A couple of months ago the Waterview Connectio tunnel was somehow re-costed at around a billion dollars more than what it was expected to cost previously. So just under $2 billion went up to just under $3 billion, due to financing costs being included for the first time (why weren’t they included before I wonder?), upgrades to state highway 16 being included in the cost (though I don’t really know why considering that’s a completely separate project) and the concept of 3 lane tunnels rather than 2 lane tunnels being revisited (which would push the cost close to $4 billion probably). All this extra cost made the project pretty damn hard for the Ministry of Transport to continue to justify. A few interesting points on the cost/benefit ratio are included below:
The benefit/cost ratio for the Waterview Connection in 2015 is 1.15, including financing costs for construction. The benefits overwhelmingly arise from travel time savings and congestion cost savings. The Waterview Connection also has some benefits from reducing volumes of some air pollutants in the vicinity of the project. On the negative side, accident costs marginally increase as a result of constructing the Waterview Connection. Other benefits and costs such as vehicle operating cost savings, CO2 emission reductions and impact on noise have also been assessed but these are minor. Finally, an estimate has also been made of agglomeration benefits and the economic costs of financing this project from taxation. While both are substantial, they largely offset each other.
The calculation of time-saving benefits are incredibly dodgy, but let’s leave that aside for a minute. The fairly low cost-benefit ratio leads to the following points being made:
A ratio of $1.15 for every dollar invested means that total social and economic benefits are only a little in excess of the total costs. This is because the high cost of tunnelling relative to surface roads largely offsets the significant benefits of building the Waterview Connection. To put it into context, we note that the Waterview Connection is six to nine times as expensive as a comparable length of motorway at the Mt Roskill State Highway 20 extension and the recently awarded Hobsonville SH18 project. If the project were delayed by ten years, the benefit/cost ratio is estimated to increase significantly to 1.7.
One starts to get an idea about how supremely expensive this link is. So the conclusion of the Ministry of Transport’s study, to look at other options, seems to have some sense. Well, that is until we look at the various costings of these other options (which NZTA have already done, considering they’ve been looking at options for this project over the past decade). Before I share those figures, it is very interesting to see what the report has to say about the prospect of tolling.
Toll modelling suggests that a toll of $2 would support around $410 million of debt. However, it would cause significant traffic diversion. We estimate that a toll of this size would reduce economic benefits by $395 million. It would reduce the benefits of the project to just $1 for every dollar invested. This compares with a cost of general taxation of around 20c for each dollar of revenue. Consequently, tolling may not prove a viable funding option for the Waterview Connection.
I guess I have kind of always figured this route would end up tolled. Its cost is about the same as all the rest of the Western Ring Route combined, so it would certainly make sense for the users of that route to share in the extremely high cost of the project. Yet, it seems that even with a very low toll of around $2 per trip, enough people would be put off from using the road to make its “economic benefits” (largely time savings) small enough for the project to be completely unviable from an economic perspective.
OK, well anyway let’s look at what the alternatives to the super-expensive tunnel might be. These costs come from the last page of the previously linked to document:
Well my reading of all this is that there is no cheap option. Even a rubbish open cut option, which would have horrible environmental effects, is $1.5 billion in 2015 dollars. That’s only $500 million less than the full tunnel option… All other options come somewhere in betwee, except for an alternative alignment going via the Rosebank Peninsula instead of through Waterview. This option comes in at the huge cost of around $2.9 billion.
But there have been rumours of some magical quick-fix. The Auckland Business Forum proposed some partial cover option they magically think will only cost around $1.2 billion (I guess they haven’t looked at the image I posted above). A well connected person I know says that the plan is to build a 700m cut and cover tunnel underneath Great North Road – to save some money but not destroy the Oakley Stream too much. This would certainly be an interesting possibility, but would have traffic management nightmares and once again probably wouldn’t end up that much cheaper than the full tunnel option.
Just so it’s completely clear, I am not necessarily a huge fan of the Waterview Connection proposal. I think that it’s pretty crazy to sink such a huge amount of money into one 5km stretch of road. The billions we’re talking about here could achieve amazing results for other aspects of Auckland’s transport system (CBD rail loop, rail to the airport, etc.). Coupled with peak oil, and the need to actually reduce our auto-dependence (not increase it) to help cut our CO2 emissions, it seems totally insane to spend that much on the Waterview Connection. However, if it is to be built then – in my opinion – it simply has to be the tunnel. Any surface option, part-surface option or whatever would simply be a disaster for the area. The loss of open space would be huge, the noise and air quality effects would be tremendous and the motorway would create a huge gash through the suburbs of Owairaka, Avondale and Waterview.
I would love to say that a surface option would never make it through the resource consenting process, but as National are in the process of trying to gut the Resource Management Act for the very purpose of assisting projects like this to get through “without the annoying interference of the public”, I can’t be too hopeful.
Processing...