MADRID METRO LINE ACCESS TO BARAJAS AIRPORT

Transcription

1 EX POST EVALUATION OF INVESTMENT PROJECTS CO-FINANCED BY THE EUROPEAN REGIONAL DEVELOPMENT FUND (ERDF) OR COHESION FUND (CF) IN THE PERIOD MADRID METRO LINE ACCESS TO BARAJAS AIRPORT REPARED BY : BARCELONA IN PARTNERSHIP WITH CSIL, C ENTRE FOR I NDUSTRIAL S TUDIES, M ILAN P CENIT, C ENTRE FOR I NNOVATION IN T RANSPORT, P REPARED FOR: EUROPEAN COMMISSION DIRECTORATE-GENERAL REGIONAL POLICY P OLICY DEVELOPMENT E VALUATION B ARCELONA, S EP TEMBER 5, 2012

2 This study is carried out by a team selected by the Evaluation Unit, DG Regional Policy, European Commission, through a call for tenders by open procedure no 2010.CE.16.B.AT.036. The consortium selected comprises CSIL Centre for Industrial Studies (lead partner Milan) and DKM Economic Consultants (Dublin). The Core Team comprises: - Scientific Director: Massimo Florio, CSIL and University of Milan; - Project Coordinators: Silvia Vignetti and Julie Pellegrin, CSIL; - External experts: Ginés de Rus (University of Las Palmas, Spain), Per-Olov Johansson (Stockholm School of Economics, Sweden) and Eduardo Ley (World Bank, Washington); - Senior experts: Ugo Finzi, Mario Genco, Annette Hughes and Marcello Martinez; - Task managers: John Lawlor, Julie Pellegrin and Davide Sartori; - Project analysts: Emanuela Sirtori, Gelsomina Catalano and Rory Mc Monagle. A network of country experts provides the geographical coverage for the field analysis: Roland Blomeyer, Fernando Santos (Blomeyer and Sanz Guadalajara), Andrea Moroni (CSIL Milano), Antonis Moussios, Panos Liveris (Eurotec - Thessaloniki), Marta Sánchez-Borràs, Mateu Turró (CENIT Barcelona), Ernestine Woelger (DKM Dublin). The authors of this report are Mateu Turró and Marta Sánchez-Borràs (CENIT - Barcelona) and CSIL for the CBA. The authors are grateful for the very helpful comments from the EC staff and particularly to Veronica Gaffey, José-Luís Calvo de Celis and Kai Stryczynski. They also express their gratitude to all stakeholders who agreed to respond to the team s questions and contributed to the realisation of the case study. The authors are responsible for any remaining errors or omissions. Quotation is authorised as long as the source is acknowledged. Cover: Metro station Aeropuerto T1 T2 T3. Source: Urbanrail.net.

3 TABLE OF CONTENTS EXECUTIVE SUMMARY PROJECT DESCRIPTION CONTEXT STRUCTURAL FEATURES AND SERVICE DELIVERED TARGET POPULATION CURRENT PERFORMANCE ORIGIN AND HISTORY CONTEXT FOR THE PROJECT KEY STAKEHOLDERS AND MANAGEMENT STRUCTURES MAIN DEVELOPMENTS SINCE COMPLETION HAS THE PROJECT STABILISED? LONG-TERM DEVELOPMENT EFFECTS KEY FINDINGS DIRECT ECONOMIC GROWTH ENDOGENOUS DYNAMICS TERRITORIAL COHESION SOCIAL COHESION ENVIRONMENTAL EFFECTS INSTITUTIONAL QUALITY SOCIAL HAPPINESS DETERMINANTS OF PROJECT OUTCOMES APPROPRIATENESS TO THE CONTEXT PROJECT DESIGN FORECASTING CAPACITY MANAGERIAL RESPONSE PROJECT GOVERNANCE INFLUENCE OF AND INTERPLAY BETWEEN DRIVERS CONCLUSIONS ANNEX I. METHODOLOGY OF EVALUATION ANNEX II. COST-BENEFIT ANALYSIS ANNEX III. MAP OF STAKEHOLDERS ANNEX IV. LIST OF INTERVIEWEES ANNEX V. REFERENCES

4 LIST OF ABBREVIATIONS AENA ATM ATO ATP CBA CF CM CRTM DG Regio EC EIB EMT EU GDP GHG ICP IFEMA INE IRR MINTRA NPV pax PPP RACC RENFE Spanish airports and air navigation (Aeropuertos Españoles y Navegación Aérea) Metropolitan Transport Authority (Autoritat del Transport Metropolità) Automatic Train Operation Automatic Train Protection Cost-Benefit Analysis Cohesion Fund Community of Madrid (Comunidad de Madrid) Regional Consortium of Madrid Transport (Consorcio Regional de Transportes de Madrid) Directorate General for Regional Policies European Commission European Investment Bank Metropolitan Body of Transport (Entidad Metropolitana del Transporte) European Union Gross Domestic Product Greenhouse Gas Index of perceived quality (Indicador de Calidad Percibida) Institute of Madrid Fair (Institución Ferial de Madrid) National Institute of Statistics (Instituto Nacional de Estadística) Internal Rate of Return Madrid Transport Infrastructures (Madrid Infraestructuras del Transporte) Net Present Value Passengers Public-Private Partnership Royal Automobile Club of Catalonia (Real Automóvil Club de Cataluña) National Network of Spanish Railways (Red Nacional de Ferrocarriles Españoles)

5 S.A. TEN-T TFM UIC VVTS WGI WHO Public Limited Company (Sociedad Autonoma) Trans-European Transport Network Railway Transport of Madrid (Transportes Ferroviarios de Madrid) International Union of Railways Value of Travel Time Saving Worldwide Governance Indicators World Health Organisation

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7 EXECUTIVE SUMMARY This case study illustrates the story of the Madrid Metro Line 8, a major infrastructure investment co-financed by the EU over the period More specifically, this is an expost evaluation assessing the long-term effects produced by the project and interpreting the key determinants of the observed performance. The analysis draws from an ex-post Cost- Benefit Analysis (CBA) 1 and from an extensive set of qualitative evidence, both secondary (technical reports, official reports, press articles, books and research papers) and primary (interviews with key stakeholders and experts have been carried out in the period March to November ). The overall approach and methodology followed in the evaluation study is briefly recalled in the box overleaf and more extensively in Annex I. OVERALL APPROACH AND METHODOLOGY The Conceptual Framework delivered in the First Intermediate Report has been developed from the evaluation questions included in the ToR 3, and further specified and organised in accordance with the study team s understanding. In particular, the Team identified three relevant dimensions of analysis: a. The object of the evaluation (the WHAT ): this relates to the typologies of long-term contributions that can be observed. Starting from the typologies identified in the ToR (socio-economic development and quality of life) the Team developed the following classification of long-term effects: Economic development (including effects on GDP growth and endogenous dynamics) and Quality of life, taken here to be synonymous with additional social wellbeing, i.e. including effects that are not captured by the economic variables. Quality of life, in turn, has been divided into: social cohesion, territorial cohesion, institutional learning, environmental effects and social happiness. b. The timing of the long-term effects (the WHEN ): this dimension relates to the point in the project s lifetime at which the effects materialise for the first time (short-term dimension) and stabilise (long-term dimension). The proper timing of an evaluation and the role it can have in relation to the project s implementation is also discussed here. c. The determinants of the project s performance (the HOW ): the assumption here is that five aspects of project s implementation and their interplay are crucial for the project s final performance. These aspects are: project design, forecasting capacity, governance, context and managerial response. Five Working Hypotheses are related to these dimensions and explain how each of them can influence the generation of the project s short or long-term effects. On the basis of this conceptualisation, a set of detailed evaluation questions are developed, which aim to guide the entire study and to support the provision of conclusions and recommendations. The methodology developed to answer the evaluation questions consists of a combination of quantitative (Cost Benefit Analysis) and qualitative (interviews, surveys, searches of government and newspaper archives, etc.) techniques, integrated in such a way as to produce ten project histories. CBA 1 Data, hypotheses and results are discussed in Annex I. 2 See Annex III for a detailed list of interviewees. 3 They are the following: What kind of long-term contributions can be identified for different types of investment in the field of environment and transport infrastructure? How are these long-term contributions generated for different types of investment in the field of environment and transport infrastructure, i.e., what is the causal chain between certain short-term socio-economic returns and long-term returns from investment? What is the minimum and average time needed for a given long-term contribution to materialise and stabilise? What are these time spans for different types of investment in the field of environment and transport infrastructure? What are the existing evaluation methods to capture a given long-term contribution for different types of investment in the field of environment and transport infrastructure? 1

8 is an appropriate analytical approach for the ex-post evaluation because it can provide quantification of or indications of some of the long-term effects produced by the project. However, the most important contribution of the CBA exercise is to provide a framework of analysis to identify the most crucial aspects of the projects ex-post performance and final outcome. Qualitative analysis on the other had is more focussed on understanding the underlying causes and courses of action of the delivery process. On the basis of the findings of the ten case studies, the Final Report will draw lessons along the key dimensions identified of what, when and how. Source: CSIL Milano Line 8 of the Madrid Metro is an external radial line of the network, which runs between the centre and the northeast of the city linking the core business centre of Madrid and Barajas International Airport. Line 8 offers a quick and reliable public transport connection to residents and employees of businesses located near its stations in central Madrid and in Barajas village. Located 12 km to the East of the Madrid municipal area, Madrid-Barajas airport is a major national and European airport handling close to 50 million passengers and over 685,000 tonnes of freight per year. Barajas has always had very good access by road - indeed it was the European airport with the highest share of people accessing by car (86.7% 4 ) - but, until 1999, it was not efficiently connected to the city via reliable public transport. There was, thus, a wellestablished need to improve public transport connections to Madrid-Barajas airport. Since the late Sixties, the idea of connecting Madrid s city centre with the airport by rail had been under study; however, it was not until the approval of the metropolitan rail network Extension Plan ( ) that the idea was seriously considered. During the Nineties, Madrid s and its peripheral districts population experienced a significant process of urban expansion as well as a relocation of economic activities, mostly to the outskirts of the metropolitan area. This led to a substantial growth in mobility between the city of Madrid and its surroundings, which provoked heavy congestion on Madrid s access routes. In this context, the creation of a Metro Line was considered the best option to link Madrid-Barajas airport, Madrid s Fair, located nearby the airport, and the surrounding residential areas. The development of Line 8 was carried out in three stages, in response to the evolution of the needs and objectives of the city. Firstly, the Extension Plan envisaged the construction of a metro section between Barajas village and the station of Mar de Cristal, so as to connect Madrid to the airport. The European Commission Directorate-General Regional Policy (DG Regio), however, highlighted that this initial project idea would have allowed limited penetration of the city and few interchange possibilities with other public transport system lines. The Commission considered that, in order to be eligible for Cohesion Funds, the line had to provide very good access to a significant share of Madrid s population and airport users; more specifically, the Airport connection to a main interchange in the city centre was required. Consequently, the metro section between Mar de Cristal and Nuevos Ministerios, in downtown Madrid, was included in the subsequent Metro Extension Plan ( ). In a 4 Referred to

9 third phase, finished in 2007, as a result of an important expansion plan at Madrid Airport, the line was extended to the new T-4 terminal building and a new intermediate station was built at Pinar del Rey. The project under assessment involved an investment cost of EUR 462 million between 1997 and 2002, 85% of which co-financed through the Cohesion Fund. A further investment of EUR 55.9 million was financed between 2006 and 2007 to extend the line, thus making EUR 518 million the total investment cost considered in the analysis. The Cohesion Fund contributed to cover about 76% of the total investment cost, while the remainder was covered by regional public funds. From a financial sustainability perspective, it can be stated that the revenues generated by the project from tariffs are not enough to cover its operating and maintenance costs. Instead, the coverage of costs is ensured by the large degree of public subsidisation of the sector. OVERVIEW OF INVESTMENT COSTS AND SOURCES OF FINANCING Financing period ; First year of operation 1998 Total investment costs (2011 prices) EUR million 100% Sources of financing and co-funding rates over the total investment costs Cohesion Fund EUR 393 million 76% European Regional Development Fund EUR 0 0% European Investment Bank EUR 0 0% National-regional-local public contribution EUR 125 million 24% Private capital EUR 0 0% The number of passengers accessing the Metro Line 8 at the airport stations has increased over the period , and then stabilised at some 35 million users per year. In total, the number of passengers joining the metro network at the Barajas terminal stations or leaving the system through the same stations represents about one third of the total number of Line 8 passengers. However, the demand is probably not yet completely stabilised: in November 2010, new bus lines connecting the city to the airport have been provided by the service operators: the improvement in the bus network system, which constitutes a direct public transport competitor for Metro Line 8, to some extent may affect the future Line s 8 demand. Madrid s Metro network has been extended by many kilometres of new lines over the last two decades, but the Extension Plan , in which the creation of Line 8 was included, was unprecedented, as it extended the subway network by 56 new kilometres of new lines and 38 new stations. As a consequence of this, Madrid has become one of the best cities in Europe in terms of external and internal transport links, which are amongst the most important factors when deciding where to locate a business. Line 8 has facilitated the location of new businesses in Madrid, with direct impacts on economic growth and, thanks to its high connectivity with the public transport system, it has prevented the concentration of commercial activity in the areas closest to the airport, and helped to disperse economic dynamics and social welfare over the entire area between the Barajas village and the city. Significant efficiency benefits also 3

10 come from time savings and reliability gains for public transport users and from reductions both in operating costs and accidents for former private car users. The line generated a positive economic return also due to cost savings for diverted traffic and to the reduction in externalities due to the change to a cleaner mode of transport. Indeed, the modal shift of motorised transport users to an environmentally friendly alternative has been highly positive for environmental quality in a polluted city such as Madrid. Reducing traffic on congested major roads has had particularly high impacts on greenhouse gas emissions. These benefits have been quantified in the ex-post CBA. The analysis indicates the economic Net Present Value of the project amounts to EUR 2,636 million, with an internal rate of return of 16.87%: such results confirm that, from an economic perspective, the project was justified. With regard to economic endogenous dynamics, the line has enhanced the integration into the city of two important and peripheral infrastructures for Madrid: its international hub airport and IFEMA (Institute of Madrid Fair), the 4 th largest trade fair in Europe in number of attendees. By providing them with a direct and reliable connection to the city centre, the project contributed to their development. On one hand, the fair has favoured the exchange of know-how and the establishment of commercial agreements with international firms, which in turn have widened the competences of local companies; on the other hand, the good transport connection has increased the productivity of companies, as it has facilitated access to their suppliers and customers. Moreover, the construction of Nuevos Ministerios station was complex, requiring a high level of technical skills, and marked a change in the way of conceiving the design of interchange nodes: actually, the station was articulated as a large, functional and user-oriented space. This knowledge has overflowed into the construction of subway stations in many other cities around the world. The expansion of the network towards the periphery represented a considerable improvement in connectivity and territorial cohesion as it reduced welfare disparities caused by unequal distribution of resources and opportunities among the region s inhabitants. Bringing a quality and affordable public transport service closer to some residents of surrounding municipalities has also had a positive impact on social cohesion by enabling vulnerable social groups, particularly immigrants with lower incomes, living in the suburbs, to more easily access the city centre, and by lowering their generalised transport costs, even in terms of time spent commuting. Finally, as for the institutions involved in the project, the existence of a metropolitan transport agency, CRTM (Regional Consortium of Madrid Transport), with strong participation by the local authorities greatly facilitated the execution of Line 8. Since then, the management system of transport projects through consortia has spread throughout Spain, which has now more than 20 similar authorities. The European Commission also definitely contributed to a better design of the line, as it required the rapid extension of the airport connection to the core business centre of Madrid, thus maximising the demand and the level of modal transfer. The institutional, economic, social and cultural context played a non-minor role in the project s success. As mentioned before, the metropolitan outskirts of Madrid were experiencing 4

11 significant residential growth, leading to an increase in centre-periphery transport flows. The context was highly positive for the project also considering the steady growth of visitors and exhibitors at Madrid s Fair since 1990, together with the planned expansion of Barajas airport and its positioning as Spain s international hub. In addition, the project benefited from the fact that, since 1991, the city of Madrid has been under the government of the same political party. This has facilitated good decision-making capacity, with long-term vision, and enabled the completion of projects such as the metro network expansion, which are planned in different stages. The success of the project was also largely due to its accurate project design and good forecasting capacity. Being in a densely populated city with a multitude of services buried under the pavement, which give rise to many potential restrictions and risks for the construction, the project called for meticulous control and special construction techniques. With the aim of anticipating possible accidents during the operational phase, advanced security and control systems were installed. Furthermore, the collaboration of skilled professionals allowed the project to promptly react and overcome unpredicted events that arose during the works, such as the discovery of polluting filtrations in the ground. Thanks to the good planning capacity and project design, the project s construction was completed without any delays and cost overruns. The well-defined roles and responsibilities of the different transport and government institutions and their experience in the transport sector within the Madrid Community positively influenced the project s outcome. With regard to the extension of Metro Line 8 to the subsequently commissioned T4 airport terminal, the Public-Private Partnership contract established was probably essential for the early completion of the whole line as it facilitated financing and construction bidding procedures. An absence of coordination between two governmental levels (central and local) and the defence of their own and conflicting interests (a rail service versus a metro line) were revealed during the project planning and execution, but it did not significantly affected the project performance. In spite of some uncertainty concerning the future demand of Line 8, which depends on the offer of alternative transport modes (such as bus lines) and on the future development of the Barajas airport, the project s effects are considered mostly stabilised. In conclusion, the Madrid Metro Line represents a successful example of infrastructural project which managed to deliver all the expected benefits at the expected time and costs. This was achieved mainly thanks to the adoption of a wide and long-term plan, ensuring a joint analysis of local and long distance transport needs and good inter-modality, which in turn led to a globally efficient solution. The European Commission played a crucial role in this respect, by pushing the local authorities to undertake a broader view in the project design, thus ensuring the maximisation of the project s impact. 5

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13 1 PROJECT DESCRIPTION This section contains a brief description of Madrid Metro Line 8, which provides access to Barajas airport. The key structural features of the infrastructure and the service delivered, the context in which it takes place, the target population and the current performance of the project are outlined, in order to give a general description of the project. 1.1 CONTEXT Situated right in the centre of the country, Madrid is Spain s capital and biggest city, with 3,265,038 inhabitants in its municipality (INE, 2011) 5, divided in 21 districts that, in turn, make up of a total of 128 neighbourhoods. It is the third largest city in the European Union behind Berlin and London. Its metropolitan area is home to 6,043,031 inhabitants 6, making it the third largest metropolitan area in the EU, behind Paris and London 7. The Autonomous Community of Madrid, one of the Spanish regions, extends beyond this area, to cover some 8,021 km 2 and a population of 6,489,680 inhabitants 8. With regard to demographics, Madrid and its peripheral districts experienced, in the Nineties, a significant process of urban expansion. The population living in the central districts grew by 11% between 1996 and 2010, whilst population in the outlying districts grew by 16% and in the metropolitan area by 48%. Alongside this urban expansion, there was a process of relocation of economic activities, mostly to the outskirts of the metropolitan area. This led to a substantial increase in the flow of people between the city of Madrid and its surroundings: travel to and from the city of Madrid grew by 39% between 1996 and 2004, from 6.9 million to 9.5 million trips per day. However, the highest increases were experienced in movements within the central districts of Madrid (51%). Flows between the central districts and the external metropolitan area increased by 48%, whilst those from the peripheral districts to the centre grew by slightly less (44%). 5 Data provided by the register, January, 1 st, AUDES, Demographia, 2011; City population, INE,

14 Figure 1.1 EVOLUTION OF MADRID CITY (LEFT) AND BARAJAS DISTRICT (RIGHT) POPULATION s t n a i t b a h I n s t n a t i b a h n I Year Year Madrid city Barajas Source: Authors from data provided by Ayuntamiento de Madrid (2011) A combination of structural advantages favours Madrid as an international centre for investment and business 9. Key factors include world-class transport infrastructure and facilities, its role as headquarters and decision centre for national and multinational companies located in Spain, the size of its metropolitan market, with high levels of purchasing power, human resources and professional qualifications, its status as an international financial centre and a concentration of advanced business services and economic and cultural ties that make Madrid a strategic platform from which to enter the Latin American market. Madrid-Barajas airport plays an important role in Madrid's economic strength and international prominence. It is a major national and European airport (Table 1.1), handling close to 50 million passengers and over 685,000 tonnes of freight per annum (2011 figures, AENA, 2011). 9 Gross Foreign Direct Investment in the Madrid region between 1996 and 2010 amounted to EUR billion, representing 59% of total Foreign Direct Investment in Spain. 8

15 Table 1.1 COMPARISON OF TRAFFIC AT THE MAJOR EUROPEAN AIRPORTS, 2010 Airport Thousand passengers % Change in 2010 over 2009 London - Heathrow (UK)* 65, Paris Charles de Gaulle (France)* 58, Frankfurt (Germany)* 53, Madrid-Barajas (Spain)** 49, Amsterdam (Holland)* 45, Rome (Italy)* 36, Munich (Germany)* 34, Istanbul (Turkey)* 32, London - Gatwick (UK)* 31, Barcelona (Spain)** 29, Paris Orly (France)* 25, Note: *: Global ACI data on March 2011, for 2010; **: Definitive Aena data for 2010 Source: AENA (2010) Located 12 km to the East of the Madrid municipal area (see Figure 1.2), Barajas has always had very good road access. However, until the creation of the Metro Line analysed here, there had not been a reliable public transport link to the airport. In 1995, Metro de Madrid presented an ambitious Expansion Plan with the purpose of extending the metro network to peripheral municipalities as well as integrating into the network some city areas that, despite having a small population, played an important role in Madrid. This was the case for Ciudad Universitaria station (L6), which serves Complutense and Politécnica University campuses; Campo de las Naciones (L8), that serves Madrid Fair (IFEMA) and Barajas Airport (L8), which connects the airport to Madrid city centre. Figure 1.2 THE GEOGRAPHICAL POSITION OF MADRID METRO LINE 8 (PINK LINE) Source: NetMaps (2011) 9

16 Currently, rail connections to the airport include the Metro Line 8 (from Nuevos Ministerios to Airport T-4) being evaluated here and, since October 2011, a rail link (Cercanías service 10 ) on Iberian gauge to Chamartín Station, a major intermodal station located in the North of Madrid. To set the context of the project it is also essential to explain the organisation of the metropolitan transport system in Madrid. Its key player is the Regional Consortium of Madrid Transport (Consorcio Regional de Transportes de Madrid - CRTM), a transport authority created in 1985 to handle all public transport modes in the Community of Madrid (CM). Its main tasks are: Planning public transport infrastructure (the metro network, main interchange points in the city); Planning transport services, definition of coordinated programmes of operation for all modes of transport and the control and inspection of services delivered; Establishment of an integrated fare system for the whole public transport system and the definition of its economic-financial framework; Projecting a single image of the public transport system, with CRTM being the only interface with the user. Its efficiency lies on three fundamental pillars. Firstly, management integration. At present, practically all the municipalities (179 municipalities) of the CM are integrated in the CRTM (only 3 municipalities with less than 1,000 inhabitants are not yet integrated) and includes towns from four surrounding provinces belonging to other Autonomous Communities. The Governing Council of CRTM is composed of 20 members, with the following representation: 5 members of CM and 5 of Madrid s City Council; 3 members of municipalities from outside CM, adhered to the CRTM; 2 of the Central Administration; 2 of trade unions; 2 of the business sector and 1 representative of public transport users. The CRTM is thus able to integrate the concerns of all recurrent users (mostly commuters) and is a counterpart of the various government departments responsible for urban development plans in aspects relating to the location of activities and land use. The CRTM has thus the authority to coordinate the various modes of transport and service operators (see Box 1.1 for a list of these operators), ensure proper technical and administrative organisation of transport, and has the power to influence urban planning (which is responsibility of the municipalities and ultimately of the Autonomous Communities) in the direction of compact residential developments and a distribution of activities that is compatible with public transport. 10 Cercanías is the name given by RENFE to the metropolitan rail services of the major Spanish cities (namely Cádiz, Madrid, Málaga, Sevilla, Zaragoza, Asturias, Bilbao, Murcia/Alicante, Santander, San Sebastián, Valencia and Barcelona). Other rail service categories include Regional, Larga Distancia (Long Distance) and Alta Velocidad (High Speed). 10

17 Box 1.1 MADRID S PUBLIC TRANSPORT OPERATORS CRTM was granted responsibility for road-based public transport by the Community of Madrid, which currently relates to 289 intercity bus routes between Madrid City and the rest of Madrid s territory. These routes are operated by 33 private companies, under 44 administrative concessions. With a fleet of 1,408 buses, these bus operators carry over 845,000 passengers daily, corresponding to an annual demand of 234 million trips. There are also 79 additional municipal routes which operate in metropolitan municipalities, carrying 43 million passengers per year. In 1983, when the Autonomous Community of Madrid was created, the State Government distributed the shares of the Metro de Madrid, S.A. (the metro services operator) between the Town Hall of Madrid, 75%, and the Community of Madrid, 25%. Both institutions ceded their equity rights to the management board of the Consortium CRTM. In 2002, annual demand for the Metro network was million trips. Empresa Municipal de Transportes de Madrid (EMT) is entirely owned by the Town Hall of Madrid. It operates 1,900 buses on 188 different routes within the municipality of Madrid. They carry 1,700,000 passengers daily, which translates into million trips per year. Another operator in the Community of Madrid is Cercanías-RENFE, an intercity railway network subordinate to the central State Administration. In the past 15 years Cercanías has increased its demand by 240%, currently reaching million trips per year. FInally, other less significant operators include Transportes Ferroviarios de Madrid (TFM), concessionaire of the Metro line 9 extension, Empresa Municipal de Transportes de Fuenlabrada and the municipal bus services of Parla. Source: Adapted from Cristóbal-Pinto, 2007b The second pillar of CRTM is fare integration, which contributes to creating a coherent and appealing image of the public transport system. With the creation of the Transport Pass, an integrated ticket for all public transport systems within a spatial zone, existing fares of the different operators were aligned and the range of different transport tickets was simplified. Finally, the CRTM is supported by modal integration, which has increased notably thanks to the creation of large interchanges in the city with the aim of allowing users to transfer comfortably between modes. Public transport in Madrid is highly subsidised (as it is in the majority of European cities 11 ), the public-sector financing percentage being around 55.5% 12. Neither tariffs not alternative sources of financing (publicity, traffic taxes, income from taxi licenses, etc.) guarantee the full coverage of operating costs, thus making public subsidy necessary. 1.2 STRUCTURAL FEATURES AND SERVICE DELIVERED The Madrid Metro network is currently the second largest metro network in Western Europe, after London. In March 2011, the total length was 291 km with 289 stations and thirteen lines (see Figure 1.3). Three of them (L7, L9, L10) run partly outside the municipality and one runs entirely through other municipalities (L12 MetroSur). With regard to technical features, as 11 For further information see Isfort (2009). 12 This percentage does not consider railway services operated by Renfe because it has signed a Contract-Programme with the State, by which the State covers the investment and operating costs of metropolitan services (Cercanías). 11

18 described by Schwandl 13, Madrid Metro has been built with UIC (International Union of Railways) gauge of 1,445 mm, all lines have overhead power supply, either by conventional tram type catenary or rigid overhead power rail and the trains ride on the left. Line 8 of the Madrid Metro is a radial line of the network, which runs between the centre and the northeast of the city linking the core business centre of Madrid and Barajas International Airport. Its stations have 110 m long platforms. This has enabled an increase in the number of carriages per train from an initial three to four. The thirteen trains that run on Line 8 belong to the 8000 series, high-performance units with air conditioning, TV sets, passenger information system, etc. They are equipped with train protection systems 14, which allow the interval between trains to be reduced while ensuring maximum safety. 13 In UrbanRail.Net (2011). 14 ATP (Automatic Train Protection) and ATO (Automatic Train Operation). 12

19 Figure 1.3 THE MADRID METRO NETWORK Source: Adapted from 13

20 Currently, the Line has 8 stations (see Figure 1.4): Nuevos Ministerios, Colombia, Pinar del Rey, Mar de Cristal, Campo de las Naciones, Aeropuerto T1-T2-T3, Barajas and Aeropuerto T4. Figure 1.4 SCHEME OF LINE 8 STATIONS Source: Authors Some of these act as interchanges with other Lines (Table 1.2): Colombia, which connects line 9; Mar de Cristal, where Lines 4 and 8 join; and Nuevos Ministerios, one of Madrid s largest interchanges in which Lines 6, 10, 8 and Cercancías (suburban services) interchange. Pinar del Rey and Barajas fulfil a role in improving accessibility and connectivity for inhabitants of Hortaleza and Barajas, which were two of the districts with the poorest public transport coverage previously 15. Finally, Campo de las Naciones and Aeropuerto stations serve two main infrastructures of the city: the former serves the fair enclosures (Madrid International Fair IFEMA and the Congress Palace) and the latter the two terminal buildings of Spain s biggest airport. Table 1.2 LINE 8 S CONNECTION WITH OTHER METRO LINES, BUS AND CERCANÍAS Interchange to metro network Station Connection with other public modes 6 10 Nuevos Ministerios Cercanías Renfe 9 Colombia Pinar del Rey 4 Mar de Cristal Campo de las Naciones Aeropuerto T1, T2 and T3 Interurban buses Barajas Interurban buses Aeropuerto T4 Source: Metro de Madrid (2012) 1.3 TARGET POPULATION The target population of the project is, firstly, citizens living in the areas served by the line; secondly, people working at the airport, flying from or to Madrid-Barajas as well as people 15 See Cristóbal-Pinto (2001). 14

21 accompanying air passengers departing from or arriving at Barajas airport; finally, people working or visiting IFEMA, Madrid s Trade Fair, one of the world s major exhibition complexes. The airport is an important economic centre for the Madrid Region, not only owing to its activity but also to its role as an employment generator. In 2001, the airport accounted for 27,168 direct, 25,678 indirect and 102,543 induced jobs, 155,389 in total (Cristóbal-Pinto et al., 2001). This amount represented 8.9% of total employment in CM, contributing EUR 10,138 million to the regional economy (13% of Gross Domestic Product - GDP). Regarding air passengers, Figure 1.5 shows that traffic in Barajas airport, which holds a leading position in the Spanish air market, more than trebled in the period In the last 4 years, the economic crisis has stopped the strong growth observed until Figure 1.5 BARAJAS AIRPORT PASSENGERS* EVOLUTION ,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000, * Both transit and terminal Source: Authors elaboration of data provided by AENA (2011) 16 AENA has given a provisional figure of 49,662,512 passengers for

22 Figure 1.6 SPAIN S BUSIEST AIRPORTS BY TOTAL PASSENGER TRAFFIC 2010 Source: AENA (2010) Besides serving the airport, Line 8 was designed to provide a public transport alternative for flows between the centre and municipalities located near the airport, notably Hortaleza and Barajas, which had been continuously increasing and were creating heavy congestion on the accesses to Madrid. Another key trip generator for the line is the Madrid Fair complex. In 2010, IFEMA had an impact on the Region's economy estimated at around EUR 2,000 million for the year and accounted for 40,000 direct and indirect jobs, according to figures provided by the European Major Exhibition Centres Association. IFEMA organised, in 2010, 81 events, with a total of 2,607,342 visitors and 434 workers, making it the 4 th largest international trade fair in the EU 17. The high quality, rapid connections with downtown Madrid have undoubtedly had a positive effect on the success of IFEMA. 1.4 CURRENT PERFORMANCE Line 8 offers a quick, comfortable, regular and reliable public transport connection for residents and employees located near its stations in central Madrid and in Barajas village. It is also an essential service for employees of and visitors to two major generators of mobility, the airport and the international fair. To evaluate the project it is, however, necessary to analyse its performance and to compare it with the options of either using other public transport or private vehicles, that represent reasonable alternatives for metro users. 17 Behind Messe Frankfurt, Messe Düsseldorf and Deutsche Messe Hannover. 16

23 1.4.1 METRO LINE 8 Metro Line 8 from Nuevos Ministerios to T4 Airport terminal, completed in 2007, is capable of carrying some 13,000 passengers per hour. During peak hours, thirteen trains - with four coaches each - service the line at an operational speed of 39.5 km/h. The travel time from one end to the other is about 24 minutes. Presently, it offers service from 06:00 in the morning to 02:00 at night. Table 1.3 sets out the average interval between trains, which is about five minutes for daytime services, and about 15 minutes for night services (from 00:00 to 02:00). This high frequency of services, together with the high level of connectivity and the growth in airport passenger numbers, explains why demand has grown consistently since its commissioning. Table 1.3 AVERAGE INTERVAL BETWEEN TRAINS ON LINE 8 Line 8 Working days Saturdays Sundays and Holidays 6:05 to 7: :00 to 7: :30 to 9:30 9:30 to 14: :00 to 15: :30 to 18: :00 to 19: :30 to 20: :30 to 21: :30 to 22: :00 to 00: :00 to Source: Metro de Madrid (2012) The contribution of the airport to Line 8 demand is presented in Table 1.4. As can be seen, passengers joining the metro system at the station located in T1, T2 and T3 terminals represent approximately 10% of all passengers using Line 8. A similar number may be considered as leaving the system through the same station. It could thus be argued that some 8 million airport-related trips were made on the line before the T-4 station was operational and the total is presently some 12 million, about a third of all trips made on the line. In total, about one third of the total number of Line 8 passengers use one of the stations located in the Barajas airport terminals. 17

24 Table 1.4 Year PASSENGERS ACCESSING METRO LINE 8 AT AIRPORT STATIONS Airport T1, T2 and T3 (pax.) Airport T1, T2 and T3 (%) Airport T4 (pax.) Airport T4 (%) TOTAL Line 8 (pax.) ,372, ,728 6 % ,006, ,988, % ,746, ,075, % ,163, ,794, % ,631, ,506, % ,527, ,822, % ,804, ,386, % ,236, ,125, % ,458, ,142, % 1,617,707 5 % 35,008, ,414, % 2,395,129 7 % 34,549, ,589, % 2,427,986 7 % 34,808, ,878, % 2,378,252 7 % 34,933,374 Source: CRTM (2011b) Being in an area with an integrated fare system (see Box 1.2), the same ticket is valid for all the lines of Metro de Madrid (Zone A). However, starting from 2007 passengers travelling to/from the Airport must pay a special additional fare, except those passengers using Transport Season Tickets (Zone A), Tourist Season Tickets or with AENA cards given to airport employees. In addition to the base fare of EUR 1.50, airport users had to pay an extra charge of EUR 1.00; this has been recently increased to EUR 3.00, thus making EUR 4.50 the total fare paid by metro users travelling between the city and the airport (see Table 1.5). Table 1.5 TARIFF SYSTEM IN PLACE FOR LINE 8 Fare for non-airport users Extra-charge for airport users Total fare for airport users From Source: 18

25 Box 1.2 MADRID S INTEGRATED FARE SYSTEM After the creation of the Consortium CRTM, in June 1985, the creation of a common fare framework was envisaged and, in 1987, the Transport Season Pass was created. To achieve this, the Madrid Community was divided into different concentric zones, each of them covering a larger area than the previous zone, according to the following classification: Zone A, coinciding with Madrid municipality; Three rings: B1, B2, B3, which cover Madrid s metropolitan area; Zones C1 and C2 for the rest of the Community of Madrid; Zones E1 and E2 in Castilla La Mancha (a neighbouring autonomous community). The price of the Transport Season Ticket varies according to the area of the zone covered and is valid for any transport operator coordinated by CRTM (Metro network, EMT 18, Cercanías-RENFE, MetroLigero network, Parla tram lines and urban and intercity buses in the Community of Madrid), without any restrictions on either the number of trips or days of the week. Figure: Price zones of the Transport Pass (left) and Distribution mode of transport of the Transport Pass ticketing (right) Source: Promoteo (2007) and authors processing CRTM (2010) The Transport Season Ticket consists of three types of monthly pass: normal pass, young pass (ages under 23) and senior pass (ages over 65); an annual ticket is also provided for normal pass and senior pass. Other tickets for public transport in Madrid are, in general, only valid for one operator, and consist of a single ticket or a ten-trip ticket. In the case of the Metro, it is also possible to buy a combined ticket (single or ten-trip) which allows the user to travel on the entire metro network (which includes Metro de Madrid, MetroLigero, MetroSur, MetroNorte, MetroOeste, TFM and airport terminals). Source: Authors processing Metro de Madrid (2012c) and Iturbe, J.I. (2000) From a financial sustainability perspective, the tariff revenues generated by the project are not enough to cover its operating and maintenance costs. Actually, it is the high degree of public subsidisation of the sector that allow to cover all costs, as explained in Section Except on the Airport Express Line. 19

26 1.4.2 BUS Currently there are three different bus lines linking Madrid with the airport: Line 200, Line 203 and Line N27. As can be seen in Table 1.6, the last two are Express lines, while the first is a standard Line. Table 1.6 CURRENT BUS PERFORMANCE TO THE AIRPORT (OCTOBER 2011) Bus line Type of bus Line Bus stops Demand Pax/working day 200 Ordinary City centre: Av. América (2), Canillejas Airport: T1, T2, T4 3, Express Line City centre: Atocha-Renfe, Plaza de Cibles, O Donnell Airport: T1, T2, T4 N27 Night Express City centre: Atocha-Renfe, Plaza de Cibles, O Donnell Airport: T1, T2, T4 Source: CRTM (2011) With regard to frequencies, there is approximately one bus every 15 minutes on both day-time lines (lines 200 and 203), whilst for line N27 (night service) the frequency decreases to one bus every 35 minutes. These bus lines serve passengers located close to important places in Madrid, such as Plaza de Cibeles or Av. América, and cover different areas to those covered by Line 8. The express lines connect the Southern part of the city centre with the airport in 40 minutes (Metro Line 8 covers the Northern part). As shown in Table 1.5, lines 200 and 203 carry 3,500 and 3,300 passengers and the night express line, 417 passengers respectively per working day. The environs of the airport are served by two other standard lines (lines 112 and 114). Their last stop is Barrio del Aeropuerto. Line 114 starts its route in Avenida América and has 19 stops. Line 112 route, with 14 stops, connects Mar de Cristal with Barrio del Aeropuerto. 3, CERCANÍAS Cercanías-RENFE is a suburban rail service operated by Renfe (the railway Spanish operator) that connects a number of large cities in Spain with their metropolitan areas and major populations of the community. These services are operated on infrastructure managed by ADIF (the Spanish rail infrastructure manager). In Madrid, there are ten Cercanías-RENFE lines (Figure 1.7), which run at lower frequencies than the Metro services: the average interval between trains is 15 to 30 minutes (on working days), depending on the line and the time of the day. Being part of the CRTM, Cercanías uses the same fare system, based on concentric rings around Madrid City. 20

27 Figure 1.7 CERCANÍAS-RENFE MADRID NETWORK Source: RENFE (2012b) The Cercanías service to the airport was opened to traffic on 23 rd of September, This line connects Madrid with the airport in 38 minutes and there is a train every 30 minutes. Even though C-1 line only allows a direct connection with the new terminal T4 (see Figure 1.8), the ticket includes a free direct bus connection from T4 to T1, T2 and T3. Figure 1.8 STATIONS OF CERCANÍAS C-1 LINE Source: Renfe (2012) Line C-1 runs from 06:00 to 00:00 every day and allows interchange with metro lines 1, 5, 6, 8, 10 and with most of the other Cercanías lines. Demand on line C-1 the week after its inauguration was, on average, 3,200 passengers per day ROAD There are three main routes to the airport from Madrid by road: using the M-40 ring road, the A-2 motorway (which connects Madrid with Barcelona) or the N-100. Congestion on the roads 21

28 of Madrid and its surroundings had been a growing problem in spite of important investments in road infrastructure. This was particularly acute in the North-eastern axis, which channels traffic to Barcelona, to the industrial areas of Valle del Henares and to the airport. Even with the construction of Line 8 and the subsequent modal shift from road to railways, and a new motorway serving the T-4 terminal, congestion is still a problem on the Madrid city centre Barajas Airport corridor. As can be seen in Figure 1.9, which shows the results of a study carried out by RACC (2009), the connection to the airport (the airport location is circled in red), which coincides with the intersection between the A2 and M-40, is still one of the most congested points in the area; indeed, average speed on these roads of less than 50 km/h 19, with systemic jams during peak hours. Figure 1.9 CRITICAL CONGESTED POINTS ON MADRID S ROADS Source: RACC (2009) 19 An analysis of traffic speed evolution over the day on the different roads of Madrid is presented in RACC (2009). 22

29 2 ORIGIN AND HISTORY 2.1 CONTEXT FOR THE PROJECT In 1996, the population of the Community of Madrid totalled 5,022,289 inhabitants, that is, 12.6% of the Spanish population. Within the community, Madrid city held 57% of the population, another 34% resided in the metropolitan area and the remaining 9% in nonmetropolitan municipalities. Madrid was also one of the most important economic centres in Spain, which accounted for 10% and 20% of Spain s exports and imports respectively. In addition, tourism was a significant component in the region s GDP (6% in 1998). Activity related to Madrid s capital, business centre and tourism roles has heavily relied on its airport. Since the Sixties, passenger numbers at Madrid Barajas have grown steadily. This, together with its central location in the Iberian Peninsula, explains why AENA, the manager of all Spanish airports, stated its intention of making of Barajas the Peninsula s international hub (Figure 2.1) in the Airports Master Plan of Figure 2.1 MADRID BARAJAS CONNECTIONS (1999) Source: AENA (1999) The area of influence of Madrid-Barajas can be extended to South America, throughout Europe and, to a lesser extent, the rest of the world, as a result of its consideration as a hub airport, capable of connecting the European Union and South America and channelling many types of routes. Source: AENA (1999) Despite being one of the Europe s busiest airports, in 1998 Madrid-Barajas airport was not efficiently connected to the city. Indeed, public transport services to the airport consisted of a single bus line run by the municipal bus operator EMT (Entidad Metropolitana del Transporte). This bus line was not included in the public transport network and connected the airport with the city centre (Plaza de Colón); fares on the line were unrelated to those applied elsewhere by EMT. In spite of being the only public transport means accessing the airport, the percentage of bus users had a lower modal share than in other European airports. As Table 2.1 sets out, most of the passengers (55.2%) travelled to the airport by taxi and 31.5% by private vehicle, making Barajas the European airport with the highest share of people accessing it by car (86.7%). 23

30 Table 2.1 ACCESS MODES TO SOME OF THE MAJOR EUROPEAN AIRPORTS, 1999 European Airport Car (%) Train (%) Subway (%) Bus (%) Other (%) Private Taxi Total Amsterdam Frankfurt Brussels Paris-Orly Paris-Charles de Gaulle Munich Dusseldorf Zurich Barajas Source: AENA (1999) As pointed out in the previous Section, road access to the airport (A-2 motorway which links Madrid with Barcelona and the ring road M-40) was congested, especially at peak hours, mainly because the metropolitan ring of Madrid was experiencing strong residential growth, with the consequent mobility increase. However, the expansion of both air passenger and freight traffic at Barajas was clearly contributing to the congestion. Air passenger traffic registered an average growth rate of 5% between 1990 and 1996, to reach 22 million passengers per year in Although not directly linked to the A-2 motorway, the development of Madrid as an important commercial centre through the development of its international fair was also dependent on the improvement of transport conditions in the Centre-Northeast corridor in which IFEMA is located. Before the construction of Line 8 the increasing number of visitors and exhibitors could only access the fair by bus, private car or taxi. Table 2.2 shows the evolution of IFEMA s activity, in terms of events organised, exhibitors and visitors. Table 2.2 IFEMA ACTIVITY DATA Year Events organised Exhibitors 14,733 16,940 26,275 40,902 40,098 National exhibitors 10,643 10,159 18,342 28,613 27,143 Foreign exhibitors 4,090 6,781 7,933 12,289 12,955 Visitors 1,733,453 1,919,479 3,370,484 4,239,088 3,874,494 Trade visitors 789,, , ,549 1,499,209 1,008,913 National trade visitors 779,, , ,953 1,395, ,743 Foreign trade visitors 10,754 26,707 42, ,564 74,170 Non-professional visitors 943,577 1,280,003 2,575,935 2,739,879 2,865,581 Fair days Surface covered (m 2 ) 370, , ,342 1,256,462 1,167,429 Source: De Santiago Rodríguez (2002) 24

31 Madrid regional and local authorities were aware that their aspirations to develop the city as a major commercial and business centre and to create an important air transport hub required high quality and rapid connections between the airport and the main attraction areas of Madrid. Since the late Sixties, the idea of connecting Madrid s city centre with Barajas airport by rail had been under study, but it was not until the approval of the metropolitan rail network Extension Plan ( ) that the idea was seriously considered. Although there were several alternatives to connect the airport to the city, the Ministry of Transport, together with the Community of Madrid and the planning and studies department of the CRTM, opted for the construction of Metro Line 8 as the best option to link Madrid-Barajas airport, Madrid s Fair and the residential areas in the environs. The Ministry of Transport was initially in favour of integrating a new airport rail connection in the Cercanías network operated by RENFE. However, extending Cercanías existing lines to the airport was complex and poorly adapted to demand 20. Hence, despite the fact that building a new metro line was more expensive, it was decided that Line 8 would be the best option. The decision was certainly influenced by the rapid expansion of the metro network and its low construction unit costs compared to the railway solution. In this context, in 1997, a financial request to finance the Mar de Cristal Barajas Pueblo metro section was presented by the Spanish Minister of Finance to the Cohesion Fund. As eligibility conditions for the Cohesion Fund (CF) required projects to be either part of the trans- European transport (TEN-T) network or for the improvement of the environment 21, the project was proposed as an access to TEN-T, as Barajas airport was considered an international connecting point in the network. Its positive effects on the environment were also highlighted, but metro lines were not, by definition, eligible under the environmental concept. This initial project, a first phase of Line 8, linked Mar de Cristal station (already served by line 4) and the airport, with an extension to the village of Barajas. This would have forced passengers with origins/destinations in most areas of Madrid to transfer in Mar de Cristal to make use of the rest of the network. The report prepared for the European Commission Directorate-General Regional Policy (DG Regio) by the European Investment Bank (EIB) argued that this service was insufficient to attract airport passengers to public transport and the project would therefore be ineligible to the CF as an access to TEN-T. Only a direct link to the city centre (the extension to Nuevos Ministerios where it would connect with lines 4, 6 and 10 and Cercanías rail services) would comply with the requirement and thus a commitment to 20 See Estudio comparativo entre las alternativas ferroviarias de acceso al aeropuerto de Barajas, in which both options, Metro line and Cercanías services, are discussed in terms of economic and social performance. 21 Projects to be eligible must belong to one of the two categories: a) Environment projects helping to achieve the objectives of the EC treaty and in particular projects in line with the priorities conferred on Community Environmental policy by the relevant Environment and Sustainable Development action plans. The Fund gives priority to drinking-water supply, treatment of wastewater and disposal of solid waste. Reforestation, erosion control and nature conservation measures are also eligible. b) Transport infrastructure projects establishing or developing transport infrastructure as identified in the Trans-European Transport Network (TEN) guidelines. Section III: What kind of projects are eligible?, in The Cohesion Fund at a glance, European Commission (2012) 25

32 immediately build the second phase of the line was recommended as a condition for the award of funds. Although line 4 has connections with most of the other subway lines, the majority of passengers from the airport will require two transfers to reach their destination, limiting considerably the attractiveness of the airport link. The extension to the central station of Nuevos Ministerios, enabling additional connections with lines 6 (circular line), 9 and 10 and also with RENFE s suburban services, is considered essential for the success of the line. Source: EIB, October 16, 1997 This condition was proposed and accepted by CM, which agreed to include the extension in its next action Plan ( ); so in 1998, this first section of Metro Line 8 was commissioned thanks to CF financing, which contributed 85% of the total investment, and to funds from CM, which contributed the rest. The development of Line 8 was, thus, divided between two Extension Plans of the Madrid Metro network. The Extension Plan included the construction of the section between Barajas village and Mar de Cristal, whilst the Plan included the Mar de Cristal - Nuevos Ministerios section. In a third phase the line was extended to the new T-4 terminal and a new station built in Pinar del Rey. Figure 2.2 shows a detailed chronology of the works. Figure 2.2 EVOLUTION OF MADRID S METRO LINE 8 Source: CRTM (2011) With the first phase, a 7.9 km long section with 4 stations inaugurated in 1999, the line linked the terminal building of Barajas Airport with the city at the peripheral station of Mar de Cristal, with connection to line 4, to enable the interchange with the rest of the Madrid Metro network (Cristóbal-Pinto et al, 2001). The second phase, opened in May 2002, represented the extension of Line 8 to Nuevos Ministerios via a 5.9 km section, which only included one intermediate station (Colombia). The Nuevos Ministerios station sits above Line 10 station, on the same level as Cercanías, under Paseo de la Castellana, possibly the most important 26

33 boulevard in Madrid, and is connected, as already mentioned, with Metro Lines 6 and 10 and Cercanías rail services. The station was designed to be both a main interchange of the metro network and a functional extension of the airport to downtown Madrid. To accomplish this, it included check-in counters in order to make the trip more comfortable for airport users, as well as to enhance Line 8 s role as an access node to the trans-european transport network (TEN-T). In 2006, an additional extension connecting Barajas village with the new airport terminal T4 was commissioned as a result of the expansion of Madrid-Barajas airport. Likewise, in January 2007 and as a result of public pressure, Pinar del Rey station was added to the existing line between Colombia and Mar de Cristal stations. Box 2.1 THE AMBITIOUS MADRID METRO EXPANSION PLANS ( AND ) Metro Expansion Plan With this Expansion Plan, the Community of Madrid delivered 56.1 kilometres of new metro lines and 38 new stations, of which 9 were interchange stations, 6 within the network and 3 with the RENFE rail network. The total investment was EUR 1,622 million for the underground sections, of which EUR 223 million was allocated to the acquisition of rolling stock, and EUR 113 million for sections at ground level. The Expansion Plan had the following objectives: Metro extensions to the densely populated peripheral districts of Madrid, such as the extensions to lines 1, 4, 7, 9 and the new line 11. Improved structure and backbone of the Metro network itself, as is the case with extensions made to the central sections of lines 7 and 10. Access to strategic areas of the city, such as IFEMA grounds and Madrid-Barajas airport with the new Line 8. Extension beyond the municipality of Madrid metropolitan corridors to areas without rail connection, as in the case of line 9 to Rivas-Vaciamadrid and Arganda. Metro Expansion Plan This plan involved the construction of 54.6 kilometres of new lines and 36 new stations, 11 of which were interchanges, with a total investment of EUR 2,787.7 million (EUR million for rolling stock). Three major projects were included: MetroSur, a circular line of 40.5 km serving the five largest municipalities, in the metropolitan South, with a population, overall, of about one million people. The extension of Line 8 from Mar de Cristal to Nuevos Ministerios. A triple action on line 10: the extension by 8.2 km to Madrid, where it connects with MetroSur; changing the rolling stock from narrow (2.4 m) to wide gauge (2.8 m) trains; and changing the supply voltage from 600 V to 1,500 V. Source: Comunidad de Madrid (2002). Metro de Madrid El Centro de la ciudad viaja al aeropuerto: Nuevos Ministerios-Barajas. 2.2 KEY STAKEHOLDERS AND MANAGEMENT STRUCTURES In order to determine which stakeholders were involved in the project and the role they played in the development of the works and in the decision processes, a short description of each of them is presented in Annex II. 27

34 During the planning phase, the CRTM played an essential role, since as an organisation participated in by all the municipalities in the region, it facilitated agreement between all the stakeholders involved. More specifically, in the early Nineties, the creation of a large-scale public transport link between the airport and the city became an obvious need. The CRTM was interested in connecting the Recintos Feriales-Campo de las Naciones area with the Metro network but, as the area was close to the airport terminals, the option to extend the line to the airport seemed a solution to two problems. The new line would simultaneously provide the Alameda de Osuna and Barajas-Pueblo residential areas with a rapid means of transport to Madrid. At the same, the Ministerio de Transportes proposed to build a rail infrastructure to link Barajas airport with the city, integrated with the Cercanías network. Finally, following the conclusions of several studies carried out by the CRTM, the rail connection was put aside and it was decided to build the new Metro Line 8, counting on central government support to obtain CF financing. The decision was not controversial. As said, the fact that the CRTM is an organisation participated in by all the municipalities in the region, facilitated the agreement on and, later on, the execution of a line crossing several of them. Figure 2.3 SCHEMATIC INSTITUTIONAL FRAMEWORK OF MADRID S PUBLIC TRANSPORT (1) Source: Álvarez de Francisco (2002) 28

35 Figure 2.4 SCHEMATIC INSTITUTIONAL FRAMEWORK OF MADRID S PUBLIC TRANSPORT (2) *Contract Programme: State subsidy and administration for investments and operation. Source: Authors processing Hatch (2004) As can be seen in Figures 2.3 and 2.4, the structure of public transport in Madrid is quite complex. The public enterprise Metro de Madrid S.A. operates most underground lines and owns most of Madrid s subway infrastructure. However, all sections built between 1999 and 2002 were executed and owned by another public company of CM, called MINTRA, mostly for the purpose of excluding the investments from its official public debt. MINTRA was empowered to charge a fee to Metro de Madrid for using the infrastructure, but was not involved in traffic management. Thus, MINTRA was the stakeholder involved in the financing and construction of the infrastructure and, once the infrastructure was built, Metro the Madrid S.A., as the service operator, undertook the service management. This arrangement allowed the diversion of the cost of the line to an external company. As the company, MINTRA, was fully owned by CM there was no bidding procedure and the operation cannot be properly considered a Public-Private Partnership (PPP) 22. The delegation of financing and construction of an infrastructure to a specialised public company may be an efficient arrangement. However, as an accounting mechanism to avoid including the investment in the public debt it did not meet EUROSTAT standards. As a consequence MINTRA has been recently dissolved (in July 2011) and its assets transferred to the regional administration, which has seen its official public debt substantially increased. 22 There have been, however, other lines in Madrid, such as the extension of line 9 to Arganda, in 1999, that have been undertaken through a concession contract. 29

36 In the second phase of the construction of the line, a new concessional model was applied, allowing the participation of the private sector. The main challenge with this new concession was to make the operation of the new section compatible with the operation of the existing line (L8), operated by Metro de Madrid. Finally CM decided to carry out the works as an extension of Line 8 without changes in operators, which would be undertaken by Metro de Madrid. The concession contract only applied therefore to the construction of the new 2.5 kmlong section (the station had already been built by the Authority for Spanish Airports and Air Navigation AENA) and its maintenance during the operation phase. The work was awarded to Metro Barajas Sociedad Concesionaria S.A., in which FCC Construcción and Caja Madrid participate. The provision of funding for the new section was entirely from the concessionaire s private resources. To recover this investment, an additional charge on the Metro fare, applied to passengers heading to (or departing from) the airport, was introduced (as anticipated in Section 1.4). Under this system, the revenues from the surcharge paid by Metro users arriving at (or leaving from) terminal T4 are paid to the concessionaire, Metro Barajas Sociedad Concesionaria. In order to avoid inequity between airport passengers, this charge applies also to users of the other terminal metro station (Aeropuerto T1-T2-T3) but, in this case, the additional income accrues to CRTM. 2.3 MAIN DEVELOPMENTS SINCE COMPLETION In the initial design of the extension, the new section of Line 8, between Mar de Cristal and Nuevos Ministerios, had only one intermediate stop at Colombia (L9); however, dissatisfied residents of Pinar del Rey, a district of Hortaleza, asked CM to build an additional metro station to serve this area as they considered it their entitlement, since the line passed under their houses. The Vice-president and Minister of Public Works, Luis Eduardo Cortes, had always refused similar requests because the line was designed to connect Madrid to the airport in a short time span, which was a condition imposed by the European Commission to accept it as eligible for a CF subsidy, and intermediate stops would increase journey times. Despite the opposition of some members of the government, the construction of the Pinar del Rey station was however included in the subsequent Expansion Plan In October 2004, in accordance with this plan, MINTRA started to build the station, which was commissioned in early 2007, adding 10,000 residents 23 to the catchment area of Line 8. Nuevos Ministerios station was the first station of the second extension of Line 8 opened to traffic. Although the station already existed, it was completely transformed in order to adapt it to the requirements of connecting Line 8 with the other lines (Figure 2.5 shows an image of the interchange). The new Nuevos Ministerios station became a check-in point where airways passengers could receive their boarding cards and check in their baggage, in one of 34 new 23 Comunidad de Madrid (2002a), Plan de Ampliación de la red de Metro de Madrid

37 check-in desks, avoiding the inconvenience of carrying it to the airport. Thus, in 2002 Nuevos Ministerios became the first transport interchange which connected directly to the airport via Metro, allowing transfer from three Metro lines, five Cercanías rail lines, ten EMT bus lines, taxis and a parking. However, four years later, the check-in point was closed due to the service interruption of Line 8 in order to construct the intermediate station Pinar del Rey. Despite the fact that, during this period, the line continued to operate in two separate sections, allowing passengers to change in Mar de Cristal station and, thus, connect to the rest of the metro network, this discontinuity prevented the carriage of luggage from Nuevos Ministerios to the airport, which had been carried out through an extra wagon added to the L8 trains. When the service was re-established, a few months later, none of the airlines offering check-in service in the station returned. It was probably due to the fact that, the number of Barajas Airport users who checked their baggage in Nuevos Ministerios was relatively low (over 200 persons a day) and, for airlines, it was not worth maintaining these additional check-in points. Nowadays all check-in desks are closed. Figure 2.5 NUEVOS MINISTERIOS INTERCHANGER Source: Metro de Madrid (2012b) In 2006, as a result of the expansion of Barajas airport, AENA inaugurated Terminal T4, located 2.6 km from the existing T1, T2 and T3 airport terminals. The same year CM, through a collaboration agreement with AENA, decided to build the extension of Metro Line 8 from Barajas-Pueblo to the new terminal T4. The new section was put out to tender and it commenced operations one year later, in May 2007, completing an efficient connection between Madrid and the airport. It has to be pointed out that the project under assessment has been implemented without major delays and cost overruns, as emphasised also in the next Sections of this report. 31

38 2.4 HAS THE PROJECT STABILISED? The most recent element of the project (the connection with terminal 4) was completed at the beginning of 2007 but the main part of the line was finished in 2002, with the connection of the airport to Madrid centre. Thus, it would be reasonable to expect that the project should have stabilised; however, since Line 8 s completion, further projects have been built and opened to traffic: new bus lines to the airport and Cercanías rail services, which are expected to have a direct impact on Metro Line 8 demand, since they constitute a direct public transport competitor. Figure 2.6 shows the evolution of Metro Line 8 demand. It can be seen that demand has steadily increased since 1998, with the exception of 2001 and the last three years. The possible explanations for this irregularity in the global growth trend are, firstly, the terrorist attack to the World Trade Centre in New York in September, 11th, 2001, which caused a fall in air travel demand all over the world and, secondly, the economic crisis of the last three years. Figure 2.6 EVOLUTION OF METRO LINE 8 NUMBER OF PASSENGERS r s e g n s e a p f o s n ilio M Year Source: Authors processing CRTM (2011) data. Since the completion of the project, bus lines offering services from Madrid to the Airport have experienced a number of changes aimed at increasing their attractiveness so as to represent an alternative option to the Metro Line 8. Firstly, in November 2004, Line 200 was introduced. It had four stops in Madrid City and one in each airport terminal. In February 2005, Line 89, the only line serving the airport during the nineties, was closed and, one year later, in February 2006, Line 201 was introduced. In May 2007 it was withdrawn. Line 204, also introduced in February 2006, was merged with Line 200 in November Finally, in November 2010, two express lines to the airport were introduced: Línea Exprés and N27. Nowadays, three bus lines offer services to the airport: one ordinary line (Line 200) and two express lines: Línea Exprés (day time services) and N27 (night services, from 23:30 to 6:00, 32

39 every 35 minutes). These express lines stop three times in Madrid (Atocha, Cibeles and O Donnell) and then at airport terminals T1, T2 and T4 (the journey lasts 40 minutes). The Express line serves over 3,000 passengers per day and Line N27 over 400 passengers per day. Not only has the bus network improved since the completion of Metro Line 8 project; so too have the Renfe services, which in late 2011 opened a new Cercanías rail line to Madrid-Barajas Airport Terminal T4 (Line-C1, highlighted in blue in Figure 2.7). Figure 2.7 DIAGRAM OF THE CERCANÍAS NETWORK AFTER THE EXTENSION TO THE AIRPORT Source: Renfe (2011) The Cercanías Aeropuerto T4 station opened to traffic in September It links Chamartín and Príncipe Pío stations to the airport in 11 and 38 minutes, respectively. Table 2.3 shows the impact that line C1 to the airport had on metro patronage. Table 2.3 IMPACT OF C1 LINE ON METRO LINE 8 DEMAND (AVERAGE DAILY PASSENGERS) Before C1 After C1 Variation Variation (%) Metro Line 8 (T1-T2-T3 and T4) 33,820 31,495-2, EMT (200, Express and Night bus) 7,722 7, Cercanías C-1 0 3,200 3, TOTAL 41,543 42, Source: CRTM (2011) Finally, in June 2011, the Ministry of Public Works (Ministerio de Fomento) approved the investment to adapt the Cercanías rail infrastructure from conventional (Iberian) to international track gauge to allow high-speed trains to access the airport. This latest development, whose aim is to integrate the Madrid-Barajas airport with the high-speed 33

40 network, may affect demand on Metro Line 8 in the nearly future. According to the press 24, civil works will be completed in 2012 and the high-speed line will be working by With the recent inauguration, in 2010, of Cercanías services to the airport we may ask whether this previously dismissed connection is necessary or redundant. The metro to the airport mainly serves users going to the airport from or to a destination in the municipality of Madrid and, more specifically, in the areas served by Metro's current network, which includes substantially all densely populated areas of the capital. The Cercanías railway principally serves travellers going to the airport from its area of influence, which not only extends through the metropolitan area of Madrid but reaches large areas of Castilla La Mancha, Extremadura and even Aragón. The number of travellers with origin and destination in Madrid is not negligible, but is restricted to travellers with easy access to Chamartín Station, in the Northern part of Madrid. Hence, since the demand for the two options is complementary rather than substitutive, the results of this report, as well as of the CBA, are considered to remain valid in the future. In any case, the changes implemented since the completion of the Metro Line 8 project, both the two extensions of the line itself and the reorganization of bus lines to the airport, as well as the introduction of Cercanías services, have affected Metro Line 8 demand and have not allowed its demand trend to stabilise completely. The current main factor that could have an impact on Metro Line 8 demand seems to be Madrid-Barajas airport traffic. Situations such as economic downturns affecting air transport can have some effects on Metro Line 8 demand: actually, as stated in Section 1.4, passengers joining the metro network at the stations located in the airport terminals represent around one third of all passengers using Line La Razón, 2010, El AVE de Valencia llegará hasta Barajas a partir de 2014, 22nd October 2010; El Economista, 2009, El trayecto de Sol a Barajas en AVE será posible en 2014, 7th November 2009; edreams, 2010, Se inicia la fase final para la llegada del AVE a Barajas, 22nd October 2010, available at: 34

41 3 LONG-TERM DEVELOPMENT EFFECTS In what follows the main long-term effects produced by the project are presented and discussed. First, a summary of the effects produced along the seven categories identified in the First Interim Report is briefly described. Then, the most significant ones are discussed and further evidence provided. 3.1 KEY FINDINGS The initially proposed metro line did not represent a global solution because, whilst it is true that it provided a public transport connection to the airport, the line s poor penetration into the city and the number of interchanges needed to reach other central stations did not fulfil the connectivity and accessibility objectives of the project. However, with subsequent complementary works (the extension of the line to Nuevos Ministerios interchange and the link to the new terminal building at Barajas Airport) Metro Line 8 has become an essential infrastructure for both the airport and for many residents of the metropolitan area of Madrid. The long-term contributions of the project must be considered under two headings: economic development and quality of life. Economic growth includes the quantifiable benefits derived from the faster and more reliable connection to downtown Madrid, traffic growth due to the positioning of Barajas as an international hub and accessibility to IFEMA, a platform to promote Spanish companies and boost international commerce. Under the heading of social wellbeing, accessibility to surrounding areas, connectivity and reduced travel times as well as the promotion of a healthy and sustainable transport alternative are analysed. The Cost-Benefit Analysis (CBA) attached in Annex II shows that the project represents a very good use of resources. The socio-economic Net Present Value (NPV) of the complete Metro Line 8 amounts to EUR 2,636 million (with an internal rate of return of 16.87%), supporting the conclusion that the project was justified. Tables 3.1 and 3.2 summarise the nature and strength of the project s impacts classified under seven categories (direct economic growth, endogenous dynamics, social cohesion, environmental effects, territorial cohesion, institutional quality and social happiness) as well as the time-horizon over which they materialise. In Table 3.3 the stakeholders affected by each category are presented. The criteria considered to assign the scores shown by the following Tables are presented in Annex I. 35

42 Table 3.1 SUMMARY OF NATURE AND STRENGTH OF IMPACTS Strength* Level 1. Direct economic growth +4 Local national 2. Endogenous dynamics +3 Regional national - global 3. Social cohesion +4 Local - regional 4. Environmental effects +5 Local - regional global (GHG) 5. Territorial cohesion +3 Local - regional 6. Institutional quality +3 Local - national 7. Social happiness +4 Local regional - national *-5 = very strong negative effect; 0 = no effect; 5 = very strong positive effect. Table 3.2 Effect 1. Direct economic growth 2. Endogenous dynamics 3. Social cohesion 4. Environmental effects 5. Territorial cohesion 6. Institutional quality 7. Social happiness TEMPORAL DYNAMICS OF THE EFFECTS* Short run (years 1-5) Long run (years 6-10) Future years Comments Important time savings, reduced congestion and savings in operating costs stabilised along with demand Development of new skills, enhancement of productivity and generation of economic value stabilised some years after the project completion Ongoing integration of vulnerable social groups (immigrants) into Spanish society thanks to affordable and reliable public transport service Reduction of pollution emissions due to the shift to a cleaner mode of transport. The impact on environment improved along with the increase of the metro demand and it is currently stabilised Increased connectivity and accessibility due to the extension of the line to high-demand areas uncovered by the network Collaboration agreement between AENA and CRTM, due to the existence of a metropolitan authority, PPP contract in the extension to T Sense of national pride, improvement in living conditions, currently stabilised. *+ = slight positive, ++ = positive, +++ = strongly positive, +/- = mixed effect. 36

43 Table 3.3 IMPACTS* ON DIFFERENT STAKEHOLDERS EFFECTS Residents of Madrid and its peripheral neighbourhoods and municipalities Airport and fair workers and users Consortium of Madrid Transport Madrid- Barajas airport (AENA) IFEMA Construction companies Government and citizens Local Regional National EU 1. Direct economic growth Endogenous dynamics Social cohesion Environmental effects Territorial cohesion Institutional quality Social happiness *-5 = very strong negative effect; 0 = no effect; 5 = very strong positive effect 37

44 3.2 DIRECT ECONOMIC GROWTH Metro Line 8 connects three of the most important economic nodes in Madrid: the airport, gateway for tourists and business travellers; the International Fair, meeting place for international commerce and companies; and Nuevos Ministerios, one of the busiest areas of Madrid, not only due to the intensity of traffic but also to the large influx of people who work, stroll and shop in this central zone (indeed, the station is the second largest interchange in Spain in number of passengers). Investments in expansion of the Madrid Metro lines and Metro Ligero carried out by the Community of Madrid exceed EUR 4,000 millio, and will benefit more than 787 thousand inhabitants. The impact on the Gross Value Added of the city in the short- and long-term could exceed EUR 7,800 million. Source: Ayuntamiento de Madrid, 2007 In 1990, Madrid occupied 17 th position within the leading cities for doing business in Europe and, in 2011, it was ranked in 7 th place, demonstrating the great change in the city in terms of competitiveness and as an attractive location for commerce. Good transport connections are one of the most important factors 25 when deciding where to locate a business. According to Cushman & Wakefield (2011), Madrid holds 7 th place in the ranking of the best European cities in terms of external transport links and moves up two places to occupy 5 th position in terms of ease of internal transport. Line 8 has obviously played an essential role in these achievements as it acts as a link with other cities and international destinations by connecting the centre with Madrid Barajas airport. In addition, it makes it easier to travel within the city as it increases connectivity within the metro network and improves accessibility to peripheral areas important industrial and economic activities (see Table 3.4). Line 8 has thus facilitated the location of new businesses in Madrid, with direct impacts on economic growth, but thanks to high connectivity with the rest of the public transport system, it has prevented the concentration of the business activity in the areas closest to the airport and helped to disperse economic dynamics and social welfare over the entire region. Table 3.4 TERRITORIAL DISTRIBUTION OF INDUSTRY WITHIN DIFFERENT SECTORS OF THE CITY Urban sector Business area surface (%) Business premises (%) Jobs (%) Central core Peri-central districts Peripheral districts Source: Observatorio Económico (2006) 25 According to the European Cities Monitor 2011, the top ten essential factors that companies consider when deciding where to locate their business are, in order of decreasing significance: Easy access to markets, customers or clients; Availability of qualified staff; Quality of telecommunications; Transports links with other cities and internationally; Value for money of office space; Cost of staff; Availability of office space; Languages spoken; Ease of travelling around within the city and The climate governments create for business through tax policies or financial incentives. 38

45 With regard to the socio-economic consequences of the investment, probably the most significant effect is the reduction in travel time, both for employees and visitors/users of the airport and the Fair and for inhabitants of the neighbourhoods along the new line. In fact, Line 8, cutting an estimated 30 minutes 26 off the journey time from the airport to downtown Madrid, has made the metro a real option for most bus travellers and also for other travellers with higher values of time. Figure 3.1 shows how metro use grew strongly in the first two years of operations, partly at the expense of bus and partly due to travelers diverted from taxis and private cars (see Table 3.5). For the latter the modal shift was due, in addition to time savings, to the benefits in terms of reliability, which are crucial in a congested environment such as Madrid s metropolitan area. Figure 3.1 MONTHLY EVOLUTION OF THE NUMBER OF PASSENGERS: METRO AND BUS, MID-1998 TO MID-2001 Source: Cristóbal-Pinto et al. (2001) 26 Compared to a standard line (L200). Time savings compared to the Express Line, in service since the end of 2010, are 15 minutes. 39

46 Table 3.5 TRANSPORT MODE OF ACCESS TO THE AIRPORT Access mode Prior to commissioning of the metro line May 2000 Taxi 54 % 18.4 % Drop off car 19 % 5.7 % Self-driven car 11% 0.5 % City centre bus 8% 0.4 % Local bus 2.1 % Metro % Other 8% 0.4 % Source: Cristóbal-Pinto et al. (2001) It is interesting to note that the air-metro link enjoys very high acceptance in Madrid compared to other European cities offering a similar service. For example, comparing the modal share of rail access to the airport between Madrid and Amsterdam, Netherlands, where a rail line connects the city centre with Schiphol Airport at the same price (EUR 3.00), it can be seen that, in Madrid, the share of the metro for journeys to and from the airport is more than double the rail share for Schiphol-Amsterdam trips 27. As a consequence of the increase in metro users, the proportion of people using cars to go to Barajas airport has been drastically reduced. This has brought about some benefits related to reductions in vehicle operating costs and accidents (see Table 3.6). Table 3.6 AVERAGE DAILY TRAFFIC AND FATAL OR SERIOUS ACCIDENTS IN THE MAIN ACCESS ROADS TO BARAJAS AIRPORT, 2009 Road Section Annual average daily traffic A-2 Access to Arturo Soria St. Eisenhower node 118, Start of Torrejón road end of Torrejón road 157, End of Alcalá road.- intersection with N , Eisenhower node Start of Torrejón road 134, End of Torrejón road End of Alcalá road 81, M-40 Junction with A-1 road Junction with A-5 road 126, Junction with A-5 road - Junction with A-1 road 128, M-11 Manoteras junction - Barajas 71, Source: Authors processing EuroRap (2009) data Annual accidents with deaths or serious injury The positive economic effects derived from this remarkable shift to the metro are incorporated in the Cost-Benefit Analysis (see Annex II) in which the highest benefits arise from savings in operating costs (fuel consumption, car usage, parking) and in travel time for diverted traffic. To obtain the value of benefits in time savings, it has been assumed that 10% 27 Based on 2002 figures for Amsterdam (see Hatch, D. (2004)) and from 2000 for Madrid (Cristóbal-Pinto (2007). 40

47 of the total traffic on the Metro Line 8 are business travellers, 70% are commuters and 20% are other passengers 28. Overall, we would conclude that the provision of high quality, rapid connections between the airport and the main attraction points of the capital city has translated into significant efficiency benefits from time savings and reliability gains for public transport users and from reductions both in operating costs and accidents for former private car users. The increase of land value and positive externalities, in terms of reductions in pollution and CO 2 and energy savings, must also be considered. The extension will have a significant positive impact on the competitiveness of the City of Madrid and on the welfare of its citizens. Source: Ayuntamiento de Madrid, ENDOGENOUS DYNAMICS Line 8 of Madrid s metro extension produced three significant improvements in terms of endogenous dynamics: one relates to enhanced productivity and the generation of economic value; the second, to health improvements; and the last one to the development of technical skills and the emergence of more customer-oriented attitudes. The first impact of Metro Line 8 is its contribution to the conversion of Madrid into a major commercial and business centre through the development of its airport and its international fair. It connects these two critical commercial nodes of the city. IFEMA is one of the region's greatest assets in promoting business development, boosting competitiveness and facilitating the access of national companies to new markets. The exchange of know-how and the establishment of commercial agreements with international firms (Figure 3.2) have widened the competences of local companies. Among its [IFEMA s] main commitments are generating wealth and development for the region and to promote and project the image of Madrid within and beyond our borders. Source: Sector Ejecutivo, February Source: expert opinion. 41

48 Figure 3.2 MAIN ADVANTAGES AND DISADVANTAGES FOR THE COMPETITIVENESS OF COMPANIES LOCATED IN MADRID Source: Ayuntamiento de Madrid (2005) At the same time, the expansion plan of Madrid-Barajas Airport (1999) envisaged converting it into an international hub. An airport generates activities with high added value, characterised by knowledge-intensity and a requirement for highly qualified employees 29. An international hub guarantees good air transport connections, which increases the productivity of companies as it facilitates access to their suppliers and customers. The second effect, the improvement in health conditions, has a direct influence on human capital. Madrid is a city significantly affected by air pollution with obvious negative effects on the health of its citizens. Indeed, pollution often exceeds the threshold values set by the World Health Organisation (WHO) 30 and the EU. Air pollution compromises lung function, increases heart attack risk and directly affects people with asthma and other types of cardiovascular diseases 31. In this regard, Line 8 has contributed to improving the air quality by shifting a considerable share of travel demand from private vehicles, taxis and buses to metro. This has been recorded in the CBA, in which benefits due to the reduction in externalities (air pollution, noise, climate change effects, and those related to accidents and congestion) as a result of the number of road trips avoided are valued at between EUR 40 and 70 million per year. Finally, the complexity of the construction of Line 8 Nuevos Ministerios station must be mentioned, because works in this station required a high level of technical skills (for detailed description of the works, see Comunidad de Madrid (2002)). The location of the interchange at the intersection of two of the most important streets in Madrid (Paseo de la Castellana, the 29 For detailed effects of airports on local and national economies, see Fageda X. (2009) WHO sets a maximum of 20 µg/m for the annual average of PM10 (particulate pollutants smaller than 10 microns in outdoor and interior spaces), above which the air is harmful to health. Madrid s air has an average concentration of 26 µg/m 3 of PM10. (ABC, October 18, 2011). 31 See WHO (2010). 42

49 main north-south road axis, and Raimundo Fernández Villaverde street, road M-20), and having to work at an existing subway and train station where the service had to be maintained, added great complexity to the construction process (Figure 3.3). Moreover, the need to maintain surface traffic and the movement of users at the station, together with the need to intervene in a listed building, conditioned the execution of the works. Figure 3.3 SECTION OF NUEVOS MINISTERIOS STATION BEFORE AND AFTER THE WORKS Source: Cristóbal-Pinto (2007) One of the key objectives of the work was to articulate a large space that could facilitate the interchange between multiple forms of access and dispersion at this transport node (train, metro, bus, by foot, taxi or private car). This marked a sea-change in the way of conceiving the design of interchanges: in the Sixties, stations were simple engineering works, where the user was given a residual importance, since the vast majority were captive to the public transport system. The aim in Nuevos Ministerios was to create a spacious and easy connection node for transfers, easy to understand, functional and less frustrating for the user. Therefore, the design of Nuevos Ministerios can be considered as the beginning of a new awareness of the importance of the user as a customer, and the role of the interchange as a node providing fast connections. This knowledge has overflowed into the construction of subway stations in many other cities, including Helsinki, Santiago de Chile and Stockholm, which took the Madrid metro network as an exemplar when designing their interchanges. 43

50 With this visit, Sweden joins the list of countries that have requested advice from the Community of Madrid to introduce improvements to the public transport system in its major cities. In Europe, a result of this collaboration was the construction of the interchange of Kammppi in Helsinki (Finland), the biggest in the city, with the participation of CRTM in its design and construction. The Consortium has also actively collaborated in an interchange built in Santiago de Chile following the model of Madrid. Source: El digital de Madrid, September 6, TERRITORIAL COHESION In 1995 the Madrid Metro network was highly developed, so that practically all central areas with strong demand were already within the radius of coverage of its stations or would soon be. The population of the municipality of Madrid living within a radius of 600 m of a metro station was 1,696,049 inhabitants. After finishing the Plan, it was 1,986,024. Figure METRO DE MADRID EXPANSION PLAN Source: Álvarez de Francisco, J.L. (2002) The improvements were mostly directed at the city s peripheral areas, while the network s coverage of the seven central districts remained practically unchanged 32, indicating a willingness to improve spatial cohesion in the urban area. This was also the objective of the Expansion Plan (Figure 3.4), in which the Line 8 works from Mar de Cristal to Barajas airport were included. The expansion of the network towards the periphery was aimed at reducing welfare disparities caused by unequal distribution of resources and opportunities among the region s inhabitants. Regarding the specific impact of Line 8, a study carried out by Cristóbal-Pinto et al. (2001) shows that Barajas village is one of the districts which have benefited the most from the network expansion (Table 3.7) as new facilities are particularly significant in areas with poorly developed networks. 32 In the central districts the metro network was reaching over 80% of residents. 44

51 Table 3.7 CLOSENESS TO A SUBWAY STATION IN BARAJAS Barajas population within the radius of coverage (%) Year m m > 600 m Source: Cristóbal-Pinto, C. et al. (2001) The main gains in terms of connectivity and accessibility have been produced by the section between Mar de Cristal and Nuevos Ministerios, in downtown Madrid, as the first phase to Mar de Cristal had limited penetration into the city and few interchange possibilities with other public transport lines (see Figure 3.5 and Table 3.8). Figure 3.5 CONNECTIVITY OF LINE 8 IN 1999 (LEFT) AND AFTER CONNECTION WITH NUEVOS MINISTERIOS IN 2002 (RIGHT) Note: The grey section on the left has not been built. Source: Metro de Madrid (2011) Table 3.8 AVERAGE ACCESS TIME TO THE 10 STATIONS 33 WITH THE HIGHEST DEMAND IN 1995 AND 1999 (IN MINUTES) From (station): Absolute change (min) Barajas Aeropuerto T1-T2-T Campo de las Naciones Mar de Cristal Colombia Source: Cristóbal-Pinto, C. et al. (2001) The completion of Line 8 meant, therefore, a considerable global improvement in connectivity and brought public transport services closer to some residents of surrounding municipalities, increasing equity among different areas of the metropolitan area. 33 These stations are: Moncloa, Sol, Plaza de Castilla, Atocha-Renfe, Avenida de América, Príncipe Pío, Nuevos Ministerios, Argüelles, Méndez Álvaro y Embajadores-Acacias. 45

52 3.5 SOCIAL COHESION Social cohesion is understood here as the capacity to minimise disparities among social classes. An analysis of Barajas village characteristics will help us to determine to what extent it has contributed to reducing inequality among social groups. At first sight one may conclude that Barajas is a well-off area of Madrid, as it has a lower rate of unemployment, a higher number of healthcare facilities and educational centres per capita and a higher per capita income than the Madrid average (see Cuadrado Roura, J.R. et al. 2005). Whilst this is true of some residential areas, specifically Alameda de Osuna, Timón and Corralejos neighbourhoods, there are two areas where, due to the high immigrant population, these results may not be applicable: Aeropuerto and Casco Histórico de Barajas. In Table 3.9 some of these inequalities are set out. Table 3.9 GENERAL CHARACTERISTICS OF BARAJAS NEIGHBOURHOODS Alameda de Aeropuerto Casco Timón Corralejos Osuna Histórico de Barajas Population (1/1/2009) 20,474 2,135 7,905 8,081 6,394 Non-Spaning nationals (%) University graduates and post-graduates 6, ,050 Per capita income in 2000 (EUR) Source: Ayuntamiento de Madrid (2009) 17,620 8,135 9,724 12,626 16,513 As can be seen, there are zones where the per capita income is one of the lowest of Madrid (Figure 3.6) due mostly to the high percentage of immigrants living there. Creating a public transport system potentially reduces the risk of marginalisation of these residents by providing more opportunities both in terms of good access to the city centre and by lowering their generalised transport costs, mainly in terms of time spent commuting. 46

53 Figure 3.6 HOUSEHOLD GROSS DISPOSABLE INCOME PER INHABITANT INDICATOR, 2000 (PERCENTAGE OF MADRID S AVERAGE) Source: Ayuntamiento de Madrid (2004) According to Malgesini 34, "the immigrants that live in Madrid use public transport" due to the fact that only 35.8% of immigrant households own a vehicle. The strong increase in the number of immigrants, mostly using the city s public transport, is one of the reasons why the number of Metro users in Madrid has doubled between 1995 and The Metro Line 8 enlarged the possibility for immigrants to work in the city centre; this benefit would have been difficult to generate without a proper public transport system. To sum up, we can definitely say that the extension of Line 8 to Barajas village has enabled vulnerable social groups, particularly immigrants with lower incomes, to be integrated into Spanish society more easily by bringing close to them a quality and affordable public transport service. 3.6 ENVIRONMENTAL EFFECTS Good public transport connections to major transport nodes eliminate a substantial amount of road traffic 35. In the case of Line 8, it reduced traffic in highly congested major roads, with particularly high impacts on air pollution and on greenhouse gas emissions (GHG), as stop-andgo traffic is the most negative for the environment. 34 In the study for Ayuntamiento de Madrid Anuario de la convivencia intercultural, See UITP (2004), Towards sustainable urban transport. 47

54 The reduction in emissions was especially relevant, because Madrid is a densely populated area with high levels of air pollution. Studies carried out in identified Madrid as having one of the highest levels of NO 2 emissions among European cities, and one of the most polluted urban areas in Spain. The situation would have been even worse if a large share of mobility had not been transferred to cleaner public transport. In summary, the project has had high impacts in terms of reduced road congestion and, as a result of this, local pollution and damage to the environment (these externalities have been quantified and valued in the ex-post CBA, see Annex II). Besides, as Line 8 runs completely underground and entirely in urban areas, no damage to any place of natural interest was caused during the works. 3.7 INSTITUTIONAL QUALITY We can define impacts in institutional quality as the wider spillover effects that the investment project brings to the public administrations and other institutions at a national or regional level. Due to the previous lack of proper public transport connection between the airport and downtown Madrid, this project had a strategic significance for the city in terms of enhancing its image as a main tourist destination as well as of developing the capital as a major commercial and business centre. These objectives were shared by all public stakeholders, so the level of cooperation of the different institutions involved in the planning, management and execution of the works was unusually high. This was a key factor for the success of the project. The importance of the role of the EU Commission in the project must be mentioned. It forced a joint analysis of local and long distance transport needs, ensuring good interchange between different transport modes, well adapted to the actual airport access demand. This led to a more globally efficient and environmentally sustainable solution for a heavy public transport investment such as the metro line. The broader view of EU institutions contributed to a better design of the line, as it required the rapid extension of the connection of the airport to a main interchange in the city centre. The isolated section initially proposed would not have generated the level of modal transfer actually observed. Delaying the construction of the second phase to downtown would have probably produced a smaller shift (as potential passengers might not have grasped the image of a new link to the airport the type of psychological effect recognised as a factor in attracting ridership) or would have generated demand at a much slower pace. For a long time the CRTM was the only public transport authority in Spain. Even though it was the first to be proposed, in the late 70 s, the Metropolitan Transport Authority of Barcelona (ATM) was only created in 1997, a decade after the CRTM. Since then, the management of transport through consortia has spread throughout Spain, which has now more than 20 similar authorities. Measures taken by the CRTM have had a significant impact on the Madrid region s 36 Heidelberg's Institute for Environmental Physics, University of Heidelberg (2004). 48

55 mobility; indeed, public transport demand has grown over 56% since its creation (Figure 3.8). The existence of a metropolitan transport agency with strong participation by the local authorities greatly facilitated the execution of Line 8, which crosses a number of municipalities. Figure 3.7 EVOLUTION OF THE NUMBER OF PASSENGERS FOR PUBLIC TRANSPORT Source: Authors processing CRTM data. Since 1991, the city of Madrid has been under the government of the same political party and this has facilitated good decision-making capacity, with long-term vision, which enables the completion of projects like the metro network expansion, planned in different stages. As a consequence of this, perceptions of the local government s ability to effectively formulate and implement sound policies increased greatly within the wider society. In fact, as can be seen in the results of the Worldwide Governance Indicators (WGI) project (Kaufmann D. et al, 2010), in which perceived government effectiveness in different countries of Europe is analysed, at the time the metro network was being extended ( ), Spanish government institutions were highly regarded. In this study, government effectiveness is defined as the perception of the quality of public services, including satisfaction with the public transport system and quality of general infrastructure, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies, drawn from statistical surveys and interviews with experts. With regard to the most recent works on the line (the extension to the Airport T4 station), the decision to use a PPP to fund infrastructure and the working agreement reached between the national agency AENA and CRTM were vital for the success of the project. 49

56 Box 3.1 COLLABORATION AGREEMENT AENA-METRO The minister of works, Francisco Álvarez-Cascos, the President of the Community of Madrid, Alberto Ruiz Gallardón, and the President and General Director of Aeropuertos Españoles y Navegación Aérea (AENA), José Eladio Seco, signed in May 6, 2002 a "collaboration agreement for the implementation and operation of a check-in service for luggage at the metro station "Nuevos Ministerios". Under that convention, AENA was responsible for the management of the check-in desks of passengers, with or without luggage, in the same way they do at the airport of Madrid Barajas; carriers interested in providing the service to Nuevos Ministerios would have operated the check-in desk facilities. Likewise, AENA was responsible for the operations necessary to get the baggage to the subway car and from there, to the Automated System of Baggage Handling at the airport. The transfer of baggage between the two stations would have been carried out by Metro de Madrid. The check-in services in Nuevos Ministerios were open every day of the year, from 6:30 AM to 10:30 PM. Source: Extract of the book Metro de Madrid. El centro de la ciudad viaja al aeropuerto (2002) MINTRA took over the works on Line 8 to T4 station through a concession to a private company. The contract s object was the construction, management, financing and maintenance of infrastructure for the extension of the line. However, the operation of public transport on the extension of Line 8 from Barajas village to the new terminal is provided by Metro de Madrid S.A., which operates the service on the rest of the network, in order to ensure continuity and, thus, respecting the principles of effectiveness and efficiency and maintaining the highest safety standards. It is due to this concession that currently it is necessary to pay a supplement (at first EUR 1.00, recently raised to EUR 3.00) when using Line 8 services to access either of the two airport stations. The fact that the special tariff for airport users has been integrated into the public transport ticket is another interesting outcome of the collaboration agreement between AENA and CRTM. 3.8 SOCIAL HAPPINESS Under the heading of social happiness, effects on psychology and perceptions of the project impacts are analysed. It is widely agreed among citizens that the creation of Metro Line 8 greatly improved living conditions of residents in surrounding areas, by increasing accessibility and connectivity to the transports network. Evidence of this comes from opinion surveys undertaken amongst Metro users. They measure the users level of satisfaction through the ICP, an indicator of perceived quality, which allows Metro de Madrid to monitor the level and trends in the opinions of customers regarding the quality of service. The rating of Line 8 is above average and one of the most highly valued lines (Figure 3.9). 50

57 Figure 3.8 PERCEIVED QUALITY RATING FOR EACH METRO LINE (2008) Source: Metro de Madrid (2009) When users were asked about the reasons for this (the index of perceived quality) growth, they mentioned: the consolidation of the service following the Expansion Plan as well as the greater coverage of the network. Source: Metro de Madrid, 2009 Line 8 has brought downtown Madrid closer to those people who previously were very dependent on car or forced to take more expensive, much less convenient and longer public transport services in order to access work or to enjoy the range of Madrid s services and leisure and cultural facilities. Moreover, Line 8 was the first line in the city fully provided with mobile telecommunication coverage. The President also congratulated all those who have enabled the finishing of this magnificent work, in particular, Madrid citizens, because works like this make it possible for our country to achieve the goal of becoming faster and faster one of the best countries in the world and in Europe. Source: ABC, May, 22 nd, 2002 Social happiness may also have a role in the aspect of tourist friendliness and in the improvement of the image of the City as a result of more comfortable and safer accessibility to and from the airport. From the point of view of users, Madrid is included in the top ten of European cities with frequent public transport users, that is, using public transport at least once a week; furthermore, public transport is the means of transport mostly used by Madrid citizens (54%) to go to work or education and 78% of Madrid s public transport users reported being very or rather satisfied with public transport in the city 37. It is not only users of public transport who appreciate the new line; non-users have taken advantage of the reduction in traffic on the streets and on the main access roads of Madrid in the area served by the metro line. 37 European Commission (2009). Eurobarometer. Perception survey on quality of life in European cities. 51

58 Line 8, as part of a large expansion plan to improve the public transport network, which is one of the factors attracting investment and talent to the city, had also a positive impact on pride among Madrid citizens because these works where a link in the chain of creating one of the longest subway networks in the world (Table 3.10). Table LARGEST METRO NETWORKS IN THE WORLD, BY LENGTH, IN 1999 City Country Opening date Length Number of lines Number of stations London United Kingdom New York United States of America Chicago United States of America Moscow Russia Paris France Mexico City Mexico Koln Germany Madrid Spain Tokyo Japan Valencia Spain Washington United States of America San Francisco United States of America Berlin Germany Seoul Korea Oslo Norway Source: Melis Maynar, M.J. (2000) As a possibly negative impact, we can mention the public discontent among inhabitants of Pinar del Rey, a neighbourhood in the district of Hortaleza, after the completion of the section to Nuevos Ministerios. Residents claimed that, as the route of the extension passed under their houses, they deserved a metro station. Eventually, the Government yielded to citizen demands and, in 2007, Pinar del Rey station was opened. The result of this action was twofold: on the one hand, residents of Pinar del Rey gained in terms of accessibility and of happiness in having viewpoint heard; on the other hand, the addition of an extra stop went against the objectives of the line: connecting the town centre to the airport and the fair in the shortest time span. 52

59 4 DETERMINANTS OF PROJECT OUTCOMES In this section the key determinants of the long-term effects discussed in the previous chapter are illustrated and discussed. Below, each significant determinant is analysed and evidence and arguments supporting the findings are presented; finally, their importance for the project s final performance and the interplay between them is discussed. Table 4.1 IMPACT OF KEY DETERMINANTS ON PROJECT S PERFORMANCE Strength* 1. Appropriateness to the context Project design Forecasting capacity Managerial response Project governance +3 *-5 = very strong negative effect; 0 = no effect; +5 = very strong positive effect (see in Annex I the criteria adopted to assign these scores). 4.1 APPROPRIATENESS TO THE CONTEXT It is appropriate to consider first the context for this project, whether it was positive or negative, and whether the project itself had an impact on the context (was it a trait-taker or a trait-maker? 38 ). The context in which Line 8 was developed was highly favourable. As pointed out in Section 2.1, the lack of an efficient public transport system linking the city centre to Madrid Barajas airport was a real problem not only for an airport with expansion potential but for a region that was developing economically. Transport institutions in Madrid were well-defined. Created in 1986 and with a successful track record (such as the creation of the integrated fare system or transport pass), the CRTM was a mature institution, conscious of the needs and potentialities of the city. Furthermore, the construction of Metro Line 8 was included in an unprecedentedly ambitious plan to extend the subway network by 56 new kilometres of lines and 38 new stations; therefore, as it was planned in a moment of network expansion, the technical context was also positive for the project. Regarding the social framework, since the early 1980s and for a number of reasons, mainly rent increases in the central area but also the search for improved quality of life, many Madrid citizens had decided to move to the metropolitan area. This was followed by a dispersal of 38 In line with Hirschman s concepts (1967), a trait-taking project is one which accepts the context without trying to change it and a trait-making project is one which attempts to change the pre-existing context. 53

60 economic activities (offices, shopping centres) towards the outskirts of the central core (see Figure 4.1). Figure 4.1 EVOLUTION OF THE POPULATION IN MADRID COMMUNITY OVER THE LAST 30 YEARS (HALF EIGHTIES ON THE LEFT AND 2010 ON THE RIGHT) Source: Martínez et al. (2011) As a direct consequence of this, mobility between the different areas of the CM increased significantly (see Table 4.2) and the development of the public transport network responded to this new demand. Metro Line 8 was the solution for people living in the eastern neighbourhoods, such as Hortaleza or Barajas, which had been growing quickly without a proper parallel development of the public transport network. Table 4.2 DAILY MOBILITY: RESIDENCE-WORK FLOWS (2004) Origin Destination Central core Peripheral districts Out-of-town Total origin Central core 22,228 29,404 18,357 69,989 Peripheral districts 29,997 60,151 68, ,272 Out-of-town 16,197 42, ,046 Total destination 68, ,404 86, ,307 Source: Ayuntamiento de Madrid (2005) The increase in the coverage of the public transport network enhances the dispersion trend. With good public transport people are tempted to move ever further from the central core. In this sense, Line 8 extension has influenced the configuration of Madrid s population map, but it can be considered as part of a global trend. The project should thus be considered a traittaker as its construction was the consequence of social, strategic and economic circumstances. Line 8 has not generated new patterns of mobility within the metropolitan area regarding Barajas airport passengers or IFEMA visitors. Their numbers would most probably have grown in the same way, independently of the construction of the line. For these users the line has essentially enticed a modal shift from road-based transport to metro, due to its reliability gains and time savings. For inhabitants of the residential areas served by the line, the 54

61 effects have been both a modal shift, probably some changes in the destination of leisure trips and also the generation of new mobility due to the reduction in the generalised cost of travel to Madrid centre. Overall, the project has simultaneously solved several problems related to access to longdistance travel and to unsatisfied travel demand of the local population. It appears therefore as a particularly interesting case of good planning capacities. 4.2 PROJECT DESIGN Some infrastructures are by their nature more complex than others. Being in a densely populated city, with a history of more than 500 years, with a multitude of services buried underground and, above all, passing through ground with many potential restrictions and risks (Figure 4.2), the infrastructure here evaluated is a technically difficult one. Figure 4.2 MAIN AREAS OF RISK FOR TUNNEL CONSTRUCTION UNDER MADRID CITY Source: Comunidad de Madrid (2012a) The depth, the geotechnical characteristics of the terrain, the presence of surface water and the position and state of the closest buildings were the most serious and feared risks and were extremely influential in the choice of construction methods. To solve all these challenges some decisions were taken in order to guarantee the success of the works. In the Table 4.3, these decisions are outlined. 55

62 Table 4.3 DECISIONS REGARDING THE WORKS PLANNED IN THE EXTENSION PLAN FOR METRO DE MADRID NETWORK ( ) ITEM Construction techniques Contract conditions Control systems Designers and building contractors Project Managers Expert advice Source: Melis-Maynar (2000) DESCRIPTION In order to ensure the safety of workers, urban structures and buildings, excavation methods with an open front (namely, the New Austrian Method and Mechanical Pre-cut) were forbidden. As the main aim was guaranteeing the quality and the safety of the project, none of the agreements could be under a fixed-price contract. However, to foster quick development of the project, it was decided to deal with as a priority all the modifications that the project required. A control system of the underground works was developed to know precisely how the tunnel excavation was affecting nearby buildings and structures on the surface. The selection of the designers and the building contractors was done carefully, taking into account the experience of the engineers each company put forward with regard to underground works in urban areas. The criteria for evaluation of tenders were based on 30% for the economic bid, 20% for the terms proposed and 50% for the technical conditions, team personnel and auxiliary means. A national or global company would not have been contracted as project manager. The project was managed by three civil engineers of the Community of Madrid whose expertise in similar works was a valuable asset. The best Spanish experts in tunnels, who had long experience of working with soft soils, were the Project Managers advisers as their experience in similar works was a guarantee for the project s success. The tunnel boring machine manufacturer s personnel also worked side by side with the Public Works technicians. The three stages into which the works were divided were not a project design decision but a direct response to the evolution of the needs and objectives of the city: the first requirement to fulfil was connection to the airport via a metro line (1 st section: Mar de Cristal-Barajas Pueblo); the second phase was the result of the DG Regio requirement for Metro Line 8 to be eligible to CF (2 nd section: Mar de Cristal-Nuevos Ministerios) and the last section was a direct consequence of the new terminal construction 2.5 km from Barajas station (3 rd section: Barajas Pueblo-Aeropuerto T4). With regard to the last extension of the Metro Line 8, the PPP contract established was probably essential for the early completion of the whole line as it facilitated financing and construction bidding procedures. As a negative aspect of the project design, in terms of cost, it can be mentioned that some stations were over-dimensioned for their real needs and aesthetic criteria often prevailed over functional criteria. Covering an area of 36,500 square metres, Nuevos Ministerios interchange is likely to be the greatest example of monumental works; actually, the interchange is in high demand to house art exhibitions, performances and other cultural events. The enormous dimensions of some stations entailed a high level of investment that was probably unnecessary, even taking into account the view that considers the stations a place where to live and a natural location for cultural and social events. 56

63 The check-in desks were paid for by the Community of Madrid who invested EUR 18.6 million. Later, AENA and the Community of Madrid signed a contract and the former became the manager of the check-in service. [...] The number of passengers using the check-in desks was, according to the last data from AENA, about 250 passengers per day what is not an important amount. Source: Madridiario, January 23, 2007 Anyway, in spite of the complexity of the project and the over-dimensioning of some stations, the project was successfully completed without cost overruns and major delays, mainly thanks to the already mentioned good planning capacities of the project promoters. Figure 4.3 IMAGES OF NUEVOS MINISTERIOS INTERCHANGE Source: Metro Madrid (2012b) 4.3 FORECASTING CAPACITY Forecasting capacity is understood as the capacity to minimise risk factors and uncertainty in the development of projects. Unpredictability can be related to some of the project phases, the technology used, the human factor, financial resources or demand forecasts. With respect to the construction phase many control systems (Table 4.4) were implemented to help identify potential problems that could appear and study the corresponding solutions in sufficient time to implement them. To manage all these systems a Security and Control Unit were established, which consisted of the following departments and tasks: Soils laboratory: execution of on-site testing, boreholes and ground studies, geotechnical characterisation of the soils and numerical models of their behaviour. Technical office: collection of the civil works data, design and monitoring of the instrumentation, control models and evaluation of risk levels. Civil works department: installation and monitoring of the specific instrumentation and supervision of the installation and measurements of the conventional instrumentation. 57

64 Table 4.4 CONTROL SYSTEMS IMPLEMENTED IN THE METRO EXTENSION Controlled variable Control Tool Soil movements Building movements Earth pressure control Continuous shield wall performance Terrain characteristics Pressure and advance of the tunnel boring machine Source: Comunidad de Madrid (2012 b) 5,400 sensors installed 317 controlled buildings in tunnels surroundings 52 tunnel sections instrumented 65 shield wall sections instrumented 410 geotechnical drill holes, 12,000 lineal meters of drill hole and 43,750 tests to the ground 384 registered variables per minute The efforts of the project managers to accurately control the construction was essential for its success as there were no accidents; therefore, the key lesson from the experience is that rigorous control of civil works and working hand-in-hand with experts in the field are essential in minimising the risks of civil works. In terms of the deadline and financial resources, the performance of the tunnelling machines was a great deal better than expected. Furthermore, as Table 4.5 sets out, not only was the duration of the works significantly shorter than in other European metro extensions but the cost efficiency of the civil works, with unprecedentedly low costs per kilometre, was also outstanding. The homogeneity and quality of the Madrid soil and the great experience acquired over the many years of boring metro lines, along with good management, were critical factors in this performance. Table 4.5 COMPARATIVE TABLE: EUROPEAN METRO EXTENSIONS City Duration* Length (km) Stations Cost ** Cost/Km. London 9 years ( ) ,000 m $ 375 m $ Athens 12 years ( ) ,800 m $ 156 m $ Paris 8 years ,090 m $ 155 m $ Lisbon 8 years ,430 m $ 118 m $ Madrid 4 years ,706 m $ 30.3 m $ Note: *: Design and construction; **: including rolling stock Source: Comunidad de Madrid (2012b) The Madrid metro has been expanding its network at costs substantially below the levels that were internationally considered possible. The whole world could learn from this evidently superb manner of procurement and implementation. Source: World Bank (1999) quoted by Melis-Maynar (2000) 4.4 MANAGERIAL RESPONSE Good project design and ex-ante forecasting capacity succeeded to minimize the risks and unforeseen factors during both the construction and operation phase, thus avoiding any delays and cost overruns. Strict monitoring throughout the evolution of the project (described in Section 4.3) and the collaboration of highly experienced staff were probably instrumental in preventing important unforeseen events and ensuring a prompt and adequate response. 58

65 The main unexpected event with which Line 8 constructors had to deal was a one kilometre section of contaminated soil found in the section between the airport (T1-T2-T3 terminals) and Barajas-Pueblo. Ground pollution was due to filtration of aviation kerosene stored in the airport s old tanks. When the filtration was discovered, the Tunnel Boring Machine which was digging the tunnel was stopped so that the works needed to clean up a spill of some 90,000 litres of kerosene could be undertaken. These filtrations are currently a solved problem. This is one of the thousand obstacles you can have during civil works [...] before the completion of any civil work there is always a long and difficult way. Source: Luís Eduardo Cortés, Civil works, urbanism and transport Councilman, quoted by El País, April 13, 1999 The addition of Pinar del Rey station after the line had already been finished was another work which initially had not been planned and, as explained in Section 2.3, was a response by the government to public complaints in Hortaleza district. In this case, it was decided to include the construction of an additional metro station in the forthcoming Expansion Plan in order to improve public satisfaction. Regarding the response of potential users to the new public transport services, it is interesting to observe that many users of the line, in particular those related to the airport and the Fair, would not use the metro to move around Madrid (they would use their cars or taxis instead). The line, being the fastest means to get to the centre and providing a high quality environment for users (which, as explained, could be considered over-designed), has attracted new users to the metro system, who may thereafter have also been using it for other trips. The case of travellers to/from the airport is particularly interesting. The key determinants of the high modal share of the metro (76%) compared with the other access modes to the airport are the affordable cost of the ticket, the high frequency of the services (a train every 3-5 minutes) and the short trip between the heart of Madrid and the airport terminal building (25 minutes from T-4 and 14 minutes from the old terminals). Besides the speed, users also value the reliability, regularity and convenience of the metro service. Although carrying luggage is obviously a major factor in favour of the car, fear of missing flights due to traffic congestion and the expense of taxi use or parking fees are negative elements that have reduced the competitiveness of the automobile for city-airport trips. 4.5 PROJECT GOVERNANCE Governance structures for the delivery of Metro Line 8 (and the metro network expansion in general) were established many years before the first important expansion plan. Participants were: CRTM, founded in 1986, responsible for planning and supervising the global network, so that resources and operations are optimised; MINTRA, the public works managing company in Madrid (regional authority), is responsible for the construction of the metro line; 59

66 Metro de Madrid SA, responsible for the operation of metro services; AENA, the Spanish airport manager, who built the T4 station; ARPEGIO, a public enterprise of CM, manages land for all kinds of uses (industrial, residential, commercial, offices). Although Metro Line 8 was not built on ARPEGIO s land, as the transport infrastructures associated to its activity are self-financed by the land development, its activity alleviates pressures on Public Administrations budgets, facilitating the financing of other public works such as the Metro network expansion. Their well-defined roles and responsibilities and their experience in the transport sector within the Madrid Community positively influenced the project s outcome. As with all the metro works in Madrid, after completion of the metro line civil works by MINTRA, the infrastructure was managed by the public operator, Metro de Madrid, responsible for both the regulation and provision of the service. However, the extension to the Airport T4 via a PPP concession was a special case. Works were carried out by a private construction firm and in order to properly define the scope and tasks of each of the stakeholders involved, three collaboration agreements for the extension works from Barajas to Airport T4 were signed: Between MINTRA and CRTM in order to fix the economic conditions of the concession. In the contract it was stated that CRTM had the power to annually set the surcharge paid by users at terminal stations. MINTRA was responsible for compelling the concessionaire to pay the cost of introducing a new type of ticket at the vending machines as well as of the software for management and control of metro accesses. Between MINTRA and Metro de Madrid, S.A. for the purpose of coordinating themselves to provide technical instructions to the concessionaire to carry out the maintenance works. MINTRA also ensured that the concessionaire placed the infrastructure at the disposal of Metro de Madrid under proper conditions. On the other hand Metro de Madrid had to operate the service according to the quality standards defined in the agreement. Between MINTRA and AENA. MINTRA was responsible for guaranteeing that both the station and the land were available for the concessionaire when they had to start the works and that the concessionaire would be responsible for the maintenance of the station. As explained in Section 3.7, whilst the building and maintenance of the line was the responsibility of the concessionaire, the provision of service was the responsibility of Metro de Madrid and the concessionaire would recover the investment cost through the surcharge paid by T4 metro users. In this concessional scheme, regulation of the relationship between the concessionaire and the transport operator was a key factor. The challenge was to establish a mechanism whereby any breach of the operator s obligations, which could affect the results of the concessionaire, would be compensated for. It was therefore agreed that, if Metro de 60

67 Madrid breached its responsibilities in terms of frequency 39, quality and safety of the service on Line 8, with a negative impact on demand between Barajas and T4, it would pay compensation. With respect to the concessionaire responsibilities, they established a system of penalties in accordance with a series of indicators related to the maintenance of civil works 40 and the different technical systems under its responsibility, including track and airport station cleaning operations. Failure to comply with the standards could reduce the revenue obtained by the concessionaire by up to 12% of the total. These incentive mechanisms increased the complexity of the conditions for providing the service but also favoured the project performance. As a negative point, we may mention some problems between different levels of government, specifically between the central government and the city Council, which had negative consequences for the development of the extension to T4 terminal and for the financing of the works on the section from Mar de Cristal to Nuevos Ministerios. First, in 1997, when the new T4 terminal project was being designed, the method of connecting it to the city was called into question. The national government, who commissioned Rogers and Lamela studios to design T4 building terminal, wanted a Cercanías line to connect the airport with Chamartín, an important rail station in Madrid. At the same time, the Madrid Community government was announcing the extension of Line 8 to T4, revealing the absence of agreement between the two governmental levels. This position of Fomento, that does not take into account the plans of the regional government to extend Line 8 of the Madrid metro to Barajas, has been captured in the design of the fourth terminal. Source: La Vanguardia, November 26, 1997 In the tender specifications there was nothing about a metro station. [...] We have only 10 months to present the definitive design [...] now we have to meet with all the organisations that want a place at the terminal to adapt the installations to their needs. Source: Carlos and Antonio Lamela, architects of Rogers and Lamela studio, quote by La Vanguardia, November 26, 1997 In Figure 4.4 the entrance to Metro Line 8 in T4 terminal is presented. 39 Failure to fulfil frequency obligations happens when the number of circulations per day is reduced by more than 15% with respect to the standards established by the CRTM. 40 Including maintenance of lighting, platforms and tunnels ventilation, passenger access control doors, ticket vending machines, fire protection installations and cleaning. 61

68 Figure 4.4 ENTRANCE TO THE METRO LINE -8 IN T4 AIRPORT TERMINAL Source: AENA (2012) The second problem was due to the lack of coordination between central and local governments. In 1999, the president of the central government made a commitment to the Madrid regional government that he would apply for CF funding for the new section of Metro Line 8 to Nuevos Ministerios. However, when works were almost finished, in Brussels there was no evidence of any request. This meant that the Community of Madrid had to finance upfront the total costs of the work, which led to severe criticism from the opposition political parties. Eventually, however, the CF subsidy was obtained and financed most of the works. The Commission has not received any request for funding from the Cohesion Fund for the extension of the metro line between Mar de Cristal and Nuevos Ministerios. ( ) In addition, in accordance with the rules for the eligibility of the fund, expenses prior to the date of receipt of the request for assistance by the Commission may not benefit from community co-financing. Source: María Valenciano, Member of the European Parliament for the socialist political party, quoted by El País, January 12, INFLUENCE OF AND INTERPLAY BETWEEN DRIVERS We can now consider which of these five aspects of project s implementation were the most influential in its final performance as well as the interplay between them. Context is without doubt the most important driver of Metro Line 8 s success. Being the only quick and reliable public transport connection to the airport and the International Fair and passing through peripheral districts whose number of residents has also been rising, has ensured adequate demand for the service. Project design has also been crucial for the project s final performance. Despite the fact that there was over-investment in some stations, the design was exemplary as it took into account all the possible threats to the project in order to anticipate possible unforeseen events. Project design has strong interplay with the context, because this awareness of hazards and risk 62

69 reduction is likely to be the consequence of previous problems in the initial expansion of the metro network. Forecasting capacity and managerial response also interact in several ways with the project design. The collaboration of skilled professionals, familiar with both this class of civil works and Madrid s soil, allowed the project to promptly react to and overcome unpredicted events that could appear during the works. Finally, project governance was an important driver because the structure of the organisations responsible for the development of the public transport network in the CM, with clearly defined roles and tasks and with experience in the previous metro expansions, established a favourable framework for a rapid and successful development of the project. Unfortunately, there is also some evidence of conflicting interests between the local and the national government, which caused friction amongst the different political parties in Madrid. 63

70 64

71 5 CONCLUSIONS This report appraises the effects of Metro Line 8, which connects Madrid-Barajas international airport, one of the main entry points both for business and tourists to Madrid, with an important economic and central node in the city, Nuevos Ministerios. The metro line connection to Madrid-Barajas airport is fundamentally trait-taking, according to Hirschman s definition (1967). The need to improve public transport connections with the airport had already been identified in the 1960s and this requirement was made more acute by the dispersion trend of the population towards Madrid s periphery. However, the framework in which the project took place and which was essential for the success of the works also covered other dimensions: the existence of a metropolitan transport agency, the CRTM, the rapid development of the metro network and the acquired know-how in subterranean works, the new potential of Madrid as an economic and entrepreneurial centre and the impressive development of Madrid-Barajas airport. The project was highly worthwhile because, while costing EUR 742 million, the socio-economic NPV of the project is equal to EUR 2,636 million, with an IRR of 16.87%. Benefits in terms of cost savings and externalities clearly outweigh the investment and operating cost, so these positive values confirm that the project was desirable for Madrid s society and increased welfare. This is the result of the combination of two main drivers: firstly, productivity in the construction phase, which facilitated finishing the works in a highly competitive timeframe as well as keeping unit production costs at a low level and, secondly, a considerable reduction in the social costs time savings, fuel usage reductions, air pollution, etc. - of the trips served by Metro Line 8. These positive outcomes are supported not only by the CBA analysis but by the results of satisfaction surveys carried out amongst metro users, which place Line 8 amongst the most highly valued lines in the Madrid metro network. When Line 8 s project was presented to DG Regio, Madrid s government had in mind an ambitious plan to expand the metro network to the periphery during the following years and, without European Community financial assistance, it is unlikely that this achievement would have been possible. Not only was EU funding, providing over 85% of the cost of the line, essential for the implementation of the project but also its requirement to directly connect the city centre to the airport via a metro line has proved notably positive for the final performance of the infrastructure. The peripheral section initially proposed, with limited penetration of the city, would have been unable to capture the current level of demand and, as a consequence of this, gains in terms of time savings, and social and territorial cohesion would probably have been lower. A lesson to be learnt from the Line 8 project is therefore that a joint analysis of local and long distance transport needs, ensuring good intermodality, can lead to a more globally efficient solution. With a good public transport connection to a major transport node, a substantial 65

72 amount of road traffic can be eliminated. It is also important to see how the existence of a public transport agency such as the CRTM, grouping all public transport modes and with competence over the whole metropolitan area, facilitates the implementation of major projects in urban areas, especially when different administrations are involved. Finally, some requirements from the EU can be instrumental in improving the efficiency and sustainability of the projects to be financed. 66

73 ANNEX I. METHODOLOGY OF EVALUATION The present Annex summarises the methodological approach undertaken for carrying out the project case studies and presented in the First Intermediate Report of this evaluation study. Moreover, the Annex further elaborates on and specifies the definition of long-term effects considered throughout the case study and the typology of determinant mechanisms analysed in interpreting the project outcomes. The main objective is to provide the reader with a set of information describing how the project evaluation was conducted and to enable him/her to replicate this methodology. 41 The Annex is divided into three parts: in the first one, the overall conceptual framework of the evaluation study is recalled and the definition of long-terms effects and project determinants are laid out; in the second one, the methodology of analysis followed to implement the ex-post evaluation is discussed; finally, the structure of the case study reports and the tools used to standardise them is described in the third part. CONCEPTUAL BASIS The Conceptual Framework of this evaluation study is based on three dimensions of analysis: the object of the evaluation (the What ), the timing of the long-term effects (the When) and the determinants of the project s outcomes (the How ). The What dimension The Team developed a classification of long-term effects, with the aim of identifying all the possible impacts of public investments on social welfare. A broad distinction of project effects is among effects on Economic development or Quality of life. Investment projects can foster economic development, which is generally quantifiable by aggregate indicators, such as the Gross Domestic Product; although economic development is not disconnected from the wellbeing of society, it is acknowledged that there are a number of other factors that may affect public welfare, that are not captured by the traditional economic indicators 42. For the purpose of this study, the notion of quality of life 43 refer to the factors that affect social development, the level of social satisfaction, the perception of social reality and other dimensions which are outside the conventional economic dimension. Under these two broad categories, a taxonomy of more specific long-term development effects of investment projects has been developed. The definition of each type of effect is provided in Table I Specific recommendations which may enable application of the same evaluation methodology to future projects are discussed in the Final Report of this evaluation study. 42 Dasgupta, 2011 and Stiglitz et al., Used also as synonymous with wellbeing, as mentioned in the ToR. 67

74 Table I.1 TAXONOMY OF LONG-TERM DEVELOPMENT EFFECTS Effects Definition Checklist Economic development Direct economic growth Endogenous dynamics Quality of life Social cohesion Environmental effects Territorial cohesion Institutional learning Social happiness Following the traditional growth theory44, both public and private investment contribute to increasing the stock of capital and thus economic growth. The direct contribution of a project to economic growth, in terms not only of real growth of GDP, but also, more generally, on economic welfare is discussed within this category of effect. Endogenous dynamics comprise all the factors that have an indirect effect on economic growth, by improving the productivity of inputs: the increase of the stock of competences and knowledge of human capital45, the introduction of a more advanced technology46 and changes in the organisational model of economic actors, making them more efficient47, are analysed insofar they contribute to increasing the production function. Public investment can affect social cohesion, by minimising disparities, avoiding social marginalisation and reducing income inequalities across different socioeconomic, gender or ethnic groups. Polluting emissions, biodiversity loss and depletion of natural resources caused by large infrastructural projects can affect social wellbeing of both the present and future generations. The project can contribute to reducing welfare disparities caused by unequal distribution of resources and opportunities among regions and their population. The focus, in particular, is on core-periphery and urban/rural differences. Investment projects can bring wide spill-over effects to the quality of Public Administration and other institutions at national, regional or local level. Institutional quality is strongly related to economic growth48, but it can also affect the quality of life of people, because of the intrinsic value that individuals can attribute to a well-ordered society49. This category encompasses all those variables which may affect the subjective perception of people s wellbeing, and have to do with their psychology, family context, religion and cultural traits. Did the project have effects on the endowment of labour or capital production factors? Did it contribute to employment creation? Did it attract new investments? Did it create new business opportunities? Did it produce time savings for business trips? Did it produce decreases in travel costs? Did the project contribute to the improvement of the productivity of the economic system? Have social behaviours changed as a result of the project? Did the project provide new/improved skills, R&D investment, organisational changes that translated into an increase in labour productivity? Did the project promote social inclusion? Did it improve the conditions of specific segments of the population (e.g. elderly, migrants)? Did it improve the affordability of services? Did the project improve the quality of the natural environment? Did it alter wildlife habitats? Did it affect the ecosystem? Were there any environmental issues related to project implementation? Did the project improve the territorial cohesion of the region/country? Did it play any role in urban-rural or core/periphery or cross-border dynamics? Did it expand the territorial coverage of the delivery of a basic service? Did the project induce any institutional learning at regional administrative level? Did it raise political awareness regarding a specific theme? Did it have effects on the level of corruption? Are the project beneficiaries overall satisfied with the project s implementation and outcomes? Did the project have any effect on the perception of quality of life? Did it affect the sense of security of the target population? In researching all the possible long-term effects of project investments, it is acknowledged that there is a risk of duplication and double-counting: for example, a project for water treatment clearly has effects on environment, which may contribute to the development of new economic activities that foster economic growth. 44 Solow, Becker, Griliches, 1992 and Griffith, Tomer, 1982 and Martinez, See, for instance, Easterly et al., Sen,

75 The When dimension The temporal dimension of analysis relates to the point in the project s lifetime at which the effects materialise for the first time, how they develop over time and whether they have already stabilised or are still evolving. A clear distinction emerges between short-term and long-term effects, with the former being the first contributions made by the project and enjoyed by society after a relatively short time following project completion (about 1-5 years); the latter, on the other hand, become visible after a longer period of time and tend to stabilise over many years. It is acknowledged that, given the varying timeframe for different effects to appear and stabilise, the choice of the time horizon and the timeframe at which the ex-post evaluation is carried out can significantly affect the results of the evaluation. The How dimension Project outcomes, i.e. the way projects affect the generation of certain effects and the varying timeframe for effects to appear and stabilise, are not certain, but result from a nondeterministic combination of different and interrelated factors. Five stylised determinants of project outcomes have been identified: appropriateness to the context, project design, forecasting capacity, project governance and managerial response. Five Working Hypotheses are related to these dimensions and explain how each of them can influence the generation of the project s short or long-term effects (see Table I.2). The three dimension of analysis are logically interconnected and by combining the What, When and How dimensions the evaluator can disentangle the causal chain between the project s inputs and the outputs. METHODOLOGY OF ANALYSIS The methodology developed to answer the evaluation questions consists of a combination of quantitative (Cost Benefit Analysis) and qualitative (personal interviews, surveys, searches of government and newspaper archives, etc.) techniques. Qualitative techniques are probably better at determining why certain effects are generated, along what dimensions, and underlying causes and courses of action of the delivery process. The media (including websites or blogs), in particular, have proved to be an excellent source of evidence identifying or revealing both objective information and perceptions about the project, thus concurring to assess the project s impact on social happiness. At the same time, quantitative data can provide an important support to test and validate certain findings derived from interviews and other sources. The most important contribution of the CBA exercise is to provide a framework of analysis to identify the most crucial aspects of the projects ex-post performance and final outcome More details on the approach adopted to carry out the ex-post CBA exercise and, in particular, indications on project identification, time horizon, conversion factors and other features are extensively described in the First Intermediate Report of this evaluation study. 69

76 Table I.2 KEY DETERMINANTS OF PROJECT OUTCOMES CONSIDERED Determinant Definition Working Hypothesis Questions to be answered Appropriateness to the context Project design Forecasting capacity Project governance Managerial response Includes the consideration of institutional, cultural, social and economic environment into which the project is inserted. Refers to the technical capacity to design the infrastructure project and to select the best project option. Relates to the feasibility and capacity to predict future variables, such as the demand level. Concerns the number and type of stakeholders involved throughout the project cycle and how responsibilities are attributed and shared. Defined as the managerial and professional ability to react to unforeseen events. Context traits can be more or less favourable for project performance and deserve early and careful consideration about which to take or to make. The terminology of context traits that can be either taken (that is, accepted, as they are considered unchangeable) or made (by changing existing or creating new traits) is drawn from Hirschman (1967). The technical and engineering capacity to design an infrastructure and to provide the appropriate mechanism for its financial sustainability should be sufficiently disciplined to reduce future risks; at the same time it should leave some degrees of latitude to enable adjustments for unforeseen circumstances. Following Hirschman, latitude is the characteristic of a project that permits the project planner and operator to mould it, or to let it slip, in one direction or another. Some projects are so structured that latitude is severely restricted or completely absent: in these cases, the project is considered highly disciplined. A good initial investment in building the forecasting capacity does not eliminate risks, but it increases the knowledge of the context, improves the project design and optimises the distribution of responsibilities without lowering the commitment to performance. High stakeholder involvement, well-defined roles and responsibilities and incentive mechanisms require commitment of resources and increase the complexity of the decision-making process, which may be subject to particular pressures, but they can favour the project performance and its sustainability over time. Unpredicted events that occur and undermine the sustainability of the project and its capacity to lead to expected benefits can be overcome by prompt and adequate response from the decision-makers and project managers, driven either by professionalism and experience or by creativity and imagination. Has the (political, cultural, socio-economic, institutional, regulatory) context played a role in influencing the attainment of long-term effects? Were there any political, social, cultural, economic, regulatory, or institutional constraints to project implementation and performance? Was the project trait taking or trait making in its nature? If it was intended to be trait making, did it succeed? To what extent and in what way did the technical, structural and financial features of the project influence its performance? Did the option selection process lead to the implementation of the most promising project idea? Was project design capacity a relevant factor in determining the observed expost performance of the project? Was the project design flexible enough to be adjusted, if needed, to external and unexpected constraints? Were the ex-ante forecasts based on a sound methodology and a comprehensive set of information? Were some important factors not sufficiently considered ex-ante? Was the forecasting capacity a relevant factor in determining the observed expost performance of the project? What are the interests and motives of different actors and incentives for decision-making? How did they change over the time-span considered? Was the ownership of the project clearly identified? Did contractual arrangements improve the co-ordination of different stakeholders towards achievement-oriented results? Was project visibility a relevant political incentive to foster proper project implementation? Was the project subject to political or other forms of pressure? How did the project react to exogenous, unpredictable, events? What remedial actions were put in place? What mechanisms were used to incentivise proactive responses? Why were these events unexpected? Was it due to their purely exogenous and ex-ante unpredictable nature? Or, was it due to poor planning capacity? 70

77 STRUCTURE OF CASE STUDIES AND STANDARD TABLES OF RESULTS Qualitative and quantitative findings are integrated in a narrative way, in order to develop ten project histories and to isolate and depict the main aspects behind their long-term performance. All case study reports share the same outline, presented in the following Table: Table I.3 OUTLINE OF THE CASE STUDY REPORT SECTION CONTENT Projects description The first section provides a brief sketch of the unit of analysis. It describes the key structural features of the infrastructure and the service delivered, the context in which it takes place, the target population and the current performance of the project. Origin and history Description of longterm development effects Determinants of project outcomes Conclusions Annexes This section describes the background in which the decision to initiate the project was taken, the need and objectives expected be met and the key stakeholders involved and their role. The section should present a brief chronicle of the main developments after the construction phase and the most recent facts. This section should describe the main long-term development effects provided by the project. The seven categories of effects should be considered and for each of them an assessment of the contribution of the project to that specific effect, and the timing of their materialisation and evolution, should be given. The main drivers influencing the performance observed are described and elaborated here. The evaluators should provide their own assessment for each of the five key determinants of project outcomes identified in the conceptual framework. The key messages in terms of lessons learnt are developed here. Ex-post cost-benefit analysis report, list of interviewees, other ad hoc analysis if relevant (such as stakeholder mapping). In order to maintain the structure of all the case study reports as similar as possible, and facilitate the cross-project analysis of findings, a set of standard tables is used to summarise the main evaluation results related to three dimensions of analysis ( What, When and How ). Section 3 and 4 of each case study include standardised tables in which scores are assigned to each type of long-term effect and each determinant. Scores ranging from -5 to +5 are given in order to intuitively highlight which are the most important effects generated for each case study and which are the most relevant determinants explaining the project outcomes. In other words, scores are used to rank the effects and determinants, showing which ones are the most relevant. Moreover, the plus or minus signs indicate the nature of the effects produced by the project (was the impact positive or negative?) and of the determinant of project performance (did the determinant positively or negatively contribute to the project outcome?). The same scores are used to disentangle the project s impacts on different stakeholders. This table allows one to better interpret the aggregated score given to each effect, by understanding on which actor the project impacted the most: for example, a +3 score to Direct economic growth may be reflected by a very high positive effect on the infrastructure operator (valued, for instance, +5) and a slightly negative effect on other actors (valued -2). As shown by this example, the aggregate score of each effect and the scores related to different stakeholders should be consistent with each other and should results from a sort of weighted average of the impacts on individual stakeholders: an aggregate positive score is inconsistent with negative impact scores on all the different stakeholders involved. 71

78 Table I.4 Score Meaning SCORES ON PROJECT S IMPACT AND DETERMINANTS OF PROJECT OUTCOMES +5 Given the existing constraints, the highest positive effects have been generated. +4 Given the existing constraints, high positive effects have been generated, but more could have been achieved under certain conditions. +3 Moderate positive effects have been generated, with large scope for further improvement. +2 Some positive effects have been produced. +1 Very little, almost negligible, positive effects have been generated. 0 No effects have been generated. -1 Very little, almost negligible, negative effects have been generated. -2 Minor negative effects have been produced. -3 Moderate negative effects have been generated, but they could have been worse. -4 Highly negative effects have been generated. -5 The highest negative effects have been generated. Note: The same scores have been used for assessing both the project s impacts and determinants. In the first case, they have to be interpreted as the nature and strength of effect generated by the project; in the latter, they indicate the strength of each determinant factor in influencing the project outcomes. The When dimensions results are synthetically presented by means of another table: for each kind of effect, a score is given to explain how the nature and strength of the impact evolved over the years, by focusing in particular, on the short-run (approximately 1-5 years after the project s completion), the long-run (6-10 years after the project s completion) and the future period. The Table contains information that allows the reader to immediately understand whether the project impacts have already stabilised or not. The meaning of the symbols used and an example of their application is presented in the following two Tables. Table I.5 SYMBOLS USED TO DESCRIBE THE TEMPORAL DYNAMICS OF THE EFFECTS Symbol Meaning + or - Positive or negative effect. ++ or -- Positive or negative effects reinforced (in positive or negative direction) with respect to the previous stage. +++ or --- Positive or negative effects further reinforced (in positive or negative direction) with respect to the previous stage. +/- Mixed effect, it is not possible to assess whether the impact was positive or negative. Table I.6 Short run (years 1-5) EXAMPLES OF TEMPORAL DYNAMICS OF THE EFFECTS Long run (years 6-10) Future years Comments The positive effect stabilised in the short-run The positive effect stabilised in the long-run The effect has grown over the years and is expected to increase also in the future The effect was at first negative; after some years it turned positive and it is still not stabilised yet. +/ Effects have been mixed in the initial stage, became positive in the longrun and are expected to further increase in the future. 72

79 ANNEX II. COST-BENEFIT ANALYSIS This Annex presents the results of the ex-post CBA performed on the project Madrid Metro Line - Access To Barajas Airport. The aim of the analysis was not only to quantitatively assess the performance of the project to date, but also to provide a forecast based on its expected future performance. The methodology applied is in line with the guidelines set in the First Interim Report and, more generally, with the methodology defined in the EC Guide (European Commission, 2008). METHODOLOGY, ASSUMPTION AND DATA GATHERING In what follows, the main assumptions and the procedure of data gathering are described in detail. Project identification The unit of analysis of this CBA is the Madrid Metro Line 8. As explained in Section 1 of the main report, the project was included in the Metro Extension Plan with the aim of providing a fast and safe public transport connection to strategic city areas, such as the Trade Fair Exhibition Centre and Barajas International Airport. About 16.5 km long, Metro Line 8 runs between station Nuevo Ministerios, in the city centre and station Terminal 4 Barajas Airport. The project was implemented in four stages from 1997 to 2007 and included the following interventions: Table II.1 SYNTHESIS OF THE INTERVENTIONS Intervention Construction phase Mar de Cristal - Campo de las Naciones 15 th February th June 1998 Campo de las Naciones - Aeropuerto Station (T1,T2, T3) Barajas 15 th April th June 1999 (Airport) 7 th September 1999 (Barajas district) Mar De Cristal -Nuevos Ministerios Completed on 21 st May 2002 Barajas district - Barajas T4 5 th June rd May 2007 Source: Authors Time horizon In line with the First Interim Report, the time horizon for the CBA of Madrid Metro line is set at 31 years (30 years + years zero in 2011). Accordingly, the timeframe for the project s evaluation runs from 1997, when the first capital expenditure occurred, to A mix of historical data from 1997 to 2010 (covering 14 years) and forecasts from 2011 to 2027 (covering 17 years) is used. Constant prices and discount rates In line with the guidelines of the First Interim Report, the CBA was performed using constant prices. Historical data have been reflated and converted into Euro at 2011 prices by using the yearly average percentage variation of consumer prices provided 73

80 by the International Monetary Fund. As for data from 2011 onwards, they have been estimated in real terms (no inflation is considered). Consistent with the choice of using constant prices, financial and social discount rates have been adopted in real terms. Specifically, inflows and outflows of financial analysis - for both the backward and forward periods of analysis have been discounted and capitalised using a 5% real rate, as suggested in the EC CBA Guide. With regard to the economic analysis, a real backward social discount rate of 5.4% and a real forward social discount rate of 3.3%, specifically calculated for Spain (see the First Interim Report for the calculation), have been adopted. Without the project scenario The project under assessment is an example of green field investment 51. As explained in Section 2 of the main report, before its implementation, taxi, train, bus and private car were the transport modes connecting Barajas Airport with the city of Madrid. On that basis, the cash flows of the project have been compared with Do nothing reference scenario, which means that no investments are undertaken to extend the metro network and, accordingly, no operating costs and revenues are in place for the Metro operator. The do-nothing scenario is considered as a realistic alternative, given the state of the public transportation network system of Madrid. By contrast, the Do something scenario consists of the construction of the new Line 8, which was considered as the best alternative to connect in a fast way the airport and the areas of Barajas district with the city centre. Data sources The analysis relied on data provided by Consorcio Regional de Transportes de Madrid (CRTM), as well as data available on AENA website, and on the opinions of the experts interviewed. Moreover, information has been gathered from a review of the literature on the Madrid Metro line network and, more generally, on urban transport projects in Spain. Technical features The project includes a total of eight stations, currently operational along Metro Line 8. As showed by the table below, they have been opened gradually from 1998 and The total length of the line amounts to 16.5 km. In 1998, only 16% of the line was operational. Between 1999 and 2007 additional km were built and made progressively ready for operation. 51 A green field investment is the provision of a new facility. Examples of green field projects are new factories, power plants, airports which are built from scratch on a green field land. 74

81 Table II.2 LENGTH AND NUMBER OF STATIONS FOR EACH METRO SECTION Year Section Km Number of stations 1998 Mar de Cristal - Campo de las Naciones Campo de las Naciones - Aeropuerto Station (T1,T2, T3) Barajas Mar De Cristal -Nuevos Ministerios Barajas district - Barajas T Source: Consorcio de Transportes de Madrid FUTURE SCENARIO DEMAND In order to assess the project s performance in the future, hypotheses have been made regarding the future trends of variables. In particular, future costs and benefits have been estimated in relation to the evolution of passengers on Metro Line 8. To develop the demand analysis, the following considerations have been taken into account: Users are currently asked to pay EUR for a single journey to enter/exit at any airport station and EUR 1.50 to enter/exit at any other Metro Madrid stations within tariff area Zone A 53. The difference between the two fares is due to an airport surcharge introduced by the operator since the opening of T4 airport metro station in 2007 (see Section 3.7 of the main text). Frequent travellers, on the other hand, benefit from discounts such as 10-trips cards, etc. Passengers of Metro Line 8 can be divided into two categories: o airport station users including passengers who travel from and to Barajas airport (T1, T2,T3 and T4 terminals); o other users including all remaining passengers who use Line 8 for other purposes. These are mainly the inhabitants of neighbourhoods along the line, users working around the area ranging from Nuevo Ministerios to Barajas district, and visitors of the Trade Fair Exhibition Centre. Historical data on passengers using the line have been provided by CRTM from 2000 to The share of airport station users has been, on average, about 30% of the total 52 It enables entry and exit for any journey between any Metro Madrid station within the Zone A tariff area, and the Airport T1-T2- T3 and Airport T-4 stations The Madrid Metro network is split into six "functional" zones: MetroMadrid (zone A), MetroSur (zones B1 and B2), MetroEste (zone B1), MetroNorte (zone B1), MetrOeste (zones B1 and B2), TFM (zones B1, B2 and B3). Each one has a "single" ticket (Billete Sencillo), valid for one trip within the zone, and a 10-trip ticket for a comparatively lower price. When crossing zone boundaries, one has to buy a new ticket for the zone being entered. There is also a "combined" ticket, which provides for a single trip between any two points of the network except the Airport stations, which have an additional supplement of EUR

82 for the period. This number is related to Barajas airport s performance 54. On the basis of this picture, the following assumptions have been made to estimate the trend of Metro Line 8 users in the future: For sake of prudency, other users are assumed to remain stable, under the conservative hypothesis of maintaining the average value observed for the latest available data ( ). Airport station users have been estimated in line with the performance of the airport in recent years. Specifically, the assumption adopted is that from 2011 to 2014, the number of airport station users will decrease by 1.20% per year, which is equal to the average annual growth rate of airport passengers recorded between 2007 and 2011, as a reflection of market contraction due to the economic crisis. From 2015 onwards, a turnaround is expected following economic recovery. However, for sake of prudency, a moderate growth of 1.6% per year has been assumed, i.e. the average rate recorded in the last five years in airport passengers. The future trend in Metro Line 8 users resulting from the above assumptions is shown in the Figure below. Figure II.1 MADRID METRO LINE 8 DEMAND HISTORICAL DATA ( ) AND FORECASTS ( ). PASSENGER TRIPS. Source: Authors 54 Data gathered from AENA website shows that Barajas airport s passengers have more than tripled over the last 20 years, ranging from 16,107,840 passengers in 1991 to 49,662,5112 in

83 Supply On the supply side, the table below shows the characteristics of the service during peak hours (7:30 to 9:30 am) in weekdays for years 2004 and Table II.3 CHARACTERISTICS OF THE METRO LINE 8 SERVICE 2004 AND N. of trains/hour N. of carriages per train 3 4 Operating speed (Km/h) Load factor (passengers per carriage) Average capacity of the line (passengers/h) 10,602 13,148 Trip Time (min.) * * Increase of trip time from 2004 to 2009 is due to the extension of the line to T4. Sources: Memoria 2004 and Informe Annual 2009 Data on carriages x km has been sourced from CRTM. On this basis, trains x km and passengers x km have been estimated by applying the relative load factors 55. For the years before 2003, given the lack of historical data, a low frequency (8 trains per peak hour) has been assumed in line with the state of the project s implementation and passenger traffic. As for the future, it is assumed that the frequency of trains will be consistent with the trend of the number of passengers carried (see above). In particular, the hypothesis is that the number of trains during peak hours will increase up to 17 at the end of the time horizon (2027), meaning one train each 3.5 minutes. The Figure below illustrates the forecast trend of Madrid Metro Line 8 supply, in terms of trains x km. 55 For passengers, a 0.75 reduction has been applied the number of passenger per carriage reported during peak hours. 77

84 Figure II.2 MADRID METRO LINE 8 SUPPLY HISTORICAL DATA ( ) AND FORECASTS ( ). TRAINS X KM. 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , Source: Authors based on CRTM data As far as the capacity of the line is concerned, the length of the network is assumed to remain constant in line with the information gathered from the interviews, which confirm that no extension has been planned. FINANCIAL ANALYSIS Investments Costs No detail on investment costs has been provided by CRTM. Accordingly, some aggregate estimates have been derived from information available in the literature. According to Cristóbal-Pinto, C. et al (2001) 56, project costs for the section from Nuevos Ministerios to Aeropuerto Station T1,T2, T3 amounted to EUR million (EUR million, in 2011 prices). This section opened to traffic in May According to the study Ampliación Línea 8 Metro de Madrid. Tramo Barajas - Aeropuerto T4, the final section Aeropuerto Station T1, T2, T3 Airport T4, which opened in May 2007, had a cost of EUR 50.4 million (EUR 55.9 million, in 2011 prices). Extraordinary maintenance cost for replacement and repairing of short life-time equipment, including those costs to handle the increase in supply at the end of the time horizon, has been estimated within the operating costs. 56 Cristóbal-Pinto, C. et al (2001). 78

85 Residual Value As a general rule, given an operational phase of 30 years and given that the residual value of the rolling stocks should be nil after 20 years the calculation has to take into account replacement and available years of life at the end of the evaluation period. As for other investment items, with longer life-cycles, land will keep its value, while it is assumed that after 30 years of operations civil works and superstructures will keep, on average, a value equal to about 35% and 25% of their initial cost, respectively. However, given the lack of detail on how the investment was broken down by the above-mentioned items, and lacking data on replacement requirements, the residual value has been estimated arbitrarily at 30% of the initial investment (EUR 154 million, 2011 prices). Operating Costs The project commenced operations in June 1998 when the stations Mar de Cristal and Campo de las Naciones were opened to traffic. Operational and maintenance costs have been provided by CRTM, calculated as a share of the total costs of operating and maintaining the entire network, broken down into Personnel, Energy and Other costs. The share imputable to Metro Line 8 has been derived on the basis of the amount of service (carriages x km) provided by this line with respect to that of the total network. In 2011, for instance, Metro Line 8 accounted for about 3.2% of the total services provided. To this costs, additional EUR 8,960 per train/year 57 have been included to consider the needs for replacement of short life-time equipment and repairing. From 2011 onwards, marginal costs for operations and maintenance have been assumed constant. Changes will depend, proportionally, upon changes in the supply of the service, in terms of increased or decreased frequency. Total discounted operating costs to operate and maintain the project is about EUR million, which correspond to an annual cost in year zero (2011) of about EUR 29.5 million. This value is expected to increase to EUR 34.9 million in 2027 due to increased service supply. Revenues As with operating costs, revenues for Line 8 have been estimated by CRTM as a share of the revenues collected on the entire network. The main source of revenues is user tariffs. Other sources include publicity, beverages machines, etc. Again, as with operating costs, tariff prices have been assumed constant over time. Accordingly, inflows from tariffs will change only in line with the volume of passengers carried. 57 CENIT processing of SENER, 2006 data. 79

86 By contrast, revenues from other sources (publicity) have been assumed fixed, as they are generally not dependent on the number of passengers. Total discounted operating revenues of the project are about EUR million, which correspond to an annual revenue in year zero (2011) of about EUR 36.1 million. This value is expected to increase up to EUR 37.1 million in Project s Financial Performance On a financial basis, the profitability of the project is negative. The Financial Net Present Value (NPV) on investment is equal to EUR -747 million (at a discount rate of 5%, real), with an internal rate of return of -3.2%. These negative values confirm that the project was in need of EU funding since no private investor would have been motivated to implement it without an appropriate financial incentive. Notwithstanding this financial performance, the operator has been able to ensure the financial sustainability of operations over time. In fact, the sustainability of the project is not an issue, as Line 8 belongs to a wider infrastructure network managed by one operator and, thus, its sustainability depends on the overall financial stability of CRTM. Results of the project financial performance are presented in Table II.15. ECONOMIC ANALYSIS From market to accounting prices In line with the CBA Guide, the social opportunity cost of the project s inputs and outputs has been considered in the economic analysis. For this purpose, market prices have been converted into accounting prices by using appropriate conversion factors. In particular, reference has been made to the Spanish Guide to the evaluation of railway investments 58 and to the Standard Conversion Factor specifically calculated for Spain 59. As for labour, it is worth noting that the shadow wage estimated by Del Bo et. al (2011) 60 for the Community of Madrid has been adopted. An exception is represented by the civil works item, for which a specific ad hoc conversion factor has been calculated, as a combination of other primary items, namely labour and materials, on the basis of experts opinion. The Table below summarises the conversion factors applied for each cost item. 58 Manual para la Evaluación de Inversiones en Ferrocarriles del Ministerio de Fomento (1996). 59 See the First Interim Report for details. 60 A specific conversion factor has been calculated by Del Bo et. all. (2011) for the Community of Madrid and this is equal to

87 Table II.4 CONVERSION FACTORS USED IN THE ECONOMIC ANALYSIS Item Conversion factor Source Note Investment costs Civil works Own calculation 10% labour: Conversion factor=0.85; 90% materials: Conversion factor=0.90 Superstructures Standard conversion factor Rolling stock Standard conversion factor Expropriation 1.3 Expert Opinion Extraordinary maintenance Standard conversion factor Other Standard conversion factor Residual value 1.04 Own calculation 46% civil works; 30% land; 24% superstructure Operating costs Labour Shadow Wage Energy Standard conversion factor Other Standard conversion factor Source: Authors Table II.16 reports the total costs as well as the benefits of the project. Project s Effects Benefits generated by the implementation of Line 8 can be distinguished into: i) Change in consumer surplus, represented by the savings in the generalized cost for existing users and the willingness-to-pay net of cost for induced users; ii) iii) Changes in producer surplus, represented by increased revenues, net of additional operating costs. Reduction in negative externalities as a result of the traffic diverted from road to the metro, including congestions savings for users who remain on the road networks; In what follows a description of each benefit s components is provided. Consumer Surplus A standard rule to calculate transport projects effects on users is the computation of the impact of the investment on the generalised cost of travel. The latter is defined as the sum of 81

88 average monetary expenditure and cost of travel time for a specific trip 61 (Hultkrantz, L. 2012). The baseline assumption is that a reduction in the generalised cost generates a change in consumer surplus, which is defined as the excess of consumers willingness to pay 62 over the prevailing generalised cost of a specific trip (European Commission CBA Guide, 2008). The construction of Metro Line 8 is an example of such an investment, since it has reduced the generalised cost for passengers travelling from and to Barajas airport and the other destinations served, both in terms of travel time and trip costs. The reduction in generalised costs has generated effects on two groups of users: i) Existing users: passengers who used to travel on the route from Nuevo Ministerios to Barajas airport and district and that, after the project s implementation, shifted from their previous transport modes (bus, taxi, car) to the new Metro Line 8. These users gain from a reduction of the travel time and travel costs with respect to their previous transport mode. The benefit is given by the difference between the generalised cost for a trip before and after the project (rectangular area in Figure AI.3 below). ii) Induced users: these are users generated by the entrance into operation of Metro Line 8. For these users, before the project s implementation, the generalised cost of a trip was higher than their willingness to pay so that they did not travel. After implementation, the cost is now lower than their willingness to pay. The benefit is equal to the excess of their maximum willingness to pay over the generalised cost for a trip (triangular area in Figure AI.3 below) and is calculated according to the so called rule of half. As shown in Figure II.3, benefits for existing users (D 0 ) have been calculated as the difference between the generalised costs for a trip before and after the project. In particular, the generalised cost of Metro Line 8 (G 1 ) has been compared with the generalised costs of each alternative transport modes (bus, taxi, car). Estimation of the number of passengers shifting from each of the alternative transport mode has been made on the basis of the data provided by Cristóbal-Pinto, C. et al (2001) 63, as illustrated in Section 3.2 of the main text. Results of this estimation are illustrated by the Figure below. In particular, total existing traffic is composed of: 49% as diverted from taxi, 18% from drop-off cars, 15% self-driven cars, 8% regular bus, and 10% other modes (e.g. courtesy bus or hired car). 61 Per the CBA guide, the generalised cost of a trip can be expressed by the following formula: where: p is the amount paid for the trip by the user (tariff, toll); z is the perceived operating costs for road vehicles (for public transport is equal to zero); τ is the total time for the trip; v is the unit value of travel time. 62 The maximum amount that a consumer would be willing to pay to make a particular trip. 63 The paper shows the share of passengers by each transport mode before and after the project s implementation. 82

89 Figure II.3 PROJECT S BENEFITS FOR USERS Note: G0 is the generalised cost before the investment; G1 is the generalised cost after the investment; D0 are the existing users, D1 D0 are the new induced users. Source: Authors Figure II.4 EXISTING PASSENGERS AS DIVERTED BY TRANSPORT MODE Source: Authors elaboration on AENA data As far as the induced users are concerned (D 1 D 0 ), the benefit has been calculated by applying the rule of half. Their maximum willingness-to-pay has been proxied as slightly below the generalised cost of bus transport, which is the cheapest alternative mode. This is due to the fact the savings for bus modal shifters are only in terms of reduced travel time, as the difference in the prices of the tickets applied for the two services is negligible. For the purpose of the analysis, it was assumed that 85% of the total number of users entering/exiting Metro Line 8 are diverted passengers, while 15% are induced. This hypothesis is derived from experts' opinion. Induced traffic generally ranges from 5% to 10% of total traffic; however, considering the specific features of Line 8, which connects to an international airport, this value has been set higher. 83

90 Evidence from interviews confirmed that benefits for users (as well as the externalities, discussed below) have been materialising progressively following the opening of the different stations on the line. Thus, progressive increasing factors have been applied to the benefits generated by the project during the construction phase as new sections open. These factors have been calculated on the basis of the cumulative length of network opened to traffic in the different years and the amount of service provided. In order to calculate the change in generalised cost, specific assumptions have been made for estimating travel time and trip cost savings for both airport-related and non-airport-related passengers. In what follows, a detailed explanation is provided. Travel time savings This benefit concerns the time saved by the users of Metro Line 8 to travel from and to Barajas airport and the other destinations served. In order to evaluate this benefit, passengers have been distinguished into airport station users and other station users. Terminal 4 and Nuevo Ministerios stations (the two extremes of the line) have been taken as origin-destination points for airport stations users. According to data gathered from the Consorcio, travel time for this trip on Metro Line 8 is 25 minutes. This value represents a time saving of about 40 minutes compared to the traditional bus lines, 15 minutes compared to the airport express bus line which entered operations in 2011, 10 and 2.5 minutes compared to car and taxi, respectively (see Table II.6). These values take into consideration differences between access/exit and waiting times 64. As for the category of other stations users, an average travel time equal to 13.5 minutes has been calculated and compared with the average time needed with the alternative transport modes. Furthermore, passenger trips have been divided into business travellers, short distance commuters and other short distance passengers (e.g. leisure). Commuters are represented by those people working in the neighbourhoods along the new line, while business travellers are mainly directed to the airport. On the basis of experts opinion, it has been assumed that 10% of the total traffic on Metro Line 8 are business travellers, 70% are commuters and 20% are other passengers. For benefit monetisation, unit VTTS (Values of Travel Time Savings) from HEATCO 65, presented in the Manual Evaluación Economica de Proyectos de Transporte, 2010 have been applied 66. For sake of caution, value of time has been assumed constant over time to avoid project benefits being affected by external variables such as GDP trend. 64 For sake of prudency in benefit estimation, times of the drivers for drop-off cars is not included in the calculation. 65 HEATCO, 2005, Developing Harmonised European Approaches for Transport Costing and Project Assessment - Deliverable 5 Proposal for Harmonised Guidelines. 66 Per Table 0.3 of HEATCO Guidelines, Deliverable 5 (p. 59), value of business time amounts to EUR (2002 prices per passenger per hour) by car/train and to EUR (2002 prices per passenger per hour) by bus. VTTS values amount to EUR 6.12 and to EUR 8.52 (2002 prices per passenger per hour) for commuters travelling by bus and train/car respectively. As for other passengers, the VTTS values amount to EUR 5.13 and EUR 7.15 (Euro 2002 per passenger per hour) for trips by bus and car/train respectively (For more details see Table 0.4 of HEATCO Guidelines, Deliverable 5). These value have been then converted into 2011 prices. 84

91 Table II.5 VALUE OF TIME SPAIN (EUR 2002 AND 2011) Euro, 2002 Business Commuters (short distance) Leisure (short distance) Car/train Euro, 2011 Bus Car/train Bus Note: Values are provided in constant prices. Source: Manual Evaluacion Economica de Proyectos de Transporte, Table II.6 Other Transport modes TIME SAVINGS PER USER MODE, AIRPORT STATION USERS Travel time before (min.) Time saved (min.) Unit benefit Business (Euro, 2011) Unit benefit Commuter (Euro, 2011) Unit benefit Leisure (Euro, 2011) Taxi Bus (express line) Bus (other lines) Car Note: Information on travel times has been gathered for car and taxi from: For taxi an average value between 18 min. (minimum travel time with no congestion on the roads) and 37 min. (maximum travel time with high congestion on the roads) For car, the time needed for parking has been taken into account. For Bus: Source: Authors Table II.7 Other Transport modes TIME SAVINGS PER USER MODE, OTHER STATION USERS Travel time before (min.) Time saved (min.) Unit benefit Business (EUR, 2011) Unit benefit Commuter (EUR, 2011) Taxi Bus (express line) Bus (other lines) Car Source: Authors Trip Cost savings Unit benefit Leisure (EUR, 2011) An estimation of the trip cost savings has been carried out with respect to each alternative transport mode for the two categories of users (existing and induced). In particular, the difference between travel cost with the metro (ticket price) and the costs borne by passengers travelling by other transport modes has been calculated. As for the purpose of the calculation, trip costs borne by bus users have been excluded since there are no significant money savings for them, as the price of the ticket equals a maximum of EUR 2.00 per trip 67. Since different

92 tariffs are applied by the project operator to airport-related users compared to other station users, trip cost savings have been distinguished for these two categories. Accordingly, two origin-destinations have been adopted to better reflect the actual cost trip for these two categories. In what follows, the assumptions made for calculating travel costs related to the alternative transport modes are described in detail: Taxi: given a distance of 13 km from Nuevo Ministerios to Barajas airport T4 and an average distance of 7 km 68 to other stations of Metro Line 8, the average trip cost estimated for airport station users and other station users amounts, in 2011, to EUR and EUR 10.98, respectively, including supplements. Table II.8 AVERAGE TRIP COST BY TAXI FOR AIRPORT STATIONS USERS AND OTHER USERS Initial charge Price Km Supplement Average trip cost (Euro, 2011)* (Euro per Km)* (Euro, 2011) (Euro, 2011) Airport stations users Other users ** Note:* Subdirección General de la Oficina Municipal del Taxi. "Área de prestación conjunta. Tarifas 2011". ** For other users, an average supplement of 0.6 Euro has been calculated assuming that about 20% of these passengers will be directed to the Exhibition Center (Parque Ferial Juan Carlos I) and, therefore, subject to a supplement of EUR To this end, a reduction factor of 0.2 has been applied. Car: drop-off cars and self-driven cars have been considered for the purpose of this calculation. For the former, trip costs include only the fuel for travelling from Nuevo Ministerios to Barajas airport (13 km) or to the other stations (7 km, on average) 69. For the latter, trip costs also include the cost for car parking, in the case of airport-related passengers directed to airport. Table II.9 COST FOR TRANSPORT BY CAR Cost of fuel* Total Average cost for Total (Euro, 2011) drop-off cars 1-day parking** Self-driven cars (Euro, 2011) Airport stations users Other users Source:* ** Other transport modes: trip costs for users travelling with other transport modes include the cost of fuel plus the cost to hire and park a car, if needed. For the sake of caution, it has been assumed that only about 40% of these users hire a car, the remaining being picked up, for instance benefitting from courtesy bus services from 68 The value has been estimates as an average of different trips from Nuevo Ministerios to other stations on line 8, excluding airport stations. In this way a 7 km origin-destination trip has been adopted for other users. 69 As for travel time, for sake of prudency, cost of return journey for drop-off car drivers has not been included in the calculation. 86

93 Table II.10 hotels, etc. As a result, total average costs of EUR and EUR have been estimated for airport station users and other users, respectively. COST FOR OTHER TRANSPORT MODES Cost of fuel* (Euro, 2011) Average cost for 1-day parking** Average cost for 1-day hiring Total Weighted average*** (Euro 2011) (Euro 2011) Airport stations users Other users *Source: **Source: *** A reduction factor of 0.4 has been applied. An overview of the average cost savings by transport mode (taxi, bus and car) and user type (airport station users/other station users) is provided in Table II.14. Producer Surplus The producer surplus is calculated as the change in the service operator s revenues thanks to implementation of Line 8, net of the additional operational costs borne. In 2011, net revenues from the application of tariffs to users amounted to about EUR 7.9 million. Total discounted net revenues amount to EUR million (2011 prices). Since the consumer surplus has been calculated net of the tariff paid by users (which, in turn, represents a benefit for the producer), the net effect in economic analysis is zero, as the two items cancel each other out, being a transfer from one stakeholder to another. Externalities Evidence from the literature confirms that improvements in public rail transport services also contribute to reducing congestion on the road network and to producing positive impacts on the environment. The main externalities associated with such investments are: reduction in vehicle operating costs for users that remain on the road due to less congestion; improvement in road safety (reduction in accidents), reduction in air pollutants emissions, noise and climate change effects. The first step for estimating the positive externalities generated by the project under assessment was to calculate the number of vehicle trips avoided on the road (cars, buses and taxis) because of the traffic diverted to the metro. This value has been estimated by dividing the number of modal shifters by the respective average occupancy factors, namely: Table II.11 AVERAGE OCCUPANCY FACTOR BY TRANSPORT MODE Car Taxi Bus Source: Evaluating Public Transit Benefits and Costs Best Practices Guidebook,

94 Unit values provided for each type of externality by the Handbook on estimation of external costs in the transport sector have been adopted to estimate the positive external effects produced by avoiding vehicle trips on the road network. For the sake of completeness, the negative externalities generated by the project during its operational life, by adding trains to the network, have been also taken into account 70. A new underground infrastructure implies an additional number of trains-kilometres, which are assumed to impact on air and noise pollution. For the sake of caution, the lowest unit values have been considered within the ranges proposed in the Handbook, as showed by the table below. It is worth noting that, for the externalities on congestion saving, it was decided to use a very low value (EUR 0.10 /vehicle*km) 71 to stress that congestion is still a problem in the metropolitan area impacted by the investment 72. Table II.12 VALUE OF EXTERNALITIES Externalities Value Unit Reference Congestion Saving 0.1 EUR/(vehicle*km) Table 7, page 34 Accidents saving EUR/(vehicle*km) Table 10, page 44 Air pollution road EUR/(vehicle*km) Table 93, page 206 Air pollution rail EUR/(Train*km) Table 94, page207 Noise road day EUR/(vehicle*km) Table 22, page 69 Noise road night EUR/(vehicle*km) Table 22, page 69 Noise rail day EUR/(Train*km) Table 22, page 69 Noise rail night EUR/(Train*km) Table 22, page 69 Climate change effects road EUR/(vehicle*km) Table 29, page 85 Climate change effects rail EUR/(Train*km) Table 30, page 86 Source: 2008 Handbook on estimation of external costs in the transport sector Economic performance Results of the project financial performance are presented in Table II.15. On a economic basis, the profitability of the project is positive. The Economic Net Present Value (ENPV) on investment is equal to EUR 2,636 million (at a real backward social discount rate of 5.4% and a real forward social discount rate of 3.3%), with an internal rate of return of 16.87%. These very positive values confirm the project increases welfare and is desirable for society. This is the consequence of a combination of two main factors: on the one hand, an efficiency in construction, without implementation delays, which kept costs low, and on the 70 By contrast, negative externalities during construction have been considered negligible given the limited time of the investment phases. 71 The lower value proposed in the handbook was EUR 0.20 /vehicle*km. 72 Given the current prices of fuel in Spain, which are generally lower than in other EU countries, it is considered that environmental externalities are not internalized in the price of gasoline ( 88

95 other hand, a significant reduction in the generalised costs of reaching the airport and the other destinations served by Metro Line 8, which increased the benefits. Table II.13 below reviews the main categories of benefits and of costs and their relative incidence. Table II.13 Benefits Generalised cost savings, Diverted traffic BENEFITS AND COSTS SUMMARY (EUR, 2011 PRICES) Total value (EUR, discounted) % of total benefits 3,566,886, % Generalised cost savings, Induced traffic 108,641, % Consumer surplus 380,542, % Externalities 580,640, % Residual value 101,819, % Costs Total value (EUR, discounted) % of total costs Investment cost 912,132, % Operating costs 637,177, % Source: Authors 89

96 Table II.14 Taxi GENERALISED COST SAVINGS BY TRANSPORT MODE AND USER CATEGORY Before After Saving Cost of time Travel cost Generalised cost Cost of time Travel cost Generalised cost Generalised cost saving Airport station users Business Commuters Leisure Non airport station users Business Commuters Leisure Bus, Express line Airport station users Business Commuters Leisure Non airport station users Business Commuters Leisure Bus, other lines Airport station users Business Commuters Leisure Non airport station users Business Commuters Leisure Car, drop-off Airport station users Business Commuters Leisure

97 Non airport station users Business Commuters Leisure Car, self-driven Airport station users Business Commuters Leisure Non airport station users Business Commuters Leisure Source: Authors 91

98 Table II.15 Calendar Year FINANCIAL ANALYSIS (EUR, 2011 PRICES) COSTS Mar de Cristal - Barajas district Mar de Cristal - Nuevos Ministerios Barajas district - Airport T4 Residual value Total investment 70,514,107 69,214,942 68,015, ,625,905 84,675,800 82,347, ,451,709 27,472, ,514,107 69,214,942 68,015,155 87,625,905 84,675,800 82,347, ,451,709 27,472,851 Personnel 0 97, ,472 1,951,325 1,899,226 4,117,568 5,836,198 6,807,167 7,481,120 7,861,892 8,811,509 Energy 0 13, , , , ,257 1,088,840 1,241,399 1,388,651 1,459,330 1,977,773 Repairing 0 32, , , , ,314 2,098,439 2,424,552 2,454,985 2,405,333 2,092,820 Other 0 33, , , ,102 2,901,847 6,500,895 9,227,809 13,491,831 14,178,534 20,628,975 Total Operating Costs 0 177,200 1,741,286 3,921,282 4,026,456 8,642,986 15,524,372 19,700,926 24,816,587 25,905,090 33,511,078 TOTAL COSTS 70,514,107 69,392,142 69,756,441 91,547,188 88,702,257 90,990,813 15,524,372 19,700,926 24,816,587 54,356,799 60,983,929 REVENUES Tariff 0 85, ,449 1,804,575 1,930,620 4,732,773 6,718,772 8,420,949 9,899,937 9,920,754 13,301,416 Other 0 105,619 1,037,880 2,276,528 2,462,702 6,121,125 8,672,987 10,860,096 12,767,477 12,794,323 17,154,202 TOTAL REVENUES 0 190,739 1,874,328 4,081,102 4,393,322 10,853,899 15,391,759 19,281,045 22,667,414 22,715,077 30,455,618 92

99 Net Cash flow Discounted Cash flow -70,514,107-69,201,403-67,882,113-87,466,085-84,308,935-80,136, , ,881-2,149,173-31,641,722-30,528, ,613, ,489, ,906, ,596, ,330, ,318, , ,815-2,880,098-40,383,747-37,107,353 93

100 Calendar Year COSTS Mar de Cristal - Barajas district Mar de Cristal - Nuevos Ministerios Barajas district - Airport T Residual value Total investment Personnel 9,592,272 10,248,010 14,634,265 12,914,807 12,687,015 12,463,241 12,243,413 12,443,289 12,646,427 12,852,882 13,062,707 Energy 2,112,004 2,219,030 2,521,333 2,225,089 2,185,842 2,147,288 2,109,414 2,143,851 2,178,849 2,214,419 2,250,570 Repairing 2,175,206 2,285,269 2,286,144 2,166,367 2,166,367 2,166,367 2,166,367 2,166,367 2,166,367 2,166,367 2,166,367 Other 20,816,840 20,746,273 14,360,382 12,673,104 12,449,575 12,229,988 12,014,275 12,210,410 12,409,747 12,612,338 12,818,236 Total Operating Costs 34,696,321 35,498,582 33,802,125 29,979,367 29,488,800 29,006,885 28,533,470 28,963,917 29,401,391 29,846,007 30,297,881 TOTAL COSTS 34,696,321 35,498,582 33,802,125 29,979,367 29,488,800 29,006,885 28,533,470 28,963,917 29,401,391 29,846,007 30,297,881 REVENUES Tariff 15,237,333 15,212,762 15,163,486 15,612,851 16,002,375 15,946,514 15,891,320 15,965,768 16,041,431 16,118,329 16,196,483 Other 19,650,862 19,619,174 19,555,625 20,135,149 20,135,149 20,135,149 20,135,149 20,135,149 20,135,149 20,135,149 20,135,149 TOTAL REVENUES 34,888,196 34,831,935 34,719,110 35,748,000 36,137,525 36,081,663 36,026,469 36,100,917 36,176,580 36,253,478 36,331,632 Net Cash flow 191, , ,985 5,768,633 6,648,725 7,074,778 7,492,999 7,137,000 6,775,189 6,407,472 6,033,751 Discounted Cash flow 222, , ,835 5,768,633 6,332,119 6,417,032 6,472,735 5,871,628 5,308,538 4,781,354 4,288,074 94

101 Calendar Year COSTS Mar de Cristal - Barajas district Mar de Cristal - Nuevos Ministerios Barajas district - A irport T Residual value -154,041,265 Total investment ,041,265 Personnel 13,275,958 13,492,690 13,712,960 13,936,827 14,164,347 14,395,582 14,630,592 14,869,439 15,112,185 Energy 2,287,311 2,324,652 2,362,602 2,401,172 2,440,371 2,480,211 2,520,701 2,561,851 2,603,674 Repairing 2,166,367 2,166,367 2,166,367 2,166,367 2,166,367 2,166,367 2,166,367 2,166,367 2,166,367 Other 13,027,496 13,240,172 13,456,319 13,675,996 13,899,259 14,126,166 14,356,778 14,591,154 14,829,357 Total Operating Costs 30,757,132 31,223,881 31,698,249 32,180,362 32,670,345 33,168,327 33,674,438 34,188,812 34,711,584 TOTAL COSTS 30,757,132 31,223,881 31,698,249 32,180,362 32,670,345 33,168,327 33,674,438 34,188, ,329,681 REVENUES tariff 16,275,912 16,356,638 16,438,682 16,522,066 16,606,811 16,692,939 16,780,473 16,869,436 16,959,852 Other 20,135,149 20,135,149 20,135,149 20,135,149 20,135,149 20,135,149 20,135,149 20,135,149 20,135,149 TOTAL REVENUES 36,411,062 36,491,788 36,573,832 36,657,215 36,741,960 36,828,088 36,915,622 37,004,586 37,095,001 Net Cash flow 5,653,929 5,267,907 4,875,583 4,476,854 4,071,615 3,659,762 3,241,184 2,815, ,424,683 Discounted Cash flow 3,826,802 3,395,740 2,993,185 2,617,524 2,267,228 1,940,850 1,637,018 1,354,435 71,659,949 Financial discount rate (backward) 5% FNPV -747,030,036 FRR -3.2% 95

102 Table II.16 ECONOMIC ANALYSIS (EUR, 2011 PRICES) Calendar Year COSTS Mar de Cristal - Barajas district Mar de Cristal - Nuevos Ministerios Barajas district - Airport T4 Conversion factor ,302,564 69,007,297 67,811, ,363,027 84,421,773 82,100, ,366,354 27,390,433 Residual value Total investment 70,302,564 69,007,297 67,811,109 87,363,027 84,421,773 82,100, ,366,354 27,390,433 Personnel , ,194 1,795,219 1,747,288 3,788,162 5,369,302 6,262,594 6,882,631 7,232,941 8,106,589 Energy , , , , ,225 1,085,573 1,237,674 1,384,485 1,454,952 1,971,840 Repairing , , , , ,475 2,092,144 2,417,278 2,447,620 2,398,117 2,086,542 Other , , , ,372 2,893,141 6,481,392 9,200,125 13,451,356 14,135,999 20,567,088 Total Operating ,662,645 3,759,266 3,868,136 8,300,004 15,028,412 19,117,671 24,166,091 25,222,009 32,732,059 Costs TOTAL COSTS 70,302,564 69,176,495 69,473,754 91,122,294 88,289,909 90,400,788 15,028,412 19,117,671 24,166,091 53,588,363 60,122,491 BENEFITS Generalised cost 0 406,523 2,891,669 7,397,368 7,984,499 30,174,872 42,858,193 51,703,625 61,969,311 63,571, ,725,251 savings for Diverted traffic Generalised cost 0 25, , , ,031 2,079,638 2,792,094 3,206,194 3,706,653 3,638,899 7,771,500 savings for Induced traffic Consumer 0 85, ,449 1,804,575 1,930,620 4,732,773 6,718,772 8,420,949 9,899,937 9,920,754 13,301,416 surplus Externalities 0 6, , , ,401 4,521,769 6,517,156 7,854,654 9,229,656 9,384,199 24,939,176 TOTAL BENEFITS 0 523,359 4,147,465 10,321,292 11,064,551 41,509,053 58,886,214 71,185,421 84,805,557 86,515, ,737,343 Net Cash flow -70,302,564-68,653,136-65,326,289-80,801,002-77,225,358-48,891,735 43,857,803 52,067,750 60,639,466 32,926, ,614,851 Discounted Cash flow -146,804, ,015, ,793, ,099, ,667,036-78,487,581 66,799,276 75,240,745 83,137,897 42,830, ,918,395 96

103 Calendar Year COSTS Conv.factor Mar de Cristal - Barajas district Mar de Cristal - Nuevos Ministerios Barajas district - Airport T Residual value Total investment Personnel ,824,890 9,428,169 13,463,524 11,881,623 11,672,054 11,466,181 11,263,940 11,447,826 11,634,713 11,824,652 12,017,691 Energy ,105,668 2,212,373 2,513,769 2,218,413 2,179,285 2,140,846 2,103,086 2,137,419 2,172,313 2,207,776 2,243,818 Repairing ,168,680 2,278,414 2,279,286 2,159,868 2,159,868 2,159,868 2,159,868 2,159,868 2,159,868 2,159,868 2,159,868 Other ,754,389 20,684,034 14,317,301 12,635,085 12,412,226 12,193,299 11,978,232 12,173,779 12,372,518 12,574,501 12,779,781 Total Operating Costs 33,853,627 34,602,990 32,573,880 28,894,989 28,423,433 27,960,195 27,505,127 27,918,892 28,339,412 28,766,797 29,201,159 TOTAL COSTS 33,853,627 34,602,990 32,573,880 28,894,989 28,423,433 27,960,195 27,505,127 27,918,892 28,339,412 28,766,797 29,201,159 BENEFITS Generalised cost savings for Diverted traffic Generalised cost savings for Induced traffic Consumer surplus 147,666, ,316, ,165, ,903, ,467, ,925, ,388, ,112, ,847, ,594, ,353,577 8,846,110 8,982,421 9,157,251 3,199,128 3,292,118 3,280,626 3,269,271 3,284,587 3,300,153 3,315,973 3,332,051 15,237,333 15,212,762 15,163,486 15,612,851 16,002,375 15,946,514 15,891,320 15,965,768 16,041,431 16,118,329 16,196,483 Externalities 24,936,848 24,606,925 24,736,297 24,920,314 25,602,085 25,532,303 25,463,218 25,566,952 25,672,379 25,779,528 25,888,425 TOTAL BENEFITS 196,686, ,118, ,222, ,636, ,364, ,684, ,012, ,929, ,861, ,808, ,770,536 Net Cash flow 162,832, ,515, ,648, ,741, ,940, ,724, ,507, ,010, ,521, ,041, ,569,377 Discounted Cash flow 190,661, ,317, ,241, ,741, ,448, ,927, ,590, ,061, ,670, ,412, ,283,656 97

104 Calendar Year COSTS Conversion factor Mar de Cristal - Barajas district Mar de Cristal - Nuevos Ministerios Barajas district - Airport T Residual value ,173,570 Total investment ,173,570 Personnel ,213,881 12,413,275 12,615,924 12,821,880 13,031,200 13,243,936 13,460,145 13,679,884 13,903,210 Energy ,280,449 2,317,678 2,355,514 2,393,968 2,433,050 2,472,770 2,513,139 2,554,166 2,595,863 Repairing ,159,868 2,159,868 2,159,868 2,159,868 2,159,868 2,159,868 2,159,868 2,159,868 2,159,868 Other ,988,413 13,200,451 13,415,950 13,634,968 13,857,561 14,083,788 14,313,707 14,547,381 14,784,869 Total Operating Costs 29,642,612 30,091,272 30,547,256 31,010,685 31,481,679 31,960,362 32,446,859 32,941,299 33,443,811 TOTAL COSTS 29,642,612 30,091,272 30,547,256 31,010,685 31,481,679 31,960,362 32,446,859 32,941, ,729,760 BENEFITS Generalised cost savings for Diverted traffic 158,125, ,909, ,706, ,516, ,340, ,176, ,027, ,891, ,769,933 Generalised cost savings for Induced traffic 3,348,392 3,364,999 3,381,878 3,399,032 3,416,466 3,434,185 3,452,193 3,470,496 3,489,096 Consumer surplus 16,275,912 16,356,638 16,438,682 16,522,066 16,606,811 16,692,939 16,780,473 16,869,436 16,959,852 Externalities 25,999,101 26,111,583 26,225,902 26,342,087 26,460,168 26,580,178 26,702,146 26,826,106 26,952,089 TOTAL BENEFITS Net Cash flow Discounted Cash flow 203,748, ,106, ,279, ,742, ,753, ,779, ,823, ,884, ,962, ,057, ,170, ,651, ,205, ,769, ,341, ,923, ,515, ,116, ,900, ,397, ,632, ,981, ,440, ,006, ,675, ,445, ,132,406 Economic discount rate (backward) 5.4% Economic discount rate (forward) 3.3% Economic NPV 2,636,406,491 Economic IRR 16.87% 98

105 SYNTHESIS OF THE HYPOTHESES OF ANALYSIS AND SOURCES The following Table lists the different sources consulted to derive the financial and economic flows and the hypotheses and assumptions made by the Team in carrying out the CBA. Item Source Hypothesis Users of Metro Line 8 Source: Authors Concorcio de Transportes de Madrid and Experts opinion Data on the number of users entering Metro Line 8 from 2000 until 2011 has been gathered from Concorcio de Transportes de Madrid, as well as the share of users directed to the airport (airport station users) and to the other stations. For the future, airport station users are assumed to follow the trend recorded for the passengers of Barajas airport in recent years, while other station users are expected to remain equal to the average trend observed from project s implementation to Airport passengers Aena website The volume of airport passengers has been gathered from Aena website for the last 20 years (from 1991 to 2011). Price of tickets Investment costs Operating costs Length of the network, number of trains, number of stations Revenues Induced and diverted passengers Concorcio de Transportes de Madrid Cristóbal-Pinto, C. et al (2001). Concorcio de Transportes de Madrid Various sources Concorcio de Transportes de Madrid Experts opinion and Cristóbal- Pinto, C. et al (2001) Information on the price of tickets has been provided by Concorcio de Transportes de Madrid. As for the future, it was assumed that the real price of tickets will not change on the basis of the information gathered from the interviews. Information on investment costs has been derived from Cristóbal-Pinto, C. et al (2001) Barajas airport - Madrid city connection, improving accessibility", which provided total costs per section. Yearly allocations have been made on a pro-rata basis. Only the costs related to Line 8 have been considered. The share imputable to Metro Line 8 has been derived on the basis of the amount of service provided by this line (in terms of carriages per km) compared to that of the total network. In 2009, for instance, Metro Line 8 accounted for about 5% of the total service provided. The sources of information include: Cristóbal-Pinto, C. et al (2001), Memoria and Informe annual published by Concorcio de Transportes de Madrid. As for the future only, the number of vehicles is expected to change in line with the increase of supply and users. Revenues on Line 8 have been estimated as a share of the total revenues collected by Consorcio de Transportes de Madrid to operate the entire network. Tariffs have been assumed constant over time and change on the basis of the volumes of passengers carried. revenues from other sources have been assumed fixed. Experts opinion suggested the share of induced and diverted passengers over the total number of Metro Line 8 users. As for induced passengers, it was assumed to be 15% (slightly higher than the normal value) since Line 8 is connecting to an international airport. With regard to diverted passengers, they have been divided by previous transport mode according to the information gathered from Cristóbal-Pinto, C. et al (2001), showing the percentage of users by transport mode before and after the project s implementation. Travel Time Various sources In order to estimate the time savings, experts opinions have been used for car and taxi, while information concerning the bus and the metro has been gathered from and Concorcio de Transportes de Madrid respectively. Time saved has then been monetized by applying difference unit values, according to business and non-business trips per the indications provided by Heatco guidelines. Travel Costs Various sources As for taxis, information has been gathered from the Subdirección General de la Oficina Municipal del Taxi, while official sources have been consulted to estimate costs related to the car and 99

106 SENSITIVITY, SCENARIO AND UNCERTAINTY ANALYSIS A sensitivity analysis has been carried out on the key variables in order to determine whether they are critical or not. The procedure requires to make them vary one at a time by a +/-1%, and then to assess the corresponding change in the Economic NVP and IRR. A variable is referred to as critical if the corresponding variation in the economic output is greater than 1% in absolute value. In addition to the sensitivity analysis, a scenario analysis has been performed on the same variables in order to identify pessimistic and optimistic future paths. The Authors tested the sensitivity of five different variables: Supply growth , Demand growth , Value of time, Trip costs of taxi (price per Km) and Cost of fuel 74. Accordingly to what reported in the previous section, these variables have been considered particularly relevant for future forecasts because of their impact on the operating costs and externalities (Supply growth), on benefits and inflows from tariffs (Supply growth), as well as on the generalised cost savings (Value of time, Trip costs of taxi, Cost of fuel). The key variables considered in the sensitivity analysis are described more in detail In what follows: Supply growth : in the CBA a -1.76% annual growth has been assumed for the forecasts, on the basis of the data of Wagon x Km annual average growth rate of years provided by CRTM. After this initial contraction period due to the current economic crisis, for sake of prudence, a conservative 1.63% annual growth (equal to the annual average growth of airport traffic) has been assumed from 2015 onwards. In carrying out the sensitivity analysis, these two growth rates has made vary by +/-1%. Demand growth : during the period both the airport station users and the other station users are assumed to decrease according to a -1.20% annual growth rate, equal to the annual average growth of the airport traffic as computed through the CRTM data. From 2015 onwards the users growth rate is equal to 1.63%, corresponding to the computed airport traffic growth rate for years As in the previous case, within the sensitivity analysis exercise the two growth rates has made vary by +/-1%. Value of time: in the CBA the value of time (EUR 2011) has been separately computed in accordance to two dimensions: purpose of the journey (business, commuter and leisure trips) and transport mode (car/train and bus). Hence, these six different time values has been exploited for computing the time cost saving, which in turns is added to the specific travel cost saving for finally obtaining the generalised cost saving (a key aggregate variable which impacts on the project benefits). In the sensitivity analysis the six value of time components contemporaneously vary by +/-1%. 74 The assumptions concerning the base values of Trip costs of taxi and Cost of fuel have been formulated starting from the data provided by CENIT. 100

107 Trip costs of taxi: within the CBA a taxi price of EUR 1.17 per Km has been assumed, irrespective of the final destination of the trip (airport or other destination). This price is net of the initial charge and of additional supplements. In the sensitivity analysis the 1.17 taxi trip cost has been considered the base value increased and lowered by 1%. A higher cost of taxi corresponds to a scenario where the benefits related to the use of the metro line increase. Cost of fuel: with respect to the cost of fuel needed to travel from Nuevo Ministerios to the airport and to the other destinations, it has been assumed equal to EUR 1.67 and 0.90, respectively. Within the sensitivity analysis these two values have been made vary by +/-1%. The fuel cost, as well as the trip cost of taxi, impacts on the final generalised cost saving. As for the previous variable, a higher cost of fuel is positively associated with the outputs because using the metro is relatively more convenient. The results of the sensitivity analysis show that the only critical variable is the Demand growth Specifically, it is associated to a NVP elasticity equal to (see Table below). Apart from Demand growth, the economic performance indicators turn out to be robust to changes in each of the independent variables while keeping the values of the others constant. Table II.17 RESULTS OF THE SENSITIVITY ANALYSIS Independent variable Variation (in percent) of the economic NPV due to a ± 1% variation Criticality judgement * Variation (in percentage value) of the IRR due to a ± 1% variation Criticality judgement * Demand growth Critical Critical Supply growth Not critical Not critical Value of time Not critical Not critical Trip costs of taxi (price per km) Not critical Not critical Cost of fuel Not critical Not critical * Critical: ΔNPV/IRR > +1%; Less Critical: ΔNPV/IRR > +0.7%; Not critical: ΔNPV/IRR < 0.7%. With respect to the scenario analysis, all the above variables vary at the same time according to pessimistic or optimistic values. Specifically, for the sake of prudence the optimistic scenario has been obtained by increasing the base values of Value of time, Trip costs of taxi, Cost of fuel and of Demand growth from 2012 to 2014 by 10%. At the same time, on the basis of experts opinion, the Demand growth from 2015 onwards has been assumed equal to 3.82%, corresponding to the annual average growth rate. Finally, also the Supply growth has been increased by 10%, obtaining the -1.59% and 1.80% values adopted for the forecasts. On the other hand, within the pessimistic scenario the demand growth has been set equal to 1.32% for the first period corresponding to the CBA base value lowered by a 10% and to 0% 101

108 for the remaining time horizon, on the basis of experts opinion. For the sake of prudence, as opposed to the optimistic scenario, the four other variables have been lowered by 10%. The following Table gives a visual inspection both of the variables ranges, as defined in the pessimistic and optimistic scenarios, and of the outputs obtained when the independent variables are made vary one at once according to the scenario analysis hypotheses. Table II.18 SYNTHESIS OF SOURCES AND HYPOTHESES MADE FOR THE CBA Variable Base assumption in CBA Hypothesis Economic NPV (EUR 2011) * Economic IRR (%) * Demand growth ( and ) Supply growth ( and ) -1.20% and 1.63% -1.08% and 3.82% 2,736,478, % -1.32% and 0% 2,574,780, % -1.76% and 1.63% -1.59% and 1.80% 2,636,126, % -1.94% and 1.47% 2,636,681, % Value of time (business, commuters, leisure) ** car/train: 28.7, 10.9, 9.2; bus: 23, 7.9, 6.6 car/train: 31.6, 12.0, 10.1; bus: 25.3, 8.6, 7.2 car/train: 25.8, 9.9, 8.3; bus: 20.7, 7.1, 5.9 2,682,358, % 2,590,454, % Cost of taxi ** ,814,900, % ,457,912, % Cost of fuel ** ,651,159, % ,621,652, % * ENVP base case: 2,636,406,491. ERR base case: 16.87%. ** EUR The economic performance indicators obtained by making contemporaneously vary all the independent variables according to the above pessimistic or optimistic hypotheses are the following: i) In the optimistic scenario, the ENPV would reach EUR 2,981 million with an economic rate of return of 17.73%. ii) In the pessimistic scenario, the ENVP would reach EUR 2,339 million with an economic rate of return of 15.99%. In addition to the sensitivity analysis on the assumptions made for the future trends of the key variables, it also has been tested the elasticity of the outputs to the real social discount rate adopted in the analyses, as a test of the methodology adopted. In the CBA, the social discount rate was estimated at 5.4% and 3.3% for the backward and forward period, respectively 75. However, it is possible to test the assumption that either the discount rates are equal to 5%. 75 The difference with the standard sensitivity analysis stems from the consideration that variations in the parameters are not the result of the uncertainty about the future, but relates to methodological choices and assumptions. Hence, the ultimate purpose of this section is to test the robustness of the results to some key methodological hypotheses. 102

109 This value is recommended in the EC Guide on the basis of the interpretation of the SDR as the social opportunity cost of capital, i.e. the return that can be generated on the marginal project in the private sector 76. It turns out that the ENVP becomes equal to EUR 2,380 million about 10% lower than the base case value. The result suggests that the sensitivity of the output to the discount rate adopted is not critical. RISK ASSESSMENT The risk assessment has been conducted on the five variables on which the Sensitivity analysis was previously performed: Demand growth , Supply growth , Value of time, Cost of taxi (price per Km) and Cost of fuel. For the sake of simplicity, it was assumed that the probability distribution of each of these variables is triangular, with the value with the highest probability being the reference one that is, the base value adopted for carrying out the CBA and the lower and upper bounds being the pessimistic and optimistic values defined in the scenario analysis. The analyses have been elaborated through an experimental Monte Carlo simulation with 1,000 random repetitions. In a nutshell, at each iteration it is randomly extracted a value from the distribution of each of the independent variables. The five extracted values are adopted for computing the ENVP and IRR, and the output results are then stored. Finally, the Monte Carlo numerical algorithm is exploited in order to approximate the probability distribution of the two outputs. In synthesis, the risk analysis procedure shows that the expected value of the NPV is equal to EUR 2,648,963,314 (slightly higher than the reference case), and that the expected value of the IRR is 16.88% (against a reference case of 16.87%). The IRR, in particular, is never lower than 3.30%. Hence, the CBA outputs appear to be robust to future possible variations in the key variables. These results indicate that the risk of the project over the remaining years of the time horizon is quite low. 76 In a closed economy with perfect information, no distortions and no externalities the social discount rate and the social opportunity cost of capital are equivalent. This because if public investments crowd out private investments, then the social discount rate can be defined as the real rate of return earned on a marginal project in the private sector. 103

110 Table II.19 (EUR) RESULTS OF THE RISK ANALYSIS ON THE ECONOMIC NET PRESENT VALUE Reference value of the ENPV 2,636,406,491 Mean 2,648,963,314 Median 2,649,077,597 Standard deviation 102,454,878 Minimum value 2,380,217,421 Central value 2,644,531,471 Maximum value 2,908,845,520 Probability of the ENPV being not higher than the reference value Probability of the ENPV being higher than the reference value Probability of the ENPV being lower than zero < Source: Authors Table II.20 (EUR) PROBABILISTIC DISTRIBUTION OF THE ECONOMIC NET PRESENT VALUE Punctual probability Cumulated probability Reference value Minimum 0.60 Central 0.50 Maximum 0.40 Mean SD low SD upp Median ,380,000,000 2,530,000,000 2,680,000,000 2,830,000,000 Source: Authors 104

111 105 Table II.21 PROBABILISTIC DISTRIBUTION OF THE ECONOMIC NET PRESENT VALUE (EUR) Source: Authors Table II.22 RESULTS OF THE RISK ANALYSIS ON THE ECONOMIC INTERNAL RATE OF RETURN Reference value of the ERR 16.87% Mean 16.88% Median 16.88% Standard deviation 0.25% Minimum value 16.14% Central value 16.83% Maximum value 17.53% Probability of the ERR being not higher than the reference value Probability of the ERR being higher than the reference value Probability of the ERR being lower than the reference discount rate (2.4 %) < Source: Authors , 3 9 3, 6 2 0, , 4 2 0, 2 3 3, , 4 4 6, 8 4 6, , 4 7 3, 4 6 0, , 5 0 0, 0 7 3, , 5 2 6, 6 8 6, , 5 5 3, 2 9 9, , 5 7 9, 9 1 3, , 6 0 6, 5 2 6, , 6 3 3, 1 3 9, , 6 5 9, 7 5 2, , 6 8 6, 3 6 6, , 7 1 2, 9 7 9, , 7 3 9, 5 9 2, , 7 6 6, 2 0 5, , 7 9 2, 8 1 8, , 8 1 9, 4 3 2, , 8 4 6, 0 4 5, , 8 7 2, 6 5 8, , 8 9 9, 2 7 1, 9 2 0

112 Table II.23 PROBABILISTIC DISTRIBUTION OF THE ECONOMIC INTERNAL RATE OF RETURN % 16.5% 17.0% 17.5% 18.0% Punctual probability Cumulated probability Reference value Minimum Central Maximum Mean SD low SD upp Median Source: Authors Table II.24 PROBABILISTIC DISTRIBUTION OF THE ECONOMIC INTERNAL RATE OF RETURN % % % % % % % % % % % % % % % % % % % % Source: Authors 106

113 ANNEX III. MAP OF STAKEHOLDERS Stakeholder Ministry of Public Works (Fomento) Government of the Community of Madrid MINTRA CRTM Consorcio Regional de Transportes de Madrid General description and responsibility Ministerio de Fomento is responsible for the development of the government policies and legislation related to transport in Spain. The objective of the Ministry has always been to extend the Renfe rail network (Cercanías) to connect the airport with Madrid, first with the T1, T2 and T3 terminals and later with the T4 terminal. The Government of the Community of Madrid is a regional government that has exclusive competence with regard to civil works made within the region. Through the Department of Transport and Infrastructure, it is responsible for developing regional policies in the field of transport infrastructure and services. Finally, the Community of Madrid has to execute National Government legislation in terms of freight and passenger transport having its origin and destination within the region. Major infrastructure works are implemented in collaboration with MINTRA. The Community of produced the metro network extension plan called Plan de Ampliación del Metro de Madrid , in which the metro section from Mar de Cristal to Barajas airport was included, as well as the subsequent extension plans ( Plan de Ampliación del Metro de Madrid and Plan de Ampliación del Metro de Madrid ). The intention of the Community of Madrid was always to extend the metro line to connect the airport with Madrid instead of extending Cercanías rail lines. MINTRA (Madrid, Infaestructuras del Transporte) was a public company, whose purpose was the financing and execution of the collective public transport infrastructures according to the plans and transport policies of the Community of Madrid. MINTRA not only developed projects, which included the design, the approval and any redesign, but also built them or undertook maintenance or consultancy works. MINTRA was responsible for the construction of the section from Mar de Cristal Station to Barajas-Pueblo and of the section from Mar de Cristal to Nuevos Ministerios. MINTRA also called for tenders to construct and operate the last section of Line 8 from Barajas-Pueblo to T4 terminal. MINTRA, in coordination with Metro de Madrid SA, set the technical instructions to the concessionaire to control it and carried out the agreed maintenance works. As MINTRA s debt was required to be consolidated with Community Madrid, it was decided, in 2010, to shut it down and transfer its financial liabilities and its activities to the regional administration. The CRTM was established in 1986 to group the efforts of public and private institutions related to public transport, in order to coordinate services, networks and tariffs, so as to offer public transport users greater capacity and better quality of service. The State, the Community of Madrid, the municipalities and public and private companies collaborate closely in this common effort. On the creation of the Consorcio, all the operators had to transfer their competences, so that today it concentrates all public transport competences in these areas. The efficacy of CRTM s attempts to improve the public transport network in Madrid, for instance through the creation of the Integrated Fare System or the Transport Pass, is reflected in the steady growth of public transport users since the 1980s. CRTM promoted the link between the airport and Madrid area throughout a metro line. Confronted with the proposal of Ministerio de Fomento, whose intention was to do so through a suburban rail service, the Consorcio commissioned a feasibility study of the project, comparing the two alternatives, which 107

114 Airport Authority (AENA) Metro de Madrid SA EMT RENFE Metro de Barajas Sociedad Concesionaria demonstrated that the metro was the cheaper and more convenient option. The existence of the consortium facilitated the implementation of the project while minimising blockages, especially thanks to its good relationships with the municipalities outside Madrid. CRTM supervised all the works developed by MINTRA and took on the role of project promoter. Executed through a concession contract, the section between Barajas village and T4 is not owned by CRTM but CRTM is responsible for the payment to the service operator, Metro de Madrid SA, for providing services in the line. Every year, the Consorcio fixes the amount of the supplement that users must pay to use the airport stations. AENA Aeropuertos S.A. (100% of the company equity is owned by AENA) manages 47 airports and 2 heliports in Spain and participates directly and indirectly in the management of 27 other airports around the world. In the case of Madrid - Barajas Airport, one of the main points of entry for tourists to Spain, AENA is the airport authority, the owner and is responsible for air traffic control. In 2000, to increase the airport's capacity, the so-called Barajas Plan was put into effect; a third runway and a new control tower were constructed. The extension of the airport included new runways, parallel to the existing ones, so that they could all function fully and continuously. This project was completed on 4 February 2006 with the opening of the new terminal which included the current T4 and its satellite building, the T4S, with a surface area of over 750,000 m² and capacity of 35 million passengers a year and 120 flights an hour. AENA, in the context of the agreement made with the consortium and the Ministry, built the mixed Cercanías/Metro rail station in T4 terminal. The new extensions have consolidated Barajas as a "hub" airport where airlines can increase connectivity between Latin American, domestic and European markets. Madrid-Barajas is now a symbol of modernity and progress and has consolidated its leading position among world airports, being the fourth largest in Europe in number of flights and passengers. Metro de Madrid is responsible for operating metro services in Madrid s subway network. In 1954, the national government assumed administrative, technical and economic responsibility for extending the network. Today it is managed by the Consorcio de Transportes de Madrid. It operates not only Line-8 from Nuevos Ministerios to Barajas-Pueblo, but also the last section to T4 terminal, although this was constructed by the private concessionaire MBSC. Empresa Municipal de Transportes de Madrid is a public bus agency owned by Madrid Municipality. EMT adapted its bus services after the Metro Line-8 was opened to traffic. A new express line that gives daily and night service has been created, and the ordinary lines have changed. RENFE (Red Nacional de Ferrocarriles Españoles) is a public company that until 2005 was responsible for most of the rail infrastructure and operations in Spain. In 2005 the management and the property of the infrastructure was given to ADIF and RENFE retained the operations activity. RENFE was in favour of connecting the airport to Madrid by extending its existing Cercanías line. When both the connection to the old terminals and the connection to the new terminal were set out, RENFE had the intention of extending the Cercanías infrastructure. In 2011 the T4 terminal was connected to Madrid by the C-1 Cercanías line, operated by RENFE. MBSC is the concessionaire of the section of the Metro Line-8 from Barajas-Pueblo to the new T4 terminal. The construction and exploitation of the line (which includes maintenance and track and airport station cleaning operations) are the responsibility of MBSC, which recovers the cost through the additional fare paid by metro users entering or exiting the airport stations. 108

115 (MBSC) ARPEGIO As Metro de Madrid is in charge of providing the metro services on this section, an incentive mechanism has been established to ensure good practices between them. The failure to comply with the standards set in it could reduce the revenue obtained by the concessionaire as well as forcing the service operator to pay MBSC compensation. ARPEGIO (Áreas de Promoción Empresarial con Gestión Industrial Organizada) is a public enterprise in the Community of Madrid that manages public lands in all categories of uses (industrial, residential, commercial, offices). It acts under private law but is subject to a double legal framework: public and private law. Its activity is complementary to the private sector. Through its supply of urbanised land at affordable prices it contributes to the balanced development of the territory of the region, in coordination with local administrations. Many of the projects implemented by ARPEGIO are good examples of integration of land use and transport, having adapted the form and density of urban developments to transport infrastructures, resulting in sustainable mobility for the residents and workers that occupy them. The transport infrastructures associated with its activity are self-financed by the land development, alleviating pressures on Public Administration budgets. 109

116 110

117 ANNEX IV. LIST OF INTERVIEWEES Interviews and correspondence were undertaken with the following individuals. We would like to thank them for their assistance in compiling our report. Interviewees Position Date Place Jose Luis Kaiser Ministerio de Economía y Hacienda Madrid Ana Raquel Ministerio de Economía y Hacienda Madrid Jose Antonio Zamora Mª Carmen Hernández Ministerio de Economía y Hacienda Madrid Ministerio de Economía y Hacienda Madrid Dionisio González Technical Director, Consorcio de Transportes de Madrid Madrid Carlos Cristóbal Consorcio de Transportes de Madrid Madrid Teodoro Delgado Director of Operations, AENA Different dates Julio Ruiz Director of Operations, Metro de Madrid Different dates Abelardo Carrillo Director, D.G. Strategic Planning, RENFE Different dates Luis Eduardo Cortés President of IFEMA Different dates Enrique Ubillos Director of Urban Planning, Ayuntamiento de Madrid Different dates Telephonic Telephonic Telephonic Telephonic Telephonic Francisco Fernández Lafuente Former General Director of Concerted Activities in Major Cities in Ministerio de Fomento Madrid 111

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119 ANNEX V. REFERENCES List of cited references ABC, 2002, Aznar pone la terminal de Nuevos Ministerios como ejemplo del despegue económico de Madrid, 22nd May ABC, 2011, Aire que mata, 10th October AENA, 2010, Annual Report 2010, available at: AENA, 2011, available at: Álvarez de Francisco, J.L., 2002, Madrid: Una Apuesta por el Transporte Público, XVI Assembléia Geral Alamys, Río de Janeiro, December AUDES, 2011, available at: Ayuntamiento de Madrid, 2004, Barómetro de Economía Urbana, October Ayuntamiento de Madrid, 2005, Mapa Industrial y Estrategia de promoción del sector industrial en la Ciudad de Madrid, Área de Gobierno de Economía y Participación Ciudadana. Ayuntamiento de Madrid, 2006, Anuario de la convivencia intercultural. Síntesis, Observatorio de las Migraciones y de la Convivencia Intercultural de la Ciudad de Madrid, Área de gobierno de empleo y servicios a la ciudadanía. Ayuntamiento de Madrid, 2007, Análisis del impacto económico de la inversión en infraestructuras de transporte. Monográfico, Barómetro de Economía de la Ciudad de Madrid. Ayuntamiento de Madrid, 2009, Anuario Estadístico, Información de los distritos: Barajas, available at: Ayuntamiento de Madrid, 2011, Cifras de población por distritos. Becker G.S., 1962, Investment in Human Capital: A Theoretical Analysis, The Journal of Political Economy, Vol. 70, No. 5, Part 2: Investment in Human Beings (Oct., 1962), pp City Population, 2011, available at: Comunidad de Madrid, 2002a, Plan de Ampliación de la red de Metro de Madrid Comunidad de Madrid, 2002b, Metro de Madrid El Centro de la ciudad viaja al aeropuerto: Nuevos Ministerios-Barajas, ISBN: x. Comunidad de Madrid, 2012a, Ampliación del Metro de Madrid. Zonas de Riesgo en el Trazado, available at: /ampliacion20.htm. 113

120 Comunidad de Madrid, 2012b, Ampliación del Metro de Madrid. Sistemas de control y seguridad, available at: Consorcio Regional de Transportes de Madrid, 1998, Estudio comparativo entre las alternativas ferroviarias al acceso al aeropuerto de Barajas, Febrero Consorcio Regional de Transportes de Madrid, 2004, Memoria CTM Cristóbal-Pinto, C. et al., 2001, Impacto de la Ampliación de Metro de Madrid ( ) sobre la cobertura y la conectividad de la red, II Congreso de Historia ferroviaria Aranjuez, 7 a 9 de febrero de 2001, Siglo y medio de ferrocarriles en Madrid. Cristóbal-Pinto, C., 2007, Nuevos Ministerios: el aeropuerto en pleno centro de negocios, Buenas prácticas de Transporte Público en Europa y América Latina: Conclusiones del proyecto europeo PROMOTEO. Cristóbal-Pinto, C., 2007b, Organización del Transporte Público en la Comunidad de Madrid: El Consorcio Regional de Transportes de Madrid, Buenas prácticas de Transporte Público en Europa y América Latina: Conclusiones del proyecto europeo PROMOTEO. Cristóbal-Pinto, C., González, J.D. and García-Pastor, A., 2001, Barajas airport Madrid city connection, improving accessibility. Association for European Transport, CRTM, 2011, 25 años: Cómo hemos cambiado estos años, Paneles de exposición, available at: CRTM, 2011b, Evolución oferta y demanda de líneas de EMT en el Aeropuerto. Cuadrado Roura, J.R. et al., 2005, Reequilibrio territorial en la ciudad de Madrid. Estudio Comparativo. Situación social y económica, Universidad de Alcalá y Observatorio económico. Cushman & Wakefield, 2011, European Cities Monitor 2011, October Dasgupta P., 2001, Human Well-Being and the Natural Environment, Oxford University Press. De Santiago, 2008, Madrid, global. La región urbana madrileña como nodo relacional en el contexto de la centralidad global, Revista electrónica de geografía y ciencias sociales. Universidad de Barcelona. Vol. XII, N.270. Demographia, 2011, World Urban Areas (World Agglomerations). 7th Annual Edition, April Available at: Easterly W., Ritzen J. and Woolcock M., 2006, Social Cohesion, Institutions, and Growth, Economics and Politics Vol. 18 (2), pp EIB, 1997, Accès a l'aéroport de Barajas - Ligne de métro, Rapport d'évaluation. El digital de Madrid, 2011, Estocolmo se inspira en Madrid para su red de transporte, 6th September

121 El País, 1999, IU teme que las filtraciones de queroseno lleguen a la línea 8 del metro, 13th April El País, 2002, Ruiz-Gallardón pierde milliones para la línea 8 ya que Aznar no reclamó ayudas europeas, 12th January European Commission, 2009, Eurobarometer. Perception survey on quality of life in European cities, Analytical report, November European Commission, 2012, The Cohesion Fund at a glance, Regional Policy-Inforegio, available at: EuroRAP (European Road Assessment Programme), 2009, Estudio de evaluación de carreteras EuroRAP Fageda, X., 2009, El impacto económico de los aeropuertos, Institut de Recerca d Economia Aplicada (IREA)-UB. Griffith R., 2000, How important is Business R&D for Economic Growth and should the Government subsidise it?, The Institute for Fiscal Studies, Briefing Note No. 12. Griliches Z., 1992, The search for R&D spillovers, Scandinavian Journal of Economics, vol.94, pp Hatch, D., 2004, Amsterdam Airport The Growing Importance of Rail Access, Japan Railway and Transport review N.39, July Heidelberg's Institute for Environmental Physics, 2004, Global air pollution map produced by Envisat's SCIAM, University of Heidelberg for European Space Agency. Hirschman A.O., 1967, Development Projects Observed, The Brookings Institution, Washington, D.C. INE (Instituto Nacional de Estadística), 2011, available at: Isfort, (2010), Modelli istituzionali e di governo nelle grandi città europee, quaderno RT Isfort. Iturbe López, J.I., 2002, El Consorcio Regional de Transportes de Madrid: más de quince años de existencia, conferencia en el Seminario Internacional PROMOTEO, 30th May Kaufmann, D. et al, 2010, The Worldwide Governance Indicators: Methodology and Analytical Issues, available at: La Vanguardia, 1997, Fomento prevé que un tren, y no el metro, llegue hasta Barajas, p.7, 26th November Laboratorio de Medio Ambiente de la Universidad Politécnica de Madrid, 2011, published in El País, La contaminación del tráfico ensombrece Madrid y Barcelona, 8th February

122 Madridiario, 2007, El área de facturación de Nuevos Ministerios, en vías de cierre, 23rd January Marínez, O. and Herráiz, P., 2011, Tendencias de la movilidad urbana: La experiencia de Madrid. Martinez M., 2009, Il management delle aziende di Public Utilities tra cambiamento istituzionale e compliance, in Modelli di governance e processi di cambiamento nelle Public Utilities, edited by Mercurio R. and Martinez M., Franco Angeli, Melis Maynar, M.J., 2000, Experiencias y resultados de la ampliación km de túnel y 34 estaciones en 40 meses, Revista de Obras Públicas, Extraordinario Diciembre 2000: El metro de Madrid nuevo reto (Monográfico), N. 3405, pp.9-23, December Metro de Madrid, 2009, Informe anual Informe de gestión. Metro de Madrid, 2009, Percepción sobre la calidad del servicio por parte de los clientes de Metro de Madrid, June 2009, available at: Encuesta%20Metro% pdf. Metro de Madrid, 2011, Galería de Planos, available at: es/conocenos/ quienes_somos/historia/album.html. Metro de Madrid, 2012a, Red de metro. Líneas y horarios, available at: es/viaja_en_metro/red_de_metro/lineas_y_horarios/linea08.html. Metro de Madrid, 2012b, Las tienes que conocer: Nuevos Ministerios. Galería de imágenes, available at: MinisteriosEmblematica. Metro de Madrid, 2012c, Viaja en Metro. Tarifas, billetes, available at: /es/viaja_en_metro/tarifas/billetes/. Ministerio de Fomento, 1995, Mapa de tráfico Planos de ciudades, Centro de publicaciones del Ministerio de Fomento. Ministerio de Fomento, 2000, Mapa de tráfico Planos de ciudades, Red de Carreteras del estado y Red Autonómica Principal. Centro de publicaciones del Ministerio de Fomento. Ministerio de Obras Públicas y Transportes, 1990, Mapa de tráfico Autopistas de peaje y detalles. Secretaría General para las infraestructuras del transporte terrestre. Dirección General de Carreteras. NetMaps, 2011, available at: Observatorio Económico, 2006, Barómetro de Economía de la ciudad de Madrid. Nº 5. Monográfico: Especial Industria. Abril Área de Gobierno de Economía y Participación Ciudadana del Ayuntamiento de Madrid. 116

123 RACC, 2009, La congestión en los corredores de acceso a Madrid, Fundación RACC. RENFE, 2011, Mapa de Cercanías, available at: RENFE, 2012, available at: RENFE, 2012b, Mapa zonas Madrid, available at: madrid/mapa_zonas_madrid.html. Sector Ejecutivo. Revista de Economía y Empresas, 2012, Primer operador Ferial de España, N.163, February Sen A.K., 1987, On Ethics and Economics, Basil Backwell eds., Oxford. Solow R.M., 1956, A Contribution to the Theory of Economic Growth, The Quarterly Journal of Economics, Vol.70, No. 1 (Feb. 1956), pp Stiglitz J.E., Sen A., Fitoussi J.P, 2009, Report by the Commission on the Measurement of Economic Performance and Social Progress. Available at: Tomer J., 1981, Organizational Change, Organization Capital and Economic Growth, Eastern Economic Journal Vol. VII, No. 1.AENA, 1999, Plan director del aeropuerto de Madrid-Barajas, available at: UITP, 2004, Towards sustainable urban transport, UITP-Euroteam, Brussels. University of Heidelberg, 2004, NO 2 levels over Europe, Heidelberg's Institute for Environmental Physics, available at: World Health Organization (WHO) and UN-HABITAT, 2010, Hidden cities: unmasking and overcoming health inequities in urban settings. Other papers and reports consulted AFE (Asociación de Ferias Españolas), 2002, Estadísticas feriales de AFE Ayuntamiento de Madrid, 2006, Informe Anual Observatorio Industrial de Madrid, Observatorio económico. Ayuntamiento de Madrid, 2009, II Plan Madrid de Convivencia Social e Intercultural, Dirección General de Inmigración y Cooperación al Desarrollo, Área de Gobierno de Familia y Servicios Sociales. Ayuntamiento de Madrid, 2011, Taxi. Área de prestación conjunta. Tarifas Berné, C. and García, E., 2005, Las ferias de profesionales: creación de valor desde la red de negocio y la comunidad, Colección Mediterráneo Económico N.11: Nuevos enfoques del marketing y la creación de valor, pp

124 CENIT, 2011, Access to Barajas Airport Metro Line, Presentation Brussels 30th November Comunidad de Madrid, 2005, Plan de Ampliación de la Red de Metro de Madrid ( ), Consejería de Transportes e Infraestructuras, available at: Consorcio Regional de Transportes de Madrid, n.a., Ampliación Línea 8 Metro de Madrid Tramo Barajas Aeropuerto T4. Consorcio Regional de Transportes de Madrid, 2004, Demanda de transporte público colectivo en Consorcio Regional de Transportes de Madrid, 2006, El transporte público al aeropuerto de Madrid-Barajas, February Consorcio Regional de Transportes de Madrid, 2007, Buenas prácticas de Transporte Público en Europa y América Latina: Conclusiones del proyecto europeo PROMOTEO (Promoción del transporte público para lograr una movilidad sostenible en las grandes aglomeraciones urbanas). Proyecto co-financiado por la Unión Europea dentro del programa URB-AL Red 8. ISBN: Consorcio Regional de Transportes de Madrid, 2010, Demanda de transporte público colectivo Ecologistas en acción, 2011, La calidad del aire en la comunidad de Madrid, Balance Ecomovilidad, 2010, La facturación de nuevos ministerios: un espacio inutilizado que podría ser un museo del transporte, 26th July Fundación Movilidad, 2009, 1er Informe del Estado de la Movilidad de la Ciudad de Madrid , 23rd February Fundación Movilidad, 2010, 2do Informe del Estado de la Movilidad de la Ciudad de Madrid 2009, 10th March Gámir-Orueta, A., 1999, La actividad ferial y congresual en España, Boletín de la A.G.E., N.28, pp García-Palomares, J.C. and Gutiérrez-Puebla, J., 2007, Pautas de la movilidad en el área metropolitana de Madrid, Cuadernos de Geografía 81-82, in the study Evaluación de los efectos de las vías metropolitanas de alta capacidad sobre el territorio, la socioeconomía y la movilidad: el caso de Madrid, del Plan Nacional de I+D+I del Ministerio de Educación y Ciencia. Hosteltur, 2006, AENA cerrará la facturación de equipajes en Nuevos Ministerio, 2nd June IFEMA, 2010, Annual Report IFEMA, 2011, General information: governing bodies, available at: 118

125 Instituto de Estudios Turísticos (IET), 2002, Encuesta de Movimientos Turísticos en Fronteras (Frontur), Secretaría de Turismo, available at: La Vanguardia, 1992, Manifestación en Madrid contra la ampliación de Barajas, 30th November La Vanguardia, 1999, La inversión en la red de metro de Madrid duplica a la de Barcelona, p.8, 14th October La Vanguardia, 1999, Madrid vuelve a pedir dinero europeo para alargar el metro, p.6, 7th November La Vanguardia, 2000, El Gobierno dice que no habrá fondos europeos para el metro, p.7, 17th October MadridEmprende (Agencia de Desarrollo Económico), 2006, Plan de mejora de áreas industriales y empresariales de la ciudad de Madrid, available at: madridemprende. Martinez M, 2010, La gestione delle infrastrutture di trasporto passeggeri: quali prospettive? Cesit Confimprese, Convegno CIBUS, Parma. Martínez, O. and Herráiz, P., 2011, Tendencias en movilidad urbana: la experiencia de Madrid, April Martínez-Conde, J.A., 2007, Financiación del intercambiador de avenida de América, Buenas prácticas de Transporte Público en Europa y América Latina: Conclusiones del proyecto europeo PROMOTEO, available at: Melis Maynar, M.J., 2001, Ampliación de la red de metro de Madrid, Revista de Obras Públicas, N.3410, pp.19-49, May Metro de Madrid, 2007, Aguirre abre el Metro a la T4 del Aeropuerto, que será utilizado por personas al día, 3rd May 2007, available at: es/comunicacion/prensa/2007/noticia0052.html. Metro de Madrid, 2010, Percepción sobre la calidad del servicio por parte de los clientes de Metro de Madrid en 2009, January 2010, available at: sites/metro/comun/noticias/pdf/informe_opinion_2009.pdf. Ministerio de Fomento, 2011, Cercanías de Madrid: Nuevo acceso ferroviario Aeropuerto T4, September Sánchez-Soliño, A., 2007, El acceso en metro a la T4 de Barajas: un nuevo modelo concesional, TecniRail, p.4, October UrbanRail.Net, 2011, available at: 119

126 Via libre, 2006, En funcionamiento el primer sistema automático de transporte en un aeropuerto español, 20th June Via libre, 2011, Del aeropuerto de Barajas al centro de Madrid en quince minutos en marzo del 2002, 8th February 2011, available at: Via libre, 2011, El autobús exprés desde Atocha al aeropuerto de Barajas transporta viajeros diarios, 17th May 2011, available at: Via libre, 2011, Hoy comienzan las circulaciones en pruebas por la nueva línea al aeropuerto de Madrid, 30th May 2011, available at: Via libre, 2011, Inversión de millones para llevar la alta velocidad al aeropuerto de Madrid, 6th June 2001, available at: Via libre, 2011, La Comunidad de Madrid anuncia la disolución de Madrid Infraestructuras del Transporte, Mintra, 11th June 2011, available at: Via libre, 2011, Mañana entra en servicio la nueva línea de cercanías al aeropuerto de Barajas, 22nd September Villafañez, R., 2007, Financiación de la ampliación de la red de metro de Madrid, Buenas prácticas de Transporte Público en Europa y América Latina: Conclusiones del proyecto europeo PROMOTEO. Other project documents consulted Comunidad de Madrid, n.a., Pliego de cláusulas administrativas particulares que ha de regir el contrato de concesión de construcción y explotación de la obra pública correspondiente al tramo Barajas-Nuevo Edificio Terminal T-4 de la Línea 8 de Metro, Consejería de Transportes e Infraestructuras, Comunidad de Madrid. Comunidad de Madrid, n.a., Pliego de condiciones para el mantenimiento, conservación y puesta a disposición de las instalaciones, Consejería de Transportes e Infraestructuras, Comunidad de Madrid. Comunidad de Madrid, 1998, Estatuto de Autonomía de la Comunidad de Madrid. Ley Orgánica 3/1983, de 25 de febrero, Servicio de Coordinación Legislativa y Relaciones Institucionales, Subdirección General de Régimen Jurídico y Desarrollo Normativo, S.G.T de Vicepresidencia, Consejería de Cultura y Deporte y Portavocía del Gobierno. 120