Vista Research Sets Premises for the Norwegian Debate on Net Ripple Effects
Oslo, 24.11.2023
Research conducted by Vista is an important premise provider in a new article on net ripple effects in the newspaper “Bergensavisen” on Thursday 23 November. The news article concerns the fact that a competing consultancy firm has pulled a consultant's report that finds major net ripple effects of the Hordfast road development project. The background for the retreat is, among other things, the research of Vista partner Rasmus Bøgh Holmen, which indicates that the net ripple effects from transportation measures in Norway are modest.
“Admittedly, my quotes in the case are taken from a different context without further discussions. Nevertheless, it is indeed the case that I am critical of many of the net ripple affect analyses of transportation measures that have been carried out on behalf of Norwegian public authorities. Therefore, on a general basis, I think it is positive that reports are drawn that turn out to be based on a lack of empirical basis,” says Holmen.
– Lack of Empirical Knowledge Foundation
In the 2010s, net ripple effect analyses related to transportation measures were frequently commissioned by Norwegian transportation authorities and local authorities.
“Ten to fifteen years ago, Norwegian knowledge communities had considerable faith that transportation investments could lead to massive net ripple effects. This belief has weakened as new empirical research has emerged. At the same time, I believe that some consultants have gone too far over several years in preparing analyses on a thin empirical basis,” says Holmen.
Still, he emphasizes that there are good theoretical explanations for how net ripple effects can occur.
“In theory, reduced travel times can yield benefits, for example through increased competition, more sharing of common resources, learning synergies and better matching between employer and employee. However, such theoretical arguments should be substantiated empirically before they are used in evaluations of transportation measures,” says Holmen.
He tells that to some extent there are international studies that indicate significant net ripple effects, but that these have been conducted in far more urban areas than we have in Norway.
“Once upon a time, the economic dynamics are different in Larvik and Trøgstad than they are in London and Tokyo. There are also some examples of studies in somewhat smaller urban areas supporting large net ripple effects, but these often have questionable empirical designs,” he says.
– Finds Limited Net Ripple Effects from Norwegian Transportation Measures
Holmen has conducted empirical studies of net ripple effects from road investments in Norway. Among other things, he has investigated the impulses from the major road projects in Southern Norway in the 2000s and 2010s.
“There are relatively many people living along the Southern Coast of Norway, while the geography is relatively clear, and the timing of the developments does not follow the local market potential. Thus, this area should be well suited for studying productivity impulses and other net ripple effects of transportation measures. Unfortunately, I find few signs of net ripple effects at both disaggregated and aggregate levels other than relatively modest effects on commuting and industry structure,” says Holmen.
He points out that some effects on commuting and regional distributional effects have also been found in other Norwegian studies. Since Holmen's study of Southern Norway and other Norwegian studies with negative results became known around 2020, interest in net ripple effect analyses in Norway has largely collapsed.
“In summary, I think it's positive that Norwegian authorities and consulting firms have taken a more sober attitude to net impact analyses related to transportation measures. Of course, I would still like to welcome more empirical studies on net efficiency analyses in transportation and other sectors,” Holmen concludes.
The newspaper article can be downloaded here.
In the article, one can inter alia read:
'The Environmental Protection Association has questioned Menon Economics about the dramatic differences between the 2019 and 2002 reports.
The company explains that research has moved very quickly after 2019. They also add that they do not want to be drawn into any public debate on the matter, but state that they "could not fail to inform Hordfast AS about the professional development in the field".
To a large extent, they refer to research from Rasmus Bøgh Holmen. In a broadcast from the Norwegian Polytechnic Association, Bøgh Holmen says that there is very little reason to trust this type of analysis.
One of them stated that the ferry-free E39 from South to North would yield gains of NOK 122 to 273 billion.
“If the effects were so enormous, we could have just invested a lot in the road, and then we would have solved the problem about what we should live on after the oil,” says Bøgh Holmen.
But the researcher found no such effects to talk about when he looked at the effects of the massive road construction that has taken place in southern Norway over the past 15 years.
“Shit doesn't become confectionery if you wrap it in gold foil,” Bøgh Holmen concludes.
“The authorities should face the facts and embrace them,” he sums up.
This autumn, Øyvind Halleraker and former Stord mayor Gaute Epland met with the government to talk about Hordfast.
He said he did not use the Menon figures from 2019 in his meetings with decision-makers, but that he referred to the Road Administration's own figures on the project's social benefits.'
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