Agglomeration externalities: a missing piece of the project appraisal puzzle?

Author(s)
Longworth, T.
Year
Abstract

This paper examines a potential source of project benefits that is referenced in overseas guidance but is apparently absent from local guidance and practice, at least in NSW. These relate to agglomeration externalities. The concept is that the larger an urban agglomeration is within a certain geographic or travel time footprint, the higher that agglomerations economic productivity will be, i.e., for a given set of inputs, output will be higher, if the degree of agglomeration is higher. If this is correct, then if a transport project were to result in travel time savings and thereby bring an existing agglomeration closer together, there would be a travel time saving (currently included in an appraisal) plus some additional value of output as a consequence of improved productivity. This paper undertakes a brief review of the literature on agglomerations and how they might relate to transport in the next section. It also examines several project appraisal guidelines to see how this concept is treated. Subsequently, the methods applied and data sources used in this study are described. Results of the analysis are then presented, along with a discussion and a conclusion. (a) For the covering entry of this conference, please see ITRD abstract no. E217541.

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Publication

Library number
C 48542 (In: C 48527 [electronic version only]) /10 / ITRD E217357
Source

In: Proceedings of the 31st Australasian Transport Research Forum : transport's role in delivering economic prosperity, liveability and sustainability, Holiday Inn, Gold Coast, Queensland, Australia, 2-3 October, 2008, 23 p., 36 ref.

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