How accurate do CBA forecasts projections tend to be, in practice?

However, as roads are long lived assets, the aim should really be to widen the net as far as possible. I live in Auckland and am a regular traveller into Northland. The Puhoi – Wellsford upgrade has been demonised as the ‘holiday highway’ but to the people of Northland it can’t come soon enough. Why?

The current road is a narrow two lane pig with limited passing opportunities. It has speed reductions, a number of very nasty curves and has a very significant bottleneck in Warkworth. The traffic on the road is significant given its current design and structure.

So one of the benefits is quicker travelling times – that’s important when you have a significant bottleneck through Warkworth both north and south. It will remove all the difficult curves and provide a safe four lane expressway.

So what are the wider benefits? Firstly, it will make it easier for Warkworth to expand to the west – currently SH1 cuts the town in two. Secondly, I’m sure you are all aware of Auckland’s house prices – by lowering travelling times and developing a safer route it makes Warkworth a more viable satellite suburb for Auckland and in particular the North Shore – so over time the benefits include increasing population around Warkworth and therefore increasing patronage on the road.

It will also improve the quality of life for residents in Warkworth who will no longer have major queues, noise and the other delights of traffic rumbling clear through the middle of their town. And many of the people living in Warkworth and environs are elderly… so better transport links means better and faster access to hospital and medical care in Auckland (North Shore).

Now these points I am making are at the ‘blue sky’ end of things, but they are nevertheless real. They are hard to quantify onto a spreadsheet and probably represent a ‘fat tail’ in a normal distribution – value to the community but hard to put a number on… the usual response is to ignore them… but ignoring them for the tidiness of a BCR calc doesn’t mean they don’t exist…

So the government has committed to a project that has not even been defined yet. I found this strange at the time.

Not sure that you are on the right track – blaming public servants. Under the last government these types of projects were subject to cost benefit analysis. They are still undertaken, but seem to be ignored. The Bureaucrats haven’t changed much – so its probably something else. (And I suspect to start with that it was a desire to build anything in order to keep the economy ticking over after the GFC, but not sure what sustains the practice of ignoring this type of input to decisions)

Based on what you did today – am looking forward to the next one

haha, no worries, the blog is pretty Matt dominated so I’m not offended! We only recently changed it so that avatars show up next to posts since a few of us are writing more these days:)

Sorry about that Will, I need to pay more attention

I think your second para is the crux of the debate currently happening in Auckland, and why I have recently become very interested in the debates around PT and density in Auckland. Sounds like that is what Auckland is trying to do, though, and this isn’t an accurate source, my twitter feed suggests that a few important measures for density have been rolled back at the final stage in the last week. I have randomly been out to Botany and Howick a couple of times recently…if that doesn’t convince you density is a good thing then nothing will!

I mostly agree with your point about a proper metro/PT, the cities I have visitied and really enjoyed have generally been those with great PT/proper metro, but that could be a biased perception because PT reliant cities are easier for tourists. Though I think there is a fair amount of cross over with what’s pleasant for tourists and residents.

I think PPPs can be good in lots of ways. Aussie state govts have a rep for running a competitive process, lots of tendering so bidders have to sharpen their pencils. Another positive is that a portfolio of infrastructure equity and debt can be quite good thing for pension funds and individual investors, if the equity’s not too levered.

I wonder how they do the BCR analysis for the CRL, as it seems one of those threshold items without which you can never become a top tier city (I can’t think of a great city without metro rail – the closest candidate being LA, but I think its lack of a decent rail system stops it from being in the same tier as New York). I think you would need an Ed Glaeser type analysis to estimate the true increase in productivity. On the other hand, PT is a waste of money unless you simultaneously allow the denser living arrangements that make it viable. I’m not sure Auckland’s completely there yet, although it’s moving in the right direction.

Interesting, reading that abstract made me want to laugh and cry – often the sign the of good article!

It did make me wonder about how this interfaces with PPPs and whether they solve any of the issues. I guess you still have the issue that the government is picking the projects, so you don’t necessarily get the “right” projects. Guess I will have to read the article to find out what the potential solutions are since it is only teased in the abstract!