A cost-benefit analysis of tunnel investment and tolling alternatives in Antwerp

Stef Proost, Van der Loo Saskia (), André de Palma () and Charles Robin Lindsey ()
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Van der Loo Saskia: K.U.Leuven-Center for Economic Studies

Energy, Transport and Environment Working Papers Series from Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment

Abstract: A proposal has been made to build a new tunnel under the Scheldt river near the centre of Antwerp in order to relieve traffic congestion on the ring road and in an existing tunnel. The new tunnel is expected to cost more than €1 billion, and tolls have been suggested to help finance construction and to manage demand. This paper conducts a preliminary cost-benefit analysis of a new tunnel and three alternative tolling schemes, and compares them with a do-nothing scenario and an option to toll the existing tunnel without building a new one. The analysis is performed using a model that was recently developed as part of the European-Union funded REVENUE project. The two tunnels are treated as imperfect substitutes, and a multi-year accounting framework is adopted that accounts for emissions, accidents and noise externalities, road damage, revenues accruing to the national and regional governments from existing transport user charges, and the salvage value of the new tunnel. With the base-case parameter values it is found that building the tunnel is worthwhile with all three tolling regimes and yields a higher benefit than not building the tunnel and tolling the old one. Nevertheless, the net benefit from building the tunnel differs appreciably between tolling regimes, and it is sensitive to the value assumed for the marginal cost of public funds.

Keywords: infrastructure investment; route choice; congestion; tolls (search for similar items in EconPapers)
JEL-codes: D61 R41 R48 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm and nep-geo
Date: 2005-09
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Working Paper: A cost-benefit analysis of tunnel investment and tolling alternatives in Antwerp (2005)
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