Sunday, January 8, 2012

SR-520 Bridge Project: Reconnecting Seattle

by Brandon Musser






Dubai as a Logistics Cluster

by Giorgi Machavariani














Construction Cluster - First and Successful Clustering Experience of Ukraine

by Denis Nedin










Table 1. Main indicators of construction cluster



Saturday, January 7, 2012

Shrinking the Atlantic Ocean – A Case of Transatlantic Superspeed VacTrain

by Shota Gvaramadze








Saturday, December 24, 2011

Texas Toll Roads: The Flawed Benefits and Costs

by Alexander Simmons

As Texas is faced with a burgeoning population and further economic development, its poor transportation infrastructure becomes a greater issue. In the past decade, the state has chosen to address this problem through toll roads financed by public-private partnerships. Currently, Texas lawmakers are debating building new toll roads or converting already existing highways into tolls. In theory, tolls help improve the mobility of the local population, prevent congestion, ameliorate road quality, decrease the amount of time needed to construct roads, increase development, boost productivity from time saved, and avoid tax increases. Many of these benefits are indeed factual and have little tradeoff; however, others are flawed. Moreover, there are costs associated with toll ways that policymakers seem unaware of. With its already widespread usage and possible expansion, it is important that policymakers consider the tradeoffs associated with toll roads.

Flawed Benefits
Theory states that new toll roads decrease congestion by providing new road alternatives. However, toll roads often only solve congestion problems for a small portion of the population. Residents within a mile from the toll road usually get the highest amount of usage, while those further away are relegated to other more congested routes. Additionally, many citizens cannot financially afford to drive tolls regularly. Thus, there ends up being a lopsided share of traffic between the two road networks and lifestyle inequality. The toll ways are usually uncongested and sometimes receive sparse usage, while the free roads face heavy traffic that result in travel times that are twice that of the tolls.

Theory urges that toll ways improve consumer access to local business and thus, further economic development along the road. However, there is little evidence to support this in the short run. According to Sukumar Kalmanje’s research, Texas toll ways attract additional trips to local business by a negligent 1% and thus, have almost no effect on short-term development. Although, in the long run, it is likely that economic development will follow the route of the toll way and lead to agglomeration. Unfortunately, there is not enough evidence from Texas toll ways to support this argument.

Tax Increases
Due to Texas’s balance budget requirement, road funding cannot be done without either cutting another government program or increasing taxes. In theory, toll ways opt as a method of building roads without increasing taxes. Yet, tolls are essentially a consumption tax on driving. Instead of paying a road tax in a lump sum, residents contribute on a daily basis.

Toll Price Increases
Currently, all toll contracts in Texas grant private contractors the right to raise toll prices on an annual basis. These increases are often tied to an inflation based index or revenue maximization formula. Proponents insist that road prices should increase proportionally with the prices of other goods. However, this argument ignores importance of roads. Consumers have the option to remove other goods from their consumption basket, but cannot do the same with driving. Additionally, price increases are allowed during recessions or oil shocks and successfully worsen downturns.

Politically Unpopular
There is widespread distain for tolls in Texas. Despite their many benefits, Texans view them as a form of double taxation and resent the constant increase in prices. At some point, the general consensus of the population must be considered by representatives.

Unwanted Foreign Influence
Since most toll roads in the United States have been built by public agencies, there is virtually no private sector toll industry. Therefore, large toll contracts are frequently given to foreign companies. In the midst of an economic downturn and growing concerns of globalization, many critics cite this as a poor economic practice and claim it exposes the United States to security risks. In reality, the foreign firms originate from strong ally countries and employ almost entirely Americans on the projects. Thus, the foreign influence has no measurable negative effect. However, while this argument is not realistic, policymakers still must consider the general perception of the public.

Opportunity Costs
As with any government sponsored project, there are opportunity costs policymakers should consider. In this case, it its best to look at the opportunity costs within transportation infrastructure improvement. For instance, funding could be directed to public transportation options, which are severely lacking in Texas. If the general stigma attached to public transportation in Texas could be overcome, the economic gains and those that benefit could be much greater than in any road project. However, large scale public transportation projects require a substantial investment and at this point, there is little political support for such spending.

As policymakers debate about how to solve Texas’ infrastructure issues, it is important that they properly measure the often cited benefits of toll ways with the costs mentioned above. If purely publicly funded roads without tolls are no longer an option due to budget constraints and public transportation projects are off the table, toll roads built via public-private partnerships may indeed be the best option for Texans. However, this does not mean that policymakers can accept toll projects naively and ignore taxpayers’ opinions. 

Crossing the Scandinavian Waters: Oresund Bridge

by Katalin Molnarfi

Copenhagen is a fairly small, but rather cool and well-run city, dressed with posters advertising green energy. Though nothing characterises it more than its delicate Oresund Bridge, the longest of its type in Europe, and winner of the IABSE Outstanding Structure Award. Board a train in Copenhagen and in a comfortable twenty minutes you will find yourself in Malmo, Sweden's third-largest city. The Copenhagen international airport is also a mere fifteen minutes far away, connecting the bridge with the rest of the world. This year marks the 11th anniversary that Sweden and Denmark opened their much-talked-about bridge-and-tunnel across the Oresund strait, four months ahead of the original schedule and under budget . Yes, ahead. These Nordic people are an exceptionally professional bunch.

Denmark with its more than 400 islands is understandably ideal for bridge-lovers and already boasts two of the world's most impressive: the Great Belt Fixed Link between East- and West Denmark, and the Oresund bridge. And how about linking eastern Denmark more directly with Germany’s Baltic Sea coastline, a three-hour direct journey to, say, Hamburg? The government has already announced an even grander project for the country's biggest large scale fixed-link: a 19-kilometre road and rail bridge across the Fehmarn strait between Denmark and Germany in order to create a new growth area, similar to the development that has taken place in the Oresund region .

Birth of a new region
The Oresund brigde undeniably folstered growth, giving boost  to both Malmo and Copenhagen. It was designed to serve an explicit dual purpose: cross-border integration, with a particular emphasis on regional productivity, and competitive vitality, as well as the concentration of the North-European pattern of traffic flows. It should function as a backbone of the Oresund Region in order to abolish economic, administrative, institutional, cultural and other barriers, in one common urban system - the integration of Greater Copenhagen and the Malmö-Lund agglomeration, while encouraging citizens to cross the shared border more easily, and give incentives to foreign investors to use the area as a hub of development. Today's Oresund region  with a population of over 3 M produces 26-27 % of Sweden and Denmark's joint GDP, being of  the the most buoyant region in Scandinavia.

A common labour market
The bridge has turned the Oresund area into a single job market. As the  time-distance barrier was reduced dramatically, and the land-see bottleneck was eliminated, the traffic is steadily increasing: every day: 20.000 people commute to work between Sweden and Denmark. A daily average of 19.400 vehicles crossed the Oresund bridge in 2011. All forms of trafic have increased, but commuting has shown the strongest increase by far. Though the past three years brought low growth years for the bridge, mainly as a result of a sharp fall in economic activity caused by the turmoil of the financial crisis, the traffic did not decrease until 2010 (also due to the Swedish krona, which then recovered its former strength in 2010). In addition to greater accessibility, growth in commuting has been driven by the dramatically rising house prices, as well as the increased workforce shortages in the Greater Copenhagen area. Commuting is, therefore, embarassingly one- directional, with around 96 per cent of all commuters living in Sweden and keeping their jobs in the other side of the Oresund. In general, commuters are well-educated and well-paid young people, being pronounced targets of the bridge's policy.

Nordic countries: a happy family?
Nordic identity is alive and well: these countries have a great many things in common, though the Swedes and the Danes were not always the best friends through history (the Oresund area was under Danish authority until 1658). There is certainly a Nordic way of doing business for instance, with consensus as its main watchword. The Nordics put  greater emphasis on partnership and co-operation than most other European counterparts. Then there is religion, Martin Luther, whose reforms left a powerful cultural and moral legacy, leading to exceptionally successful, export-oriented economies. However if the two countries on both sides are to prosper together, Danes and Swedes will have to make efforts of further harmonising labour, tax and social policies. The Oresund region could therefore become a laboratory of transnational regional co-operation within the EU. Development towards a bi-national, integrated, functional urban region is in progress, though the space is much slower, than expected, but doing fairly well. 

Importance of the First Nature Geography in Regional Development

by Otabek Saydikaharov

Spatial inequality in a country could be because of the natural advantages of some regions comparing to others and also due to the agglomeration effects which might lead to clustering of activities. Advantage of first nature geography simply means that being close to rivers, coasts, ports, forests etc. some regions may benefit from natural endowments through specialization in certain type of activities like fishing , growing crops and forestry. A few decades ago, there were two regions in Uzbekistan, Karakalpakstan and Khorezm benefiting from water endowment of Amudarya and Syrdarya rivers and of formerly one of four largest lakes in the world, the Aral Sea. During the Soviet Union, Karakalpakstan and Khorezm specialilised in rice production and were one of the main rice-producing regions in the Soviet Union. After the independence those regions’ specialization did not change and they continued to be Uzbekistan’s largest rice producing regions.

However, during the Soviet Union period two main rivers which are sources of the Aral Sea, the Amudarya and Syrdarya, were channeled only to irrigation and substantially used for agriculture especially in the aim of increasing the amount of cotton and rice production. Unsustainable irrigation projects like a massive irrigation in the Kyzylkum Desert were introduced during this period, and continuing irrational use of water sources after the collapse of Soviet regime created a very serious problem - the evaporation of Aral Sea (see figure 1).

The disaster of the Aral Sea caused huge devastating economic problems especially for the local people in Karakalpakstan and Khorezm who were generating their income only depending on the endowments of the first nature geography. In rural areas of these regions majority of population depend on their farming lands for the livelihood however because of water shortages these lands adversely affected and polluted and as a consequence local economy decreased and rural population encountered economic hardship, malnutrition and illness. The drought in 1999-2001 had a severe effect on Karakalpakstan’s rice production. The agricultural land area decreased and total rice production fell from 414,000 in 1999 to175, 000 tons in 2000.

Once in Karakalpakstan tens of thousands of people were employed in fishing industry but now as a result of careless use of first nature geography this industry no longer exists causing the increase in unemployment rate and threat to poverty. According to the assessment of certain organizations the drying up of the Aral Sea has led to direct and indirect socioeconomic costs of USD 144 million in total.

Substantial amount of chemical pesticides were used in lands to increase the cotton production, and later when country faced water shortages those lands instead turned to be the source of danger. Winds then scattered the dust of chemicals to the surrounding areas causing health problems for the habitats and also damaging the agricultural deeds. According to observations, there are up to 10 major dust and salt storms occurring a year in the region and they are often between 150 and 300 km wide. In these regions, people are mostly suffering from protein and vitamin deficiencies resulting from malnutrition as well as anemia, tuberculosis, immunological problems, birth defects, children’s liver, kidney and respiratory diseases because of ecosystem contamination. The increase in levels of such various diseases has already become one of the main concerns of the government.

Due to the irrational immense use of first nature and myopic regional policy in the past, the current government encountered long term adverse impact of past experience. In order to increase the production of cotton and rice in water abundant regions so as to increase export, careless use of water resources brought huge cost to the government.  The government has been looking for possible ways to recover the Aral Sea and consequently ecosystem condition of that region. One of the options was to bring water from Caspian Sea but after estimations it was found to be too costly. Since it was believed that there is no way which can totally recover the previous condition of Aral Sea regions the government let the habitats of Karakalpakstan and Khorezm to migrate to the capital and get residence permit without any difficulties. As a result of huge migration and increased demand for houses, house prices soared up in the capital which made much more difficult situation for middle class citizens to buy a house in the city.

Since first nature geography matters a lot in the process of individuals’ and firms’ decision making about locations to live or operate, each policy implemented by government should also take its importance in regional development into account. Otherwise, adverse impact might occur and cost the government considerably in the long term as happened in Uzbekistan.

Figure 1. The Shrinking of the Aral Sea: Socio-Economic Impacts