RESURRECTION OF THE BOMBAY TRANS-HARBOUR
LINK PROJECT BY USING WHEATON'S MONOCENTRIC
MODELS OF URBAN LAND USE
by
Shubhada Bhave
Bachelor of Architecture
Sir J.J. College of Architecture
Bombay University, India
1984
SUBMITTED TO THE DEPARTMENT OF
ARCHITECTURE IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREES OF
MASTER OF SCIENCE IN ARCHITECTURE STUDIES
AND
MASTER OF CITY PLANNING
at the
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
February 1987
Copyright (c) 1987 Shubhada Bhave
The Author hereby grants to M.I.T.
permission to reproduce and to distribute publicly copies
of this thesis document in whole or in part.
/
Signature of Author
A
, .,,
Department of Architecture
February 13, 1987
Certified by
Ranko Bon
Assistant Professor of Econo ics in Architecture, Thesis Supervisor
Accepted by
U
JiajBeH
Chairman, Departmental Committee for graduate students
Accepted by
MASS
CH
LOSNGY
Director,
FEB 2 5 1987
Philip Clay
Master of City Planning Program
RESURRECTION OF THE BOMBAY TRANS-HARBOUR
LINK PROJECT BY USING WHEATON'S MONOCENTRIC
MODELS OF URBAN LAND USE
by
Shubhada Bhave
Submitted to the Department of Architecture on February 13, 1987
in partial fulfillment of the requirements for the degrees of
Master of Science in Architecture Studies
and
Master of City Planning.
Abstract
BOMBAY TRANS-HARBOUR LINK PROJECT: A possible solution to Bombay's
seemingly unsurmountable social problems.
The primary idea behind this thesis is to present a new technique for the appraisal of large
scale urban transportation projects which are envisaged to have a major impact on the
surrounding physical and economic urban structure. The Bombay Trans-Harbour Link
(BTHL) Project, a 16 kilometers long road bridge proposed by the Indian Planning
Commission to connect the island city of Bombay and the surrounding mainland, was
considered to be an excellent case study for demonstrating the application of this technique.
This project would mean a major transportation investment for the Bombay Metropolitan
Region. The investment is justified because it is envisaged to act as a catalyst to draw
people from the island to the mainland. This would help reduce the existing acute
congestion in the city of Bombay by securing more land mass and bringing this newly
acquired land within convenient commuting time of the existing business district in the
main city.
Thus, the three essential features that the BTHL would perform are:
1. Open up new 'virgin' land for development and thus be an integral part of the
process of decentralizing Bombay.
2. Form the 'connecting link' between the mainland and Bombay city, thus
removing the only significant bottleneck to development, namely, the lack of
adequate communication between the island and the mainland.
3. Once built, the BTHL would open up vast unused areas on the mainland that
would in all probability attract other investments and improvements or
requirements necessary for development which, once the BTHL is
constructed, would be relatively easy to meet.
In this case, transportation infrastructure such as the BTHL becomes almost a
prerequisite, though by no means a guarantee, of economic development. The benefits
would be long-term ones, and in fact in the initial time period after the investment, traffic
growth could be much larger than the corresponding anticipated growth in income. In
these early stages, the ratio of capital to output could well be extremely high. Thus, in
view of the anticipated strategic role of the BTHL and the large investment required, a
careful appraisal of the costs and benefits of the project is particularly important. It is
equally important to set forth the investment criteria which would be used in deciding
whether or not to undertake the project.
The engineering feasibility of the project as well as its total cost has been established by
Messrs. Peter Fraenkel and Consultants. The Project is estimated to cost US $110.41
million in 1990 constant prices. This thesis emphasises the fact that the methods of
evaluation used to date for appraising the benefits of transport investments suffer from
the application of mistaken techniques and from inadequate analyses of economic
externalities and linkages.
The first part of the thesis partly includes a description of these methodologies and a
critique of each of them. The second half of the thesis is written from the viewpoint of a
consultant to the Indian Planning Commission under the auspices of Tata Economic
Consultancy Services, entrusted with the task of seeing whether an investment in the
BTHL today would be justified or not, and if so on what grounds. I have endeavoured to
present a different methdology for the appraisal of the BTHL Project.
This new approach is based upon the application of monocentric models of urban land
use to theories of metropolitan spatial development, a technique developed in its most
recent form by Professor William C. Wheaton of the departments of Economics and
Urban Studies and Planning, M.I.T. By using both static and dynamic monocentric
models, this approach helps envisage and compare two alternative urban scenarios of the
future, one without the project and one with it. The urban structure is analysed in terms
of city spread outward from the Central Businesss District, the rent gradient along the
cross-section of the city, and the density structure at all points in the city. This
information concerns the potential utility derived per person in either scenario, which in
turn becomes the primary criterion for an investment decision.
Thesis Supervisor: Ranko Bon
Title: Assistant Professor of Economics in Architecture
Acknowledgements
I wish to extend my most sincere thanks to the following gentlemen who assisted and
guided me towards preparing this document.
Professor Ranko Bon (Department of Architecture, M.I.T.), for acting as my advisor from
the faculty of architecture.
Professor William C. Wheaton (Departments of Economics and Urban Studies, M.I.T), for
giving a lot of his time to develop a modelling technique for use in this specific context and
for subsequently advising me through this semester.
Professor Alan Strout (Department of Urban Studies, M.I.T.), for giving valuable feedback
and correcting me on the essential points of benefit-cost analysis.
I furthermore wish to thank Professor Ralph Gakenheimer (Departments of Civil
Engineering and Urban Studies, M.I.T.) for acting as one of the readers of this thesis and
Professor Julian Beinart (Department of Architecture, M.I.T.), for guiding me through the
course of the thesis preparation seminar and helping me formulate my thoughts.
In addition, I wish to thank the American Institute of Architects for the research grant
scholarship which provided me the opportunity of spending an extended period of time in
Bombay in connection with both planning and operating agencies in order to gather
sufficient data for the preparation of this document.
I must further add that this thesis could never have been submitted in its present printed
format without the diligent editing and computer expertise of Jean Marie Diaz.
It goes without saying that none of these individuals or organizations necessarily endorses
the views presented herein.
And lastly let me dedicate this thesis to my parents who made it possible for me to come to
M.I.T. and ever put my wishes before theirs. It was their unwavering confidence in me and
the constant support of my husband Brett, that helped me put so much effort into my work.
Table of Contents
Abstract
Acknowledgements
1. BOMBAY CITY: HISTORY OF DEVELOPMENT
1.1 NEED FOR EXPANSION ON THE MAINLAND
1.2 HISTORY OF PLANNING STRATEGIES THAT HAVE INFLUENCED
THE DEVELOPMENT TO DATE
1.2.1 INDUSTRIAL LOCATION
1.2.2 OFFICE AND COMMERCIAL ESTABLISHMENT LOCATION
1.2.3 LOCATION OF WHOLESALE MARKETS
1.2.4 ADDITIONAL PORTS
1.2.5 HOUSING
1.2.6 TRANSPORTATION
2
3
6
10
17
23
24
25
27
27
30
2. BTHL: THE SOUTHERN LINK BETWEEN THE ISLAND AND THE
MAINLAND
2.1 WHY IS BTHL DESIRABLE FROM THE PLANNER'S POINT OF VIEW?
2.1.1 ENVISAGED DEVELOPMENT SCENARIO-
35
3. A LOOK AT THE FINANCIAL AND ECONOMIC ANALYSIS OF THE
BTHL DONE BY TATA ECONOMIC CONSULTANCY SERVICES.
3.1 ECONOMIC APPRAISAL OF THE BTHL PROJECT AS DONE BY TECS
3.1.1 IDENTIFICATION OF BENEFITS OF TRANSPORT PROJECTS
3.1.1.1 Reduced Operating Expenses In Areas Now Served By A New
Facility
3.1.1.2 Stimulus To Economic Development Now Served By The New
Facility
3.1.1.3 Savings In Time For Passengers And Freight
3.1.1.4 Reductions In Accidents And Damage
3.1.1.5 Increased Convenience And Comfort
3.1.2 BENEFITS SPECIFIC TO THE BTHL PROJECT
3.1.3 IDENTIFICATION OF BENEFITS
3.1.3.1 Savings In Vehicle Operating Expenses
3.1.3.2 Value Added In Industry
3.1.3.3 Savings In Time
3.1.4 QUANTIFICATION OF BENEFITS
3.1.5 METHODOLOGY OF QUANTIFICATION
3.2 A CRITIQUE OF THE ECONOMIC APPRAISAL DESCRIBED IN PART
45
47
47
48
48
49
49
50
51
53
53
55
3.2.1 Principles Of Social Benefit-Cost Analysis
3.3 A NOTE ON THE FINANCIAL APPRAISAL OF THE BTHL PROJECT
3.3.0.1 Rental Levies
3.3.0.2 Sales Tax Proceeds
3.3.0.3 Toll Receipts
3.3.0.4 Regarding Rental Levies
3.3.0.5 Regarding Sales Tax Proceeds
3.3.0.6 Regarding Toll Receipts
55
61
61
61
62
62
62
62
39
40
46
46
46
47
3.4 A CRITIQUE OF THE FINANCIAL APPRAISAL DESCRIBED IN PART
63
3.4.1 The Methodology In General
3.4.2 Specific Drawbacks With The Identification And Quantification Of
Financial Benefits In The Case Of The BTHL
3.4.2.1 Toll Receipts
3.4.2.2 Sales Tax Levies
3.4.2.3 Rental Levies
63
63
NEW TECHNIQUE FOR THE APPRAISAL OF TRANSPORT
PROJECTS: APPLICATION OF WHEATON'S MONOCENTRIC
MODELS OF URBAN LAND USE
4.1 Introduction
4.2 A BRIEF OVERVIEW OF DIFFERENT OPINIONS REGARDING THE
APPRAISAL OF TRANSPORTATION INVESTMENTS
4.3 DEVELOPING THE WHEATON MODEL
4.3.0.1 URBAN LAND SUPPLY
4.3.0.2 RURAL LAND SUPPLY
4.3.0.3 RESULTANT OUTPUT OF THE MODEL
4.4 MONOCENTRIC MODELS OF URBAN LAND USE: APPLICATION TO
BOMBAY'S TRANSPORTATION PLANNING
4.4.1 Introduction
4.5 MONOCENTRIC CITY MODELS AS APPLIED TO THE PROBELM OF
TRANSPORTATION INVESTMENTS
4.6 CONCLUSIONS REGARDING CHAPTER 4, SECTION 4.3
4.6.0.1 COMMENTS
4.7 THEORIZED IMPACT OF THE PROJECT IN RESTRUCTURING
URBAN GROWTH IN AND AROUND BOMBAY BASED ON LAND
RENT PATTERNS
67
5. INPUT DATA AND METHODOLOGY FOR SIMULATION
5.1 DISCUSSION ON THE OUTPUT OF THE 'BOMBAY' AND THE
'BOMBAY2' MODELS
5.2 COMPARING THE RESPECTIVE WITH AND WITHOUT PROJECT
SCENARIOS OF THE TWO MODELS
5.2.1 URBAN BOUNDARY
5.2.2 POPULATION DISTRIBUTION AND LOT SIZES
5.2.3 POPULATION DISTRIBUTION AND DENSITIES.
5.2.4 Rental Incomes
5.2.5 UTILITY LEVEL PER INDIVIDUAL
5.3 SUMMARY OF THE SIMULATIONS PERFORMED
5.4 CONCLUSIONS REGARDING CHAPTER 5
5.4.1 APPLICATIONS OF THE 'BOMBAY' AND THE 'BOMBAY2'
MODELS
96
109
4. A
COMMENTS
6. CONCLUDING
REGARDING THIS STUDY
Appendix A.
A.1 Table 2
A.2 Table 3
A.3 Table 4
AND
OVERALL
OBSERVATIONS
63
64
65
67
68
72
74
75
78
81
81
83
86
92
93
115
115
115
117
117
118
120
122
134
140
145
146
147
148
A.4 Table
A.5 Table
A.6 Table
A.7 Table
Appendix B.
B.1 Table
B.2 Table
B.3 Table
B.4 Table
B.5 Table
B.6 Table
B.7 Table
5
6
7
8
149
150
151
152
2
3
4
5
6
7
8
153
154
155
156
157
158
159
160
Appendix C.
C.1 Table 2
C.2 Table 3
C.3 Table 4
C.4 Table 5
C.5 Table 6
References and Notes
161
162
163
164
165
166
167
Appendix D.
D.0.1 CONNECTED AGENCIES
D.O.2 OTHER ABBREVIATIONS
170
171
172
Chapter 1
BOMBAY CITY: HISTORY OF DEVELOPMENT
Large metropolitan cities the world over eventually tend to be suffocated by the
various serious civic problems which arise due to overpopulation and the resulting intensive
congestion. Bombay city in India is no exception. If at all, the situation there is worse than
in most other cities and is deteriorating day by day.
The island city of Bombay, which is commonly regarded as the commercial capital of
India, cannot continue to develop for long in its present form. The land mass within the
municipal confines of the Bombay Metropolitan Region is around 600 sq.kms., of which
438 sq.kms. -is part of Greater Bombay. Because of the peculiar physical configuration of
the city, this land mass is distributed in the form of a narrow north-south crescent. The
population in the region has already surpassed nine million and is still rising rapidly. The
average density works out to be 1106 persons per hectare. Though this number is high in
itself, it does not tell the whole story because the population is extremely unevenly
distributed over the different wards. In fact, the upper extreme of density is 2000+ persons
per hectare.
The commercial/business activities are concentrated in a small tip in the south of the
city, such that around 62% of the total employment is concentrated in 4% of the land mass
of the island. At the same time, residential areas have spread to the north. The transport
system is thus under an extremely heavy strain as it is required to carry more than eight
million commuters every day in an almost unidirectional flow, the majority of the working
population travelling to the CBD in the morning and back north in the evening.
This has created intense demand for central residential locations. Housing is getting
increasingly inadequate as construction is stalled due to the acute pressure on land, which
has caused an increase in the land price. The result is that more than half of the population
today does not have a roof over its head and slums on footpaths and shanty colonies are on
the increase.
Because of its peculiar physical configuration, the city can expand only in the
northern direction. The land mass in the city has already been excessively utilised and there
is very little scope for further horizontal expansion of the built area. Since most of the
business and industrial activities are concentrated in the southern region, any northward
expansion of the residential area leads to increasing commuting time between the residence
and the place of work and discourages people from moving there. The inevitable result is
acute congestion in the city, intense pollution and noise. All these have been far above the
internationally recommended safe limits for some years now.
Over the years, the city has grown in a most unplanned and haphazard manner. Its
population has been continuously rising, and is now over nine million, not including the
suburbs. Housing conditions are appalling, with peak densities now reaching over 2000
persons per hactare. Industrial and commercial establishments have mushroomed wherever
they could find space. Traffic and communication are extremely poor. Most of the civic
infrastructure are in need of major repair. The net result is extremely poor living conditions
for the majority of residents in Bombay.
The population of Greater Bombay increased from 4.17 million in 1961 to 5.9 million
in 1971 and further to 8.24 million in 1981. The land mass toward the center was used up
fairly quickly and today offers no scope for further expansion, unless redevelopment and
conversion of present land use takes place. However, if the densities have to be prevented
from rising beyond their already high level, then a substantial amount of additional capital
outlay would be required in residential conversion or new construction. The only other
alternative is for residential densities to be allowed to increase to unreasonably high levels.
The population of South Bombay has been stable at around 1.5 million over the last
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decade, since residential densities had already reached saturation limits. On the other hand,
population in the suburbs and extended suburbs has increased considerably, rising from 1.4
million to 4.96 million in one decade, as a result of a lot of open land being available for
expansion. Now all land at reasonable commuting distance from the CBD has been eaten
away and travelling from the extended suburbs is comparable to long distance travel.
The overall population growth rate in the BMR in the past two decades was around
2
3.6% p.a. while the national growth rate was only 2.2% p.a. This phenomenal population
increase has caused an increase in the population densities at all locations in the city, but
especially steeply as one approaches the CBD at the southern tip. The central density was
1388 persons/ha in 1961, which increased to 1917 persons/ha in 1971 and is around 2000+
persons/ha today.
This acute demand for central space has caused a substantial increase in the price of
land, in addition to which the housing conditions have grown steadily worse.
As the
statistical records of the National Building Organization show, today 75% of the population
lives in one room units, 15% in two room units and only 10% in larger dwellings. The land
rent varies from as high as Rupees 1.25 per square foot near the CBD, to Rupees 0.25 to
2
0.50 in the extended suburbs. This deterioration of the housing condition is evidenced by
an almost secular decline in the rate of building completion certificates issued since 1975.
In 1981, Greater Bombay contained 1.59 million dwelling units with slums
accounting for over 30% of these.
The growing population figure in the Bombay
Metropolitan Region (BMR) was attributable to the ever increasing employment
opportunities as compared to elsewhere. The total employment over the past two decades
increased from 1.68 million to 2.86 million.
Moreover, most of this employment is concentrated in the extreme southern tip of
Bombay. The land mass of this southern tip is only 35 square kms. in contrast with the 369
square kms. of the suburbs. This means that about 61% of the offfice and industrial jobs
are in an area of 16 square kms. which is only 4% of the total land mass.
This extreme concentration of jobs in the city's southern tip, together with the
peculiar north-south configuration of the city, has created substantial transportation
problems. Since this southern tip is accessible only from one direction, this employment
concentration has placed a tremendous strain on the city's bus and train services causing
quite a few hardships to the millions of daily commuters.
9-
In addition to the congestion caused by the lopsided employment distribution, the
heavy port activity which Bombay supports on its eastern stretch, further impedes the northsouth flow of traffic.
The overall effect is that the peak hour traffic from north to south even reaches 4500
Passenger Car Units (PCU) per hour. Apart from this traffic congestion, the overall
metropolitan congestion and overcrowding has exerted severe strain on the other civic
amenities, like water supply and sanitation. These problems combined with the housing
shortage, the lack of adequate open space even for parks and playgrounds, has resulted in
very poor living conditions for the residents as well as a host of other social problems.
These conditions will continue to deteriorate unless lasting measures such as expansion of
the land area are taken quickly.
1.1 NEED FOR EXPANSION ON THE MAINLAND
By the year 2001, CIDCO surveys estimate the population of Greater Bombay to
grow from the present 8.3 million to 13 million. By that time all the land in the island city
which is economically amenable to housing development will have been used up, and the
only way to accommodate the natural increase in population and the continuing
immigration will be to expand beyond the present limits of Greater Bombay into the rest of
the BMR. The Development Plan has estimated that to satisfy the requirements of
residential land within Greater Bombay for the projected population of 2001, it would be
necessary to channel the city's development into zones hitherto earmarked as 'NoDevelopment' zones, despite the fact that these largely consist of vacant and barren tracts of
land along railway corridors located some distance from existing populated areas and
marshy and hilly areas. Extending infrastructure to these areas is likely to be relatively
expensive.
Net residential densities in Bombay are extremely high as Census Data and other
1
surveys about Greater Bombay reveal:
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These densities compare unfavourably with foreign metropolitan cities and indeed
with all other metropolitan Indian cities. As compared to this, net residential density in the
1
only developed node, Vashi on the mainland, is much lower:
Net residential density
Gross residential density
: 670 persons/ha.
: 325 persons/ha.
When seen in isolation the density of Vashi reflects a pleasingly low figure. But it
also means that the Vashi node has not made any significant dent in the present situation in
Bombay and that accelerated development elsewhere on the mainland is essential in order
to encourage the benefits of agglomeration with the island city.
If there is no acceleration in the growth rate on the mainland, the overall density
would decline to 297 persons/ha as the impact of open lands and non-residential areas in
New Bombay is felt. Thus if New Bombay does not develop rapidly enough, residential
densities in Greater Bombay, already very high, will come under further pressure.
Thus, the most important benefit from the BTHL will be the vast areas on the
mainland to be opened for housing development. In spite of this fact, these areas have not
yet been developed, despite the enormous pressure on the supply of housing in Bombay.
This has principally been because of the lack of quick communication and easy access to
the city, and especially to the CBD.
With Greater Bombay reaching the saturation limit for population density and New
Bombay not developing fast enough because of the absence of any east-west link, the only
other location for expansion is northward. However this northward expansion has already
created problems of its own. One such problem is that the commuting time to the heart of
the island city keeps increasing as expansion goes further north. The total commuting time
by train is approaching two hours from the northern-most point of Greater Bombay to the
CBD at the southern tip. Furthermore, Traffic congestion and peak load on the transport
network have increased with the augmentation of the north to south commuter movement.
Today, the principal means of mass transport, the rail network, is used to its capacity, with
the five suburban rail corridors carrying over four million passengers daily to and from the
southern end of the city. In addition, even the public transport buses carry around four
million passengers daily. A not inconceivable scenario for future Bombay would then be as
follows:
Existing zoning restrictions may be relaxed as the pressure on land increases in order
to allow part of the 'No-Development Zone' to come under housing. This expansion can
however be very limited in extent, since much of this zone consists of land that would be
relatively difficult and expensive to develop. What is more likely to happen, therefore, is
that net residential densities in Greater Bombay will rise still further and conditions of
living will worsen beyond the present level. After that the most visible manifestation of
such a 'disaster scenario' will be aggravation of the housing crisis, which even today has
reached alarming proportions.
The severly bad housing condition today is partially attributable to the culmination of
several factors such as the scarcity of land, rapid increase in population, the dilapidated
state of much of the formal housing stock, poor housebuilding performance, misplaced
3
government regulations such as wrongly applied rent control measures, and other factors.
1.2 HISTORY OF PLANNING STRATEGIES THAT HAVE INFLUENCED THE
DEVELOPMENT TO DATE
The following section describes some of the most critical problems caused by the
historically unplanned growth of Bombay. This is not to say that urban planning efforts
were never attempted. In fact, several steps were taken from time to time in that direction.
4,5
These have been briefly chronicled below.
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Modak-Meyer Master Plan for Bombay city drawn up.
Maharashtra Housing Board established to construct houses for
different income levels under various social housing schemes. Nearly
70% of their construction is in Greater Bombay.
Bombay Town Planning Act enacted.
Barve committee suggested the expansion of the southern tip by
reclamation of land and the development of alternative growth centres
in the northern tip.
Messrs. Wilbur Smith and Associates prepared several road network
plans for improving communications.
Maharashtra Regional and Town Planning Act came into force.
Development Plan of Greater Bombay prepared and approved by the
State Government
Bombay Metropolitan Region Planning Board set up.
Bombay Building Repairs and Construction Board established as part
of the Urban Renewal Scheme.
Bombay Repairs Cess established to generate necessary finance for
undertaking repairs of old and dilapidated buildings so that conversion
of land use and reconstruction could take place and new capital outlays
could be utilized to rebuild at desired densities. Maharashtra Slum
Improvement Board established because around this time the rapid
industrialisation of Bombay led to an influx of migrants into the city in
search of employment and this led to the inevitable growth of slum
dwellings.
1948
1954
1957
1962
1967
1969
However, none of these plans achieved any notable success and certainly did not lend
hope for long range and permanent benefits to all the residents of the city. It was then that
the 20-year development plan was prepared by the BMR Planning Board in 1969, the latter
being the first to recommend the following:
" Development of New Bombay on the mainland across the Thane Creek;
" Need for controlling commercial growth in South Bombay;
* Creating another sub-centre, towards the north, in a hitherto monocentric city
in order to reduce aggregate commuting; and
e
Control on the establishment of new industries.
Following the preparation of the Development Plan in 1975, the BMRDA was set up
for coordinating and controlling the various existing activities and local bodies for the
growth and development of the BMR. Its main function was to plan for the region as a
whole, the orderly development of housing and commercial and industrial activities in
4
Greater Bombay and the mainland.
The northern part of the island city did not offer much land for long term
agglomeration benefits with the Central Business District to materialize.
However, the
construction of the BTHL and the subsequent opening up of a vast area on the mainland
would give scope for most of the above recommendations to be put into effect. In fact,
BMIRDA amd CIDCO have both done a lot of footwork in investing towards this goal of
decentralizing Bombay so much so that the connecting link to the mainland is now perhaps
the only significant bottleneck to the development of New Bombay.
A brief look at the planning manouvers undertaken by CIDCO and BMRDA with a
5,6
view to decentralizing Bombay, reveals that they were in six principal directions:
1.2.1 INDUSTRIAL LOCATION
Ever since 1969, severe restrictions have been placed on industrial activity in any part
of Greater Bombay, increasing in intensity towards the south. Following this, the State
Government's Regional Plan of 1974 made major changes in the industrial location policy,
such as restricting and rationalising certain zoning policies. Dispersal and decentralisation
were looked upon as major policies with respect to industrial location, for the achieving of
which larger incentives (such as augmenting infrastructural facilities) were to be provided.
New industrial undertakings were allowed only in New Bombay or in the extended suburbs
to the north.
However, these policies based upon developing growth centres by the provision of a
combination of incentives were not very successful.
Growth tended to concentrate in
already developed areas of the BMR. It can thus be concluded that, unless a wholesale
shifting of industries is made possible and sufficient agglomeration benefits offered, the
chances of success towards decongesting the island city would not substantially improve.
1.2.2 OFFICE AND COMMERCIAL ESTABLISHMENT LOCATION
BMRDA made a conscious effort to have a polycentric pattern of job distribution
instead of a monocentric one. In particular, it was contemplated that South Bombay should
not have any further development unless it was with the objective of deliberately promoting
growth elsewhere. With this in view, district centres and suburbs were encouraged to cater
to business establishments. It was hoped that New Bombay would become a growth centre
with a diversified base. To achieve this in the fastest possible way, BMRDA suggested the
shifting of government and semi-government offices to the North and to New Bombay,
hoping that the linkages of these establishments would be strong enough to encourage and
promote further shifting. It was further hoped that the new port suggested for Nhava on the
mainland may help attract much more activity in the future.
It was found, however, that the development of the port at Nhava by itself was not
enough to persuade the private sector to relocate. Even the relatively low cost of land at
Nhava in contrast to that in the CBD in Bombay was not a sufficient incentive for offices to
shift there. A brief investigation of the causes reveals that all the locations suggested as new
growth centres, have been in remote suburbs. More often than not, these suggested
locations have not been able to develop the needed cluster of economic activities which
could provide sufficient agglomeration benefits to office establishments. Increasingly,
studies showed that the benefits of agglomeration available in the central city outweighed
the savings in private costs involved in locating the office elsewhere. As it stands today, the
Nhava- Sheva port cannot develop the necessary critical mass to ensure self-sustained
growth. This is because the Thane-Creek Bridge has not provided a substantial reduction in
commuting time to the CBD though it provides an east-west link to the main city from the
mainland. It also did not help direct any of the congestion away from the north- south
direction.
However, it is hoped that once a southern link is built and areas on the mainland are
brought much closer to the CBD in terms of commuting time, agglomeration benefits will
soon be evidenced, and effective decentralization can be achieved.
EFFI75 70 AT115A6
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1.2.3 LOCATION OF WHOLESALE MARKETS
This activity causes the maximum amount of population congestion and subsequent
traffic obstruction. Most of the wholesale vegetable markets are the open air kind and use a
large amount of human labour which occupies an enormous quantity of space. A substantial
amount of the traffic obstruction is due to truck traffic which carries products from
elsewhere in the country to these markets, most of which are well within the city. Similar
conditions exist for non-agricultural produce markets.
The Regional Plan of the BMR envisages the shifting of agricultural and nonagricultural produce markets to New Bombay. At present all the wholesale agricultural
produce markets are located in and around the South Island City. Unfortunately this already
congested region does not possess the physical characteristics to contain a wholesale
market. The result is that these wholesale markets are mixed with retail activities and
densely populated tenements. The acute shortage of business and warehousing space has
led to a steep increase in the cost of space, a large scale conversion from residential to
commercial land use, acute lack of parking space, and ever increasing traffic congestion.
CIDCO has thus undertaken the phased development of wholesale markets in New Bombay
in addition to allocating undeveloped plots to desirous traders.
It was estimated through past surveys that wholesale markets together generated a
very large number of person trips per day. The impact of the proposed shifting of markets
can be gauged from the pattern of outward flow of commodities from the existing markets.
Surveys showed that only about 25% of the outward flow was within the island city and
30% was accounted for by the suburbs. Thus, only around half of the total inflow of
commodities is for consumption within Greater Bombay. This implies that almost half of
the total inflow of commodities need not enter the city at all. The commodities are entering
at present only because of the inward central location of the wholesale markets. Thus
shifting of the wholesale markets is likely to have a significant positive impact on traffic
congestion in the city.
To start with, the BTHL would play a similar role as mentioned in the earlier two
cases. Because of the geographical constraints, all trucks entering Bombay from outside
have to pass through New Bombay. Since only about half of these goods are for
consumption within the city of Bombay, around half of the trucks need not enter the city at
all but could terminate in New Bombay. The only trucks that would need access to the city
are intra-city distribution trucks, catering to the consumption demand within the city itself.
Thus New Bombay could handle all inter-city heavy truck traffic, and only smaller intracity distribution trucks would be added to the Bombay traffic instead of the present load of
heavy long-distance vehicles. Access to the South Island City would be via a newly
constructed southern link and to the North Island City via the TCB.
1.2.4 ADDITIONAL PORTS
All the strategies mentioned above would remove the congestion on the Eastern
corridor only to an extent, the reason being that the main sources of congestion on this
easten stretch of the city are the ports and the port-related activities. The only far reaching
solution would be to augment port capacity elsewhere. Thus the government has decided to
construct an additional port at Nhava- Sheva, as mentioned earlier. This new port would
handle all the overseas trade, and only the internal trade would then need to be handled by
Bombay port. Even now, as part of the overall plan for New Bombay, an entire region
around the port has been identified for development to contain infrastructure required for
the port, areas for port-based industries, housing and commercial activities and various
social infrastructure.
As already mentioned, however, just the development of the port at Nhava would not
be enough for the private sector to relocate.
As it stands today the Nhava port cannot
develop the necessary critical mass to ensure self-sustained growth. It is only following the
development of a sufficient cluster of economic activities by virtue of the link, that
sufficient employment can be generated and impetus can be provided to the development of
New Bombay.
1.2.5 HOUSING
The census data of 1981 estimated the need for 60,000 new housing units in the BMR
per year. As against this, the maximum building capability achieved to date has been
25,000 units per year. The following schemes are in operation or at least in the proposal
stage to help alleviate housing shortage in the BMR:9
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The World Bank inititated and assisted a "Bombay Urban Development
Program". This included two programs:
e The Slum Upgrading Program, where slum areas mostly in Greater
Bombay are proposed to be upgraded by measures such as provision of
tenure, improved infrastructure, home improvement loans, etc.
e The Low Income Sites and Services Program, which would develop
serviced residential, commercial and small industrial plots within a range
of existing residential, commercial and industrial activity.
MIHADA and CIDCO are following the World Bank example and are
developing a number of sites in various extended suburbs.
"Habitat India" organised a slum resettlement scheme, which envisaged
allocating land to cooperative housing societies to be formed by slum
dwellers and surrendering to the Government the land presently occupied
by them.
As evidenced by the steadily deteriorating condition of Bombay, however, none of
these schemes have achieved any significant success, the main reason being that all these
schemes tried to achieve the impossible task of accommodating the ever-growing
population of Bombay within the narrow confines of the island city itself. Since the space
available is very restricted, horizontal expansion could only be very limited. Vertical
expansion would still not solve the problem of the over-burdened infrastructure. The overall
effect is that residences and workplaces remained as separate as before. Land rents
remained just as high toward the centre. Travel costs as a percentage of total consumption
kept increasing and net residential area per person was not increasing sufficiently with
distance to compensate for this. A vicious circle has thus been formed and, as housing still
continues to increase to very high densities within the city, social diseconomies of scale are
beginning to be felt strongly.
Hopefully, a southern link could trigger off a virtuous circle. Once commuting time
to the CBD is substantially reduced, residential decentralization would follow. This of
course assumes that locational decisions are based upon travelling time to the CBD. Mutual
dependency would then induce employment centres to follow residential development and
once the linkage effects begin to be felt, development can be expected to be reasonably
rapid.
1.2.6 TRANSPORTATION
The first comprehensive investigation involving road traffic in the Bombay area was
conducted by Messsrs. Wilbur Smith and Associates in 1962. In their "Bombay Traffic and
Transportation Study" they recommended the construction of several freeway and
expressway systems. The two most important proposals were the construction of the West
Island and the East Island Freeways to provide relief to the western and eastern corridors of
the island city. The World Bank also gave aid for "Pedestrian and Traffic Flow
Improvement" for schemes such as pedestrian subways, foot over-bridges, widening and
extension of roads and bridges, etc.
All these measures were aimed, however, at improving conditions within the city in
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order to accommodate the existing traffic in the best possible way. None of these helped in
diverting any of the traffic elsewhere. The construction of the BTHL in conjunction with
these earlier measures, however, would substantially help in redistributing traffic loads in a
more efficient manner.
Moreover, if New Bombay is to develop as planned, it would seem logical to
establish major links between Bombay and the Mainland. As already mentioned, the first
and only link to date between the city is the Thane-Creek Bridge, which opened to traffic in
1972. This bridge creates a northern link, connecting the respective northern areas of the
island city and the mainland. The carrying capacity of the bridge has, however, reached
saturation over the past decade. For accelerated development of New Bombay, a link with
the southern areas of the mainland is obviously required. This link would have to cater to
the differing travel demand created by the planned decentralization of economic activities
from Bombay to New Bombay. The traffic survey made by CRRI estimated that such a
7
southern link would carry a load of around 90,000 PCU's by year 2001.
Points 1 through 6 above show the advantages of constructing a link connecting the
respective southern portions of the island and the mainland from many different angles.
Many of these are social benefits, always difficult to quantify and express in monetary
terms. Different ways of capturing these benefits are discussed later in this thesis.
Chapter 2
BTHL: THE SOUTHERN LINK BETWEEN THE ISLAND
AND THE MAINLAND
"BTHL" is an abbreviation for the proposed Bombay Trans-Harbour Link Project.
The proposed project cost was established, in a feasibility study conducted in 1982-83 by
an international consortium of consultants led by Peter Fraenkel and Consultants (UK), and
including Premier Consultants (India), Christiani and Nielson A/s (Denmark), and Dr.
Helmut Homberg (West Germany).
In December 1983, the Steering Group of the Government of Maharashtra appointed
Tata Economic Consultancy Services (TECS) to carry out a study on the economic
feasibility and environmental aspects of the proposed Trans-Harbour communication link
between Bombay and the Mainland. Subsequently a financial study of the same project
was also carried out by TECS.
The results of both these analyses were not quite satisfactory from the Government's
point of view. It was felt that a broader environmental impact analysis of the project would
be needed. The analysis done by the author in this thesis, endeavours to look at the project
from the broader viewpoint of the economy as a whole and it demonstrates a new approach
for the analysis of transport projects.
The BTHL comprises of a 16 kilometers long road bridge of reinforced concrete
construction spanning the Thane Creek between Sewree in the south of the island city and
Nhava in the south of the mainland. The benefits due to the project are assumed to arise
mainly on account of the quick and easy access which it will provide between Bombay and
the mainland. The opening up of large areas of land for housing would in fact constitute the
most important benefit of the link and is especially significant in relieving the acute
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population pressure in Greater Bombay. The link would thus provide a new geographical
focus for the development of Bombay and its environs thereby easing the various problems
associated with congestion that have arisen on account of the city's haphazard and
unplanned growth.
The Central Road Research Institute (CRRI) estimates the traffic on the BTHL to be
92,000 vehicles in year 2001, which is the year when the BTHL is expected to be
7
commissioned for use. The CRRI states that this will save an estimated 17 kms per traveller
per trip, thus saving an estimated 85 million litres of fuel annually. It is the southern part of
New Bombay where a large number of hectares of land are available for housing, which
will benefit most in terms of commuting time by the construction of the link. From this
point, the total commuting time to the central business district in the city will be on an
average 90 minutes.
9
The basic assumptions underlying the appraisal of the BTHL Project are:
1. Construction of the bridge will commence in 1991 and will be complete by
the end of year 2000;
2. The East Island Freeway and the Sewree Expressway will be constructed by
the year 2000; and
3. In the absence of the project, economic activities on the mainland will take
place in accordance with CIDCO's plan for New Bombay, which has been
developed without accounting for the link. The BTHL will accelerate the
development of such activities, thereby generating economic value in the
Bombay region.
The economic costs of the project as computed by Messrs. Peter Fraenkel and
Consultants were estimated basically under two heads, costs of construction of the BTHL
and costs of operations and maintainence. The NetPresent Value of the total costs
discounted at 12% to the year 1990 works out to be = US $110.41 million.
The entire exercise of estimating the benefits and costs was done using shadow
prices, or opportunity costs which represent the value of benefits foregone when resources
are shifted from one process to another productive activity. A Standard Conversion Factor
(SCF) of 0.8 was chosen to convert all relevant to their economic values, based on the
procedure commonly adopted by the World Bank.1
The same procedure is also adopted for calculating benefits at economic prices. The
methods used by Tata Economic Consultancy Services for calculating the project benefits,
as well as the new approach used by the author for the same are both described in the
subsequent chapters of this thesis.
The government will undertake the construction of the BTHL, subject to arriving at a
satisfactory solution to all the following conditions:
1. Optimum location and capacity for the road link.
2. Most appropriate form for the crossing taking into view the following factors:
Possibilities of widening of the road crossing to accommodate
a future capacity estimate of 90,000 PCU's per hour;
Environmental impacts during and after construction;
Suitability from the point of view of Shipping, Defence and
Aviation; and
3. Advice on the cost-benefit analysis and implementation of the project, taking
into view recommendations on possible ways of financing the project and
means of recovering the project costs through tolls or user fees.
The engineering feasibility of the project has been conclusively established by the
earlier consultants. This includes points 1 and 2 mentioned above.
1Foreign
exchange is scarce. It is thus worth more than what would be given by the official exchange rate in
terms of domestic resources. The Bank contends that the UNIDO method of pricing goods domestically at
border prices and inflating the foreign exchange by applying a foreign exchange rate premium to it,tends to
embarrass governments, since the method shows that the domestic economy has been overvalued.
The Bank thus adopts an alternative method, by which all prices are measured such that the denominator is
not domestic currency but the domestic equivalent of foreign currency. Thus, instead of applying a premium
to the foreign exchange, you apply a Standard Conversion Factor (SCF) to domestic prices. Since the World
Bank contends that the foreign exchange premium for India is = 1.25, the SCF which would bring the
domestic prices in appropriate balance with the true value of foreign exchange, would be 1/1.25 = 0.8. Thus,
all economic benefits and costs would equal financial benefits and costs times 0.8.
This thesis, provides at least a partial answer to point 3. Its main emphasis is on the
identification and quantification of overall benefits to society. However, it chooses not to
deal with the issue of recovering project costs through pricing techniques. To do so would
require the compilation of another detailed document and is beyond the scope of this thesis.
2.1 WHY IS BTHL DESIRABLE FROM THE PLANNER'S POINT OF VIEW?
Given the above background, an obvious solution to the decongestion of the island
city lies in locating housing not in Greater Bombay, but in the rest of the BMR. The
available locations would thus be either toward the north or in New Bombay. The northern
locations as previously noted are handicapped by the long commuting time to the city
which is in excess of two hours. This leaves New Bombay as the only efficient solution to
Bombay's needs for expanding and absorbing more land.
The northern region of New Bombay is already served by the Thane- Creek Bridge,
and the central and eastern regions by the East- West Railway Corridor. The southern half
of New Bombay will however benefit most by the BTHL in terms of lower commuting
time. Average commuting time between the southern half of the mainland and the CBD on
the island will then be restricted to 90 minutes on average.
Thus in terms of average radial distance to the CBD the overall city size would be
actually getting smaller, and resources would then be used more efficiently. The more the
urban boundary expands, more will be the social diseconomies of scale to be felt in
Bombay.
Seen in this perspective, the BTHL project will not merely provide the most efficient
solution to Bombay's acute accommodation problem, but it would also be the most viable
solution open to the city. As said before, in the absence of this project, Bombay's growing
population will have only two equally unpalatable alternatives open. One would be to
expand into the farflung suburbs in the BMR, outside of Greater Bombay from where
commuting to work in the CBD would be synonymous with long distance travel. A second
alternative would be to remain within already congested regions, in which case, population
densities would rise well above normally accepted ceilings. The demand for social
amenities would fall well above the capacity of the city's already overburdened
infrastructure to supply it. This would also mean the quality of life for vast numbers of the
city's population would deteriorate to unacceptable levels.
There is of course a third, albeit theoretical alternative, which is perhaps open only to
more developed countries. In these countries, social diseconomies of scale would induce a
dispersal of population and jobs to other cities and towns. This is however unlikely to have
much validity in the case of Bombay. Developing countries have, almost by definition, a
much narrower range of alternative industrial agglomerations available to choose from, if
for no other reason than that industrial development is itself so limited in scope and
intensity. Secondly, any progress made in creating jobs, or even residential accommodation
in dispersed locations is frequently eroded by a rapid growth in the country's population.
A large amount of land would thus have to be opened at one time in order that bulk
shifting of various sectors could be achieved, and agglomeration benefits would soon start
to be felt.
2.1.1 ENVISAGED DEVELOPMENT SCENARIO
Both SICOM and MIDC have long discussed creating "Counter Magnets" elsewhere
in the state of Maharashtra as a solution to the situation in Bombay. But despite
considerable discussion on this topic and some measure of success, this is still an uphill task
at a practical level.
The experience of Vashi node showed for example that an isolated development has
the danger of ultimately degenerating into a mere "dormitory township". One possible
solution would be to have integrated development where New Bombay and Greater
Bombay develop together, complementing each other and functioning as one large single
metropolis. This would also give New Bombay a chance to develop the needed cluster of
economic activities since it would be in close proximity to Bombay, the nearest industrial
agglomeration.
The BTHL could provide this organic link, where both the island city and the
mainland could contain residential and commercial development so that people would be
commuting both ways. Only through such uniform, two-way traffic flows would distant
industrial areas receive an all round stimulus. In this manner Bombay would be able to
escape its geographical constraints, and develop radially instead of being forced to develop
into a linear corridor.
The identification and quantification of the precise benefits of such a development
scenario is, as said earlier, relatively difficult, in many cases necessitating the use of
subjective judgement. The various methods followed for these tasks are discussed in the
following chapters.
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Chapter 3
A LOOK AT THE FINANCIAL AND ECONOMIC ANALYSIS
OF THE BTHL DONE BY TATA ECONOMIC CONSULTANCY
SERVICES.
Sections 3.1 and 3.3 of the following chapter briefly discuss the most traditional
methods that have been used to evaluate the benefits of transportation projects such as the
BTHL. Part I looks at the traditional economic analysis as carried out by TECS whereas
Part II looks at the financial analysis, also done by TECS.
Measuring of financial costs and benefits is usually a fairly uncontroversial issue,
since monetary profitability to the project entity is the only measure for determining
financial viability. In case of an economic analysis, where project viability is determined by
the 'welfare maximization' accruing to the economy as a whole, measuring the economic
costs of a project is substantially simpler than measuring its economic benefits and can
usually be limited to making adjustments in the actual expenses to the extent that they do
not adequately reflect real economic costs. This thesis does not concern itself with the
calculation of costs. The emphasis rather is on the various methodologies used for the
identification and quantification of benefits which are then weighed against the costs earlier
calculated by Messrs. Peter Fraenkel and Consultants.
Sections 3.2 and 3.4 of the following chapter deal with the question of why the
measurement of benefits is such a controversial and difficult issue. In view of these
difficulties, each part proceeds to critique the traditional methodologies used to date. These
methodologies have been discussed in the specific context of the Bombay Trans-Harbour
Link Project. The following chapter presents a new modelling technique for the same
purpose. It is shown to overcome quite a few of the difficulties experienced in the methods
presented in Chapter 3.
3.1 ECONOMIC APPRAISAL OF THE BTHL PROJECT AS DONE BY TECS
The Steering Group of the Government of Maharashtra wished to have a study
conducted with regard to a social cost-benefit analysis of the BTHL Project. The terms of
reference stated the need to examine the 'socio-economic' and 'environmental' aspects of
the proposed link on the society or economy as a whole. Hence, the present study, done by
Tata Economic Consultancy Services in March 1985.9
Part I of this chapter describes the methodology as carried out by TECS, which was
on very traditional lines. This methodology, described in the following pages is based
mainly on desk research about economic benefit-cost methodologies including past
investigations on relevant topics, and certain basic data from the previous consultants'
reports. Part II of this chapter offers a critique of this methodology with respect to some of
the more obvious flaws.
3.1.1 IDENTIFICATION OF BENEFITS OF TRANSPORT PROJECTS
The study revealed that the economic benefits arising out of transport projects such as
the BTHL are generally more difficult to measure than their corresponding costs. This is
mostly because many of the benefits are such that there are no corresponding market prices
available. A good example is the benefit derived due to savings in time which is difficult to
measure because the savings take place over a fairly long time horizon which necessitates
fairly long range forecasts to be made. The same is true about the quantification of many
other benefits. The most commonly observed benefits arising from transport projects as
stated in the consultants' report encompass the following:
-
3.1.1.1 Reduced Operating Expenses In Areas Now Served By A New Facility
These are perhaps the only benefits of transport projects easily measurable in
monetary terms. These mainly arise from items such as fuel savings, maintainence,
depreciation, etc. These can be directly measured as the difference between the 'With
Project' scenario and the 'Without Project' scenario.
46
3.1.1.2 Stimulus To Economic Development Now Served By The New Facility
These benefits can be measured in terms of the net value of additional output arising
from the provision of a transport facility. The difficulty, however, is in judging how much
of the stimulus to economic development can be allocated to transport and how much to
other complementary investments. Again, the best way of doing this is with the help of the
"With" and the "Without" Project scenarios, even though in doing so, a considerable
amount of value judgement is involved.
3.1.1.3 Savings In Time For Passengers And Freight
These are comparatively more difficult to identify and measure. The valuation of
savings in time is a function of the opportunity costs involved. Moreover, the type of
externalities that would arise would depend upon the amount of time saved on account of
the new facility in relation to original trip duration. If this is substantial, then one could
quantify benefits such as bringing new areas into easy commuting distance of workplaces,
and making it possible for existing commuters to enjoy more leisure time.
There would be an opportunity cost,"t", the time saved if it were substantial enough
to pursue other meaningful activity, even leisure. The valuation of these commodities
could be done through the computation of 'Aggregate Consumption Benefits'.
3.1.1.4 Reductions In Accidents And Damage
These arise only in certain kinds of transport projects, for example, the result of
widening an existing highway into a dual carriageway. The most obvious difficulty in the
measuring of this benefit is that it involves judgements on the value of human life, always a
highly controversial issue.
3.1.1.5 Increased Convenience And Comfort
The TECS study stated that these benefits are unlikely to be of a magnitude large
enough to affect the economic viability of most kinds of transport projects. Though some of
these are not directly quantifiable, they can all be said to give rise to positive externalities.
Quantification would thus be largely a value judgement involving the internalization of the
associated externalities.
3.1.2 BENEFITS SPECIFIC TO THE BTHL PROJECT
The TECS study revealed that the most obvious benefits from the construction of the
BTHL would arise mainly on account of the quick and easy access which it will provide
between Bombay and the mainland. Provision of such an access would result in savings in
commuting time across the harbour and therefore cost. It would also help accelerate the
industrial and socio-economic development of the mainland. The anticipated aversion of the
housing crisis has already been elaborated upon earlier. Thus, substantial benefits could
flow to the region's economy from the generation of value added by industries, provision of
employment opportunities, availability of additional housing, resource savings in
transportation, etc., all of which will have a favourable impact on the island city in terms of
decongestion of all civic services.
Indirect benefits which can perhaps be described only in qualitative terms would
include benefits such as environmental benefits due to decongestion of Bombay city,
improvement of the quality of life of residents on the island and the mainland, reduction in
pollution, social development of the mainland, etc. These would be much more difficult to
quantify than the directly felt ones.
Prima facie, therefore, the study identified the principal benefits of the BTHL Project
as accruing from savings in vehicle operating expenses, stimulus to the industrial
development of the region, and savings in time.
The following few pages discuss the methodology followed by Tata Economic
Consultancy Services for the identification and quantification of these benefits. Following
this, 3.4 of the same chapter, critiques this methodology used by TECS. Chapter IV then
provides an insight into a new method for the identification and quantification of transport
benefits.
3.1.3 IDENTIFICATION OF BENEFITS
3.1.3.1 Savings In Vehicle Operating Expenses
The BTHL would substantially reduce the distance and provide quicker access
between Bombay city and Nhava-Sheva on the mainland for both long distance as well as
intra-hinterland traffic. As compared to the existing alternative of using the Thane-Creek
Bridge, there will be benefits accruing directly and immediately, such as savings on fuel,
and some indirectly and after some time such as savings in vehicle maintainence.
CRRI surveys showed that long distance traffic, all of which presently uses the
Thane-Creek Bridge, would form a substantial component of the traffic on the new bridge.
From the mainland south of Nhava to the city south of Sewri, the reduction in trip length
would be about 17 kms. The total savings in fuel and maintainence costs would thus depend
upon the projections of such traffic for the coming decades, through the use of a traffic
model, and then calculating the savings by comparing the "With" and "Without" Project
9
scenarios. Such projections would then have to take into account the following:
1. The location of the proposed port at Nhava-Sheva, which would itself
generate and divert a certain amount of traffic from Bombay Port;
2. In addition to long distance traffic, social and economic developments on the
mainland will necessitate interaction between the city and the mainland which
will generate traffic movement across the harbour; and
3. The proposed location of the new international airport in New Bombay, will
also generate new two-way traffic.
3.1.3.2 Value Added In Industry
With the construction of the proposed link, it is envisaged that new areas will be
"opened up" for industrial location, especially in the south and the south-east of the lower
half of New Bombay. The link will bring such areas closer to Bombay and make possible
active interaction between the city and the mainland.
Past experience reveals that the Thane-Creek Bridge proved to be an indispensable
link between Bombay and the MIDC industrial belt on the Thane-Belapur road, and
between Bombay and New Bombay itself. Though undoubtedly a few industries had
already been established even before the construction of the Thane-Creek Bridge, most of
the speedy development took place only after the project was sanctioned. The BTHL would
have the same basic advantages in as much as the areas would become much more
accessible and travelling time would be cut substantially.
Most of the industries postulated to come here are in the nature of expansion or
diversification of already existing Bombay based companies, for whom communication
with the city would be a distinct advantage. Further advantages would be easy access to
Bombay's market, to the various sources of raw material and skilled manpower, and to the
excellent communication facilities.
These are what were described before as the
agglomeration benefits.
Bombay is the administrative capital of the state of Maharashtra as well as the
financial capital of the country. Thus, even for virgin companies to be located in New
Bombay, the existence of such a nearby metropolis would be a distinct advantage, and
interaction with this metropolis could be considered an inevitable stimulus to growth. In
addition these new industries would have a concentration of skilled manpower to draw on
from population centres in the CIDCO region or otherwise. On this basis, industrial
development is estimated within and without the immediate borders of the BMR.
Ideally, the construction of this link would induce the development of specific growth
centres in this area with MIDC providing basic infrastructure. Favourable conditions for
setting up new industries already exist in the southern part of the mainland within the BMR.
With plentiful utilities likely to be available in this area, and with the advantage of the
Nhava- Sheva Port in the vicinity, the region has a considerable potential for development.
In addition, there is already a large demand for industrial areas.
To the extent that part of this development can be identified as being mainly on
account of the link, it would be considered as an external benefit of the link project which
can then be valued and internalized. The contribution of these industries to the gross
national income could be valued as the difference between benefits gained in the "With"
and "Without" Project scenarios, and attributing the incremental benefits to the link. The
net benefit to society from the link would then be the value added, net of all additional costs
of infrastructure, land development, and related facilities - without which the incremental
benefit would not be realized.
The consultants' report however, stated the difficulty of the need to rely on value
judgement in order to forecast the levels of value added under different assumptions.
Observed trends in existing industrial area were used by the consultants as a guideline for
this exercise.
3.1.3.3 Savings In Time
The consultants' study identifies the benefits due to savings in time as follows. The
most positive externality of the link would be to bring a large area on the mainland within
reasonable commuting time of the island city. This would have the very important effect of
reducing some of the pressure of housing in Bombay which would otherwise reach
unreasonably high levels at the end of the century.
Admittedly, some of the residential areas of the BMR are scheduled to be developed
independently of the Link Project. The main contributions of the link to these projects
would be to improve accessibility, and subsequently to stimulate the development of these
areas so that the construction of residences would take place at a more rapid pace. Further,
the link would lend a significant appreciation to land and property values on the mainland,
especially regions in close proximity to the link and in hitherto inaccessible regions in the
southern part of the BMR.
This latter contribution, i.e. the appreciation in property values, is then assumed to be
the reflection of the social value of benefits of agglomeration, which was made possible by
the link. This is to say that, in the absence of the link, residential areas in most of New
Bombay would be poorly connected to the island city in terms of commuting time. The
residents would then feel a comparatively poor identification with the megalopolis that is
Bombay, especially its commercial centre, the southern tip of the island.
As the "Without Project" scenario outlined earlier shows, the anticipated increase in
Bombay's population by the turn of the century is phenomenal, totalling around 20 million
by 2001 A.D. There will be little choice other than to live in the suburbs on the virtual
periphery of feasible commuting time from the city.
In this situation, New Bombay,
especially its southern regions, would be no more attractive to the commuter than the
distant suburbs of Greater Bombay. The 'critical mass' of people that is needed to develop a
CBD would then be denied or at least delayed to New Bombay. This would give rise to yet
another vicious circle, in which the growth and development of the entire region would be
more uneven.
In Bombay, a broad inverse relationship is seen to exist between property values and
system commuting time and thus commuting costs. This empirical correspondence was
used by the consultants to determine the various property values on the island city. These
observed rates in different localities were then applied to areas on the mainland which were
at comparable system travel times. These property rates which can be charged on the
mainland were then assumed to be the "consumer's willingness to pay" which formed a
measure of the housing benefits or indirectly of the benefits due to savings in time.
3.1.4 QUANTIFICATION OF BENEFITS
For the purposes of this critique, only the methodology of quantification of the
housing benefits has been elaborated upon, since this involves the maximum amount of
subjectivity. As said before, to quantify the housing benefits the consultants mainly
concerned themselves with the benefits accruing due to savings in time. "Savings in time"
are taken to be of consequence only in as much as they make it possible to 'open up' large
amounts of land on the mainland chiefly for residential dwellings, within reasonable
commuting time of the island city. Housing opportunities will accrue from the expectation
that the link will accelerate the housing development in New Bombay.
The 'social value' of these 'time savings' is therefore the value of 'provision of new
housing within reasonable commuting time' measured in terms of 'aggregate consumption'
i.e. in terms of "consumer's willingness to pay". The "consumers" were assumed to be the
people who are expected to occupy the newly opened up areas on the mainland.
To measure the net benefits two scenarios "With Project" and "Without Project" were
considered. A much faster rate of development was assumed for the "With Project"
situation. Also, since the commuting time to the city will be much lower with the link, it
was assumed that the valuation placed by society on such housing, will be much higher
with the link than without it. The difference in the 'willingness to pay' between the two
scenarios is taken to be the net benefits due to housing directly attributable to the link.
3.1.5 METHODOLOGY OF QUANTIFICATION
"Consumer's willingness to pay" was estimated by using as proxy the prevalent rates
in the northern suburbs of Bombay which are located within comparable commuting time
of the CBD in South Bombay for corresponding areas on the mainland. This is done for
both the "With Project" and the "Without Project" situations and the difference calculated
between the two. The following modes of travel between Bombay city and the mainland are
.
then assumed for the two scenarios:
9,10
"With Project" scenario:
: Bus
Mass transport
Public transport
: Car
- via the East Island Freeway.
- via the BTHL.
- via the East Island Freeway.
- via the BTHL.
"Without Project" scenario:
: Rail
Mass transport
Bus
: Car
Public transport
-
via the East-West Corridor.
via the East Island Freeway.
via the East Island Freeway.
via the Sewree Expressway.
via the Thane Creek Bridge.
The rates for housing in the comparable suburbs of the island city were obtained
through a survey of flat owners and through informal discussions with officials of the "Flat
Owners' Association" and the "Housing Development Finance Corporation" (HDFC) in
Bombay, and therefore assumed to be fairly accurate.
The following assumptions were then made for the quantification of these housing
benefits: 9
1. Net Residential Area = 44% of the Gross Area for Residential Development;
2. The estimated benefits are expected to accrue from the acceleration in
housing development only in the southern half of New Bombay, which totals
2500 ha. This is because the link is not assumed to benefit the northern half of
New Bombay as much in terms of commuting time. Thus, this estimate about
the pace of housing development in the CIDCO regions is at best a
conservative estimate, since the total amount of residential land thrown open
by CIDCO in New Bombay totals 7000 ha within the political boundaries of
the BMR, in addition to a considerable area in the immediate vicinity.
3. For middle income housing, 'willingness to pay' is based on the travel time
for mass transport and for high income housing it is based upon the travel
time for private transport.
The study did not include the benefits arising out of areas earmarked for sites and
services. Since these areas account for a substantial portion of the CIDCO region, the study
in fact omitted a substantial portion of the economic benefits. Given all the restrictions
imposed on the quantification of benefits, the aggregate benefits must be regarded as a very
conservative estimate.
On the basis of the above assumptions, the total economic benefits for middle and
high income housing were calculated separately, for the "With" and "Without" Project
scenarios and discounted to the present using a discount rate of 12%.2
The difference in the present values in the two scenarios came out to be US $149.57
million. This can be termed as the financial benefit of the BTHL Project. A standard
conversion factor of 0.8, prescribed by the World Bank for the current year was used to
convert financial prices to economic prices. The report stated that this this economic benefit
which came out to be US $119.66 million was a very conservative estimate.
The
corresponding costs as computed by Messrs. Peter Fraenkel and Consultants are US
$110.41 million also at 1990 constant prices.
3.2 A CRITIQUE OF THE ECONOMIC APPRAISAL DESCRIBED IN PART 3.3
The critique which follows has its basis in the principles of social benefit-cost
analysis which need to be satisfied. These can be described as follows.
3.2.1 Principles Of Social Benefit-Cost Analysis12
All countries, especially developing countries, are faced with the problem of
allocating resources efficiently in order to achieve their fundamental objectives which
include the maximization of economic growth, more equitable distribution of income,
development of backward regions, etc.
2Refer
to Appendix A for tables A.1 through A.8 which demonstrate the calculations done by Tata
Economic Consultancy Services regarding the economic benefits arising from housing and resource savings in
transportation.
Irrespective of the scope or magnitude of this objective, some kind of trade-off must
clearly exist. A country cannot have more of everything at the same time. A choice has to
be made for competing ends. "Social or Economic Benefit-Cost Analysis" is a method of
presenting this choice conveniently, in terms of a common denominator. In terms of this
'denominator', which is the discount rate, if the benefits exceed the costs the project can be
accepted. If not, it must be rejected.
In a purely financial analysis of a proposed project, monetary 'profitability' is the
only measure for determining its viability. "Social Benefit-Cost Analysis" uses a different
measure, which could be described as "the estimated effect of a project on the fundamental
objectives of the economy". This analysis values 'costs' and 'benefits' differently. Financial
prices can then not be utilized for the analysis.
Thus, the fundamental principles of
economic analysis can be described as follows:
It is necessary to go into the question of what prices represent in terms of real
resource costs or gains to the economy in relation to fundamental objectives. This is the
principle of 'shadow prices', which in practice differs substantially from that of 'financial
prices'. Shadow prices are defined as the increase or decrease in welfare resulting from any
marginal change in the availability of commodities or factors of production. In practice,
valuation of these welfare changes is synonymous with the estimation of "Social
Opportunity Costs", which are the outputs or returns foregone in alternative uses. In what
ways the economic analysis described earlier fails to satisfy these basic principles is
elaborated in the following pages. This economic appraisal as carried out by TECS, has
been critiqued in view of the objectives mentioned earlier.
Given the definition of economic costs and benefits, they are perforce to be valued
differently than in a financial analysis. An economic analysis should be concerned with
"welfare maximization" and all economic benefits and costs should thus have been valued
in terms of their welfare implications to the economy. In this case, inevitably it would
require a fairly clean judgement about the fundamental objectives which the city of
Bombay is facing today.
Instead of this, we find that the identification and quantification of economic benefits
and costs has been restricted mainly to users. For example, resource savings in
transportation are attributed only to the users of the BTHL because of the distance saved in
commuting. However the study completely ignores the fact that there will also be resource
savings to the residents of Bombay city, chiefly due to the reduction of congestion in the
main north-south length of the city. Savings in time will form a large component of these
resource savings.
As a second example, the project's welfare impact with respect to housing benefits
can best be approximated in terms of "aggregate consumption", usually estimated in terms
of the "consumer's willingness to pay". As said before, this concept of "willingness to pay"
is a convenient means of valuing a variety of disparate benefits into a single index of
aggregate consumption. Thus the contribution of any commodity to society's aggregate
welfare is ultimately a function of the aggregate willingness of consumers to pay for it.
The economic argument presented above, thus takes a biased perspective. In the first
place, the term 'consumer' is defined narrowly and taken to mean only the people now
occupying the newly developed areas on the mainland. The analysis however does not take
into account the change in the welfare measure or the utility accruing to the individuals or
the consumers in the city of Bombay. If done correctly, the "aggregate consumption"
should include changes in consumption on the mainland as well as those on the island city.
For example, though the total rental income on the mainland may increase, the rental
income from Bombay city alone may decrease since the prices on the island city would
drop after some of the demand shifts to New Bombay, thus changing the overall rental
structure. Thus the aggregate rental income may increase or decrease, subsequently causing
a corresponding change in the aggregate income, and the individual utility will accordingly
change. This will give rise to another subsequent difficulty.
57
In the analysis, to estimate "consumer's willingness to pay" existing suburbs or
locations which are within system travel times comparable to travel distances in the "With"
and "Without" Project scenarios were selected. Existing property rates of the comparable
suburbs on the island were then applied to corresponding areas on the mainland. However,
the study ignores that these are 'Marginal Rate Transactions', i.e., if the supply of housing
were to be sizeably increased due to the opening up of the mainland by the link, then the
rates on the island city which have been used for comparative purposes would decline. Thus
property values on the island would not be a correct measure of the consumer's willingness
to pay on the mainland.
In short, therefore, one could say that the main disadvantage of such an approach is
that it does not implicitly encompass environmental benefits such as the decongestion of the
island (whether absolute or relative) and the subsequent improved quality of life. This is a
serious omission, since a major premise in the consideration of the link project, is the extent
to which it will have favourable environmental impacts on the island city as well as on the
mainland. The study has assumed in fact that these benefits of increased convenience and
comfort, are unlikely to be of a magnitude large enough to affect the economic viability of
the project. In reality, however, directly or indirectly the link can be expected to act as a
catalyst to the development of the BMR as a whole. This externality of the link, needs to be
15
valued and internalized.
The consultants' report has also included 'value added due to industry' as a major
part of the benefits due to the BTHL Project. The argument made by the consultants is that
the construction of the link would induce the development of specific growth centres in the
New Bombay area, and to the extent that this can be identified as being mainly on account
of the link, it could be considered as an external benefit of the link project.
approach could be criticized for a number of reasons.
Such an
Most importantly, it would be
difficult to know how much of the increased output is attributable to the improvements in
transport made by the BTHL, and how much to other complementary investment.
In the second place, by the norms of traditional macro-economic theory, an
investment project such as the BTHL would not be considered to produce any sizeable
benefits. This is because of the following reason. The BTHL would perhaps facilitate the
location of industries on the mainland. However, even if the locational decision of an
industry is influenced by the BTHL, it does not necessarily mean the industry, in its new
location, contributes anything more to the economy or to the Gross National Product of the
country than it did before. Counting the benefits due to value added by industry as a result
of increased output per worker, is thus a very indirect method and would involve too much
value judgement. Thus, the correct methodology of quantification of the benefits would be
to take into account the benefits directly accruing to each individual in the city. The
quantification of indirect benefits however, becomes a very subjective exercise, and prone
to errors.
All of this is however not the fault of the project analyst, but it is an essential
drawback in the traditional methodology of economic appraisal. Some of society's
objectives that are being considered in this specific context unfortunately cannot easily be
incorporated into social prices, such as for example, reducing congestion and coping with
further influx of workers in cities. Though such objectives are no less a legitimate concern
for the government, it is beyond the scope of the techniques used to date to place a value on
such goods. Though an attempt has been made to measure these non-quantifiable economic
benefits by comparing the "With" and the "Without" Project scenarios, the net benefit so
computed would still not include all the non-quantifiable benefits.
Indeed, in some cases even if the net benefits do not present an overtly favourable
picture, it is possible that the loss may be compensated for by the non-quantifiable benefits
that society needs. The economic analysis presented here makes it very difficult to compare
such desirable but non-measurable social objectives against finite cost figures. It is thus
easy to underestimate the net benefits or costs by ignoring external or linkage effects. The
most that can be done in this technique is to make a rough estimate of the net external
impact that the project will have and try to include that in the appraisal. This would
however become a very subjective exercise.
Summarizing this critique of the economic appraisal of the BTHL Project, the most
serious drawback occurring throughout the analysis could be described as follows. All
changes in unit prices (land, travel) or changes in supply (land) that in turn order changes in
prices must be evaluated through a demand curve, such as the one shown on the following
page. However, we find that the calculations done by Tata Economic Consultancy Services
are not developed from the principle of "demand analysis". The analysis therefore becomes
faulty since the future demand is not adequately forecast.
3.3 A NOTE ON THE FINANCIAL APPRAISAL OF THE BTHL PROJECT
The purpose of a financial analysis is to determine whether a project entity is likely to
be financially viable, or likely to meet its financial obligations to produce a reasonable
return on the capital invested. The financial analysis thus focuses on the costs and revenues
of a project entity which may be responsible for the project, and is usually summarized by
the entity's income and cash flow statements and its balance sheets. The basic assumptions
underlying the appraisal of the BTHL Project is similar in both the financial and economic
appraisals.
Subsequent to the economic appraisal, the Steering Group of the Government of
Maharashtra wished to have a study to appraise the costs and revenues that would accrue to
the Government if the BTHL were to be constructed. This study as carried out by the
appointed body, Tata Economic Consultancy Services in September 1985 is briefly
presented below. 0
In estimating the benefits of the project, two alternative scenarios, "With" and
"Without" Project were postulated. Relevant benefits were taken to be the difference in the
figures in the two scenarios. These are thus the 'net' or the 'incremental' benefits of the
project. The project benefits were identified as follows:
3.3.0.1 Rental Levies
These apply to lands leased for residential and industrial purposes on the newly
developed portions of the mainland.
3.3.0.2 Sales Tax Proceeds
Incremental revenues under this head were estimated only by the value of increased
industrial production which the link would facilitate and on which a minimum levy of 4%
was applied.
3.3.0.3 Toll Receipts
An average toll of Rs.10/vehicle was applied to all "external" traffic likely to use the
bridge. This "external" traffic referred essentially to long distance traffic whose origin or
destination was outside Greater Bombay.
The following assumptions were made in the estimation of these benefits:
3.3.0.4 Regarding Rental Levies
Prevailing rentals in the CBD were taken as the maximum rate that could be levied in
the "With Project" scenario, and lower rates were arbitrarily chosen for the "Without
Project" scenario.
Although the bridge is scheduled to open in the year 2001, it was
expected that housing and industrial development would commence earlier, on account of
the 'anticipated' benefit of time and distance savings afforded by the BTHL. Hence two
situations were postulated:
In the first one it was assumed that the development of land and infrastructure as well
as the resultant rental benefits will commence midway through the construction phase of
the project.
The second more conservative scenario assumed that development on the
mainland would commence only in the year that the BTHL was ready for operation.
3.3.0.5 Regarding Sales Tax Proceeds
Incremental tax proceeds on consumption goods were not considered since it was
assumed that consumption patterns would remain unchanged with or without the Project.
3.3.0.6 Regarding Toll Receipts
"Internal" Traffic between Bombay and New Bombay was not considered for the
purposes of toll, as this was thought to amount to double-counting of benefits. This was
because, higher the toll levied for using the bridge, lower would be the appreciation of land
values on the mainland and hence the receipt from rental levies. It was however, recognized
that in practice, it would be difficult to implement the levy of toll for only external vehicles
using the bridge.
The consultants' report stated that the rental levies formed a maximum proportion of
the benefits. A sensitivity analysis wherein tolls and sales-tax receipts were excluded,
indicated only a marginal fall in the worth of the project.
3.4 A CRITIQUE OF THE FINANCIAL APPRAISAL DESCRIBED IN PART 3.1
3.4.1 The Methodology In General
This type of methodology uses financial or monetary profitability as the only measure
for determining project viability. Often however, a project could be necessary in order to
serve the fundamental objectives of the economy. Such a project is normally called a
"public good". These types of projects should almost by definition be concerned with
'welfare maximization' and thus especially for public goods all benefits and costs should be
valued in terms of their welfare implications for the economy. Thus monetary profitability
would not be the right or only criteria on which to base an investment decision, especially
as said before for a "public good".
In the language of economics, one could say that the financial analysis is very narrow
by definition, because the profits or the costs to one enterprise do not represent real gains or
losses or rather real resource costs or benefits to the economy as a whole to the extent that
workable competition does not prevail in major sectors of the economy. Thus market prices
are often not enough by which to value a good.
3.4.2 Specific Drawbacks With The Identification And Quantification Of Financial
Benefits In The Case Of The BTHL
3.4.2.1 Toll Receipts
Limiting the measured benefits to tolls paid presupposes that the benefits of the link
are confined solely to the actual users of the BTHL. This is actually not the case. Since the
link is intended to promote the dispersal of Bombay's population, the greater the usage of
the facility, the larger will be the benefits to all the residents of Bombay, even if they
themselves are not the actual users.
And thus, if this is the case, the incidence of the financial levy required to recover the
costs, should justifiably be allowed to fall upon the population at large through for example,
general taxes, rather than on users through toll charges, especially as user charges are a
subjective measure and bear no real relation to the actual cost of construction of the BTHL.
Thus, since the price charged as user taxes does not represent the real resource cost to
the economy, it is bound to be somewhat arbitrary, and the distribution of benefits through
tolls could either reduce their overall size or be inconsistent with other public policies. For
example, the principal public policy in the case of the BTHL is to attract people to the
mainland. Charging of toll could thus be inconsistent with this policy, since it would detract
rather than attract people. In fact if charged at all, toll taxes should be considered as neither
benefits or costs. They are a cost to the taxpayers, but a benefit to the government. They
may in fact be considered merely as "transfer payments" from the 'consumer surplus' to the
'producer surplus'. In addition to those mentioned above, there are quite a few difficulties
with respect to the actual collection of toll tax. One such difficulty is that traffic estimates
derived from the model are likely to be sensitive to the assumptions made regarding the toll
structure on the link. Furthermore, the analysis does not take into account that if toll taxes
were actually charged, there will also be corresponding offsetting costs such as the cost of
toll collection procedures, as well as the costs accruing due to the simultaneous lowering of
traffic speed.
3.4.2.2 Sales Tax Levies
Similar to toll taxes, sales taxes are neither a benefit nor a cost from the country's
point of view. An increase or decrease in the sales tax does not mean that there would be an
increase or decrease in the economic resources required as inputs to a project. (Except to
the extent that they raise prices and thus reduce the quantities that could be purchased.)
These benefits can also be more appropriately be regarded as "transfer payments" rather
than costs or benefits.
3.4.2.3 Rental Levies
For the quantification of benefits due to rental levies, prevailing rental rates in and
around the CBD in South Bombay were used. These however do not correctly represent the
"consumer's willingness to pay" because of the following reasons: In Bombay city,
historical evidence has shown that, rents from properties decrease monotonically with
increasing distance from the CBD. Even if the BTHL brought about a substantial reduction
in commuting time and distance, the nearest point on the mainland would still be at least six
miles away radially from the CBD. The likelihood of rents anywhere on the mainland
equalling those at the Central Business District is very low. Therefore, the values attributed
to the rental incomes have been miscalculated. (As mentioned earlier, this assumes that
commuting time to the CBD is the only significant factor affecting land rents at any
particular location. Other factors, such as less congestion, better views, etc., are assumed
not to make a substantial difference to the monotonic declining gradient of rents, outward
from the CBD).
Such an analysis using the appreciation of rental levies on the mainland implicitly
harbours another drawback. It neglects the fact that the appreciation of property values on
the mainland could be accompanied by a depreciation of values on the island city itself.
Thus a more accurate accounting of the benefits would be not only the increased rental
levies on the mainland but the aggregate change in rental income all over Bombay and the
mainland.
Furthermore, it has not been taken into account that rental payments will only equal
the change in transportation savings. The financial analysis has assumed that the collection
of toll will be allowed on construction of the bridge. Then in this "with toll" situation,
consumers will be willing to pay that much less as rental payments as they pay in toll taxes.
The analysis has thus ignored that the charging of toll will cause a decrease in the aggregate
rental payments, since toll taxes and rental payments are both made out of the same
"consumer surplus".
Summarizing the above three points one could say that within the narrow bounds of
the definition of a financial analysis of a single project, the direct objectives of the project
entity could be fulfilled by a positive financial cash flow, but this would give no clue as to
the welfare impacts on the economy itself.
Chapter 4
A NEW TECHNIQUE FOR THE APPRAISAL OF
TRANSPORT PROJECTS: APPLICATION OF WHEATON'S
MONOCENTRIC MODELS OF URBAN LAND USE
4.1 Introduction
This chapter deals with a relatively new approach to project appraisal which could
conceivably replace or at least complement traditional methods of benefit-cost analyses. It
can be anticipated that there will be an increasing reliance by governments and private
investors on the kind of project analysis to be described below because of three important
factors:16
1. It makes it possible to devise relatively simple and directly applicable rules
for judging investment proposals, so that application of this technique can
become more universal and used for all investment projects of a similar
nature;
2. The results of this kind of project appraisal can be reduced to a
comprehensive set of decision making rules; and
3. It overcomes one of the most serious drawbacks of traditional appraisal
techniques in as much as it implicitly encompasses externalities and linkages
accruing from the project, as opposed to the traditional methodologies which
generally identify only direct user benefits.
The Planning Commission of the State Government of Maharashtra should be able to
use this document to aid in the decision making process of whether or not to undertake the
construction of the BTHL. It is also hoped that the World Bank would review this thesis
before making a final decision on whether or not to finance the BTHL Project.
A certain amount of guesswork has gone into the preparation of the following
section. This was required since only in rare circumstances will statistical raw material
match concepts of pure theory. Because it is the essence of most investment projects that all
benefits and some of the costs occur in the future, future economic development has had to
be prophesized. The computerized model which was used for this purpose was made as
case-specific as possible by basing all the input parameters within the context of the
economic framework of Bombay.
4.2 A BRIEF OVERVIEW OF DIFFERENT OPINIONS REGARDING THE
APPRAISAL OF TRANSPORTATION INVESTMENTS
Briefly summarizing the earlier part of this document, in rapidly urbanizing India in
the past two decades the planning of urban transportation by Federal, State and Local
authorities has come to depend increasingly on economic decision making. Perhaps to a
greater extent than in other areas of government investment (with or without international
financial and technical assistance), urban transportation has developed an elaborate
planning methodology, until today based on the traditional fundamentals of Benefit-Cost
Analysis.
In the initial stages, expanded transportation facilities are seen to reduce the effective
price (including time) of travel. In the short run this increases the number of trips, while in
the long run this encourages urban decentralisation and greater lengths of trips. Both forces
increase aggregate travel and the consumer surplus thus generated can be approximated
from an estimated demand function for the use of the BTHL.
This methodology was initially restricted to financial appraisal techniques, and more
recently these financial studies are often complemented by economic appraisal studies.
However, this methodology has been criticized frequently over the years, mainly because it
is a partial approach (as illustrated in the previous section of this thesis) and appears to
ignore the long-run repercussions of major transportation investment in the "adjoining"
market for land and housing. Thus, it includes only direct user savings as benefits of the
project and ignores the effect of externalities and linkages. One example of an externality
would be as follows. A change in the transportation network could change the pattern of
land rents which in turn would increase or decrease the total rental income, which would
16,21
affect the overall aggregate income level.
These changes in rent and density that invariably follow transportation investment
certainly leave little doubt that benefits and costs are being created in addition to those
accruing directly to highway users. The intent in this chapter is to extend a solution to the
economy as a whole, such that society's objective function would include the maximization
of total output, but will be by no means limited to such a maximization. There will be
additional social objectives, part of which will be incorporated in the objective function and
part will be treated as constraints that the economy must satisfy. Thus, valuation of inputs
and outputs at social prices will ensure that the allocation of resources will maximize total
welfare.
In dealing with this problem of measurement of transportation benefits, Wheaton has
quoted the views of many writers who to date have developed quite varied opinions, some
of which have been illustrated earlier in the section on traditional analyses. 6
Early authors such as Robert M. Haig suggested that land prices fully capitalized the
benefits received by highway users, so that any increase in these benefits would only show
up in higher land rents and to consider both changing rents and user savings would amount
to "double counting". 16
This view is supported by Arnold Harberger in his many writings on economic
benefit-cost analysis, and the technique he advocates has been demonstrated earlier in the
economic appraisal done by TECS for the identification and quantification of the benefits
16,17
of the BTHL project. This traditional view gave way to several succeeding alternative
solutions to the same question of quantification of benefits.
Mohring cast serious doubt on Haig's proposition by arguing that while a reduction
in travel costs must surely generate benefits, "aggregate" land payments may increase or
decrease because the increases in some land rents may be completely offset in specific
cases, by decreases in others. The economic appraisal demonstrated earlier surely justifies
this criticism because it considers only the increased land payments from New Bombay and
does not take into account the possibly changed land payments in Bombay. It therefore
chooses to ignore the fact that "aggregate" land payments from the BMR as a whole may
decrease. Clearly in this situation user benefits and changing land rents could not be
equivalent.
Anne Friedlaender expanded this view, arguing that changing land rents represented
an additional benefit in the land market, distinct from that accruing to highway users. There
was some question however, of whether and how the additional benefit should be
measured. As Wheaton points out, in the short run, such changes represent capital gains or
losses, while in the long run they are only "transfers" between tenant and landlord. Within
16
the traditional benefit framework, neither makes a contribution to the GNP.
16
A recent contribution to the debate was made by David Pines and Yoram Weiss.
They come closest to taking "aggregate" land payments into account and are thus a step
ahead of the rest. They state that a "weighted difference" between rent increases in the
affected area and rent decreases in other areas is a more appropriate measure. Most
importantly, they conclude with the view that transportation benefits should be determined
with a general equilibrium measure of income compensation.
The most recent attempt to develop such a "Spatial Equilibrium" model of
transportation investment comes from Robert Solow and William Vickrey (1971, 1973).
They explore the question of what optimal amount of land should be devoted to urban
transportation.
Increasing such land (which means making new investment) reduces
congestion and spatially stimulates the demand for residential land consumption. On the
other hand, greater land devoted to transportation restricts the supply available for
residential use. This viewpoint is used as a basis for developing the Wheaton model, which
is principally based on the principle of, "Demand Curve Analysis". It should be made clear
at this point that what we need is a model that forecasts how the BTHL Project forecasts
land prices and consumption by changing the supply of land and the cost of travel. A
graphical representation of the following principle would be as follows:
t4ET VTiL4 1Y/PE#50NOgF
THE NA6te1NAL CifAN66 N eZN 60M03
5 UJ PWS
ZZMPN ATCQ PGONAND
-
q AN Tl
FUN62 [ON
6F LN~p Pt3(MuA5 p
Figure 4-1: DEMAND CURVE ANALYSIS: Measurement of demand and economic
benefits for urban transportation systems
Without the project we would get the following:
Initial price of land: P
Maximum amount the consumers are willing to pay: ODAQ.
Amount that the consumers do pay: OPAQ,
Therefore, initial consumer surplus: PDA
Once the BTHL is constructed however, the changing (rather, the increased) supply
of land and the reduced price of travel would induce two effects:
1. More land could be consumed. In this case,
Maximum willingness to pay at the lower price: Q.AFQ,
Amount consumers actually have to pay: Q.JFQ
Resulting consumer surplus: JAF
2. A reduced price for the same amount of land consumed.
3. Resulting additional consumer surplus: P,P.AJ
The model therefore is based on the fact that all changes in unit prices (land, travel)
or changes in supply (land) that in turn order changes in prices must be reevaluated through
a demand curve analysis.
4.3 DEVELOPING THE WHEATON MODEL
The model used for the quantification of the benefits of the BTHL has been taken
from the family of monocentric models (originally developed by Alonso) and adapted for
use in this specific context. The purpose of this chapter, then, is to demonstrate through the
exploration and use of the Wheaton model a more appropriate methodology for the
measurement of benefits of certain types of transportation investments. Within this
framework, urban commuting is viewed as a "factor" necessary for the consumption of
housing and land. The model works on the basis of the assumption that the approach of
"income compensation" or "compensating variation" is the right measure of project
investment benefits.
"Income compensation" is defined as the amount that is required to be paid by a
consumer to leave him as well off with an investment project as without it. Why is this
measure of "income compensation" (technically known as compensating variation) the right
measure of welfare?
Only an economy with no distortions, economies/diseconomies of scale, etc., allows
the allocation of resources according to market prices to lead to a maximization of profits
for the producers and of utility to the consumers. However, since no such perfect system
exists, market prices in practice will not inevitably guide producers and consumers toward
social
optimum.
The
best
way
then
of
measuring
social
and
private
(demanders'/consumers') benefit would be by calculating "consumers' willingness to pay"
which would include all market distortions. This is the concept of "consumer sovereignty"
where his willingness to pay determines the ultimate value of all final products. Expressed
in monetary terms, therefore, economic benefits are measured as the maximum amount
people, either individually or collectively, would be willing to pay for the project's output.
A consumer's decision of how much to buy of any particular good available to him in
the market depends upon the limited amount of income he has available. Thus, since his
willingness to pay depends upon his budget constraint, this limited 'budget' or 'income' of
the individual becomes one of the necessary exogenous parameters of the model. Let us
term this exogenous income, "Y".
Let us now begin by assuming a city which contains "N" individuals distributed such
that each household is made of five members. There are thus "N/5" households in the city.
It is assumed that at least one member of each household is engaged in productive work and
that all such work activity occurs at a singular point in the city, the central business district.
We will then assume that "Y" is the equal and identical income accruing to every
such working member within the city. Since residences and workplaces are assumed to be
separated, this fact necessitates costly commuting by these working members. We will
further assume that the consumption set available to the consumer contains three items
only:
1. Land consumption, "q", whose rent is, "r";
2. Travel cost to a central employment district, which is assumed linear and
equal to a constant, "k", times the distance, "t"; and
3. Expenditure on everything else, which we will assume to be a composite
commodity, "x".
With this in mind, the consumer variables, "x" (the composite commodity) and, "q"
(land consumption), are thus determined to maximize land rent with respect to the utility
function.
Let us now assume that the total land supply, "A", is made up of urban land, and
surrounding peripheral rural land. Total rental income is then the income accruing from
both urban land users as well as rural land users.
R = r(urban users) + r (or "s" which is the rural opportunity rent of land)
Further, the total household income is defined so as to come from two sources:
1. Exogenous wage receipts = "Y ", which is the income accruing at the Central
Business District of the city; and
2. An equal share of net rental payments that accrue from urbanization, "R".
4.3.0.1 URBAN LAND SUPPLY
The supply of land available for urban use reaches from the city centre to a distance
"b" at the urban periphery. Rental income from urban users equals the integral of the bid
rents of consumers from the city centre to the urban periphery, "b".
,F-
FENT\&6&T ePPe8TUNtlY
titi09T P0(NT ON
UN
N Ar
LAND
ON fnAT
t:AP1UV5 M [LbT6 F Pk Z6
'GPjPt19FRY "b OF VR6AN
LAQt eLt-Py LAIOp~a LGAND
T
eA
In this case, the demand balances supply when the holding capacity of land up to
point, "b", equals the long run population to be housed, "N".
4.3.0.2 RURAL LAND SUPPLY
At the urban periphery "b" the land rent equals the opportunity rent from non-urban
or alternative to urban or rural land use.
Rental income from rural users = s (A - 7tb2
(NDME FF0M UMB/\N (/5eU
[N6ONE
=
FF9OM MIU3AL, U6695
=5 C(A - Jc b9
We will now assume that though consumers will live at different locations in order to
maximize their own utility, since all households are identical, equilibrium requires that all
households enjoy the 'same' level of utility. This utility depends upon land consumption,
"q", and the rest of the composite commodity available for consumption, "x". This utility
condition can be stated as,
Utility = u(x,q).
(1)
However, as noted earlier, this equality of utility takes place only under the condition
of budget constraint. The budget constraint allows a consumer to pay only an amount equal
to "r" as land rent. Thus mindful of their resources, and given a common utility, "u",
households will offer for each site the maximum that their budget will allow. The location
pattern of residences then depends on which household has the highest bid for each
particular site.
Since total income Y equals the sum of total rental payments from both rural and
urban users as well as exogenous wage receipts at CBD, the condition of income constraint
or budget constraint can then be noted as:
Y = rq + x + kt.
(2)
Thus,
x = y - rq - kt.
(2')
Taking this condition of income constraint and inserting it into equation (1), we can
rewrite the utility condition, U = u(x,q) as
U = u(y - kt - rq, q).
(3)
The consumer can then decide how much land to buy at each location by maximizing
his utility with respect to q.
This gives a condition which states that,
Marginal Utility of q
Marginal Utility of x
This is the maximum rent, "r" that he is willing to pay for a property, at any location
from the CBD. With transportation improvements, such as the construction of the BTHL,
and the resulting lower commuting costs, the consumer can purchase land at a price less
than the maximum he would be willing to pay, or travel to the CBD at a price less than the
maximum he would be willing to pay. It is only under these circumstances that the
consumer can be said to be better off than before.
In the language of economics, this difference between the maximum amount a
consumer is willing to pay and what he actually does pay, is referred to as the "consumer
surplus". Let us explain this a little further.
In addition to condition (4), it must also be true that if t changes, utility maximization
must not change, because, given a choice of locations, consumers must be indifferent to the
choice of location. Thus, differentiating the bid rent,"R" with respect to, "t" and equating it
with zero, we arrive at the following condition:
(5)
Change in R with respect to T = dR/dt = -k/q
This condition means that as a consumer considers a more distant location, the extra
commuting is balanced by savings in land expenditure.
Finally the land market as a whole to be in equilibrium, the amount of land that
households consume or demand must be equal to the total land supply. This condition is
stated by the following two equations. The first one states that the total population, "N"of a
city is such that,
N=J
01
-2ndt
(6)
and the second one states that the land rent at the urban periphery "b" equals the rural
opportunity rent of land or that,
rb=s
(7)
We further say that, according to equation (5) as "k" falls, the rent gradient becomes
less steep, density flattens, city boundary expands and the consumers are made better off.
The utility level thus rises as shown in figure 4.01. In the long run, another effect is seen
which is that the supply of land rises, density flattens and moreover because land is made
accessible, border may not increase. Thus the utility level is even higher than in the
previous case. This phenomenon is represented in figure 4.02.
Overall, we can say that the project creates increased utility for everyone. The basic
question the model asks itself in calculating the utility is, " What change in Y would give
the same level of utility without the project as with the project so that everybody is equally
well off?" The answer to this question then is "income compensation", which the model
derives.
4.3.0.3 RESULTANT OUTPUT OF THE MODEL
In the initial stages of the construction of the BTHL,
" The total price of travel falls, but as yet no additional land mass is added to the
city. As a result,
* The city boundary expands.
" Overall residential density is lowered.
* Aggregate travel increases.
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t& CENTr&AL
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In the long run, with the construction of the BTHL,
" The total price of travels falls and in addition, land mass on the mainland is
developed as an extension of the mainland, thus allowing more residential land
for development. It is assumed that the demand for residential land is such that
all new land coming on the market would be purchased, and thus once the
market clears decongestion of the island would automatically take place, the
valuation of the resultant social benefit being covered by the "consumer's
willingness to pay". As a result,
" City boundary contracts.
" Residential density is lowered.
" Aggregate travel may increase in the short run, but will almost certainly
decrease in the long run.
eENfSOL.
eKTS
5TEC-&P rNNnY 61(NT
PA
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413 >
rus APPITIoMAL 6ANP
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APP7(T1ONAZ, AfP9
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NNNGI>
F&ATT&P P5NSV'
6wApiiwr
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FW0A
Summarizing therefore, the variables and parameters which need to be satisfied for
the working of the model are derived from two basic equations which are as follows:
Utility condition: Utility
=
u (x,q).
Budget constraint: r = (y - x - kt)/q.
The variables which are fed exogenously into the model are, the total population,
"N", income, "y", transportation costs, "k", rural opportunity rent, "s" or "r ", and travel
time to the CBD, "t".
The model then endogenously derives the individual utility level, "u", land
consumption at location t, "q", density pattern with respect to commuting distance, "1/q (t)",
rent pattern with respect to commuting distance, "R (t)", and the border of urbanization,
"b".
The simultaneous solution of the various equilibrium conditions derived from these
parameters and variables represents the so- called "city model", which calculates the final
expression for the general equilibrium compensation per individual. This "level of welfare"
is determined so as to meet the resulting demand for space.
The "N" individuals in the city are assumed to be distributed such that at any distance
"t" from the CBD, there are 2 t/q individuals. The final expression for the general
equilibrium income compensation per individual in the city will then equal:
2xCIN
b
t2/qdt
The aggregate project benefits for all individuals then equal,
2x bt2/qdt
40
This is then the final expression for "marginal change in consumer surplus" which
may also be expressed as the level of consumption of the BTHL. This, then is the change in,
"Y " required to give the same level of utility without the project as with the project, so that
everybody is equally well off, and which we had earlier termed as, "Income
Compensation".
In this entire analysis it is therefore assumed that no separate benefits need to be
calculated on account of the presumed improvement in the quality of life, such as for
reduced population density in residential areas, reduced noise, lower pollution, etc. This is
because the proposed, "willingness to pay" implicitly incorporates such changes.
It should be mentioned that while the benefit of a transportation project accrues
initially to the users or to the owners of the transportation facility, competition and a desire
to maximize profits leads them to share it in various degrees with other groups such as
producers, etc. The cost reduction then benefits the nation as a whole and not the users of
the transportation facility alone. Thus, the value of the project is measured by its
contribution to the growth of national income.
4.4 MONOCENTRIC MODELS OF URBAN LAND USE: APPLICATION TO
BOMBAY'S TRANSPORTATION PLANNING
The following section describes the Wheaton model as applied to the appraisal of
22,25
urban transportation projects. It is, as mentioned earlier, the final and most complete
version of the Solow-Vickrey model, adapted to suit the specific context of the city of
Bombay. Hopefully, the following section will lead to a sufficiently clear understanding of
the model. Some of the assumptions may seem a little unrealistic at first glance, and the
reader may thus tend to doubt the veracity of the model for use in shaping major policy
issues. However, as the discussion develops further, it reveals the aptitude of the model for
influencing judgement regarding transport investment in the right direction.
4.4.1 Introduction
The family of the so called "Monocentric City Models" represents a unique branch of
microeconomics. Each model expands the theory of consumer/producer behaviour to
incorporate two additional pieces of data -- space consumption and locational preference.
For the moment, the consumption set of each individual includes expenditure on travel
costs to the CBD as well as expenditure on land consumption. These two items in the
consumption set are generally assumed to bear an inverse relationship with each other. To
treat this model in as simple a manner as possible, all monocentric models are based on a
common set of three assumptions. The applicability of these assumptions in the specific
context of Bombay city is tested at the end of this chapter.
Assumption I
It is assumed that at least one member of every household is engaged in productive
work and that all such activity occurs at a singular point in space. Residences and
workplaces must therefore be separated, a fact that introduces costly commuting.
Assumption II
Within the neo-classical framework, a household utility function is assumed in which
'the consumption of space' and 'rental income' are positive arguments and the 'cost of
commuting' is a negative argument. Given a constrained budget, utility maximization
results in a situation in which space consumption must be traded against commuting cost, or
that higher density must be weighed against greater travel. Density patterns thus evolve as a
consequence of this tradeoff.
Assumption III
It is assumed that the consumption of space, does not involve the use of capital that is
either rigid or immobile in the long run.
Past land use therefore, plays no role in
determining present or future density, and change through redevelopment is always
assumed at least as a possibility.
Unfortunately, urban structure in almost every society departs from at least one of
these assumptions. The applicability of the model will depend upon how serious the
digression is. For example, housing capital is rigid in all but nomadic cultures and while
some cities may have a dominant pattern of central employment, locational decision
making is rarely based solely on a trade-off between space and commuting costs.
Consequently, one should not expect the monocentric models to produce especially
accurate representations of modem cities. If the assumptions made are really far from the
truth, then the models' utility in forecasting urban growth for policy analysis would be
limited. It would still, however, serve an important educational function by increasing the
understanding by planners and economists of how urban spatial markets operate in theory.
The clarity of the simple structure has created a new awareness of spatial equilibrium and
of the role of transportation.
Fortunately the application of this model to the case of Bombay suffers from very
few drawbacks because the assumptions in the model are very close to the reality in
Bombay. This has been elaborated with respect to the specific assumptions at the end of this
chapter in the second section.
The specific case of the model's implications for the decision making process in
urban transportation projects is explored in Section I, a very important extension of the
model. This section accommodates the simultaneous relationship between transportation
and density. Section II concludes this chapter. It looks at the recurrent three assumptions. It
is suggested that the relaxation of any one of them will create mathematical difficulties that
require more complicated simulation approaches to urban modelling. However, quoting
from Wheaton, "Loss of generality and mathematical elegance is the price of realism."
4.5 MONOCENTRIC CITY MODELS AS APPLIED TO THE PROBELM OF
TRANSPORTATION INVESTMENTS
We now come to the most relevant part of the model. Using the expanded model
described above, Wheaton investigated a major problem in policy making, that of the
benefits from reductions in travel costs, which presumably occur as a result of greater
highway investment. Wheaton sought to determine if the presently used traditional method
of measuring only the cost savings to users captures all the consumer surplus.
He deduced that a reduction in travel cost within the more general model would not
only benefit users directly but by adjusting aggregate rents could change the rental income
and thus the aggregate income. This in turn would ultimately alter the level of welfare or
utility. Changing rent would also affect land consumption and so secondary consumer
surplus may be gained or lost in the land market as well. This change in consumer surplus
can be represented under the derived demand curve for travel.
Until now, we have shown the model to be a descriptive, educational device,
exemplifying the application of traditional microeconomics to spatial decisions and the
creation by transportation of a so-called hedonic market for urban land. However, the
model discussed so far has recognized only part of the relationship between land use and
transportation. While the friction of space gives rise to a density pattern, the location of
residences may in turn influence the cost of travel.
It is common knowledge that the character of highway transportation results in
congestion costs. The extent of these externalities depends jointly on the size of the
highway facilities and the magnitude of their usage. In a monocentric city, where all
commuting is done radially towards the centre, the shape of the density gradient will affect
the volume of traffic passing each point. Thus, unless investment in transportation facilities
is sufficient to insure free-flow travel, travel cost and residential density must be
determined simultaneously. The general equilibrium income compensation necessary to
offset the reduction in travel costs represented in Wheaton's model in the previous chapter
captures all these effects simultaneously.
The most sophisticated version of this model (Mills and Solow, 1972) incorporates
this effect of congestion. It can be described as follows. Given the budget constraint,
households maximize a utility function that depends on other goods, "x" and space
consumption, "q". The cost of travel in this model, "k(t)", is distinguished from that in the
previous descriptions because it incorporates the value of time costs in addition to direct
money expenses. Therefore, the total cost of travelling a unit mile will depend on traffic
flow or speed and hence on the supply of transport facilities, and on the volume of traffic at
location "t". The supply of transportation facilities is presumed to be proportional to the
amount of land devoted thereto. In a monocentric city, a fraction of land at each location,
"w(t)", is exogenously set aside for highways. This is the land assumed to be withdrawn
from the residential market for use in transportation. The volume of traffic, "v(t)", passing
through these facilities at a particular point depends on the number of commuters who live
beyond that location. The Mills-Solow model then helps us compute the cost per mile of
travel under the assumption that travel costs at the CBD equal a predetermined amount,
usually zero.
As before, land consumption, "q", and consumption of other goods, "x", are
determined as functions of the price of land, "R", and the cost of travel, "k". The model
further determines the urban boundary or the size of the city, "b". We could now use the
model to test sensitivity to change in the various parameters, for example, those required to
check whether the flattening of the density gradient could be achieved by either expanded
transportation facilities or claiming of additional land mass.
The model would, for instance, state that in the short run as the price of travel falls, or
income rises, the city boundary expands, residential density is lowered and aggregate travel
increases. The model states in the long run, when the price of travel falls in addition to
more land mass being made accessible for development, the city boundary shrinks,
residential density is lowered, and while the aggregate travel may increase in the short run,
it will almost certainly decrease in the long run.
Summarizing, therefore, one could say that the "general spatial equilibrium income
compensation" value of a marginal transport investment is equal to a marginal change in
consumer surplus, measured under the derived demand function of travel, and can thus be
used to compute the value of the net benefits of a transportation investment. It is because of
this that all the changes in housing and land market that accompany highway investment
can be completely ignored in benefit calculations if highway demand is adequately
forecasted, so as to permit the implicit inclusion of the benefits into the model.
To keep the model relatively simple, however, simulations are carried out only for
the exogenously changing variables of population, travel cost, and rural rent. Income
however is retained as a constant parameter in all the simulations, the reason being as
shown in the following. Wheaton's research revealed that utility functions in the model are
not very sensitive to differing income levels. As income increases, the value of time and
space consumption rises, but they increase in an exactly offsetting manner. Thus the bid
rents of low, middle, and high income households all look quite similar. The model,
therefore, for the moment assumes that all individuals have identical incomes the value of
which is equated with the average per household income in Bombay.
4.6 CONCLUSIONS REGARDING CHAPTER 4, SECTION 4.3
Is it really possible to apply the described model of the monocentric city to the
specific context of the city of Bombay?
Can a policy decision as major as the construction of the BTHL be based on the
results of such a model?
The answer to both the questions raised above would be 'yes' if all the assumptions
made for the working of the model, and the parameters which set the context of the
environment, are shown to be true or at least not far from the truth. Once the shortcomings
of the model are recognized, it would be easier to veer the final judgement such that the gap
is bridged.
As said earlier, taken as a group, monocentric city models have three assumptions in
common. They assume that (a) all employment is centrally located, (b) locational choice
depends only on commuting cost and space consumption, and (c) all housing capital is fluid
and mobile. These assumptions illustrate an important problem in any scientific research
which is that models that are simple enough to yield general, deductive conclusions
frequently require over restrictive assumptions.
In the case of the monocentric city models, these assumptions are essential for
mathematical tractability. Without these assumptions, the solution would become more
general in character but noticeably more difficult to obtain. The question is thus of the
applicability and the veracity of these assumptions under specific conditions. If applicable
in a specific context, each assumption could eliminate an important and essential feature of
urban structure. The important question to be decided is, therefore, whether in the case of
Bombay the eliminated features are ones which could form the core of many urban policy
issues?
In the following few pages, the relevance of applying these assumptions is
discussed in the context of Bombay city.
Assumption I: All employment is centrally located
This is perhaps the most widely criticized assumption of the monocentric models.
There are few cities with even a majority of the employment located in the CBD. It is
fortunate, however, that Bombay is one of the few existing cities in which this is entirely
true partly owing to its peculiar geographical configuration. Though part of its service
employment is spread among most regions, and although there has been a recent move
towards decentralization of office and industrial establishments, the majority, i.e. 62% of
the employment, is located in the southern tip which barely makes up 4% of the total land
mass of Bombay. It is also true that, as assumed in the model, this CBD at the southern tip
emerged from a competitive solution to the land market because the bids of firms declined
more rapidly than that of the households. The assumption about a centrally located
employment centre is, therefore, well justified in this case.
Let us look at a tentative future scenario. BMRDA and CIDCO are making
concentrated efforts to decentralize the current CBD which is in the southern tip. The initial
idea was to move part of it towards the northern end of the city. This however was not
successful because merely moving a part of the CBD to the north did not divert congestion
from the main city at all and the tentative northern CBD suffered from a lack of enough
space to establish a CBD big enough to achieve agglomeration benefits.
With the proposed bridge across the mainland, however, part of the north-south
traffic could be diverted into an east-west movement. Initially this would tend to trigger a
decentralization of residences. Recent studies of industrial location (Kemper, 1970) have
shown that the location of households and firms is closely interdependent.
With such a bridge, it should be entirely possible to model the Bombay Metropolitan
Region as a system of monocentric subcities, each with an employment subcentre and a
workforce. At the very least there would be two such subcities in the BMR, the existing one
in the south of the BMR and a new one on the mainland. The actual degree of employment
decentralization which would be feasible or the number of subcentres that would likely be
created can perhaps only be explained by a more detailed study of agglomeration
economics.
In the long run, greater decentralization would mean the creation of two smaller
subcentres and would lead to "less" aggregate commuting. This would further enhance the
benefit stream as the distance travelled and thus the cost of travel comes down still further.
Either of the two models used for the purposes of simulation can conceivably lead to this
future scenario.
However, the shortcomings of the model in its present form, need to be recognized.
The model cannot incorporate the growing tendency towards two-worker households or the
large amount of travel for purposes other than commuting to work. These two issues
suggest that to most consumers the concept of accessibility is more general than simply that
of travel cost to the subcentre of their own employment. This certainly complicates the
essential simplicity of the basic model. With multiple centres, workplaces or trip purposes,
transportation costs bear a discontinuous and highly complicated relationship to euclidean
space.
Assumption II: Locational choice depends on income, the preference for space
and the disutility of commuting
As said before, though some cities do have a dominant pattern of central
employment, locational decision making is rarely based solely on a trade-off between space
and commuting costs. The assumption, however, is reasonably true in the case of Bombay
again by virtue of the peculiar north-south configuration of space in the city. As said before,
employment centres in Bombay are concentrated in the extreme southern tip. Households or
the labour force extend to the far northern region and even on the mainland, though the
latter are relatively few to date. Traffic congestion in this very narrow north-south arc is one
of the main problems of the city.
Historical data from the Bombay Housing Board show that plots in South Bombay
have been commanding the highest rents or prices for some years now. Census data show
that the richest cross section of society is almost completely concentrated in the southern
tip.
The locational preference of people is supported by further evidence of the past few
years. The efforts to decentralize the present CBD, at least to some extent began around a
decade ago. Offices began to be located in certain commercially zoned areas in the nothern
tip, especially in the Bandra-Kurla complex. It was just around this time that residentialproperty rates in the Bandra/Pali Hill area in the north increased phenomenally and now
command rents next only to those charged in South Bombay. This is also the second highest
peak of concentration of high income people in Bombay.
This agglomeration of higher income groups nearer the CBD shows that property
values in Bombay vary to a large extent with system commuting time and costs. It is
important to note the difference between commuting distance and commuting time in a city
as ridden with congestion as Bombay. Here, commuting distance is of consequence only in
so far as it affects the costs of transportation. If transportation costs could be held constant,
the only variable which would affect locational decisions would be the system time
involved. A good example can be seen from the following. The very affluent section of
population localities such as Malabar Hill or Cuffe Parade (which are in close proximity to
the CBD as also to all the supporting services such as theatres, restaurants, educational
institutions, etc.) command relatively higher rates than Bandra or Juhu, though the income
level of the cross section of people living at either place could be about the same. Similarly,
upper middle localities such as Dadar or Mahim would command relatively higher rates
than comparatively more distant suburbs such as Borivli or Versova. We have in the
Wheaton model, therefore, assumed an unambiguous statistical relationship between system
times and property values for any given income or group.
Assumption III: In the long run, all capital is fluid and mobile
This presupposes that the structure of a city in which capital has been built gradually
will in the limit closely resemble that of a city in which capital is put in place all at once.
This means that housing capital is neither physically nor economically durable. Without
durability there is no opportunity cost to old capital, no barrier to change, and no history to
urban development. Redevelopment occurs continually to replace old and sub-optimal uses
by new.
In reality this assumption rarely holds good. As Wheaton states,
"Since housing is the most rigid form of capital, land development is essentially an
evolutionary process."
The history of the urban structure of Bombay city reveals that there was a very long
period of time (from the late 1800's to the 1970's) during which capital within the city
remained almost static. At around the end of this century, buildings started reaching the end
of their economic life, and over the last two or three decades a huge amount of
redevelopment is being seen in the southern tip of Bombay and around the new BandraKurla commercial complex in northern Bombay. This phenomenon has been explained by
24
Wheaton, who states,
"There is frequent profitabilty of replacing even rigid capital. Urban growth can occur
through demolition or conversion as well as through new development."
When capital was relatively new (around the late 1800's), increasing urban
population caused new households to be first accommodated on vacant land at the fringe,
and central capital remained almost completely rigid. As demand kept building to excessive
levels and the city expanded, land rent for more central sites exceeded that for capital
structures already there.
It was at this point that conversion, demolition and new
construction occurred at the centre.
However, now that the building capacity in Bombay (especially at the southern tip),
is almost completely saturated, the city should expand more rapidly at the fringe and the
urban rent profile is expected to be more convex. It is also entirely possible that the
government would invest even more money in reclaiming additional land from the creeks,
swamps and marshes at the southern tip, and new construction as well as redevelopment
could take place centrally. To account for both these possibilities happening in the
treatment of capital stock, two separate scenarios have been considered for modelling:
Simulation
I. "Bombay":
Redevelopment occurs
through
so
demolition
and
conversion of buildings in the CBD of Bombay city. Further increase in population can
now be simultaneously accommodated in the reconstructed, rebuilt area of Bombay as well
as the newly opened up areas on the mainland.
Simulation II. "Bombay2": The island city of Bombay remains static and fixed. No
further redevelopment or change occurs. The mainland serves the purpose of absorbing all
the "growth" in population and the original population in Bombay remains fixed. This
could well be the more likely scenario because of the fact of the low residential mobility
envisaged in Bombay city.
Thus, because of the inherent limitation of general modelling, an alternate simulation
methodology was thought appropriate. A number of simulations have thus been performed
with different future population distribution estimates. The total population in the two
scenarios above remains the same. The difference lies in the redistribution of population
between the island city and the mainland.
4.6.0.1 COMMENTS
It would be tempting to conclude that the results of this analysis pertain to all
government transportation investments that have impacts in the land market. If this were the
case, the persistent problem of measuring and evaluating these impacts might be avoided.
16
Unfortunately, this extrapolation is premature.
To begin with, many types of road investments have direct influences on land and
housing and not just indirectly induced ones through the alteration of some other market
price. For example, consider a transport investment within a larger urban renewal project; if
the proposed policy or the urban renewal project is cheaper land development, then this will
have a direct impact in the land market, or may give rise to externalities which directly
influence the surrounding market, rather than only a secondary "induced" change. Clearly
therefore, it is important to characterize the type of influence that any investment has on the
land market before considering whether and how to evaluate it.
Secondly, to avoid the complexity of Solow's model, this paper assumed an
exogenous price for commuting. In actual practice, the price faced by transport users is an
endogenous function of the extent of their usage, often depending upon location, mode of
tranport, route followed in transit, or fuel cost, etc. Moreover, in the absence of congestion
tolls, this exogenous price of commuting will not equal social cost and so the market for
transportation will contain a distortion. As Harberger suggests, the correct benefit measure
for investment may be different in the presence of such distortion. Thus, without
"congestion" or "peak" pricing the benefits of urban highway investment may involve a
more complicated assessment of demand than that conducted in this paper.
4.7 THEORIZED IMPACT OF THE PROJECT IN RESTRUCTURING URBAN
GROWTH IN AND AROUND BOMBAY BASED ON LAND RENT PATTERNS
The development of land at the edge of the city, whenever it occurs, must compete
with the present value of agricultural land rents. Thus, the overall price/density gradient
will not necessarily be smooth, but it will be continuous and the net present value of land
development or the 'price' of land will decline continuously with greater commuting
distance. However, the present value of rent payments would decrease by exactly the same
amount as the present value of travel costs would increase. The land consumption would
then be based upon an "income compensated demand curve". Because of utility convexity,
land consumption will always increase as land prices fall with distance. It is further
contended that the pattern of development is influenced, not by the rate of population
growth, but only by the growth rate in household income and the change in travel costs.
Given the situation in Bombay city, residential density and the price per unit of land
will continue to decline monotonically from the location of employment. This could be in
three places, the southern tip of Bombay, the Bandra-Kurla commercial tip in north
Bombay, and the new CBD on the mainland. With the establishment of these monocentric
subcities, concentration of higher rents and subsequently higher income residents will be in
more than one location in the city.
A greater population would result in higher density at all locations, i.e. an increase in
density at each existing location as well as expansion at the urban fringe. This could create
a steeper density gradient. At the same time, increases in income or further decreases in the
cost of travel will create a flatter density and price gradient. Thus residential density would
primarily be determined by the price for land, which would reflect current travel cost
savings. It would moreover be totally flexible subject to an overall floor to ground space
constraint. As the situation stands today, even in suburbs located far away from the CBD,
residential density is often higher than at some intermediate locations. Especially for these
excessively dense suburbs, a necessary condition for density to decrease would be
'sufficiently rising income' or 'sufficiently falling travel costs'. The latter could be made
possible by the BTHL.
The history of the island city shows that as population increased over short time
periods, the density increased over space for a few periods. However, growing pressures
for vacant central land, due to the immobility of the CBD, soon led to redevelopment and
replacement of older capital. Today, urban land use is composed of higher density, partially
reconstructed development in the centre and a relatively flat density gradient from there
outward. This trend is expected to continue in the future in a cyclical manner. Thus,
different growth profiles may not necessarily result in development. Population growth
which is bound to happen either by itself or when accompanied by changes in travel cost,
could cause redevelopment because existing density levels would then have become suboptimal.
Thus, once the proposed bridge is opened up and new land starts being developed at
reasonable commuting distances with respect to the CBD, one could adopt the stance that
the government (which at present owns 75% of this land), should throw it open to the free
market. One would then certainly expect that speculative land holding would occur. One
would imagine that an asset would be held until the marginal rate of net price appreciation
equals the opportunity cost of time -- normally the interest rate. Such widespread
speculation can be considered a necessary and perhaps desirable outcome of a well
functioning market in which major changes in demand are accurately anticipated. This
wide-spread holding could be totally pareto-efficient.
Chapter 5
INPUT DATA AND METHODOLOGY FOR SIMULATION
For the actual evaluation of the Bombay Trans-Harbour Link Project, Wheaton's
mono-centric model of urban land use based on the static theory of spatial equilibrium was
used. To treat the problem in as simple a manner as possible the analysis is restricted
exclusively to comparative statics. Though various dynamic models have been formulated,
some of which even overcome some of the shortfalls of the static ones, static modelling has
been chosen for the purposes of this analysis because it allows more simplicity. The
conceptual and mathematical structure of the dynamic models is often very complicated and
a lot of subjective judgement is involved.
Furthermore, if one or more of the assumptions had been belied in the static analysis,
then the static equilibrium portrayed by such a model would not have correctly reflected the
process of urban development, as each assumption could well eliminate an important and
essential feature of urban structure, which in fact could be the core of many urban policy
issues. As it happens however, the case of Bombay was singular in its ready adaptability to
the basic assumptions of the static model. As described in the earlier section, the
assumptions closely reflect the existing situation in Bombay, and thus the conclusions
drawn are not based on unreal or farfetched suppositions. These assumptions thus helped in
mathematical tractability, and their imposition on the model in fact, enabled the solution to
be much more specifically geared to the case of the city of Bombay.
Moreover, because of the essential elegance and simplicity of the model, it was
possible to carry out a number of simulations fairly easily and quickly and thus incorporate
within the analysis a sufficiently broad confidence interval. For example, the value of the
per capita income of the country was used to represent the income level of all the
households instead of using different exogenous incomes for the various different income
groups. Thus upper and lower extremes of income were not considered at all. Each
individual's exogenous income was equated with the per capita national income of US
$1400 per year.
The next question would be to decide how serious an effect a particular margin of
error would have on the final decision. Thus a number of sensitivity analyses were carried
out for those variables which seemed to have the greatest impact on a project's profitability.
Since the margin of error surrounding the estimate of social prices is even greater than for
market prices, there will often be a considerable range of options for true social values. The
conclusions, therefore, were accepted only when it was found that the results of all the
simulations tended in the same direction. Comparisons with reality also helped to narrow
down the confidence interval quite substantially.
The static equilibrium "Base Simulation" model was programmed by Professor
Wheaton. The target of the model is the Urban Space which is within the confines of the
political boundaries of the Bombay Metropolitan Region. The area pockets which are
marked as 'gaothans' (village like pockets) or as semi-rural areas have been deducted from
the total urban land lying within the boundaries of the BMR. As said before, this total urban
space comprises of two parts, (a) the old island city of Bombay lying west of the Thane
Creek, and (b) the mainland called "New Bombay" situated east of the Thane Creek.
Two specific scenarios were then mapped out for the workings of the model:
Scenario I: "Without BTHL"
This assumes only the one (existing) east-west link between the island and the
mainland.
Scenario II: "With BTHL"
This presumes the existence of two such east-west links (one existing, one proposed),
between the island city and the mainland. It is assumed in Scenario II, that the construction
of the bridge will commence in 1991 and will be complete by the end of the year 2000.
Benefits due to the project are assumed to be felt from 2001 onwards. In all the simulations
carried out there is assumed to be only one employment centre in the southern tip of the
island city. No sub-centres have been considered in the analysis. Thus, the whole space
within the BMR is considered to be one monocentric space. All distances are then counted
radially in linear distances from the employment centre. This total urban space of Bombay
and the mainland was partitioned into several concentric rings, each one half mile in width.
The distance of any ring from the CBD is determined as the radial distance from the outer
tip of the ring to the centre of the employment district. The gross residential area in each
concentric ring was separately calculated, as also the existing population in each ring. It
should be noted that the population data was only available zone-wise, as is to be expected,
and the distribution of this zone-wise population in concentric rings has been done as
accurately as possible. From the total area of each ring, the estimated vacant land was
deducted, leaving the gross area available for development. Note that the term vacant
denotes vacant, reclaimed, hilly, marshy areas, and the restricted 'no- development' zones.
It denotes land not available for development.
Each simulation corresponds to only one single time period during which the
exogenous input parameters remain constant. Different simulations were then run in which
the initial market characteristics varied from those in the terminal or the base period by
some specified cumulative rate of growth. These simulations can then be said to depict
different urban "histories", each of which is based upon some set of assumed growth
profiles up to the predicted market conditions of year 2040.
Two separate series of
simulations were then run as described in the earlier section of this chapter.
SIMULATION I: "BOMBAY"
Redevelopment occurs through demolition and conversion of buildings in the CBD of
Bombay city. Further increase in the population can now be simultaneously accommodated
in the reconstructed, rebuilt area of Bombay city as well as in the newly opened up areas on
the mainland. In this simulation, the model endogenously decides both, the extent to which
the urban boundary needs to stretch outward from the CBD in order to accommodate the
original population as well as the city spread needed to accommodate every incremental
stage of population growth. Thus, it decides endogenously that the city should spread to a
radius of 12.5 miles in order to accommodate the population of 2.3 million households in
the design year of 2001.
SIMULATION II: "BOMBAY2"
The island city of Bombay remains static and fixed. No redevelopment or change
occurs. The mainland serves the purpose of absorbing all the 'growth' in population
whereas the original population in Bombay remains fixed. In the "Without Project"
scenario, in terms of radial distance from the CBD, the nearest point on the mainland is 9
miles away from the CBD, whereas it is only 6 miles away from the CBD in the "With
Project" scenario. In this scenario, there may not be net decongestion of Bombay over the
present level, but future congestion could be alleviated.
The 'Bombay2' model is
programmed slightly differently from the 'Bombay' model. The difference lies in the fact
that in the 'Bombay2' model, the original size of the island city is fixed exogenously at a
radius of 10.5 miles from the CBD. The model determines endogenously only the required
city spread to accommodate the 'increase' in population which is to be accommodated on
the mainland.
The Libraries
Massachusetts Institute of Technology
Cambridge, Massachusetts 02139
Institute Archives and Special Collections
Room 14N-118
(617) 253-5688
This is the most complete text of the
thesis available. The following page(s)
were not included in the copy of the
thesis deposited in the Institute Archives
by the author:
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1. All distances are denoted in radius miles from C80.
2. All area figures are denoted in square miles.
3. All population figures denote a percentage of the total population
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TAEBLE 5.b
WITHOUT PROJECT SCENARIO.
RRDIUS FROM
CB
AREA IN EACH VACANT ARER
RING
PER RING
Bombay
Bombay
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
5.5
6
6.5
7
7.5
8
8.5
9
9.5
10
10.5
11
11.5
12
12.5
13
13.5
14
14.5
15
15.5
16
16.5
17
17.5
18
18.5
19
19.5
20
20.5
21
21.5
22
22.5
23
23.5
24
24.5
25
25.5
26
26.5
27
27.5
28
GROSS
LAND AREA
0.785
1.375
1.590
1.440
1.125
1.125
1.000
1.440
1.690
2.190
2.310
2.300
1.900
2.250
2.500
2.840
3.030
3.000
3.030
3.220
3.280
3.560
3.590
3.750
3.880
4.000
4.125
3.780
3.125
2.030
2.280
3.870
4.530
4.810
5.050
5.160
5.250
5.420
5.600
5.650
5.530
5.890
6.000
4.710
3.590
2.940
1.540
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.024
0.041
0.048
0.043
0.034
0.034
0.135
0.194
0.228
0.296
0.312
0.311
0.257
0.304
0.338
0.383
0.409
0.405
0.409
0.435
0.312
1.424
1.436
1.500
1.552
1.600
1.650
1.512
1.875
1.218
1.368
2.322
2.718
2.886
3.030
3.096
3.150
3.252
3.360
3.390
3.318
3.534
3.600
2.826
2.154
1.764
0.924
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0.000
0.000
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AREA IN EACH VACANT AREA
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PER RING
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Mainland
PERCENT POP.N
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18.30
31.74
31.68
7.30
1.80
0.590
1.490
2.375
3.040
3.770
4.380
5.170
6.325
7.450
8.550
8.960
9.530
10.330
11.750
12.820
13.140
13.920
14.100
14.200
14.120
12.500
11.190
13.160
13.380
13.200
13.180
13.020
12.850
12.430
11.480
9.440
9.160
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7.500
6.650
5.680
1.500
0.780
0.310
342.260
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1.400
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3.000
3.000
4.000
5.000
6.325
7.450
8.550
8.960
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10.330
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12.820
13.140
13.920
14.100
14.200
14.120
12.500
11.190
13.160
13.380
13.200
13.180
13.020
12.850
12.430
11.480
9.440
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7.500
6.650
5.680
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TABLE 5.C
WITH PROJECT SCENARIO.
RADIUS FROM
CBD
AREA IN EACH VACANT RRER
RING
PER RING
Bombay
Bombay
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
5.5
6
6.5
7
7.5
8
8.5
9
9.5
10
10.5
11
11.5
12
12.5
13
13.5
14
14.5
15
15.5
16
16.5
17
17.5
18
18.5
19
19.5
20
20.5
21
21.5
22
22.5
23
23.5
24
24.5
25
25.5
26
26.5
27
27.5
28
GROSS
LAND AREA
0.785
1.375
1.590
1.440
1.125
1.125
1.000
1.440
1.690
2.190
2.310
2.300
1.900
2.250
2.500
2.840
3.030
3.000
3.030
3.220
3.280
3.560
3.590
3.750
3.880
4.000
4.125
3.780
3.125
2.030
2.280
3.870
4.530
4.810
5.050
5.160
5.250
5.420
5.600
5.650
5.530
5.890
6.000
4.710
3.590
2.940
1.540
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
PERCENT POP.N
Bombay
0.024
0.041
0.048
0.043
0.034
0.034
0.135
0.194
0.228
0.296
0.312
0.311
0.257
0.304
0.338
0.383
0.409
0.405
0.409
0.435
0.312
1.424
1.436
1.500
1.552
1.600
1.650
1.512
1.875
1.218
1.368
2.322
2.718
2.886
3.030
3.096
3.150
3.252
3.360
3.390
AREA IN EACH VACANT AREA
RING
PER PING
Mainland
Mainland
0.590
1.240
1.960
2.560
3.350
4.220
5.540
7.220
8.565
8.630
9.950
8.070
8.160
8.440
8.840
9.890
9.500
9.280
10.880
10.940
11.980
12.560
12.970
12.500
11.690
10.910
10.820
11.560
11.000
10.470
11.080
10.630
11.440
10.160
8.630
7.230
5.910
4.940
3.750
3.125
2.500
2.000
1.500
0.690
0.190
9.318
3.534
3.600
2.826
2.154
1.764
0.924
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
338.060
153.080
106
PERCENT POP.N
Mainland
Both series of simulations, "Bombay" and "Bombay2", contain five different time
periods for each individual set of constant exogenous utility parameters. Each time period
has a length of ten years, and each successive time period corresponds to an increased
population figure.
The following exogenous variables were assigned within the context of this urban
space and used as input data into the model. (The values of these variables were changed
according to the simulation being performed. However, before putting in the variable data
for the simulations, utility parameters were set such that certain values remained constant
through all the series of simulations.)
1. The total household income remains fixed over each time period. For this
purpose, the exogenous and (for the moment) identical income of each
individual, "y", was equated with the value of the Annual Per Capita Income
of India = US $1400.
This was calculated as follows:
P.C.I. (India) = Rs.2180/year: 1983-84 current prices
P.C.I.(Maharashtra State) = Rs.3032/year: 1983-84 current prices
The average conversion rate for the ruppee is Rs. 13 per US dollar. Thus
average Per Capita Income equals US $233 per individual. Thus average Per
Household Income would be US $1400, assuming a household size of five
individuals. This income figure was kept constant for all the simulations.
2. As stated, household income is assumed to be divided between land
consumption "q", whose rent is 'r' and the rest of the composite commodity
"x", whose value is unity. The model then assumes that the share of the
annual income on land expenditure remains constant through all the
simulations at a value of 5% of the total.
107
These variables which were exogenously fed into the model were calculated
as follows:
I. The total population is composed of "N" number of individuals with
identical tastes.
As explained earlier, simulations were carried out for successive increases in
population. The estimates of population growth were taken from CIDCO
surveys and from the observed growth rates of the past three decades as
revealed by past census figures.
As mentioned earlier, in forecasting future population, account was taken of
the fact that BMIRDA is taking several mitigating measures to stem migration,
but offsetting this, substantial new land is simultaneously being opened up to
accommodate larger population.
Adjustments have thus been made to the
estimates based on these figures. Consider for example the "Bombay" model.
The base population in Period I is assumed to be equal to 11.5 million
individuals or 2.3 million households. Population figures for each successive
time period are then predicted as follows:
PERIOD
YEAR
TOTAL
POP.
POP.AS
# HH's
I
II
III
IV
V
2001
2011
2021
2031
2041
11.5
15
20
25
30
2.3
3.0
4.0
5.0
6.0
ANNUAL
GROWTH
RATE
3.00%
3.33%
2.50%
2.00%
There is assumed a slight increase in the population growth rate in between
Periods I and II, but subsequently, a decreasing growth rate has been
assumed, since by this time the mitigating measures envisaged by the
108
government to stem migration would start taking effect as well as the
development of alternative industrial growth centres in areas outside Greater
Bombay.
The average household size was assumed in the model to be equal to 5. This
figure was based on the 1983 IDBI (Industrial Development Bank of India)
survey, which stated that average household size for the State of Maharashtra
was equal to 5.07.The total number of households in Bombay was thus
automatically computed as being equal to N/5.
I.The annual travel cost is defined as the linear constant "k" times the distance
to the CBD "t".
For the base simulation, the annual travel cost of a round trip per mile to and from the
central employment district was taken to be US $150. This was calculated as follows:
Annual Per Household Income equals US $1400. Assuming 250 working days/year,
Average Daily Wage would be US $5.60/day. Let us assume Average Daily Wage to be US
$6.00/day. Assuming a 10 hour work day, the hourly wage would work out to 60 cents per
hour.
Buses are the most common means of mass transport for the majority of the
population. The average travelling speed of the buses is 10 m.p.h. If we then value time at
1/2 the wage rate, time cost per mile would be 3 cents. Thus, round trip cost per mile would
work out to 6 cents. Annual round-trip cost per mile would then be 6 times 250, which
equals US $15 per year. Simulations were also carried out by increasing this annual travel
cost to US $20.
HI.The annual opportunity rural rent for urban peripheral land "s", was
assumed to be US $1000 /yr.
No information could be found on the actual price of urban peripheral land in and
around the city of Bombay. The figure of US $1000/year was arrived at by using data from
109
cities in other third world countries of comparable size and density. Simulations were also
carried out by decreasing the value of the annual rural rent to US $500/yr. It must be noted
that the term "rural" rent in the case of Bombay actually represents "rent at the urban
periphery". The effect of these exogenously imposed parameters on the simulations can be
seen from the printouts of the program at the end of this chapter.
5.1 DISCUSSION ON THE OUTPUT OF THE 'BOMBAY' AND THE 'BOMBAY2'
MODELS
Let us use a couple of the simulations for exploring which factors the model
determines endogenously, and how they differ between the "Bombay" and the "Bombay2"
models. These are presented in tables B-3 and B-7 if Appendix B. Both simulations assume
the following utility parameters :
1. Number of households: 5.0 million.
2. Average annual household income = Annual Per Capita Income = $1400 p.a.
3. Annual cost of round-trip transport per mile = $15 p.a.
4. Share of household income on land expenditure: 5%.
5. Annual opportunity rural land rent at urban periphery
=
$1000 p.a.
6. Time period = Year 2021.
Given these utility parameters, the models proceed to reveal the value of
endogenously determined parameters, given that all input data correspond to a single time
period, of the year 2021. To understand the format of the models' output let us use the
example shown below. The simulation below (Table B-1 from Appendix B) pertains to the
"Bombay" model, and corresponds to the following parameters:
1. Time period: Year 2001.
2. Total population at the time: 2.3 million households.
3. 'Without Project' scenario.
110
TABLE 5-d (or table B-1) from Appendix B)
As seen from table B-I demonstrated on the previous page, the output of the models
is arranged as follows:
ENTER THE # OF HOUSEHOLDS IN CITY:230000
ENTER AVERAGE ANNUAL HH INCOME:1.4
ENTER ANNUAL COST OF R-TRIP TRANSP PER MILE:.015
ENTER LAND EXPENDITURE SHARE:.05
ENTER ANNUAL RURAL LAND RENT:1
ENTER 1 IF PROJECT, 0 IF NOT;O
ENTER STARTING BOUNDARY (miles);5
.05
.01
1.40
2300000. 00
.00
1
1.0686
U
11
1.4663
dist
5
1.
1.5
2.0
2.5
3. 0
3.5
4. 0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9. 0
9.5
10.0
10.5
11.0
11.5
12.0
23.5
-. 0153
land rent
14.3106
12.8334
11.5022
10.3031
9.2-237
8.2525
7.3792
6.5944
5.8895
5.2567
4.6890
4.1800
3.7239
3.3154
2.9499
2.6229
2.3306
IV1
23.5000
1.00
V
lot size
.0048
.0054
.0059
.0066
.0073
.0081
.0091
.0b0
.0112
.0125
.0140
.0156
.0174
.0194
.0217
.0243
.0272
2.0695
.03(4
1.8365
1.6285
1.4431
1.2779
1.1309
1.0000
1.0000
.0341
.0382
.0429
.0481
.0541
.0608
.0608
1 D4168. 7000
1 64478.3000
1 71358.4000
1 39745. 1000
98254.3000
88375.9500
70618.5600
91363.3400
96279.8700
1 11964.2000
1 05920.0000
94529.1100
69952.3500
74161.2500
73724.8400
74885.9400
71393.7400
75538.8300
84877.5600
93702. 3500
94335.9600
97450.8100
94312.1300
93887.2100
93887.2100
Columns
Utility.
Commuting distance in radius miles from the CBD.
III.
IV.
Urban land rent in each successive ring from the centre to the
periphery.
Average lot size in each successive ring from the centre to the
periphery.
111
Population in each ring in terms of number of households.
DISCUSSION ON THE MODELS' OUTPUT
The following discussion refers only to the corresponding "Without Project"
scenarios of the two models. It pertains to tables B- 1, B-3, B-5, and B-7 of Appendix B.
1. POPULATION
Bombay2 3
The Bombay2 model assumes that no redevelopment takes place in the existing
capital stock of the island city. The old existing population on the island city remains fixed.
Any growth in population beyond the year 2001, is now accommodated in New Bombay. In
table B-7 the population equals 5.0 million households. This implies a difference of 2.7 m.
households above the figure of 2.3 assumed for the base simulation.
Column V then
indicates that up to the radius of 9 miles, which is the boundary of the island city of
Bombay, no growth of population has been allowed to take place. Growth is only
accommodated on newly developed land from a radius of 9 miles outward up to a radius of
16.5 miles.
Bombay
The Bombay model allows redevelopment and conversion of older capital stock.
Growth in population results in an increase in density at all locations. Growth is thus
accommodated on the island as well as on the mainland. In table B-3 the growth of 2.7
million households causes the urban boundary to extend only up to a radius of 14.5 miles.
Since redevelopment of the entire city is assumed to take place to needed densities at every
successive stage of population growth, the horizontal spread of the city away from the CBD
is less than in the Bombay2 model.
3
1t should be noted that in the "Bombay2" model, only the output figures corresponding to a radius of 9
miles from the CBD and outward are to be taken into account when reading the simulations.
112
2. AVERAGE LOT SIZE.
Bombay2 Model
The Bombay2 model assumes that the average existing lot size up to a radius of 9
miles outward from the CBD is equals 0.0124 acres. In a perfect market economy, this
would be the approximate size of every lot in the city. However, as Column IV in table B-7
shows, actual lot sizes vary from 0.0104 acres at a radius of 9 miles to 0.0591 acres at the
periphery which is at a radius of 16.5 miles. Average lot sizes, are therefore seen to increase
monotonically from the point that the mainland begins, at a radius of 9 miles from the CBD,
to the urban periphery.
Correspondingly we find residential density dropping from 96
households per acre at 9 miles to 17 households per acre at the periphery.
Bombay Model
In the Bombay model, the average lot size of 0.0124 acres occurs approximately in
the middle of the city at a radius of 6 miles. As seen in table B-3, the lot sizes varying from
0.0026 acres at the centre to 0.0591 acres at the periphery. The slope of the density gradient
in the Bombay model is seen to be much less steep than in the Bombay2 model. Though
the peripheral densities in both models are seen to remain the same, the urban periphery
extends less far out in the Bombay model as compared to the Bombay2 model. (14.5 in the
Bombay model as compared to the 16.5 of the Bombay2 model.)
3. LAND RENT
Bombay2 Model
The simulations show that though land rent decreases monotonically with increasing
distance from the CBD, the rent gradient is much more steep nearer the centre, and flattens
out considerably as we go further away. The overall rent gradient is much steeper in the
'Bombay2' model than in the 'Bombay' model. As the population keeps increasing in
successive time periods, land rents nearer the CBD keep going up. This is evidenced in
113
table B-7 by the fact that the land rent at a distance of 9 miles in year 2001, when the
population is 2.4 million households, is calculated by the model as $1442.9 per acre. The
land rent in year 2021, when the population is 5.0 million households, is on the other hand
$6951.5, showing that the land rent has increased to more than four times its original value,
when in fact the population increased by only two times. Thus land rents are seen to
increase in much higher proportions than the percentage increase in population.
Bombay Model
For the same corresponding increase in population, we find that the land rents at any
particular location in the Bombay model are lower than the central rents in the Bombay2
model. In table B-3, when population increases from 2.3 million to 5.0 million, land rents at
a 9 mile radius increase from $2069.5 to $3865.7. Thus in the Bombay model, land rents
are seen to increase approximately in the same proportion as the increase in population,
both increasing to twice their original value.
4. AGGREGATE VALUE OF INCOME COMPENSATION
Bombay2 Model
Total household income comprises of exogenous non-wage receipts, "y " plus an
equal share of aggregate rents "R". As seen in the utility parameters, the Bombay2 model
starts with an exogenously determined identical income for each individual, which has been
equated with the Annual Per Capital Income of $1400. Further, as seen in column II of table
B-7, the existing rental income equals $135.7.
The rental from newly developed land then has to be such that the average aggregate
rental income which is the average of the rental incomes from existing land as well as
newly developed land, comes out to be $97.3. The household income then becomes, 1400 +
97.3 = 1497.30, as seen at the top of column II.
Bombay Model
114
Table B-3 reveals that the average aggregate rental income, which is the average of
the rental incomes all over the city is $66.8. The total household income is thus equals
$1400 plus $66.8 or $1466.8. This figure is thus seen to be lower than the total income
figure in the corresponding 'Without Project' simulation in the Bombay2 model.
5. URBAN PERIPHERY
Bombay2 Model
Both simulations assume the total population of the BMR to have grown to 5.0
million households by year 2021, from the initial figure of 2.3 million households of year
2001. As noted earlier, the Bombay2 model assumes no redevelopment. The model is set up
so that the original 2.3 million households continue to live on the island and the growth of
2.7 million households is accommodated on the mainland. In column II of table
B-7 the model shows that to accommodate this growth in population, land supply has
to reach from the city centre to a location "b" at the urban periphery, which as seen at the
bottom of column II, is at a radius of 16.25 miles or 32.5 rings away from the CBD.
Correspondingly, as seen from the bottom of column III of table B-7, it is at this
distance of 16.5 miles from the CBD, that consumer bid rents equal the opportunity cost of
rural land "s", which is assumed equal to $1000 per annum.
Bombay Model
In the Bombay model, since redevelopment and conversion of older stock is assumed,
growth of population is distributed over the mainland as well as the old island city. The
horizontal spread is thus lesser than in the Bombay2 model. As seen in table B-3, the city
has to extend to a radius of only 14.5 miles or to a distance of 28.5 rings away from the
CBD. It is at this distance that consumer bid rents equal the $1000 per annum.
115
5.2 COMPARING THE RESPECTIVE WITH AND WITHOUT PROJECT
SCENARIOS OF THE TWO MODELS
The following discussion pertains to tables B-3, B-4, B-7 and B-8 of Appendix B.
5.2.1 URBAN BOUNDARY
Bombay2 Model
After the proposed construction of the BTHL, the nearest point in New Bombay will
be only 6 miles away from the CBD on the island, instead of the initial separation of 9
miles. Column V of table B-8 then indicates that this population will now be
accommodated from a radius of 6 miles outward up to a radius of 14.5 miles. Thus, in the
'With project' scenario, the urban boundary has to extend only up to a radial distance of
14.5 miles from the CBD in order to accommodate all the population as opposed to the 16.5
miles of the 'Without Project' scenario as seen in table B-7.
Bombay Model
In the 'With Project' scenario of the Bombay model, as seen in table B-4, building
the new bridge means that the urban boundary has to extend only up to a 13.5 miles, instead
of the 14.5 miles, of the 'Without Project' scenario as seen in table B-3. Moreover, the
horizontal spread of the city is even lesser than in the Bombay2 model.
5.2.2 POPULATION DISTRIBUTION AND LOT SIZES
Bombay2 Model
Since in the 'Without Project' scenario, new residential developments have to be
pulled much further away from the CBD in terms of radial distances to accommodate the
growing population, the mid point of the city is also much further away from the CBD. In
the 'Bombay2' model, population density remains the same from the CBD up to a radius of
116
9 miles. Rental income is arrived at by capitalizing on the changes caused by the growth in
population that is accommodated on the mainland. Lot sizes available at any particular
radial distance from the CBD are much smaller than those at corresponding distances in the
'With Project' scenario. However, we find that the proportional difference between the
corresponding lot sizes in the two scenarios remains the same from the centre to the
periphery. For example as seen from tables B-7 and B-8,
Radial Distance
Ratio Of
Lot Sizes
Without With
Project Project
Without/With
9.0 miles
0.0104
0.0169
0.61
14.5 miles
0.0366
0.060
0.61
Moreover, the gradient of lot sizes shows the same decline in the 'Without Project'
scenario and in the 'With Project' scenario, the lot sizes reducing by the same increment in
both scenarios.
Bombay Model
As seen in tables B-3 and B-4, the ratio of lot sizes in the two scenarios is revealed as
follows:
Radial Distances Lot Sizes
With
Without
Project
Project
Ratio Of
Without/With
9.0
0.0163
0.0210
0.77
13.5
0.0464
0.0598
0.77
Thus, in the Bombay model as in the Bombay2 model, the gradient of lot sizes
remains about the same in both the 'With' and the 'Without' project scenarios. Lot sizes are
smaller in the 'Without Project' scenario than those at comparable distances in the 'With
Project' scenario, but the proportional difference between the corresponding lot sizes in the
two scenarios remains the same from the centre to the periphery.
117
5.2.3 POPULATION DISTRIBUTION AND DENSITIES.
Bombay2 Model
In this model we find that peak densities closer to the centre are much lower in the
'With Project' scenario than in the 'Without Project' scenario. The densities at the
periphery are however not much affected. They tend to remain more or less the same in
both scenarios or to decrease only infinitesimally in the 'With Project' scenario. For
example as seen in tables B-7 and B-8,
Densities (HH's Per Acre) % Decline
Without
With
Project
Project
Location
At 9 MILES
At PERIPHI ERY
96
17
59
40% decline
6% decline
16
Bombay Model
This model shows that densities at the centre are definitely much more affected by
the construction of the project than densities at the periphery, but in lesser proportion than
in the Bombay2 model. For example, tables B-3 and B-4 demonstrate the following:
Location
Densities (HH's Per Acre)
With
Without
Project
Project
At CBD
At PERIPHERY
385
17
303
17
%Decline
23 % decline
0 % decline
5.2.4 Rental Incomes
Bombay2 Model
In this simulation of the Bombay2 model the Per Capita Rental Income is seen to
decrease with the construction of the project. As seen in tables B-7 and B-8, Per Capita
Rental Income decreases from 1.4845 to 1.4562.
118
Bombay Model
On the other hand, in the Bombay model we find that in the 'With Project' scenario
as seen from tables B-3 and B-4, Per Capita Rental Income increases from 1.4697 to
1.4705. The change in rental income is computed assuming that the income compensation
is actually paid. Any measured changes in the aggregate rent will be based on altered utility
levels, and hence the changes are not equivalent to the net change in per capita rental
income, the latter being based upon the assumption of constant utility.
Thus, though the utility level of each individual increases with the construction of the
project (as seen in part V below), the per capita rental income and consequently the
aggregate rental income could increase or decrease. Thus the increase or the decrease of
aggregate rental income is not an appropriate indicator of benefits to society.
5.2.5 UTILITY LEVEL PER INDIVIDUAL
Finally as a cumulation of all the factors mentioned above, individuals will have
different levels of utility in the two scenarios.
Bombay2 Model
The model shows that the utility level of each individual in the 'With Project'
scenario is higher than in the 'Without Project' scenario. For example, as seen from tables
B-7 and B-8, the level of utility in the 'With Project' scenario is 1.0539 utils, whereas, the
level of utility in the 'Without Project' scenario is 1.0369 utils. The difference in the two
scenarios in terms of altered utility levels is thus 0.0170 utils. Translated in monetary
terms, the difference in the utility level of an individual in the two scenarios will equal 1.4
times 1000 times 0.017 or $23.8 per person.
The aggregate project benefits to the economy of the BMR, at this time period of year
2021 and given the fixed set of utility parameters, then is equal to the utility per person
multiplied by the number of working or commuting population. The model assumes it will
119
be recalled that one member of each household is an earning member and has thus to travel
to his place of work which is always assumed to be separate from his residence. As the
most conservative estimate then, the number of people commuting can be taken to be equal
to the total number of households. Thus Net Project Benefits in year 2021 would then be
equal to $23.8 times 5 million households or $119.0 million. Thus, the total aggregate
benefits accruing to the entire population of the BMR are substantially higher with the
construction of the BTHL. The successive simulations show that the current value of
monetary benefits increases as the population keeps growing.
Bombay Model
As seen from tables B-3 and B-4, the individual utility in the 'With Project' scenario
is 1.0499, while individual utility in the 'Without Project' scenario is 1.0365. The
difference in the level of welfare of the individual in the two scenarios is thus 0.0134. In
monetary terms then, the level of welfare is equal to,
1.4 times 0.0134 times 1000 or $18.76 per person. Therefore, project benefits for the
year 2021 in current prices equal 18.76 times 5 or $ 93.8 million. Thus, in the long run,
benefits due to the BTHL are higher if one assumes that Bombay city will develop along
the lines of the 'Bombay2' model, rather than develop along the lines of the 'Bombay'
model.
In view of this discussion, let us now review the summary of all the simulations
performed within the Bombay and the Bombay2 models.
120
5.3 SUMMARY OF THE SIMULATIONS PERFORMED
The study of these prototypical simulations using both the "Bombay" and the
"Bombay2" models, leads to a few generalizations about the working of the two models.
Summarizing the previous few pages one could thus make the following observations.
1. City spread: Population increases cause less horizontal spread in the
'Bombay' than in the 'Bombay2' model. As a consequence, the midpoint of
the city is also closer to the CBD in the 'Bombay' model, and the urban
periphery extend closer in.
2. Population density: In the 'Without Project' scenario, densities at locations
closer to the CBD are generally higher in the Bombay2 model, while the
peripheral densities are about the same in the two models. Thus the slope of
the density gradient is steeper in the Bombay2 model.
Once the BTHL is assumed to be built, densities nearer the CBD show a
much sharper fall in the Bombay2 model than in the Bombay model. Thus,
the BTHL is seen to have much more impact on central densities in the
Bombay2 model than in the Bombay model.
3. Increase in land rents: In the Bombay2 model, even a small increase in
population causes a proportionately much larger increase in land rents nearer
the centre. In the Bombay model, even to begin with, land rents at any
location are much lower than the Bombay2 model. Subsequently, we find
that for every increase in population, land rents in the centre increase in the
same proportion as population increases.
Furthermore, summarizing and generalizing the comparison between the respective
'With' and 'Without' Project scenarios of the two models, we could make the following
additional comments.
121
1. City spread: The construction of the BTHL would help to a much larger
extent in reducing the horizontal spread of the island city if one assumes that
development of the city will proceed along the lines of the 'Bombay2' model
instead of the 'Bombay' model.
2. Lot sizes: Lots increase monotonically as we go outward from the CBD in
both models. However, the difference in lot sizes at comparative distances in
the 'With' and 'Without' Project scenarios of the Bombay model, remains the
same at any location within the city.
On the other hand, lots increase in
increasing proportions, as we recede from the CBD, in the Bombay2 model.
3. Peak densities: Construction of the BTHL would have a large impact on the
peak densities in the Bombay2 model, but not as much in the Bombay model.
4. Per Capita Rental Income: Construction of the BTHL would cause the
annual per capita rental incomes to decrease in the Bombay2 model but to
increase in the Bombay model. As said before, however, this is no indicator of
increased or decreased welfare levels as the individual utility level is seen to
increase in both the models.
5. Utility levels or Project benefits: In the initial stages of population growth,
project benefits are higher in the Bombay model than in the Bombay2 model.
With subsequently increasing population however, the BTHL generates much
higher project benefits in the Bombay2 model as compared to the Bombay2
model. This is because, as population keeps growing, it becomes increasingly
difficult to accommodate through continued horizontal expansion, since this
would result in the city growing to inefficient proportions, or displaying
diseconomies of scale. In such a scenario, where no redevelopment of the
122
city's interior is possible and the only alternative for a city to face population
growth is expansion away from the CBD, a project such as the BTHL would
be much more valuable than in a city where redevelopment of older capital
stock is allowed, thus offering an alternative way of stopping sub-optimal
horizontal spread of the city.
In reality, the future development of the city of Bombay would probably see a
combination of the two models, "Bombay" and "Bombay2", with, perhaps, a greater leaning
towards the scenario portrayed by the "Bombay2" model. Whichever path the future
development of the city of Bombay follows, tables C-I through C-6 of Appendix C reveal
that benefits due to the BTHL Project exceed the corresponding costs by a substantial
margin. Fortunately this statement can now be made with a reasonable amount of
confidence, since plenty of simulations were performed, each with a different set of
assumptions and parameters. This enabled us to take into account a number of alternatives
for possible development scenarios in the future.
5.4 CONCLUSIONS REGARDING CHAPTER 5
Summarizing therefore, let us go over the salient features of each section and see how
different growth and development patterns can be envisaged for Bombay city under
different sets of assumptions as made in the "Bombay" and the "Bombay2" models.
The main features in the two models have been illustrated with the help of figures
5.04 to 5.12 presented in the following ten pages. These reveal different ways in which
future development of the city of Bombay could take place and show how the development
scenarios would differ in the "Bombay" and the "Bombay2" models. They further reveal,
as noted earlier, that whether the city develops along the lines of the "Bombay" model or
the "Bombay2" model, in both cases the BTHL would help restrict uneconomical city
spread, and consequently increase the 'level of welfare' or the 'utility level' of each
individual in the city.
123
As stated earlier, the land mass of the city of Bombay has a peculiar geographical
configuration. The city is shaped in the form of a north-south crescent, connected to the
mainland only on its northern parts and bounded by the sea on all its other sides. High
natural birth rate and ever increasing migration have caused the population of the city to
near 13 million. This population is moreover, very unevenly distributed. Most of the
employment (around 62%), is concentrated in 4% of the land mass in the southern tip of the
city whereas the residential areas spread far north into the suburbs and extended suburbs.
The city is thus definitely monocentric with regard to its employment concentration, but
unfortunately this CBD is placed to one extreme end of the city instead of in the
geographical middle.
The BMR has experienced a population growth rate of around 3.6% per annum in the
past two decades. This growth rate, though much higher than the national average, is
certainly not disastrously high by international standards. In fact comparisons with other
countries show that it is relatively low on the international scale.
The main problem in Bombay is then, not merely the growth rate of population but
the intense shortage of land for expansion in order to accommodate the population growth.
There is a large amount of vacant land available on the mainland. This has not yet been
developed because of the lack of a major east-west link between the island city and the
mainland. This is coupled with the fact that housing conditions within the city are showing
increasing deterioration and are growing steadily worse. Most of the already burdened civic
infrastructure are in need of major repairs.
It is these latter two problems coupled with the population increase, that have caused
a tremendous demand for central space, causing a subsequent increase in the price of the
latter. The increasing population has caused very high density levels at all locations in the
city, and especially steeply as one goes nearer the southern tip of the city, as is revealed by
figures 5.05 and 5.09. The lopsided employment concentration has also placed a substantial
124
TA~L5-e-
LEGEND U3ED FOR THE FOLLOWING GRAF'{4
OL
bQ0MAY
JNciieAE IN PopuLATioN FtstJvLr5 IN INC8E.ASED PN51TY AT ALL L-OCATION- WITH EVF-0Y
MNCPREMNTAL INCFREASM OF PDPULAION, ~PI-EVELoP1EI~r OC(WUi5 ALL O'/EP5 UP-CITY.
5OM5AY 2? MODEL
NO PWOOEVEWOPt4E.NT 15 ALUoWSD. l6LANO CUIY fir=MAINS T1M 5ADMS r-t ALL 51$6E-OF
r"tAND.
POPUL.VIDN C~WN1I. ALL. uNF-W u R~P6VL.'AI OCvnC&EOA)U 15 ArC.'!OOMP1E9OLY ON~.
FOPMJA1I2' OaC~wyN ct4LANo ciy IN PI~Y.01
REM4AN5 CON&$ANTI 'rtlac)6#Ol) IN'6Ot61SAY1Z WMOL
INCA~EAWO
;5(n CAN6FS IN JIIE 'f~oMAy'MO(EL
Of'.,'lt'oN DeNsIny Al ANY 4cATION IN Wotin
oNft
-10 iCO' O(3 'M2,5Tlr46'
,PopotAvoON 8EIN ADO
6iY O0'NEwV'
------------
N~Wew F~ I . C-)U) IN POU(AT(ON lhAT 1:5
A6CO(WWE ONL ON *IffF MAINLAND
ammpq R'
~f4oFiltWV
LAN
li 6060816 OF MII 16L4P 611Y(
1WG NORM INT1O TVIE 6UqS~~i5 0P5
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(V~51P6UAY-5
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t.
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TOTAL PorI0AJoN 2.3M tit
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OF
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J
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eb'
PGA. [t7N 5(Ty AFO5UNP 609
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-- A3 IN Y8f2001.
u ul LW PU
05 1 1-5 2 2-5 3 3-5 + 4-5 5 5-5 6 6-5 7
7-5 8
-5 9
9-5
PEN S(Tl&~S
10 10-5 ti 11-5 12. 12-5(EIENI
"IL5 FFOM
6O
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BOMSAY MODEL
CITY OF &OM6AY
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A5 A55UMMED AT
a
WIT/HOUT PROJECT 5CENABIO
EGINNING OF Dr.516N 'FI 2001
1BY
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TOTAL PONLAT(ON 5M litiS
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d
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CITY OFrBOM1AY At
YEAP5 2022
PopuLAriOr 5MI1W,
YEAM
POFULNJIION 2.3t 1HS
6E6(NI4N6 d0i PE1S(
C
5OME AY MODEL
FibuW7 5.oa
-
-
TOTAL RPpJLATioN
2-4N1 HH:5
DES&N YEBi 2001
P'E'N
LUNVPAL
Pr:NSI1Y
l1Y TUFit tc)A5 fOL.O VN5I1Y7 IN-ICeXTPA
SlA4P
THIS PUN511Y OF ltt
P (X5R FOP, ALL TIM' & PUNCDS IN TH~ t; &f3AY2 NODEL.
toW PEN~3PHURAL.
L
1
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41
a
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WiTIOLJT PROJECT 5CENARI(O
CITY OF BOM5AY A5 A5Vt'MitWD AT B6NNING OF M5161 4 YEAI9 200(
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TOTAL PoPUIATION 5.OM Hls
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F0 '-
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TOTAL
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5
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YEAR OF PPOJScr UFE
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2031
2021
YEAR O~F PhO0JECeTLFE
strain on the city's bus and train services, thus causing severe hardships to the millions of
daily commuters.
5.4.1 APPLICATIONS OF THE 'BOMBAY' AND THE 'BOMBAY2' MODELS
The results of both these models have been presented with the help of two different
scenarios for each set of fixed utility parameters. These are the "With Project" and the
"Without Project" scenarios. The "With Project" scenario assumes that the proposed
construction of the BTHL has taken place.
Both the "Bombay" and the "Bombay2" models start with a basic assumption that
once the BTHL is built, people would be willing to live on the mainland and any land
opening up would immediately be taken up by the created demand. This assumption is
based on the following fact. The BTHL will bring the areas on the mainland at reasonable
commuting distances (and time) from the CBD. Surveys reveal that people are willing to
accept the tradeoff between living outside the island city and increased comfort in terms of
living conditions and commuting time, as well as the advantage of residential ownership, all
of which the mainland would have to offer.
The construction of the BTHL would thus mean a substantial improvement in the
transit system of the city because of its potential capacity to to divert residential
development, some of the employment and subsequently a large amount of traffic to the
mainland. As seen in figures 5.05/5.06 and figures 5.09/5.10, the construction of the BTHL
may therefore result in a much flatter density gradient than before.
For any particular year, the models work under the assumption of a constant
exogenous annual travel cost. We are thus assuming that by living further away, people still
spend the same on transportation, but they can now live at lower densities. Thus, even
without lowering the unit cost of transportation, there will be net utility accruing to an
individual resident of the BMR.
135
We further assume that the additional development of the city of Bombay under
increasing population can take place broadly in two possible ways. One such envisaged
scenario is represented by the "Bombay" model and the next one by the "Bombay2" model.
The following pages discuss the salient points of the "Bombay and the "Bombay2"
models, with the help of figures 5.04 through 5.12 which are presented prior to this section.
The Bombay Model
This model can best be described as being an 'instant static model'. The model as
such assumes when a part of the mainland is made accessible by the construction of the
BTHL, population will start spilling over on the mainland.
This model assumes that growth in population of a city can cause the redevelopment
or the conversion of older capital stock in the centre of the city. Once the additional land
mass on the mainland is integrated with the city of Bombay through improved
transportation, the region consisting of both the island and the mainland develops as an
integrated whole, and an increase in population would result in an increase in density at all
locations. This is evidenced in figures 5.05, 5.06, and 5.07. In figure 5.07 which represents
the "Bombay" model, Part A represents the initial spread of the city in the design year 2001.
Part B shows that with increased population and the same amount of land, residential
development goes further north at ever increasing commuting distance from the CBD. Part
C then shows that when additional land mass in the surrounding areas of the mainland is
taken up and joined to the city, development instead of going further north, at ever
increasing commuting distance from the CBD, will spread sideways and the distribution of
population will be such that, the urban periphery will now extend less far out from the
centre or the CBD. Thus the city size does not develop to an uneconomically large
proportion. As a result, individual level of welfare increases. In each simulation within the
'Bombay model' therefore, it is assumed that utility increases not because of the decrease in
136
the unit cost of travel, but because of the opening up of more land mass as the construction
of the BTHL relaxes the land constraint. The utility lies in the fact that in spite of the
additional land mass, in terms of radial spread from the CBD, the city is much smaller than
it would be with an equivalent increase in population in the 'Without Project' scenario. This
subsequently results in less aggregate commuting for the population of the BMR as a
whole, even though we have not assumed any reduction in the unit cost of travel.
Eventually in the long run however, this reduction in aggregate commuting would
result in a reduction in the overall level of traffic congestion, allowing savings in time and
other resource costs to commuters, and thus subsequently reducing the unit cost of
transportation. Therefore, with the availability of an expanded supply of land, even if unit
cost per mile of travel did not decrease, the total transportation outlay as a percentage of an
individual's aggregate income would decrease, thus creating savings in the unit cost of
travel in the long run.
Thus the 'Bombay' model is at best a very conservative estimate, assuming unit
travel costs to remain constant over time in spite of a substantially increased transport
investment In fact the benefits would be even higher than the ones calculated if the travel
costs were to go down.
The 'Bombay2' Model
This is the second envisaged scenario. The 'Bombay2' model can be better explained
by drawing a comparison with the 'Bombay' model. In comparing the 'Bombay' series
with the 'Bombay2' series, we will start with the major differences.
Redevelopment and conversion of older capital stock is permitted in the Bombay
model. You can thus build higher into the interior.
In Bombay2 in contrast, redevelopment is not allowed to change the old capital stock
137
in the interior of the old island city. As seen in figure 5.11, the island city remains static,
retaining its original density of year 2001 at all times. All growth has to be absorbed in the
newly opened up areas on the mainland i.e. in New Bombay. Thus, since no redevelopment
occurs, the city increasingly spreads horizontally outward from the CBD, for every
incremental increase in population. This horizontal spread of the city is much more in the
Bombay2 model than in the Bombay model. Thus in the Bombay2 model, the BMR as a
whole is much more affected in its size or radial spread outward from the CBD if the BTHL
were not to be constructed, than in the Bombay model.
Figure 5.09 further reveals that in the 'Without Project Scenario' of the Bombay2
model, the nearest point on the mainland is 9 miles away from the CBD. It is from this
point outward that the population growth is absorbed. On the other hand, in the 'With
Project Scenario', growth can be accommodated from 6 miles outward to the periphery and
the city spread is much smaller, as revealed in figure 5.10.
Very broadly therefore, the Bombay2 model can be described as a 'Two Period Anas
Model', which is based on the theory of simple myopic growth. With respect to the
'Without Project' scenario we could describe the "Two Period Anas Model" or the
"Bombay2" model as follows. 4
Period I
This is the period during which the island city develops from 0 miles to a radius of 9
miles and establishes a certain density pattern which we will term as "old density", which is
shown in Part 'A' of figure 5.11. This period which is equivalent to the 'Anas' model, lasts
upto year 2000. The development of each ring within the radius of 9 miles is determined
exclusively by market conditions at the time of development. Unlike the 'Bombay' model,
older capital in the interior is assumed to be durable, and once built is assumed to remain
4Refer
figures 5.09, 5.10, and 5.11 pertaining to the following discussion.
138
forever or abandoned, but never altered or replaced. The "old" residential density thus
always remains fixed after the year 2000, and the existing capital stock does not changes, as
seen in figure 5.11.
Period II
This period begins in year 2001, when the population starts growing still further.
New development now begins at the outer edge of the development from the previous
Period I, i.e. at the urban fringe. Thus growth is accommodated only on the "new" land
beyond a radius of 9 miles outward to the urban periphery, as seen in figures 5.09 and 5.11.
This urban periphery extends just far enough so that the intervening land accommodates the
growth in households at their demanded densities. This new development has a density
pattern of its own which we will term as "new" density. At the time that redevelopment is
occurring, the old rent and the old density pattern of Period I remain fixed. The character of
the older stock of the island city influences that of new development in New Bombay only
by setting the existing boundary from which that development proceeds. (9 miles in the
'Without Project' scenario, as seen in figure 5.09 and 6 miles in the 'With Project' scenario,
as seen in figure 5.10).
The condition for Period I can be expressed as follows:
0
9 miles
2.3
Initial Population in Period I
households
million
up to year 2000
Land mass of Bombay city
Land mass on the island
Similarly, the condition for Period II can be expresssed as follows:
J 9 miles
Urban Periphery
0.7
Net change or growth in
population
million households
New land mass of New Bombay Land mass of New Bombay
In 'Bombay2' therefore, the existing stock never changes. The capital stock at any
139
period of time is just the accumulated construction that has occurred in all periods prior to
the present. According to this model, therefore, spatial development of the BMR occurs
incrementally over time in successive rings from the centre of employment outwards. As a
result, as seen in figures 5.09 and 5.10, the density gradient exhibits a saw-tooth pattern,
declining smoothly within periods, but making discrete changes between the two broadly
defined periods. Greater travel distance as in the 'Without Project' scenario ensures that
land consumption will fall or that density will increase between periods.
This density
increase between periods is seen to be much lesser in the 'With Project' scenario due to the
commuting time and distance being cut down by the construction of the BTHL.
140
Chapter 6
CONCLUDING COMMENTS AND OVERALL
OBSERVATIONS REGARDING THIS STUDY
It has been assumed throughout this thesis that residential densities are a prime
indicator of congestion. In relation to international standards, Bombay can certainly be
called a very congested city. At the same time, a city's density pattern is also important in
any analysis of congestion. Bombay city in particular has very high density near the core
but has substantial vacant land at the periphery. The physical setting in which the city
exists, its age, the economic functions which it performs, and the area within which it is
located, all have a bearing on a city's spatial density pattern.
Urban geographers have found both similarities and differences in the pattern of
growth of cities in developed and developing countries. Among cities in developed
countries, four distinct stages of growth have been observed.
1. 'Youth Stage', in which the population is spatially relatively restricted, and
concentrated near the city's business core.
2. 'Early Maturity Stage', in which there is a real expansion of the city, and
greatly increased density adjacent to the commercial core.
3. 'Late Maturity Stage', in which occur still greater peak densities and spatial
expansion. There is also the emergence of a 'density crater' in the density
gradient of the city that is accounted for by the lowered desirability of
residence in the commercial core and the ability of commercial users of
central locations to outbid residential users, the latter then moving to the
suburbs. This 'density crater' is often accompanied by a surrounding 'density
141
rim' which is a high density area in the mid-city a little removed from the
CBD but not as far as the suburbs.
4. 'Old Age Stage', which shows still greater spatial expansion, a deepened
density crater and a density rim further removed from the commercial core of
the CBD.
Among Third World cities as evidenced in Bombay, several differences to the above
pattern emerge. Even with continued spatial expansion, central densities often remain high.
The result is continued overcrowding and congestion in or near the core areas. Moreover,
while the affluent in the developed world suburbanize and consume relatively inexpensive
land, in the cities of the Third World it is often seen that the group with the least spatial
mobility resides on land at the periphery. Improvement of income levels often leads to
greater demands for relatively central locations with a resultant increase in overcrowding.
One reason for such a tendency is the imperfect accessibility to the core city areas from the
peripheral areas in Third World Cities. Data show that Indian cities have much more
congested CBD's than the cities of most other countries even in the Third World.
During the decade 1971-81, Bombay's density gradient started showing some signs
of 'Late Maturity', although at a much higher density level than in cities at a similar stage
in developed countries. At the same time, density in the northern suburbs dropped below
the average city density, one reason being out- migration. These density losses however
have been more than offset by density gains in the mid-Bombay areas.
Thus, what happened in Bombay in the last decade, is distinct from the
suburbanization witnessed in developed countries. In the latter, the process of urbanization
is proving to be a finite process. Low rates of natural population increase, virtually no inflow of rural migrants, and suburbanization have put well defined constraints on city
growth.
Bombay's case is slightly different. The overall rate of population growth has
142
remained constant at 3.5% per annum during the last three decades. The locational pattern
of growth has inevitably been oriented towards the suburbs and extended suburbs because
of the total lack of additional space in the CBD. While the south island city could only grow
by 0.6% per annum, the suburbs grew at around 5% per annum.
In the coming years, the pace and locational pattern of Bombay's population growth
will depend on how far the forces of decentralization can offset the pace of natural
population increase and inward migration. The pace of natural population increase has
been growing over the years, and now accounts for about half of the total population
increase. As a recent World Bank report on Bombay comments, "The real question is
whether the pace of 'natural' decentralization is fast enough".
One way of approaching this problem of quick decongestion, is the 'polycentric'
approach which seeks to create an independent, self-supporting city which could create a
counter-magnet to Bombay. As said earlier in the thesis, the object of this approach, would
be to prohibit all future growth in the city and to divert it instead to New Bombay, which
would ultimately be encouraged to grow into a self-sufficient city. Such a scenario, appears
on the face of it an attractive one, and if it could be made to work, would offer a solution to
many of Bombay's problems. A moot point however is whether New Bombay can develop
at an acceptable pace and independently of the old metropolis.
As said earlier, Vashi is the child of the Thane-Creek Bridge, which connected the
mainland to Bombay in the respective northern areas. The development of Vashi started just
around the time that the bridge was opened in 1972. CIDCO and TECS surveys show that
nearly 60% of Vashi's residents have come from Greater Bombay. More than half of them
still commute to the metropolis for work. This dependence exists because many sectors of
the economy have not been developed satisfactorily in New Bombay. This failure could be
attributed to the fact the existing link with old Bombay is not good enough. This is because,
despite acute and escalating congestion in the island city and despite plentiful availability of
143
built-up land and infrastructure offered by CIDCO in New Bombay, the majority of the
sectors in the economy prefer to stay either in the city or shift only to the northern regions
of New Bombay next to the Thane-Creek Bridge. It is therefore the city of Bombay which
has provided and is providing the major propulsive forces behind New Bombay's
development, which at best is extremely slow. Why has this happened?
3
As Nigel Harris points out,
"Despite the ambitious program of new town development in various countries, the
number of people involved has been far too small to significantly affect the urban
population, and the cost of new town development precludes any other result. These new
towns have not been able to be 'self-contained' since their size and restricted employment
base inevitably makes them dependent upon the nearest metropolis. "
After surveying the attempts to create new towns by various Third World nations,
Bertrand Renaud, an urban economist from the World Bank, came out strongly in favour of
'satellite towns' (or 'dormitory towns') and against 'new towns'.
32
He points out,
"Wherever new towns have come up, they have proved to be an enormous waste of
resources, since they, by and large fail to take off, or their growth is too slow. In contrast
to new towns, such satellite towns are viable and economical."
In the light of all the information presented above, it can be forseen that, conceived as
an independent entity, it is doubtful if New Bombay would for some time be able to absorb
the future waves of migrants that come to the metropolis. No other town or growth centre in
the State of Maharashtra, has been able to attract a significant proportion of the migrants
from outside the State, most of whom continue to come to Bombay.
33
As Richardson notes,
"Migrants are typically low-income, and low income service jobs are typically generated
only after a major concentration of economic activity has built up rather than in the early
stages of an area's development. A growth centre needs to be sufficiently advanced to
spin off a large number of service and informal-sector jobs".
In accordance to this statement, we find that most of the migrants to Vashi are
144
predominantly middle-income. Moreover, a concentration of economic activity implying a
critical mass of population and jobs will take a considerable time to generate.
Against this background, it seems that efficient communication links with Bombay
are more essential than incidental to New Bombay's development. A link such as the BTHL
would be an essential ingredient of the alternative approach to decongestion, where the
spatial growth concentrations of the city are diversified. A characteristic of this type of
decongestion is that it is spontaneous in that it represents an extension of natural
metropolitan growth. This type of desired decongestion can then be defined as:9
1. The consideration of Bombay Metropolitan Region as one city, the 'Bombay
Metropolitan City".
2. Using the entire city to move people and jobs out of Greater Bombay as
'naturally' as possible into the mainland, by providing uniform and adequate
employment, civic amenities and transport and. communications services
throughout the region.
3. Directing all of the above without affecting the economic prosperity of the
region, which could otherwise have a negative effect on the economies of the
state and the country.
The recommended approach should thus be that Greater Bombay should "grow
naturally" into what could be called the Bombay Metropolitan City, whereby the growth of
the metropolis in the years to follow would be eastwards into the mainland.
As noted earlier, the simulations performed show that whichever way the city of
Bombay chooses to decentralize, either along the lines of the 'Bombay' model, or along the
lines of the 'Bombay2' model, there is net added utility to every individual residing either
on the island city or on the mainland. Quickening the pace of development on the mainland,
clearly amounts to quickening the pace of decentralization, which is what the new approach
to decongestion of Bombay is all about.
145
Appendix A?
ECONOMIC COSTS OF THE 8THL PROJECT
(As calculated by M/s Peter Fraenkel and Partners).
YEAR
CONST.
1985
1986
198?
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2039
2039
2040
MAINT.
11.98
23.97
23.97
23.97
23.97
23.97
23.97
23.97
23.97
11.98
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
NPV at 12% to 1990
TOTAL
COSTS
0.00
0.00
0.00
0.00
0.00
0.00
11.98
23.97
23.97
23.97
23.97
23.97
23.97
23.97
29.16
28.02
15.83
15.83
15.83
13.02
14.47
15.21
15.21
15.21
16.90
24.78
24.78
24.78
24.78
24.78
23.74
23.74
23.74
23.74
25.10
31.51
31.51
31.51
31.51
31.51
31.51
31.51
31.51
31.51
30.16
24.72
25.24
25.24
25.24
25.24
25.24
25.24
25.24
25.24
21.17
1.05
110.41
146
A. 1
A.
Table 1
A.2 Table 2
The following pages present the estimates about various data as made by
the original group of consultants.
QUANTIFICATION OF BENIFITS :
INCREASE IN LAND VALUES OF RESIDENTIAL LAND
POPULATION ESTIMATES : (Before the design year).
GREATER BOMBAY
1961
1971
1981
1986
1991
4.15
5.97
7.55
8.89
10.23
0.21
0.62
1.03
(Island city)
NEW BOMBAY
(Mainland)
REST OF THE BMR
1.30
1.90
2.32
3.20
4.08
TOTAL BMP
5.45
7.87
10.07
12.70
15.33
POPULATION EsrIMATES : (After the design year 2001).
2001
-2010
2011
With
2020
Without
2021
With
2030
Without
2031
With
12.90
14.70
15.20
15.80
17.10
16.20
18.40
NEW BOMBAY
1.84
3.15
2.89
5.06
4.27
7.64
6.07
REST OF THE BMR
5.84
7.36
7.12
9.20
8.68
9.93
9.30
20.58
25.21
25.21
30.05
30.05
33.77
33.77
GREATER BOMBAY
TOTAL BMR
PROJECTED LAND DEVELOPMENT IN NEW BOMBAY
In # hectares of Gross Residential Area
2001
to 2010
2011
to 2020
2021
to 2031
New
Bombay
Nhava
Sheva
New
Bombay
Nhava
Sheva
New
Bombay
Nhava
Sheva
WITH PROJECT
210
85
280
120
340
150
WITHOUT PROJECT
150
50
175
60
200
Net Residential Area is 44% of the Gross Residential Area.
147
A.2
70
2040
Without
-
A.3 Table 3
COMPUTATION OF ESTIMATED NET BENIFITS DUE TO INCPEASE IN LAND VALUES
Projections of Gross Developable Land: (Totally 2500)
In # of hectares/year, only in the Nhava-Sheva region.
2001 to 2010
2011 to 2020
2021 to 2030
WITH BTHL
CIOCO (upper)
MIG
30
40
50
HIG
5
7
9
22
32
40
3
5
7
60
84
105
MIG
16
20
25
HIG
3
3
4
MIG
14
16
17
HIG
2
3
3
35
42
49
CIOCO (lower)
MIG
HIG
TOTAL
(With Project)
WITHOUT BTHL
CIOCO (upper)
CIOCO (lower)
TOTAL
(Without Pr)
LAND VALUES IN $ / 50.FT
WITH BTHL
CIOCO (upper)
In Constant *
MIG
30.60
HIG
69.30
CIOCO (lower)
MIG
23.10
HIG
53.90
WITHOUT BTHL
CIOCO (upper)
In Constant $
MIG
21.56
HIG
53.90
CIDCO (lower)
MIG
17.33
HIG
46.20
148
A.3
-
Projections of Gross Developable Land:
(Totally 7000)
In # of hectares/year, in the entire New Bombay region.
2001 to 2010
2021 to 2030
2011 to 2020
WITH BTHL
CIOCO (upper)
117
MIG
72
98
HIG
8
10
13
MIG
60
80
96
HIG
7
8
11
147
196
237
52
60
69
CIOCO (lower)
TOTAL
(With Project)
WITHOUT BTHL
CIOCO (upper)
MIG
HIG
------------
8
7
6
-----------------------------------------------
CIOCO
(lower)
----------------------------------
-50
42
MIG
HIG
------------------------------------------
5
5
57
6
TOTAL
(Without
Pr)
122
105
9----------------
149
A.4
140
ECONOMIC BENIFIT STPAIN FOR INCREASE IN LANO VALUES :
Considering only the 2500 ha of the Nhava-Sheva region.
YEAR
H"UuuM WEFITS.
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
PV of ben
at 12 X
to 1990
RnmSpoWT
8&p!T5S
0.DU
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
118.27
118.27
118.27
118.27
119.27
118.27
118.27
118.27
118.27
118.27
184.57
194.57
184.57
184.57
184.57
184.57
184.57
184.57
184.57
184.57
237.55
237.55
237.55
237.55
237.55
237.55
237.55
237.55
237.55'
237.55
237.55
237.55
237.55
237.55.
237.55
237.55
237.55
237.55
237.55
237.55
43.60
58.92
58.82
58.92
58.82
58.82
59.82
58.82
58.82
58.82
50.82
58.82
58.82
58.82
58.82
59.82
58.82
58.82
58.82
58.82
58.82
193.78
51.66
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
33.95
33.95
33.95
33.95
33.95
33.95
33.95
33.95
33.95
33.95
43.60
43.60
43.60
43.60
43.60
43.60
43.60
43.60
43.60
Re. HOUSING BENEFITS.
This is
at financial prices.
Economic Benifits = Financial Benifits P SCF.
Economic Benifits from Gross Developable Area =
193.78 x 0.8 =
155 million dollars.
Thus, economic benifits from Net Residential Area
68 million dollars.
15500.44 =
THUS,
68
TOTRL ECONOMIC BENEFITS FROM THE 8THL AS STATED BY THE CONSLLTAINS
+ 51.66M =
119.66 million.
This assumes that only the 2500 ha around Nhava-Shava will be affected
directly by the link.
However, a total of 7000 ha are being thrown open to residential development
ment in New Bombay. The total benifits from all of this land will be
such higher. Re will now attempt to quantify these.
150
A.5
.5
Table 5
ECONOMIC BENIFIT STRAIN FOR INCREASE IN LAND VALUES :
Considering the 7000 ha in all of New Bombay.
NET BENIFITS
DUE TO INCREASED LAND VALUES.
YEAR
1965
1986
198?
1988
1989
1990
1991
1992
1993
1994
1995
1996
199?
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
PV OF BENIFITS
at 12% to 1990
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
229.38
229.38
229.38
229.38
229.38
229.38
229.38
229.38
229.38
229.38
346.73
346.73
346.73
346.73
346.73
346.73
346.73
346.73
346.73
346.73
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
444.52
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
33.95
33.95
33.95
33.95
33.95
33.95
33.95
33.95
33.95
33.95
43.60
43.60
43.60
43.60
43.60
43.60
43.60
43.60
43.60
43.60
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
58.82
370.46
51.66
These benifits are at financial prices.
Economic benifits = Financial benifits 9 SCF.
Economic benifits from 7000 ha of gross developable area =
296
370 x 0.8 =
Thus, economic benifts from the net residential area will be =
130.24 million dollars.
296 w 0.44 =
THUS, TOTAL ECONOMIC BENEFITS DUE TO THE BTHL PROJECT AS STATED BY THE
CONSULTANTS FOR A GROSS AREA OF 7000 HA. ON THE MAINLAND ARE
130.24 + 51.66 =
181.9 million dollars.
151
A.6
A. T
RESOURCE SAVINGS DUE TO TRANSPORTATIO4 :
(As stated by the original group of consultants).
The region-wise break-up of the 42 zones in
AREAS
Island City
South
Island City
North
Suburbs
New Bombay
Rest of the BMR
the BMR is as follows
# OF ZONES
6
6
10
8
12
flows are between 16 zones in the BMP,
The relevant traffic
12 of which are from Greater Bombay, and 4 on the mainland.
Note :
Population, enployment and ownership estimates for these zones were
obtained from the 1980 census data.
METHODOLOGY USED FOR THE QUANTIFICATION OF TRANSPORT BENEFITS
Recently done TECS surveys provided the consultants with data about the
estimates of Zonal Population, Zonal Employment and Vehicle Ownership.
Thus, trip generation (productions and attractions) of each zone could
be calculated.
The various figures for modal split were obtained from the CRRI surveys,
both for Mass Transport and Private Transport.
These initial two stages provided the input data for calculating the
inter-zonal Trip Distribution.
flows would be only
As said before, it was decided that relevant traffic
between 16 zones in the BMR, 12 of which are in Greater Bombay, and 4 on
the Mainland.
distribution data between these relevant 16
Thus the inter-zonal trip
estimates across the
zones, enabled the projection of two way traffic
BTHL, from the design year onwards.
Estimates were then made for resource savings in transportation for the
different vehicle types. This multiplied by the estimates of the two way
traffic
flows gave the total savings in resource costs due to the BTHL.
152
A. 7
)
Transportation model as determined by Peter Fraenkel
STEPS TO BE FOLLOWED
1. Trip generation.
2. Modal split.
3. Trip distribution.
and consultants
1. TRIP GENERATION :
x PRODUCTIONS :
HBW TRIPS = (0.571
HBO TRIPS = (0.294
x
x
P) + (2.085
P) + (3.297
NHB TRIPS =
x
P)
(0.029
M
m
+ (2.003
+ (0.040
x E)
x
ATTRACTIONS :
HBW TRIPS = 34.55 + (1.205 xE)
HBO TRIPS = 8.96 + (0.204 XP) + (0.325 M E)
NHB TRIPS = 0.94 + (0.014 'P) + (0.214 KE)
where,
HBW = Home based work.
HBO = Home based other purpose.
NHB = Non home based.
P = Zonal populaion.
E = Zonal employment.
VO = Zonal vehicle ownership.
2. Modal split is as follows
Depicted as percentage of mass transport
REGIONS
Island citu
South
Island city
North
Suburbs and
New Bombay
Rest of the BMR
ATTRACT
PRODUCE
75
65
85
80
85
90
95
95
3. TRIP DISTRIBUTION :
This matrix for inter-zonal movements is produced by combining,
in a formula the trip generation estimates.
Seperate distribution has been carried out for private and mass transit.
The gravity model used is as follows :
Tij =
PiAj (e-mtij)X(tij-n)
Ej~j (e^1-mtij)K(tij^ -n)
where,
Tij = trips from zone i to zone j
Pi = zonal production
Aj = zonal attraction
tij
= travel times between zones i and j.
m,n = parameters which have already been calliberated by
Ms. Peter Fraenkel and consultants.
Parameters
m
n
Private
transit
0.11
0.6
Mass
transit
0.02
0.8
The estimates of travel time (tij) were derived from CRRI.
(Central Road Research Institute : On the basis of their projections of
road network likely to prevail by year 2001).
153
A.8
A8 Table 8
Appendix B
B.1 Table 1
WELCOME TO THE CITY MODEL
dollar numbers in 1000s)
(enter all
ENTER THE # OF HOUSEHOLDS IN CITY: 2300000.
ENTER AVERAGE ANNUAL HH INCOME: 1.4
ENTER ANNUAL COST OF R-TRIP TRANSP PER MILE:.C15
ENTER LAND EXPENDITURE SHARE:.05
ENTER ANNUAL RURAL LAND RENT: 1
ENTER 1 IF PROJECT, 0 IF NOT;O
ENTER STARTING BOUNDARY (miles);5
2300000. (0
01
1.40
.05
1.00
05
1.4663
1. 0686
di st
.5
1..0
1.5
2.
(
2.
5
3. 01
3.5
4. 0
4.5
5.0
5.5
6.0
-.
0153
land rent
14.3116
12.8334
11.5022
10.3031
9. 2237
8.2525
7.3792
6.5944
5.8895
5.2567
4.6890
4. 1800
6.5
7. 0
3.7239
3.3154
2.9499
2.6229
2.3306
7.5
.(
8.5
9.0
9.5
2.0695
10.5
1.8365
1.6285
1 .4431
11. ()
1-2779
11.5
12.0
23.5
1.1309
1(. ()
1.0000
1 . 0000
154
B. 1
23.5000
lot size
.(0048
104168.7000
164478.3000
. 0C59 171358.4000
.0066 139745. 1000
98254.3000
, 0073
88375.9500
0081
70618.5800
.0091
91363.3400
.0101
96279.8700
.0112
.0125 111964.2000
.0140 105920. 00OO
94529.1100
.0156
69952.3500
.0174
.0194
74161.2500
73724.8400
.0217
74885.9400
.0243
71393.7400
.0272
75538.8300
.0304
84877.5600
.0341
93702.3500
.(0382
94335.9600
.0429
97450.8100
.0481
94312. 1300
.0541
93887.2100
.0608
93887.2100
.0608
. 0054
B.2 Table 2
WELCOME TO THE CITY MODEL
(enter all
dollar
numbers in 1000s)
ENTER THE # OF HOUSEHOLDS IN CITY:2300000.
ENTER
ENTER
ENTER
ENTER
ENTER
ENTER
AVERAGE ANNUAL HH INCOME:1.4
ANNUAL COST OF R-TRIP TRANSP PER MILE:.015
LAND EXPENDITURE SHARE:.05
ANNUAL RURAL LAND RENT:1
1 IF PROJECT,,
IF NOT; 1
STARTING BOUNDARY (miles);5
2300000. 00
00
1. 40
1. 0822
1.4668
dist
.5
1.0
1.5
2. 0
2.5
3.0
3.
4. o
4.5
5.0
5.5
6.0
6.5
.05
.01
-. 0305
land rent
11.2108
10.0531
9.0098
8. 0702
7.2244
6.4634
5.7791
5. 1642
4.6119
4.1162
3.6715
3.2727
2.9155
7.0
2.5956
7.5
8.0
8.5
9.0
9.5
10. 0
2.3092
2.0532
1.8243
1.6196
1.4373
1.2745
10.5
1.1293
11. 0
21.5
1. 0000
1 . 0000
155
B. 2
1. 00
21.5000
lot size
.0062
81641.0300
.0066 128902. 0000
.0076 134287.8000
.0084 109508.4000
76991.3000
.0094
69247.5200
.0104
55330.9400
.0116
0129
71581.3300
.0143
.0160
.0178
.0199
.0222
.0248
.0277
.0310
.0347
.0388
.0435
.0488
.0548
.0615
.0615
75429.6000
87712.9500
82973.7600
93041.2000
90551.5100
108685. 4000
116868.1000
127826.5000
133776.7000
140713.3000
150714.7000
154537. 5000
139187.9000
140618.2000
140618.2000
-
WELCOME TO THE CITY MODEL
(enter all
dollar numbers in 1000s)
ENTER THE # OF HOUSEHOLDS IN CITY:5000000.
ENTER AVERAGE ANNUAL HH INCOME:1.4
ENTER ANNUAL COST OF R-TRIP TRANSP PER MILE:.01 5
ENTER LAND EXPENDITURE SHARE:.05
ENTER ANNUAL RURAL LAND RENT: 1
ENTER 1 IF PROJECT, 0 IF NOT;O
ENTER STARTING BOUNDARY (miles);5
5000000. 00
1. 40
.01
.05
00
28.5000
1.4668
-.0359
1.0365
lot size
di st
land rent
.5
1.0
1.5
2. 0
2. 5
3.0
3.5
4. 0
4.5
5. 0
5.5
6.0
6.5
7,
0
7.5
8. 0
8.5
9. 0
9.5
10. 0
10.5
1 1. 0
11.5
12. 0
26.6892
23.9363
21.4551
19.2201
17. 2080
15.3975
13.7693
12. 3059
10.9915
9.8114
8.7526
7.8032
6.9524
6. 1904
5.5084
4. 8983
4.3529
3.8657
3. 4306
3.
0425
2.6964
2. 3880
2.1134
1 . 8690
1.6517
1.4586
12.5
13.0
13.5
1.2871
194126.5000
306542.3000
319390. 6000
260488. 3000
183163.4000
. 0044 164762. 3000
.0049 131667.4000
. 0054 170360. 1000
.0060 179543.0000
.0067 208809. 1000
.0075 197554.2000
.0083 176324.2000
. 0093 130493. 1000
.0104
.0116
138357. 0000
174641.6000
137555.3000
.0130 139734.6000
.0146 133230.7000
.0 163 140979. 3000
.0183 158423.4000
.0205 174911.9000
.0230 176111.8000
.0258 181944.4000
.0290 176101.9000
.0326 175326.2000
.0366 178308. 1000
.0412 177720.3000
1.1349
.0464
.0524
14.5
1. 0000
1. 0000
.0591
.0591
156
B.3
1.00
.0026
.0029
. 0032
.0035
.0039
14.0
28.5
B.3 Table 3
155713.5000
137108. 2000
137108.2000
WELCOME TO THE CITY MODEL
(enter all
ENTER
dollar numbers in
THE # OF HOUSEHOLDS
1000s)
B.4 Table 4
IN CITY:5000000.
ENTER AVERAGE ANNUAL HH INCOME: 1. 4
ENTER ANNUAL COST OF R-TRIP TRANSP PER MILE:.015
ENTER LAND EXPENDITURE SHARE: .05
ENTER ANNUAL RURAL LAND RENT: 1
ENTER I IF PROJECT, 0 IF NOT; I
ENTER STtARTING BOUNDARY (miles);5
1.00
.05
.01
1.40
5000000.00
.00
1.4673
26.5000
-.
0474
1.0499
lot size
di st
land rent
. 0033 150696. 4000
20. 7223
.5
.0037 237967.4000
18.5853
1.0
.0041 247946.5000
16.6591
1.5
.0046 202224.3000
14.9241
2. 0
.0051 142197.8000
13. 362)
2.5
.0056 127915.0000
11.9564
3.0
.0063 102223.7000
10.6923
3.5
.0070 132266.8000
9. 5562
4. 0)
.
0078 139399. 4000
8.5356
4.5
0086 162125.6000
7.6194
5.0
153390. 1000
.0096
6.7973
5.5
172029.5000
.0108
0602
6.
167453. 5000
.
0120
5.
3995
6.5
.0134
201021.2000
4.8079
7.0
.0150 216191.8000
4.2783
7.5
.0168 236503.6000
3.8045
8.0
.0187 247554.9000
3.3810
8.5
.0210 260436.0000
3.0026
9.0
.0235 278995.9000
2. 6648
9.5
.0264 286123.0000
2. 3633
10. 0
.0296 257749.6000
2.0946
10. 5
-0332 260445.4000
1.8551
11.
.0373 200097.7000
1. 6418
11.5
.0419 181820.5000
1.4520
12. 0
. 0472 167197.000X0
1.2832
12.5
154798.9000
.0531
1.1332
13.0
149994.6000
.0598
1 . 0000
13. 5
.0598 149994.6000
1 - 000O
26.5
6.
0-
157
B. 4
B.5Table5
WELCOME TO THE CITY MODEL
(enter all
1000s)
numbers in
dollar
ENTER THE # OF HOUSEHOLDS IN CITY: 2400000.
ENTER AVERAGE ANNUAL HH INCOME:1.4
ENTER ANNUAL COST OF R-TRIP TRANSP PER MILE:.015
ENTER LAND EXPENDITURE SHARE: .05
ENTER ANNUAL RURAL LAND RENT: 1
ENTER I IF PROJECT, 0 IF NOT;O
ENTER STARTING BOUNDARY (miles);5
.05
.01
1.40
2400000. 00
r
.00O
20. 5000
-. 0247
1.4435
1 . 0684
1.4435
1.0684
.0427
.0124
lot size
land rent
di st
, 0066
10.2920
.0073
9.2142
1 . 0.
.0082
8.2444
1.5
.0091
7.3724
2.0
S.0101
6.5886
2,5
.0112
5. 8846
3.0
.0125
5.2526
3.5
.0140
4.6856
4.0
.0156
4.1772
4.5
.0174
3.7216
5. 0
.0194
3. 31 36
5. 5
.0217
2.9484
6.0
.0243
2.6217
6.5
.0272
2.3297
7.0
. 0304
2. 0688
7.5
.0341
1. 8359
8. 0
.0382
1. 6281
8.5
.0429
1.4429
9.0
.0482
2778
1.
9.5
.0541
1308
1.
10. 0
.0608
1.0000
10.5
0C)0
.
1
. 0608
20.5
.5
158
B. 5
1
.
00
- 0000
-0000
- 0000
-0000
- 0000
-0000
-0000
. 0000
- 0000
- OO0
. 0000
- 0000
. 0000
- 0000
0000
. 0000
8800.9160
19797. 3400
28089.0600
45784. 5400
45784.5400
WELCOME TO THE CITY MODEL
dollar numbers in 1000s)
(enter all
ENTER THE # OF HOUSEHOLDS IN CITY:2400000.
ENTER AVERAGE ANNUAL HH INCOME:1.4
ENTER ANNUAL COST OF R-TRIP TRANSP PER MILE:.015
ENTER LAND EXPENDITURE SHARE: .05
ENTER ANNUAL RURAL LAND RENT:1
ENTER 1 IF PROJECT, 0 IF NOT;1
ENTER STARTING BOUNDARY (miles);5
.05
.01
1.40
2400000.00
.00
15. 5000
-. 1971
1. 4079
1. 0700
1.4079
1.0700
.0050
.0124
lot
size
rent
land
di st
.0113
5.8686
.5
.0126
5.2392
1.0
.0140
4.6744
1.5
-0156
4.1680
2.0
.0175
3.7140
2.5
. 0195
3. 3Q74
3.0
.0218
2.9434
3.5
.0244
2.6178
4. 0
.0273
2.3266
4.5
.0305
2.0665
.0342
1.8342
5.5
.0383
1.6269
6.0
.0430
1.4420
6.5
.0483
2773
1.
7.0
.0542
1.1306
7.5
0609
1.0000
8.0
.0609
1.0000
15.5
5.
0
159
B.6
B.6 Table 6
1. 00
-0000
.0000
0000
-0000
0000
.0000
0000
0000
.0000
0000
0000
9850.9760
18457.0300
25990.8300
30222.9700
35186.7800
35186.7800
B.7 Table 7
WELCOME TO THE CITY MODEL
(enter all
dollar numbers in 1000s)
ENTER THE # OF HOUSEHOLDS IN CIrY: 500000).
ENTER AVERAGE ANNUAL HH INCOME:1.4
ENTER ANNUAL COST OF R-TRIP TRANSP PER MILE':.015
ENTER LAND EXPENDITURE SHARE:.05
ENTER ANNUAL RURAL LAND RENT:1
ENTER 1 IF PROJECT, 0 IF NOT; 0
ENTER STARTING BOUNDARY (miles) ;5
5000000. 00
.05
1.40
.01
1.00
.00
-. 0496
32 . 5000
1. 4973
1 . 0369
.0124
.1357
1. 4973
1.0369
lot size
dist
land rent
.0017
41.0147
. 0000
.5
.0000
1.0
.0019
36.8658
1.5
.0000
33.1185
.0021
.0000
.,0023
2.0
29.7358
.0026
. 0000
26.6838
2.5
.0000
.0029
23. 9315
.0032
. 0000
3.5
21.4510
. 0000
4.0
19.2166
.0000
0039
17.2049
4.5
.0000
.0044
15.3948
5. 0
. 0000
.0049
13.7670
5.5
.0000
.0054
12.3040
6.0
.0060
.0000
10.9898
6.5
0000
.0067
9. 8100
7. 0
.0000
. 0075
8.7514
7.5
.00(10
* 0083
7. 8022
8. 0
. 0000
. 0093
6.9515
8.5
36273. 8500
.0104
6. 1897
9. 0
81968.8600
.0116
5.5078
9.5
. 0130 116836.4000
4.8978
10.0
.0146 191329. 4000
4.3525
10.5
.0163 203937. 8000
3.8653
11.0
.0183 203818.4000
3.4304
11.5
.0205 208490. 2000
3. 0423
12. 0
.0230 219470.4000
2.6962
12.5
.0258 224610.6000
2.3879
13. 0
.0290 225349.6000
2.1133
13.5
. 0326 205809. 3000
1.8689
14. 0
.0366 199255.8000
14.5
1.6517
.0412 179225.3000
1. 4586
15. 0
.0465 180730. 6000
1. 28-71
15.5
.0524 185058.1000
1.1349
16. 0
.0591 171799.2000
1.0000
16.5
.0591 171799.2000
32.
5
1 . 0000
160
B. 7
WELCOME TO THE CITY MODEL
(enter all
dollar
numbers in
1000s)
ENTER THE # OF HOUSEHOLDS IN CITY: 5000000.
ENTER AVERAGE ANNUAL HH INCOME:1.4
ENTER ANNUAL COST OF R-TRIP TRANSP PER MILE:.015
ENTER LAND EXPENDITURE SHARE:.05
ENTER ANNUAL RURAL LAND RENT:1
ENTER I IF PROJECT, 0 IF NOT;1
ENTER STARTING BOUNDARY (miles);5
5000000. 00
1. 40
.
01
.05
B.8 Table 8
1. 00
.00
1.0539
.0124
1.4868
.1041
di st
.5
1 .0
1.5
2.0
2.5
3.
0
3.5
4.0
4.5
5. 0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9. C)
9.5
10.0
10.5
11.0
11.5
12. 0
12.5
13.0
13.5
14.0
14.5,
26.5
-.
1467
1. 0539
land rent
25.4448
22. 8537
20.5152
18.4057
16.5037
14.7899
13.2465
11.6572
10.6074
9. 4837
8.4739
7.5671
6.7532
6. 0230
5.3685
4.7820
4.2569
3.7870
0037
.0042
.0046
.0051
.0057
.0063
.0070
.0078
. 0087
.0097
0109
0121
.0135
.0151
.0169
.0189
2.9912
2.6557
2.3563
2.0892
1.8510
.0211
.0237
.0265
.0298
.0334
.0375
.0421
.0474
.0533
. 0600
.0600
1. 6389
1. 4501
1.2821
1.1327
1. C)C)00
1.0000
B.8
.
3668
3.
161
28.5000
1.4868
lot
size
.0028
.0030
.0034
.0000
.0000
.0000
.0000
.0000
. 0000
.0000
.0000
.0000
.0000
.0000
43237. 5400
81538.4300
115577.0000
135291.7000
158573. 0000
178807.1000
209991.8000
244668.9000
259325.3000
268775.2000
274376.7000
204487.1000
185179.7000
170579.2000
158612.7000
155923.3000
132232.4000
118960.9000
118960.9000
Appendix C
C.1 Table 1
SUMMARY OF SIMULATIONS PERFORMED.
Note :
1. All distances are indicated in miles.
2. All parameters except the variable ones mentioned are constant.
3. Population is represented in millions of people.
4. Project benefits are presented in millions of $s.
THE BOMBAY MODEL.
SIMULATION I.
Variable paraneters
Annual r-trip cost/mile
N
HH's
=
$15, Annual rural land rent = 1000.
Without Project
Utils
2.3
3.0
4.0
5.0
6.0
Urban
Boundary
1.0686
1.0586
1.0470
1.0365
1.0281
=
$20,
Annual rural land rent
$/person
Project
Benefits
=
19.18
18.90
18.76
18.90
57.54
75.60
93.90
113.40
1000.
d u
$/person
Project
Benefits
Urban
Boundary
Utils
10.25
11.25
11.75
12.25
12.75
SIMULATION Il1.
Variable parameters
Annual r-trip cost/mile = $15,
0.0137
0.0135
0.0134
0.0135
With Project
Urban
Boundary
1.0452
1.0347
1.0206
1.0102
1.0021
2.3
3
4
5
6
11.75
12.75
13.25
13.75
1.0723
1.0605
1.0499
1.0416
Without Project
Utils
d u
Urban
Boundary
Utils
11.75
12.75
13.75
14.25
14.75
SIMULATION II.
Variable paraaeters
Annual r-trip cost/mile
# HH's
With Project
0.0090
0.0120
0.0120
0.0119
10.25
11.25
11.75
12.25
1.0437
1.0326
1.0222
1.0140
12.60
16.80
16.80
16.66
37.80
67.20
84.00
99.96
Annual rural land rent = 500.
Project
Benefits
$/person
d u
With Project
Withoutroject
a HH's
--------------------------------------------------------------------------------------Utils
Urban
Utils
Urban
Boundary
Boundary
----------------------------------------------------------------1.0778
14.25
3
1.0644
14.75
1.0783
13.75
0.0139
19.46
58.38
4
1.0515
15.75
1.0648
14.75
0.0133
18.62
74.48
5
1.0420
16.75
1.0548
15.75
0.0128
17.92
6
1.0333
17.25
1.0459
16.25
0.0126
17.64
2.3
SIMULATION
IV.
Variable
Annual
89.60
105.84
parameters
r-trip
=
cost/mile
$20,
Annual
rural
rent
land
=
500.
Project
#
Without
HH's
Project
With
d
Project
u
$/person
Benefits
---------------------------------------------------------------Utils
Urban
Utils
Urban
Boundary
Boundary
---------------------------------------------------------------1.0506
12.25
3
1.0375
12.75
1.0497
12.25
0.0122
17.08
51.24
4
1.0249
13.75
1.0353
12.75
0.0104
14.56
58.24
5
1.0140
14.25
1.0246
13.25
0.0106
14.84
74.20
6
1.0054
14.75
1.0159
13.75
0.0105
14.70
88.20
2.3
162
C.
1
C.2 Table 2
THE BOMBAY2 MODEL.
SIMULATION I.
Variable parameters
Annual r-trip cost/mile = $15, Annual rural land rent = 1000.
d u
With Project
Without Project
# HH's
$/person
Project.
Benefits
Utils Urban
Urban
Boundary
Boundary
-------------------------------------------------------------------------------------Utils
33.60
3
1.0649
13.25
1.0729
10.75
0.0080
11.20
4
1.0509
15.25
1.0639
12.75
0.0130
18.20
5
1.0369
16.25
1.0539
14.25
0.0170
23.90
119.00
6
1.0258
17.25
1.0439
15.25
0.0181
25.34
152.04
72.80
11.
SIMULATION
parameters
Variable
Annual
10.25
1.0684
2.4
=
cost/mile
r-trip
$20,
Annual
rent
land
rural
=
1000.
Project.
#
Without
HH's
d
Project
With
Project
u
$/person
Benefits
---------------------------------------------------------------Utils
Urban
Utils
Urban
Boundary
Boundary
--------------------------------------------------------------1.0487
2.4
43.68
3
1.0379
12.75
1.0483
10.25
0.0104
14.56
1.0177
14.75
1.0357
12.25
0.0180
25.20
100.80
4
0.9996
15.75
1.0215
13.25
0.0219
30.66
153.30
5
0.9838
16.25
1.0085
13.75
0.0247
34.58
207.48
6
III.
SIMULATION
parameters
Variable
Annual
10.25
=
cost/mile
r-trip
$15,
Annual
rural
land
rent
=
500.
Project
#
Without
HH's
With
Project
d
Project
u
*/person
Benefits
---------------------------------------------------------------Utils
Utils
Urban
Urban
Boundary
Boundary
----------------------------------------------------------------
30.66
3
1.0685
14.75
1.0758
12.25
0.0073
10.22
4
1.0549
16.75
1.0679
14.75
0.0130
18.20
72.80
5
1.0418
18.25
1.0574
16.25
0.0156
21.84
109.20
6
1.0296
19.25
1.0472
17.25
0.0176
24.64
147.84
IV.
SIMULATION
parameters
Variable
Annual
11.25
1.0701
2.4
r-trip
=
cost/mile
$20,
Annual
rural
land
rent
=
500.
Project
#
Without
HH's
Project
With
d
Project
u
$/person
Benefits
---------------------------------------------------------------Utils
Utils
Urban
Urban
Boundary
Boundary
---------------------------------------------------------------1.0504
11.25
3
1.0417
14.25
1.0518
11.75
0.0101
14.14
4
1.0211
16.25
1.0383
13.75
0.0172
24.08
5
1.0026
17.25
1.0237
14.75
0.0211
29.54
147.70
6
0.9867
17.75
1.0118
15.75
0.0251
35.14
210.84
2.4
163
C.2
42.42
96.32
C.3 Table 3
SUMMARY OF' BENEFIT STREAMS XFOR THE ALTERNATIVE SIMULATIONS.
presented in millions of people.
Benefits are presented in millions of $s.
Note : Population is
YEAR
POP.N
SIMULATIONS
BOMBAY MODEL
I
1991-2000
2001-2010
2011-2020
2021-2030
2031-2040
11.5
15.0
20.0
25.0
30.0
57.54
75.60
93.80
113.40
II
37.80
67.20
84.00
99.96
BONBAY2 MODEL
IV
III
58.38
74.48
89.60
105.84
164
C.3
51.24
58.24
74.20
88.20
I
33.60
72.80
119.00
152.04
II
43.68
100.80
153.30
207.48
III
30.66
72.80
109.20
147.84
IV
42.42
96.32
147.70
210.84
EVALUATING BENEFITS AGAINST COSTS FOR THE BTHL PROJECT.
ECONOMIC BENEFIT AND COST STREAMS.
Note :
The Net Present Value has been calculated by discounting at
12% to the year 1990, in each of the following simulations.
YEAR
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
19%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
SUM
NPV
BOMBAY
SIMULATION I.
COSTS
BENEFITS
11.98
23.97
23.97
23.97
23.97
23.97
23.97
23.97
23.97
11.98
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
57.54
59.35
61.15
62.96
64.76
66.57
68.38
70.18
71.99
73.79
75.60
77.42
79.24
81.06
82.88
84.70
86.52
88.34
90.16
91.98
93.80
95.76
97.72
99.68
101.64
103.60
105.56
107.52
109.48
111.44
113.40
115.36
117.32
119.28
121.24
123.20
125.16
127.12
129.08
131.04
257.72
110.41
3742.97
170.43
C4 Table 4
BOMBAY
SIMULATION II.
BENEFITS
COSTS
YEAR
BOMBAY
SIMULATION III.
YEAR
COSTS
BENEFIT
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
SLIM
NPV
11.98
23.97
23.97
23.97
23.97
23.97
23-97
23.97
11.98
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
37.80
40.74
43.68
46.62
49.56
52.50
55.44
58.38
61.32
64.26
67.20
68.88
70.56
72.24
73.92
75.60
77.28
78.96
80.64
82.32
84.00
85.60
87.19
88.79
90.38
91.98
93.58
95.17
96.77
98.36
99.96
101.56
103.15
104.75
106.34
107.94
109.54
111.13
112.73
114.32
257.72
110.41
3241.14
137.65
23.97
165
C.4
SUm
NPV
11.98
23.97
23.97
23.97
23.97
23.97
23.97
23.97
23.97
11.98
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1..05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
257.72
110.41
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
58.38
59.99
61.60
63.21
64.82
66.43
68.04
69.65
71.26
72.87
74.48
75.99
77.50
79.02
80.53
82.04
83.55
85.06
86.58
88.09
89.60
91.22
92.85
94.47
96.10
97.72
99.34
100.97.
102.59
104.22
105.84
107.46
109.09
110.71
112.34
113.96
115.58
117.21
118.83
120.46
3569.65
168.11
C.5 Table 5
YEAR
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2009
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
SUM
NPV
BOMBAY
SIMULATION IV.
COSTS
BENEFITS
11.98
23.97
23.97
23.97
23.97
23.97
23.97
23.97
23.97
11.98
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
257.72
110.41
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
51.24
51.94
52.64
53.34
54.04
54.74
55.44
56.14
56.84
57.54
58.24
59.84
61.43
63.03
64.62
66.22
67.82
69.41
71.01
72.60
74.20
75.60
77.00
78.40
79.80
81.20
82.60
04.00
85.40
86.80
88.20
89.60
91.00
92.40
93.80
95.20
96.60
98.00
99.40
100.80
2948.12
139.15
80MBAY2
SIMULATION I.
YEAR
COSTS
BENEFITS
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
SUM
NPV
11.98
23.97
23.97
23.97
23.97
23.97
23.97
23.97
23.97
11.98
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
91.28
95.90
100.52
105.14
109.76
114.38
119.00
122.30
125.61
128.91
132.22
135.52
138.82
142.13
145.43
148.74
152.04
155.34
158.65
161.95
165.26
168.56
171.86
175.17
178.47
181.78
257.72
110.41
4456.06
155.05
166
C.5
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
33.60
37.52
41.44
45.36
49.28
53.20
57.12
61.04
64.96
68.88
72.80
77.42
82.04
86.66
BOMBAY2
SIMULATION II.
YEAR
COSIS
BENEFIT
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
20:37
2038
2039
2040
sUM
HPV
11.98
23.97
23.97
23.97
23.97
23.97
23.97
23.97
23.97
11.98
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
257.72
110.41
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
43.68
49.39
55.10
60.82
66.53
72.24
77.95
83.66
89.38
95.09
100.80
106.05
111.30
116.55
121.80
127.05.
132.30
137.55
142.80
148.05
153.30
158.72
164.14
169.55
174.97
180.39
185.81
191.23
196.64
202.06
207.48
212.90
218.32
223.73
229.15
234.57
239.99
245.41
250.82
256.24
6033.51
208.15
YEAR
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
.2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
SUM
NPV
80MBAY2
SIMULATION III.
COSTS
BENEFITS
11.98
23.97
23.97
23.97
23.97
23.97
23.97
23.97
23.97
11.98
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
30.66
34.87
39.09
43.30
47.52
51.73
55.94
60.16
64.37
68.59
72.80
76.44
80.08
83.72
87.36
91.00
94.64
98.28
101.92
105.56
109.20
113.06
116.93
120.79
124.66
128.52
132.38
136.25
140.11
143.99
147.84
151.70
155.57
159.43
163.30
167.16
171.02
174.89
178.75
182.62
257.72
110.41
4306.19
148.72
BOMBAY2
SIMULATION IV.
YEAR
COSTS
BENEFITS
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
sUM
NPV
167
C.6
11.98
23.97
23.97
23.97
23.97
23.97
23.97
23.97
23.97
11.98
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
42.42
47.81
53.20
58.59
63.98
69.37
74.76
80.15
85.54
90.93
96.32
101.46
106.60
111.73
116.87
122.01
127.15
132.29
137.42
142.56
147.70
154.01
160.33
166.64
172.96
179.27
185.58
191.90
198.21
204.53
210.84
217.15
223.47
229.78
236.10
242.41
248.72
255.04
261.35
267.67
257.72
110.41
6014.82
201.63
C.6 Table 6
Appendix D
D.1 GLOSSARY OF ABBREVIATIONS USED IN THE REPORT
Island City: This is the main city of Bombay. It is a peninsula bounded by the Bay
of Bengal on the east, the Arabian Sea on the west, and the Indian Ocean on the South. It
lies to the west of the Thane Creek which separates it from the mainland.
Suburbs: These are the peripheral areas spreading further up from the northern tip of
Bombay city.
Greater Bombay: This is the island city inclusive of its suburbs. The latter are
considered a part of the north-island city.
Mainland: Within the boundaries of the Bombay Metropolitan Region, the mainland
consists of seven different nodes which together comprise New Bombay. New Bombay
was initially proposed as a satellite to the main city of Bombay to alleviate some of the
latter's burden. It lies to the east of the Thane Creek.
The island city is separated from the mainland by the Thane Creek. The ThaneCreek Bridge is the only east-west link between the two. However, the island does connect
with the mainland as one goes further and further up from its northern tip, from the suburbs
and extended suburbs, but this is a very considerable distance.
The island city runs in the shape of a north-south corridor running parallel to the
mainland beyond the Thane Creek. Thus, a northern link would connote a connection
between the north island city and the corresponding northern portions of the mainland and
likewise a southern link would connect the with corresponding southern portions.
BMR: The Bombay Metropolitan Region which comprises of the island city of
Bombay inclusive of the suburbs and New Bombay on the mainland.
168
D1
South Island City and North Island City: These are two clearly discernible
divisions of the island city. The South island city primarily includes the Central Business
District. All areas north of the Mahim Creek form part of the North island city inclusive of
the suburbs and the extended suburbs.
CBD: The Central Business District situated in the extreme southern tip of the Island
City. In fact 61% of the total employment in the city is concentrated at this tip, which
forms barely 4% of the total land mass.
TCB: The Thane-Creek Bridge to date the only east-west link between the island city
and the mainland.
It connects the northern tip of the island city (Chembur) with the
corresponding northern part (Vashi) of the mainland.
BTHL: The Bombay Trans-Harbour Link Project. This is the proposed southern link
to the mainland, which would connect the southern tips of both the island and the mainland.
(Sewri on the island with Nhava on the mainland).
D.1.1 CONNECTED AGENCIES
BMC: Bombay Municipal Corporation
BMRDA: Bombay Metropolitan Region Development Authority
CIDCO: City and Industrial Development Corporation of Maharashtra
CRRI: Central Road Research Institute of India
IM-B: Indian Institute of Management, Bangalore
MIDC: Maharashtra Industrial Development Corporation
MSEB: Maharashtra State Electricity Board
PFP: Peter Fraenkel and Consultants, an international group of consultants, initially
appointed to appraise the BTHL project
169
D2
SICOM: State Industrial Investment Corporation of Maharashtra
TECS: Tata Economic
Consultancy
Services,
the
largest techno-economic
consultancy of its kind in India. This thesis is prepared by the author, under the auspices of
this agency
D.1.2 OTHER ABBREVIATIONS
(In reference to chapters 4 and 5)
P.C.I.: Per Capita Income, represents the 'Per Worker Income' or the income of
every working member in the city of Bombay. Since it is assumed that each household has
only one earning member, this term also represents the 'Per Household Income'.
UTILS.: This is the index or the unit used for measuring the "level of welfare" or the
"utility level" of individuals under different conditions. The model in chapter 4 is set up
such that each util can be represented in monetary terms by multiplying with a factor of
1.40.
170
D3
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iii