Examining the Social Costs of Port Operations

BACKGROUND: While the social costs of transportation are the topic of several previous studies, little knowledge exists about the social costs of port operations. With increasing demand for freight transportation, coupled with a political objective to bring about growth in maritime freight transport, it is time to open this black box. International studies emphasize the importance of port productivity for domestic competitiveness and economic growth. Comparable assessments for Norway are few, and little information about the potential for improved exploitation of the current port infrastructure is available. Moreover, most studies on the external costs of maritime transports pay little attention to port operations, despite that their damage costs are likely to surpass those of maritime operations at sea, far from where people live. EXPORT responds to these knowledge gaps. The project work can broadly be separated into three areas: data collection, productivity and efficiency analysis, and analysis of the external cost of port operations. STATUS: EXPORT's kick-off conference took place on October 7th, 2014. Following the conference, EXPORT focused on data compilation. The project's first Work Package (WP) was concluded in 2015, after the relevant data were collected and organized. The project then focused on WPs 2-4 on productivity and efficiency analysis and external costs. This work was completed in 2017. WP5 synthesized the project results and disseminated them by means of EXPORT's closing conference, which took place on September 12th, 2017. This marked the finalization of EXPORT. Schøyen, Rødseth, Wangsness, and Førsund's paper "Samfunnsøkonomiske kostnader ved havnedrift" (Status 2017. Kystverket, 2017: 55-58) provides an overview of EXPORT. OUTPUT: Rødseth and Wangsness' report "Production analysis in port economics: A critical review of modeling strategies and data management" (TØI report 1390/2015) reviews the literature on port productivity, provides an overview of data, and discusses external costs of port operations. A detailed overview of the data collection and organization can be found in Rødseth and Wangness' report "Data availability for traditional and environmental productivity and efficiency analyses of Norwegian ports" (TØI report 1461/2015). How the compiled data can be used to analyze port productivity in Norway was discussed at the 2015 "NHO Transport and Logistics" conference and by Rødseth, Schøyen, Wangsness, and Førsund's paper "Produktivitet og effektivitet i norske havner" (Status 2017. Kystverket, 2017: 66-71). The results of the productivity and efficiency analyses are documented by Rødseth, Wangsness, Schøyen, and Førsund "On incorporating quality in port performance measurement: Theory and application to the Norwegian port sector " (TØI working paper 51072/2017) and Rødseth, Wangsness, Førsund, and Schøyen "Size efficiency reconsidered: Application to Norwegian seaports" (TØI working paper 51125/2017). These studies indicate excess capacity in the port sector as spatially small and specialized ports are found to be productive, and thereby do not refute upholding the current port system with small and scatter ports. Rødseth, Wangsness, and Klæboe (TØI report 1590/2017) summarize the work on port externalities. EXPORT has estimated emissions to air for each call taking place in the largest ports in Norway between 2010-2014, and has studied noise pollution in the port of Oslo. Accidental spills to sea/ground, dispersion of contaminated sediments, and injuries and fatalities have also been considered. Emissions to air is found to be the most important externality, adding substantially to the current estimates of the external costs of maritime transport. Regardless of this increase in external costs, maritime transport still turns out to be the preferred mode from the point of view of the environment. The studies by Rødseth, Wangsness, Schøyen, and Førsund (2017) and Rødseth, Wangsness, and Schøyen ("Economies of density in ship working and their environmental implications: Evidence from Norwegian container terminals", TØI working paper 51165/2017) examine the relationship between port productivity and emissions to air at the port level and for container handling, respectively. They reveal a potential for more efficient cargo handling, and thereby for reducing emissions to air per unit of cargo handled. A key result is that Norwegian container terminals have not exhausted economies of scale, and thus appear to be equipped to handle larger ships/amounts of cargo per call. Rødseth, Wangsness, and Schøyen show that this means that marginal external costs are in general lower for large ships (that carry large container volumes) as opposed to small ships. The policy advise is consequently to implement port charges that are regressive in the container volume (Pigouvian taxation).

The EXPORT project assesses the scope for improving environmental-economic efficiencies of Norwegian ports. The project will provide valuable inputs on the optimal use of the existing Norwegian port infrastructure and its contributions to increasing the competitiveness of maritime transport. Few studies on this subject are available, and the project will thus provide valuable inputs to policy makers and stakeholders in the Norwegian port sector. The project will also provide general knowledge about the e xternal costs of port operations that will be of interest to the scientific community. On the basis of its results, the project will provide policy recommendations for maritime transport in general and ports in particular. EXPORT's research questions wil l be examined by empirical analyses. Currently there is no available dataset - national or international - that allows extensive empirical assessments of environmental-economic issues for ports. Hence, the project will make a great effort to compile an ap propriate dataset for ports that will include information on inputs, cargo handling, externalities, and contextual variables. After collecting the data, the environmental-economic efficiencies of ports will be examined on the basis of microeconomic produc tion analysis. The project is organized in the form of 6 work packages (WPs), where the partners in the project (Institute of Transport Economics; University of Oslo; Buskerud and Vestfold University College; Center for Environmental and Resource Econom ics (Sweden)) act as the leaders of the WPs that are related to their areas of expertise.