Economic Analysis for Melbourne East West Link Needs Assessment

In association with Steer Davies Gleave of UK and Econsearch, GHD provided an economic analysis for the East West Link Needs Assessment (EWLNA) of Melbourne for the Government of Victoria. The purpose of the study was to identify and provide an economic assessment of possible options to best meet the long-term transport infrastructure needs of the city of Melbourne.

The project required the economics consortium to undertake benefit-cost analysis of options to improve transport efficiency through an improved east-west transport link. The options were identified by the East-West Study Team.

The three project streams were:

• benefit-cost analysis, which estimated the direct benefits and costs of the project options (including external benefits or costs such as those arising from changes in traffic emissions);  
• quantitative assessment of the indirect effects of the project by estimating flow-on effects arising from transport infrastructure development on the Melbourne and Victorian economies (through changes in gross state product, gross regional product and employment);  and
• a broad assessment taking into account agglomeration economies that are not at present fully taken into account in traditional benefit cost analysis.

These include the benefits of clustering of economic activity, which allows more workers to be connected with more and better jobs and facilitates more efficient business interaction.   We provided the benefit-cost analysis, focusing on the benefits and costs of the project and contributed to the economy wide assessment.

A key aspect of the study was a sound understanding of passenger and freight flows along and around the east-west link and the importance of increasing the efficiency of freight movements to benefit the Victorian economy.