The elusive gains from urban transportation megaprojects: A general equilibrium analysis of “Grand Paris Express”
Jean Mercenier (CIRED, Paris 2)
The “Grand Paris Express” is a 40 billion-10 year project aiming to develop 68 new stations and 200 kilometers of new railway lines in Ile-de-France (IdF), that is, around the city of Paris. The hope is to stimulate employment, productivity and welfare. The expense is to be covered by borrowing during the first decade, with reimbursement ensured by taxes on local households and firms in a period of 50 years. Few studies, based on both partial and general equilibrium (GE) analyses have concluded that some 150.000 new jobs are to be expected from this megaproject. We revisit the issue using an intertemporal GE approach and conclude (a) that these numbers seem grossly inflated; (b) that the employment expansion in IdF is likely to result mostly from job destructions elsewhere in the country; and (c) that the productivity gains are too modest to compensate for the expenditure costs so that the welfare gains turn out to be negative.