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Maley Drive – Costs & Benefits

I had a chance to present my cost-benfit analysis of the Maley Drive Extension to the Chamber of Commerce’s committee on the subject. The committee seems split on the proposal – some members clearly being concerned about the costs and the limited benefits, others committed to the old view that any infrastructure spending is good for the local economy.

It was amusing to find that at least one member of the committee prefered to trust economic calculations by the engineers to what he called my “back of the envelope calculations.” I suppose that it is pretty hard to trust an academic economist even if he teaches cost benefit analysis. The joke is that the City engieers have not presented any cost-benefit analysis.

Going ahead with a major project without a cost-benefit analysis seems to me to be irresponsible behaviour on the part of any city council.

A few members of the committee seem to think that the Maley Drive extension would divert so much traffic from Lasalle that it would lead to more businesses starting or expanding along the busiest section of Lasalle. With no population growth projected for the city, new businesses would have to come from other parts of the city, so there would be no net gain. There could be losses. Many businesses want high-traffic locations. If that is true, diverting traffic from Lasalle could reduce land values there!

The Maley Drive extension has several serious strikes against it.maley-drive-extension

1) it is part of a much larger plan that will probably never be finished but will probably cost twice what the current section will cost.

2) Road projects in Ontario typically run 18-46% over cost so there is a lot of fical risk for the city.

3) All overruns will fall on city taxpayers.

4) By my calculations, the benefits to the people of Sudbury are much smaller than the total cost.

5) There is no evidence that there is sufficient demand for this road.

6) The City’s own traffic study said that the roads in the City are not near capacity.

6) We have not been maintaining the roads we have. With the additional debt we will not be able to catch up on the years of neglect to city Infrastructure.

7) There are other projects that would contribute much more to the city al lower costs.

It seems that Sudbury is like a poor family around Christmas time. The kids are asking for an expensive new toy. There is a tremendous temptation to spend too much on something they don’t need and won’t use. But the kids often get their way at Christmas time. Who knows what the Chamber’s committee will decide.

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