Cambridge International as and a level Economics Ebook

 4 / 11
1.4
1.8
13
BCR with WEIs 
=
 6 / 11
1.7
2.3
Note: BCR – benefit:cost ratio; WEI – wider economic impact
Table 6.2 
Standard case cost–benefit analysis of HS2
Source:
 
Department for Transport (2013)
The benefit:cost ratio, as stated earlier, is crucial in 
determining whether a project should go ahead. For the 
full scheme and also phase one, this ratio is greater than 1 
indicating that there is a projected benefit. The higher 
benefit:cost ratios include an estimate of the external 
benefits. Despite the high costs to the government, the data 
provide a strong case for the HS2’s construction.
High speed rail is well advanced in France, Italy, South Korea 
and China. Britain developed railways more than 150 years 
ago. As things stand, HS2 will be progressed. If, however, 
there is change in political will or a massive increase in costs 
(as some are predicting), it seems only then that HS2 will 
be cancelled.
141
Chapter 6: Basic economic ideas and resource allocation

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SELF-ASSESSMENT TASK 
6.5
Traff ic problems in Bangkok
Bangkok, the capital of Thailand, is one of Asia’s 
megacities. For its citizens, and those who visit as 
tourists or for business reasons, one thing that no one 
can get away from is its horrendous traff ic congestion. 
The population is increasing at a massive 2% per annum 
and, as in all parts of Asia, vehicle ownership levels are 
increasing at a substantial rate as a consequence of 
economic advancement. This situation means increasing 
stress levels, deterioration in the quality of life and 
increasing health problems for its burgeoning population. 
A recent government report has estimated that:
■ 
the typical resident spends 44 working days a year 
stuck in traff ic
■ 
peak vehicle speeds have fallen to 6 km per hour
■ 
lost production due to congestion is estimated to be 
10% of Thailand’s GDP
■ 
much of the energy used to move vehicles is wasted 
because of the congestion
■ 
one million people a year suff er from diagnosed 
respiratory diseases linked to the air pollution 
quality, which has 18 times more CO
2
emissions than 
the WHO maximum guideline
■ 
there is a high incidence of lung cancer among the 
adult population and children have unacceptable 
levels of lead in their blood
■ 
thousands of people a year suff er strain and stress-
related illness directly attributable to the severe 
congestion
■ 
schoolchildren leave home for school at 5am to beat 
the congestion.
Morning rush hour in Bangkok
Unlike its ‘neighbours’ such as Kuala Lumpur, Singapore 
and Hong Kong, Bangkok does not have a rapid transit 
system, although one has been planned for at least 
30 years. The time has surely come when this has to be 
authorised.
Suppose you have been asked by the authorities in 
Bangkok to produce a cost–benefi t analysis for a new 
rapid transit system for the city.