Analysis of the Wider Economic Impact of a Transport Infrastructure Project Using an Integrated Land Use Transport Model

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Analysis of the Wider Economic Impact of a Transport Infrastructure Project Using an Integrated Land Use Transport Model sustainability Article Analysis of the Wider Economic Impact of a Transport Infrastructure Project Using an Integrated Land Use Transport Model Wanle Wang 1,2,3,4 , Ming Zhong 1,2,3,* and John Douglas Hunt 1,2,3,5 1 National Engineering Research Center for Water Transportation Safety, 1040 Heping Avenue, Wuchang District, Wuhan 430063, China; [email protected] (W.W.); [email protected] (J.D.H.) 2 Intelligent Transport Systems Research Center, Wuhan University of Technology, 1040 Heping Avenue, Wuchang District, Wuhan 430063, China 3 Engineering Research Center for Transportation Safety, Ministry of Education, 1040 Heping Avenue, Wuchang District, Wuhan 430063, China 4 College of Air Traffic Management, Civil Aviation University of China, 2898 Jinbei Road, Dongli District, Tianjin 300300, China 5 Department of Civil Engineering, University of Calgary, 2500 University Drive NW, Calgary, AB T2N 1N4, Canada * Correspondence: [email protected]; Tel.: +86-27-5085-3212 Received: 20 October 2018; Accepted: 4 January 2019; Published: 12 January 2019 Abstract: Major cities in developing countries are undergoing massive transportation infrastructure construction, which has significant impacts on the land use and economic activities in these cities. Standard Cost–Benefit Analysis (CBA) is applied to quantify the user benefits of transport projects, but does not provide an answer as to who will obtain the benefits and who will lose out and excludes the calculation of Wider Economic Impacts (WEIs) which can sometimes be large and hardly negligible. This paper introduces thoughts and experiences obtained through the design and development of an integrated land use transport model for the assessment of the WEI of a transport infrastructure project. The development and application of such an integrated model for WEI analysis should help decision-makers understand not only the “direct or immediate” impact of transport infrastructure on mobility, but also those “indirect or long-term” impacts on the distribution patterns of economic activities, corresponding land use, and resulting urban structure. Keywords: wider economic impacts; integrated land use transport model; distributional effect; agglomeration effect; metro line project 1. Introduction For the past two decades, the study of a range of Wider Economic Impacts (WEIs) or Wider Economic Benefits (WEBs) associated with transport infrastructure projects has caught the attention of many researchers. Researchers argue that large transport projects, together with the appropriate policies, can generate additional benefits over the user benefits calculated in the traditional Cost–Benefit Analysis (CBA) method. The assessment of WEIs has been included in the guidelines for transport appraisal in many countries, e.g., the U.K., the Netherlands, and so on [1,2]. Nowadays, major cities in developing countries are undergoing massive transportation infrastructure construction, which has significant impacts on the land use and economic activities in these cities. To understand the wider economic impacts brought about by transport projects, especially by the land use change response, and the distribution of such benefits, an integrated land use transport model is an urgent need. Sustainability 2019, 11, 364; doi:10.3390/su11020364 www.mdpi.com/journal/sustainability Sustainability 2019, 11, 364 2 of 17 PECAS stands for the Production, Exchange, and Consumption Allocation System (PECAS), which is one of the integrated land use transport modeling frameworks recently developed. Built upon the theories of and experiences with its pioneers MEPLAN [3] and TRANUS [4], the PECAS framework simulates the spatial economic systems under consideration and has been enhanced with several distinct features such as enhanced representation of socioeconomic systems through a social accounting matrix and microsimulation-based space development [5]. Over the last 15 years, the PECAS framework has been implemented in different locations worldwide, including Oregon (statewide) [6,7], California (statewide) [8], Atlanta [9], San Diego, Los Angeles, and San Francisco, USA; City of Edmonton, Province of Alberta, Canada [5]; Caracas, Venezuela [10]; and Mumbai, India [11]. This paper introduces thoughts and experiences obtained through the design and development of an integrated land use transport model for the assessment of the wider economic impacts of a transport infrastructure project, especially the agglomeration effect. An integrated land use transport model for the City of Wuhan, China, which is developed based on a PECAS model, is used to analyze the agglomeration effect of a metro line construction project. A large number of data have been assembled to develop the model, including census population/employment (2010), a household travel survey (2008), Yearbooks (2008 onwards), input–output tables (2007 onwards), land use (current and zoned) and space quantities at the traffic analysis zone (TAZ) level (2012), space rent/sale price, and household financial survey results. The development and application of such an integrated model for WEI analysis should help decision-makers understand not only the “direct or immediate” impact of transport infrastructure on mobility, but also those “indirect or long-term” impacts on the distribution patterns of economic activities, corresponding land use, and resulting urban structure. The paper is organized as follows: After a literature review and brief introduction of one of the WEIs of a transport project—the agglomeration effect—the PECAS framework and the Wuhan PECAS model are introduced as our methodology. Then, the capability of the model to measure the agglomeration effect of the project is demonstrated with a case study. The study results are presented in the following section, where a discussion is also provided. Finally, our conclusions and recommendations are given. 2. Literature Review Traditionally, the “rule of half” (RoH) method, which is based on the consumer surplus concept, is applied in CBA for a transport project appraisal. Many studies have explained the details of this method [12–14]. In welfare economics, the level of welfare is measured by adding up the amounts of money that people are willing to pay for goods and services [12]. As shown by the demand function in Figure1, suppose with a transport infrastructure improvement, the generalized cost ( GC) decreases from GC0 to GC1; the travel demand will increase from T0 to T1 accordingly. Consumers who have already agreed to pay (GC0) now pay GC1, generating a welfare change represented by the area B. Now new consumers pay for the trip at a lower cost, whose welfare change can be approximated by the “rule of half”: 1/2(T1 − T0)(GC1 − GC0), which is shown by the area A. The total change in consumer surplus is A+B. SustainabilitySustainability 20192019, 11,,11 x ,FOR 364 PEER REVIEW 3 of3 18 of 17 GC GC0 B A GC1 T T0 T1 Figure 1. “Rule of half” (RoH) method for user benefit assessment. Figure 1. “Rule of half” (RoH) method for user benefit assessment. 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