Economic Impacts and Public Financing of Port Capacity Investments: The Case of Rotterdam Port Expansion

Abstract

Ports, as well as large-scale infrastructure in general, require substantial investments from public and private sources and generate direct and indirect benefits for society. Ports also have associated external impacts: negative impacts on the environment as well as traffic congestion. Competition between seaports has increased substantially. As a result, the efficient use of port facilities has received more emphasis. The traditional role of government in providing such facilities is increasingly being questioned. Public and private roles need to be differentiated more clearly. These factors cause a rising interest in untangling issues of public versus private financing of investments in port improvements; a workable concept for public financing of port investments is called for. A concept is presented for differentiating public and private portions in financing port investments. The public contribution is based on and justified by the indirect economic impacts of the total investment project. The concept is illustrated by data included in the cost–benefit analysis of the proposed second seaward expansion of the port of Rotterdam.