The fixed Belt link between and and its importance for the economic growth By Brian Gardner Mogensen, Department in the Danish Capital Head of Transport Region Economics, Grontmij

Geograhfic overview – North-Vest Europe Fixed Link Fehmern Belt Fixed Link – Design - Facts

Price 41 billions DKK / Government-guaranteed loans Length 19 km / 11,9 miles Payment Model User funded Trafic - 10,800 vehicles per day - 3,800 train passengers per day - 1,300 train wagons per day

The goal of the paper is to analyze the effects of the fixed Femern Baelt- connection with regard to the change in traffic flows and the impact on growth in the Capital Region in 2030.

Capital Approach - The direct effects caused by changes in the traffic flows are inserted as initial impulse in a regional economic input-output model for the Capital Region of Denmark.

- The initial impulse or primary effect can be defined as changes in employment and/or the revenue in one of the examined industries and the derived output consists of changes in direct, indirect and induced employment, production, gross value added and tax revenue in the remaining economy in the region

The expected changes as to traffic flows are based on the Fehmarn Belt Traffic Consortium's official forecast from 2003, supplemented with more recent data and forecasts. Traffic flows are projected to 2030 when it is expected that traffic flows will have adapted to the new infrastructure.

Basic assumptions

The opening year for the fixed connection 2021

Annual growth of the ferry traffic for the period until the opening of the connection in 2021 2.3 % p.a.

Traffic growth in the first 5 years after the opening of the connection 1.7 % p.a.

Growth in the train traffic for the originally planned opening year (2015) and the postponed opening year (2021) No changes

Induced car traffic (initial effect) 40 %

Phasing of the induced car traffic 5 years

Phasing of the induced car traffic including the opening of the land works on the German 7 year after the opening year side of the fixed link (rail/road) The general growth in the Capital Region is first determined in order to get a base for the extrapolation and in order to discuss the expected effect of the fixed connection over Femern Baelt in 2021 and 2030:

- Population - Labor force and employment - Occupational structure and growth - Gross value added - Productivity - Export

In the further analysis, focus on the manufacturing, detail, construction & plant and tourism industries, since these make up the primary inputs in the further analysis.

Growth rates in the different industries within the capital region are calculated:

- Employment Manufacturing - Gross value added - Export - Employment Retail - Gross value added - Production

Construction - Employment - Supply and demand of labor - Commuting

- Overnight stays Tourism - Revenue - Value added - Employment - Case – the so-called Green STRING- corridor (Scania-) Method, Manufacturing:

No clear information on how the future freight transports over the Femern Baelt related to export and import (and transit transport) will evolve

It was decided to calculate the potential marginal effect pr. 1 mill. DKK of more/less exported freight

Method, Retail trade: In relation to mapping the effects of the fixed Femern Baelt-connection for the retail trade in the Capital Region it has not been possible to identify an unambiguous effect, as different trends with different effects can occur. Due to this, it has not been possible to concretize data for calculations in the input-out model, i.e. a qualitative assessment has been conducted considering the following trends (partially based on observations for the Danish-German border in Sourthern ):

- More competition on both side of the connection to be expected - Increased traffic will increase the growth potential for the retail trade - Cross-border shopping is expected to gain a larger share of the Danish retail trade - German stores supply more and more Danish products, and they hire Danish labor (Not relevant on though)

Conclusion: - A larger pressure on the Danish retail trade in the area around the fixed connection to be expected - A limited number of Danes will find employment in the retail trade in Northern Germany

Method, Construction industry:

The effects caused by the fixed link in relation to the general development in the construction industry can be evaluated and data for the input-out model can be estimated.

Trends: - More competition on both side of the connection - Increased traffic will increase the growth potential for the construction industry

Conclusion: - The construction industry in the capital region will not experience any visible effect on the availability of labor as a result of a fixed Fehmarn Belt link. - Commuting as a result of the fixed Fehmarn Belt link will not change significantly - All in all, the total number of more commuters from Germany to the Capital Region in the construction industry in 2030, resulting in an employment-crease in the number of 15 persons, which is not yielding significant secondary economic effects.

Method, Tourism:

The effects are calculated separately for the car and train travelers and are defined as changes in the number of overnight stays and the corresponding economic effects. Existing information and rapports are used to evaluate the effects of the changes in traffic flows on tourism.

Trends: - Wonderful ’s tourist rapport from 2011 shows that foreign tourists on average have 3 overnight stays per trip which on average amount to 676,000 additional days of overnight stays in 2030. Multiplying this with the average consumption of 466 kr. per overnight stay for foreign tourists this results in additional revenues of 315 mill. DKK in 2030. - 57 % of all passenger transport across the Fehmarn Belt will be tourist related and 44 % of these travels will be to Eastern Denmark. According to Eurostat, 72 % of all travelers will be Germans. This means a total number of 177,000 in 2030. The expected revenue in the Capital Region will thus be approximately 247 mil. DKK in 2030.

Results, Manufacturing

Fehmarn - Household Total extended activity expenditures Employment, number of persons Direct employment 0.6 0.6 Indirect 0.3 0.3 Induced 0.4 0.4 Total employment 0.9 0.4 1.3 Income creation (Gross value added), mil. kr. Direct income 0.4 0.4 Indirect 0.2 0.2 Induced 0.2 0.2 Total 0.6 0.2 0.8 Taxes, mil. kr. Direct 0.1 0.1 Indirect 0.1 0.1 (indirect + Income) Induced 0.1 0.1 (Indirect + Income) Total 0.2 0.1 0.2 Production value, mil. kr. Direct 1.3 1.3 Indirect 0.4 0.4 Induced 0.4 0.4 Total 1.7 0.4 2.1 Results , Construction

Fehmarn - Household Total extended activity expenditures Employment, number of persons Direct employment 9 9 Indirect 3 3 Induced 3 3 Total employment 12 3 15 Income creation (Gross value added), mil. kr. Direct income 3.7 3.7 Indirect 1.9 1.9 Induced 1.7 1.7 Total 5.6 1.7 7.3 Taxes, mil. kr. Direct 1.0 1.0 Indirect 0.5 0.5 (indirect + Income) Induced 0.5 0.5 (Indirect + Income) Total 1.5 0.5 2.1 Production value, mil. kr. Direct 6.8 6.8 Indirect 4.2 4.2 Induced 3.1 3.1 Total 11.0 3.1 14.2 Results, Tourism

Fehmarn - Household Total extended activity expenditures Employment, number of persons Direct employment 720 720 Indirect 131 131 Induced 178 178 Total employment 851 178 1.029 Income creation (Gross value added), mil. kr. Direct income 222 0 222 Indirect 75 0 75 Induced 0 106 106 Total 297 106 402 Taxes, mil. kr. Direct 68 0 68 Indirect 23 0 23 (indirect + Income) Induced 0 34 34 (Indirect + Income) Total 91 34 124 Production value, mil. kr. Direct 436 0 436 Indirect 158 0 158 Induced 0 201 201 Total 594 201 795 Case studies

In order to estimate the isolated expected effect of the fixed Fehmarn Belt- connection on the freight and passenger transport related to the Capital Region, 3 cases for transport hubs are analyzed. Thus, the cases help to clarify whether the Fehmarn Belt-connection can expected to have a positive or negative effect on the growth in the respective transport hubs. The three cases are the Capital Region’s three big transport hubs.

1) Copenhagen Malmö Port (CMP) 2) Høje Taastrup Transportcenter (HTTC) 3) Copenhagen Airport (CPH)

The case studies are based on existing knowledge and interviews with experts and decision-makers at the transport hubs.

Copenhagen Malmö Port (CMP)

- CMP is a Danish-Swedish port company and the result of the fusion of Københavns Havn A/S and Malmø Havn AB in 2001.

- CMP manages a range of different freight types such as:

。Dry Bulk, e.g.: salt, sugar, corn, construction materials, metal etc.

。Liquid Bulk, e.g.: gasoline, oil, chemicals etc. Container freight

。RoRo freight ( trailers)

。Cars

Høje Taastrup TransportCenter (HTTC)

- HTTC consider itself to be a regional centre for freight forwarding, logistics and warehousing in the Capital Region

- There is a rail/road-terminal in connection with HTTC, that is operated by the company DB Schenker Rail (owned by DB - German Railways)

Copenhagen Airport (CPH)

- CPH serves as a hub for the airline company SAS while a range of other airline companies operate from the airport.

- CPH is currently a workplace for approximately 22,000 people

Main conclusions, case studies

It can be concluded that CMP, overall, will not get affected 1) Copenhagen Malmö Port (CMP) positively or negatively in the form of an increase of revenue and/or more jobs by the future Fehmarn Belt-connection.

The Fehmarn Belt-connection will affect the freight revenues in 2) Høje Taastrup Transportcenter (HTTC) HTTC positively.

CPH will - as a result of the Fehmarn Belt-connection - new opportunities to attract new customers in Northern Germany 3) Copenhagen airport (CPH) on the routes that are not offered by airline companies in Hamburg and , i.e. mainly are intercontinental routes

Discussion

- Denmark has no general accepted method of calculating dynamic effects of transport investments.

- This analysis is only one possible approach to calculate the effects.

- In Denmark we have very little knowledge of if and how already realized transport investment in roads, railways, fixed links, etc. has led to growth in employment and production on national, regional and local level.

- We are very interested in your experience in this field!

- We are very interested in the Economic Impact Analysis method under the SHRP programme!