UBC Undergraduate Research

Agglomeration Economies : The UBC-Broadway Corridor Jimenez, Fernando; Unigovska, Olga; Ng, Hok Hin


The UBC-Broadway Corridor Millennium Line extension would connect UBC with Broadway Corridor (UBC-Broadway Corridor) and other parts of Vancouver. This would create added economic benefits resulting in wider benefits created by agglomeration economies. This report investigates the procedure of monetizing this value to incorporate the impact of agglomeration economies within existing CBA. The methodology is to examine the predictive changes in the industry related output of our measured zone after a potential project implementation. Due to insufficient data, we’ve opted to aggregate all traffic zones into one super-zone that covers the whole corridor. The 3 industries for the computation within the super-zone includes the technological, healthcare and other industries that do not fall under previous categories. The first part is to measure the Effective Density (ED), which is an index that represents the proximity between zone area in respect to its employment population. By obtaining data on industry employment and generalized travel cost we have found a resulting relative change in ED of 6.38%. This indicates that a reduction in generalized travel cost would lead to an increase in ED. The agglomeration benefits of a transport scheme are linked to the effects of generalized travel costs and effective density: firms and workers in their existing location will be relatively closer to each other. As generalized costs fall firms and workers may relocate in response to the change in transport costs and thereby have further effects on density. Using the industry specific agglomeration elasticity gives us the resulting impact within each industry occurring through relative changes in ED. It provides clear insight on the effects of the changes in productivity within each industry in relation to a change in proximity. The result of our computations shows that the impact on Healthcare/Social Assistance Industry as 0.945%, impact on High Tech Industry as 0.198% and impact on Other Industries as 0.178%. This tells us the Healthcare/Social Assistance industry would be the most sensitive to project impacts. To quantify the benefits, we then use the changes in GDP per worker with the forecasted employment levels to aggregate, average and discount the benefits over a 25-year period. The result of the project indicates that the total agglomeration economic benefits of the project will potentially be $735 to $860 million ($2016). Disclaimer: “UBC SEEDS provides students with the opportunity to share the findings of their studies, as well as their opinions, conclusions and recommendations with the UBC community. The reader should bear in mind that this is a student project/report and is not an official document of UBC. Furthermore readers should bear in mind that these reports may not reflect the current status of activities at UBC. We urge you to contact the research persons mentioned in a report or the SEEDS Coordinator about the current status of the subject matter of a project/report.”

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