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Jerry Blackett and HS2 rewards

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The HS2 economic appraisal doesn’t seek to quantify carbon impacts, visual impacts, or productivity impacts on businesses along the line (etc). And ‘wider economic benefits‘ are also excluded. On the GoHS2 blog, Jerry Blackett claims that the HS2 business case underestimates the ‘advantage’ of HS2, because agglomeration benefits aren’t monetised:

The HS2 debate has seen a lot of claims made on both sides as to the veracity of the business case, the environmental case, the capacity case and any other case you’d care to imagine. And I think the anti-HS2 campaigners have a point. The business case doesn’t stack up. It’s far too cautious!

Speaking on behalf of the Birmingham Chamber of Commerce Group – which represents 3000 businesses in the West Midlands – we feel that the business case underplays many of the likely benefits of HS2. Agglomeration benefits, the benefits that accrue when large numbers of people come together in cities and towns, are completely left out of the Department for Transport’s business case. The British Chambers of Commerce have suggested that Birmingham alone could see agglomeration benefits equivalent to £106 per worker per year over a sixty-year period. That’s serious money!

So why hasn’t this huge benefit of HS2 been included in the business case? Well it’s very difficult to calculate. You can’t use a calculator to estimate the chance encounters and the opportunities that manifest when people live in large urban centres and when we make it easier for people to travel between them.

HS2 will make it easier for people to come together over greater distances by removing physical barriers. Agglomeration benefits may be difficult to quantify but they do occur. Our Victorian railways heralded a new era in our industrial and social expansion and they have served us well. But the business community is clear: it’s high time that we invest in a 21st century railway and reap the benefits (including those not included in the DfT’s business case).

Given that the these benefits are “difficult to calculate”, how did the British Chambers of Commerce conclude that “Birmingham alone could see agglomeration benefits equivalent to £106 per worker per year”? Mr Blackett doesn’t identify the document.

If “agglomeration benefits do occur”, are their effects larger with investment in transport within agglomerations, or between agglomerations? With all the HS2 made-up numbers and factoids bandied around, it’s easy to forget that economic appraisals should involve the comparison of alternatives.

Written by beleben

August 26, 2011 at 11:59 am

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