Willingness to pay for improved transport infrastructure : an econometric study of five Norwegian projects

In this paper we introduce an econometric time series model where we make implicit value of time estimation. Traffic demand functions are estimated for five Norwegian cases, where recent subsea toll roads (and some bridges) replaced ferry connections. In addition to estimating price elasticities (in generalized costs) we estimate a shift parameter interpreted as an inconvenience cost, which can be regarded as an implicit measure of willingness to pay for quality improvements. This enables us to test for the ex ante value of time estimate (based on stated preference analysis) and we find significant shifts in between -10% to +70% of time benefits, indicating that the real willingness to pay for new infrastructure often is higher than expected. We also find significant price elasticities of about -0,8 for all five relations.