Browse by: "2007"

This paper discusses the role of transportation in policies to address energy security and climate change. It focuses on three elements: the impact of energy prices on transport demand, the potential contributions of the transport sector to energy policies, and the interaction between energy and other policy concerns in transport. Transport is relatively unresponsive to broad-based price signals, in particular to changes in prices of fuels, but there nevertheless is considerable scope to improve the fuel efficiency of vehicle fleets. As a result, we should not expect energy policies to trigger dramatic changes in the nature of transport systems. Furthermore, this unresponsiveness suggests that it is relatively costly to reduce energy use in transport, and thus that efficient policies will probably not extract as much energy savings (in percentage terms) from transport as from other sectors. Reducing energy use in transport can be done with price incentives or with regulatory measures. But if reducing climate change is a primary goal, measures that mandate conservation need to be accompanied by others that make fossil fuels economically unattractive – for example broad-based carbon taxes. Otherwise, fossil-fuel reserves will remain economically usable and therefore will constitute a future source of carbon dioxide emissions. We argue that other transport problems, notably congestion, local air pollution, and accidents, are associated with considerably higher marginal external costs than are climate change and energy security. It follows that policies to deal directly with these other problems deserve high priority, regardless of energy policies.

À l’heure où beaucoup s’inquiètent du financement des Objectifs du Millénaire pour le développement (OMD), les engagements récemment pris par les pays donneurs d’augmenter le volume de l’aide arrivent à point nommé. À elle seule, l’aide ne sera cependant pas suffisante : il faudra de nouveaux acteurs et de nouvelles sources de financement. De nombreux pays en développement en bénéficient déjà, d’où de nouvelles opportunités mais aussi de nouveaux défis pour les gouvernements de ces pays et pour les donneurs. Ce Cahier de politique économique analyse les tendances du financement du développement en s’appuyant sur l’expérience du secteur de la santé au Ghana. De nouvelles sources de financement constituent désormais des alternatives crédibles à l’Aide publique au développement (APD), même pour les « chouchous des bailleurs », pays où l’aide représente un pourcentage élevé du PIB. Cela a des implications politiques importantes. En effet, si ces nouvelles sources de financement ont accru l’enveloppe financière globale, elles posent aussi des défis en matière de suivi et de coordination. Comme le montre l’expérience du Ghana, les pays en développement ont besoin de systèmes d’information plus performants pour prévoir les différents flux et les planifier. Pour accroître l’efficacité du financement, il leur faut également des mécanismes de coordination incluant les nouveaux bailleurs de fonds...

It is a truism that future prices of energy for transportation will be determined by the forces of supply and demand. For transport fuels, these forces have entered a crucial phase that is likely to persist for several decades. Oil production from conventional resources outside of the OPEC countries will peak within a few years. Unconventional fossil resources that can be exploited at current prices, resources whose early development is already well underway, pose an even greater threat to the global climate. To bring these resources to the market at a rate to match the growth in demand for mobility fuels in the developed and developing economies will require massive, risky investments. Serious risks are posed by the environmental acceptability of these fuels and also by the fact that a sudden downturn in world oil prices would turn them into stranded assets. It is also a truism that no one can accurately predict the price of oil. Today, oil costs $70 per barrel. Ten years ago, it cost less than $20 per barrel. Twenty seven years ago oil prices peaked at $90 per barrel. Thirty-seven years ago oil cost only $10 per barrel and its price had been relatively stable for almost fifty years. Those who carefully craft future oil price scenarios know that they are not predicting but rather attempting to define alternative paths of central tendency. Even the best official oil price projections look nothing like the past thirty-five years of history. It is important to understand why this is so. Since 1972, world oil prices have been strongly and unpredictably influenced by the actions of the OPEC cartel. It is very likely that they will be for the next thirty years, as well.

This paper is concerned with the links between agglomeration, productivity and transport investment. If improvements in transport systems give rise to changes in the mass of economic activity accessible to firms, for instance by reducing travel times or the costs of travel, then they can induce positive benefits via agglomeration economies. The paper presents empirical results from an econometric analysis of the relationship between productivity and accessibility to economic activity for different sectors of the UK economy. The results show that agglomeration economies do exist and that they can be substantial, particularly for services. Furthermore, the effect of agglomeration externalities is not trivial when considered in the context of transport appraisal. Initial calculations typically indicate additions to conventional user benefits of 10%-20% arising from increasing returns to economic mass.

Our demand analysis is complemented by ‘bottom-up’ sectoral analysis, which focus on changes in end-user demand – for example, the impact of the switch from gasoline to diesel vehicles in Europe, the effects of the rapid expansion of petrochemical capacity in Asia and the Middle East, or the growing use of natural gas and coal for power generation in Europe. Although this approach provides a valuable comparison with the main ‘top-down’ assessment, its results must be interpreted with caution. For example, will there be sufficient feedstock supply (predominantly naphtha) to sustain China’s petrochemical expansion plans? Will this expansion result in a regional petrochemical surplus, leading to the closure of less efficient plants? Global demand is predominantly driven by two primary forces, price and income. If the assumptions underlying those variables are wrong, then the output of the model will be affected. Similarly, the robustness of the historical data underpinning the model is important. Finally, substitution issues can work in many ways, leading to additional modelling complications. Prices When constructing our medium-term forecasting model, a price assumption was one of the harder concepts to incorporate. The dynamics of the oil market have changed considerably over the past five years and we are unaware of any formal price model that predicted a rise in the oil price from $25 to $90/bbl over the past four years. The seemingly robust relationship between oil stocks in the OECD and prices appeared to break down, Additional inputs such as refining capacity, spare upstream capacity, investment flows, natural gas prices and the term structure changes between spot and forward prices have all had an impact.

With concern about how to finance the Millennium Development Goals (MDGs) widespread, recent donor pledges to raise aid volumes are welcome. However, aid alone will not suffice – bringing in new actors and sources of development finance will be essential. In many developing countries, this is already happening, creating new opportunities and challenges for their governments and donors....

Fast-growing African countries are attracting private equity and risk capital as never before. The conditions attracting private investors are likely to improve.

This paper begins by motivating the need for including “wider economic effects” when conducting transport infrastructure appraisal, followed by a discussion of various techniques to do so. The major focus is on studies from the cost function perspective that incorporate spillover benefits from public infrastructure capital, with a presentation of applications on highways, airports, and ports infrastructure stocks. The substantial differences between approaches focusing on “narrow” and “wider” impacts is evaluated, along with discussion of how application of the tools of spatial econometrics has facilitated estimation of models that capture wider economic benefits.

Assessments of the economic benefits of transportation infrastructure investments are critical to good policy decisions. At present, most such assessments are based of two types of studies: micro-scale studies in the form of cost-benefit analysis (CBA) and macro-scale studies in the form of national or regional econometric analysis. While the former type takes a partial equilibrium perspective and may therefore miss broader economic benefits, the latter type is too widely focused to provide much guidance concerning specific infrastructure projects or programs. Intermediate (meso-scale) analytical frameworks, which are both specific with respect to the infrastructure improvement in question and comprehensive in terms of the range of economic impacts they represent, are needed. This paper contributes to the development of meso-scale analysis via the specification of a computable general equilibrium (CGE) model that can assess the broad economic impact of improvements in transportation infrastructure networks. The model builds on recent CGE formulations that seek to capture the productivity penalty on firms and the utility penalty on households imposed by congestion (Meyers and Proost, 1997; Conrad, 1997) and others that model congestion via the device of explicit household time budgets (Parry and Bento, 2001, 2002). The centerpiece of our approach is a representation of the process through which markets for non-transport commodities and labor create derived demands for freight, shopping and commuting trips. Congestion, which arises due to a mismatch between the derived demand for trips and infrastructure capacity, is modeled as increased travel time along individual network links. Increased travel time impinges on the time budgets of households and reduces the ability of transportation service firms to provide trips using given levels of inputs. These effects translate into changes in productivity, labor supply, prices and income. A complete algebraic specification of the model is provided, along with details of implementation and a discussion of data resources needed for model calibration and application in policy analysis.

In this paper, we review some of the basic energy balance and climate change impact issues associated with biofuels. For both the basic energy and greenhouse gas balances of producing and using a range of fuels, and for the increasingly debated and important issues of non-greenhouse gas impacts such as a land, fertilizer and water use, we conclude that an improved framework for the analysis and evaluation of biofuels is needed. These new methodologies and data sets are needed on both physical and socioeconomic aspects of life-cycle of biofuels. We detail some of components that could be used to build this methodology and highlight key areas for future research. We look history and potential impacts of building the resource base for biofuel research, as well as at some of the land-use and socioeconomic impacts of different feedstock-to-fuel pathways.

The increase in the oil price and the worsening of climate change are fostering biofuels programs around the world. Brazil has a long tradition in biofuels. The country is a large-scale producer of ethanol since the 1970s. In 2006, ethanol was responsible for 17% of all vehicle fuel supply in the Brazil. Brazil’s ethanol production from sugarcane is also recognized by its economic performance. In 2005, Brazilian government has launched a biodiesel program. The aim of this report is to make a critical review of Brazilian ethanol and biodiesel programs. It provides lessons about the potential competitiveness of biofuels vis a vis traditional fuels. The document also presents the potential social and environmental impacts of the biofuels in Brazil. The analysis made in this report has been based on an extensive literature review on the subject of biofuels in Brazil. Interviews with experts have also been made in order to clarify some particular issues. The report is divided in two parts: the first is focused on ethanol program and the second to the biodiesel. The first part of the report is divided into the following sections: i) economic performance; ii) the environmental performance; iii) the social performance; iv)energy security performance; v) Brazil as a world-class ethanol exporter. The second part of the report is divided into the following sections: i) economic performance; ii) the environmental performance; iii) Brazil as a world-class biodiesel exporter.

The increase of carbon dioxide (CO2) in the atmosphere is coursed by an increasing use of fossil fuels; natural gas, oil and coal. This has so far resulted in an increase of the global surface temperature of the order of one degree. In year 2000 IPCC, Intergovernmental Panel on Climate Change, released 40 emission scenarios that can be seen as images of the future, or alternative futures. They are neither predictions nor forecasts and actual reserves have not been a limited factor, just the fossil fuel resource base. This paper is based on realistic reserve assessments, and CO2 emissions from resources that cannot be transformed into reserves are not allowed. First we can conclude that CO2 emission from burning oil and gas are lower then what al the IPCC scenarios predict, and emission from coal is much lowers then the majority of the scenarios. IPCC emission scenarios for the time period 2020 to 2100 should in the future not be used for climate change predictions. It’s time to use realistic scenarios. Climate change is current with more change to come, and furthermore, climate change is an enormous problem facing the planet. However, the world’s greatest problem is that too many people must share too little energy. In the current political debate we presumably need to replace the word “environment” with “energy”, but thankfully the policies required to tackle the energy problem will greatly benefit the environment.

Governments have influenced the development of bioenergy, particularly liquid biofuels (ethanol, biodiesel and pure plant oil used as a fuel), for several decades. This paper discusses the economics of biofuels and provides an overview of current policy measures to support their production and consumption. It discusses also how the different policies supportive of biofuels interact with broader agricultural, energy, environmental and transport policies, and the relative effectiveness of biofuels in achieving objectives in these areas. The paper concludes with several recommendations on further research.

The debate on whether there are wider economic benefits from transport infrastructure investments continues to cause debate and controversy. This debate occurs both between analysts seeking to find a robust method for identifying and measuring the size of such benefits and between policy makers seeking to justify or refute the need for a particular investment. It is timely to review progress on arriving at a consensus view of the contribution of infrastructure to the wider economy which is consistent with best practice in appraisal. This paper will review progress and try to bring out some common themes for discussion. The main aim of this paper is to bring together the various alternative methodological approaches to this problem which differs not just in the detail of the analysis, but more significantly in the scale at which the analysis is undertaken. It is argued that it is of particular importance to understand the way in which changes in the provision of transport affect microeconomic decisions, including those within firms and households, and to understand the operation of markets as well as to model the resultant flows and their macroeconomic consequences.

Economic contributions of investments of transport infrastructure are typically assessed from a microeconomic perspective, which tries to identify the link between specific transport infrastructure improvements and the productivity of specific production units. The traditional economic tool of the microeconomic perspective is cost benefit analysis (CBA), an ex ante tool which tries to capture the benefits of time and cost savings --- as well as further gains from logistical improvements and facilities consolidation made possible by transport improvements --- and the associated costs including external costs. The objective of this Round Table sponsored by OECD / ECMT and Boston University is to identify and move towards methods which incorporate the wider economic benefits of transport infrastructure, not typically captured in the CBA estimates of benefits and costs. The aim of this brief paper is to offer an overview of such wider economic benefits ensuing from transport infrastructure investments.

Bioenergy, including biofuels, could become a substantial tool for mitigating greenhouse gas emissions, locally and globally, possibly providing a large fraction of global primary energy supply by 2020. Exactly how large that share will be is not possible to predict with any precision, being dependent on a complex array of physical, social, economic, technical (innovation) and environmental factors. In addition, there will be competition for biomass resources between the different bioenergy sectors (electricity, heat, transport) and alternative uses e.g. for chemical feedstocks and materials. There will be synergies too, particularly arising through advanced polygeneration and biorefinery supply chains that could help to raise primary productivity and raise resource-use-efficiencies. However, assessing the actual environmental impacts of increased bioenergy and in particular, biofuel usage, will depend sensitively on the scale and mix of technology options employed and on the location. Location is important the fundamental factors that govern biomass productivity vary significantly according to site e.g. soil type, climate, including water availability and temperature. Across a range of indicators, one biofuel may not be the same as another, even where the final fuels are chemically and physically identical e.g. anhydrous ethanol derived from wheat, sugarcane, sugar beet, cassava or from residues.

The transport sector is almost fully dependent on oil-derived products and in both the United States and in Europe this sector contributes with about one third of total energy consumption and about 30 % of the CO2 emissions. The transport sector is forecasted to contribute with 90 % of the increase in CO2 emissions projected for EU in 2010. With the increasing use of oil for transport in China, India and other Asian countries the rush for oil has resulted in increasing prices on oil and a push for production of oil substitutes. Finding alternatives is a key issue and biofuels are expected to be the easiest alternative fuel as no significant changes in the infrastructure or in established vehicles and engines are required. Biomasses play a unique role as raw materials for the production of transport fuels as outlined by US Department of Energy. It is important to understand that biofuels are not always “bio”- and in some situations large scale production will lead to a larger over-all use of fossil fuel and thereby a larger emission of carbon dioxide. Biodiesel produced from rape seed and bioethanol produced from corn might be questionable when it comes to the net energy produced. Furthermore, production of these types of biofuels will occupy land, which might be used for food production and it can further lead to loss of rainforest or deforestation in parts of the world where the new opportunities opens for new developments.

This concluding paper discusses key aspects of the five research papers presented at this Roundtable in terms of their policy applications. It notes problems concerning how policy makers make use of economic analysis findings, and then summarizes the breadth of macro-, meso- and micro-economic methods in terms of their predictive use for infrastructure assessment and planning. It then examines tradeoffs and limitations among all the methods that affect their policy application, and it identifies directions needed to enhance the applicability of future economic models for policy makers.

Les pays pauvres sont vulnérables aux chocs exogènes, qu’il s’agisse des prix à l’exportation ou des catastrophes naturelles, et leur situation n’est pas près de changer. L’incidence des chocs est plus élevée dans les pays aux revenus les plus faibles que dans les autres pays en développement, et les premiers tendent à en pâtir davantage. Entre 1997 et 2001, on y a dénombré en moyenne une catastrophe tous les 2.5 ans. Les chocs induits par les prix des matières premières y sont également plus graves, et on y en recense, en moyenne, un tous les 3.3 ans. Dans environ 26 pays très endettés, les exportations se concentrent à plus de 50 pour cent sur trois matières premières, voire moins, et 62 pour cent des exportations des pays les moins avancés sont constitués de produits primaires non transformés. Les chocs exogènes qui affectent les prix des matières premières obèrent directement et significativement la croissance, et les chocs négatifs sur les termes de l’échange peuvent faire boule de neige. Collier et Sewn (2001) montrent, pour un échantillon de cas dans lesquels la perte directe de revenu équivalait, en moyenne, à 6.8 pour cent du PIB, que la perte de revenu totale corrélée représentait plus du double (14 pour cent du PIB). D’après les recherches, ces chocs négatifs accroissent l’incidence de la pauvreté. Ils ont en outre des répercussions significatives sur les soldes budgétaire et extérieur. Une étude du FMI indique que les chocs liés aux termes de l’échange et aux conditions météorologiques défavorables exacerbent les problèmes d’endettement1.

Infrastructure investment represents large capital values, whereas the benefits and other consequences are extended into the future. This makes methods to assess investment plans an important issue. This paper develops a framework in which infrastructure networks are interpreted as determinants of the spatial organisation of an economy, while the very same organisation is assumed to influence the growth of functional urban regions (FUR) and thereby the entire economy. The suggested framework is formulated so as to facilitate the modeling of agglomeration economies, and hence to separate intra-regional and interregional transport flows. A basic argument is that transport networks should preferably be described by their (physical) attributes, and several accessibility measures are presented as tools in this effort. This type of accessibility measures combine information about time distances between nodes in a FUR and the corresponding location pattern. The attempts to estimate aggregate production functions and associated dual forms is assessed in view of the so-called new growth theory are discussed, and it is concluded that this approach has been more successful when cross-regional data are employed in combination with infrastructure measures that reflect attributes. The discussion of macro approaches is followed by a detailed presentation of how accessibility measures can depict the spatial organisation of FURs and the urban areas inside a FUR. Such measures are candidates as explanatory variables in macro models, although the presentation concentrates on applications in commuting models, and sector growth models. In particular, the paper presents a model in which an individual urban area’s accessibility to labour supply interact with the same area’s accessibility to jobs, in the context of a FUR. Empirical results from Sweden are used to illustrate how the spatial organisation and its change is influenced by the inter-urban networks of urban areas in a FUR. It is also argued that the model is capable of depicting essential aspects of recent contributions to the economics of agglomeration.