The Channel Tunnel and regional development in Europe: an overview

Applied Geography (1994), 14,9-25

The Channel Tunnel and regional development in Europe: an overview R. W. Vickerman Centre for European, Regional and Transport Economics, Canterbury, Canterbury, Kent, CT2 7NF, UK

University of Kent at

Abstract This paper provides an overview of the possible regional development effects across Europe of the Channel Tunnel. It identifies the regional significance of the tunnel in the context of the emergent European Capitals region of the European Community, but as part of a total network as well as simply improving one link. The paper proceeds to review the conflicting effects of changes in infrastructure provision on output and production, but also to emphasize the potential importance of more subjective evaluations of the tunnel’s impact. This leads to a discussion of the regional policy implications, identified at a local, national and EC level. The paper concludes that the regional development implications are still not clear and will continue to depend on how individual decision-makers and policy-makers respond to the opportunities presented. In particular, there is no clear evidence for infrastructure such as the Channel Tunnel leading to increased concentration of economic activity in core regions at the expense of the periphery, but it may, however, be part of a process of concentration within core regions as a result of the increasing accessibility of the metropolitan areas. The contribution of major transport infrastructure to the process of regional development has been a controversial issue for a long time (Straszheim 1972; Gwilliam 1979; Botham 1982; Moore et al. 1991). In most cases the debate has been about the extent to which improved transport will affect a specific region’s competitiveness and economic performance. Such improvements are typically looked for in terms of connections to the region or the efficiency of the region’s internal transport. Transport efficiency here depends on both the network and the level of service provided on that network. The uncertain impact of transport infrastructure on regional development arises for various reasons (see Vickerman 1992a, for a more complete theoretical discussion of this). First, improvements in external connections are usually two-way, any reductions in transport costs for potential exporters being matched by similar reductions for importers. For a deficit region, the greater inward flows may also benefit by an even greater amount because of scale economies. Secondly, the contribution of transport costs to total costs is also relatively small (of the order of 3-4 per cent), such that the contribution of any increase in transport efficiency to overall competitiveness is also likely to be very small indeed. Furthermore, transport can clearly be substituted for other inputs in the production process such that variations in transport costs between regions are not reflected in variations in overall costs by that amount, although they may be reflected in the way transport is used (McKinnon 1994). 0143~6228/94/01/0009-17

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The Channel Tunnel and regional development in Europe

When there is a major change in the transport infrastructure affecting a region, firms or individuals may respond in one of two ways. They may use more transport, as a result of an increase in activity, since transport is now cheaper relative to other goods and services. Alternatively, they may maintain the level of activity and benefit from the increase in profit or welfare resulting from the lower transport cost. This reflects the fact that transport is both an end product, consumed in its own right, and an intermediate good, or input to other activity. Even after allowing for such differences in the way in which changes in transport provision may affect the performance of one region, there may be further factors to be taken into account. Very large infrastructure projects may change the balance of advantages between regions in a more complex manner due to the presence of network effects. In these cases it is not just the immediate regions affected by the infrastructure, but regions which could be located at a considerable distance (Vickerman 1991b). This paper considers the Channel Tunnel as one such infrastructure, the effects of which can only be adequately considered on a multiregional basis. Specifically, it is suggested that the neighbouring regions of Kent and Nord-Pas-de-Calais may derive little benefit, especially in the short to medium term, and that any gain to southeast England as whole are distorted by the potentially benefical impacts on London as a metropolitan centre. The paper further argues that it is important to consider both the objective changes brought about by the tunnel and the subjective or perceived changes in different regions’ positions. The latter may be particularly significant in affecting regional policy responses at a local/regional, national or European Community level. The paper concentrates on reviewing the issues and establishing a framework for analysing the impact of the Channel Tunnel; a more detailed consideration of the theoretical issues involved has been developed elsewhere (Vickerman 1992b). First, it considers the wider European regional context within which the Channel Tunnel needs to be considered. It then explores in greater detail the objective changes which the tunnel will bring in this regional pattern, before introducing a discussion of the more subjective elements based on regional responses observed to date. The policy dimensions are then considered, both in terms of regional policy measures and transport policy, recognizing that policy responses may be both positive to encourage the beneficial changes and negative to curtail the detrimental effects. The concluding section establishes a framework for assessing the impacts of the Channel Tunnel within which some of the more detailed contributions in this volume can be assessed. The Channel Tunnel in its regional context The regional setting

The Channel Tunnel lies in a central position to the European Capitals Region defined by the European Commission (Fig. I), one of the macro-regions (Commission of the European Communities 1991b) which transcend traditional regional types and national frontiers. The Capitals Region stretches from London to Frankfurt-am-Main and from Paris to Amsterdam. It contains 85 X lo6 people, over 25 per cent of the population of the European Community, and produces over 30 per cent of its GDP. The region includes the current national capitals of six EC countries: the UK, France, Belgium, Luxembourg, the Netherlands and Germany. The Channel Tunnel is one of a number of major infrastructure projects in Europe which aim to overcome some of the missing links of the European network.

R. W. Vickerman

Continental Western

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Diagonal

Mediterranean

Eastern Mediterranean Alpine Region Atlantic Arc European Capitals Region North Sea Region The New Lander

1 - Channel

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Tunnel

- Great Belt Crossing

Figure 1.

Macro-regions

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- Swiss Neue Eisenbahn-Alpentransversale Brenner

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and major

infrastructure

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These have arisen either because of physical barriers, usually sea or mountains, or political barriers (Vickerman, in press). Political barriers are obvious in the case of missing links at the eastern border of the European Community, and erstwhile political barriers in the case of some of the infrastructure needed in the integration of the former GDR into the Federal Republic of Germany (Mellor 1992; Rothengatter 1992). However, political barriers are also important within the European Capitals Region, where different national administrations have followed different policies towards transport development. Thus much heavier flows of traffic occur from border regions to the major centres within a country than to major centres in the neighbouring country, even where the distances to the latter are shorter. Compare, for example, the flows between Lille and Paris and Lille and Brussels. The distance between the former pair is twice that between the latter, but the rail flows are more than six times greater (Vickerman 1992b).

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The Channel Tunnel and regional development in Europe

The tunnel is both part of the development of a coherent network (road and rail) for the European Capitals Region and one of a series of individual large-scale projects across Europe (Vickerman 1991a). The other major projects are those for the Great Belt and Oresund crossings in Denmark and Sweden; the NEAT (Neue Eisenbahn-Alpentransversale) project for base tunnels of the Gotthard and Lotschberg routes in Switzerland; and a new Brenner base tunnel between Austria and Italy (see Fig. 1). The key feature of each of these projects is that they are strongly biased to the use of rail transport. The overall effect on transport usage in Europe may, therefore, be much stronger than would be expected from the sum of each individual project because of the synergy between them, which increases the scope for through rail transport and for combined or multimodal transport. Core andperiphery

The relevance of the Channel Tunnel to the developing map of Europe depends on the view taken of the relative importance of each of a set of competing influences. A key issue is that of centralization versus decentralization; the great fear expressed here is that completion of major infrastructures like the Channel Tunnel is a further breaking down of barriers which are helping to prevent dominance of the EC by a small set of key core economic regions (see, for example, the discussion of the regional effect of the Single Market by Begg 1989). Core regions are defined here as those with economic dominance, but the location of the core regions towards the geographic centre of the Community makes centralization both an economic and a geographic phenomenon. This view is consistent with an application of the economic potential concept based on the gravity model (Keeble et al. 1982a, 1982b, 1988). This is also consistent with the standard transportation model which analyses flows on the same basis (Evers et al. 1987; Evers and Oosterhaven 1988; Rietveld 1989). The basic problem with these approaches (see Vickerman 1992a for a fuller discussion) is that they assume a constant pattern of activity and behavioural responses; they are not sufficiently able to distinguish between the use of transport as an end product and its use as an intermediate good. By doing this transport can be allowed to be substituted for, or by, other factor inputs. This enables a rather different pattern of response to new infrastructure in regions in different locations, and with different initial resource endowments. This differential response can be applied at the macro level of (geographically) core and peripheral regions, but it can also be applied within any one of these regions to distinguish between effects at the intraregional core and its periphery. In terms of the traditional core-periphery argument, the Channel Tunnel would be viewed as a centralizing force which had the effect of disadvantaging peripheral regions by improving the relative accessibility and potential of more central regions. The initial response in the UK was a hostile one from the regions which are more remote from the tunnel. Similarly, at a wider European level, it has been assumed that the Channel Tunnel is largely irrelevant to the needs of the main peripheral regions (with the exception of Ireland), simply because of their distance from it. However, this argument is too simplistic since it can be argued that, because of the tunnel’s potential effect on the integration of transport networks, it may also be highly relevant to peripheral regions. It is not just the interregional balance which is important here but also the intraregional balance. Within any region, whether at the core or the periphery, it must not be assumed that there is a uniformity of regional performance. The

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European Capitals Region contains both many of the richest regions in the EC-London, Paris, Frankfurt, and so on-and a large number of regions with levels of performance (either in terms of GDP per capita or unemployment) which are well below the EC average. It is particularly noticeable that it is the border regions along internal frontiers of the EC which are amongst the poorest within the region. Hence regions such as Kent and Nord-Pas-de-Calais have levels of GDP per capita of between 90 and 95 per cent of the EC average. Several of the Belgian provinces, however, display values of around 75 per cent of the average. The main contrast here is between the major metropolitan centres which dominate the economy of the macro-region, and the intervening areas (Vickerman 1991b, in press). These intervening areas suffer from negative spillovers of congestion and inflation engendered by the economy of the metropolitan regions. They are also disadvantaged because typically they are not eligible for such substantial regional policy assistance as peripheral regions and they suffer from large volumes of transit traffic. Although many of the old industrial areas of Belgium and France are eligible for Objective-2 assistance from the EC, the limits on the amount and eligibility make these regions less attractive on this basis than the peripheral regions (see, for example, the discussion in Vickerman 1992~: 168-180). Transit traffic is high because of the amount of traffic between the metropolitan areas themselves and also because traffic between these core metropolitan areas and the peripheral regions must pass through these central intervening areas, imposing costs such as congestion and pollution. Given the origin and destination of the bulk of this traffic, efficient management of the transport network also makes it desirable that there is minimal access to the network in the intervening areas. Thus it could be expected that there would be less frequent access points to major motorways and a minimal provision of stations on new high-speed rail routes. This could work seriously to the disadvantage of such regions.

The transport network Central to the future development of the European Capitals Region is the completion of the north European high-speed rail network (Vickerman 1992~). This involves linking the French TGV-Nord to the neighbouring countries. The Paris-Lille-Calais section opened for service during 1993, but the further links will take time to develop. The section from the Lille to Brussels should be in service by 1996, and a combination of upgrading and new lines should provide onward links into the Netherlands and towards Koln by the end of the 1990s. This should coincide with the completion of the proposed Koln to Frankfurt-am-Main new line of German railways, to provide high-speed rail links between all the major continental metropolitan areas in the European Capitals Region by the end of the century. The link from the Channel Tunnel to London has been the subject of much delay and controversy over route (Goodenough and Page 1994) and is unlikely to be ready for service before 2000. Nevertheless, within lo-15 years transport throughout the region should undergo a major revolution, leading to all the major centres coming within some 4.5 hours of each other by a surface mode. As well as the completion of a new high-speed rail network, considerable work is planned to complete the major road network in the region. To date this has suffered from the existence of national borders which have prevented the development of the network as a whole, leaving some critical missing links. Several key sections, such as the coastal link from Calais to Oostende, a direct Lille-Brussels route, and direct routes through the Ardennes, have been slow in

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The Channel Tunnel and regional development in Europe

being developed. For all of these, the completion of the Channel Tunnel has been a major catalytic element in defining the need for developed transport corridors. The French have seen the importance in providing routes which avoid Paris as part of the Schkma Directeur Routier. The completion of the A26 from Calais via Reims through to Dijon in 1992 provides the easterly route. The development of the Al6 Rocade Littorale along the coast from Dunkerque to Boulogne and thence to Amiens and Paris or via Rouen towards western France will provide the more westerly route, as well as a more direct route to Paris for UK traffic (Bruyelle and Thomas 1994). These developments have important implications both between and within the traditional regions, however. It is clear that the development of both rail and road networks is designed to meet the needs of the major traffic generators, the metropolitan centres. In some cases this can have desirable regional implications, such as the creation of a major transport node in the Lille region. In other regions it will create interregional tensions, such as the much publicized attempts of Picardie to get the route of TGV-Nord diverted through Amiens, or the battle over the route of the high-speed rail line in Belgium between Flemish and Walloon regional interests and the desire of the latter to develop both a road and rail corridor through the centre of the region (Dorsale Wallonie) to divert traffic away from Brussels and the Flemish corridor (Vickerman 1992b). In all regions with access to the networks there will be new intraregional tensions. The prime example is clearly that of southeast England, where the strategic need to avoid all the development benefits from the Channel Tunnel being concentrated in London led to a clear need for policy action in Kent, especially East Kent, central to which was the commitment to an international passenger station in Ashford (Button 1994). However, there are similar tensions evident between the coastal region and the Lille area in the Nord-Pas-de-Calais. The crucial decision, part financed by the r&ion, was to locate a new TGV station for international traffic in the centre of Lille as the basis for a massive programme of urban redevelopment. This has important implications for the relative attractiveness of Lille and the much more depressed coastal regions, despite the development programme for Calais in particular (Bruyelle and Thomas 1994). This section has shown that there is a patchwork of regional development issues at all levels associated with major infrastructures like the Channel Tunnel. These involve questions of the distribution of costs and benefits both between and within regions. The interregional effects occur not only in the traditional dimensions of core and periphery but also between metropolitan and non-metropolitan regions within the core. This suggests that many of these effects transcend the traditional regions, both in analytical terms and, most importantly, in terms of the appropriate level of policy-making. Objective impacts of the Channel Tunnel The objective impacts of the Channel Tunnel depend essentially on how it affects the cost of transport. The cost of transport enters into the spatial economy as one part of the generalized cost of spatial separation of activities, usually modelled through the gravity model. It is necessary, however, to distinguish carefully between what can be termed the output effects and the production effects of such changes (see Vickerman 1992a for a detailed review of modelling approaches to new transport infrastructure).

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Output effects The output effects are those related to the definition of the market areas of firms which are typically captured through the measurement of economic potential (Keeble et al. 1982a, 1982b, 1988). The transport cost effect relates both to the price of transport (which depends on an assumption concerning the relative prices charged by Eurotunnel compared with existing ferry and airline services) and how this will change with the change in competition. Keeble et al. (1982b) made the extreme assumption that a Channel Tunnel carried a zero fare in order to obtain an estimate of the maximal impact. The forecasts by Eurotunnel’s Traffic and Revenue Consultants have been based on a broad assumption that competition will cause ferry fares to fall in real terms by 5 per cent for passengers and 10 per cent for freight relative to 1988, with air fares falling by 5-8 per cent (Eurotunnel 1990; Le Maire and Pevsner 1992). The tunnel is assumed to be able to match this. Others have suggested that increased competition may lead to an even greater fall in fares (Kay et al. 1989, 1990). The economic potential approach argues that this change in transport costs will reduce the deterrence effect of distance, from which the newly connected regions gain. The shape of the typical deterrence function predicts that the impact will fall with greater distance from the tunnel. However, the argument is more complex than this since the relative distribution of regions by income levels also plays a part. Furthermore, since the price of transport in the economy as a whole is reduced, this will produce an increase in total economic interaction, which will benefit all regions in proportion to their existing level of activity. The net impact on relative well-being of poorer regions near to the tunnel will be reduced because of the greater benefit derived by the richer regions. Thus the metropolitan regions such as London, Paris and Koln would gain at the expense of both the nearer regions and those further away. These changes reflect a changing size and shape of market areas. Firms within each region are assumed to gain or lose competitiveness and expand or contract accordingly. Since potential is typically calculated in an aggregate way, it does not allow the relative importance of transport costs to vary between different activities in a region. Hence, a given change in transport costs is expected to affect all firms in a similar way. In this sense, therefore, transport cost changes are assumed to affect only the level of output and not its composition or how it is produced. The empirical evidence for this more complex pattern of change is contained in a series of studies of UK trade (for a useful review, see Chisholm 1992). Thus far it has been assumed that transport costs can be measured simply by the generalized cost of transport itself. Ideally this requires two modifications. First, it has to be recognized that the average cost of transport may not be the most relevant measure for users who are also interested in the reliability of delivery or arrival times. Congestion is a major element in determining this, although it is clear that different modes of transport have different efficiencies in dealing with a given level of congestion on a network. Secondly, transport efficiency will affect levels of stockholding by firms and inventory costs may actually be much more substantial relative to total costs than transport costs themselves.

The second objective impact is the production effect. In this a change in transport costs is expected to be reflected in either a change in the composition of output

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The Channel Tunnel and regional development in Europe

and/or a change in the way that output is produced. Such studies take a production function view of the regional economy in which the relative prices of inputs affect factor usage and hence the price and competitiveness of output. There are two important ways in which this may modify the expectations of change resulting from the Channel Tunnel. First, a reduction in the price of transport in a region may change the balance of comparative advantage towards activities which are heavier users of transport. At the extreme, a region which had no means of transporting bulk goods could have no industries needing bulk transport of inputs or outputs. Secondly, for any activity there would be expected to be a substitution of now relatively cheaper transport for other factor inputs. In other words, a change in transport provision may lead to a change in the way transport is used within the production process. Individual plants could become more specialized, but integrated with other plants in other regions, using bulk flows of intermediate goods. Land use transportation models incorporate these effects in part, using input-output relationships to capture something of the transport needs of the individual activities (ACT et al. 1992). These are, however, very demanding in terms of data and have problems of imposing a static production structure on each industry through time. Data on regional variations in input-output structures are also limited and costly to obtain. This tends to lead to studies imputing regional structures on the basis of national structures adjusted by regional trade flows, where these exist, or simply assuming a structure which does not vary spatially. More formal production function approaches, including variable coefficients, suggest that there may be important differences in the interaction of transport with other factors of production between regions (see Biehl 1.991). The essence of these approaches is to demonstrate that the critical factor is whether there is spare capacity in the use of input factors, of which transport infrastructure is one. The important feature of infrastructure is that it has an element of public good which enables it to enhance the productivity of other factor inputs up to the point where congestion or a bottleneck arises. Blum (1982) shows clearly how the absence of transport infrastructure can limit the production potential of a region. Interestingly, the study reported by Biehl (1991) for 168 regions of the EC, identifies southeast England and Nord-Pas-de-Calais as members of a group of only ten of these regions which show overutilization of infrastructure whilst spare capacity exists within other factors; that is, regions whose development is seriously constrained by a lack of infrastructure. Subjective impacts of the Channel Tunnel Reg~~~a~per~ept~o~s

Whatever the objective assessment of the change in transport costs and the effect of this on market area or production function, the critical factor is the extent to which investors perceive a substantial enough change in the characteristics of a location to encourage them to move there from other locations or to modify their expansion plans if already located there. Part of this could be turned into an objective measure to the extent that it involves perceived externalities. The growth of new industrial areas, particularly in the high-technology sector near to airports or along major highways, reflects this phenomenon. The image of the Channel Tunnel is a key element here. It has received international prominence, especially from the involvement of over 200 banks worldwide in the finance of the project itself. These

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have a potential interest in encouraging their clients to consider using the tunnel as a means of protecting their own investments. A similar situation applies to the construction companies, many of which are also involved in development projects such as business parks. This profile could ultimately lead to a much more positive response to the tunnel than the objective assessments may suggest. On the other hand, there is an image of growing congestion in the nearby regions, on the assumption that they are indistinguishable from other parts of the European Capitals Region. This assumption of high costs and limited development potential, however untrue that may be for areas like East Kent or the coastal part of Nord-Pas-de-Calais, may severely restrict new inward investment. Subjective assessments are, of course, extremely difficult to evaluate. It is possible to observe the extent to which actual locations or levels of investment fall short of, or exceed, those which could be predicted on the basis of a theoretical model. Henley et al. (1989) showed that firms’ existing locations and stated relocation plans depended much more on their perceptions of local conditions (wage rates, land costs, development control restrictions) than on the actual situation. The survey used in this study, of firms in various regions of the UK outside the South East, showed a clear misperception of all of these characteristics in relation to location in Kent. It was also clear from this survey that changes in transport costs were unlikely to motivate a firm to change location. Alternatively, through time it is possible to see the extent to which actual investment plans made by firms match up to the a priori expectations of change. Based on the same survey as Henley et d. (1989), the 1987 Kent Impact Study (Department of Transport 1987) forecast around 12500 net job gains for the Kent economy as a result of the Channel Tunnel and its associated infrastructure improvements. In the 1991 review of this study (PACEC 1991), these gains had been scaled down to just 2500. This was partly on the basis of a refined model of employment change, but also on the basis of the degree of uptake of investment opportunities between 1987 and 1991. Kent County Council’s own monitoring figures show a reduction in industrial land use over this period against the planned increase of 885 ha. Similarly, in Nord-Pas-de-Calais, despite very low land prices and ready availability of immediately developable land (over 800 ha), the take-up had been extremely slow by mid-1992. Prestige office and commercial development sites in the centre of Lille had also been extremely difficult to let (see Holliday et al. 1991a for more detail). The policy issues

Subjective assessments of areas are also strongly dependent on the projected image of the area by policy-makers (Burgess 1982). This includes the degree of revealed investment in the area by the public sector as an accompaniment to change. Thus a strategic plan for infrastructure and economic development in a region can be perceived by outside investors as public support for, or belief in, the development potential of a region. It is not clear that this is sufficient, since most investors will not rely just on the region’s own assessment, but it may be important in simply encouraging investors to put a region on a shortlist of potential sites. High in the factors accorded priority is the availability of development incentives, particularly where regions feel that they lose competitive edge by not having such incentives available. Hence, for example, the presence of Objective-2 status under the European Regional Development Fund (ERDF) for large parts of Nord-Pas-deCalais is seen to disadvantage Kent, particularly those parts of East Kent where the

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The Channel Tunnel and regional development in Europe

unemployment rate is persistently high and as high as large parts of assisted Nord-Pas-de-Calais. The creation of a transfrontier region which enables Kent to secure some access to ERDF funding through INTERREG is a significant move in this direction (Commission of the European Communities 1991a), although the amount of money involved is relatively small. More significant was the granting of Assisted Area status to parts of the coastal areas in 1993. Within the UK there has been a difficult balance for the government to maintain between its treatment of East Kent and those of the assisted regions. Debate over the Channel Tunnel during the passage of the Channel Tunnel Act through Parliament in 1986437 often focused on the unfortunate fact that the tunnel was located in the more prosperous South East and that yet more infrastructure investment was going to that region (see Holliday and Vickerman 1990; Holliday et al. 1991b for a fuller discussion). Although there was no direct aid to Kent available under regional policy, both direct government expenditure and expenditure aided by Transport Supplementary Grant has ensured that Kent has received a disproportionately large share (around 10 per cent) of the roads budget. The 1987 Channel Tunnel Act required British Rail to bring forward detailed plans for how it would serve the regions following consultation (Gibb et al. 1992). This involved both plans for day and night international passenger trains and plans for regional freight centres and through freight services to continental destinations. Regional responses Many UK regions undertook their own studies of the likely impact of the Channel Tunnel on their own regional economies (see Holliday and Vickerman 1990; Holliday et al. 1991b for further details). These studies tended to be rather negative, mainly because they were methodologically dominated by the traditional modelling approach of the input-output study and the gravity model which would tend to show a sharp fall-off in positive benefits with distance from the tunnel. They were also linked with growing fears about the way in which the completion of the Single European Market would also disadvantage regions which were seen to have largely uncompetitive traditional industrial sectors. In contrast, the early academic studies argued that the Channel Tunnel would be largely neutral in terms of its relative impacts on UK regions (Chisholm 1986; Vickerman 1987). However, such studies can also be seen to have the role of identifying needs for further government assistance to a region. It is more in a region’s interests to identify disadvantages, if these bring compensation, than to show that it will benefit. This does carry the risk of dissuading potential investors if it is too negative, but the gains of extra government assistance will often outweigh this risk since they can be seen as an expression of government confidence in a region. A more positive attitude has been apparent in Nord-Pas-de-Calais (Bechtel 1985; Conseil Rkgional Nord-Pas-de-Calais 1986), but this is essentially about identifying and seizing the opportunities presented by a more favourable geographical situation and the need to effect a restructuring of a lagging regional economy (Breuillard 1992; Langrand 1992). Certainly, more measured academic studies have stressed the risks as well as the opportunities (Metge and Potel 1987; Barre 1988; Bruyelle 1988). The principal characteristic in France is to view the tunnel as a catalyst, but one which will not work on its own to bring benefits; hence the close association between the tunnel and TGV and other regional policies. At the European level a similar contrast between opportunities and risk phenomena can be identified. A study of the regional impact of the Channel

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Tunnel throughout the Community was commissioned by the EC following expressions of concern by the European Parliament at the extent to which such new infrastructure may upset the regional balance and further disadvantage peripheral regions, especially in the southern periphery (European Parliament 1988). This study (ACT et al. 1992, and for a summary see Fayman et al. 1992) identified 13 regions in different situations throughout the EC. Part of the study involved a modelling exercise, as discussed above, but a major part involved a detailed assessment of regional impacts with politicians, administrators and opinion informers in the various regions. Again there was a sense of identifying the negative aspects since, at least as far as local regional government is concerned, the opportunity was being presented to lobby for direct aid or policy initiatives. These could ensure the ability of regions to capitalize on possible gains which were also seen to be in the best interests of the Community as a whole, such as those which help to complete transport networks of Community significance. On the other hand, regions could seek to be compensated for any additional disadvantages which such developments imposed on them as a result of this. Disadvantages could be seen as being incurred both by the more central regions suffering from the environmental effects of increased EC international traffic, and by more peripheral regions being made more peripheral. The results of the EC study (ACT et aE. 1992) suggest that most of the beneficial effects will be felt along those corridors of Europe where transport infrastructure has been or will be improved. However, the effects will differ for different sectors. Although some regions will benefit and others suffer across the board, others will experience disadvantages in industrial sectors but benefit in service sectors, or vice versa. This will depend on the relative improvements to transport services. However, the complex relationship between transport and regional development at the wider European level needs further study if sensible policy measures are to be formulated (Commission of the European Communities 1991b). This issue is explored in more detail in the following section. Regional policy implications

of the Channel Tunnel

It has been suggested above that a major transport

infrastructure project such as the Channel Tunnel has implications for two sorts of complementary policy intervention. First, the tunnel may require supporting infrastructure and the regions affected other forms of assistance to turn the opportunities created by the tunnel into positive benefits. Secondly, to the extent that the tunnel creates a bias in the advantages towards one region or groups of regions, there may be a case for policies which are designed to ensure a more equitable distribution of the net advantages between regions. Much of the emphasis in the nearby regions of Kent and Nord-Pas-de-Calais has been dominated by ensuring complementary infrastructure. In the UK, this has been largely led at the local level and thus concentrates on ensuring a sufficient capacity for through traffic on major routes to avoid excessive negative externalities falling on local traffic and communities and on providing links to the tunnel from all parts of Kent (Button 1994). What has not been sufficiently identified is the wider regional or national dimension which would concentrate on the potential for development of transport networks as a whole, both road and rail. The tunnel has therefore been seen as a free-standing piece of infrastructure, to which links must be justified on a route-by-route basis, rather than as just one short section in a wider network.

20

The Channel Tunrael and regional development in Europe

In France, a more balanced approach has been followed (Holliday and Vickerman 1990). There are complementary regional policies, which aim to satisfy the same two goals of accommodating the through traffic flows and connecting all parts of the region to this developing infrast~cture. The major difference is that, for both road and rail, the regional plans are part of a national strategic plan, Sc&ma Directeur. In this sense the tunnel is being linked into the national network. At a European level, the tunnel is clearly seen as part of the EC strategic transport network. However, the EC has little competence to act in securing remaining links in that network except in terms of limited Infrastructure Fund provisions to give aid to member governments wishing to make investments which concur with the overall strategy. The onus is clearly on the member states to initiate projects. The Commission can only give guidance in terms of its perceived priorities to try and secure the network it wishes to see (Vickerman 1991a). The 1992 Commission White Paper on transport (Commission of the European Communities 1992) emphasizes trans-European networks, but within a framework of consistent charging for infrastructure and the principle of subsidiarity. Integration and coordination would be achieved by establishing a genuine level playing field for transport, not by excessive planning and direction. Policy objectives that are relevant to the Channel Tunnel include both transport and regional development objectives. It is difficult to separate these from each other. A second level of analysis is to examine the impacts on the overall level of activity and the relative distribution of this between different regions in order to identify areas where policy can assist the creation of benefits and those where it is necessary to curtail either excessive development or unacceptable reductions in the level of activity. The important issue here is to achieve an appropriate level of policy formation which avoids regions simply competing against each other for a given amount of net benefit. A major area of concern relates to the need to achieve accessibility to the network of which the Channel Tunnel is a part. On the assumption that this primary network will be developed as a result of the growth of traffic, the next step is to assess the extent to which each region can access this network, and for each type of traffic. A good example of this is the degree of provision of stations for trains on high-speed rail routes. The continuing problems over provision of the international passenger station at Ashford in Kent, and the lack of any provision on the Lille-Brussels route in Wallonia, disadvantage these regions in comparison with Nord-Pas-de-Calais (Vickerman 1992b). It is, however, also clear that the simple provision of a station does not bring automatic benefits unless adequate improvements are made to the local infrastructure that provides access to that station. The same situation applies in the case of plans to develop regional freight terminals (Gibb et al. 3992; McKinnon 1994). Providing infrastructure is an obvious part of the development of a regional policy. The absence of good transport is a disincentive to development. Infrastructure also has the advantage from the policy perspective of being relatively neutral between sectors and thus less likely to infringe EC competition rules than direct aid to industry. This does ignore the extent to which regions dependent on sectors with very different transport needs will receive differential effective assistance from an infrastructure policy. Nevertheless, over the period 1975-89 some 80 per cent of all ERDF money has gone into infrastructure projects (Vickerman 1992~: 50). It may not be sufficient, however, to make a substantial change in the fortunes of a region where infrastructure is not currently the major bottleneck (the majority of regions, according to the study by Biehl 1991).

R. W. Vickerman

21

The problem for other accompanying policies is to identify the appropriate sectors to which aid should be given. There is a tendency in many of the regional studies referred to in the previous section, and in the evidence collected for the EC study (ACT et aE. 1992), for a limited range of areas of intervention to be highlighted. Thus, for example, regions are inclined to identify high-technology industry and tourism (especially theme parks) as high-profile sectors to which a region should aspire. This arises largely because the successful regions of Europe have a concentration of such sectors and many of them are also important parts of the developing European high-speed rail network (see Vickerman 1993a, in press for a fuller discussion). It is not clear that this is always likely to be the most successful approach which a region can take. Regions such as Kent and Nord-Pas-de-Calais do have a particular locational advantage relative to the Channel Tunnel, and relative to other regions. This suggests that a policy that is related to recognizing their degree of interdependence with other regions is more likely to succeed than one that simply tries to emulate the success of other European regions such as Rhone-Alpes or Lombardy. It also suggests a need for complementary developments in the regions. Such a policy is likely to be fostered by the development of interregional agreements to create ‘Euroregions’, assisted by the EC. These are becoming increasingly important in border regions of the Community since they are seen as vital to the breaking down of borders, including the artificial barriers to trade erected by member states to protect the interests of some of their poorer border regions (see Commission of the European Communities 1987, 1991a, 1991b; Maillat 1990). The Channel Tunnel has led to the creation of such a Euroregion between Kent and Nord-Pas-de-Calais, now extended to include the whole of Belgium, which has the aim of ensuring consistent development throughout the affected regions (Luchaire 1992; Vickerman 1993b). Conclusions:

regional implications

of the Channel Tunnel

This paper has been concerned with the development of a framework for understanding the regional implications of the tunnel rather than predicting exactly where the positive and negative effects will occur. It has been suggested that this has to be done on a wide geographical basis and by allowing for dynamic changes in industrial location and production methods. Even so, the picture is complex and does not allow for the easy production of a balance sheet of changes. Only two serious attempts have been made to quantify the changes resulting from the present project, both using forms of land use transportation models. One of these (Simmonds 1992) concerns only UK regions, the other is the study by ACT et al. (1992) summarized by Fayman et al. (1992) which is based on a selection of regions from across the EC. The problem with both of these is that they produce long-run equiIibrium impacts, which tend to ignore some of the short-run adjustment problems. Such problems, including the reduction in port and ferry employment and the disruptive effect on local labour markets from the construction period, affect the regions closest to the tunnel most seriously and may have longer-term impacts which an equilibrium model fails to identify. Both studies do, however, identify very clearly that transport improvements are concentrated into corridors where the associated infrastructure is improved. Further refinement would also suggest that this is likely to be concentrated at particular points along such corridors. In other words, there is no continuous impact through space. ACT et al. (1992) refer to ‘grey areas’ or ‘interstitial spaces’

22

The Channel Tunnel and regional development in Europe

which, despite their relative closeness to the tunnel and its new associated infrastructure, receive no benefit or indeed may suffer a benefit reduction by a concentration of activity towards the favoured zones. Which regions these are depends on the definition of regions used. Many of these problems may occur within traditional regions (such as the Thanet area of Kent or the Boulogne area of Nord-Pas-de-Calais) as well as between them (such as Picardy or Normandy in France, Flanders in Belgium or Zeeland in the Netherlands). The tunnel itself would appear to have only a relatively small independent effect: the major impact is of the improvements in the larger network of which it is part. The development of that network, both the high-speed rail network linking the major metropolitan centres and the completion of missing links in the major road network, is likely to have the effect of increasingly concentrating the core regions of the European economy. On the basis of the evidence in the studies cited, this

Figure 2.

The potential impact of future improvements in the high-speed rail network

R. W. Vickerman

23

appears as a smaller core with an increasingly close onset of peripherality and a more marked contrast between core and periphery. In reality, allowing for non-continuity in the effects, that concentration would take the form of a ~agmentation of the core into the major metropolitan areas and their hinterlands, but also its extension into those metropolitan regions outside its current geographical area, linked to the core by improved transport corridors. These would include such centres as Lyon and Stuttgart, which could be joined by Milan and Barcelona with the completion of new infrastructure (see Fig. 2). Although this representation of the emerging pattern of spatial economic activity is somewhat speculative, it does suggest that major new transport infrast~cture could have important consequences for the process of regional change in Europe. Such change has important policy implications since it requires rather different definitions of regions qualifying for assistance than the traditional ones based on a combination of location and industrial structure. It also has important implications for the measurement of the wider economic impacts of such infrastructure, whether or not this is provided by the public sector. This impo~ant area for future research will only succeed if these wider questions are considered, in order to develop a clearer understanding of the process of economic change in a spatial context. References Marcia1 Echenique & Partners (1992) l%e regional impact of the Channel Tunnel throughout the Community. Final Report to DG XVI, Commission of

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