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

Stef Proost, Saskia van der Loo, André de Palma () and Charles Lindsey ()

No 543762, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

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 donothing 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)
Date: 2005
Note: paper number ETE WP 2005-7
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Published in Working Papers, pages 1-22

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Related works:
Journal Article: A cost-benefit analysis of tunnel investment and tolling alternatives in Antwerp (2005)
Working Paper: A cost-benefit analysis of tunnel investment and tolling alternatives in Antwerp (2005)
Working Paper: A cost-benefit analysis of tunnel investment and tolling alternatives in Antwerp (2005)
Working Paper: A cost-benefit analysis of tunnel investment and tolling alternatives in Antwerp (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:543762

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