March 2011 | Frontier Economics, Atkins, ITS 1 Appendix 10 - Budapest Ring Road (eastern section) in Hungary 10.1 Introduction 10.1.1 Project overview Location The M0 motorway acts as an orbital road around Budapest. To date the northern, eastern and southern sections of the orbital motorway have been constructed. There are also proposals for a western section and the southern section is currently being upgraded. Part of the eastern section and a link road (the M31) between it and the M3 is the focus of this study. Budapest sits at an important junction for international traffic. This can be seen in Figure 1. It is also evident from the fact that three land-based Pan-European corridors pass through Budapest. These are corridors IV (from the north-west to the south-east), V (from the west to the east) and X (to the south along the route of corridor IV initially). As can be seen from Figure 1, in terms of traffic volumes, corridor IV from the Austrian and Slovakian borders to Budapest is the most important. The importance of the M0 Eastern sector to international and long distance traffic is illustrated in Figure 2 – which shows the passage of trucks (both national and international) in Hungary. Appendix 10 - Budapest Ring Road (eastern section) in Hungary 2 Frontier Economics, Atkins, ITS | March 2011 Figure 1. Foreign vehicle traffic in Hungary (2006) Budapest Source: http://www.kti.hu/uploads/images/Trendek6/Masodik/2-360.jpg [accessed 23rd August 2010] Figure 2. Traffic of trucks in Hungary (2008 volumes) M0 Eastern Sector Lots 2, 3 and 4) M31 not constructed in 2008 Source: http://www.kti.hu/uploads/images/ocf/modell/7-raterheles_tgk.jpg [accessed 23rd August 2010] Appendix 10 - Budapest Ring Road (eastern section) in Hungary March 2011 | Frontier Economics, Atkins, ITS 3 Figure 3. M0 Eastern Sector Lot 4 Lot 5 Lot 3 Lot 2 Source: Jacobs Consultancy (2004) Eastern Section of M0 Budapest Ring Road Between National Road 4 and M3 Motorway. Economic and Financial Appraisal. Final Report. Report dated June 2004. Appendix 10 - Budapest Ring Road (eastern section) in Hungary 4 Frontier Economics, Atkins, ITS | March 2011 Description The M0 Eastern Sector comprises of four sections, one of which has been funded solely by the Hungarian government. The remaining three sections and the M31 spur (between the M0 and the M3) have been part-funded by the EU. The different sections of the M0 and the M31 are illustrated in Figure 3. Initially, only the three sections of the M0 Eastern Sector (Lots 2, 3 and 4) were to be part-funded by the EU1. The M31, whilst part of the original funding application in 2004, was excluded from the funding due to financing constraints. However, as the tendered costs for the M0 East sections were well below those estimated, an amendment to the application to include the M31 (Lot 5) was made in 2006. Each of the four sections co-funded by the EU was subject to a separate tendering exercise – hence the reason they are referred to as ‘Lots’. As can be seen from Table 1 the EU has co-funded 38.7 km of motorway of which 25.5 km is on the M0 and 12.2 km comprises the M31. This motorway is Dual 2 lanes throughout, though the southern section of it (Lots 2 and 3a) has been constructed with provision for upgrading to Dual 3 lanes at a later date. In accordance with Hungarian law, no vignette or toll charges are payable on the M0 or M31. This is because they form part of an orbital motorway around an urban area. The total cost of constructing the co-funded sections of the M0 Eastern Sector and the M31 is estimated at €367m2 of which the EU has contributed €271m2 (which is 85% of the costs excluding sunk costs and other ineligible costs). The Hungarian Authorities also invested €6.0m into an electronic communication system on the motorway. The M0 Eastern Sector opened to traffic on September 16th 2008, whilst the M31 Gödöllő Connection only opened in the summer of 2010. 10.1.2 Context Socio-economic context Table 2 presents some summary data for Hungary and Budapest, with averages for the EU also presented for comparison. As can be seen from this table, GDP per capita in Hungary is about two thirds of the EU average. Budapest, as the largest city (1.8 million people) and the capital of Hungary, performs more strongly, economically, than the rest of the country. This can be seen as output and income per head is higher in Budapest than in the rest of the country. As 1 Lot 1 (M0 between M5 motorway and Trunk road 4) was funded in its entirety by the Hungarian government. 2 It is an estimate as not all costs have been invoiced yet by the contractor. Appendix 10 - Budapest Ring Road (eastern section) in Hungary March 2011 | Frontier Economics, Atkins, ITS 5 such GDP per capita in Budapest is just under 90% of the EU average for 2007 (the last year that such regional data is available for). Hungary experienced strong economic growth up to the beginning of the recent recession. Between 2000 and 2006 its economy outperformed that of the EU as a whole, however, since 2007 this trend has been reversed. 2009 saw a severe drop in output with a 6.3% reduction in real GDP per capita. For 2010 the economy is forecast to stabilise with moderate growth in 2011. Unemployment data mimics the previous two observations. Firstly, unemployment is lower in Budapest than in other parts of the country. Secondly, unemployment in Hungary used to be below the EU average until the recent economic problems became apparent. Now it is higher than the EU average. Appendix 10 - Budapest Ring Road (eastern section) in Hungary 6 Frontier Economics, Atkins, ITS | March 2011 Table 1. Description of M0 Eastern Sector and M31 Length Design Standard Construction period (excludes Cost planning and land purchase period) Start End (road Total cost1 Funding by opens) EC (€M) Sunk costs n/a n/a €35.648M n/a Original funded project M0 between Trunk road 4 and Dual 2 lanes with provision for expansion to 6.7km --- --- --- --- Trunk road 31 (Lot 2) dual 3 lanes M0 between Trunk road 31 and Part A (from Trunk road 31 to Gödöllő Trunk road 3 (Lot 3) Connection): Dual 2 lanes with provision for 10.9km expansion to dual 3 lanes --- --- --- --- Part B (from Gödöllő Connection to Trunk road 3): Dual 2 lanes M0 between Trunk road 3 and 8.9km Dual 2 lanes --- --- --- --- M3 Motorway (Lot 4) Sub-total 26.5km 13th Dec 2005 16th Sept 2008 --- --- Amendment M31 Gödöllő Connection (Lot 5) 12.2km Dual 2 lanes 22nd Sept 2008 26th July 2010 --- --- Total 38.7km Mixture of Dual 2 and Dual 3 motorway 13th Dec 2005 26th July 2010 €367.1m €271.0M Note 1: Costs are ex ante as actual costs have not been finalised Source: Funding application, funding decisions, financing memorandi and construction progress reports Appendix 10 - Budapest Ring Road (eastern section) in Hungary March 2011 | Frontier Economics, Atkins, ITS 7 Table 2. Socio-economic data for Hungary and Budapest 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 GDP/capita (market prices, €) European Union (27 countries) 19100 19800 20500 20700 21700 22500 23700 25000 25100 23600 Hungary 10500 11600 12600 13000 13700 14200 15000 15600 16100 14900 Budapest 9900 11900 14800 15000 16900 18800 19800 21900 --- --- Real GDP/capita growth (% p.a.) European Union (27 countries) 3.9 2 1.3 1.3 2.5 2 3.2 3 0.5 -4.2 Hungary 4.9 4.1 4.4 4.3 4.9 3.5 4 1 0.6 -6.3 Budapest --- --- --- --- --- --- --- --- --- --- Unemployment (%) European Union (27 countries) --- --- --- 9.1 9.2 8.9 8.2 7.2 7.0 --- Hungary 6.4 5.7 5.8 5.9 6.1 7.2 7.5 7.4 7.8 --- Budapest 5.3 4.2 3.8 3.6 4.4 4.7 4.8 4.9 4.3 --- Notes: --- data not available Source: Eurostat http://epp.Eurostat.ec.Europa.eu/portal/page/portal/Eurostat/home [accessed September 2nd 2010] Appendix 10 - Budapest Ring Road (eastern section) in Hungary 8 Frontier Economics, Atkins, ITS | March 2011 In a transport context there is significant congestion in central Budapest reflecting both the fact that it is the economic centre of the city but also the fact that there are only a handful of bridges over the Danube. The high traffic volumes and levels of congestion are a major contributor to poor air quality. As shown in Figure 4, the centre of Budapest is classified as ‘heavily polluted’ (red square). Aside from a polluted sector (amber square) in the north of the city the remainder of the city is classified as having acceptable air quality (yellow square) or good (green) or excellent (blue). Figure 4. 2009 Air quality in Budapest (NO2) Source: Országos Meteorológiai Szolgálat (2010 p59) 2009. évi összesítı értékelés hazánk levegıminıségérıl a manuális mérıhálózat adatai alapján. http://www.kvvm.hu/olm/results.php [accessed 2nd September 2010] Strong economic growth in Hungary earlier in the decade has contributed to increasing car ownership, freight traffic and distances travelled. As a result, passenger traffic has increased by 24% and truck traffic by 18%3 from 2003 to 2008. Between 2007 and 2008 truck traffic decreased by 0.4%. This reflects 3 http://internet.kozut.hu/szakmai/orszagos_kozutak_adatai/eredmenyek/Lapok/default.aspx [accessed 1st Sept 2010] Appendix 10 - Budapest Ring Road (eastern section) in Hungary March 2011 | Frontier Economics, Atkins, ITS 9 both the start of the recession and the fact that obligatory toll payments were introduced.