Including Indirect Environmental Impacts of Large Infrastructure Projects in Cost Benefit Analysis

Including indirect environmental impacts of large infrastructure projects in Cost Benefit Analysis

Master of Science Thesis

For the degree of Master of Science in Construction Management and Engineering at Delft University of Technology

Aikaterini Rentzelou

April 2014

Graduation Committee

Prof.dr. Bert Van Wee Dr. Jan Anne Annema Ir. L.P.I.M. Hombergen

Construction Management and Engineering – Faculty of Civil Engineering and Geosciences

Delft University of Technology

Acknowledgments A very heartfelt thank you goes to Dr. Jan Anne Annema, my supervisor, for his tremendous support and positivity during my thesis research. I really appreciate his incredible generosity and confidence in me.

I would also like to thank Ir. Leon Hombergen and Professor Bert van Wee for their guidance and valuable feedback.

I gratefully acknowledge Drs. L.F.C.M. (Lauran) van Oers from Centrum voor Milieuwetenschappen Leiden (CML), who was extremely helpful with the administration of ECOINVENT database for the emissions factors.

Finally, I would to thank my family and close friends for their love and encouragement. Their enduring support truly makes all the difference.

Summary So far, current appraisals like Cost Benefit Analyses (CBA) for new road and railway infrastructure normally address direct and social environmental impacts (for example the benefit of reduced congestion or improved accessibility that leads to more users and vehicles and cause more environmental damage). Clearly, these impacts are caused during the operation and maintenance of an infrastructure project. However, they are not the only impacts caused by infrastructure projects. In the infrastructures’ construction phase there are environmental impacts caused that, as far as we have seen, have not been examined in depth or taken into consideration in standard CBA. It can be said that the construction is a step often forgotten in the emissions/impacts calculation, because it is an occasional emission which occurs before the beginning of the operation of the project.

With the present thesis an attempt has been given in examining the importance of taking environmental impacts of the construction phase of an infrastructure project into account in Cost Benefit Analyses. In order to reach the goal of the research the following methodology is followed: literature study (desk research) was realized at first and then it was applied for two case studies.

Comparing the processes that take place and the materials used during the construction phase of an infrastructure (focusing on road and railway) it was noticed that, even though every project is unique, there are some processes that are almost always/for every project carried out. These processes are mostly the materials production and their transportation, (for example asphalt, concrete, steel, ballast, etc.), excavation of materials (for example gravel and sand), and the construction machines used. These processes consider are examined in the present thesis.

Based on these basic processes the impacts to be examined are selected. It was identified that the most important impacts because of these processes were impacts on land use, noise and air emissions. Even though all the three of them are very important, in the present thesis there is a focus only on air emissions because at first point they have been prioritized internationally due to the negative effects in human health, in the toxicity of air and the global warming problem. Especially global warming problem is considered scourge of our era because it leads to negative changes in the environment and the earth affecting in a disastrous way the whole planet. Another very important reason for focusing in air emissions was that because of their importance data and information about them were easier to find and elaborate from previous researches. Air emissions include a big variety of different kind of pollutants that are produced from different sources. For the selected basic processes the most important pollutants, as they were indicated from previous research reports, are Carbon Dioxide (CO2), Sulphur Dioxide (SO2), Methane (CH4), Nitrous Oxides

(NOx), Particulate matters (PM).

A calculation method for the emissions and emissions costs of the abovementioned basic processes is created by calculating the emissions and emissions costs for hypothetical cross sections of 1Km road and 1Km railway. They present the way of sequence of the basic processes for such hypothetical and simple samples of infrastructures. The results came out

3 of these indicate which processes have the higher emissions costs and what the most principal pollutant from those examined is.

Then, this calculation model is applied for two real infrastructure projects in the Netherlands: the highway A13/A16 and the Hanzelijn railway. These projects are both large infrastructure projects that include many construction parts (tunnels, noise barriers, bridges, etc). They give the opportunity to calculate the emissions for different kind of materials and constructions, and they follow, in their biggest part, a typical construction pattern for a highway and railway respectively. This helps in examining typical/basic processes that take place in this kind of infrastructures’ construction and use it in other similar projects. Last, their Cost Benefits Analysis reports were available so to compare and include their emissions costs under their construction costs and see their contribution to the total amount.

Nevertheless, not all the necessary data for the calculations were easy to reach. Data about the specific aspects of the projects (for example quantity of materials used, working hours per day, etc.) were not publicly available. Therefore, assumptions were made based on other projects and on the experience of people related to infrastructures’ construction. Their importance and the rate to which they affect the results were examined in a sensitivity analysis chapter in the end of the thesis.

The results from the emissions costs that were calculated for the two real projects show that materials’ transportation and production of steel, asphalt and concrete are the processes with the higher emissions. They also verify the results came out from the hypothetical road and railway construction that greenhouse gases are most principal pollutants. More specifically, - For the A13/A16 highway, the construction costs calculated in its Cost Benefit Analysis are €1,790,000,000. Adding the emissions costs calculated (€2,745,500- €13,270,200) leads to an increase of 0.15%-0.74% of this construction costs. - For the Hanzelijn railway, the construction costs calculated in its Cost Benefit Analysis range from €647.000.000 to €723.000.000. Adding the emissions costs calculated (€8,317,700-€36,704,300) leads to an increase of 1.2%-5.1% of this construction costs.

Even though the emissions costs are millions, their contribution to the total construction costs is not that significant (the percentages are low compare to the amount of the construction costs). However, they do occur and contribute to the final emissions and emissions costs. It must be also mentioned that they are the minimum possible calculated emissions costs of the two projects because of the missing processes. Moreover, the calculated emissions costs refer only to the new constructions and not reconstructions that the projects include also. In addition, a sensitivity analysis is conducted in order to show the sensitivity rate of the parameters that affect and lead to the higher emissions costs for the calculated results.

The two case studies examined here showed the abovementioned results but it is suggested that the emissions costs should be included in the Cost Benefit Analysis. However, it is recommended the same calculations to be applied also for other infrastructure projects as

4 well with all the information available in order to verify the results and the recommendation to be included in the construction costs.

Table of contents Summary...... 3 1. Introduction ...... 10 1.1 Research goals ...... 10 1.2 Methodology followed ...... 13 1.3 Remarks about impacts and infrastructures ...... 17 2. Literature Study...... 19 2.1 Introduction ...... 19 2.2 Infrastructures ...... 19 2.2.1 Introduction ...... 19 2.2.2Road Infrastructure...... 20 2.2.3 Railway infrastructure ...... 21 2.3 Life Cycle Assessment ...... 22 3. Life Cycle Assessment of Infrastructures: Application to road and railways infrastructures ...... 26 3.1 Introduction ...... 26 3.2 Road Life Cycle Assessment ...... 26 3.3 Railways Life Cycle Assessment ...... 33 4. Case studies: Application of the calculations in two real projects in the Netherlands ...... 39 4.1 Introduction ...... 39 4.2 The case of highway A13/A16 ...... 39 4.3 The case of Hanzelijn railway ...... 47 5. Evaluation of emissions costs ...... 56 5.1 Introduction ...... 56 5.2 Air emissions ...... 57 5.3 Climate change costs ...... 59 5.4 Calculation of emissions costs of infrastructures ...... 60 5.4.1 Emissions costs for a hypothetical road of 1Km ...... 60 5.4.2 Emissions costs for a hypothetical railway of 1Km ...... 62 5.4.3 Remarks ...... 63 5.5 Calculation of emissions costs of the case studies projects ...... 63 5.5.1 Emissions costs of A13/A16 highway ...... 63 5.5.2 Emissions costs of Hanzelijn railway ...... 66 6. Include the emissions costs in the Cost Benefit Analysis of the projects ...... 70

6.1 Introduction ...... 70 6.1.1 Cost Benefit Analyses of the two case studies projects ...... 70 6.2 Characteristics of the SCBA of A13/A16 highway...... 71 6.3 Characteristics of the SCBA of Hanzelijn project ...... 72 7. Sensitivity analysis ...... 75 7.1 Introduction ...... 75 7.2 A13/A16 highway project ...... 75 7.2.1 Change of the distance parameter ...... 75 7.2.2 Change of the road layers’ thickness parameter ...... 77 7.2.3 Change of the construction way parameter ...... 79 7.3 Remarks ...... 80 7.4 Hanzelijn project...... 81 7.4.1 Change of the distance parameter ...... 82 7.4.2 Parameter of motor effect/engine performance of rail unloading system ...... 83 7.4.3 Estimation of the emissions costs of the two stations ...... 85 7.5 Remarks ...... 88 8. Conclusions ...... 90 References ...... 93 Appendixes ...... 96

Table of abbreviations CAFE – Clean Air for Europe

CBA – Cost Benefit Analysis

CH4 – Methane

CO2 – Carbon Dioxide

EIA – Environmental Impact Assessment

GHG – Green House Gases

GWP – Global Warming Potential

IPCC – Interngavernmental Panel on Climate Change

ISO – International Standards Organization

LCA – Life Cycle Assessment

LCI – Life Cycle Inventory

LCIA – Life Cycle Inverntory

NOx – Nitrogen Oxides

OEEI – Infrastructural Effects Research Program

PM2.5 – Particulate Matter

SETAC – Society of Environmental Toxicology and Chemistry

SO2 – Sulfur Dioxide

UIC – International Union of Railways

WHO – World Health Organization

1. Introduction

1.1 Research goals Infrastructures are very important projects contributing and changing people’s everyday life in both positive (related to the economic growth of an area, raising the quality of life) and negative (social and environmental impacts) ways. More specifically, infrastructures represent an enormous investment of materials, energy, and capitals and they result in significant environmental burdens and social costs. Therefore, they need to fulfil requirements that make them to be the best available choice. Consequently, the question is which information and criteria should be used as a base for a decision on infrastructure’s construction. In an overview perspective, there are many different, sometimes competitive, alternatives but because of the important investment capitals and social costs that infrastructure projects have, the most important tool established for supporting the decision making process for the realization of such a project was, and remains to be, the outcome of a Cost Benefit Analysis (CBA).

A typical Cost Benefit Analysis (CBA) is a technique that compares the monetary value of benefits with the monetary value of costs in order to evaluate and prioritize issues taking into consideration the effect of time. Nevertheless, the last years this is not enough because there is a continuously growing worldwide emphasis on sustainable development that has lead to businesses, governments and other decision makers, i.e. international traffic associations, ministries of transport, construction companies and even moreover producers of road construction materials searching for opportunities to reduce natural resource consumption, improve energy efficiency and minimize waste (Flynn, 2011). Therefore, infrastructures have to be faced in a holistic view and take into consideration all the issues that are related to them and not only the costs. Infrastructure projects have different kind of impacts like direct (impacts to cost) and indirect/external (impacts on the land use and environment) impacts (Verhaeghe, 2011) that have to be taken into account. As a result, a more sophisticated CBA approach has been developed and attempts to put a financial value on intangible costs and benefits like for example the cost of environmental damage. This is realized by combining the typical CBA with information taken from an Environmental Impact Assessment (EIA) that records the consequences of the projects to the environment and the nature. In this way within CBAs the social-economic return is determined including, mainly, “direct” effects on the environment and nature (Eijgenraam et al., 2000) for example those due to driving, sailing or flying. However, at the same time there are emission that consider being “indirect” mostly because they have not been examined in depth yet such as the disappearance of nature due to the construction of infrastructure and the emissions caused by their construction plus the production of materials used (for example asphalt).

So far, current appraisals like Cost Benefits Analyses (CBA) normally address direct and social environmental impacts (for example the benefit of reduced conjunction or improved accessibility that leads to more users and vehicles and cause more environmental damage that has to be evaluated). In other words, current CBAs include impacts caused mostly during the operation/use and maintenance of the infrastructure. In the Netherlands specifically the Infrastructural Effects Research Program (OEEI) is developed with the purpose to include these impacts in the CBAs offering the chance to determine the

10 contribution of these impacts to the national welfare. However, the abovementioned impacts are caused mostly during the operation and maintenance of an infrastructure project but they are not the only ones caused by infrastructure projects; during infrastructures’ construction phase (figure 1.1-red box) there are environmental impacts caused which, as far as we have seen, have not been examined in depth or taken into consideration in the CBA. It can be said that the construction is a step often forgotten in the emissions/impacts calculation, because it is an occasional emission which occurs before the beginning of the operation of the project.

These ‘indirect’ environmental impacts, that are missing and so far have not been examined in depth, are caused in the early beginning of the construction phase of an infrastructure because of processes and services like raw material extraction, manufacturing, production of the materials, transport of the materials, etc.

Figure 1.1: Framework for assessing infrastructure systems (Sahely et al., 2005)

These kind of ‘indirect’ environmental impacts include, for example, emissions to air, noise, land use, etc. and although they are not included in any Cost Benefit Analysis (CBA) as far as we focused and saw in the literature studied they are very important.

In the present thesis we focus on air emissions caused during the construction of infrastructures since they constitute indicators of environmental impacts that have been prioritized internationally (for example Kyoto protocol) due to the multiple negative effects: in human health, in the toxicity of air and the global warming problem. Especially global warming leads to negative changes in the environment and the earth affecting in a disastrous way not only humans but also animals and plants and the world in general. Moreover, because of the importance of air emissions, data and information about these emissions (for example emissions factors) were easier to find and elaborate from previous researches.

According to all the aforementioned information, the main goal that this research will attempt to achieve is to include and evaluate these ‘indirect’ air environmental impacts of infrastructure projects (impacts caused during their construction phase) in the Cost Benefit Analysis by specifying in road and railway infrastructures. In other words, aim to see if and how much the picture changes if we consider the emissions costs from the construction of

11 the infrastructure. In this way, we will be able to evaluate how much these kind of impacts affect the results compare to the standard CBAs and give a more insight about their contribution and their importance to the total costs of such a project. In order to answer the abovementioned research question and reach the desired goal the objectives of this research are the following: - Investigate what kind of environmental impacts are caused during the construction phase of road and railway infrastructures, - Choose the categories of environmental impacts to be examined and select which processes of the construction will be examined, - Quantify and then monetize these impacts for two real projects , - Evaluate the results and formulate recommendations.

The first objective is necessary because the term ‘indirect’ environmental impacts have different meanings in different groups (for example between economists and engineers or environmentalists) so it has to be specified about what is examined here. The second and third objective will form the core literature review and will involve the study of areas such as Infrastructures, Life Cycle Assessment (LCA) and Cost Benefit Analysis (CBA). Finally, as a result of the literature study findings and an analysis of their application in two real projects, recommendations will come out. These recommendations can later be used by different parties related to infrastructures such as engineers, economists, project managers and policy makers that have to choose among alternatives. Even the designers or parts in tendering phase can benefit from these results for example because they will gain more criteria in choosing the best design or construction materials than only by their cost.

In chapter 2, information about infrastructures and Life Cycle Assessment (LCA) is introduced; For the infrastructures, firstly general information explaining what infrastructures are, what they include and when they are used and then more specific information is given about road and railway infrastructures by mentioning the most important technical characteristics needed for their construction and the progress of the present thesis. For the LCA information is given about how it works, what it contains, the environmental impact categories, etc.

In chapter 3, explicit information follows about road and railway Life Cycle Assessment, the basic construction processes, the impact categories and the pollutants that are selected to be examined in the present thesis. According to these, calculations models are created and the air emissions are calculated for hypothetical road and railway cross sections.

In chapter 4, the two case studies are presented and an application of methodology and calculations realized in chapters 2 and 3 follows. This result in the calculations of the emissions caused during some basic construction process of the two case studies projects.

In chapter 5, evaluation of the environmental impacts that have been calculated in the previous chapter is realized. Emissions costs factors are multiplied with the emissions of the projects so the valuation of the emissions and the emissions costs is the final result.

The results from chapter 5 are used in chapter 6 where Cost Benefit Analysis of the projects is explained. More specifically, after an introduction about CBAs, the CBAs of the two case

12 studies projects are presented and modifications are made by adding the emissions costs from chapter 5 in the CBA under the category construction costs.

In chapter 7, a sensitivity analysis is made for the two case studies with the aim to eliminate the uncertainties that are included in the calculations because of the assumptions made.

The final chapter contains conclusions and recommendations according to the results from the whole process followed for the completion of this thesis.

1.2 Methodology followed Construction of infrastructures is a phase, most of the times, forgotten in the emissions/impacts calculation. This happens for several reasons; firstly because it is an occasional emission which occurs, mostly, before the beginning of the project. Secondly, the impacts from this phase are not directly related with the project, but with the processes taking place for its construction and that is why they are called ‘indirect’ impacts. The processes which cause these ‘indirect impacts are materials production and transportation, excavation of materials, the emissions because of the construction machines, etc.

The goal of this thesis is to include these ‘indirect’ impacts in the Cost Benefit Analysis (CBA) of infrastructures and then to evaluate them and make some recommendations for their contribution in the total construction costs according to the results. In order to reach this goal, the method that was followed consists of two main parts: the literature study/desk research and application of the findings on two case studies (large infrastructure projects with many construction parts that follow, for their biggest part at least, a simple construction pattern and their CBAs were available). In more details, the process followed is illustrated in the following figure (figure 1.2) and is explained step by step in the following paragraphs.

Figure 1.2: Methodology followed for the thesis realization

In more details the sequence for the steps is the following: Step 1: Literature Study Literature study was made in order to gain a deeper inside in the aspects of:  Infrastructures: - What are infrastructures and what is their role in the society, - What are the emissions because of infrastructure projects during the whole lifecycle of the project, - Infrastructures’ construction phase and processes related to it, by specifying in road and rail infrastructures. Findings of this study were that infrastructures are, in general, very important for society and people’s everyday life. However, considering their construction, except some

common/basic processes and materials, no further generalization can be applied; every infrastructure project is unique.  Life Cycle Assessment (LCA): - What is an LCA and how it works, - Impacts that an LCA report should include, - Connection of LCA and infrastructures A lot of information about this subject was found in Swedish and Norwegian reports where the aspect of the LCA develops more and more.  Cost Benefit Analysis (CBA) - What is a CBA, what it includes and how it is used as an economic appraisal for infrastructures, - The need for a social CBA; including not only monetary aspects but also environmental and social impacts and their contribution to the national welfare.  Emissions cost factors In order to include the ‘indirect’ impacts in the Cost Benefit Analysis they must firstly be expressed in monetary terms. For this reason there have been calculated emissions cost factors. There are several researches about emissions cost factors. However, up to now, most of the studies and the reports written refer in depth to the use/operation of transport infrastructure. For the construction phase of the infrastructure, where the present thesis focuses on, there is no detail information except that it constitutes a part of the cost category named “effects of up-and downstream processes”; that is the costs of the whole energy cycle based on life cycle data for both the infrastructure and the vehicles from their construction to their operation and maintenance, mainly because of the consumption of fossil fuels. For the purpose of the thesis, the input values of the cost factors per pollutant were taken from CAFE CBA (Service Contract for Carrying out Cost-Benefit Analysis of Air Quality Related Issues, in particular in the Clean Air for Europe (CAFE) Program) study. In this study general figures have been produced for all EU countries taking into account uncertainties and by using sensitivity analysis. In more details, CAFE CBA study generates damage estimates per ton emission for a range of air pollutants in different situations by distinguishing among countries. Because it follows the Impact Pathway methodology (see chapter 5.2), it provides enough reliable results as the use of the methodology agreed for impact assessment and valuation in the CAFE CBA analysis means that the methods used to quantify impacts and perform valuation have been subject to intensive scrutiny and peer review (CAFE CBA, 2005).

Moreover, the prices are accurate for a period of around 10years (2000 to 2010). This facilitates the calculation process, since the Cost Benefit Analyses (CBA) of the projects examined have different reference years (2005 for A13/A16 highway and 2008 for Hanzelijn) but they are both during this decade. Thus, the cost factors and the calculated emissions costs can be included in the CBAs without discounted.

Step 2: According to the literature studying findings and the goal of the thesis, in the second step it was made the selection of:

- The basic construction processes and materials that occur in every infrastructure project (despite their uniqueness), - The impacts that were going to be examined. Comparing the processes that take place and the materials used during the construction phase of an infrastructure (road and railway) it was noticed that there are some processes that were almost always/for every project carried out. These processes were mostly the materials production and transportation, (for example asphalt, concrete, steel, ballast, etc.), excavation of materials (for example gravel and sand), and the construction machines used. However, it has to be mentioned that despite these common processes, every infrastructure project is considered to be unique because of the different techniques that takes place for specific demands for the project (based on the soil conditions, the expected traffic loading, etc.). Therefore, these common processes consider being the basic processes and thus these were examined in the present thesis.

Based on these basic processes the impacts to be examined were selected. It was identified that the most important impacts because of these processes were impacts on land use, noise and air emissions. Even though all the three of them are very important, in the present thesis there is a focus on air emissions; air emissions were examined. The reasons for this decision were at first point based on the fact that they have been prioritized internationally due to the negative effects in human health, in the toxicity of air and the global warming problem. Especially global warming problem is considered scourge of our era because it leads to negative changes in the environment and the earth affecting in a disastrous way the whole planet. Another very important reason for focusing in air emissions was that because of their importance data and information about them were easier to find and elaborate from previous researches.

Air emissions include a big variety of different kind of pollutants that are produced from different sources. For the selected basic processes the most important pollutants, as they were indicated from previous research reports, are Carbon Dioxide (CO2), Sulphur Dioxide

(SO2), Methane (CH4), Nitrous Oxides (NOx), Particulate matters (PM).

Step 3: In the next step, all the findings and decisions from the previous two steps were applied in hypothetical infrastructure cross sections (road and railway). These hypothetical projects were used in order to create the calculation method for the calculation of the emissions and consequently for the emissions costs. They present the way of sequence of the basic processes for such hypothetical and simple samples of infrastructures. Moreover, they indicate which processes have the higher emissions costs. The calculation processes are presented in the Appendix A, B.

Step 4: In this step two real Dutch projects are examined and their air emissions are calculated according to the calculations made for the hypothetical projects in the previous step. The two real projects/case studies chosen are: the highway A13/A16 and the Hanzelijn railway. These projects were chosen for several reasons. First of all, they both are large infrastructure projects that include many construction parts (tunnels, noise barriers, bridges,

16 etc). In this way, they give the opportunity to calculate the emissions for different kind of materials and constructions. Secondly, they are projects that follow, in their biggest part, a typical construction pattern for a highway and railway respectively. This helps in examining typical/basic processes that take place in this kind of infrastructures’ construction and use it in other similar projects. Last, their Cost Benefits Analysis reports were available so to compare and include their emissions costs under their construction costs and see their contribution to the total amount.

Nevertheless, not all the necessary for the calculations data were easy to reach. This process of data selection cost a lot of time of the whole thesis writing. Data about the specific aspects of the projects (for example quantity of materials used, working hours per day, etc.) were not publicly available. Therefore, assumptions were made based on other projects and on the experience of people related to infrastructures’ construction. After a lot of emails and research the data that were used were: for the A13/A16 highway based on the A4 highway that is under construction in the same general area (technical information were found from the information centre of the project in Schiedam) and for the Hanzelijn, most of the data got available after communication with the manager of the project. However, again not all the necessary data were available, and thus some assumptions were made. Their importance and the rate to which they affect the results were examined in a sensitivity analysis chapter in the end of the thesis.

Step 5: In this step the monetization of the above calculated emissions was realized and then they were included in the CBAs. The process of the monetization of the emissions was based on the emissions calculated and the cost factors chosen in the previous steps. The emissions costs are calculated based on the equation: Emissions cost per pollutant = (quantity of emissions*cost factor) of the pollutant. According to the cost factor, the resulting emissions costs range from a minimum to a maximum value (within a bandwidth for every process and in total for the project). Afterwards, it was calculated what percentage are the minimum and maximum emissions costs to the construction cost of the project that was calculated in the CBA. By this percentage then the construction cost is increased. According to these percentages, the conclusions and recommendations came out.

Step 6: Sensitivity analysis was also done in order to see the ‘sensitivity rate’ of the results to the a