0 0

2.3 construction works -78,145,396 0 -3,040,589 0 -10,432,884 -36,029,932 -11,917,423 0 0 0 0 0 0 0 0 0 0 2.4 supply -84,147,013 0 0 -2,473,788 -22,464,634 -34,242,601 -6,469,983 0 0 0 0 0 0 0 0 0 0

2.5 supervision and authors supervision -1,455,821 0 0 0 -130,747 -765,529 -259,013 0 0 0 0 0 0 0 0 0 0

2.6 project management -2,625,313 0 0 -369,811 -513,588 -678,089 -481,121 0 0 0 0 0 0 0 0 0 0

2.7 promotion -144,303 0 0 0 -4,775 -39,018 -72,863 0 0 0 0 0 0 0 0 0 0

2.8 other costs -1,690,938 0 -21,262 -4,834 -496,428 -786,327 -4,800 0 0 0 0 0 0 0 0 0 0

3 OPEX 0 0 0 0 0 0 -554,491 -537,882 -519,040 -525,884 -538,912 -543,696 -550,306 -4,027,296 -533,492 -543,869

3.1 Bus transport - operational costs 0 0 0 0 0 0 457,363 480,419 514,947 528,933 543,759 559,363 575,693 591,499 646,993 663,627

3.2 Tram transport - operational costs 0 0 0 0 0 0 102,364 98,792 92,088 81,698 61,704 46,744 29,007 9,678 -10,764 -33,010 3.3 Ordinary annual maintenance for the new section 0 0 0 0 0 0 -220,594 -221,697 -222,805 -223,919 -225,039 -226,164 -227,295 -228,431 -229,574 -230,721 3.4 Intermediate repairs of the modernised tram section 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

3.5 Re-investments on the depot 0 0 0 0 0 0 0 0 0 0 0 0 0 -3,955,703 0 0

4 Residual value 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

5 Total (1+2+3+4) -74,909 -3,067,045 -3,143,717 -36,071,005 -77,380,213 -19,205,203 -604,311 -588,853 -577,824 -580,924 -404,547 -400,786 -398,749 -3,866,379 -394,956 -395,284

74 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

It. Project financial effectiveness 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

1 Operational income 159,456 167,758 175,238 192,139 209,925 226,640 242,821 270,306 285,348 301,056 316,628 332,754 3,541,881 3,604,078

1.1 Income from tickets 159,456 167,758 175,238 192,139 209,925 226,640 242,821 270,306 285,348 301,056 316,628 332,754 3,541,881 3,604,078

1.2 Income from scrap metal sale 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2 CAPEX 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2.1 preparatory phase (design, documentation, expertiese, FS) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2.2 land acquisition 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2.3 construction works 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2.4 supply 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2.5 supervision and authors supervision 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2.6 project management 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2.7 promotion 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2.8 other costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0

3 OPEX -555,531 -567,567 -581,144 -604,886 -631,223 -658,123 -686,957 -32,700,371 -751,728 -786,875 -824,953 -866,259 -570,006 -1,299,744

3.1 Bus transport - operational costs 680,773 699,619 718,999 729,251 739,201 751,367 764,404 778,257 791,416 806,728 822,734 839,402 855,089 856,169

3.2 Tram transport - operational costs -57,200 -83,487 -112,034 -143,015 -176,621 -213,053 -252,530 -295,286 -340,425 -389,280 -442,138 -499,307 -170,487 15,042

3.3 Oridinary annual maintenance for the new section -231,875 -233,034 -234,200 -235,371 -236,547 -237,730 -238,919 -240,113 -241,314 -242,521 -243,733 -244,952 -246,177 -247,407

3.4 Intermediate repairs of the modernised tram section 0 -11,704,566 0 0 0 0 0 0 0 0 0 0 0 -14,101,462

3.5 Re-investments on the depot 0 0 0 0 0 0 0 -2,407,677 0 0 0 0 0 -1,012,176

4 Residual value 0 0 0 0 0 0 0 0 0 0 0 0 0 47,692,465

5 Total (1+2+3+4) -396,075 -399,809 -405,905 -412,747 -421,297 -431,483 -444,136 -32,430,065 -466,380 -485,818 -508,325 47,158,961 2,971,875 49,996,799

Source: Authors

75 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 17. Financial return on national capital (EUR) Lp. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

1 Inflow 0 0 0 108,871 105,013 0 -49,820 -50,972 -58,784 -55,040 134,365 142,910 151,557 160,916 138,536 148,585

1.1 Inflow from tickets 0 0 0 0 0 0 -49,820 -50,972 -58,784 -55,040 134,365 142,910 151,557 160,916 138,536 148,585

1.2 Inflow from scrap metal sale 0 0 0 108,871 105,013 0 0 0 0 0 0 0 0 0 0 0

1.3 Residual value 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2 Outflow -85,431 -3,067,045 -974,830 -16,230,668 -46,253,609 19,523,223 -3,766,882 -3,628,613 -3,491,364 -3,408,380 -4,927,058 -4,745,192 -4,565,152 -7,857,200 -4,175,040 -10,804,114

2.1 National contribution -85,431 -3,067,045 -974,613 -15,530,895 -43,854,763 52,384,670 0 0 0 0 0 0 0 0 0 -6,805,347

2.2 OPEX 0 0 0 0 0 0 -554,491 -537,882 -519,040 -525,884 -538,912 -543,696 -550,306 -4,027,296 -533,492 -543,869

2.3 Capital repayment 0 0 0 0 0 -29,331,805 -1,625,867 -1,625,867 -1,625,867 -1,625,867 -3,251,734 -3,251,734 -3,251,734 -3,251,734 -3,251,734 -3,251,734

2.4 Interest repayment 0 0 -217 -699,773 -2,398,846 -3,529,642 -1,586,524 -1,464,864 -1,346,456 -1,256,629 -1,136,412 -949,762 -763,113 -578,171 -389,814 -203,164

3 TOTAL (1+2) -85,431 -3,067,045 -974,830 -16,121,797 -46,148,596 19,523,223 -3,816,702 -3,679,584 -3,550,148 -3,463,419 -4,792,692 -4,602,282 -4,413,596 -7,696,284 -4,036,503 -10,655,529

Lp. 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

1 Inflow 159,456 167,758 175,238 192,139 209,925 226,640 242,821 270,306 285,348 301,056 316,628 332,754 3,541,881 51,296,543

1.1 Inflow from tickets 159,456 167,758 175,238 192,139 209,925 226,640 242,821 270,306 285,348 301,056 316,628 332,754 3,541,881 3,604,078

1.2 Inflow from scrap metal sale 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1.3 Residual value 0 0 0 0 0 0 0 0 0 0 0 0 0 47,692,465

2 Outflow -3,021,859 -3,648,828 -2,888,419 -5,108,210 -5,774,244 -5,360,522 22,117,276 -30,460,800 -1,907,923 -877,364 304,924 -4,454,579 -4,158,327 -4,888,065

2.1 National contribution 801,920 0 -2,307,276 -4,503,323 -5,143,021 -4,702,399 22,804,233 2,239,571 -1,156,195 -90,489 1,129,877 -3,588,321 -3,588,321 -3,588,321

2.2 OPEX -555,531 -567,567 -581,144 -604,886 -631,223 -658,123 -686,957 -32,700,371 -751,728 -786,875 -824,953 -866,259 -570,006 -1,299,744

2.3 Capital repayment -3,251,734 -3,251,734 0 0 0 0 0 0 0 0 0 0 0 0

2.4 Interest repayment -16,515 170,473 0 0 0 0 0 0 0 0 0 0 0 0

3 TOTAL (1+2) -2,862,403 -3,481,070 -2,713,181 -4,916,071 -5,564,318 -5,133,882 22,360,098 -30,190,494 -1,622,575 -576,308 621,552 -4,121,825 -616,446 46,408,478 Source: Authors

76 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Financial Sustainability The financial sustainability has been assessed for both the city - on the basis of the city of Gdańsk financial forecast for 2017-2045 and the operator – GAiT (former ZKM) – by adjusting the ex-ante financial projections on the basis of 2009-2016 data.

The project investments was co-financed by the EU (ERDF) and the national contribution. The overall level of EU co-funding for this project was 80% of eligible expenditures. The own contribution was partially co-financed from issuing revenue bonds by the project partner (ZKM, actually GAiT). The project financial sustainability is presented in the table overleaf; the analysis is developed from the standpoint for the entire public transport system of the city (tram and bus, service operations and infrastructure maintenance), as this can be considered as a unitary entity from the point of view of the city. Cash inflows therefore include not only the project revenue, but all ticketing revenue form the system; cash outflows include operating and maintenance costs for the entire bus and tram network as well as investment costs for the project. Data on network revenue and costs are not available for 2007 and 2008, but nonetheless the results of the analysis clearly show that the project is not financially self-sustainable, as so it is the whole transport system of the city: ticketing revenue cover only around 2/3rd of the costs. Notwithstanding the negative financial performance, the operator has been able to ensure the financial sustainability of operations over time. In fact, the sustainability of the project is guaranteed by compensation payments from the City to GAiT, which are part of the existing Public Service Contract valid till 2030 for trams.

77 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 18. Financial sustainability of the project (EUR) PROJECT SUSTAINABILI 2007 2008 2009 2010 2011 2012 … 2017 … 2022 … 2027 … 2032 … 2036 TY IN EURO Sources of 317,613 13,004,269 13,329,358 153,402,675 328,537,358 81,430,059 financing Total revenues n.a. n.a. 94,206,909 102,035,942 110,679,307 118,769,765 126,687,990 144,008,053 176,576,627 220,219,200 269,374,469 Compensation n.a. n.a. 68,614,825 71,002,599 84,927,737 96,594,651 105,724,176 98,938,574 67,590,149 60,572,767 96,196,399 payment Total inflows n.a. n.a. 176,151,092 326,441,216 524,144,402 296,794,475 232,412,166 242,946,627 244,166,776 280,791,967 365,570,869 Initial 317,613 13,004,269 13,329,358 153,402,675 328,537,358 81,430,059 0 0 0 0 0 investments Replacement n.a. n.a. 0 0 0 0 0 0 0 0 64,081,828 costs Loan repayment n.a. n.a. 0 3,470,062 24,475,085 40,676,051 34,376,737 30,117,855 0 0 0 (incl. interest) Total operating n.a. n.a. 162,607,855 169,299,664 170,807,443 174,302,423 197,186,706 211,794,921 242,853,534 278,942,774 299,445,659 costs Taxes n.a. n.a. 213,879 268,814 324,515 385,942 848,723 1,033,851 1,313,243 1,849,193 2,043,382 Total outflows n.a. n.a. 176,151,092 326,441,216 524,144,402 296,794,475 232,412,166 242,946,627 244,166,776 280,791,967 365,570,869 Net cash flow n.a. n.a. 0 0 0 0 0 0 0 0 0 Cumulated net n.a. n.a. 0 0 0 0 0 0 0 0 0 cash flow Source: Authors

78 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

A II.4 Economic Analysis From market to accounting prices In line with the CBA Guide (2014), the social opportunity cost of the project’s inputs and outputs has been considered in the economic analysis. For this purpose, market prices have been converted into accounting prices by using appropriate conversion factors. In particular, reference has been made to the Blue Book for the Public Transport Sector in Poland29. As for labour, it is worth noting that the shadow wage estimated by Del Bo et. al (2011) for Pomorskie Region (0.73) has been adopted to correct past values, instead 0.81 has been used to correct future values. The Table below summarises the conversion factors applied for each cost item.

Table 19. Conversion factors for input ITEM CONVERSION FACTOR SOURCE Labour cost under 0.73 backwards Conversion factors for labour as reported in investment costs and 0.81 forwards the First Interim Report, Volume I operating costs Land acquisition, supply, other costs JASPERS Blue Book for Public transport 1 under investment sector costs Material cost under JASPERS Blue Book for Public transport 1 operating costs sector Energy costs under JASPERS Blue Book for Public transport 0.66 operating costs sector JASPERS Blue Book for Public transport Residual value 0.83 sector Source: Authors based on cited sources Project’s effects Benefits generated by the implementation of the project can be distinguished into:

 Change in consumer surplus, represented by the time savings;  Changes in producer surplus, represented by trip cost savings for transport producers other than the PT operator (the latter being included in the OPEX);  Reduction in negative externalities as a result of the traffic diverted from road to the tram, including air pollution savings, GHG savings, reduction of collisions and accidents, reduction of traffic noise;

29 Blue Book, New edition, 2015, Public transport sector in the cities, agglomerations, regions.

79 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 35. Main socioeconomic benefits (Present Value, EUR)

Noise (0.00%)

GHG (0.01%)

Air pollution (2.3%)

Safety (0.72%)

Vehicles operating costs (4.12%)

Travel time (92.86%)

0 100 200 300 400 500 600 Milioni

Present value (EUR) Source: Authors The decrease in accident costs, due to a modal transfer from car to public transport, is quite marginal, such as the environment and climate cost decrease impact, in line with other public transport projects. This reflects the absence of any enforcement action in favour of public transport in the assumptions of this project. In what follows a description of each benefit’s components is provided.

Time savings The travel time savings result mainly from the from the bus users that shifted to the tram, being more reliable public transport mean. There are also time savings for the professional users. The ex-post time savings were calculated as person-hours saved due to project implementation * unit time cost for Poland for different trip purposes (commuting, business and other), according to the methodology described in the First Interim Report, Volume I (i.e. according to JASPERS Blue Book for public transport sector in Poland). The time savings appear to be the most dominant benefit in line with other investments of similar nature.

Trip cost savings In line with the conservative approach adopted in the ex-ante CBA, the passenger*km diverted form car for the calculation of the VOC savings was estimated as a fraction (33%) of the public transport traffic increase. The unit parameters applied for the ex- post VOC calculation follow the JASPERS Blue Book for public transport sector in Poland and are differentiated by vehicle category.

Air pollution savings Calculation of air pollution savings follows the methodology recommended by the JASPERS Blue Book for Public transport sector in Poland and is in line with the one adopted ex-ante. The unit parameters differentiated by vehicle category and appropriate for urban area were used for multiplication by the amended ex-post volumes of veh-kms in various speed ranges (every 10 km/h). This external benefit represents approximately 2.3% of the total economic benefits coming out of the project ex-post analysis.

GHG emission savings The GHG emissions’ savings have not been calculated at the ex-ante stage. In this ex- post CBA, the methodology recommended for Polish urban transport sector has been

80 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 again adopted to calculate this effect on the basis of vehicle-kms by categories of vehicles and speed ranges, multiplied by the corresponding unit parameters recommended in the JASPERS Blue Book. This effect is marginal for the project in subject.

Reduction of collisions and accidents The effect resulting from reduction of accidents have been reflected in decreased number of accidents including injuries and fatalities. However due to availability of data covering only the small part of the project area, not comparable to the one covered by ex-post analysis, the ex-post assessment was made on the basis of ex-ante data with the use of social accident unit parameters as recommended by the Volume I of the First Interim Report for fatalities, severe injuries and slight injuries. Considered the observed reduction in number of accidents this effect might remain slightly underestimated at this stage30.

Reduction of traffic noise Noise effect is another effects that has not included in the ex-ante analysis. In the ex- post CBA noise benefit has been valued following the approach suggested by the JASPERS Blue Book for Public transport sector and adopting recommended unit parameter to the forecasted transport work expressed in vehicle-kms.

Project’s Economic Performance

Table 20. Economic performance indicators of the project INDICATOR PLN EUR ENPV 1,731,039,447 408,264,020 B/C 3.6 EIRR 17.7% Source: Authors The ERR in Gdańsk is comparable to the results of other tram projects implemented in Poland. Also, the distribution of economic effects is comparable to the ex-ante analysis with the domination of travel time savings. The socio-economic ex-post indicators confirm that the project was desirable for Gdańsk’s society and increased welfare.

The results of the economic analysis are presented in the table below.

30 It shall be noted that in the short term (2011-2016), the estimated impact is slightly negative, due to a marginal increase in the volume of veh*km at the network level during the initial stages of the project operation. The project is then beneficial for road safety from 2016 on.

81 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 21. Economic return of the project (EUR) PRESENT IT. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 VALUE

1 CAPEX -162,462,573 -54,683 -2,244,683 -2,964,141 -32,610,929 -67,279,606 -15,767,989 0 0 0 0 0 0 0 0 0 1.1 preparatory phase (design, -54,683 -3,791 -215,557 -1,559,522 -208,799 0 0 0 0 0 0 0 0 0 0 documentation, expertise, FS) 1.2 land acquisition 0 0 0 -489 -4,657,704 0 0 0 0 0 0 0 0 0 0

1.3 construction works 0 -2,219,630 0 -7,616,005 -26,301,850 -8,699,719 0 0 0 0 0 0 0 0 0

1.4 supply 0 0 -2,473,788 -22,464,634 -34,242,601 -6,469,983 0 0 0 0 0 0 0 0 0

1.5 supervision and authors supervision 0 0 0 -95,445 -558,836 -189,080 0 0 0 0 0 0 0 0 0

1.6 project management 0 0 -269,962 -374,919 -495,005 -351,218 0 0 0 0 0 0 0 0 0

1.7 promotion 0 0 0 -3,486 -28,483 -53,190 0 0 0 0 0 0 0 0 0

1.8 other costs 0 -21,262 -4,834 -496,428 -786,327 -4,800 0 0 0 0 0 0 0 0 0

2 OPEX -12,626,148 0 0 0 0 0 0 287,314 302,886 325,519 327,622 335,686 335,262 333,023 -3,169,908 358,833 2.1 Bus transport - operational costs 0 0 0 0 0 0 387,478 407,011 436,263 448,112 479,813 493,582 507,992 521,939 570,907

2.2 Tram transport - operational costs 0 0 0 0 0 0 86,723 83,697 78,017 69,215 54,447 41,247 25,596 8,540 -9,498

2.3 Ordinary annual maintenance for 0 0 0 0 0 0 -186,887 -187,822 -188,761 -189,704 -198,574 -199,567 -200,565 -201,568 -202,576 the new section 2.4 Intermediate repairs of the 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 modernised tram section 2.5 Re-investments on the depot 0 0 0 0 0 0 0 0 0 0 0 0 0 -3,498,819 0

3 Residual value 18,148,183 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

4 Socio-economic benefits 565,204,558 0 0 0 0 0 0 22,193,881 23,238,816 23,468,927 25,655,494 25,239,564 26,972,501 28,412,290 29,836,526 30,076,514 4.1 vehicles operating costs savings 23,258,473 0 0 0 0 0 0 949,242 881,080 814,428 749,498 1,001,219 1,290,911 1,363,884 1,436,256 1,429,964 4.2 travel time savings 524,843,884 0 0 0 0 0 0 20,808,422 21,950,687 22,276,277 24,556,884 23,586,746 24,885,028 26,136,922 27,369,319 27,616,675 4.3 accidents savings 4,068,464 0 0 0 0 0 0 -23,048 -24,844 -32,656 -27,901 205,188 219,280 233,157 247,966 224,821 4.4 pollution savings 12,961,805 0 0 0 0 0 0 455,419 428,169 407,308 373,561 442,744 573,395 674,366 778,948 801,030 4.5 GHG savings 69,548 0 0 0 0 0 0 3,862 3,739 3,586 3,468 3,612 3,755 3,815 3,874 3,858 4.6 Noise 2,384 0 0 0 0 0 0 -16 -16 -16 -16 55 131 146 163 166

6 Total -54,683 -2,244,683 -2,964,141 -32,610,929 -67,279,606 -15,767,989 22,481,195 23,541,702 23,794,446 25,983,116 25,575,250 27,307,763 28,745,312 26,666,617 30,435,347

82 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

IT. 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

1 CAPEX 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.1 preparatory phase (design, 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 documentation, expertise, FS) 1.2 land acquisition 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1.3 construction works 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1.4 supply 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1.5 supervision and authors supervision 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1.6 project management 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1.7 promotion 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1.8 other costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2 OPEX 352,869 345,634 -9,990,064 328,928 309,604 287,692 265,236 240,856 -1,915,293 185,019 154,357 120,768 83,955 386,866 -12,787,956

2.1 Bus transport - operational costs 585,585 600,714 617,344 634,444 643,491 652,271 663,006 674,510 686,734 698,345 711,857 725,980 740,689 754,531 755,483

2.2 Tram transport - operational costs -29,128 -50,473 -73,669 -98,859 -126,197 -155,850 -187,998 -222,832 -260,561 -300,391 -343,500 -390,142 -440,588 -150,438 13,273 2.3 Ordinary annual maintenance for the new -203,589 -204,607 -205,630 -206,658 -207,691 -208,729 -209,773 -210,822 -211,876 -212,935 -214,000 -215,070 -216,145 -217,226 -218,312 section 2.4 Intermediate repairs of the modernised 0 0 -10,328,109 0 0 0 0 0 0 0 0 0 0 0 -12,443,130 tram section 2.5 Re-investments on the depot 0 0 0 0 0 0 0 0 -2,129,591 0 0 0 0 0 -895,270

3 Residual value 0 0 0 0 0 0 0 0 0 0 0 0 0 0 39,584,746

4 Socio-economic benefits 31,188,057 32,253,130 33,283,420 34,269,414 35,446,557 36,595,864 37,683,924 38,733,610 39,743,320 36,269,115 36,191,269 36,023,584 35,748,610 35,339,727 35,802,635

4.1 vehicles operating costs savings 1,419,314 1,408,885 1,401,031 1,393,275 1,385,861 1,376,400 1,369,258 1,362,217 1,355,280 1,417,727 1,481,843 1,545,712 1,609,335 1,643,191 1,677,006

4.2 travel time savings 28,724,743 29,786,769 30,808,654 31,786,933 32,953,224 34,096,738 35,174,302 36,213,215 37,211,846 33,601,244 33,380,185 33,067,092 32,645,835 32,141,288 32,504,008

4.3 accidents savings 237,176 249,624 261,271 272,911 292,229 312,653 331,983 351,470 371,153 388,701 405,185 421,776 438,132 456,006 487,018

4.4 pollution savings 802,811 803,852 808,476 812,318 811,279 806,117 804,438 802,776 801,120 857,456 920,007 984,891 1,051,131 1,095,030 1,130,356

4.5 GHG savings 3,842 3,827 3,811 3,796 3,780 3,767 3,753 3,739 3,725 3,780 3,832 3,885 3,937 3,959 3,980

4.6 Noise 170 173 177 180 184 187 190 193 196 207 217 228 240 254 269

6 Total 31,540,925 32,598,764 23,293,356 34,598,342 35,756,161 36,883,555 37,949,159 38,974,466 37,828,027 36,454,134 36,345,625 36,144,352 35,832,565 35,726,594 62,599,425 Source: Authors

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A II.5 Sensitivity analysis A sensitivity analysis has been carried out on the key variables in order to determine whether they are critical or not. The procedure requires to make them vary one at a time by a +/-1%, and then to assess the corresponding change in the Economic NVP and IRR. A variable is referred to as “critical” if the corresponding variation in the economic output is greater than 1% in absolute value. The Authors tested the sensitivity of a long list of different variables. As a result of the sensitivity test (see table below), the following 8 critical variables have been identified: number of passengers of bus, number of passengers of tram, average travel time for bus, average travel time for tram, average travel time for car, average travel time for business vehicle, value of time and average VOC.

Table 22. Results of the sensitivity analysis VARIATION (in %) of the CRITICALITY INDEPENDENT VARIABLE economic NPV due to a ± 1% JUDGEMENT * variation Number of passengers of bus 14% Very critical Number of passengers of tram 10% Very critical Average travel time for bus 14% Very critical Average travel time for tram 10% Very critical Average travel time for car 30% Very critical Average travel time for business 10% Very critical vehicles Value of time (all transport modes) 16% Very critical Average VOC 37% Very critical Annual number of accidents 0% Not critical Noise 0% Not critical Air pollution 0% Not critical Climate change 0% Not critical OPEX 0% Not critical Source: Authors Note: Very critical: ΔNPV > +5%; Critical: ΔNPV > +1%; Not critical: ΔNPV/IRR < +1%. A II.6 Risk assessment The risk assessment has been conducted on the eight critical variables as a result of the sensitivity analysis: number of passengers of bus, number of passengers of tram, travel time saving for bus, travel time saving for tram, travel time saving for car, travel time saving for business vehicle, value of time and average savings in VOC. For the sake of simplicity, it was assumed that the probability distribution of each of these variables is triangular, with the value with the highest probability being the reference one – that is, the “base value” adopted for carrying out the CBA – and the lower and upper bounds being the “pessimistic” and “optimistic” values defined in the scenario analysis.

The analyses have been elaborated using the Monte Carlo simulation technique with 1,000 random repetitions. In brief, at each iteration it is randomly extracted a value from the distribution of each of the independent variables. The extracted values are then adopted for computing the ENVP and IRR. Finally, the 1,000 estimated values of ENPV and IRR are used to approximate the probability distribution of the two indicators.

The risk assessment shows that the expected value of the ENPV is equal to EUR 489.2 million (slightly higher than the reference case), and that the expected value of the ERR is 17.68% (against a reference case of 17.73%). The probability that the ENPV will

84 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 become negative and that the ERR will be lower that the SDR adopted in the analysis is almost nil. However, there is a 50% probability that the two indicators assume a lower value than in the reference case. Hence, the CBA outputs appear to be robust to future possible variations in the key variables. Overall, the risk analysis shows that under the project has a negligible risk level.

Figure 36. Results of the risk analysis for ENPV (left-hand side) and ERR (right- hand side) CBA Reference value CBA Reference value 408,264,020 17.73%

Estimated parameters of the distribution Estimated parameters of the distribution Mean 489,219,952 Mean 17.6850% Median 409,242,796 Median 17.7669% Standard deviation 331,291,209 Standard deviation 4.48% Minimum -97,120,645 Minimum -4.466% Maximum 2,320,508,803 Maximum 30.560%

Estimated probabilities Estimated probabilities Pr. ENPV ≤ base value 0.498 Pr. ERR ≤ base value 0.498 Pr. ENPV ≤ 0 0.003 Pr. ERR ≤ Social discount rate 0.003 Source: Authors

Figure 37. Probabilistic distribution of the Economic Net Present Value (EUR)

Source: Authors

Figure 38. Probabilistic distribution of the Economic Internal Rate of Return

Source: Authors

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ANNEX III. LIST OF INTERVIEWEES

The following table provides details on the stakeholders that have been interviewed as part of the ex-post assessment. The stakeholders have been identified based on the authors referenced in the documents included in the application dossier provided by the European Commission. The institutions approached through these referenced contacts have been consulted in order to confirm the most appropriate and relevant persons to be involved in this ex-post analysis. Additional stakeholders have been identified on the basis of the review of articles and Web Sites, which have been consulted as part of this evaluation.

NAME POSITION AFFILIATION DATE Mayor’s Plenipotary for Marcin Dawidowski City Hall of Gdańsk 03.10.2017 European Projects Wydział Programów Rozwojowych/ Robert Radecki Project coordinator Development Programmes Unit 03-04.10.2017 City Hall of Gdańsk Wydział Programów Rozwojowych/ Anna Kozub-Lewna GPKM IIIC coordinator Development Programmes Unit 03.10.2017 City Hall of Gdańsk Wydział Polityki Gospodarczej / Economic Bożena Żmijewska Development expert Policy Unit 03.10.2017 City Hall of Gdańsk Biuro Rozwoju Gdańska / City Development Tomasz 03.10.2017 Transport designer Office Budziszewski City Hall of Gdańsk Wydział Środowiska / Environmental Unit various phone Anna Waszczyk Air quality expert City Hall of Gdańsk and e-mail exchanges Wydział Środowiska / Environmental Unit various phone Jan Grabowski Noise expert City Hall of Gdańsk and e-mail exchanges Sebastian ZTM / Minicipal Transport Company Deputy Director 03.10.2017 Zomkowski Aleksandra Chomicz Economic Expert GAiT / Gdańsk Buses and Trams Company 03-04.10.2017 Head of Technical Tram Jerzy Dzióbek GAiT / Gdańsk Buses and Trams Company 04.10.2017 Department Zygmunt Kordus Technical Expert GAiT / Gdańsk Buses and Trams Company 04.10.2017 Housing Estates (Wspólnota Mieszkaniowa Jarosław Dambek Inhabitant 03.10.2017 Południowy Stok, ul. Sosnkowskiego) Karol L. Housing Estates (Wspólnota Mieszkaniowa Inhabitant 03.10.2017 (anonymous) Południowy Stok, ul. Sosnkowskiego) Housing Estates (Osiedle Pogodne, ul. Anny various phone Sylwia W. Inhabitant Jagielonki, Dąbrówki I Królowej Jadwigi) and e-mail (anonymous) exchanges Head of Public Transport Marta Kietlińska Centre for European Transport Projects 06.10.2017 Projects Department Centre for European Transport Projects various phone Dorota Comberska Evaluation Team Expert and e-mail exchanges Department of Ministry of Development various phone Hanna Bałos Infrastructural and e-mail Programmes exchanges JASPERS 09.11.2017 by Patrizia Fagiani Transport Economist e-mail Programme Manager - EU DG Regio Desk Officer. Unit F3 - Programmes 30.10.2017 by Maria Galewska policies and Projects in Poland email

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Metropolitalny Związek Komunikacyjny Zatoki Specialist on public Kamil Bujak Gdańskiej / Metropolitan Union of Gdańsk 17.11.2017 transport integration Bay Transport Krzysztof Koprowski Journalist Trójmiasto.pl 13.11.2017 President of the Stanisław Kur NORD S.A. 21.11.2017 construction company

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REFERENCES

City of Gdańsk, 2010. Agreement between the Housing Estate “Południowy Stok” Nr I, II, III, IV by Sosnowskiego str. In Gdańsk and GIK Sp. z o.o., 23 City of Gdańsk, 2010. Agreement between the Housing Estate Pogodne by Anny Jagiellonki 1-46, Dąbrówki and Królowej Jadwigi 141 in Gdańsk and GIK Sp. z o.o., 20 City of Gdańsk, 2010. Zarządzenie Nr 1546/10 Prezydenta Miasta Gdańska z dnia 21 października 2010 r. w sprawie realizacji Gdańskiego Projektu Komunikacji Miejskiej – etap III, 13

City of Gdańsk, 2014. Plan zrównoważonego rozwoju publicznego transportu zbiorowego dla Miasta Gdańska na lata 2014-2030. Gdańsk, 123

City of Gdańsk, 2014. Plan zrównoważonego rozwoju publicznego transportu zbiorowego dla Miasta Gdańska na lata 2014 – 2030. Gdańsk, 1232010. Zarządzenie Nr 1546/10 Prezydenta Miasta Gdańska z dnia 21 października 2010 r. Gdańsk, 13

City of Gdańsk, 2014. Report: Postrzeganie miasta oraz zmian rozwojowych zachodzących w mieście przez mieszkańców Gdańska, Gdańsk: City of Gdańsk, 51

City of Gdańsk, 2016. Wieloletnia prognoza finansowa Miasta Gdańska. Gdańsk, 72 City of Gdańsk, badanie „Jakość życia w Gdańsku” 2007-2016. Gdańsk, 30

City of Gdańsk, 2017. Gdańskie badania ruchu 2016 wraz z opracowaniem transportowego modelu symulacyjnego Gdańska; Raport 1; Raport z przygotowań badań i pomiarów z niezbędnymi uzgodnieniami. Gdańsk, 93 City of Gdańsk, 2017. Gdańskie badania ruchu 2016 wraz z opracowaniem transportowego modelu symulacyjnego Gdańska; Raport 2; Raport z przeprowadzenia badań i pomiarów. Gdańsk, 93

City of Gdańsk, 2017. Gdańskie badania ruchu 2016 wraz z opracowaniem transportowego modelu symulacyjnego Gdańska; Raport 3; Raport z przeprowadzenia badań i pomiarów. Gdańsk, 93 City of Gdańsk, 2017. Registration of rolling stock failures 2009-2017, Gdańsk City of Gdańsk, 2017. Website: http://www.gdansk.pl/biznes/Gdansk-w-liczbach,a,33608

CUPT, 2014. Raport z osiągniętych efektów. Warszawa: CUPT, 2

CUPT, 2015. Raport z osiągniętych efektów. Warszawa: CUPT, 2

CUPT, 2016. Raport z osiągniętych efektów. Warszawa: CUPT, 2 Czepczyński, M. (et al.), 2014. Gdańsk 2030 Plus development Strategy. Gdańsk: Gdańsk City Council, 76 DS. Consulting Sp. z o.o., 2011. Gdański Projekt Komunikacji Miejskiej – etap IIIA. Studium Wykonalności. Gdańsk, 470 European Commission, 2012-2015. Project dossier: Application form with the annexes

GAiT, 2017. Financial statements of GAiT for 2013-2016 including income statement, balance sheet and cash flow

Gdańsk University, Social Research Unit, 2015. Barometr opinii mieszkańców Gdańska na temat wybranych problemów miasta i polityki lokalnej

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JASPERS, 2012. JASPERS Completion note for the project: 2011 095 PL MUN URT Gdańsk Urban Transport Project – stage IIIA. 42

Kopeć, K., 2012. Commuting to the stadium PGE Arena Gdańsk – the 2012 UEFA European Football Championship perspective, with T. Michalski, A. Radchenko (red.), Global, continental, national and regional conditions of local development, Publishing House “ADNDU”, Gdańsk-Kharkiv, s. 99-107.

Lemitor Ochrona Środowiska Sp. z o.o. (2013). Analiza porealizacyjna dla zadania pn.: „ Budowa linii tramwajowej Chełm – Nowa Łódzka” (+39 files with noise ex-post measurement results + 5 maps + Annex). Wrocław, 50 Main Office of Statistics (GUS), 2000-2016. Statistical data on city of Gdańsk, Pomeranian Voivodship. Warszawa: GUS

Michalski, L. (et al.), 2015. Strategia transportu i mobilności obszaru metropolitalnego. Gdańsk-Gdynia-Sopot do roku 2030. Gdańsk, 104

Wyg international, 2008. Gdański Projekt Komunikacji Miejskiej, Rozwój proekologicznego systemu transportu tramwajowego w Gdańsku, etap IIIA; Studium wykonalności dla zadań inwestycyjnych i modernizacyjnych przewidzianych do realizacji w latach 2008-2011. Warszawa, 199

ZTM, 2017. Rolling stock energy consumption data from ZTM.

Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

New construction of the motorway A14, section Schwerin-Nord – Jesendorf

Germany

This report is part of a study carried out by a Team selected by the Evaluation Unit, DG Regional and Urban Policy, European Commission, through a call for tenders by open procedure No 2016CE16BAT077. The consortium selected comprises CSIL – Centre for Industrial Studies (lead partner, Italy), Ramboll Management Consulting A/S (Denmark), Significance BV (The Netherlands), TPLAN Consulting (Italy). The Core Team comprises:  Scientific Director: Massimo Florio (CSIL and University of Milan);  Project Manager: Silvia Vignetti (CSIL);  Scientific Committee: Ginés de Rus, John Nellthorp, Emilie Quinet;  Task managers: Silvia Vignetti (CSIL), Gerard de Yong (Significance), Roberto Zani (Tplan), Emanuela Sirtori (CSIL), Xavier Le Den (Ramboll), Julie Pellegrin (CSIL);  Thematic Experts: Gianni Carbonaro (CSIL), Enrico Bernardis (Tplan), Mario Genco (CSIL), Eric Kroes (Significance), Kim Ruijs (Significance), Barry Zondag (Significance). A network of National Correspondents provides the geographical coverage for the field analysis. The authors of this report are Ann-Kathrin Kuppe, Gerald Hamöller, Knud Trubbach (all Ramboll Transport Germany) and Thomas Neumann (Ramboll Brussels). The authors are grateful to all the project managers, stakeholders and beneficiaries who provided data, information and opinions during the field work.

The authors thank for the very helpful insights from the EC staff and particularly to Mariana Hristcheva, Jan Marek Ziółkowski, Jerome Glantenay, Witold Willak and other members of the Steering Group. They also express their gratitude to all stakeholders who agreed to respond to the team’s questions and contributed to the realisation of the case study. The authors are responsible for any remaining errors or omissions. Quotation is authorised as long as the source is acknowledged along with the fact that the results are provisional. Cover picture source: own picture taken on 6.10.2017

Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

TABLE OF CONTENTS LIST OF ABBREVIATIONS ...... 93 EXECUTIVE SUMMARY ...... 95 1 PROJECT DESCRIPTION ...... 101 1.1 PROJECT CONTEXT ...... 101 1.2 PROJECT OBJECTIVES...... 107 1.3 STRUCTURAL FEATURES ...... 110 2 ORIGIN AND HISTORY ...... 112 2.1 BACKGROUND ...... 112 2.2 FINANCING DECISION AND PROJECT IMPLEMENTATION ...... 114 2.3 CURRENT PERFORMANCE AND OTHER INVESTMENT NEEDS ...... 122 3 DESCRIPTION OF LONG-TERM EFFECTS ...... 127 3.1 KEY FINDINGS ...... 127 3.2 EFFECTS RELATED TO THE ECONOMIC GROWTH ...... 129 3.3 EFFECTS ON QUALITY OF LIFE AND WELL-BEING ...... 134 3.4 EFFECTS ON THE ENVIRONMENTAL SUSTAINABILITY ...... 136 3.5 EFFECTS RELATED TO DISTRIBUTIONAL ISSUES ...... 136 3.6 TIME-SCALE AND NATURE OF THE EFFECTS ...... 136 4 MECHANISMS AND DETERMINANTS OF THE OBSERVED PERFORMANCE 138 4.1 RELATION WITH THE CONTEXT ...... 138 4.2 SELECTION PROCESS ...... 139 4.3 PROJECT DESIGN ...... 139 4.4 FORECASTING CAPACITY ...... 140 4.5 PROJECT GOVERNANCE ...... 141 4.6 MANAGERIAL CAPACITY ...... 142 4.7 PROJECT BEHAVIOURAL PATTERN ...... 142 5 FINAL ASSESSMENT ...... 144 5.1 PROJECT RELEVANCE AND COHERENCE ...... 144 5.2 PROJECT EFFECTIVENESS ...... 144 5.3 PROJECT EFFICIENCY ...... 146 5.4 EU ADDED VALUE ...... 146 5.5 FINAL ASSESSMENT ...... 146 6 CONCLUSIONS AND LESSONS LEARNED ...... 149 ANNEX I. METHODOLOGY OF EVALUATION ...... 150 A I.1 MAPPING THE EFFECTS ...... 150 A I.2 MEASURING OF EFFECTS ...... 153 A I.3 UNDERSTANDING THE EFFECTS ...... 153 A I.4 SYNTHESIS AND CONCLUSIONS ...... 156 ANNEX II. EX-POST COST-BENEFIT ANALYSIS REPORT ...... 157 A II.1 METHODOLOGY, ASSUMPTION AND DATA GATHERING ...... 157 A II.2 FUTURE SCENARIO ...... 158 A II.3 FINANCIAL ANALYSIS ...... 160 A II.4 ECONOMIC ANALYSIS ...... 166 A II.5 SENSITIVITY ANALYSIS ...... 171 A II.6 RISK ANALYSIS ...... 171 ANNEX III. LIST OF INTERVIEWEES ...... 174 REFERENCES ...... 175

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LIST OF ABBREVIATIONS

B/C Benefit/Cost ratio

BMVI Bundesministerium für Verkehr und digitale Infrastruktur (Ministry for Transport‘s name from Dec. 2013, changed after elections)

BMVS Bundesministerium für Verkehr, Bau und Stadtentwicklung (Ministry for Transport’s long name until Dec. 2013)

BVWP Bundesverkehrswegeplan (Federal Transport Infrastructure Plan) CBA Cost-benefit analysis

CF Cohesion Fund

DEGES Deutsche Einheit Fernstraßenplanungs- und -bau GmbH Company for road planning and construction, owner: FRG 29.08%, each federal state 5.91% DG REGIO Directorate-General for Regional and Urban Policy

DM Deutsche Mark DTV Durchschnittliche tägliche Verkehrsmenge (average daily number of vehicles for all day types) EC European Commission

EIA Environmental Impact Assessment

ENPV Economic Net Present Value

ERDF European Regional Development Fund ERR Economic Rate of Return

ESIF European Structural and Investment Funds EU European Union

FNPV/C Financial Net Present Value of the investment FNPV/K Financial Net Present Value of national capital

FRG Federal Republic of Germany

FRR/C Financial Rate of Return on investment FRR/K Financial Rate of Return on national capital

FS Feasibility Study GDP Gross Domestic Product

GDR German Democratic Republic (until 1989) GHG Greenhouse Gas

MCA Multicriteria Analysis MWP Mecklenburg Western Pomerania

NPV Net Present Value NUTS2 Nomenclature of Territorial Units for Statistics

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O&M Operating & Maintenance TEN-T Trans-European transport networks

ToRs Terms of References VAT Value Added Tax

VOC Vehicle Operating Cost VOT Value of Time

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EXECUTIVE SUMMARY

This case study illustrates the story of the construction of the motorway section Schwerin-Nord–Jesendorf, part of the A14 Wismar–Magdeburg. This major infrastructure investment was co-financed by the EU over the period of 2006-2009. More specifically, this is an ex-post evaluation assessing the long-term effects of the project and disentangling the mechanisms and determinant factors that have contributed to producing these effects. The analysis draws from an ex-post Cost-Benefit Analysis (CBA)1 and from an extensive set of qualitative evidence, both secondary (technical reports, official reports, press articles, books and research papers) and primary (interviews with key stakeholders and experts carried out during September – November 20172).

OVERALL APPROACH AND METHODOLOGY

The Conceptual Framework delivered in the First Intermediate Report had been developed to answer the evaluation questions included in the ToR, and further specified and organised in accordance with the study team’s understanding. In particular, there are three relevant dimensions of analysis:

 The ‘WHAT’: this relates to the typologies of long-term contributions that can be observed. The Team classified all the possible effects generated by transport projects (including road, rail and urban transport projects) under the four following categories: ‘Economic growth’, ‘Quality of life and well-being’ (i.e. factors that affect the social development, the level of social satisfaction, the perceptions of users and the whole population), then also ‘effects related to environmental sustainability’ and ‘distributional impacts’.  The ‘WHEN’: this dimension relates to the point in the project’s lifetime at which the effects materialise for the first time (short-term dimension) and stabilise (long- term dimension). The proper timing of an evaluation and the role it can have in relation to the project’s implementation is also discussed here.  The ‘HOW’: this dimension entails reasoning on the elements, both external and internal to the project, which have determined the observed causal chain of effects to take place and influenced the observed project performance. To do this the Team identified six stylised determinants of projects’ outcomes (relation with the context; selection process; project design; forecasting capacity; project governance; managerial capacity). The interplay of such determinants and their influence on the project’s effects is crucial to understanding the project’s final performance

The methodology developed to answer the evaluation questions consists of an ex-post Cost Benefit Analysis complemented by qualitative techniques (interviews, surveys, searches of government and newspaper archives, etc.), combined in such a way as to produce a project history. CBA is an appropriate analytical approach for the ex-post evaluation because it can provide quantification and monetisation of some of the long-term effects produced by the project (at least those also considered in the ex- ante CBA). However, the most important contribution of the CBA exercise is to provide a framework of analysis to identify the most crucial aspects of the projects’ ex-post performance and final outcome. Qualitative analysis on the other hand is more focussed on understanding the determinants and causal chains of the delivery process as well as to assess effects that may be difficult to translate in monetary terms.

1 Data, hypotheses and results are discussed in Annex II. 2 See Annex III for a detailed list of interviewees.

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MAIN PROJECT FEATURES

The project area is located in the north of Germany, in the federal state of Mecklenburg- Vorpommern (Mecklenburg-Western Pomerania) near its capital Schwerin and close to the Baltic Sea. It is part of the broader project of the construction of the motorway A14 Magdeburg – Wismar, stretching for a total of almost 170 km from the motorway junction Magdeburg (A2) up to the motorway junction Wismar (A20). The project consisted of the construction of a four-lane motorway section with a total length of 14.31 km between the junctions Schwerin-Nord and Jesendorf. Together with other two sections, already constructed and in operation at the date of the grant request, it completed the northern section of the A14 Schwerin–Wismar connecting the two east- west running coastal motorways A20 and A 24 (Hamburg – Berlin). The project was intended to close the gap between the two existing sections, and to divert long-distance traffic from secondary roads to the motorway, with an improvement in terms of travel time saving and reduced pollution.

The first draft of the A14 was sketched in 1958. The main motivation to build the new motorway was strategic planning: for military reasons it was deemed important to have a capable road connection along the border to West-Germany, but still in some distance to it.

In the 80’s the A24 (Hamburg–Berlin) was built by state-owned contractors in GDR, with funding from West-Germany. Remaining financial resources from the building of the A24 were used for the construction of the motorway from junction Schwerin towards Wismar. The project was stopped after reaching intersection “Schwerin Ost”. After the reunification the project was restarted, and in 2009 the project section studied was the last one to be opened. Both the values for passenger cars and trucks increased by 25% after the motorway opening. Especially concerning freight transport, the increase resulting from the opening of the project section was significant, with 200 additional vehicles a day in 2010 compared to 2009. After a decline in 2014 the traffic grew significantly in 2016 (for a total of about 75% compared to 2009).

However, today only about 40% of the volume of private traffic and 26% of that of lorries forecasted in the ex-ante CBA for 2015 have been achieved.

PROJECT PERFORMANCE

Project relevance and coherence The objectives of the project section are the same as the objectives of entire A14, i.e. providing a faster connection between Wismar and the south-east of Germany, including the Berlin area. After the German reunification the argument for closing the gap in the motorway network between the A20 in the north and the “Schwerin connector” in the south was primarily to improve the accessibility and, in turn, competitiveness of Schwerin and the wider region. The construction of the northern section of the A14 Schwerin- Wismar was supported by several regional and local key actors and was strong enough for the project section to be included in the Federal Transport Infrastructure Plan.

The project relevance is, however, influenced by wider trends in many regions in the former GDR, i.e. by slow socio-economic development and declining population and thus the motorway is running under capacity which has negative effects on its overall relevance. Also, the alignment of the project section and neighbouring sections on the

96 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 eastern shore of the Lake Schwerin is contestable and potentially has a negative influence on the performance of the motorway.

At the time of writing the motorway is running under capacity; however, traffic is slowly growing, and it is expected that the finalisation of the A14 sections between the A24 and Magdeburg, thus rendering the whole A14 functional, will significantly increase the traffic flow and thus performance of the project from 2022 on.

Project effectiveness The result of the ex-post CBA indicates that the project provides positive socio-economic benefits. The positive outcome materialised despite the negative exogenous influence of a general slow socio-economic development in the wider region. The different effects generated by the project are briefly presented below:

 The positive effects are mostly travel time savings, increased safety on the motorway in comparison to secondary roads and lower GHG emissions. Some other effects such as improved service quality due to a resting facility in the project section, slightly increased reliability of journey time, incremental income for the service provider of the A14 and some more intangible effects such as wider economic impacts, institutional learning of the involved planning authorities and improved territorial cohesion also contributed to the positive outcome of the project to different extents Despite the generation of these positive factors the project effectiveness is negatively influenced by traffic levels which are below the expectations. However, the positive outcomes are expected to spike in 2022 upon completion of the southern extension of the A14 from the A24 to Magdeburg3.  The alignment of the project section and its neighbouring sections on the eastern shore of Lake Schwerin instead of the western shore can be contested from today’s perspective and might have impeded a higher traffic flow on the motorway.

Project efficiency Thanks to the good planning capacity and project design, the project’s construction was completed without any delays and cost overruns; in fact, the final budget has been 10% lower than initially foreseen.

The project is not financially sustainable when looking solely on the incremental revenues coming from the toll system. However, in Germany the maintenance and operation of motorways is paid from the general budget of the federal government.

EU added value It should be assumed that the project section would also have been built without the funding of the EU, among other reasons also because it had been identified as urgent need in the Federal Transport Infrastructure Plan. However, the project might have been delayed and maybe reduced in its scope, e.g. regarding environmental protection measures. A relevant aspect of EU added value is funds availability. For the overall project A14 the EU funding makes a difference by contributing to reduce the funding gap that could not

3 This effect is already considered in the ex-post CBA.

97 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 have been supported by the project promoter. As a result, the return on national capital, ‘after the EU grant’4 (FRR/K), improves significantly.

Table 1. Results of financial analysis (ex-post)

PERFORMANCE INDICATORS RESULTS Financial Rate of Return of the Investment FRR/C -10% FRR/K -8.1% Financial Net Present Value (EUR million) FNPV/C -165.76 FNPV/K -88.41 Source: Authors’ calculation Today, the project section is part of the TEN-T comprehensive network as classified in the EU-regulation 1315/2013. It also contributes to the EU Strategy for the Baltic Sea Region (EUSBSR). However, those roles have only been attributed after the project section had been built and did not play a role in the planning process.

MECHANISMS AND DETERMINANTS

In terms of mechanisms and determinants explaining the project performance, a number of findings can be drawn from the project assessment:

 The history preceding the project has a strong influence on its performance today. The decisions leading to the final project route were not always taken strictly reflecting considerations of transport needs. In particular, military considerations were at the basis of the beginning of the planning of the A14 during GDR times, while after the reunification, when the planning process of the entire motorway started, for political reasons it was assumed that the regions in the former GDR would quickly catch up to the economic performance of the FRG if the right infrastructure was provided.  The project section was classified as urgent need in all national transport master plans preceding the financing decision. This classification, however, has been influenced by historical and regional context, and local initiatives.  From today’s perspective the alignment on the eastern side of Lake Schwerin instead of a western alignment could be challenged and thus in an ex-post perspective, the decision for the existing planning possibly did not maximise all benefits for the project and the region.  Constructions costs were lower than expected: in the ex-ante CBA, the construction costs amounted to EUR 112.5 million while after finalisation the construction costs were about EUR 100.5 million, corresponding to a reduction of nearly 11%. Lower construction costs have had a positive effect on the overall socio-economic performance of the project. Good project design, project governance and managerial capacity contributed to the lower construction costs.  Transport demand was lower than expected: already during the planning of the final project section, it was clear that the traffic and economic forecast for the region in early planning phases would not be realised. However, the applied forecasting methodology, even though compliant with German regulations at that time, did not take recent developments into account and the final decision to close the gap on the A14 was made based on older assumptions.

4 See the CBA Guide (2014), p. 49

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 The project has been delayed due to new environmental requirements in the region. The updated planning process involved a multitude of stakeholders, also from the scientific community, to revise the motorway layout. Consequently, the eventual approval processes went without major complications from environmental public and private actors.

CONCLUSIONS

The ex-post assessment of this project points towards an overall positive outcome from the project section of the A14 motorway in northern Germany. The project section contributes to the "Convergence" objective of the ERDF Federal Transport Operational Programme for the 2007-2013 programming period in Germany through the construction of a new motorway section that closed a remaining gap in the A14 between Wismar and the A24. By doing so, it converges the region physically to other regions in Germany and is part of a signal that the FRG intended to send to the states of the former GDR by investing into their wider socio-economic development. The results of the ex-post CBA are positive, also confirming that the project is adding value to the EU society.

The history of the A14, dating back to at least the late 1950s, and the German reunification created path dependencies and conditions that played a crucial role in the decisions to build the project section and its final layout. The performance of the project section, which is lower than initially expected, has to be seen against the background of those path dependencies. Several lessons can be learned from the ex-post assessment of this major project:

 The project demonstrates that good project management and design can lead to an overall positive outcome even if disadvantageous exogenous factors render the overall project context difficult. The expected socio- economic, including population density, development in the region did not meet the assumptions made during the planning phase, leading to a lower-than-expected traffic volume and thus having an impact on the benefits of the project. However, the completion of the project with a cost saving of approximately 10% partly balanced these effects.  The project shows that planning processes needs that technical analysis underpinning the motivation of the projects should be systematically updated in order to reflect the most up-to-date projections and assumptions. Planning of major transport investments may take a lot of time before the financing decision. In the meanwhile, the socio-economic context may undergo even significant changes and development that may lead to a reconsideration of some aspects (if not the entire concept) of the project. During the project preparation some assumptions (e.g. forecasts for inhabitants, employment and good flows) for the ex-ante CBA have been based on nationally standardised numbers in line with existing national methodologies in Germany. Such forecasts were however not fully updated and thus failed to fully reflect the socio-economic realities in the region. These numbers led to overoptimistic assumptions for the project performance.  Due to the nature of the evaluation future developments are subject to assumptions that yet have to materialise. The overall positive outcome of this project relies, among other factors, on the assumption that the remaining sections of the A14 between the A24 and Magdeburg will be finished within the evaluation period, most probably in 2022 as assumed in the CBA.

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 Taking into account the latest state-of-the-science during project planning can be crucial for project success. Following new environmental legislation during the project planning phase the project design considered the latest state-of-the science which led to acceptance by most environmental actors (except by the German Federation for the Environment and Nature Conservation -BUND- who submitted a demur against the planned construction which was declined during the plan-approval procedure) and thus helped the project being eventually approved. Also, even though the project section leads through a Natura 2000 protected area no data for direct negative impacts exists for the new motorway.

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1 PROJECT DESCRIPTION

The project ´New construction of the motorway A14, section Schwerin-Nord – Jesendorf5´ (CCI 2009DE161PR007) assessed in this study concerns the construction of a new motorway6 between the two intersections Schwerin-Nord and Jesendorf (further in this report named ´project section´). The project area is in the north of Germany, in the federal state of Mecklenburg-Vorpommern near its capital city Schwerin and close to the Baltic Sea. The 14.3 km long project section is part of the project “Motorway A14 Magdeburg– Wismar”, which is in total almost 170 km long and stretches from the motorway junction Magdeburg (A2) over the A24 up to the motorway junction near Wismar (A20). It was classified as a running and fixed-term project as an urgent need within the demand plan for Interstate Highways 2004. At the time of writing the extension south of the project section to Magdeburg is ongoing and the remaining sections are expected to open in 2022.

1.1 PROJECT CONTEXT The Federal Republic of Germany (FRG, short: Germany) is a federal parliamentary republic in central-western Europe. Since its reunification on 3 October 1990 it consists of 16 federal states7 (including the three city states Hamburg, Bremen and Berlin) and has, as of 2016, a total population of 82.5 million inhabitants.8 The central government, the federal states, and the German municipalities have different tasks and responsibilities.

Following World War II Germany was divided into two separate areas, with the east controlled as part of the Soviet Bloc (and then to become the German Democratic Republic, GDR) and the west aligned to Western Europe as the Federal Republic of Germany (FRG) (see Figure 1). The reunification was the process in 1990 in which the GDR and the FRG were merged again to form the reunited nation of Germany.

5 Official German title: “Neubau der Autobahn A 14, Modul 1: 2. BA AS Schwerin-Nord – AS Jesendorf” 6 Bundesautobahn 7 Referred to as Bundesländer 8 Federal Statistical Office https://www.destatis.de/EN/FactsFigures/SocietyState/Population/Population.html;jsessionid=1452D36C1D9B6 6370AE5474EF5CDBB38.InternetLive2

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Figure 1. Former border between the FRG and the GDR

< project section

Source: https://www.britannica.com/place/Germany/The-era-of-partition The project area (marked by a red circle in the map) is located in the former GDR (orange). It is in the western part of the federal state of Mecklenburg-Vorpommern (Mecklenburg Western Pomerania, further named MWP), located relatively close to the federal states Schleswig-Holstein and Hamburg (the city with the second highest population in Germany, of approximately 1.8 million inhabitants). The region borders the Baltic Sea and is home to several ports as shown in Figure 2.

Figure 2. Major ports at Baltic Sea

Source: own illustration based on BMVI (2016) The ports are an important economic factor in the region: Wismar, where the A14 ends, is mainly a bulk cargo port (salts and wood), the other are ferry harbours with roll-on Roll-off traffic (RoRo) and with several functions (container feeder, general cargo), of which Rostock is the most important.

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Figure 3. Cargo shipment at selected ports (tonnes /year in 2010)

Source: own illustration based on Bundesamt für Statistik 2011 MWP has a total of 1.6 m inhabitants and with 69 inhabitants/km2 is the federal state with the lowest population density in Germany.9 Rostock is its only city with a population of over 100,000 (namely 206,000). Schwerin, the capital, has a population of 96,000.

Figure 4. Population density in Germany in 2015, A14 (simplified)

Source:http://www.bibdemografie.de/DE/ZahlenundFakten/02/Karten/k_02_20_bevoelkerungsdichte_2015.ht ml In 1990 the total population of MWP was 1.9 m10. Following the reunification, the birth- rate almost halved11 and an emigration process mainly towards the western federal states started, which resulted in a decrease of population, still ongoing. The project area itself is in the MWP counties12 Nordwestmecklenburg and Ludwigslust-Parchim.

9 http://www.statistik-portal.de/Statistik-Portal/de_jb01_jahrtab1.asp 10 https://www.laiv-mv.de/Statistik/Zahlen-und-Fakten/Gesellschaft-&-Staat/Bev%C3%B6lkerung 11 https://www.berlin-institut.org/fileadmin/user_upload/Deutschland_2020/meckpomm.pdf 12 In Germany “Landkreise” or “Kreisfreie Städte” (the latter are cities independent from a “Landkreis”)

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Figure 5. Population forecast of the counties around the project area

Source: own illustration based on Statistisches Amt Mecklenburg-Vorpommern, 2009 As shown in Figure 5, the workforce (people from 18 to 65 years) is estimated to decline by 18% in the region by 2030, while the number of people over 65 will increase by 36% and the number of children and youth will decline by 19%. This development affects the rural areas to a higher extent.

The gross domestic product per capita of MWP (EUR 25,025) is the lowest of all federal states, the industrial sector is relatively weak compared to other regions in Germany.13 In the project region the public sector is the main employer. The economy of the area also strongly relies on tourism, as the number of employees working in trade, transport, hotel and gastronomy represents 21.2% of the total number of employees in the counties.

13 http://www.vgrdl.de/VGRdL/tbls/tab.jsp?rev=RV2014&tbl=tab01&lang=de-DE

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Figure 6. Number of employees by sector 2016

Source: own illustration based on Statistisches Amt Mecklenburg-Vorpommern (o.J.b) More than half of the employees working in the city of Schwerin commute to their work; most of them from the neighbouring counties of Nordwestmecklenburg and Ludwigslust- Parchim. On the other hand, about 10% of the population of Schwerin is commuting into the neighbouring administrative districts or to Hamburg, Rostock or the federal state of Schleswig-Holstein. The population in the catchment area that benefits from the closure of the gap of the project section, are the inhabitants (approximately 100,000) of the city of Schwerin and its surroundings, as well as the users of the national major road network between Schwerin and Wismar towards Lübeck and Rostock to the North and between Schwerin and Hamburg. Long-distance travellers from the Berlin area to the Baltic coast west of Wismar, and further to the federal state of Schleswig-Holstein and the mainland of Denmark are also expected to benefit from the completion of the project section, since they can avoid the Hamburg bottleneck by using the project section.

As illustrated in Figure 7 the development of the GDP for MWP shows a very high rise 1992-2016, nominally +139%. Accounting for inflation, it is still +64% and thus nearly twice of the development of the whole FRG which totals at +38%. However, it is important to note that the industry existing in the former GDR nearly entirely had to be restructured after reunification — so the starting point was on an extremely low level, and the first years show the early recovery phase.

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Figure 7. GDP in MWP 1991–2016 (EUR million)

Source: Statistisches Bundesamt (2017)14

14 https://de.statista.com/statistik/daten/studie/5044/umfrage/entwicklung-des-bruttoinlandsprodukts-von- mecklenburg-vorpommern-seit-1991/

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1.2 PROJECT OBJECTIVES The project runs east of the Lake Schwerin through the counties of NordwestMecklenburg and Ludwigslust-Parchim (see Figure 8; the borders of the counties are highlighted as a dashed light grey line). The landscape is characterized by the dominant Lake of Schwerin, as well as small lakes and creeks embedded in wooded valleys.

Figure 8. Map of the administrative districts adjacent to the A14

Source: Openstreetmap (2017) The service provider and therefore also the operator of motorways in Germany is the state. On federal motorways a toll for trucks has been imposed since 2005. The toll is directly fed back into government budget and has to be used for the subject area where it was collected15.

15 On some routes (not the A14, however), there are also public–private partnerships, where the toll is paid to a private company for a fixed period; these companies are responsible for (re)building and maintenance during that period.

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Figure 9. Development of the motorways in Germany since 1990 (status 1/2016)

< project section

Source: BMVI (2016) Figure 10 shows the complete motorway A14 Magdeburg–Wismar. The yellow lines depict the sections which, at the time of the grant application, still needed to be built. The section north of the A24 was completed in 2009 with the project section. The section south of the A24, which was supposed to be opened for traffic in 2017, is still under construction and expected to be completed in 2022. Recently the section A24- Ludwigslust has become operative.

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Figure 10. The A 14 between the A 2 and the A 20 (overview)

< project section

Source: IVV (2009:43) The project covers the construction of a four-lane motorway section with a total length of 14.31 km between the junctions Schwerin-Nord and Jesendorf. It is in the northern part of A14 Schwerin–Wismar, which connects the two east-west running motorways A20 (coastal motorway) and A24 (Hamburg–Berlin). Until the project section was finished, long-distance traffic between the A24 and the A20 had to use the secondary road L101 between the intersections Schwerin-Nord and Jesendorf.

In the ex-ante CBA, the objectives of the project section, being part of the broader A14 section between Wismar and Magdeburg, were defined as follows:16

 Improvement of the accessibility of Schwerin;  Contribution to the development of the region; and  Shortening of the trips from Berlin to Lübeck and further to the federal state of Schleswig-Holstein and to the mainland of Denmark (Jutland).

The project section was supposed to generate a considerable reduction in the cost of transport, particularly by travel time shortening. Positive environmental effects were also expected due to the shift of traffic from country roads also passing through settlements. In addition, this shift should result in a considerable improvement in traffic safety. The quality of life of some residents in the adjacent municipalities significantly improved

16 BMVBS (2008)

109 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 through the release of secondary roads. Some residents, however, are inflicted by noise from the motorway.

The transport infrastructure was expected to intensify economic exchange and to support the labour market-related links between Schwerin and Wismar as well as their adjacent areas. The completion of the A14 between the A24 and the A20 was expected to improve the connection to the German motorway network – including a better connection to the ports in the North and East (strengthening the maritime location) – as well as the connection to the trans-European network. It was supposed to benefit the accessibility and therefore also the development of the surrounding regions.

1.3 STRUCTURAL FEATURES The project section consists of a free-range dual separate carriageway road outside a built-up area. The cross-section with a width of 26 metre has been selected based on the predicted traffic volume and for landscape protection reasons. The demand for land choosing this cross-section is lower than in wider standard cross-sections due to the smaller dimensions of the hard shoulder and lanes. For traffic safety reasons, however, the hard shoulder was widened to 2.50 metre resulting in a special cross-section with a width of 27 metre. The standard cross-section is shown in Table 2 below.

Table 2. Structural elements ITEMS TECHNICAL FEATURES Length 14.31 Km Design speed 100 km/h Half central reserve 1.50 m Inner marginal strip 0.50 m 2. Lane 3.50 m 1. Lane 3.50 m Outer marginal strip 0.50 m Hard shoulder 2.50 m Side strip 1.50 m Width of a carriageway in one direction 13.50 m Crest width (2x13.50 m.) 27.0 m Source: BMVBS (2008:6f.) On the project section, there are 13 engineering structures with a total length of 1,134 m: the viaducts in Liessow (339 m) and Mühlenbach (501 m), seven bridges (total 266 m; two of them wildlife crossings) and four tunnels (27.5 m; three of them wildlife crossings). Part of the project section is a basic service area without facilities called "Pröbbower See" south of the intersection Jesendorf in both directions.

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Figure 11. Viaduct over valley at Figure 12. Viaduct over Liessow Mühlenbach

Source: own pictures 6.10.2017 The figures above show the two large bridges, which are crossing valleys for minimising the environmental impact. Because of the subsoil, the bridges needed deep foundation. They were built out of specifically designed concrete elements and as a separate structure for each direction.

Figure 13. Two amphibia tunnels Figure 14. Amphibia tunnel “U”- profile

Source: own pictures 6.10.2017 The project section features several tunnels and bridges for animals. They are built following the latest scientific findings at time of construction. For example, the amphibia tunnels consist of concrete elements with upside down “U”-profiles instead of a closed rectangle, which is statically more difficult to build. If the bottom is concrete covered with earth, amphibia will possibly refuse to use the passage.

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2 ORIGIN AND HISTORY

2.1 BACKGROUND The first draft of the A1417 (stretching from Wismar to Dresden) is documented back to 1958 in files of the Ministry of Transport of the GDR18. Since then several sections of the motorway have been built. The first section to be constructed was the southern section Leipzig East–Grimma–Interchange Nossen, which opened in 1970/71. The part between the interchange Schwerin on the A24 (Hamburg–Berlin) and the intersection Schwerin- Ost was constructed 1984-1986 with remaining budget from the construction of the A24 in the years before.

The A24, linking the two largest cities in Germany (Hamburg and Berlin), was opened in 1982. The motorway was built by the GDR authorities, but financed by the FRG. For the FRG reliable connections to West-Berlin (an enclave) were important. Thus, the FRG financed so-called “transit connections” for its citizens and cargo operators. Even though the constructed motorways, railways and waterways through the GDR usually did not follow the same quality criteria as in the FRG, the access to West-Berlin was secured. All transit connections were open for the domestic GDR-traffic as well while the border control points were heavily secured. While the other transit road corridors (Berlin–Hannover, Berlin–interchange Hermsdorf– Frankfurt/München) could use existing pre-war motorways, Hamburg was only connected by an ordinary state road. Thus, the FRG government in 1978 came to an agreement with the GDR for the construction of a completely new motorway Hamburg–Berlin. The motorway was opened in 1982.

From the total amount of DM19 1.37 billion which West-Germany had granted to the GDR, only DM 1.1 billion had been spent for the construction of the A24. The GDR decided to use the remaining budget to continue construction on the long-planned motorway from Wismar to Magdeburg which today is the A14.

The alignment of this motorway was heavily influenced by strategic purposes: the military wanted a capable road connection along, but in some distance to the border with West-Germany. For this reason, an alignment of the motorway east of the Lake Schwerin was chosen, improving the access to important east-German and Soviet military infrastructure there. Hence, military objectives were the main motivation for the motorway, while traffic and cargo needs were not crucial. Wismar was an important export harbour until 1989, but mainly for bulk cargo (potash salt) with low or non-relevance for road transport. Also, the industry at Wismar (shipyards) was not dependent on road transport.

The planning and construction process of the motorway A14 was unique in a technical way, since it had to be constructed in a very short timeframe. When it became clear that budget would remain from the A24 project, the planning authorities decided to get the construction started and finished in a very short time, before the resources were going to be used for other projects or withdrawn. Therefore, the stake-out of the route was supported by helicopters, using straw bales as marking points — this procedure was only used once for this project. On the other hand, for the first time in the GDR, ecological

17 The motorway numbers in former GDR came in use after 1989, however they are used also for the time before to ease the reading 18 http://www.autobahn-online.de/netz1958ddr.html 19 Deutsche Mark; DM 1 = EUR 1.96

112 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 aspects were considered in the planning, and special attention was paid to keeping the cultivation areas intact, a process in which local farming cooperatives were involved.

The construction started at the junction with the A24, and reached 20.1 km to Schwerin- Ost, of which 7.6 km were constructed with single lanes only. In 1985 the continuation of the motorway further north was stopped due to financial problems. The completed section was called the “Schwerin connector”, stretching from the junction with the A24 to Schwerin-Ost. The “Schwerin connector” was called A241 after reunification, the 3-digit number indicating a regional motorway. This number is used in the approval and application documents. Another major motorway with relevance for the A14 is the A2020. This motorway is part of a vast construction plan carried by DEGES (Deutsche Einheit Fernstraßenplanungs- und -bau GmbH, i.e. the German Unity motorway planning and construction company), a state-owned project management institution founded after German reunification with the aim to support the federal states in former GDR, primarily by planning and construction of new motorways. The A20 was one of the largest projects of the DEGES as part of the “traffic projects German reunification”21, stretching from Lübeck to the A11 (Stettin– Berlin). The objective of the project was to connect the Baltic regions of MWP and Poland to the motorway system and to improve the transit traffic between eastern and western Europe.

For these projects, special laws and regulations were passed to speed up the planning and building process. Due to the accelerated procedures the first section of the A20 west of Wismar already was opened in 1997, while the whole motorway was completed in 2005. After finishing the A20 motorway there was a gap in the motorway network between the A20 and the A241 (i.e. between Wismar and the “Schwerin connector”). The project section, which was subject to ERDF funding, is part of the link between the A20 and the A241 and stretches from the intersection Jesendorf to Schwerin Nord. With the opening of the project section the northern part of the A14 motorway between the A24 and Wismar was completed in 2009, and the former A241 was renumbered as a part of the “A14 Wismar–Dresden”. Today, the A14 is part of the TEN-T comprehensive network (see Figure 15) as classified the EU-regulation 1315/2013. However, this categorization has been done after the planning and construction of the project section had been finalised, and it did not play a role in the decision-making processes.

20 Also called “Küstenautobahn” (coastal motorway) 21 Verkehrsprojekte Deutsche Einheit

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Figure 15. Classification of A14 and A20 as part of comprehensive network

Source: Official Journal of the European Union, EU (2013:52) 2.2 FINANCING DECISION AND PROJECT IMPLEMENTATION After the reunification in the early 1990s the argument for finishing the A14 was not primarily the need to handle existing traffic flows, but to improve the accessibility of the region, the Baltic harbours and the coastal holiday resorts. The intention was to support the development of the economy, the maritime cluster and the tourism sector. The latter is a vital industry in MWP, primarily along the coast. Since, according to the local tourism association, about 85% of the tourists are travelling by car good accessibility is crucial for the competitive position of the tourist resorts.

The residents in the region largely supported the A14. In the 1990s the unemployment in the former GDR was high. A good connection to Hamburg and, to a lower degree, the Lübeck area was expected to enable the inhabitants to commute to these cities and prevent them from moving away. Also, Wismar harbour was supporting the project. Even if the share of goods transported by trucks is only about 15% due to the high share of bulk cargo, a direct connection to the “hinterland” seemed crucial.

Together these factors led to the support of the project by politicians of nearly all parties, both, local and regional, and as a reflection of this advocacy activity closing the gap between Schwerin Ost (the “Schwerin connector”) and Wismar has been classified as urgent need within the 1992 Federal Transport Infrastructure Plan (BVWP).

As shown in the following Figure the construction of the A14 Schwerin–Wismar was realised in three phases:

 Section 1 / Schwerin-Ost to Schwerin-Nord, open to traffic on 19 December 2000;  Section 2 / the project section, open to traffic on 21 December 2009; and  Section 3 / Jesendorf–Wismar, open to traffic on 24 August 2006.

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Figure 16. Overview map module 1 Schwerin - Wismar

Source: OSM (2017) The planning process for the first construction phase went smoothly and construction, starting in August 1997, took three years. Phase two and three, however, were more complex in their realisation. For both phases the plan-approval procedure started in September 1998. In December 1998, it became clear that the planning and construction of the remaining two phases would be delayed. Following this, the Schwerin chamber of industry and commerce22, which strongly supported the project due to expected positive impacts on the local economy, launched the initiative “Volksinitiative pro A241” in 1998 resulting in 24,000 signatures. In response to the initiative the parliament of MWP commissioned the Ministry of Economics, Employment and Health to take measures for expediting the process.

In February 2002, new lists of Important Bird Areas (IBA) of MWP was published which included areas relevant for the second construction phase (the project section). The newly declared IBA “Schweriner Seenlandschaft” had to be reported to the European Commission which led to delays in the planning process. In April 2005, the government of MWP decided to register a special protection area (SPA according to The Birds Directive 2009/147/EG23) for birds in the affected nature reserves. Following the declaration, the plan-approval procedure for the project section was re-launched in May 2005. So, the planning process had to consider the new situation of the alignment of the motorway in or close to preserved areas.

22 IHK Schwerin 23 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32009L0147

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In 2004 an initiative called “Bündnis B189/B5 statt A14” was formed as an alliance of a number of independent citizens' initiatives with the objective of stopping the further development of the A14 south of A24 and instead promoting the extension of the existing trunk roads B189 and B5 between Magdeburg and Schwerin (i.e. south of the project section). The initiative argued that the projected traffic of 15,000 passenger cars per day did not justify the construction of a new motorway. The initiative is supported by the German Federation for the Environment and Nature Conservation (Bund für Umwelt und Naturschutz Deutschland e. V., short: BUND), one of the most important environmental organisations in Germany. During the plan-approval procedure of the project section BUND submitted a demur against the planned construction which was declined by the planning authority. The plan approval order24 for the project section was given in April 2007, construction started in October 2007.

On 7 December 2007, the European Commission approved the ERDF Federal Transport Operational Programme for the 2007-2013 programming period in Germany. This programme involved Community support for the regions of the Federal Republic of Germany under the "Convergence" objective. The programme's total budget was around EUR 2.33 billion and the Community contribution through the ERDF amounted to around EUR 1.52 billion. This represents approximately 5.8% of the total EU funding allocated to Germany under the cohesion policy for 2007-2013.25 The primary goal of the programme was the improvement of supra-regional transport infrastructure as a factor for sustainable regional development. The ERDF programme co- financed the development and improvement of the Trans-European Transport Network and other major supraregional transport connections, better links to important business locations, the strengthening of gateway functions and a shift to more environmentally friendly modes of transport, along with improvements in efficiency. The project was included for funding in the Operational Programme, being in line with its priorities and strategic objectives. The process is summarised in Box 1.

24 Ministerium für Verkehr, Bau und Landesentwicklung Mecklenburg-Vorpommern – Planfeststellungsbehörde:2007 25 http://europa.eu/rapid/press-release_MEMO-08-542_en.htm

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Box 1. The projects decision making process

 1992: The first all-German transportation plan stated that the gap between Wismar and Schwerin should be closed

 1993: Survey of possible alignments

 1996: Finalisation of the Regional Planning Procedure26 for section 1 (Schwerin Nord – East). Start of the plan approval procedure27

 1997: Start of the construction of section 1  1998: The support group was initiated by the chamber of commerce28

 1999: With 23 767 signatures the petition was discussed and affirmed by the parliament of Mecklenburg-Vorpommern, this led to acceleration of the realisation.

 2000: First section opens (Schwerin-Nord–Schwerin-Ost)  2002: 71 163 signatures were collected in the federal states of Mecklenburg- Vorpommern, Brandenburg and Sachsen-Anhalt for the building start of the southern A14; common proclamation of the chambers of commerce of Schwerin, Rostock, Potsdam and Magdeburg at the German Ministry of Transport

 2003: Plan approval procedure for section 3 (interchange Wismar–Jesendorf)

 2004: Law for trunk roads 2003-201529 passes the German parliament, relying on the German transportation plan, containing the A14 realisation

 2004: Formation of an initiative against the A14 between Schwerin and Magdeburg30

 2004: Finalisation of the Regional Planning Procedure for the southern motorway from Schwerin to Magdeburg

 2006: Launch of section 3 (Wismar – Jesendorf), the motorway A241 is renamed to A14, underlining its primary importance

 2007: Plan approval procedure finished for section 2 (Jesendorf – Schwerin-Nord, project section), construction start

 2009: Launch of section 2 (Jesendorf – Schwerin-Nord, project section) Source: Karge et al (2009: 246f) The plan approval order for the project considered two main alignment options to connect Schwerin and Wismar, on the eastern or the western side of the lake, as shown in Figure 17 below. The two principal alternatives are shown as blue lines. The shaded areas mark nature protection zones (European and National standards).

26 Raumordnungsverfahren 27 Planfeststellungsverfahren 28 “Volksinitiative A241” 29 Fernstraßenausbaugesetz 30 Bündnis B189/B5 statt A14

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Figure 17. Western and eastern alignment, protection areas

Source: Authors, Background Map: Landesamt für Umwelt, Naturschutz und Geologie (LUNG), Kartenportal Umwelt M-V The plan approval order report states that no major differences were found regarding the direct environmental impacts of the two options. Taking into account regional planning considerations the following arguments for the eastern corridor were stated in the plan approval:

 Slightly higher traffic is expected than on the western corridor; the numbers are expected to increase significantly when the southern part of the A14 (i.e. between Schwerin and Magdeburg) is finished;  Better connectivity between Schwerin and the North-Eastern parts of MWP;  Better connection for Wismar and especially the port;  Shorter overall length (12km);  Omission of 9 km trunk road;  Fewer bridges;  Shorter and cheaper construction;  Shorter paths leading to less emissions and vehicle operation costs; and  Is part of integrated transport strategy to connect important urban areas.

After the decision for the eastern alignment has been taken, 10 different route alternatives had been screened for the project section as shown in Figure 18, with the selected route highlighted in green.

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Figure 18. Route alternatives under examination for project section

Source: Ministerium für Verkehr, Bau und Landesentwicklung Mecklenburg-Vorpommern – Planfeststellungsbehörde (2007:14) The eventual selection of the route as well as specifications and final layout of the motorway was discussed diligently to identify the best practical environmental option. This includes the small-spatial alignment, crossings for animals (bridges and tunnels), compensation areas in the wider surroundings, fresh and waste-water management and a planning of the construction phases which takes the seasonal behaviour of animals and plants into account.

The project section was submitted to the ERDF Federal Transport Operational Programme by the Federal Ministry of Transport and Digital Infrastructure in September 2009, shortly before the opening of the project section on 21 December 2009. The financial contribution of EUR 57.7 million by the ERDF programme was approved in March 2010. The financial contribution covers 51% of the EUR 112.5 million that had been used as assessment basis. The financing decision of the EC lists the following positive outcomes to be expected from the project:

 Improved accessibility between the region Schwerin and the region Wismar;  Reduced transportation costs especially due to higher travel speeds and thus reduction of travel time;  Positive environmental impact due to dislocation of traffic away from urban areas;  Increased road safety; and  Increased economic relations between Schwerin and Wismar.

The expenses for the construction were EUR 100.5 million, which means a reduction by 11%. This implicates a reduction of the EU-grant about EUR 6.3 million.

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Table 3. Final report of ministry, status March 2017 APPLICATION FINANCIAL STATEMENT FINANCING (EUR million) (EUR million) Total cost 112.537 100.522 ERDF funding 57.700 51.427 National public funding 54.837 48.875 Other sources 0.221

FINANCIAL REPORTING APPLICATION FINANCIAL STATEMENT Total cost for grant (EUR million) 112.537 100.301 Grant share 78.88% 78.88% Net-Revenue-withdrawal (EUR million) -23.767 -21.183 Assessment basis (EUR million) 88.769 Eligible expenses (EUR million) 79.118 ERDF funding (EUR million) 57.700 51.427 Eligible expenses of nat. public funding 27.691 (EUR million) Source: BMVI 2017:98 For ERDF applications of major projects, the EU requires, among others, an ex-ante CBA including an economic and a financial analysis as well as a risk assessment. In January 2009, an ex-ante CBA has been prepared by Ingenieurgruppe IVV GmbH & Co. KG and AVISO GmbH for the construction of all missing sections of the A14 between Magdeburg and Wismar (see Figure 19 below).

The ex-ante CBA has been created based on official federal projections31 regarding the development of economic and settlement structures as well as traffic demand. It was prepared according to the methodological guidelines of the EC for CBA of major projects (2008); however, as permitted by the guidelines, the methods were adapted to the national context. The ex-ante CBA in the ERDF application for the project section was prepared assuming that the effects assessed in the CBA (e.g. transport cost, environmental effects etc.) for the construction of all missing sections of the A14 between Magdeburg and Wismar, were proportional to the lengths of a given section. Thus, the share of the project section from the total original CBA section (Wismar to Magdeburg), 8.44%, was used to calculate the effects.

31 The data was provided by BMVBs in the 2007 report “Prognose der deutschlandweiten Verkehrsverflechtungen 2025”.

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Figure 19. Scope of the 2009 CBA between Magdeburg and Wismar

Source: IVV (2009) Table 4 to Table 6 summarise the results of the CBA from the ERDF application. Five of the effects are benefits (positive values) and two costs (negative values). The benefits identified ex-ante were: reduced transport/travel time, improved accessibility, and increase of safety, environmental effects and regional effects. The costs on the other hand were the maintenance and the induced traffic (see Figure 20).

Table 4. Ex-ante financial analysis (Motorway Wismar–Magdeburg)

PERFORMANCE INDICATORS RESULTS

Financial Rate of Return of the Investment FRR/C -2.7% FRR/K 0.6% Financial Net Present Value (EUR million) FNPV/C -728.140 FNPV/K -254.849 Source: BMVI (2007: 23)

Table 5. Ex-ante economic analysis (Motorway Wismar–Magdeburg) PERFORMANCE INDICATORS RESULTS Social discount rate 3.0% Economic return ERR 18.7% Net present value (EUR million) ENPV 3,103.2 Benefit/cost-ratio BCR 4.35 Source: BMVBS (2008: 25)

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Table 6. Ex-ante benefits (Motorway Wismar–Magdeburg and project section) BENEFITS 2008-2040 TRANSPORT IMPROVED REGIONAL INDUCED SAFETY ENVIRONMENT MAINTENANCE (EUR million), COST ACCESSIBILITY EFFECTS TRAFFIC DISCOUNTED Overall project “A14 Wismar- 2,433.00 1,112.00 721.40 156.90 45.90 -69.80 -369.20 Magdeburg” Project section "Jesendorf- 205.48 93.91 60.92 13.25 3.88 -5.89 -31.18 Schwerin Nord" Total share 60.4% 27.6% 17.9% 3.9% 1.1% -1.7% -9.2% ...of benefits respective cost 54.4% 24.9% 16.1% 3.5% 1.0% 15.9% 84.1% only Source: BMVBS (2008: 25) The major expected benefit was the reduction of transport costs with more than half of the total share of all effects. It relates to the saved travel time. The determined benefit- cost ratio of the economic CBA was 4.35. No details on the calculations and underlying assumptions of benefits are provided in the ex-ante CBA, so it is difficult to assess its quality and reliability. At the same time, some of the evoked approaches are not fully in line with the DG REGIO approach laid down in the Guide to Cost-Benefit Analysis of Investment Projects available at the time of project implementation (2008 edition), for example ‘regional effects’ are calculated by referring to assumed wage effects in the regions and contribution to decrease in unemployment.

Figure 20. Ex-ante benefits (broken down on project section). EUR million, discounted

Source: Authors following Ingenieurgruppe IVV GmbH & Co. KG and AVISO GmbH

2.3 CURRENT PERFORMANCE AND OTHER INVESTMENT NEEDS The A14 is classified as ‘AS I’ road infrastructure32, according to the German guidelines for the construction of roads, due to its major contribution to the performance of the network. There is no permanent counting point for traffic on the project section. However, one counting station is located on the A14 just north of the interchange with the A24. The data of this counting point shows a slow increase in traffic since the opening of the project section. Before the completion of the project section the traffic volume (near the

32 AS=Motorway, I – large scale connection between major cities and to metropolitan areas

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A24 intersection) remained stable, from 6,500 passenger cars per day33 in 2003 to 5,500 in 2009, and from 550 heavy vehicles a day to 650.

After opening of the project section both values increased to over 10,000 passenger cars and almost 1,000 heavy vehicles a day in 2016. There has been a decline in the traffic volume in 2014, which can be associated with the construction of the motorway interchange Schwerin, which had been under construction from 2013 until its opening in 2015. This was needed in the context of the extension of the A14 southwards. Figure 21 and Figure 22 below show the evaluation of the average number of passenger cars and heavy vehicles, respectively for all day types from 2003 to 2016.

Figure 21. Average daily number of passenger cars for all day types from 2003 to 2016 (Counting point Goldenstädt A14, just north of interchange A24)

Data source: BASt (2016)

Figure 22. Average daily number of lorries for all day types from 2006 to 2016

Data source: BASt (2016) In the ex-ante CBA by Ingenieurgruppe IVV GmbH & Co. KG and AVISO GmbH a daily average flow of 26,000 passenger cars was calculated for the reference year 202534. It is not documented, however, how this forecast develops over the course of the analysis.

The projections for heavy traffic flow, which is important for the estimation of toll income, were calculated based on 2007 numbers which had been extrapolated based on a linear function until the year 2025.

33 In Germany the traffic flow is measured as number of vehicles by the average for all day types (DTV, durchschnittliche tägliche Verkehrsmenge). 34 Based on the 2007 BMVBS report “Prognose der deutschlandweiten Verkehrsverflechtungen 2025”

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As can be seen from the actual traffic flow, the flows differ widely from the assumptions used in the initial CBA. The situation today is that only about 40% of private traffic volume stated in the application forecast for 2015 have been achieved. For the heavy traffic the actual volume is only 26%35 of the one projected in the CBA.

According to the consultants (IVV), this is because the demographic and other input data still were over-optimistic regarding the development of the former GDR, even if it was clear in 2002 that the situation and even more the development was very different from the optimistic population forecast. However, even a more realistic population forecast as a base date would have resulted in an overestimation of the traffic flows, if the methodology for the traffic forecasts had remained unchanged.

The base case in the ex-ante forecast assumed the A14 south of the A24 would have been in service already. In reality, this will probably not happen before 2022. Three sections of the A14 south have already been in operation since 2014 (equals 34.36 km), two are under construction right now (18.31 km) and the other eight sections are in the planning approval stage (103.13 km). After finishing the motorway from interchange Schwerin to Magdeburg the project will unfold all the effects. According to our assumption, reflected in the CBA, this will give an additional 25% to the actual traffic flow. The monetised effects in BMVI:2008 (Großprojekt Antrag) solely report the benefits as discounted sum, but the values used for the monetization were not published and even unknown for the commissioner of the study (BMBVS). For the CBA purpose, we have recalculated these to yearly values.

The phenomenon of ‘underperforming’ motorways, however, also concerns other routes in the area, for example the A20. Between Lübeck and Wismar the traffic volume has been 28,000 vehicles in 2010 (forecast 40,000); between Wismar and Rostock it has been 30,000 instead of 60,000 of the forecast. In the eastern section (close to the interchange A11/A20 “Uckermark”) there has been a traffic volume of 12,000 vehicles a day, which ranks this motorway stretch as one of the least frequented in Germany. In 2016 the usage rose slightly: Lübeck–Wismar with 32,000 vehicles, Wismar–Rostock with 34 000 vehicles and further east 15,000 vehicles (see Figure 23).

Since a considerable share of the traffic on the A14 and A20 is regional, it can be linked to the demographic development of the region. The official forecast for the population in the served corridor predicts a decline between 2017 and 2030 of about 5% total (Statistisches Amt Mecklenburg-Vorpommern: 2017). The decline of the workforce (people aged 18-65) is much higher: 18%. This must be seen against the background of the already low population density of MWP, as mentioned in chapter 1.

Concerning the heavy traffic, it can be assumed it will stay on an unchanged level, meaning that the decline in the population will be repealed by the general growth.

35 BASt (2016)

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Figure 23. Traffic flows 2015; Landesamt für Straßenbau Mecklenburg- Vorpommern onm

Source: BASt 2016

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A closer look at the traffic data shows that the A14 is not bundling the traffic, as it does not carry more traffic than some of the country roads in the area. The road L72/B105 between A24–Schwerin–Wismar has about the same traffic volume, the westerly bypass of Schwerin even the double amount.

There are a number of explanations to this, which originate from some misconception of the project:

 The motorway-bound traffic from Schwerin must cross the lake via the Paulsdamm (an embankment dating back from 1842) to reach intersection Schwerin Nord, or make a detour and pass the lake on the south shore to intersection Schwerin East. Here, the remaining 2-lane section of the trunk road B321 is actually going to be upgraded to four lanes. Moreover, the motorway on the eastern shore creates a lot of additional traffic over and around the lake.  South of the Paulsdamm an additional fixed link over the lake (as a bridge) was considered because of the high traffic volume. However, the planning was not followed through because it soon became clear that this project would not be approved due to ecological consideration and opposition from the population.  The primary roads B104 and B106 have been expanded to a 4-lane divided highway in the western vicinity of Schwerin (westerly bypass), so now there are two 4-lane divided roads on both sides of the lake.  The westerly bypass as part of the motorway A14 would had given better access to the city of Schwerin and for the smaller towns also to the motorway network. The origin/destination and through traffic could have been bundled on the motorway. Due to ecological considerations, however, the initial plan was abandoned, and the expected transport impacts were also reduced.  Also the connection of the major city of MWP, Rostock, to the capital Schwerin is not straight forward because the A14 is heading some kilometres west before the A20- interchange, and thus there is a detour on the route. The two motorways are running some 4 km close to each other as shown in the following map (Figure 24).

Figure 24. Detour for journeys between A14 and A20 east

Source: OpenStreetMap contributors

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3 DESCRIPTION OF LONG-TERM EFFECTS

The project section is a comparatively short gap-closure, thus the dominant effects considered in the analysis are those related to the shift from the existing country road to the motorway. Effects on a larger scale seem to be of very low relevance for the project section, if seen isolated. For this reason, the approach to evaluate the effects is conservative and is only considering the effects which are certain. Other possible, related effects ― such as additional commuter streams ― are negligible due to the rural structure of the area and the distance to large agglomeration.

3.1 KEY FINDINGS This section describes the main long-term effects provided by the project, i.e. it gives a description about what has changed in the long run as a result of the project. The effects are considered under four categories: economic development as well as quality of life and well-being, environmental sustainability and distributional effects.

The results of Cost-Benefit Analysis, as included in the Annex II to this report indicate that the project adds value to the European society under the social and economic points of view. In the baseline case, the Socio-Economic Net Present Value (ENPV) equals EUR 157.262 million, whereas the Economic Internal Rate of Return is at 7% with the applied discount rates of 2.57% backward and 2.71% forward, referring to the time of completion of the project. These results show that the project yields positive socio-economic net benefits. The distribution of benefits in the CBA is presented in the figure below.

The motorway has brought a range of effects. Some of them, namely travel time, safety and GHG emissions have been monetised and used in the CBA. About 73% of socio-economic benefit relates to travel time savings, while the rest is given by the increase in savings (accident and fatalities avoided), with only a negligible share of environmental effects, as the distance is nearly unchanged and the lower speed on secondary roads in comparison to motorways is counterbalanced by additional acceleration on secondary roads.

Figure 25. Socioeconomic benefits by type. EUR million, discounted.

0.193 Value of time 80.440

Safety

202.719 Greenhouse Gas Emission

Source: Authors based on CBA results For other effects no or insufficient data were available, or the effects are difficult to capture in monetary terms. Those effects are described qualitatively but they have not been included in the calculations of the CBA.

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The table below summarises the nature and strength of the project’s effects classified under the above referred four categories (economic growth, quality of life and well-being, environmental sustainability and distributional issues), as well as the territorial levels where these are visible.

Table 7. Summary of nature and strength of effects (the effects highlighted in green are those included in the ex-post CBA) CATEGORY EFFECT STRENGTH* LEVEL Economic Travel time +4 Local – Regional growth Vehicle operating cost 0 Local – Regional Reliability of journey time +1 Local – Regional Income for the service provider +2 National Wider economic impacts +2 Regional – National Institutional learning +2 Local - Regional Quality of life Safety +3 Local and well-being Security N.R. Noise 0 Local Crowding N.R. Service quality 1 Local Aesthetic value N.R. Urban renewal N.R. Environmental Local air pollution 0 Local sustainability Climate change (GHG Emissions) +1 Local – regional – global Biodiversity No data Local – Regional Water pollution N.R. Distributional Social cohesion 0 Regional issues Territorial cohesion +1 Regional – National Note: * the strength score reflects the weight that each effect has with respect to the final judgment of the project. In particular: -5 = the effect is responsible of the negative performance of the project; -4 = the effect has provided a negative contribution to the overall performance of the project; -3 = the effect has contributed in a negative way to the performance but it was outweighed by other positive effects; -2 = the effect has a slightly negative contribution to the project performance; -1 = the effect is negative but almost negligible within the overall project performance; 0 = the effect has no impact on the project performance; +1= the effect is positive but almost negligible within the overall project performance; +2 = the effect has a slightly positive contribution to the project performance; +3 = the effect has contributed in a positive way to the performance but it was outweighed by other positive effects; +4 = the effect has provided a positive contribution to the overall performance of the project; +5 = the effect is responsible of the positive performance of the project; The cells in green have direct influence on the benefit-calculation ENPV N.R. = The effect is not relevant for the specific project; No data = The effect is potentially relevant, but no evidence on impacts is available. This shall be used only for relatively low significant effects whose inclusion would in no case dramatically affect the overall assessment.

The following sections include some more detailed description of the effects incorporated in the ex-post CBA and/or supported by available qualitative evidence either from documental sources or interviews.

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3.2 EFFECTS RELATED TO THE ECONOMIC GROWTH

3.2.1 Measurable effects

The reduction of travel time for travellers, shippers and carriers is the most important outcome of the construction of the motorway. Even though the project section is short, considerable time savings are achieved by using the new motorway in comparison to the travel on the alternative secondary road L101. The travel times are calculated with routing programs (bing and osm), which give the best results as real times are constantly measured by the built-in navigation systems of most cars. The time used for exiting the motorway, passing the intersections and re- entering is calculated as well, by choosing points on the motorway before and beyond the intersection (about 15.5 km).

On the secondary road L101 (with comparatively low standard) a maximum driving speed of 90 km/h is realistic. Considering turns, stops, passages through villages etc. the average travel time is 17 minutes (at about 60 km/h average speed). This corresponds with own observations. On the motorway, the route takes 8 minutes at a speed of 120 km/h, resulting in saved travel time of 9 minutes.

Figure 26. Travel times from routing programme

Source: Bing routing programme

Heavy traffic is assumed to reach a maximum speed of 70 km/h on the secondary road (slowing down private vehicles as well, that is why the time for car and lorries on the country road is similar). Because of more waiting time and longer acceleration, the average speed for lorries is about 55 km/h via the L101, resulting in 18 minutes driving time. At the maximum speed of 80 km/h on the motorway, which is considered to also be a realistic average, heavy traffic needs 11 minutes for the route on the motorway.

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Table 8. Travel time saving in the project scenario and the counterfactual CARS HEAVY VEHICLES Km Min Ø Km/h Km Min Km/h Motorway 16.3 8.0 122 16.3 12.0 82 Country road 17.01 17.0 60 17.01 8.0 57 Saving 0.8 9.0 0.8 6.0 Source: Authors based on Bing routing programme While lorries travel for business reasons, trips with private vehicles serve different purposes (e.g. commuting, business trips and other purposes). Aggregate numbers for Germany suggest the following split: commuting 21%, business trips 7% and 71% for other purposes (infas/DLR 2008:116).

However, no data are available for the respective shares on motorways or/and in more rural areas and the numbers can vary considerably from the averages mentioned above. Especially business trips will have a higher relevance on roads mainly used for long distance trips. Lacking actual data, assumptions have been made for the trip purposes of private vehicles, the values are in accordance with the shares used for the ex-ante forecast. The respective shares are presented in Figure 27.

Table 9. Time Value by trip purpose, Ø number of passengers / vehicle SEGMENTATION PRIVATE EUR/PERSON/HOUR SHARE VEHICLE Commuter 9.07 30% Businesses 18.68 10% Other 8.36 60% Weighted Ø 9.61 Ø passengers / vehicle 1.3

LORRIES 3.74 EUR / T / H Ø cargo weight per lorry 16.0 t Value of time 59.84 €/h Source: Authors

Figure 27. Benefits 2010-2035: Value of time segmented by trip purpose. EUR million, discounted (on the left) and million hours (on the right)

Source: Ex-post CBA

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In absolute terms these benefits are significant, and they are the main contributor to the positive socioeconomic outcome of the project. However, the full potential of this effect has not been unfolded since the traffic on the project section is lower than projected. As mentioned earlier, when the remaining part of the A14 is finalised (it is assumed in 2022), an increase in traffic volume along the entire A14 is likely to be observed, thus improving the contribution to the socioeconomic benefits of the project. The proposed effect is included in the CBA calculations, assuming that the volume on the project section will rise about 15% in 2022, 7.5% in 2023 and 2.5% in 2024.

3.2.2 Non-measurable effects

For transport projects one major output for travellers and transporters of goods is the saving of vehicle operating costs, e.g. fuel and fares. Better connections result in shorter distances leading to less expensive travel costs. The route over the project section on the A14 is with 14.3 km only 200m shorter than the alternative route over the L101 (14.5km) which leads to only a minimal reduction of costs. For this reason, the impact on vehicle operating costs is considered insignificant and was not included in the CBA. Federal motorways are, according to the German Federal Highway Law, exclusively designated for high-speed transport by motor vehicles free from level crossroads and with designated connections for access and exit. They have separate lanes for directional traffic. Because of their design, motorways are much more reliable in terms of reliability of journey time. A higher speed is allowed, and there is no waiting time at crossings. The construction of the motorway has increased the reliability of journey time. At the same time in general the traffic in the project area is not high and no relevant congestion issues where identified even before the construction was completed so the significance of this benefit is limited.

The income for the service provider, the toll, is calculated for the traffic diverted from the country road, so that it constitutes additional revenue for the provider. Although significant, this aspect is not included in the CBA when accounting for economic benefit since it would be a double counting if added to the value of time. In fact, the willingness to pay for a faster transport (reflected in the collected tolls) is already (and more appropriately) included in the monetized value of time saving. Tolls are only collected from lorries, they can cover ordinary maintenance and to some extent re-investment only on motorways with high demand — not on the A14 (here assumed to be renewed every 10 years for a total amount of EUR 10 m, see below on financial sustainability of the project). The service provider and therefore the operator of motorways in Germany is the state. On these federal motorways toll for lorries are imposed and the income is spent for the maintenance and construction general. On some motorway section maintenance and (re)construction is transferred to private companies, they are receiving the road toll (P.P.P.). This is not the case on the A14.

The expectation of wider economic effects of the road on the regional competitiveness was among the main drivers for the project implementation. The reduced travel costs may have contributed to create increased competitiveness as a further prerequisite for the development of the economic integration and connection of the affected areas and as a support for the development potential of the regions. In addition, the new construction was supposed to increase the efficiency of transit traffic on the north-south relation. The

131 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 location quality as well as the economic integration of the centres was also expected to improve.

The A14 did not attract commercial estates in a significant degree yet, at the intersections of the project section and further north there are no industrial or business areas. South of the project section, near Goldenstädt, a business park is open since 1993; however, it operates below full capacity utilisation.

Improvements of the connection between Schwerin and other major centres such as Lübeck, Rostock and Wismar ― the most important Baltic Sea ports of the region ― are achieved. This can contribute to an increased commuter linkage between the major centres and the rural area in the closer catchment area.

Even if Wismar still mainly is a bulk cargo harbour, the direct connection to the “hinterland” is important. For the metropolitan area Leipzig/Halle and Magdeburg, in terms of the landside connections Wismar is the most appropriate harbour. The average quantity of lorries to the harbour is about 50, the daily number between 5 and 200. Beside the shipping business the industrial cluster connected to the harbour is important: both the very large timber industry and the shipyard are relying on good transport conditions. Wismar is head office of “MV Werften” (MWP shipyards), a group of shipyards in Wismar, Stralsund and Rostock. MV Werften is since 2016 part of the “Genting Hong Kong” group, the Wismar shipyard is planned to be the main place for construction of cruise ships. The cruise business of the harbour itself is — compared with Lübeck or Rostock — until now comparatively small, about 10 ships with up to 1 000 passengers / each. Anyhow, the fast connection for charter buses to Berlin via the A14 is very important, because many of the passengers are visiting the capital. The cruise business is a big chance for Wismar: unlike the other harbour cities the historical centre has not suffered heavy bombing during World War II, the remarkable historical structures designated Wismar inner city as UNESCO-world heritage site.

For Wismar the time saved is due for the complete area of Berlin/Brandenburg, Sachsen- Anhalt, Thuringia, Saxony and beyond.

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Figure 28. Change of car driving time to Wismar by the project section

Source: Bundesministerium für Verkehr und digitale Infrastruktur (2017), p. 261 The improved accessibility supports tourism, which can strengthen an alternative form of income and the generation and creation of jobs. With the construction of the project section the reachability of places of touristic importance in the region northwest of Mecklenburg (e.g. Island Poel, Boltenhagen) is enhanced. Also for the lake Schwerin region the local tourist organisation could register a rising demand, also off the coast. About 98% of the tourist is using private vehicles for the trip. In total the number of tourist accommodation here is very low, but no quantitative information is available. As shown in the graphic below time savings were achieved for wider regions in Germany. The driving times between Schwerin and Wismar (city to city) however, according to route planning programmes are nearly equal: 42 minutes via the highway B106 and 44 minutes on the motorway. This is because of the detour of 13km via the motorway, at 33 km distance. Anyhow, the route via the motorway has some advantages through avoiding traffic jams and the two alternatives lead to a higher capacity. The improved accessibility can be reflected in the increase of commuters from 15,000 in 2007 to nearly 30,000 in 2015 north of Schwerin, the respective numbers southeast of Schwerin: 45,000 to 60,000. The relations (from/to) however, are not visible on the map.

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Figure 29. Commuters per day 2007 and 2015

Source: Bundesministerium für Verkehr und digitale Infrastruktur (2017), p. 247 Despite the understanding of a possible positive contribution to wider regional effects, lacking solid quantitative data and also taking into account the decreasing population in the area, the wider effects could only be assessed as a marginal contribution to long- term effects of the project.

Institutional learning refers to wider spill over effects that any investment project may bring to the Public Administration and other institutions at national or regional levels in terms of expertise gained by working on large scale projects. As explained in the previous sections, the decision-making process was long and involved the interaction and confrontation of many different actors and stakeholders, including federal state and national institutions, local political parties, environmental groups, association of citizens and business representatives. Even if not fully documented, based on evidence from interviews there is the perception that there has been a learning process for most actors involved (government, planning authorities, citizen initiatives). The project section, being part of the A14 between Schwerin and Wismar, which has been in planning since shortly after the reunion, was among the first major projects to be conducted in MWP, implying the need to reflect the existing and fast evolving legislative, institutional and administrative context. In addition, the project planning process constituted one of the first interactions of the local planning authorities with the Birds Directive.

3.3 EFFECTS ON QUALITY OF LIFE AND WELL-BEING

3.3.1 Measurable effects

The construction of the motorway contributes to an increase in traffic safety, due to the general higher traffic safety on motorways in comparison with secondary roads. The increase in safety is the result of the bundling of traffic to a four-lane and direction- separated design. As a direct consequence of the project traffic is diverted from secondary roads to the motorway. As the motorway is safer than other roads, fewer accidents occur as compared to the situation without the project. By drawing from existing statistics on accidents and fatalities in Germany on country road and motorway,

134 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 we calculated the prevented fatalities assumed for the realisation of the project — compared to what was likely, if all the traffic had to use the highway L101.

Table 10. Casualties avoided with the project AVOIDED 2010-2035 FATALITIES SEVERE SLIGHT SUM Casualties, N. 8.5 150.0 735.6 894.1 Monetary equivalent, EUR million discounted 18.234 44.563 17.644 80.440 Source: Authors’ assumptions based on BMVBS (2010a:163) Using the social accident unit parameters as recommended by the Volume I of the First Interim Report for fatalities, severe injuries and slight injuries, the total effect of increased safety amounts to EUR 80.4 million, discounted (2010-2035).

Figure 30. Casualties avoided with the project. EUR million, discounted (on the left), number (on the right)

Source: Authors assumptions based on BMVBS (2010a:163) The increase in safety is the second largest benefit included in the CBA.

3.3.2 Non-measurable effects

In Germany noise is only measured if the project directly affects people. As this project is a construction of a section of a motorway, which is not built in or through settlement areas, it does not affect the population in a significant way in the circumference of the motorway. In the municipalities along the project section some residents are unsatisfied with the noise, claiming that the standard of the noise protection is not as high as to some natural reserve areas. For the city of Schwerin, no relief of traffic caused by the motorway could be stated, so non-improvement of the well-being is perceptible.

Country roads normally do not have a resting facility. The new A14 section Schwerin- Nord – Jesendorf has a resting facility with a toilet building on both sides. This increases the service quality on the route. However, the installed facility does not include additional services such as gas station, shop or restaurant. For this reason, this aspect is rated 1, no significant improvement in the service quality can be reported.

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3.4 EFFECTS ON THE ENVIRONMENTAL SUSTAINABILITY

3.4.1 Measurable effects

There are only slight effects in terms of GHG emission (CO2) reductions, which are attributable to the more efficient transport service (i.e. reduction in travel time and distance). The effect has been quantified in the CBA but is only of a small magnitude and accounts for a negligible share of total benefits.

3.4.2 Non-measurable effects

While negative effects by local air pollution may have materialised due to a higher average speed of vehicles, positive effects may also come from the fact that the speed is more regular on the motorway than on the secondary roads. Overall, the two effects may compensate each other. Local air pollution is therefore considered negligible for this project. Environmentalists (e.g. German Association for the Environment and Nature Conservation (BUND36) have been arguing against the completion of the A14. According to them, the project is inflicting biodiversity in ecological sensible areas on a major part of the planned route layout, both north of the A24 (Lake Schwerin) and south (Elbe floodplain). Both areas represent a refuge for migratory birds and amphibians. Environmentalist groups were pointing out that, based on the traffic forecasts an upgrade of the existing roads with some bypasses would be sufficient for the expected traffic volume. Interestingly, as pointed by planners of the motorway during interviews, the completion of the northern part of the A14 through such sensible areas could probably not be realised today.

That said, no survey was made to assess the actual impact of the project on the environment and it is difficult to make a solid assessment of the actual impact. There is also evidence of attempts to mitigate potential negative impact (e.g. amphibia tunnel). Therefore, lacking more robust evidence on negative impacts, this aspect is considered neutral.

3.5 EFFECTS RELATED TO DISTRIBUTIONAL ISSUES

3.5.1 Non-measurable effects

No relevant social cohesion effects could be detected for this project.

The project under assessment had been called for by almost all local political parties and by the citizens in the area as a major investment expected to improve the territorial cohesion and accessibility of the region thus reducing the peripheral nature from major urban centres. Improving the transport accessibility was expected to be improve the territorial cohesion and helping to improve the economic prospects of local population, especially young people. Despite the reduction in travel time from the periphery to major urban areas and to the Baltic, there is no evidence of significant additional improvement in terms of territorial cohesion and the demographic prospects in the regions remain negative.

3.6 TIME-SCALE AND NATURE OF THE EFFECTS The project section was opened for traffic in 2009 and most of the effects from this project materialised within a short timeframe and can be considered fully developed by

36 Bund für Umwelt und Naturschutz Deutschland – BUND e.V.

136 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 the time of writing. However, some changes can be expected to come from the opening of the A14 section between Magdeburg and Schwerin (i.e. south of the project section) which is foreseen in 2022.

Table 11. Temporal dynamics of the effects LONG RUN CATEGORY OF SHORT RUN FUTURE (6-10 COMMENT EFFECTS (1-5 YEARS) YEARS YEARS) Relevant time savings, Economic growth + + ++ reduced congestion, increased reliability Quality of life and Increased safety and ++ ++ ++ well-being service quality Environmental + + + Reduced GHG emissions sustainability Distributional Improved territorial + + ++ issues cohesion. Note: + = slight positive, ++ = positive, +++ = strongly positive, +/- = mixed effect.

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4 MECHANISMS AND DETERMINANTS OF THE OBSERVED PERFORMANCE

In this section the key determinants of the project outcomes discussed in the previous sections are illustrated and discussed. Each significant determinant is analysed and supported by evidence and arguments. The following box summarises the analysis of the determinants.

Table 12. Determinants of project outcomes DETERMINANT STRENGTH Relation with the context -2 Selection process +1 Project design +2 Forecasting capacity -3 Project governance +4 Managerial capacity +4 Note: -5 = the determinant is responsible of the negative performance of the project; -4 = the determinant provides a negative contribution to the overall performance of the project; -3 = the determinant contributes in a moderate negative way to the overall performance of the project; -2 = the determinant has a slightly negative contribution to the project performance; -1 = the determinant plays a negative but almost negligible role to explain the overall project performance; 0 = the determinant does not play a role on the project performance; +1= the determinant plays a positive but almost negligible role to explain the overall project performance; +2 = the determinant has a slightly positive contribution to the project performance; +3 = the determinant contributes in a moderate positive way to the performance; +4 = the determinant provides a positive contribution to the overall performance of the project; +5 = the determinant is responsible of the positive performance of the project.

4.1 RELATION WITH THE CONTEXT The history preceding the project has a strong influence on its performance today. As described in the chapters above, the decisions leading to the final project route were not always taken strictly from a purely transport perspective (e.g. when taking military considerations into account in the very beginning of the A14) or based on, from today’s perspective, viable assumptions (e.g. traffic data projections). Shortly after the reunification in the early 1990s, when the planning process of the motorway including the project section in its final form started, it was assumed that the regions in the former GDR would quickly catch up to the economic performance of the FRG if the right infrastructure was provided. The decisions and processes for the alignment of the former GDR were taken quickly.

The arguments for closing the gap in the motorway network between the A20 and the “Schwerin connector” were thus primarily to improve the accessibility and, in turn, competitiveness of the region. Consequently, the section south of the project section from Schwerin-Ost to Schwerin-Nord opened to traffic in December 2000 while the section even further south (the Schwerin connector) had already been in place since 1985.

Against this background the decision of closing the gap must be considered reasonable, even though the expected performance of both, the project itself (i.e. less traffic than expected) and the desired socio-economic effects did not occur to the expected extent already at the beginning of construction in the project section. Those two levels are interrelated and especially the socio-economic performance of the region depends on several factors, most of which are outside the scope of the region itself.

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From a social standpoint, it can be argued that the project in general (A14) and the project section sent out an important message after the German reunification to the former GDR that the Federal Government invests in the future of the region. In summary, the relation with the socio-economic context is rather negative in light of the low traffic volume which was foreseeable already at the start of the project and the remaining low socio-economic performance of the region. A positive aspect is, however, the relation with the political and historical context, where the investment played the role of signal effect to the wider region.

4.2 SELECTION PROCESS The project section was classified as urgent need in all national transport master plans preceding the financing decision. This classification, however, has been influenced by historical and regional context, and local initiatives. The selection of the A14 motorway to be prioritised has not been preliminarily based on need from a transport perspective. In fact, expected wider economic benefits and sending a message that the region (as part of the former GDR) would be developed and supported played a more important role in the selection process. The history of the A14 in interplay with the reunification created a path dependency which eventually favoured the completion of the project section to close the remaining gap within the larger motorway.

The motorway today plays a role in the transport infrastructure of the region and, since the final outcome is still positive despite a downsizing of the expected benefits, the selection process can be considered a positive determinant element.

4.3 PROJECT DESIGN The project section closed a gap in the A14 which resulted in a continuous traffic flow on a motorway. The sections north and south of the project section were constructed with two lanes in each direction which is the minimum for motorways. Even though it was already clear at the time of planning that the traffic on the motorway would be underperforming in the short- to mid-term, reducing the number of lanes would have resulted in the motorway being a normal trunk road. In the final layout the project section provides time savings and savings in vehicle operating costs which would have not been provided by a trunk road. Also, the consistent nature of a 4-lane motorway has the potential to reduce bottlenecks for the future development of the region. As such, it has been embraced by regional economic stakeholders such as the Chamber of Commerce (IHK Schwerin).

As described earlier, from today’s perspective the alignment on the eastern side of Lake Schwerin instead of a western alignment could be challenged for a number of reasons and thus, in an ex-post perspective, the decision for the existing planning did not maximise all benefits for the project and the region. The main reason for selecting the eastern alignment was that a continued planning process on the already prepared alignment (first by the “Schwerin connector”, then north and south of the project section) would be more seamless in comparison to a complete new alignment on the western side and could be realised more quickly. This expectation did not fully come true due to a design process complicated by additional nature protection measures that became necessary during the implementation; however, the extent of the now existing protection areas was not known at the time of the planning and construction of the sections north and south of the project section. The construction and implementation phase of the project started in 2006 when the first capital expenditure occurred; the first day of construction was 30 October 2007. As mentioned earlier construction itself did not face major problems and was finished under

139 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 budget and within a shorter timeframe than foreseen. Construction cost within the application CBA was calculated at about EUR 112.5 million. After finalisation, the construction cost amounted to about EUR 100.5 million, which is a reduction by nearly 11%.

Reduction in construction cost of major projects between planning and realisation are not common in public sector projects in Germany. According to the conducted interviews with the building authority, reasons for this are:

 The tenders for construction of the motorway were tailored to an optimum of effectiveness, allowing local entrepreneurs to bid successfully (construction section length 10-15 km);  Planning was proactive to reducing local resistance, e.g. by planning the construction roads in a manner that allowed them to be transformed to rural roads for the farmers and residents afterwards;  Bridges and other structures were tendered separately and realised about one year in advance.  Ecological compensation measures were designed following state-of-science and not only state-of-the-art standards. Normally there is an offset of at least 5 years before the insights of science are transformed to technology standards. The implementation of the scientific insights was costly, but might have facilitated the acceptability of the project, thus preventing some delays.

The roadway is one of the first in Germany where the bearing and surface layers are combined. This recent technology is more efficient in the construction, requires less material and results in an improved quality of the roadway. Nature protection measures played an important role during construction. The project section is partly situated within a Natura 2000 area and measures were taken during construction in order to limit the impact on nature. For example, the building schedule has been adapted to take into account requirements by the biosphere. Also, a noise reducing pavement has been used for the section.

Overall, the project design contributed positively to the outcome of the project due to the effective and efficient construction as well as the implemented state-of-the protection measures. However, the positive picture is distorted by the alignment on the eastern side of Lake Schwerin which, from today’s perspective, is questionable.

4.4 FORECASTING CAPACITY The forecasting regards the possibility and capacity to predict future trends and forecast the demand level and estimate the technical challenges of the project.

The forecasting for traffic demand on the project section has been overestimated at two points in the project history.

In a first instance the economic and demographic development of the project region has been overestimated during the decision to construct the A14 after the German reunification.

The second point where the traffic flow has been overestimated is in the planning and approval phase (e.g. in the ex-ante CBA) of the project. As shown below this can be attributed to a general uncertainty for forecasts in Germany at the time of the project application as well as the selection of the methodology rather than a faulty forecast.

CBAs for major projects in Germany are standardised and carried out according to a clearly defined process of the Federal Transport Infrastructure Plan (BVWP). In the ex-

140 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 ante CBA, it was highlighted that using this CBA methodology for the application for the ERDF funding had been found acceptable. Crucial input data used in the ex-ante CBA are origin-destination matrices to assess transport demand for persons and goods for the status quo scenario and the do-minimum scenario. For the Federal Transport Infrastructure Plan period 2004 to 2015 (called BVWP 2003) those matrices were calculated based on data from 1998 to 2003. So, the status quo (2004) was up to date when the CBA for the application was performed. The demand matrices for the do- minimum scenario are a prognosis for 2025 mainly based on national projections of:

 Inhabitants by birth rates and migration;  Employment;  Mobility behaviour;  Good flows; and  Transport infrastructures (e.g. motorways, railways, ports) which are already prioritised as urgent need with in BVWP 2003 have been fully constructed until 2025.

The process for CBA requires the development of transport model needs based on the given demand matrices and a plausibility check by triangulating real traffic counts. The objective for the use of standardised matrices for all major transport projects is that it leads to a better transparency of project results and as well to reasonable comparability of major transport projects in Germany. However, since the status-quo in 2004 the economy developed differently than expected, especially in the region where the project was implemented. Population development was significantly more negative than expected. The higher birth rate in place during the time of the reunification in the eastern part of Germany in comparison to the old federal states adapts more and more to the lower birth rate in the west. In addition, the migration balance of the eastern federal states is significantly negative, especially in the rural areas. This led to a significantly higher decrease of the population than expected.

The forecasting capacity was fully in line with the German standardised process which, according to the ex-ante CBA, was accepted to be used for the ERDF funding application. However, the inflexible nature of this process, not asking for continuous updating of the CBA along the process, led to distortions in the forecasting of traffic demand. At the time of planning of the project section it was already foreseeable that the expected socio- economic development in the region, including population growth, did not meet the expectations that have been earlier assumed in the region.

4.5 PROJECT GOVERNANCE The German planning and plan-approval procedures are highly regulated and require the involvement of a multitude of stakeholders. As mentioned before the project has been delayed due to new environmental requirements in the region. The updated planning process involved a multitude of stakeholders, also from the scientific community, to revise the motorway layout. Consequently, the eventual approval processes went without major complications from environmental public and private actors. The regional chamber of commerce was a major actor in pushing for the project and it can be assumed that the involvement accelerated the project. However, their arguments were targeted at a wider economic development of the region and transport demand on the project section was not the major concern. The project governance followed the standard procedures in Germany. External actors, namely the regional chamber of commerce, worked towards creating political momentum

141 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 in favour of the motorway with which they eventually succeeded (it should be mentioned again, however, that the project also had broad support in the local population and most political parties). As explained earlier, the planning process of the project section has been influenced by a number of factors, predominantly new environmental legislation. The planning authorities took the new baseline into account and updated the planning. As far as known, this process was handled without major complications and resulted in an updated layout of the motorway to take the environmental concerns into account. The reaction to changing conditions, the efficient construction and the streamlined procedures of maintenance and operation of motorways in Germany greatly contributed to the positive outcome of the project. Overall, the governance structure of the project, with the relatively smooth interplay of the national authorities with the regional and local stakeholders, proved to be a positive determinant of the project performance.

4.6 MANAGERIAL CAPACITY As mentioned earlier the construction itself did not face major problems and was finished under budget and within a shorter timeframe than planned – both of which are not typical for such projects in Germany. This indicates an effective managerial capacity. The operation and maintenance of the motorway is managed by the public sector as for most motorways in Germany37. For the A14 about 30% of operation and maintenance can be paid by the road toll, the rest is financed by the federal state.38 In 2017 the German federal government decided that from 2021 on the management of the maintenance of all motorways in Germany will be carried out by a state-owned company organised as “GmbH” (Ltd.) — this will change the organisation of the work, but not the principals of financing. No major concerns are related to the operation and maintenance of the motorway which is rather straightforward, thus the managerial capacity is considered to be a positive determinant of the project performance.

4.7 PROJECT BEHAVIOURAL PATTERN Following the identification of the typical determinants of project performance and the main project outcomes, the final step entails describing the chain of interlinked causes and effect determining the project performance over time. The behavioural pattern of the project under assessment is provided in the following figure. The round boxes indicate the projects’ determinants, the rectangular boxes in light grey refer to the observed events, the ‘+’ signs next to the green arrows indicate that the factor has positively influenced the project performance. Arrows in dark green indicate factors that had a stronger influence on the project, arrows in light green instead indicate factors that had a positive but less strong influence.

37 There are some PPP-contracts since 2009, but not for the A14. 38 At the time of writing the introduction of a toll also for private cars is planned on motorways and other major roads in Germany. If the obligation to pay tolls is extended to private vehicles, a much higher part of ongoing costs will be funded by the toll. However, the new laws are currently contested at the European court by the Netherlands and Austria due to a possible discrimination of foreign drivers.

142 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 31. Behavioural pattern

Source: Authors The project can in general be classified as “Rising Sun” because of its relative success, also taking into account that some of the effects will materialize when the remaining sections of the A14 between the A24 and Magdeburg are finished.

This pattern is typical of projects which, soon after their implementation, are affected by under capacity issues because of a combination of low demand forecasting capacity, weak appropriateness to the context, and weak technical capacity to design the infrastructure. Thanks to good management and governance the project turns around to reap new benefits. However, in the case of this motorway section the project design has also positively contributed to a limited extent and thus the behavioural pattern could also be seen as “Modified rising sun”.

The preconditions of the project were rather negative due to limited forecasting capacity and relation with the context as explained above. The lower-than-forecasted socio- economic development and traffic demand in the region entailed an underutilization of the motorway. A positive exogenous impact is, however, expected after the remaining sections of the A14 south of the A24 open which should lead to increased traffic demand of the project section and thus contribute to the long-term success of the project.

The project design gives a mixed picture. On the one hand the alignment on the eastern shore of Lake Schwerin can be contested – even though it has to be seen against the historical background which, in turn, is influenced by the project governance in form of stakeholders pushing for fast implementation of the A14. On the other hand, the professional design paved the road for and effective implementation of the project which contributes to the project’s positive outcome. The project overall positive performance is the result of a combination of good managerial capacity and project governance, and supported by positive project design. The management capacity lead to a finalisation of the project under budget which is not common in public projects in Germany. Due to lower costs of the project the overall results of the CBA remained positive even though the traffic demand was lower than assumed. Also, the reaction to changing environmental stipulations has been managed effectively with an adapted layout of the motorway which eventually led to greenlighting of the project and limited objections by environmental stakeholders even though the project section traverses protected areas.

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5 FINAL ASSESSMENT

5.1 PROJECT RELEVANCE AND COHERENCE The objectives of the project section are coherent with the strategic objectives of providing a faster connection between Wismar and the south-east of Germany, including the Berlin area. After the German reunification the argument for closing the gap in the motorway network between the A20 in the north and the “Schwerin connector” in the south was primarily to improve the accessibility and, in turn, competitiveness of Schwerin and the wider region. Hence, the investment was perceived relevant especially for supporting the tourism industry, for ensuring a direct connection the “hinterland” for Wismar harbour as well as to allow inhabitants to commute to Hamburg and, to a lower degree, to the Lubeck area. The construction of the northern section of the A14 Schwerin-Wismar was largely supported by the regional chamber of industry and commerce, the local population and nearly all the political parties both at local and regional level. The support of local initiatives and politicians was strong enough for the project section to be included in the Federal Transport Infrastructure Plan. The project relevance is, however, influenced by wider trends in many regions in the former GDR, i.e. by slow socio-economic development and declining population. The development in the project region has been slower than forecasted at the time of project planning and thus the motorway is running under capacity which has negative effects on its overall relevance. Also, the alignment of the project section and neighbouring sections on the eastern shore of the Lake Schwerin is contestable and potentially has a negative influence on the performance of the motorway. The project section is part of the stretch that connects the A24 and the A20 in the vicinity of Schwerin and thus has a network function.

5.2 PROJECT EFFECTIVENESS The result of the ex-post CBA indicates that the project provides positive socio-economic benefits with a cost of EUR 100.5 million (in nominal value).compared to an socio- economic NPV equal to EUR 152.6 million and an EIRR of 6.1%. The positive outcome materialised despite the negative exogenous influence of a general slow socio-economic development in the wider region and is also due to the good managerial capacity within the project which led to the project section being built within schedule and under budget. The positive effects are mostly travel time savings, increased safety on the motorway in comparison to secondary roads and lower GHG emissions. Some other effects such as improved service quality due to a resting facility in the project section, slightly increased reliability of journey time, incremental income for the service provider of the A14 and some more intangible effects such as wider economic impacts and institutional learning of the involved planning authorities also contributed to the positive outcome of the project to different extents.

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The expansion of the motorway network from Schwerin to Wismar also represented an improvement in connectivity and territorial cohesion as it contributed to an increased number of commuters between the major centres of Schwerin, Lubeck and Rostock and the neighbouring rural areas. The commuters between the metropolitan area of Schwerin and the region of Wismar increased from 15,000 in 2007 to about 30,000 in 2015. To what extent this is caused by the motorway alone is not known, however, since the travel time (city to city) is only slightly reduced by the motorway. However, effects on territorial cohesion are expected to be wider in the future when the southern extension of the A14 from the A24 to Magdeburg will be completed and the connectivity with other regions in Germany such as Berlin and Dresden / Leipzig will be improved.

Despite the generation of these factors the project effectiveness is negatively influenced by traffic levels which are below the expectations.

In respect to the time frame of effects, it is reasonable to consider that most of the benefits and effects are likely to have already materialised and stabilised. However, the positive outcomes are expected to spike in 2022 upon completion of the southern extension of the A14 from the A24 to Magdeburg. This is expected to positively contribute to increase the traffic level of the A14 between the A20 and the A24. In terms of mechanisms and determinants explaining the project outcomes, the first finding is that the project was politically driven after the German reunification and that traffic demand was not necessarily the primary driver for the project. Instead, the objective to contribute to the wider socio-economic development of the region by an increased connectivity has played a significant role together with the purpose to send a signal to the former GDR that the FRG was willing to develop the regions. Even earlier, a military objective drove the development and alignment of the A14. The fact that the project was spurred by political objectives rather than traffic needs is the main explanation of the benefit shortfall which is currently observable.

The shortfall of the project's benefits today is largely due to an overestimated traffic forecast alongside overly positive expectations to the wider economic development of the region, although the forecast procedures followed by the planning authorities were in line with the German standardised process for this type of projects. From a technical point of view the ex-ante CBA was overoptimistic. As a matter of fact, it relied on an old traffic demand estimated based on overoptimistic assumptions related to population trends, the expected regional growth and the completion of the network. Since the 1990s, when the project was planned, the economy in the project region has only slowly developed significantly and the population development was significantly more negative than expected. The alignment of the project section and its neighbouring sections on the eastern shore of Lake Schwerin instead of the western shore can be contested from today’s perspective and might have impeded a higher traffic flow on the motorway. This is for a number of reasons such as the limited accessibility of the motorway from most parts of Schwerin as well as a parallel alignment of the A14 with the A20 for some kilometres. However, the choice for the eastern alignment has to be also considered against a historical background as first sections on this alignment already had been constructed much earlier, namely the “Schwerin Connector” during GDR times.

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5.3 PROJECT EFFICIENCY Thanks to the good planning capacity and project design, the project’s construction was completed without any delays and cost overruns; in fact, the final budget has been 10% lower than initially foreseen. Also, the results of the ex-post CBA ─ with ENPV at the level of EUR 157.262 million and ERR equal 7% ─ confirm that the project was desirable form the point of view of society and that the expected effects have been materialised to a certain degree.

5.4 EU ADDED VALUE On 7 December 2007, the European Commission approved the ERDF Federal Transport Operational Programme for the 2007-2013 programming period in Germany. This programme involved Community support for the regions of the Federal Republic of Germany under the "Convergence" objective. The project section was submitted to the ERDF Federal Transport Operational Programme by the Federal Ministry of Transport and Digital Infrastructure in September 2009, shortly before the opening of the project section on 21 December 2009. The financial contribution of EUR 57.7 million by the ERDF programme was approved in March 2010.

Table 13. Results of financial analysis (ex-post)

PERFORMANCE INDICATORS RESULTS Financial Rate of Return of the Investment FRR/C -10% FRR/K -8.1% Financial Net Present Value (EUR million) FNPV/C -165.76 FNPV/K -88.41 Source: Authors’ calculation For the overall project A14 the EU funding makes a difference by contributing to reduce the funding gap of -165.76 that could not have been supported by the project promoter. As a result, the return on national capital, ‘after the EU grant’39 (FRR/K), improves significantly. Based on the evidence collected through interviews, it seems that the project section would also have been built without the funding of the EU, among other reasons also because it had been identified as urgent need in the Federal Transport Infrastructure Plan. However, the project might have been delayed, maybe reduced in its scope and/or realised in a different way, e.g. regarding environmental protection measures. Today, the project section is part of the TEN-T comprehensive network (see Figure 15) as classified the EU-regulation 1315/2013. It also contributes to the EU Strategy for the Baltic Sea Region (EUSBSR). However, those roles have only been attributed after the project section had been built and did not play a role in the planning process.

5.5 FINAL ASSESSMENT The project A14 represents an example of a road infrastructural project which, despite overoptimistic assumptions in the planning phase, still contributes positively to its socio-economic context thanks to a combination of good managerial capacity and project governance, and supported by a strong project design of the final motorway.

39 See the CBA Guide (2014), p. 49

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Thanks to those factors the project’s construction was completed without any delays and cost overruns and the final budget has been more than 10% lower than initially foreseen.

However, the benefits do not meet the ex-ante expectations which are largely due to an overestimated traffic forecast alongside overly positive expectations to the wider economic development of the region, although the forecast procedures followed by the planning authorities were in line with the German standardised process for this type of projects. The positive effects from the project are expected to spike in 2022 upon completion of the southern extension of the A14 from the A24 to Magdeburg which should lead to increased traffic flows on the motorway.

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Table 14. Evaluation matrix CRITERION EQ ASSESSMENT SCORE

Relevance To what extent the original objectives of the examined major project matched: Since the beginning the project was not in line with the 2  the existing development needs, development needs but was in line the priorities  the priorities established at the programme, national, and/or EU level. established in the Federal Transport Infrastructure Plans. Coherence  Are the project components in line with the stated project objectives? Fully consistent 5  To what extent the examined the project were consistent with other national and/or EU interventions carried out in the same field and in the same area? Effectiveness  Has the examined major project achieved the objectives stated in the The project has not achieved the expected objectives 2 applications for Cohesion policy support? due to exogenous factors.  Was the actual implementation in line with the foreseen time schedule?  What factors, including the availability and the form of finance and to what extent influenced the implementation time and the achievement observed?  What has changed in the long run as a result of the project (for example, is there evidence showing contribution of the project to the private sector investments)?  Were these changes expected (already planned at the project design stage, e.g., in terms of pre-defined objectives) or unexpected (emerged, for instance, as a result of changes in the socio-economic environment)?  How have these changes matched the objectives set and addressed the existing development needs, the priorities established at the programme, national and/or EU level?  Did the selected project turn out to be the best option among all feasible alternatives? Efficiency  Are there any significant differences between the costs and benefits in the Negative differences due to external factors (general 3 original cost-benefit analysis (CBA) and what can be observed once the project economic situation and population decline in the has been finalised? region).  To what extent have the interventions been cost effective? Thanks to the good planning capacity and project design, the project’s construction was completed without any delays and cost overruns; in fact, the final budget has been 10% lower than initially foreseen EU added  What is the EU added value resulting from the examined major project (in It should be assumed that the project section would 1 value particular, could any of the major projects examined, due to its risk profile, also have been built without the funding of the EU, complexity or scope, have not been carried out if not for the EU support)? among other reasons also because it had been  Did the examined major projects achieve EU-wide effects (e.g. for preserving identified as urgent need in the Federal Transport the environment, building trans-European transport networks, broadband Infrastructure Plan. However, the project might have coverage etc.)? been delayed and maybe reduced in its scope, e.g.  To what extent do the issues addressed by the examined interventions continue regarding environmental protection measures. to require action at EU level? Source: Authors

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6 CONCLUSIONS AND LESSONS LEARNED

The ex-post assessment of this project points towards an overall positive outcome from the project section of the A14 motorway in northern Germany. The project section contributes to the "Convergence" objective of the ERDF Federal Transport Operational Programme for the 2007-2013 programming period in Germany through the construction of a new motorway section that closed a remaining gap in the A14 between Wismar and the A24. By doing so, it contributes to the physical convergence of the region to other regions in Germany and is part of a signal that the FRG intended to send to the states of the former GDR by investing into their wider socio-economic development. The results of the ex-post CBA are positive, also confirming that the project is adding value to the EU society.

The history of the A14, dating back to at least the late 1950s, and the German reunification contributed to raise expectations of local stakeholders and created path dependencies, both conditions playing a crucial role in the decisions to build the project section and its final layout. The performance of the project section, which is lower than initially expected, has to be seen against the background of those path dependencies. Several lessons can be learned from the ex-post assessment of this major project:

 The project demonstrates that good project management and design can lead to an overall positive outcome even if disadvantageous exogenous factors render the overall project context difficult. The expected socio-economic, including population density, development in the region did not meet the assumptions made during the planning phase, leading to a lower-than-expected traffic volume and thus having an impact on the benefits of the project. However, the completion of the project approximately 11% under budget partly balanced these effects.  The project shows that planning processes should be based on updated technical studies reflecting the most recent knowledge and assumptions of the expected development of the regions. During the project preparation some assumptions (e.g. forecasts for inhabitants, employment and good flows) for the ex- ante CBA have been based on nationally standardised numbers in line with national methodologies in Germany which, however, were not able to fully reflect the socio- economic realities in the region. These numbers led to overoptimistic assumptions for the project performance.  The timing for the full materialisation of expected effects is dependent on the future realisation of related investments. The overall positive outcome of this project relies, among other factors, on the assumption that the remaining sections of the A14 between the A24 and Magdeburg will be finished within the evaluation period, probably in 2022. When investment projects are part of a wider plan, as it is often the case with transport projects, the full completion of related investments is a crucial element underpinning the materialisation of long-term effects, especially those related to economic growth.  Taking the latest state-of-the-science into account during project planning can be crucial for project success. Following new environmental legislation during the project planning phase the project design considered the latest state-of-the science which led to acceptance by most environmental actors (except by the German Federation for the Environment and Nature Conservation -BUND) who submitted a demur against the planned construction which was declined during the plan-approval procedure) and thus helped the project being eventually approved. Also, even though the project section leads through a Natura 2000 protected area no data for direct negative impacts exists for the new motorway.

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ANNEX I. METHODOLOGY OF EVALUATION

This Annex summarises the methodological approach applied for carrying out the project case studies and presented in the First Intermediate Report of this evaluation study. The main objective is to provide the reader a concise account of the evaluation framework in order to better understand the value and reach of the results of the analysis as well as to enable him/her, if interested, to replicate this methodology.40

 What kind of long term contribution can be identified for different types of investment in the transport field?  How is this long-term contribution generated for different types of investments, i.e., what is the causal chain between certain short term and log-term socio- economic returns from investments?  What is the minimum and average time needed for a given long term contribution to materialise and stabilise? What are these time spans for different types of investments in the transport field?

40 Specific recommendations which may enable application of the same evaluation methodology to future projects are discussed in the Final Report of this evaluation study.

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Table 15. Taxonomy of effects DIRECT EFFECTS DESCRIPTION Reduction in travel time for business travellers, shippers and carriers (including the hours gained because of a reduction Travel time of congestion) is a typical positive outcome of transport project, except those that specifically aim at environmental or safety benefits. Vehicle operating cost savings for the travellers (fuel costs, fares) and for transporters of goods (this refers to the Vehicle operating cost distance-dependent transport costs) are relevant if the project aims at reducing congestion and/or the journey distances. This means reduced variation in journey times. Reliability benefits are potentially important for many projects, unless Reliability of journey time journey times are already quite reliable. However, often forecasting models or other information for the impacts on and through reliability are missing (de Jong and Bliemer, 2015) It includes the revenues (e.g. rail ticket income increase) accrued by the producer (i.e. owner and operators together) as well as the operational cost savings. To some extent it can reflect the previous aspects (i.e. the service fare is Income for the service EFFECTS ON increased to reflect a better service allowing for significant time saving for the users) so double counting shall be provider ECONOMIC avoided. This aspect might be particularly relevant for public transport projects or toll road projects, especially if the GROWTH project is expected to feature significant traffic (generated or induced) or a substantial change in fares. ADDITIONAL EFFECTS DESCRIPTION It refers to the agglomeration effect on productivity (the productivity of the economy is increased because the project leads to a clustering of economic activities together in a core city which makes these sectors produce more or better goods and services together than before). Agglomeration effects are unlikely to occur for small projects and even for Wider economic impacts large projects there are specific pre-conditions (see for instance Chen and Vickerman, 2017). Wider economic impacts (agglomeration effects) depend on whether the project makes a potential economic cluster location substantially more accessible. This is only possible if the infrastructure network before the project had important missing links which the project effectively removes. It refers to wider spillover effects that any investment project may bring to the Public Administration and other institutions at national or regional levels in terms of expertise gained by working on large scale projects. Learning may Institutional learning lead to productivity gains by stimulating the improvement of existing technical know-how, improved policy-making, competitive tendering and divert resources towards the most growth enhancing projects.

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DIRECT EFFECT DESCRIPTION Travel time Leisure time saving relates to projects that provide a reduction in travel time for non-business travellers. It relates to the amount of fatalities, serious and slight injuries, damage-only accidents. Safety impacts should possibly Safety (accident savings) be included in all project evaluation. Safety of travellers in the vehicle and at stations, platforms and stops, safety of the goods transported (often damaged Security or stolen). Security impacts are often neglected in project evaluation, but for public transport projects (both urban and intercity) they can be of considerable importance. EFFECTS Noise It refers to the exposure of population to noise measured in dB RELATED TO QUALITY OF LIFE ADDITIONAL EFFECT DESCRIPTION AND WELL- A reduction of crowding in public transport is mainly relevant for projects that provide significant additional capacity in Crowding BEING public transport. Service quality (other than It refers mainly to the availability of specific service features increasing the journey comfort e.g. smoother movement of crowding) the vehicles, more comfortable seats, provision of electricity, Wi-Fi, catering. This relates to projects that provide infrastructure with positive visual effects (e.g. a beautifully constructed bridge) or Aesthetic value when public transport provide a better image in the eye of the public. Also, it refers to projects that lead to a less attractively looking landscape (e.g. constructing high walls). It refers to the spillover effects of urban transport projects on residents (not necessarily users of the project) due to an Urban renewal improved local context and possibly reflected in an increase in real estate values. DIRECT EFFECT DESCRIPTION Local air pollutants are typically small particles, NOx, VOCs and SO2. The increased/decreased volume of local air Local air pollution emissions is a typical effect of transport projects. Climate change refers to the volume of greenhouse gases (GHG) emitted by transport infrastructure. The Climate change EFFECTS ON THE increased/decreased volume of GHG emissions is a typical effect of transport projects. ENVIRONMENT ADDITIONAL EFFECTS DESCRIPTION This refers to the reduction of biodiversity through the extinction of species in a specific area. It is not a common effect Biodiversity but it can be relevant in selected cases. Emissions of substances, e.g. from the road, into watercourses, that are harmful for people (as drinking water) or for Water pollution life in the water EFFECTS RELATED ADDITIONAL EFFECTS DESCRIPTION TO Social cohesion It encompasses the allocation of the main benefits over income and social groups DISTRIBUTIONAL ISSUES Territorial cohesion It encompasses the allocation of the main benefits over central (core) and peripheral areas Source: Authors

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In terms of their measurement level, the effects can be distinguished into: A. Effects that by their nature are already in monetary units (e.g. transport costs savings). These can therefore be easily included in a cost-benefit analysis (CBA). B. Effects that are quantitative, but not in money units, and that can be converted into money units in a reasonably reliable way (e.g. transport time savings, accidents, air pollution)41. These effects can also be included in the CBA. C. Effects that are quantitative, but not in money units, for which there are no reasonably reliable conversion factors to money. We propose not to try to include such effects in the CBA, but to discuss them in a qualitative way together with the overall outcome of the CBA. D. Effects that are difficult to measure in quantitative (cardinal) terms, but do lend themselves for ordinal measurement (a ranking of the impact of different projects on such a criterion can be provided, such as very good, good, neutral, bad, very bad). We propose to discuss these effects in qualitative terms. E. Effects that might occur but that are subject to a high degree of uncertainty: these will be treated as part of the risks/scenario analysis that will be included in the CBA. F. Effects that might occur but that we cannot even express in an ordinal (ranking) manner: they are residual effects that can be mentioned in qualitative description in case study report.

In short, all the projects’ effects in A and B are evaluated by doing an ex-post cost- benefit analysis (CBA)42. Reasonably, these represent the most significant share of long- term effects. Then the outcome of the CBA (e.g. the net present value or benefit-costs ratio) is complemented by evidence from C and D, while E is used for descriptive purposes. Moreover, qualitative techniques are used to determine why certain effects are generated, along what dimensions, and underlying causes and courses of action of the delivery process (see below).

Section 3 of each case study includes a standardised table in which scores are assigned to each type of long-term effect. Scores ranging from -5 to +5 (-5 = very strong negative effect; 0 = no effect; 5 = very strong positive effect) are given in order to intuitively highlight which are the most important effects generated for each case study.

41 Methods to establish such conversion factors include: stated preference surveys (asking respondents about hypothetical choice alternatives), hedonic pricing or equating the external cost with the cost of repair, avoidance or prevention or with the costs to achieve pre-determined targets 42 More details on the approach adopted to carry out the ex-post CBA exercise and, in particular, indications on project identification, time horizon, conversion factors and other features are extensively described in the First Intermediate Report of this evaluation study.

153 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 external and internal to the project, which determined the observed causal chain of effects to take place and influenced the observed project performance.

The interplay of such determinants may reinforce or dilute one effect over the other. Moreover, each determinant may contribute, either positively or negatively to the generation/speed up/slow-down of certain short-term or long-term effects. For this reason, it is important not only to understand the role that each determinant has on the observed project outcome, but also their interplay in a dynamic perspective.

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Table 16. Stylised determinants of projects’ outcomes DETERMINANT DESCRIPTION It includes the considerations of institutional, cultural, social and economic environment into Relation with which the project is inserted, was the project appropriate to this context?; is there a the context problem that the project can solve?; does the project remain relevant over the years? It refers to the institutional and legislative framework that determines how public investment decisions (and especially those co-financed by ESIF) are taken, i.e. which is the process in Selection place and the tools used to select among alternative projects. The selection process is process influenced by incentive systems that can lead politicians and public institutions to either take transparent decisions or strategically misrepresent costs and/or benefits at the ex-ante stage. It refers to the technical capacity (including engineering and financial expertise) to properly design the infrastructure project. Under a general standpoint, we can distinguish:  the technical capacity to identify the most appropriate conceptual design, which best suits the need of a specific context. Even when a region really is in need of the project, it usually requires a well-designed project to solve the observed problems. This, in turn, involves that different alternatives are considered and the best option in terms of Project design technical features and strategical considerations is identified;  the technical capacity to develop the more detailed level of design (preliminary and detailed), thus identifying most effective and efficient detailed infrastructure solutions and construction techniques, thus avoiding common pitfalls in the construction stage (such as introducing variants that are not consistent with the original conceptual design) and the risk of cost overruns during the construction phase by choosing inappropriate technical solutions. It regards the possibility and capacity to predict future trends and forecast the demand level and estimate the technical challenges, thus estimating correctly the required resources (e.g. looking at the dangers of over-predicting demand and under-predicting construction costs). Forecasting In particular, technical forecasting capacity is related to the quality of data used and capacity forecasting/planning techniques adopted. At the same time, forecasting capacity includes the ability of the project promoter and technical experts not to incur in the planning fallacy (the tendency to underestimate the time or cost needed to complete certain tasks) and optimism bias (the systematic tendency to be overly optimistic about the outcomes of actions). It concerns the number and type of stakeholders involved during the project cycle and how responsibilities are attributed and shared. This is influenced by the incentive mechanisms. If Project bad incentives exist, this can lead different actors involved in the project management to governance provide benefits for their members, thus diverting the funds away from their optimal use, or forcing them to delegate responsibilities according to a non-transparent procedure. It refers to the:  professional ability to react to changes in the context/needs as well as to unforeseen; Managerial  professional capability to manage the project ensuring the expected level of service in the capacity operational phase. To ensure a project success, it is not enough that it is well planned and designed, but also that the organizations in charge of the management and operations provide a good service to the end users (e.g. ensuring a good maintenance of the infrastructure). Source: Authors

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Table 17. Behavioural patterns archetypes. Behavioural patterns are illustrated by use of diagrams linking determinants and project outcomes in a dynamic way TYPE Bright star This pattern is typical of projects where the good predictions made ex-ante (both on the cost side and demand side) turn out to be accurate. Proper incentive systems are in place so that the project actually delivers value for money and success. Even in the event of exogenous negative events, the managerial capacity ensures that proper corrective actions are taken and a positive situation is restored. Rising sun This pattern is typical of projects which, soon after their implementation, are affected by under capacity issues because of a combination of low demand forecasting capacity, weak appropriateness to the context, and weak technical capacity to design the infrastructure. However, due to changed circumstances or thanks to responsible management and good governance the project turns around to reap new benefits. Supernova This pattern is typical of projects for which the good predictions made ex-ante (both on the cost and demand side) turn out to be accurate. However, due to changed circumstances or because of weak management capacity and/or governance the project eventually turns out to be unsuccessful. Shooting star This pattern is typical of projects starting from an intermediate situation and resulting in a failure. This outcome can be explained by a low forecasting capacity affected by optimism bias which yields a cost overrun. Then during project implementation, because of low managerial capacity and/or poor governance (also due to distorted incentives) corrective actions are not implemented, this leading to project failure. The situation is exacerbated if unexpected negative events materialise during the project implementation. Black-hole This pattern is typical of projects that since the beginning of their life fail to deliver net benefits. This is a result of a combination of ex-ante bad factors (i.e. low technical capacity for demand forecasting, optimism bias, inappropriateness to the local context and bad incentives affecting both the selection process and the project governance) and careless management during the project implementation or bad project governance (e.g. unclear divison of responsibilities, bad incentive schemes). Source: Authors A I.4 Synthesis and conclusions Qualitative and quantitative findings are integrated in a narrative way, in order to develop ten project ‘histories’ and to isolate and depict the main aspects behind the project’s long-term performance. A final judgment on each project is then conveyed in the case studies with an assessment structured along a set of evaluation criteria, as suggested in the ToRs. Evaluation criteria are the following:

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ANNEX II. EX-POST COST-BENEFIT ANALYSIS REPORT

A II.1 Methodology, assumption and data gathering In what follows, the main assumptions and the procedure of data gathering are described in detail.

 Project identification The unit of analysis of this CBA is the construction of the section Schwerin-Nord – Jesendorf of motorway A14. As explained in Section 1 of the main report, the project was part of a of a broader project for the construction of the A14 Wismar– Magdeburg, which is in total almost 170 km long and stretches from the motorway junction Wismar (A20), crossing the A24 up to the motorway junction Magdeburg (A2). The project section is the last leg between the intersections Jesendorf and Schwerin of the northern part of the A14 (Wismar – A24) finished in 2006 just without the project section. The section south of the junction A24, which according to the ex-ante study should have been opened before the project section, is now set to be opened in 2022, which is a realistic assumption given the current state of construction. The original traffic forecast from the application (forecast horizon 2015) compared to the actual traffic situation shows, that approximately 50% of the expected value so far has been achieved. This is estimated including the full effect of the motorway to Magdeburg — as assumed in the original forecast.

 Time horizon In line with the First Interim Report, the time horizon for the CBA of the project is set at 25 years of operations and 4 years of construction, for a total of 29 years of time horizon. Accordingly, the timeframe for the project’s evaluation runs from 2007, when the first capital expenditure is recorded, to 2035. A mix of empiric traffic demand data from 2007 to 2016 (covering 10 years), forecasted to 2018– 2035 (covering 19 years) is used.

 Constant prices and discount rates In line with the guidelines of the First Interim Report, the CBA was performed using constant 2017 prices. This means that for the period 2007-2016 they have been adjusted and converted into Euro at 2017 prices by using the yearly average percentage variation of consumer prices provided by the International Monetary Fund. As for data from 2017 onwards, they have been estimated in real terms (no inflation is considered). Consistent with the choice of using constant prices, financial and social discount rates have been adopted in real terms. Specifically, inflows and outflows of financial analysis - for both the backward and forward periods of analysis – have been discounted and capitalised using a 4% real rate, as suggested in the EC CBA Guide (2014) for the current programming period. With regard to the economic analysis, a real backward social discount rate of 2.57% and a real forward social discount rate of 2.71%, specifically calculated for Germany (see the First Interim Report for the calculation), were adopted.

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 Without the project scenario As explained in Section 2 of the main report, before the construction of the A14, other alternative routes were available for the overall project, including an alignment west of Schwerin and the lake. However, this alternative was sorted out early, probably to speed up the realisation of the motorway. At the time of the request for funding, the chosen alignment was the only possible options to close the existing gap between the two already existing sections of A14. For this reason, the most realistic scenario in the absence of the project (the without the project scenario) is the situation with only country road between the 2 intersections. Maintenance for the highway is to a high degree independent from the traffic flow, because the wear and tear is primarily time-dependent.

 Data sources The analysis relied on data provided by the road authorities and on the opinions of the experts interviewed. Moreover, information has been gathered from a review of documents available online and on the local press. A number of ad hoc assumptions, then validated with relevant stakeholders, were made by the authors of this case study for the specific purpose of this analysis. When it is the case this is specified in the report.

 Technical features The project includes a four-lane motorway section with a total length of 14.31 km between the junctions Schwerin-Nord and Jesendorf. It consists of a free-range dual separate carriageway road outside a built-up area. It includes 13 engineering structures with a total length of 1,134 m: the viaducts in Liessow (339 m) and Mühlenbach (501 m), seven bridges (total 266 m; two of them for game animals) and four tunnels (27.5 m; three of them for game animals).

A II.2 Future scenario Demand In order to assess the project’s performance in the future, hypotheses have been made regarding the future trends of variables. In particular, future costs and benefits have been estimated in relation to the evolution of passengers in the area. To develop the demand analysis, the original demand and assumptions included in the ex-ante analysis were revised based on the information available at present. The traffic forecasts for the ex-ante analysis were prepared for the year 2015 with an outlook for the year 2025. Ex-post data on traffic highlight that the ex-ante forecasts for demand were overoptimistic, and only half of the forecasted demand actually materialized, even if the effects of the outstanding section of the A14 (to Magdeburg) are already included. For this reason, the current level of traffic is used as baseline and it is projected in the future year according to the forecast of the population in the served corridor, especially the workforce. In particular:

1 For the with-project scenario: o The total demand of transport was adjusted to the observed values as provided by the road authority up to 2016; o The growth after 2016 was adjusted to official population statistics by the federal state of Mecklenburg-Vorpommern.

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o Because of the wide-meshed motorway network in the area is assumed, that the gap closure will not divert traffic from other routes in a relevant scale, but only from the highway to the project section. The distance is unchanged, travel time reduces by 9 minutes (lorries by 6 minutes), 2 For the without-project scenario, for which no data can be observed after 2009 (i.e. the actual project opening): o The traffic volumes are about the same as in the with-project, but with more transport time and accidents on the highway compared to the motorway section; The historical and future trend in traffic demand for the with-project scenario resulting from the above-mentioned assumptions is shown in the figure below:

Figure 32. Demand – historical data (2006-2016) and forecasts (2017-2035) on project section (average daily traffic on project section)

Source: Authors, recalculated from counting point Goldenstädt

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A II.3 Financial Analysis Investment cost The investment cost of the project with reference of the main element of the project is depicted below:

Table 18. Investment cost breakdown by project component SHARE OF EUR MILLION, RESIDUAL PROJECT ITEM SHARE VALUE AFTER 2017 VALUE VALUE 30 YEARS Land 3.744 3% 100% 3.744 Road surface etc. 42.669 38% 0% 0.000 Bridges 50.272 45% 70% 35.190 Environmental measures 6.562 6% 0% 0.000 Equipment etc. 7.878 7% 0% 0.000 Total 110.933 100% 38.934 Source: Authors based on Project Final Report Residual value The residual value is calculated according to the assumed loss in value for the considered investment items and based on engineering opinion of their economic life. The residual value after 30 years is about 35% of the capital costs (not discounted).

Operating & Maintenance costs The O&M costs borne by the operator have been calculated according to the same methodology used in the ex-ante assessment. In particular they amount to EUR 0.914 million per year for ordinary maintenance starting in 2010. For toll collection EUR 0.306 million in 2010 which increases up to EUR 0.473 million in 2034. In addition, expenditure for extraordinary maintenance is estimated as being equal to EUR 10 million in year 2019 and 2029.

Operating revenues Project revenues constitute the incremental toll revenues collected from lorries (no tariff are levied for passengers) after the project is implemented. No revenues are collected in the without the project scenario, so the collected revenues in the project scenario are fully incremental. They are calculated by considering a toll of EUR 0.163 per lorry-km43 and amount to a total of EUR 16.7 million, non-discounted, for the entire time horizon.

Project’s Financial Performance On a financial basis, the profitability of the project is negative.

Table 19. Results of financial analysis 2007-2035

PERFORMANCE INDICATORS RESULTS

Financial Rate of Return of the Investment FRR/C -10% FRR/K -8.1% Financial Net Present Value (EUR million) FNPV/C -165.76 FNPV/K -88.41 Source: Authors These negative values confirm that the project needed public funding since no private investor would have been motivated to implement it without an appropriate financial

43 The amount results through division of the toll revenue on the project section with the number of lorries in the same period.

160 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 incentive. Even with the European funding it is still negative, which means the national owner has to pay for the project during operation.

This is not extraordinary, because in Germany motorway construction and maintenance usually is tax-paid public service. The state gets a big amount of taxes through fuel taxes. Even if this money is not “earmarked”, it is an integrative part of financing i.e. the motorway network. The Financial Performance values calculated above may therefore not be fully appropriate to evaluate German motorway projects.

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Table 20. Financial return on investment, EUR million Net present 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 value 1 OPERATIONAL INCOME

1.1 Toll revenue 14.15 0.46 0.62 0.63 0.65 0.68 0.63 0.68 0.68 0.68 0.68 0.68

2 CAPEX

2.1 Investment costs 153.49 1.59 44.71 41.26 6.76 3.15 2.01 0.70 0.33

3 OPEX

3.1 Regular maintenance 21.89 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01

3.2 Extraord. maintenance 15.74 10.00

3.3 Cost toll 8.41 0.31 0.31 0.32 0.33 0.34 0.35 0.36 0.37 0.37 0.38 0.39

4 RESIDUAL VALUE 19.99

5 TOTAL 1-2-3+4 -165.763 -1.59 -44.71 -41.26 -7.62 -3.86 -2.71 -1.39 -1.00 -0.73 -0.69 -0.70 -0.71 -10.72 -0.72 Total, discounted at 5.1 -2.71 -71.39 -61.61 -10.92 -5.26 -3.46 -1.67 -1.13 -0.79 -0.72 -0.70 -0.68 -9.91 -0.64 2017 prices

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 1 OPERATIONAL INCOME

1.1 Toll revenue 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68

2 CAPEX

2.1 Investment costs

3 OPEX

3.1 Regular maintenance 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 3.2 Extraord. maintenance 10.00

3.3 Cost toll 0.40 0.41 0.41 0.42 0.43 0.44 0.44 0.45 0.45 0.46 0.46 0.47 0.47 0.47 0.48

4 RESIDUAL VALUE 38.93

5 TOTAL 1-2-3+4 -0.73 -0.74 -0.75 -0.75 -0.76 -0.77 -0.77 -0.77 -10.78 -0.79 -0.79 -0.80 -0.80 -0.80 38.13 Total, discounted at 2017 5.1 -0.63 -0.61 -0.59 -0.57 -0.56 -0.54 -0.52 -0.51 -6.74 -0.47 -0.46 -0.44 -0.43 -0.41 19.31 prices

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Table 21. Project financial return on national capital (EUR Million) Net present 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

value 1 OPERATIONAL INCOME

1.1 Toll revenue 14.15 0.46 0.62 0.63 0.65 0.68 0.63 0.68 0.68 0.68 0.68 0.68

NATIONAL PUBLIC 2 FUNDS 2.1 Public funds (FRG) 75.19 0.86 24.21 21.05 0.67 0.81 0.83 0.11 0.33

2.2 Public funds (MWP) 0.34 0.00 0.11 0.09 0.00 0.00 0.00 0.00 0.00

2.3 National operating funds 2.37 0.86 0.70 0.70 0.69 0.67 0.73 0.69 0.70 0.71 0.72 0.72

3 OPEX

3.1 Regular maintenance 21.89 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01

3.2 Extraord. maintenance 15.74 10.00

3.3 Cost toll 8.41 0.31 0.31 0.32 0.33 0.34 0.35 0.36 0.37 0.37 0.38 0.39

4 RESIDUAL VALUE 19.99

5 TOTAL 1-2-3+4 -88.413 -0.87 -24.32 -21.14 -2.39 -2.22 -2.24 -1.49 -1.66 -1.46 -1.38 -1.40 -1.41 -11.43 -1.45 Total, discounted at 2017 5.1 -1.47 -38.83 -31.58 -3.42 -3.02 -2.86 -1.80 -1.89 -1.58 -1.44 -1.40 -1.36 -1.32 -1.29 prices

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

1 OPERATIONAL INCOME

1.1 Toll revenue 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68

2 NATIONAL PUBLIC FUNDS

2.1 Public funds (FRG)

2.2 Public funds (MWP)

2.3 National operating funds 0.73 0.74 0.75 0.75 0.76 0.77 0.77 0.78 0.78 0.79 0.79 0.80 0.80 0.80 0.81

3 OPEX

3.1 Regular maintenance 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 3.2 Extraord. maintenance 10.00

3.3 Cost toll 0.40 0.41 0.41 0.42 0.43 0.44 0.44 0.45 0.45 0.46 0.46 0.47 0.47 0.47 0.48

4 RESIDUAL VALUE 0.00

5 TOTAL 1-2-3+4 -1.46 -1.48 -1.49 -1.51 -1.52 -1.53 -1.55 -1.56 -11.57 -1.58 -1.59 -1.60 -1.60 -1.61 -1.62 Total, discounted at 2017 5.1 -1.25 -1.22 -1.18 -1.15 -1.11 -1.08 -1.04 -1.01 -0.98 -0.95 -0.92 -0.89 -0.86 -0.83 19.31 prices

163 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Financial Sustainability The financial sustainability was assessed. Notwithstanding the negative financial performance (i.e. incremental revenues are not able to cover the incremental O&M), financial sustainability of operations over time is guaranteed by compensation payments from the national fiscal resources. This is in accordance with the financing of the German road network, which until now is basically taxpayed. In the table of financial sustainability the ‘national operating funds’ shows the amount of public funds needed to cover during the operating phase the financial gap which is not covered by operating revenues.

164 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 22. Financial sustainability of the project (EUR Million) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

1 OPERATIONAL INCOME

1.1 Toll revenue 0.46 0.62 0.63 0.65 0.68 0.63 0.68 0.68 0.68 0.68 0.68

1.2 Public funds (FRG) 0.86 24.21 21.05 0.67 0.81 0.83 0.11 0.39

1.3 Public funds (MWP) 0.00 0.11 0.09 0.00 0.00 0.00 0.00 0.00

1.4 National operating funds 0.86 0.70 0.70 0.69 0.67 0.73 0.69 0.70 0.71 10.72 0.72

1.5 EU grant 0.73 20.39 20.11 6.09 2.34 1.17 0.59 0.00

2 CAPEX

2.1 Investment costs 1.59 44.71 41.26 6.76 3.15 2.01 0.70 0.33

3 OPEX

3.1 Regular maintenance 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.008 1.01 1.01

3.2 Extraord. maintenance 10.00

3.3 Cost toll 0.31 0.31 0.32 0.33 0.34 0.35 0.36 0.37 0.37 0.38 0.39

4 RESIDUAL VALUE

5 Total net cash flow 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total cumulated net cash 5.1 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 flow

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2025

1 OPERATIONAL INCOME

1.1 Toll revenue 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 1.2 Public funds (FRG)

1.3 Public funds (MWP)

1.4 National operating funds 0.73 0.74 0.75 0.75 0.76 0.77 0.77 0.78 10.78 0.79 0.79 0.80 0.80 0.80 0.81 1.5 EU grant

2 CAPEX

2.1 Investment costs

3 OPEX

3.1 Regular maintenance 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 3.2 Extraord. maintenance 10.00

3.3 Cost toll 0.40 0.41 0.41 0.42 0.43 0.44 0.44 0.45 0.45 0.46 0.46 0.47 0.47 0.47 0.48

4 RESIDUAL VALUE

5 Total net cash flow 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total cumulated net cash 5.1 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 flow

165 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 23. Conversion factors for input CONVERSION- ITEM SOURCE FACTOR Labour backward 0.870 Del Bo et. al. Labour forward 0.930 2011 Investment costs (other than labour costs) 1.000 Prudential O&M costs (other than labour) 1.000 approach Residual value 1.000 Source: First interim report Assumptions on the share of labour costs included both in the investment and O&M costs were adopted, referring to data included in the ex-ante analysis. For the remaining items, lacking indications from national guidelines and for prudential purposes, a conversion factor equal to 1 was used.

Project’s effects Benefits generated by the implementation of the project can be distinguished into:

 time savings as a result of increase in speed;  accidents savings because of the diversion from country road to motorway;  reduction in negative externalities as a result of a shorter distance, including GHG savings.

166 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Table 24. Economic return on investment (EUR Million) NPV CF 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1 CAPEX 134.63 1.52 42.68 39.38 6.46 3.01 1.92 0.67 0.31 9.75

43.19 0.87 1.1 Labour costs 0.48 13.61 12.56 2.06 0.96 0.61 0.21 0.10 3.25 0.93 1.2 Non-labour costs 91.44 1.00 1.04 29.06 26.82 4.40 2.05 1.31 0.45 0.21 6.50

2 OPEX 31.00 1.25 1.26 1.27 1.28 1.29 1.29 1.30 1.31 1.35 1.36 1.37

Regular maintenance 7.31 0.87 2.1 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.33 0.33 0.33 (labour) 0.93 Regular maintenance 14.98 2.2 1.000 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 (non labour) Cost toll system 2.86 0.87 2.3 0.09 0.10 0.10 0.10 0.103 0.11 0.11 0.11 0.12 0.12 0.13 (labour) 0.93 Cost toll system (non 5.84 2.4 1.00 0.20 0.20 0.21 0.21 0.221 0.23 0.23 0.24 0.24 0.25 0.25 labour) 3 RESIDUAL VALUE 24.06

SOCIO-ECONOMIC 283.32 4 BENEFITS 10.29 11.19 11.71 11.92 10.35 11.94 11.87 11.81 11.76 11.70 11.63 4.1 Travel time savings 202.72 7.37 7.99 8.35 8.51 7.41 8.52 8.48 8.44 8.40 8.36 8.32

4.1.1 Commuter 43.96 1.59 1.76 1.84 1.86 1.60 1.87 1.86 1.85 1.84 1.83 1.81

4.1.2 Business 30.18 1.09 1.21 1.27 1.28 1.10 1.29 1.28 1.27 1.26 1.25 1.24

4.1.3 Other 81.03 2.93 3.24 3.40 3.44 2.94 3.45 3.43 3.41 3.39 3.36 3.34

4.1.4 Lorries 47.56 1.75 1.79 1.84 1.93 1.78 1.92 1.92 1.92 1.92 1.92 1.92

4.2 Accident savings 80.44 2.92 3.20 3.35 3.40 2.93 3.41 3.39 3.37 3.35 3.33 3.31

4.2.1 Death 18.23 0.66 0.72 0.76 0.77 0.66 0.77 0.77 0.76 0.76 0.76 0.75

4.2.2 Severe 44.56 1.62 1.77 1.86 1.88 1.62 1.89 1.88 1.87 1.86 1.85 1.83

4.2.3 Slight 17.64 0.64 0.70 0.74 0.75 0.64 0.75 0.74 0.74 0.74 0.73 0.73

GHG and local 0.16 4.3 pollution 0.00 0.00 0.01 0.01 0.00 0.01 0.01 0.01 0.01 0.01 0.01 4.3.1 Private vehicle 0.12 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

4.3.2 Lorries 0.04 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

5 TOTAL 157.26 -1.52 -42.68 -39.38 2.58 6.92 8.52 9.97 8.75 10.65 10.57 10.50 10.41 0.58 10.27

5.1 Total, discounted, EUR 2017 -1.96 -53.63 -48.24 3.08 8.05 9.67 11.04 9.44 11.20 10.84 10.50 10.13 0.55 9.48

167 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

CF 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 1 CAPEX 9.76

0.87 1.1 Labour costs 3.26 0.93 1.2 Non-labour costs 1.00 6.50

2 OPEX 1.37 1.38 1.39 1.39 1.40 1.41 1.41 1.42 1.43 1.43 1.43 1.44 1.44 1.45 1.45

Regular maintenance 0.87 2.1 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 (labour) 0.93 Regular maintenance 2.2 1.00 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 (non labour) 0.87 2.3 Cost toll system (labour) 0.13 0.13 0.13 0.14 0.14 0.14 0.14 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.93 Cost toll system (non 2.4 1.00 0.26 0.26 0.27 0.27 0.28 0.28 0.29 0.29 0.29 0.30 0.30 0.30 0.31 0.31 0.31 labour) 3 RESIDUAL VALUE 38.93

SOCIO-ECONOMIC 11.57 11.52 13.09 13.87 14.13 14.04 13.95 13.85 13.76 13.67 13.64 13.61 13.58 13.55 13.52 4 BENEFITS 4.1 Travel time savings 8.28 8.24 9.37 9.93 10.12 10.05 9.99 9.93 9.87 9.80 9.78 9.76 9.74 9.72 9.70

4.1.1 Commuter 1.80 1.79 2.03 2.15 2.19 2.17 2.15 2.13 2.12 2.10 2.09 2.09 2.08 2.08 2.07

4.1.2 Business 1.24 1.23 1.39 1.47 1.50 1.49 1.48 1.46 1.45 1.44 1.44 1.43 1.43 1.42 1.42

4.1.3 Other 3.32 3.30 3.74 3.96 4.03 4.00 3.97 3.93 3.90 3.87 3.86 3.85 3.84 3.83 3.82

4.1.4 Lorries 1.92 1.92 2.20 2.35 2.39 2.39 2.39 2.39 2.39 2.39 2.39 2.39 2.39 2.39 2.39

4.2 Accident savings 3.29 3.27 3.71 3.93 4.01 3.98 3.95 3.92 3.89 3.86 3.85 3.84 3.83 3.82 3.81

4.2.1 Death 0.75 0.74 0.84 0.89 0.91 0.90 0.89 0.89 0.88 0.87 0.87 0.87 0.87 0.87 0.86

4.2.2 Severe 1.82 1.81 2.06 2.18 2.22 2.20 2.19 2.17 2.15 2.14 2.13 2.13 2.12 2.12 2.11

4.2.3 Slight 0.72 0.72 0.81 0.86 0.88 0.87 0.87 0.86 0.85 0.85 0.84 0.84 0.84 0.84 0.84

4.3 GHG and local pollution 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01

4.3.1 Private vehicle 0.00 0.00 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01

4.3.2 Lorries 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

5 TOTAL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

5.1 Total, discounted, EUR 2017 10.20 10.14 11.70 12.48 12.73 12.63 12.53 12.43 2.58 12.24 12.20 12.17 12.13 12.10 51.01

168 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 33. Socio-economic benefits by type

Source: Authors Time savings The travel time savings result from the shorter driving time on the motorway compared to the county road for both, private cars and lorries. The ex-post time savings were calculated with a routing program, added with extra time for exiting and re-entering the motorway. It is estimated as being equal to 9 minutes for private vehicles and 6 minutes for lorries. The value of time adopted was recommended in the First Intermediate Report and is reported below:

Table 25. Value of time (EUR). SEGMENTATION PRIVATE EUR/PERSON/HOUR SHARE VEHICLE Commuter 9.07 30% Businesses 18.68 10% Other 8.36 60% Weighted Ø 9.61 Ø passengers / vehicle 1.3

LORRIES 3.74 EUR / T / H Ø cargo weight per lorry 16.0 t Value of time 59.84 €/h Source: Authors The total value of benefit in terms of time savings is EUR 202.7 million discounted, and it is the dominant benefit in line with similar investments in the transport sector.

169 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 34. Time saved by travel purpose, EUR million discounted (on the left) and million hours (on the right)

Source: Ex-post CBA

Safety In order to calculate the accidents and fatalities prevented due to the construction of the new motorway, as compared to the less safe existing highway, we relied on national accident statistics.

Table 26. Casualties for each road type and prevented casualties with project section SEVERE SLIGHT ACCIDENTS RATE FATALITIES INJURIED INJURIED Monetised value for each casualty (EUR million) 2.480 0.343 0.028 Casualties per Million veh-km/motorway (n.) 0.002 0.022 0.104 causalities per Million veh-km/ country road (n.) 0.007 0.120 0.586 Prevented casualties per Million veh-km 0.006 0.098 0.482 (without-with) Source: First interim report (monetized value) and for accident rates: BMVI (2017:162f) GHG emission savings Calculation of air pollution savings follows the methodology recommended by the international practice as recalled in the First Intermediate Report (Vol. I). This is marginal, since the travelled distances are nearly unchanged. This benefit amounts to EUR 0.16 Million at present value.

Project’s Economic Performance The economic performance of the project is solidly positive and points to a positive net contribution of the project to the social welfare.

Table 27. Economic performance indicators of the project PERFORMANCE INDICATORS VALUE Economic Net Present Value, EUR million 157.262 Benefit/Cost-Ratio 2.0 Economic Internal Rate of Return 7.0% Source: Authors

170 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

A II.5 Sensitivity analysis Since the analysis relies on a series of assumptions underpinning the estimates of current (when actual data were not available) and future values, a sensitivity and risk analyses are necessary to measure the degree of uncertainty affecting the performance indicators. First, a sensitivity analysis has been carried out on the key variables in order to determine whether they are critical or not. The procedure requires to make them vary one at a time by a +/-1%, and then to assess the corresponding change in the Economic NVP and IRR. A variable is referred to as “critical” if the corresponding variation in the economic output is greater than 1% in absolute value. The authors tested the sensitivity of a long list of different variables. As a result of the sensitivity test 4 critical variables have been identified, as shown in the table below.

Table 28. Results of the sensitivity analysis ECONOMIC NET PRESENT VALUE CRITICALITY INDEPENDENT VARIABLE DUE TO A ± 1% VARIATION JUDGEMENT* (EUR MILLION) Traffic growth 0.000 Not critical Traffic forecast private vehicles 0.130 Very critical Assumption: growth cargo traffic /year 0.030 Critical Operation & maintenance annual increase 0.000 Not critical Reinvestment cost 0.000 Not critical Travel time saved: private vehicles 0.010 Critical Value of time: commuter 0.010 Critical Traffic volume 2009-2014 on project section 0.000 Not critical in relation to counting point* * only for year 2015 there is a counted value available for the project section. This value is assumed being proportional to the value at A14 counting point Goldenstädt (just north of intersection A24)

Source: Authors A II.6 Risk analysis Variables identified as critical have been used for the risk analysis. Critical variables considered for the “Monte Carlo” simulations are always with triangular distribution and according to the following range of variations:  Traffic growth: the increase of 25% in the future demand, due to the opening of the southern section, is varied in a range of 5–100%  Time saving: the net saving of 9 minutes for private vehicles is considered in a range of 7.2-10.8’ while the value of 6 minutes for lorries is considered in a range of 4.8-7.2’  Value of time is considered in a range of ±20%.  Traffic growth in the period 2009-2014, calculated on the basis of the existing counts (assumed to be 129% of the contiguous section), is varied in a range of 90-142%.

They point to a non-risky situation, with the key performance indicators remaining positive even under the most pessimistic assumptions, with a nil probability that the Economic Net Present Value to turn negative.

171 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 adopted for computing the ENVP and IRR. Finally, the,1 000 estimated values of ENPV and IRR are used to approximate the probability distribution of the two indicators.

Figure 35. Results of the risk analysis

Economic Net Present Value ― ENPV Economic Rate of Return ― ERR

CBA Reference value CBA Reference value 157 7.0000%

Estimated parameters of the distribution Estimated parameters of the distribution Mean 148 Mean 6.1189% Median 146 Median 6.1063% Standard deviation 30 Standard deviation 1.05% Minimum 56 Minimum 2.636% Maximum 263 Maximum 9.785%

Estimated probabilities Estimated probabilities Pr. ENPV ≤ base value 0.638 Pr. ERR ≤ base value 0.792 Pr. ERR ≤ Social discount rate 0.000 Pr. ENPV ≤ 0 0.000

The risk assessment shows that the expected value of the ENPV (mean estimated parameter of distribution) is equal to EUR 148 m (slightly lower than the reference case), and that the expected value of the ERR is about 5.8% (against a reference case of 7%). The probability that the ENPV will become negative and that the ERR will be lower that the SDR adopted in the analysis is almost nil. However, there is a 60% probability that the two indicators assume a lower value than in the reference case. Hence, the CBA outputs appear to be robust to future possible variations in the key variables. Overall the risk analysis shows that the project has a low risk level.

172 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Figure 36. Probability distribution of ENPV and ERR ENPV Probability Density Function ENPV Cumulative Distribution Function

1.6E-02 1 0.9 1.4E-02 0.8 0.7 1.2E-02 0.6 1.0E-02 0.5 0.4 8.0E-03 0.3 6.0E-03 0.2 0.1 4.0E-03 0 2.0E-03 56 97 139 180 222 263 ENPV 0.0E+00 56 70 83 97 111 125 139 153 166 180 194 208 222 236 249 263 Cumulated probability CBA reference value Mean Median

Std. Dev. from mean ERR Probability Density Function ENPV ERR Cumulative Distribution Function

1.0E+03 1 9.0E+02 0.9 8.0E+02 0.8 7.0E+02 0.7 0.6 6.0E+02 0.5 5.0E+02 0.4 4.0E+02 0.3 3.0E+02 0.2 0.1 2.0E+02 0 1.0E+02 2.64% 3.66% 4.68% 5.70% 6.72% 7.74% 8.76% 9.79% 0.0E+00 ERR

Cumulated probability CBA reference value Mean Median Std. Dev. from mean ERR

173 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

ANNEX III. LIST OF INTERVIEWEES

NAME POSITION AFFILIATION DATE

Mr Stefan Road authority for federal state Department leader 6.Oct. 2017 Anker MWP Mrs. Edith Sector leader Road authority for federal state 5.Oct. 2017 Musialczyk (Environment Measures) MWP Mr. Bernd MIV-Schwerin (Contractor of Project Steering 5.Oct.2017 Kanscheit Landesamt für Straßenbau) B.U.N.D. Schwerin Mrs. Corinna (environmental organisation – Regional Office leader 28. Sept. 2017 Cwielag Bund für Umwelt und Naturschutz, section Schwerin) Stabsstelle Wirtschaftsförderung, Dr. Roland Leader Regionalentwicklung und Planen, 27. Sept. 2017 Finke County NW-Mecklenburg Mr. Stefan Road authority for federal state Account manager 29. Nov. 2017 Fritsche MWP Mr. René Ministry of Transport, Staff leader 26. Sept. 2017 Müller Federal state MWP Mr. Christian Ingenieurgruppe IVV GmbH & Co. Responsible for ex-ante survey 06+29. Nov. 2017 Knörzer KG Dr. Ulrich KifL- Kieler Institut für Director 28. Oct. 2017 Mierwald Landschaftsökologie Mr Friedrich Public Relations Wismar harbour 9. Nov. 2017 Tönnies MV Werften Wismar Mrs. Meyer Public Relations 29. Nov. 2017 (Genting Hong Kong) Mrs. Pamela Chamber of Commerce (employers Director 1. Dec. 2017 Buggenhagen association Mecklenburg) Mr. Jörg 11. Oct 2017 Contact person funding application BMVBS (Managing Authority) Stangl 27. Nov 2017 Mr. Bernhard Management authority of the State Agency of Agriculture and 1. Dec. 2017 Fiedler Natura 2000 site “Schweriner See” Environment Western Pomernia Mr. Kai Desk officer at the European European Commission 29. Nov. 2017 Stryczynski Commission’s geographical desks Mr. Norbert Tourism association Director 9. Nov. 2017 Vormelker Mecklenburg-Schwerin Mr. Geert Traffic departement Department leader 30. Nov 2017 Böcker City of Schwerin Mr. Rüther Data analyst Toll collect 10. Nov. 2017 Mrs. Uta Environment Authority of the Sector leader 4. Dec. 2017 Möller county Ludwigslust-Parchim Mrs. Irina Amt Crivitz Local development 8. Nov 2017 Pickmann municipality around project section

174 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

REFERENCES

BMVI (2014): Verkehr in Zahlen, http://www.bmvi.de/SharedDocs/DE/Artikel/K/verkehr- in-zahlen.html BMVI (2016): Bundesverkehrswegeplan 2030, Berlin

BMVI (2016): Methodenhandbuch zum Bundesverkehrswegeplan 2030 BMVI (2016): Übersichtskarte “Entwicklung der Bundesautobahnen seit der Wiedervereinigung, Berlin. http://www.bmvi.de/SharedDocs/DE/Anlage/VerkehrUndMobilitaet/Strasse/entwicklung- der-bundesautobahnen-seit-der-wiedervereinigung.pdf?__blob=publicationFile

BMVI (2017): Abschließender Durchführungsbericht, Operationelles Programm Verkehr EFRE Bund 2007 – 2013, Berlin

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BMVBS (o.J.), Projektdossier (Kurzfassung), BAB A14, Nordabschnitt, 2. BA (…), Berlin BASt (2016), Bundesanstalt für Straßenwesen, Automatische Zählstellen, Dauerzählstelle Goldenstädt, http://www.bast.de/DE/Verkehrstechnik/Fachthemen/v2- verkehrszaehlung/Aktuell/zaehl_aktuell_node.html?nn=624736&cms_detail=1602&cms_ map=0 Bundesamt für Statistik (2011), Verkehr / Seegüterumschlag deutscher Häfen, Wiesbaden, https://www.destatis.de/DE/Publikationen/Thematisch/TransportVerkehr/Schifffahrt/See gueterumschlag5463301101124.pdf;jsessionid=F5A9A764EFFF1867137B7C45B7B0E7E0. InternetLive2?__blob=publicationFile DEGES (2009): EFRE Großprojektantrag – Übersichtskarte A 14, Magdeburg - Wittenberge - Schwerin – Wismar. Planungs- und Baustand.

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IVV (2005), Verkehrsuntersuchung für die A241 zwischen AS Schwerin-Nord und AS Jesendorf, Aktualisierung der Untersuchung aus dem Jahre 2002, Ergebnisbericht, Aachen IVV (2009), Ingenieurgruppe IVV GmbH & Co. KG, Aviso, Bewertung von Projekten des Bundesfernstraßennetzes als Grundlage für die Beantragung von EFRE-Förderungen: Neubau der A 14, vom AK Magdeburg (A 2) bis zum AK Wismar (A 20). Aachen

Karge,Wolf; Slutz, Reno; Greßmann, Dietmar (2009): Vom Knüppeldamm zur Autobahn, Wege von Schwerin nach Wismar, Schwerin

175 Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013

Landesamt für Straßenbau Mecklenburg-Vorpommern (2015), Verkehrsmengenkarte Statistisches Amt Mecklenburg-Vorpommern (o.J.): Faltblatt Straßenverkehrsunfälle, Ausgabe 2009 – 2016 [online] https://www.laiv-mv.de/Statistik/Zahlen-und-Fakten/Wirtschaftsbereiche/Verkehr [13.10.2017] Statistisches Amt Mecklenburg-Vorpommern (o.J.): Statistische Berichte. Sozialversicherungspflichtig Beschäftigte in Mecklenburg-Vorpommern, Ausgabe 2006 – 2016 [online] https://www.laiv-mv.de/Statistik/Publikationen/Statistische-Berichte/ [16.10.2017] Ministerium für Verkehr, Bau und Landesentwicklung Mecklenburg-Vorpommern – Planfeststellungsbehörde (2007): Planfeststellungsbeschluss für den Weiterbau der Bundesautobahn A241 (A14) von der Anschlussstelle Schwerin-Nord (B104) bis zur Anschlussstelle Jesendorf (L101) (…) Official Journal of the European Union (2013): Regulation (EU) No 1315/2013 of the European Parliament and of the Council of 11 December 2013 on Union guidelines for the development of the trans-European transport network and repealing Decision No 661/2010/EU, [online] http://publications.europa.eu/resource/cellar/f277232a-699e- 11e3-8e4e-01aa75ed71a1.0006.01/DOC_1 [09.10.2017] Openstreetmap (2017): Karte, [online] https://www.openstreetmap.de/karte.html [17.10.2017]

Straßenbauamt Schwerin (Broschüre, o.J.): Bundesautobahn A14 Abschnitt AS Schwerin- Nord bis Jesendorf, Schwerin Wikipedia (2009a): Map of the western part of Bundesautobahn 20, originally planned as Bundesautobahn 22 (Westerstede–Drochtersen), [online] https://commons.wikimedia.org/wiki/File:Karte_Bundesautobahn_22.png [14.10.2017] Wikipedia (2009b): Karte mit dem in Planung bzw. in Bau befindlichen Lückenschluss (hellblau); [online] https://de.wikipedia.org/wiki/Bundesautobahn_14#/media/File:Bundesautobahn_14_ma p.png [20.10.2017]

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ISBN: 978-92-76-17421-9