Measuring the welfare effects of infrastructure: A simple spatial equilibrium evaluation of Dutch railway proposals

We specify a spatial computable general equilibrium model for the Netherlands based on the so-called New Economic Geography. The model distinguishes 14 sectors, two modes of transportation and over 500 municipalities. Key parameters are estimated by fitting predicted interregional trade flows to bi-regional input-output data. The model is then calibrated to a baseline scenario for 2020. From there, the transport grid is modified in line with six proposals for changes in rail infrastructure. The effects of these changes on employment and welfare are computed. We find that the most ambitious project leads to a redistribution of around 8000 jobs from regions further out to regions along the line and especially at the end of it. The net national welfare effect is equivalent to a 250 million euro (0.016%) increase in GDP.