Social Impacts – developing a methodology for the calculation of benefit

Currently available model tools fail to capture all potential impacts, and thus do not provide a correct picture of the total amount of utility the E39 Coastal Highway Route project will bring to society. The Social Impacts subproject is tasked with developing a methodology that meets this need to a greater extent.

Social benefit as a legitimizing factor

In the transport agencies’ proposal for the National Transport Plan (NTP) which was presented in February 2016, socio-economic cost-effectiveness is a central criterion in the ranking of projects, and the transport agencies present a project portfolio based on calculated net benefit. This is the social impacts of infrastructure development that to a great extent legitimize the large costs such development often requires. Currently available methods for socio-economic analysis are in lack of a methodology for quantifying regional economic impacts and impacts on social structure. Cost-benefit analysis as currently employed only accounts for road user and passenger benefits, operator benefits, and public budget impacts, and for accidents, noise, air pollution, remaining value and tax costs.

A continuous and improved E39 Coastal Highway Route will produce such great changes in travel time, distances and predictability that there is a probable potential also for great changes to society. This applies to residential and labour market impacts, social structure (e.g. health services, education, transport and air terminals, public government, politics, services and trade), changes in transport patterns and impacts on trade and industry and on value creation. These impacts are referred to as additional benefits or wider economic impacts. Calculations carried out within the Social Impacts subproject show that such benefits will not be limited to those living in close proximity to the project, but will affect the entire country.

Study carried out as part of the E39 Coastal Highway project

The Social Impacts subproject started the work to develop a new methodology in 2012, and it is still in progress. The aim is to develop a methodology that makes it possible to quantify the wider economic impacts of major infrastructure projects, so that these impacts can be included in the economic analysis. A number of studies and reports have been produced as part of the Social Impacts subproject. These documents are available in Norwegian under “Temarapporter”.

Since the study began in 2012, considerable efforts have been vested in developing and demonstrating various calculation methods for wider economic benefits.  It is methodologically challenging to predict the extent and the timing of these potential impacts. In order to promote the development of methodology within the field of wider economic benefits, the Social Impacts subproject has found it important to work in several different directions.

The study shows major variation in calculated benefits. This is due to different assumptions and different approaches. However, there is broad agreement among experts regarding the underlying basis for wider economic impacts, and that the value of these can be estimated. The next step for the Social Impacts subproject is to collect data from Norwegian contexts and carry out micro-economic analyses (a combination of economics and statistics that is used when analysing economic conditions for large groups of individuals).

Contact

Subproject Manager is Cathrine Helle-Tautra