Does the economic case for a third runway stack up?

Posted by christian - 15 January 2009 at 12:31pm - Comments

Climate Emergency, no 3rd Runway - the banner held above a jumbo jet by Greenpeace campaigns.

In the next few hours we're expecting the government to annouce they're going ahead with the third runway. The aviation industry likes to suggest that building a third runway at Heathrow has become vital to Britain's future economic wellbeing and the government may use this as a justifcation. To listen to some of the more enthusiastic cheerleaders for aviation expansion, you might think that the entire UK economy is about to collapse, and only laying an enormous strip of tarmac through Sipson village will save it. But is it really that simple? We know aviation expansion is a sure-fire way to wreck the climate, but do we really have to choose between the climate and "jobs and prosperity"?

Well, not according to the experts. They reckon the economic benefits of a third runway have been exaggerated by the government. And we're not talking radical environmentalists here - we're talking about the Sustainable Development Commission, the government's own environment and economics advisory body. They say that the government are over-estimating the economic benefits of airport expansion at Heathrow, and under-estimating the carbon dioxide emissions that would result. Their commissioner Hugh Raven recently reckons that pressing ahead with Heathrow expansion is "highly irresponsible" given uncertainty about how useful aviation really is economically.


Or take the IPPR - apparently New Labour's favourite think tank. They're clear that there is an "overwhelming" environmental case against a third runway, but they also say that the economic advantages of the scheme have been "greatly overstated". environmental case against a third runway, but they also say that the economic advantages of the scheme have been "greatly overstated". WWF UK calculated the climate damages a third runway would cause, it would end up costing the UK economy £5 billion pounds. That figure is calculated using the government's own economic models, along with Sir Nicholas Stern's recommended carbon price from the Stern Review, commissioned by, er, the government. Not good, when the government's own methods end up highlighting the scale of the economic and climate disaster they're trying to create.

Even if the economics experts aren't buying the "third runway leads to economic prosperity" argument, maybe the business community is clamouring for it anyway? Not really. In a recent poll, just four percent of British businesses believed expanding Heathrow would benefit their business. (37% would like a fast rail link between London and the North.) Bob Ayling, the guy who used to run British Airways, and a man who you might expect to be fairly pro-aviation expansion, has said that a third runway is likely to prove a "costly mistake." And even if more passengers were passing through the airport, a chunk wouldn't be bringing much economic benefit to the UK anyway - a third are transfer passengers who might donate the price of a cup of tea to BAA, but little else.

Even worse for BAA, it seems that travellers aren't clamouring for more runways either. In these credit crunch times, the number of passengers travelling by plane in the UK is falling. Meanwhile, high-speed trains are taking off across the continent - in Spain domestic flights dropped by 20% over the past year, while high-speed train travel rose by 28%. This is a bit of a spanner in the works for Heathrow expansion - the number one destination from Heathrow is Paris, and as we know there's a train to Paris, with ticket sales up 10% over the past year. Over a 100,000 flights a year from Heathrow go to cities less than 300 miles away, easily do-able by train.

Really, it's the credit crunch which points the way forward. There's no way any money spent or short-term jobs created in Heathrow expansion can help us out of an economic downturn - construction on a third runway wouldn't start for a decade. The economy is in too turbulent a state for a distant, limited and economically-dubious scheme to have much of an effect.

If we want real economic stimulation, there's only one smart choice. The government could take the opportunity to lift us out of recession on the back of a green jobs revolution, much like the one planned by Barak Obama in the US. Spending on building green infrastructure, a high speed rail network and renewable power generating capacity could create the kind of skilled jobs and economic benefits we'll need to have a firm economic footing in the future.

The real economic question is why they aren't getting on with it...

Find out more about Airplot, our little bit of Heathrow »
The case against Heathrow expansion (pdf) »

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