SR-520 Bridge Project: Reconnecting Seattle

by Brandon Musser

State Route 520 (SR 520) is a 12.8 mile corridor linking downtown Seattle and its Eastern suburbs of Bellevue, Kirkland, and Redmond (collectively known as the “Eastside”) which are separated by the 30 mile long Lake Washington. The route is of considerable economic importance to the greater Seattle area as it provides one of only two passages across the lake, connecting the dense downtown residential area to several large commercial centers, including Microsoft's main campus in Redmond which employs nearly 40,000 people (another employer in the area you may have heard of is Boeing). Every day, around 115,000 vehicles travel the four-lane, 2,285 meter long floating bridge which currently spans the lake. However, the bridge, which was opened in 1963, was originally designed to accommodate only 65,000 vehicles per day. During peak rush hours, traffic merging onto the bridge creates a bottleneck, turning the freeway into a parking-lot and the short 10-15 minute journey from Redmond to Seattle into an insufferable hour-long nightmare.

Construction is to begin in 2012 on a new bridge which will replace the existing bridge and expand the flow of traffic to six lanes, as well as a pedestrian path, and will be compatible with future inter-city light-rail proposals (http://www.wsdot.wa.gov/Partners/Build520/ ). Additional upgrades will be made to both on- and off-ramps, further improving the flow of traffic along the entire corridor, but especially in the vicinity of the bridge. The additional third lane (in each direction) will be a designated HOV lane (reserved for car-pools, motorcycles, and public transit), improving the reliability and attractiveness of using means of public transportation to commute to and from work. Much wider shoulders will also dramatically decrease the time of accident/breakdown response and cleanup/removal, which are often responsible for the worst traffic delays. The eventual implementation of light-rail will provide residents of the metropolitan centers of Bellevue and Seattle with a very quick, reliable point-to-point means of commuting which will avoid traffic all-together. The new bridge is scheduled to open in 2014, while a definite time-line has not yet been set for the light-rail.

The new bridge, along with the upgrades being made along the entire corridor in general should greatly reduce the cost of commuting between Seattle and the Eastside, not only in terms of dollars but in the opportunity cost of time as well. Using two different models of economic geography, we can speculate as to what kind of implications the drastically reduced transportation costs could have on the economic dynamics of the region. Predictions depend largely upon how one views the greater Seattle area; as two distinct regions (Seattle and the Eastside) or as one larger integrated economic region. According to the Krugman model of New Economic Geography, in a two region scenario exhibiting a mobile labor force, there are two forces in which reduced transport costs could induce agglomeration. The first being the price-index effect and the second being the home market effect (HME). Under the price-index effect, the larger market has an advantage because the price-index will fall with the size of the market, making products cheaper in that region. According to the HME, the region with higher aggregate income will enjoy a more than proportional amount of variety of consumer goods and a more than proportional amount of the higher-skilled workers, making the larger market more attractive. The NEG model would, therefore, suggest that lowering the transport costs between Seattle and the Eastside could spur agglomeration in the larger market (Seattle) at the expense of the smaller market.

On the other hand, if we consider the greater Seattle area to be one large market, the classic Von Thunen could offer insight as to the effects of reduced transport costs between Seattle and the Eastside. The model is used to examine crop selection based on bid-rent functions which depend heavily on the transport costs of various crops. In this case, we can think of different economic functions (industrial/commercial activities) with activity locations being based off of the same bid-rent functions.  According to the model, as transport costs fall, so should the area of land profitable for agricultural activity, introducing opportunities for new activities that were once unprofitable under high transport costs to become profitable. To me, this scenario depicts a region becoming increasingly integrated as the flow of goods (or people) becomes less costly.

I believe the second model is more applicable to this case of decreasing East-West transport costs in the Seattle area as I believe the area is much more resemblant of an integrated market than two separate regions. Reduced transport costs could allow smaller or less profitable firms to locate on the periphery, where it was once unprofitable to do so because of the high costs of attracting skilled-workers from the core (downtown). In other words, reducing the costs of labor flows throughout the greater metropolitan area will make the region more attractive to (external) firms looking to relocate to the area by being able to locate near the periphery (taking advantage of lower big-rent costs) while still being able to draw from a very large pool of skilled-workers in the core. Relocation of firms to the area will also attract new workers, enhancing the overall economic activity of the region.

Shrinking the Atlantic Ocean – A Case of Transatlantic Superspeed VacTrain

by Shota Gvaramadze

The idea of it was first proposed by Michel Verne in his book in 1888, a son of the famous French science fiction author Jules Verne. But it was not until 60ies when engineering visionaries started to get into the science of building a transatlantic superspeed vac-train (TSV). The idea is spectacular and audacious, as well as unimaginably hard and expensive by today’s capacities and costs.  

A TSV train would hover above the track without physically touching it thanks to the magnets, eliminating the rail friction altogether (which limits the train speed). Magnetic levitation train is no longer a science fiction; such train already has been serving a route between Shanghai city and its airport since 2004. Different from a conventional maglev train, TSV would be moving in a vacuum tunnel submerged and fixed 50 meters above the bottom of Atlantic Ocean (shown on the picture), eliminating another source of friction - air. By eliminating two sources of friction, air and rail track, the train will be able to accelerate up to the speed of 8000 km/h allowing the train to cover a distance of 5000 kilometers between London and New York in just 54 minutes, shrinking the time and space between two continents (it would take 20 minutes to reach the full speed and same time to slow down to make the journey comfortable for passengers. This is the reason why it would take about 54 minutes to travel and not less).

Different sources estimate the cost of project from $175 billion up to staggering $12 trillion making the project unimaginable to be embraced by any current government. For a comparison, average cost of building a 500 km HSR track in Europe is estimated to be around 10 billion EUR (operational costs not included). This number doesn’t even reach the lowest proposed cost of $175 billion. However, as the engineering and material sciences evolve and advance, costs will be pushed down to a point where undertaking such venture might even become possible. In spite of all costs, uncertainties, technical feasibility, risks associated with under water travel (which is way outside of the scope of this article), I think it would still be interesting to look into the socio-economic impacts of such a grandiose undertaking should it one day become a reality.

The Japanese and European experiences show that HSR trains that cover the distances between two cities in less than 2.5 hours can obtain 80-90% of all air traffic and 50% if HSR train covers the distance in less than 4.5 hours. TSV easily meets this requirement. Financial Times in 2009 listed London – New York flight as the third busiest international route with annual number of passengers slightly over 1,6 million. By transporting 80-90% of those passengers, TSV will be one of the busiest train routes on earth.

High Speed Rail (HSR) projects almost never cover their infrastructure and operational costs and are therefore financed by tax payers’ money. Such spending is always justified by the wider social and economic benefits HSRs bring. These are passenger time savings, reduction in congestion, reduction in accidents, reduction in environmental externalities and benefits including the development of the less developed regions. Historically, United States and UK have favored HSR projects much less than other European countries, Japan or China. However, if such project was ever given a green light by British and American governments, TSV would make impossible possible and have a number of wide scale social and economic effects on two cities.

A study on UK’s InterCity 125/225, a HSR network, has shown that towns that became reachable from London within 1 and 2 hours, had higher employment rates as well as gross value added per head after the construction of HSR line. Employment increase was highest in knowledge intensive business services and creative industries. Reason for this is the high cost of tacit knowledge exchange in spite of advancement of information and communication technologies. Therefore, New York and London, two hubs of advanced and high value added service industries have very high potential to benefit from a TSV. Cutting a travel time between two cities from 7 hours (by air) to 54 minutes would enable more frequent business meetings, increase working hours of business travelers and as a result increase the productivity of firms. Extent of productivity will also depend on ticket costs, whether every day commuting would be possible, uniting two job markets into one, increasing the size of the labor market pool and enabling workers to move from less productive to more productive jobs between two cities. These two cities as agglomerated as they already are would become even more competitive, with firms having larger markets and enjoying the scale economies. As world’s two financial centers, these cities probably have most in common than any other two cities in different countries. By having similar physical size and economies, as well as identical intellectual resources and endowments, these two cities could benefit from a shared and united market most. On the negative side, as the output of these two cities would increase, so would the congestion and office rents, which already pose enormous problems to  respective city officials.

As history has already shown, often impossible can quickly become possible. So who knows maybe one day it will really be possible to have lunch on Manhattan and still make it to London for an evening theatre performance. 

Have Citizens of Belgrade Paid Too Much?

by Snezana Ilic

In everything that man pushes by his vital instinct, builds and raises, nothing is more beautiful or more precious than bridges. Bridges are more important than houses, more sacred because they are more useful than temples. They belong to everybody and they are the same for everybody, always built in the right place in which the major part of human necessity crosses, more durable than all other constructions and they do not serve for anything secret or bad.

Using those words the Yugoslavian writer who was awarded the Nobel Prize for Literature, Ivo Andric, explained his ardor for bridges almost 50 years ago.

The Sava Bridge, Belgrade, Serbia

A few months ago, when I saw  the newly built bridge on the Sava River in Belgrade, Serbia -  I felt the same enthusiasm. The bridge is standing proudly and waiting to be officially opened for traffic in December 2011, aiming to become the new symbol of the city.

The necessity of the bridge is clear having in mind that the city is situated on the constellation of two rivers, the Danube and the Sava, and has 1.7 million residents  with only two functioning bridges across the rivers to connect the old part of the town (The Old Belgrade) and the new one which stands for business center (The New Belgrade). Furthermore, the bridge represents the missing element of the The Inner Major Half-Ring (UMP)  that connects Western and Northern part and much larger area of the city.

However, the opponents of this construction were very loud in the years before the building started. Many architects stated that this bridge would present physical danger, and it would be unsuitable to build a main road through the city core which would give to the residents of Belgrade an enormously expensive and dysfunctional bridge in the wrong place.

According to the results of previous studies on the bridge , estimated positive effects are numerous. First, the results of the analysis which used the volume of traffic in 2005. showed that there would be decrease in mileage by about 100,000 km per day if only passenger cars are taken into consideration. This would save about 11 tons of fuel a day. There would be used  3,250 tons less fuel per year. By 2021 year, when the volume of traffic is expected to increase by 35%, results are even more significant amounting to savings of about 35 tons of fuel per day or 10,000 tons per year. As a consequence of those savings, there will be less air pollution. Second, the average time required for travel would be shorter by around 30 minutes. Third, the new bridge and the ring would reduce traffic flows on existing roads and bridges in the center (30%), and thus eliminate delays and adverse effects caused by this (the project itself provides a series of effective measures of environmental protection, specific pavement, protective sound barrier, etc.). This list can be extended with less tangible benefits such as the bridge would provide a look of a metropolis to the city.

However, now I would like to turn to the indirect economic effects, sometimes more difficult to assess but equally important. Concerning its position, the bridge will provide higher accessibility to the business core of the city which will lead to the higher employment density.

Proof for this can be found in the case of construction the Auckland bridge . Furthermore, in the same study, the strong relationship between employment density and productivity  measured by the average wages was proven. Based on this, one might expect the same relationship to be established between two parts of the Belgrade  that are now connected. This is the case especially because the productivity measured in terms of average wages (Table 1) is the highest in the business part  (out of 17 municipalities). The main factors of agglomeration are benefits arising from increase in wages and productivity coming from densification of activities in urban areas. It is planned to build a tram road across the bridge as part of a public transportation network which will improve accessibility even further since transport possibilities are important in determining whether the city will be dense or detached. 

Table: Annual average wages by municipalities, Belgrade

In addition, the improved accessibility between two parts of the city optimizes land use over the city, and it will surely increase the land prices in the areas close to the bridge.

Having in mind the role that cities can play in enhancing both regional and national development, the significance of an increasing productivity in the cities itself is one of the major urban policies to be considered.

Next time while crossing any bridge make sure to devote a few moments of admire to those magnificent constructions whose great impact we tend to forget. 

Interesting: Discovery channel made a documentary movie “Built it Bigger” about this bridge, since it is the longest single pylon cable bridge in the world.

Trailer: http://www.youtube.com/watch?v=SaMBNwpcpx8&feature=player_embedded

More information: http://science.discovery.com/tv/build-bigger/projects/serbia/sava-river-bridge.html?fb_ref=fb2&fb_source=profile_oneline

Addiction to Ryanair

by Vija Pakalkaite

A Ryanair story takes place in a tiny airport of Kaunas which is the second largest city in Lithuania. This story could be compared to drug addiction in such a way that it provides euphoria (region is quickly developing), but has its costs (the “health” of a country Lithuania is weakening – people are emigrating).

Short history

Ryanair came to Lithuania in 2005 and chose Kaunas airport to operate. Due to an economically successful launch in 2005, in 2010 Ryanair decided to establish an airplane base in Kaunas airport, which means, that planes not only land-take passengers-leave, but also stay overnight. In addition, Ryanair announced its plans to establish an aircraft technical maintenance center in Kaunas in years to come.

In May 2011 Ryanair announced a very unpleasant surprise to the Kaunas airport (but pleasant to the residents of Vilnius), by announcing it will begin to provide flights from the capital city Vilnius airport as well. However, once a dull and uninteresting Kaunas airport now is full of life. It is planned that in 2011 this airport will serve around 850,000 passengers.

What to expect

Theoretically, if transportation costs are high, the spreading forces would dominate and different sites would try to do all economic activities within the teritorry instead of importing some. As transport costs fall, agglomeration forces will take over. It becomes possible to take advantage of a scale economy and then transport good cheaply to the other sites. This could be applied to the transportation of labor force as well. When flights become cheaper  people would use them to move to the larger cities which already have many residetns and labour. The entry of Ryanair to the Lithuanian airline market was one example of rapidly falling transportation costs to the consumer.

In addition, one of the features of the low-fare airlines is that they choose airports that are not of primary importance to provide their services. Such airports usually charge airlines with no or low fare and expect to gather benefits by providing additional services to the travelers. So they expect that the regional economy around the airports will expand, and airport facilities as well would be expanded.

Special shuttles soon were established

Until Ryanair‘s decision to fly from Vilnius,Kaunas airport was the only „window“ to the world where one could catch a low-fare airplane in Lithuania. As a result, all  passengers who wishedto use Ryanair had to reach Kaunas airport first. This was not so easy for passangers especialy during the night. The entry of Ryanair increased the demand of easing possibilities to reach Kaunas airport, and the supply was subsequently provided.

Special shuttle services were soon provided both in between Kaunas airport and Kaunas city, as well as other largest cities, including Riga which is the capital of Latvia. The former shuttle takes people from the Kaunas airport and brings them to hotels and other places in the Kaunas city then back to the airport. It is a special bus route which schedule is adjusted to the flight schedule. Besides, a “special prolonged stop” in the shopping town “Urmas” with more than 70.000 square meters of retail space was incorporated in the route of the shuttle service. The latter ones, for example, a Lithuanian shuttle taxi operator „Ollex“ bring passengers from Vilnius directly to Kaunas airport (price 11 EUR) and from the seacost city Klaipėda too (price 18 EUR), the schedules of the shuttle are as well tied to the schedules of the Ryanair flights.

Regional development

There were new cafeterias  established in the vicinity of Kaunas airport, some of them even in local residencies. A pizzeria was opened and a couple of bed-and-breakfast places in a nearby disctrict. Near the airport a shopping center is being built as well as a hotel inside the Kaunas airport. When Ryanair opened a base in Kaunas airport in 2010, Kaunas hotels became booked 80% of the time. In the city of Kaunas itself a bunch of new bars was opened, and the existing bars are full of foreigners.

Establishement of Ryanair base also revitalizedthe flat rent business in Kaunas, because pilots and fligh crews  are  renting flats in Kaunas. There are 100 employers in the base, and it is calculated that the establishment of the base directly or indirectly created a thousand of work places in the region.

How Lithuanians “agglomerated” London

However, not everything was so picture perfect. Once a nation of 3.5 million Lithuania now has just 3, 045,000 residents. The country in ten years since 2001 lost 12% of population, out of which 76% because of emigration. The acceptance to the European Union, visa-free Schengen zone and low-fare airlines decreased the price of travelling. During ten years, the region of Kaunas lost around 13% of its residents – similar to the entire average of Lithuania. Most popular destinations to emigrate for Lithuanians are United Kingdom, Ireland, Spain, and now, since it opened borders to the labor from new EU members, Germany. It is believed, that in London and nearby it around 100,000 Lithuanians are settled.

This being said, Ryanair routes are adjusted to the emigration habits of Lithuanians. There are 15 routes from Kaunas, out of which 8 fly to various destinations in the UK, one in Ireland, and one in Germany. The rest half dozen of flights go to the Netherlands, Belgium, Norway, France and Finland which could be considered to be more for tourism.

Short conclusion

Ryanair entry to Lithuania via Kaunas indeed gave positive stimulation to the economy of the Kaunas region, but many of the economic activities are directly related with the presence of Ryanair itself. If this airline ever decided to leave Kaunas airport many of the positive effects would soon disappear. Ryanair could have contributed as transportation means for many of the Lithuanians to emigrate and it still does so. However, if not as a result of this airline, a Lithuanian who truly wanted to leave the country would find a way to do it. 

When Irish low-fare company Ryanair decides upon the routes it probably first thinks about the profits it will earn, and only then about the impact to the economy of a region or a country. In this photo you can see the author of the blog post and Ryanair CEO Michael O'Leary in 2010, when he decided to establish a plane base in Kaunas airport.

Economic Effects of Cologne (Köln) - Frankfurt High Speed Rail

by Natalia Costin

The Cologne – Frankfurt high speed rail started operating in 2002 .The Speed of the train, running at 320 km/h, reduced the journey from 2hr 15 min to over an hour. The number of passengers willing to travel increased significantly by 2010 to around 20-25 million from 9 million. With high speed rail, travel time between Frankfurt and Cologne is 55 percent faster than with old track and 35 percent faster than with travel by car.  As a result of a new ICF we would expect some economic changes in Cologne and Frankfurt, however our expectations would be wrong because an economic impact was present just in the cities situated on the line of high speed rail which were: Limburg, Siegburg and Montabaur.

Travel Time Treatment

 

Research from LSE looked at prosperity and growth of intermediate stations, Limburg and Montabaur and compared the economic performance of those towns with more then 3,000 other municipals in the neighborhoods . During four year period of fast train activity the economic growth grew by at least 2, 7 percentage more in those two cities that are on the route compared to unconnected neighbors.  Additionally in Limburg and Montabaur in the market potential indicator is present an increase of about 30%. 

ICE train stations in Limburg and Montabaur are most often used for work purpose, to travel daily to Frankfurt. This point highlights that high speed rail Cologne- Frankfurt has an important effect on job creation in both regions. For example per day there is approximately 80 percent of daily commuters from Limburg and 60 percent from Montabaur.  Additionally the attractiveness of ICE increases with time.  Figure 1 show that Cologne and Frankfurt can be reached now by roughly 40 minutes train rides from Limburg and Montabaur, “making their location central with respect to two of the major regional economic agglomerations with a total population of approx. 15 million”. 

High speed rail motivate people to move closer to its route. There was a survey taken in Montabaur and Limburg which could provide an explanation for inflow of new residence.  The results of survey highlight the point that about 20 percent of Montabaur commuters and roughly 15 percent of Limburg commuters moved closer to high speed rail because of improved speed and accessibility it offers. 

In case of another intermediate station Siegburg, investigations of the Geographical Institute of Bonn University have shown that roughly 90 percent of passengers travel with high speed rail to and from Frankfurt. Additionally it was observed that partly as a result of Inter-City Express real estate investment increased there. Studies of Bonn University stated that Inter-City Express in Siegburg as well increased the inflow of population similarly to Montabaur and Limburg. For example 3 percent of Siegburg population has chosen the location based just on high speed rail access.

Frankfurt as a result of Inter-City Express had attracted more commuters compared to Cologne. There were not that many trips for example from Siegburg to Cologne as from Siegburg to Frankfurt. Frankfurt was more attractive place for commuters because in Frankfurt there is larger labor market. It is interesting to mention that there is no evidence of formation of megapolis between Frankfurt and Cologne, as someone would expect. The reason could be reduced business interaction between both regions because Cologne is a cultural center while Frankfurt is a financial and banking center.

In conclusion in main regions Cologne and Frankfurt no significant changes in economic impact were described as a result of Inter-City Express. However the increase in accessibility of high speed intermediate stations such as Limburg, Siegburg and Montabaur to Frankfurt and Cologne promoted rise in economic development. The increase in market access influenced on the increase in GDP, higher employment possibilities, increase in real estate price, variation in access to market and reduced travel time.  

Why are Transport Projects so Important for Our Economic Development?

By Evgenia Ivanova

As the US President Barack Obama has once said: “A major new high-speed rail line will generate many thousands of construction jobs over several years, as well as permanent jobs for rail employees and increased economic activity in the destinations these trains serve.” The quote is indeed true and it made me think how we rarely have the chance to stop for a moment and consider the positive economic benefits of transport projects. Their tremendous impact on the way we live not only shortens the distance and brings us close together but they also alter our environment through agglomeration formation. The high-speed rail (HSR) serving the road between Cologne and Frankfurt in Germany is an excellent example to illustrate my point.

Opened for the first time in 2002 as an Inter-City Express (ICE) high-speed passenger dedicated line, it serves the 177 kilometers distance between Cologne and Frankfurt. With trains running at a speed of 320 km/h, this ICE has reduced the rail time from 2h 15 min to just a bit over an hour for the non-stop services. Less than ten years after the first train started operating, there are plenty of evidence for the positive effects that the ICE line brought for the regional development and the labor markets of the smaller towns interconnected by the service.

Evidence of Agglomeration Formation and Development Impacts

With the construction of the line we observe an increased intra-regional accessibility, where the cities form a band and each city pair is no more than 40 minutes away from each other, thus giving the opportunity of daily commuting. A number of recent studies have analysed the economic effects of better transport accessibility as a result of high speed rails and concluded that there is a tendency of 0.25% growth in GDP for any 1% increase in market access. The existence of the HSR has indeed confirmed the results of these studies and transformed the region by boosting its economic growth and allowing for agglomeration formation (Figure 1).

Figure 1

The most remarkable was the regional economic transformation of the two intermediate stations Montabaur and Limburg on the route. The two cities are located exactly between two major agglomerations - the Rhine-Main area and the Rhine-Ruhr conurbations – and each of them has become more reachable to the traditional employment center-cities Cologne, Frankfurt as well as Wiesbaden. Despite the proximity of the regions around Montabaur and Limburg to large metropolitan areas, until the opening of HSR in 2002, they have preserved their rural character, with high quality of life and affordable land and rent prices. Several months after the beginning of the train services the regions started growing in migration attractiveness due to the lower prices of living there and the lower costs of commuting to the megalopolis cities.

Since Frankfurt is the main employment market in the region and an important hub on the road, which has a better connection and more frequent services especially during rush hours, it attracts the majority of commuters from Montabaur, Limburg and the surroundings. I should mention here that 80% of daily commuters from Limburg and about 60% of commuters from Montabaur travel to Frankfurt using the ICE line. Also a significant number of people chose to reallocate to the smaller towns from the neighboring large agglomerations, which strengthens the recent trend of people moving from the core metropolitan areas to the periphery, seeking higher quality and lower land prices and at the same time having the advantages of shorter and cheaper commuting to their work places.

The impact of the HSR on Montabaur, Limberg and the surrounding regions has been indeed positive. The population gains through the migration of new residents are tremendously important and beneficial, having in mind the demographic problems which Germany, similar to the rest of Europe, is facing nowadays.

Since the line is relatively new, functioning for less than 10 years, there is still no economic boom observed in the regions connected by it. However, the significance of the urbanization tendencies, the residential migration and the increase in the real estate prices as a result of it, give positive prospects and make us optimistic about the future development of the cities.