Socio-economic impact of the developmentof the lower vistula by ENERGA SA

Socio-economic impact of the development

of the lower Vistula

Krystyna Wojewรณdzka-Krรณl Ryszard Rolbiecki Gdaล sk 2017

Socio-economic impact of the development

of the lower Vistula

Krystyna Wojewรณdzka-Krรณl Ryszard Rolbiecki Gdaล sk 2017

Publisher ENERGA SA Editorial Office Acta Energetica al. Grunwaldzka 472 80-309 Gdańsk tel. +48 58 77 88 466 http://actaenergetica.org/ e-mail: redakcja@actaenergetica.org Editor in Chief Acta Energetica Zbigniew Lubośny Vice Editor in Chief Acta Energetica Rafał Hyrzyński Managing Editor Acta Energetica Jakub Skonieczny Reviewers Elżbieta Załoga Janusz Granatowicz Editor Katarzyna Żelazek Bernard Jackson Proofreading Mirosław Wójcik Design and typesetting Art Design Maciej Blachowski Translation and proofreading Skrivanek sp. z o.o. Print Grafix Centrum Poligrafii All rights reserved Printed in Poland Copyright by Acta Energetica Gdańsk 2017 ISBN 978-83-945413-0-9

Reviews “The publication expresses a modern approach to the scientific publication’s objectives and mission, as ruled by the study’s high scientific, cognitive and utility values, as well its clarity of argument in the subject matter with a high degree of complexity”. “The publication should be of particular interest to stakeholders in the waterways potential, especially in the areas of transport, power, water management, tourism, agriculture and forestry, and regional development”.* Elżbieta Załoga “I think it is very important that the idea of sustainable development has been presented, which means a proper balance between the social, economic and environmental aspects”. “In my opinion the study ‘Socio-Economic impact of the lower Vistula development’ is a breakthrough in the debate, ongoing for many years, about the viability of the Lower Vistula River comprehensive development”.* Janusz Granatowicz * fragments

From the Publisher The Vistula River has always been Poland’s main axis, determined the locations of cities and towns, and played essential roles, both economic and strategic. Over the centuries, however, its full potential has been used to only a limited extent. To fully use it, it is necessary first to analytically assess the potential in all areas, using state of the art scientific methods and recognised international standards of investment efficiency evaluation, and then – if the analysis has proven the legitimacy of such actions, to develop a long-term, national strategy of the Vistula River development and to implement the investment projects in the most effective manner, while fully respecting the environment. The Vistula River’s impact on key areas of Poland’s economy, such as transport, agriculture, tourism, and also on its energy security, as well as on implementation of the European Union’s strategic objectives concerning inland waterways and renewable energy sources, and on flood control, was reported in Acta Energetica. In issue 2/15 Book 1. The Vistula River’s general characteristics, an account of the current state of the Vistula and its economic use, taking into account natural values. In issue 3/16 Book 2. Hydropower in Poland and Europe, the current status of Poland’s hydropower potential utilisation with reference to future opportunities in the context of other EU countries. These publications, however pioneering and synthetically describing matters of the economic use of the Vistula in many areas, have not yet addressed the measurable effect on the Polish economy of the Lower Vistula Cascade – an idea with its roots still in the pre-war concepts. The authors of this work are the first to comprehensively estimate the Lower Vistula Cascade economic effects, viewing this issue through the prism of Polish economic development. So far only one Cascade stage has been completed: the dam with the largest Polish flow hydropower plant in Włocławek; the next in the pipeline is the barrage in Siarzewo. The benefits for the Polish economy discussed in the book depend on the completion of the entire Cascade (waterway clearance with appropriate specification), and not a single dam, so a governmental strategy is needed to set the objectives in this area. Without a long-term strategy encompassing the other Vistula dams the Cascade will remain an idea only, and the opportunity for growth through the Vistula’s development will be irretrievably lost. This book is an example of the best practices in the collaboration between business and science. It is part of a broader corporate social responsibility of Grupa ENERGA – the issue’s publisher and sponsor. It is a great pleasure to present you this book, a unique compendium, hoping that the knowledge contained in it will help to increase awareness of the economic importance of the “queen of Polish rivers.”

prof. dr hab. inż. Zbigniew Lubośny Editor in Chief, Acta Energetica Rafał Hyrzyński Head of Strategy and Strategic Assets Management Department, ENERGA SA Vice Editor in Chief, Acta Energetica

Table of Contents SECTION I SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA I. Introductory remarks â&#x20AC;&#x201C; specificity of inland waterways............................................................................................ 13 II. Sources of benefits from the development of the lower Vistula............................................................................... 19 III. Risks associated with abandonment of implementation the Lower Vistula Cascade........................................... 78 SECTION II STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT I. Analysis of available studies of demand for cargo transport..................................................................................... 93 II. Analysis of demand for cargo transport through the lower Vistula River............................................................ 110 III. Analysis of the demand for passenger transport using inland navigation in the area of the lower Vistula River.................................................................................................................................................................... 144 SECTION III ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA I. Methods for analysing the economic performance of investments....................................................................... 167 II. Cost estimate for the development of the lower Vistula River................................................................................ 181 III. Estimate of benefits........................................................................................................................................................ 193 IV. Analysis of results........................................................................................................................................................... 237 SECTION IV IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION I. Gross domestic product as a synthetic measure of economic development........................................................ 253 II. Analysis of changes of GDP in regions located at the lower Vistula...................................................................... 260 III. Impact of the Lower Vistula Cascade on GDP in Poland and regions located at the lower Vistula................. 270 BIBLIOGRAPHY................................................................................................................................................................ 311

Introduction The main challenge of a modern transport policy is to create a competitive and resource efficient transport system – as has been written in the “WHITE PAPER on transport”1 of the European Union (2011). This requirement, in the face of rising external costs of transport, as well as the growing threat to energy security, and the deepening risk of water scarcity and flood hazards, leads to considerations of the development of inland waterways. In the context of these problems, as well as the risks associated with the deterioration of the transport services at Gdańsk and Gdynia sea ports’ facilities, the development of the lower Vistula waterway is being increasingly discussed. This publication is a result of many years of research in the field of inland waterway transport, including the development of inland waterways, and its primary objective is to present the socio-economic effects of the lower Vistula waterway’s comprehensive development. The lower Vistula is usually identified as the stretch of the river from the mouth of the Narew River to its mouth to the sea. The research reported in the study was based on the development concept of the Lower Vistula Cascade (KDW)2, which includes the Vistula River from Warsaw to the mouth, and this stretch was identified in the study as the lower Vistula. The publication consists of four sections. The first section, “Socio-economic premises of the lower Vistula development” highlights the specific, multi-purpose nature of inland waterways, and the need for complex (multi-tasking) development projects in waterways. The main emphasis in this part of the study has been placed on the sources of benefits from the Lower Vistula’s comprehensive development. This chapter concludes with an analysis of the hazards, which will appear if the lower Vistula waterway development is abandoned. In the second section, “Study of the demand for transport by the lower Vistula waterway” the demand for transport along the waterway is estimated using the questionnaire method and the method of reasoning by analogy. An important premise for the development of inland waterways is the opportunity to activate water sports and tourism. Therefore, this part of the study reports an attempt to estimate the demand for passenger transport by the lower Vistula waterway, based on an analysis of European trends. In the third section, “Estimation of costs and benefits of the Lower Vistula River comprehensive development” the net costs are estimated, as well as the incremental benefits and the resulting net benefits, which in turn provided the basis for a ratio analysis of the economic viability of the lower Vistula waterway development. This account was based on the currently used capex project profitability measures, such as Economic Net Present Value – ENPV and Benefits Costs Ratio – E/C. This analysis was concluded with the project’s risk assessment based on sensitivity analysis. The fourth section, “Impact of the Lower Vistula Cascade on GDP expressed in PLN million” is a macroeconomic insight into the effects of the lower Vistula waterway development. In this chapter, against the background of theoretical considerations of the GDP as a synthetic measure of economic development, the trends of GDP changes in Poland and in the regions bordering with the lower Vistula waterway are presented, and the impact of the Lower Vistula Cascade on economic growth was analysed. This impact was estimated based on GDP accounting methods, in particular the expenditure method and the added value method. The publication is targeted primarily at business practitioners – groups of stakeholders of the waterway’s potential, especially in transport, energy, water management, tourism, agriculture and forestry, and the regional development sectors – local government officials, business people and politicians, as well as the scientific community, students of transport and logistics. Krystyna Wojewódzka-Król Ryszard Rolbiecki

1 BIAŁA KSIĘGA transportu [WHITE PAPER on transport], The European Union

2011 [online], http://ec.europa.eu/transport/ sites/transport/files/themes/strategies/doc/2011_white_paper/white-paper-illustrated-brochure_pl.pdf [access: 8.11.2016]. 2 Hydrodynamiczny model dolnej Wisły z uwzględnieniem koncepcji kaskady stopni piętrzących [Hydrological model of the lower Vistula, taking into account the concept of barrage cascade], collective work edited by M. Szydłowski, Gdańsk, April 2014.

ANALYSIS OF SOCIO-ECONOMIC IMPACT OF THE DEVELOPMENT OF THE LOWER VISTULA

SECTION I SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Table of Contents I.

INTRODUCTORY REMARKS – SPECIFICITY OF INLAND WATERWAYS ...................................................13 1.1. Multipurpose nature of waterways .........................................................................................................................13 1.2. The share of inland waterway transport in handling the transportation needs ..............................................14 1.3. Creating an international transport network .......................................................................................................15 1.4. The idea of sustainable development .....................................................................................................................17

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA .................................19 2.1. Transport ....................................................................................................................................................................19 2.1.1. Sustainable development of transport .........................................................................................................19 2.1.2. Seaports ............................................................................................................................................................31 2.1.3. Logistics centre................................................................................................................................................46 2.2. Hydropower generation ...........................................................................................................................................48 2.3. Flood protection ........................................................................................................................................................54 2.4. Tourism .......................................................................................................................................................................59 2.5. Regional development ..............................................................................................................................................66 2.6. Meeting the water needs ..........................................................................................................................................74 III. RISKS ASSOCIATED WITH ABANDONMENT OF IMPLEMENTATION THE LOWER VISTULA CASCADE............................................................................................................................78 3.1. Flood losses ................................................................................................................................................................78 3.2. Transport problems, the threat to competitive position of seaports .................................................................81 3.3. Problems with water quantity and quality ............................................................................................................85 3.4. Environmental degradation, uncontrolled devastation of riverside areas .......................................................86 3.5. Problems with regional development ....................................................................................................................87 3.6. Conclusions ................................................................................................................................................................88

I. Introductory remarks – specificity of inland waterways 1.1. Multipurpose nature of waterways

The specificity of inland waterways is a result of both the complex nature of their development and the fact that the layout and length are determined by natural conditions. Because of these factors there are some common mistaken ideas about the possibilities and needs for development of waterways, which in effect have a negative impact on the process of their growth. In contrast to routes in other modes of transport, waterways are used not only for transport of people and cargo. Three groups of investments in infrastructure can be distinguished in the waterway development process, namely: • aimed at improvement of navigation conditions in waterways (deepening, regulation, sewerage, reservoirs, canals and shipping tunnels) • undertaken to meet the water needs of other sectors of national economy and to counteract the negative impact of waters • used in other modes of transport, built at intersections of waterways and roads. The first two groups of investments are closely related because: • the majority of investments undertaken for the purpose of inland navigation affects the hydrographic conditions, and hence the water management method • objectives of individual sectors of the economy can be common when the investment meets the needs of different sectors, or conflicting when the fulfilment of the needs of one sector has a negative impact on another sector • individual investment plans complement each other. Therefore, it can be concluded that there are no single-purpose investments in infrastructure related to water management. The „single-purpose investment” term used in the literature can at most mean that a structure is built to meet the needs of a single water user, without taking into account the impact – both positive and

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

negative – of this project on other sectors of the economy. As the losses caused by such an investment may significantly exceed the planned effects, the only rational way to develop a waterway is multipurpose development that takes into account interests of various consumers and water users1. Multipurpose investments have a higher efficiency than a single-purpose investment that pursues similar objectives because: • their objectives are in line with general economic objectives and allow for selection of the investment variant which is best from the point of view of the whole economy • expenditures on their implementation are lower than the amounts of expenditures on implementation of so-called single-purpose solutions. Certain expenditures for multipurpose development of waterways are the so-called common part, which benefits all sectors of the economy, while the remaining can be divided and assigned to individual sectors of the economy (Fig. 1). Total expenditures on multipurpose waterway development are usually large, but the efficiency of achievement of individual tasks is high while including only a part of common costs and separable costs. As a result, the costs of development of inland waterways, for example, are usually lower than the costs of road construction in competitive modes (per tonne-kilometre [tkm]). Due to the lack of awareness of these relationships, significant total expenditures are often wrongly an argument against the development of inland waterways, in particular for the purposes inland waterway transport or power industry. It also happens that urgent problems are solved in a piecemeal fashion “to achieve savings”, which often causes more losses than benefits in various areas of the economy. An example of a multipurpose water investment can be the construction of the cascade of dams at the Austrian section of the Danube (Dunaj), which began in 1954 from Ybbs-Persenbeug dam, and 9 dams were built over the next 43 years. The following have been ensured as a result: safe passage of flood waves formed under influence of alpine torrential rains, melting snow and glaciers of the Alps; safe, cheap and environmentally friendly water transport at the Rhine – Main – Danube (Ren – Men – Dunaj) route (e.g. leisure and hotel ships with a tonnage of approx. 2 thousand tonnes navigate at that section); operation of 9 hydropower plants with a capacity of 2100 MW, generating 13,300 GWh per year; operation of municipal and industrial water intakes. Hundreds of kilometres of walking paths for pedestrians and bikers, swimming areas and observation points for motorized tourists were built along the reservoirs; safe exploration of the equipment located at barrages is allowed. Fish migration is possible through various fish passes, including passes in the form of a mountain stream. The purity of Water in the Danube (Dunaj) has been improved through the comprehensive construction of sewage treatment plant2.

1.2. The share of inland waterway transport handling the to transportation needs

A common argument against the development of waterways for transport needs is the low share of inland waterway transport in handling the transport needs. In countries where natural water courses are unevenly distributed or short, the share of this mode in relation to transport needs may indeed be low. However, the low share should not be considered equivalent to marginal importance of this mode, in the context of either transport needs or the country’s socio-economic development.

K. Wojewódzka-Król, Współzależności w rozwoju śródlądowych dróg wodnych [Correlation in the development of inland waterways, Logistics], Logistyka (addition on CD Logistyka-nauka), [electronic document] – 2011, No. 6, pp. 5089–5100, CD No. 3. 2 W. Depczyński, Włocławek, 40 lat stopnia wodnego – fakty i mity o zagrożeniu [Włocławek, 40 years of barrage - facts and myths about the threat] [online], http://www.inzynierbudownictwa.pl/ technika,materialy_i_technologie,artykul,wloclawek__40_lat_stopnia_wodnego_-_fakty_i_mity_o_zagrozeniu,3146 1

I. INTRODUCTORY REMARKS – SPECIFICITY OF INLAND WATERWAYS

Fig. 1. The structure of expenditures and effects of multipurpose water investments / source: own work

In the region of occurrence of inland waterways, the share of this mode may in fact be quite dominant or at least significant, and its impact on the socio-economic development – very big. For example, in Poland – this share is 0.1% on average, and in handing of Szczecin-Świnoujście Ports – approx. 9% (in the period best for navigation – 25%), in the UK – 0.1% on average, while in the city logistics in London – 6% (9 million tonnes, i.e. over twice more than carried through navigation in Poland); in Netherlands – 39% in average, in handling of the Port of Rotterdam – 79%.

1.3. Creating an international transport network

According to the definition of “infrastructure”, it is the basis of economic development, which suggests the need for its pre-emptive development in relation to needs3. Transport infrastructure is an important factor in economic development. Its development may be stimulating to the socio-economic development and integration processes. However, the relationships between the development of international links and infrastructure are not one-sided: • a good layout of transport network with uniform parameters is a factor stimulating the development of international cooperation (the lack of convenient transport links restricts international exchange, hinders contact and can create a barrier to integration) • the development of integration contributes to creation of specific needs in terms of infrastructure and thus affects the acceleration of processes to establish a uniform transport network; integration also creates new possibilities for funding the transport network development. K. Wojewódzka-Król, Uwagi o zakresie pojęcia i niektórych cechach infrastruktury transport [Comments about the scope of concept and some characteristics of transport infrastructure], “Zeszyty Naukowe Wydziału Ekonomiki Transportu Uniwersytetu Gdańskiego”, 1975, No. 5. 3

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 2. AGN waterways / source: European Agreement on Main Inland Waterways of International Importance AGN, United Nations, Geneva, 19 January 1996, ECE Trans/120

I. INTRODUCTORY REMARKS – SPECIFICITY OF INLAND WATERWAYS

Significant impact of infrastructure on the socio-economic development, equalisation of differences and opportunities for development of regions and economic integration is the cause of numerous measures in the EU countries to support the development of infrastructure, equalisation of differences in the infrastructure development status, elimination of bottlenecks, construction of missing links and creation of environmentally friendly modal structure of transport systems. Improperly established structure can become a limiting factor for socio-economic development and international cooperation, can reduce or even nullify the development measures taken in other areas of the economy. In practice, the creation of a uniform transport network corresponding to the needs of economic integration in terms of both layout and parameters faces numerous limitations. In addition to the barriers typically associated with the creation of infrastructure (existing zoning, environmental and capital-related barriers), they include, above all, difficulties resulting from the conflict between national and common interests of countries that establish a common transport network. In this case, a condition necessary to establish a uniform European transport network is to clearly identify the desired objective understood as the target system and the target applicable technical standards, as well as the methods to achieve it. Therefore, it has become to determine the following: • priority investment projects to support the existing infrastructure system • priority modernization investments to eliminate the so-called bottlenecks in the future transport network • priority modernization investments aimed at adjustment of existing roads that are a part of the future European transport network to European standards. An important initiative to unify the European waterways is the European Agreement on Main Inland Waterways of International Importance adopted in 1996, known in short as AGN (Fig. 2). From the point of view of international relations, Polish waterways have great potential and its use is very important for implementation of the idea of trans-European transport networks. Unfortunately, Polish waterways currently constitute the so-called bottleneck on the map of European inland waterways, therefore hindering the development of inland waterway transport in Europe as an integral element of sustainable transport development. Plans for 2014–2020 assume that the EU funding in the field of transport infrastructure will be focused on the core transport network, supplementation of missing border links, elimination of the so-called bottlenecks and support of smart grids. The core network will be implemented in nine corridors with at least three modes of transport running through at least three member states and including two cross-border sections. This means that the previously dominant concept of intermodal competition is replaced by the concept of cooperation between all modes of transport, which allows for more environmentally friendly solution to today’s transport problems. The concept of corridors strengthens the position of inland waterway transport, because road and railway transport routes are often built in river valleys, so the corridors often run along inland waterways. As a matter of fact, these routes do not always meet the criteria for the core network (e.g. they do not run through three countries), but the location in the transport corridor creates demand conditions favourable for development of navigation. The lower Vistula River (dolna Wisła) is located in the 1st transport corridor: Baltic – Adriatic (Bałtyk – Adriatyk).

1.4. The idea of sustainable development

The idea of sustainable development provides for meeting social needs in an economically efficient and environmentally sound manner. Sustainable growth means: • building a more competitive low-carbon economy that makes efficient, sustainable use of resources • protecting the environment, reducing emissions and preventing biodiversity loss 17

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

• capitalising on Europe’s leadership in developing new green technologies and production methods • introducing efficient smart electricity grids • harnessing EU-scale networks to give our businesses (especially small manufacturing firms) an additional competitive advantage • improving the business environment, in particular for SMEs • helping consumers make well-informed choices. EU targets for sustainable growth include: • reducing greenhouse gas emissions by 20% compared to 1990 levels by 2020. The EU is prepared to go further and reduce by 30% if other developed countries make similar commitments and developing countries contribute according to their abilities, as part of a comprehensive global agreement • increasing the share of renewables in final energy consumption to 20% • moving towards a 20% increase in energy efficiency4. In the energy sector, this means the need to increase energy production from renewable sources. Sustainable growth also affects other water users and consumers. In transport, the way to realise this idea is not only to support the development of environmentally friendly modes, but also a complete change in the concept of the transport system based on accelerating the implementation of the basic trans-European links and the creation of the aforementioned transport corridors that will enable the choice of modes of transport as well as efficient and effective fulfilment of transport needs. The idea of sustainable development assumes a proper balance between the social, economic and environmental aspects. This does not mean that the environment will remain untouched, as every investment activity affects the environment, and it does not mean a primacy of the economic aspect, because sometimes social considerations are a priority, but it also does not mean the fulfilment of social needs at any cost. Therefore, the investment appraisal using any of these aspects independently of the others violates the principle of sustainable growth.

Europa 2020 [online], http://ec.europa.eu/europe2020/europe-2020-in-a-nutshell/priorities/sustainable-growth/index_ pl.htm [access: 15.07.2015]. 4

II. Sources of benefits from the development of the lower Vistula 2.1. Transport Emissions The benefits of the development of inland waterways are felt in many areas of the economy (Fig. 3) and they are both economic and non-economic effects (including in particular social effects and some environmental effects that are different to measure).

2.1.1. Sustainable development of transport

Assessing the benefits from the development of inland waterway transport at the lower Vistula River (dolna Wisła) is closely associated with the idea of sustainable development of transport and applies to three main areas: 1. external costs of transport and effective costs of transport 2. the role of this mode of transport in establishing the competitive position of seaports in Gdańsk and Gdynia 3. the role of inland waterway transport in the location and functioning of logistics centres located along the lower Vistula River (dolna Wisła), and thus the impact of this mode on the socio-economic development of the regions.

Energy intensity Energy consumption has a big impact on external costs and transport costs. Research conducted by research institutes show that in transport of both bulk and container cargo, the advantage of inland waterway transport over other modes is considerable in terms of energy consumption (Fig. 4). Technical and technological progress means that environmentally friendly changes have been introduced in all modes, but often inland waterway transport, the aim of which is to eliminate emissions of air pollutants (the concept of zero-emission vessels, which use green energy sources), demonstrates advantage over other modes of transport in this regard. Emissions of NOx and SO2 in this mode of transport are already considered minimal.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 3. The effects of the development of inland waterways / source: own work

Fig. 4. Primary energy consumption by different modes of transport for the transport of different types of cargo (megajoules/tkm) / source: own work based on: Economical and Ecological Comparison of modes of transport: road, railways, inland waterways, PLANCO Consulting GmbH, Essen, in co-operation with Bundesanstalt für Gewässerkunde, Koblenz 2007, p. 13

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

*1300–1350 tonnes Fig. 5. CO2 emissions during transport of goods (bulk and general cargo) using different modes of transport / source: own work based on: The power of inland navigation. The future of freight transport and inland navigation in Europe 2013–2014, The Blue road. Dutch Inland Navigation Information Agency (BVB), Rotterdam 2013

Analysis of average numbers shows that despite significant technical progress road transport emits several times more air pollution, especially CO2, than inland waterway transport. However, rail transport has already achieved better results than water transport. By 2020, CO2 emissions will be reduced in all modes of transport, but on average inland waterway transport will follow rail transport and will be much ahead of road transport in this regard (Fig. 5). Only broader implementation of the concept of zero emission ship will improve this situation. However, there have already been projects that enable a 40-percent reduction in CO2 emissions (Eco Tanker Amulet)5 .

Noise pollution The problem of the modern civilization is the noise generated, among others, by transport. The location of inland waterways, their large distance from population centres, as well as the solutions used in the means of inland waterway transport minimise noise emissions in this mode, and therefore the average external costs of noise generated by means of transport are estimated at zero, compared to 0.33 euro cents/tkm in rail transport and 0.79 euro cents/tkm in road transport (Fig. 6).

Safety risk

Inland water transport is one of the safest modes of transport, despite a significant increase in transport of hazardous goods. One of the reasons is the almost complete separation of freight and passenger transport, which is usually carried out in attractive tourist and recreation areas. Moreover, the high degree of specialisation of transport, which is manifested by the adjustment of means of transport to the specificity of cargo, regulations, in particular on the transport of hazardous goods, and requirements for training of ship crews minimise the safety risk in this mode of transport (Fig. 7)6.

Amulet Motor Tanker with a Clean Conscience [online], http://www.ecotanker.nl/images/pdf/Factsheet_eng.pdf [access: 10.11.2015]. 6 Inland Navigation Flanders [online], http://www.binnenvaart.be [access: 08.03.2014]. 5

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 6. Noise pollution in transport (euro cents/tkm) / source: Economical and Ecological Comparison of modes transport: road, railways, inland waterways, PLANCO Consulting GmbH, Essen, in co-operation with Bundesanstalt für Gewässerkunde, Koblenz 2007

Fig. 7. Costs of accidents in freight transport (euro cents per 100 tkm) / source: Verkehrswirtschafftlicher und ökologischer Vergleich der Verkehrsträger Schiff, Straβe, Schiene, PLANCO Consulting GmbH, Essen 2007, pp. 25–26

Total infrastructure area (thou. ha) 15

Share in total area of country (%) 0.5

France

110

0.2

4.3

Netherlands

1.1

12.2

Poland

0.01

0.4

Germany

0.2

3.9

United Kingdom

0.2

4.2

Italy

0.1

2.2

Country Belgium

In total area of transport (%) 4.6

Tab. 1. Land consumption of inland waterway transport / source: K. Woś, Kierunki aktywizacji działalności żeglugi śródlądowej w rejonie Odry w warunkach integracji Polski z Unią Europejską [Directions for Inland Navigation Development at the Oder under the Conditions of Poland’s Integration with the European Union], Warsaw 2005, p. 17

Land consumption Another factor affecting the attractiveness of inland waterway transport is low land consumption and, at the same time, a much better use of land than in other modes of transport. The area occupied by the infrastructure of inland waterway transport in European countries ranges from 0.4% in Poland to 12.2% in the Netherlands of the total area of transport (Tab. 1). However, in the countries where infrastructure is well developed it is also intensively used. 22

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Cost type Accidents Noise Pollution Climate Infrastructure Congestion Total

Road transport 5.44 2.138 7.85 0.79 2.45 5.45 24.118

The difference in costs compared to road transport External costs saved due to withdrawal from road transport per 1000 tkm Transport work allowing to save EUR 1 by withdrawing from road transport

Rail transport 1.46 3.45 3.8 0.5 2.9 0.235 12.345

Inland waterway transport 0 0 3 irrelevant 1 irrelevant no more than 5.0

Short sea shipping (SSS) 0 0 2 irrelevant less than 1.0 irrelevant no more than 4.0

EUR 11.8/1000 tkm

approx. EUR 19/1000 tkm

approx. EUR 20/1000 tkm

EUR 11.80

EUR 19

EUR 20

85 tkm

52 tkm

50 tkm

Tab. 2. Marginal average external costs by mode of transport (EUR/1000 tkm) / source: own work based on: Inland Navigation Flanders [online], http://www.binnenvaart.be [access: 08.03.2014]

The numbers for intensive transport per kilometre of linear infrastructure: • 3.5 million tonnes of cargo in inland waterway transport • 2.5 million tonnes in rail transport • 1.5 million tonnes in road transport7. Low land consumption very often makes inland waterway transport in developed areas, e.g. in the hinterland of seaports, not only an attractive alternative to meet the needs of transport needs, but even the only option – when waterway whose development does not require the acquisition of new land leads to the hinterland.

Congestion One of the most important problems of modern transport is congestion, which generates losses in various areas of the economy, estimated at 1% of gross domestic product (GDP) in the EU countries8. These costs and the negative impact on the competitiveness of the economy and quality of life force to seek ways to resolve or at least mitigate this problem. Inland waterway transport is not at risk of congestion, and most of inland waterways have large capacity reserves.

External costs A small degrading impact of inland waterway transport on the environment affects the low external costs of inland waterway transport. External costs of degrading impact of transport on the environment – accidents, noise, pollution, changes in climate and infrastructure (occupied land) and congestion are significant and estimated by the European Union at 1.5% of GDP9. Compared with various modes of transport, external costs generated by inland waterways are small. Inland Navigation [online], http:/www.binnenvaart.be [access: 09.02.2014]. Roadmap to a Single European Transport Area [online], http://ec.europa.eu/transport/strategies/facts-and-figures/transport-matters/index_en.htm [access: 10.07.2015]. 9 White Paper. European transport policy for 2010: time to decide, Luxemburg 2001. 7 8

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 8. External costs of transport (EUR/1000 tkm) / source: own work based on Tab. 2

External effects Accidents

Road transport

Rail transport

Inland waterway transport

Vito*

EC**

PLANCO***

Vito

PLANCO

Vito

PLANCO

22.8

5.4

37.8

1.6

1.5

2.3

0.07

0.0

0.3

Noise

4.4

2.1

7.4

2.8

3.5

12.7

< 0.1

0.0

Air pollution

9.1

8.7

29.1

0.4–9.46

4.3

3.5

5.4

3.0

4.2

Congestion

5.4

5.5

1.2

–

0.2

0.0

–

0.0

Infrastructure

1.9

2.5

0.0

0.2

2.9

0.0

0.7

1.0

0.0

Other

–

1.3

–

0.4

–

0.0

Soil and water contamination

–

8.6

–

0.0

–

0.0

43.5

24.1

85.4

7.1

12.3

19.0

6.2

5.0

4.5

Total

* Flemish Institute for Technological Research (Vito), Belgium ** European Commission, Brussels *** PLANCO GmbH, Essen, Germany Tab. 3. Comparison of external costs of various modes of transport in EUR/1000 tkm, source: Trump cards of inland navigation [online], http://www.binnenvaart.be/en/binnenvaartinfo [access: 10.03.2014]

According to research, external costs per 1000 tkm are estimated as follows: • in road transport – at EUR 24.12 • in rail transport – at EUR 12.35 • in inland waterway transport – at no more than EUR 5 (Tab. 2). Implementation of eco-friendly trends in various modes of transport and the development of methods for estimating the external costs in transport cause changes in the results of further research. Comparison of external costs of transport in the research conducted by different research institutes show huge differences in results, which is also affected by different assumptions, but water transport is usually the most preferable option in those comparisons (Tab. 3, Fig. 8). Only in the report of the Dutch CE Delft (Committed to the Environment) and the Swiss Infras are the results of this research slightly better for rail transport than those for inland waterway transport (Fig. 9). All research show, however, that despite a significant technological progress in road transport, the external costs generated by this mode of transport are many times higher than in the case of inland waterway transport. As 24

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 9. External costs of freight transport (without costs of congestion): 27 EU countries, excluding Malta and Cyprus, but including Norway and Switzerland / source: own work based on: External Costs of Transport in Europe. Update Study for 2008, Report CE Delft, INFRAS, Fraunhofer ISI, Delft, September 2011, p. 10

Fig. 10. External costs saved through the acquisition of 1000 tkm from road transport by other modes of transport in EUR, according to various studies / source: own work based on: Trump cards of inland navigation [online], http://www.binnenvaart.be/en/binnen-vaartinfo [access: 10.03.2014]

a result, a transfer of 1000 tkm from road transport on inland waterway transport could bring EUR 19.1 to 80.8 of savings in external costs (Fig. 10), not including other benefits.

Costs of waterway transport Costs are particularly affected by many times lower labour intensity and the above-discussed energy intensity of inland waterway transport. It should be noted that the development of transport as well as technical and technological progress increases the differences in the consumption of natural resources in various modes of transport – in favour of inland waterway transport10.

Labour intensity

In comparison with rail and road transport, inland waterway transport is characterized by a relatively low labour intensity, which means high work performance. In the 70s it was estimated that the global performance in inland waterway transport is 2.5 times higher than in rail transport. Data of 2000 for selected European countries shows 10 F.J. Schroiff, Das Binnenschiffahrt-Verkehrssystem, Hannover 1984, pp. 40, 45–49, 52, 109.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 11. Performance per employee in transport in selected countries in 2010 / source: own work based on: EU transport in figures 2013, Luxembourg 2013

that these relations have changed significantly in favour of navigation. The average advantage of inland waterway transport over road transport in terms of labour intensity is over 30x higher in 27 EU countries (Fig. 11). Labour costs in highly developed countries of Western Europe are an important element of overall transport costs. Low labour intensity, the above-discussed low energy intensity and other features of this mode, such as high capacity and mass transport, have an impact on transport costs. As a result, the cost advantage of inland waterway transport is considerable, although it varies greatly depending on: • navigation conditions of waterways • the size of the fleet used for transport • applied ways of supporting this mode due to the low external costs • assortment and distance structure of transit. Navigation conditions are the primary factor in determining the size of the fleet used for transport and the degree of utilization of its capacity, which in turn determine the so-called economies of scale. The increase in the size of ships from 750 t to 4400 t makes it possible to lower the transport costs almost three times (from EUR 30–40/1000 tkm to EUR 10–15/1000 tkm)11.

Ship size The size of ships determines the scale of reduction of unit costs of transport associated with greater draught and thus better use of capacity. In the case of large ships, the cost of transport of 1 tkm with an increase of draught from 2 to 4 m can be lower by up to 30%; these differences are smaller for smaller ships – a few to several percent12. An important factor affecting the cost advantage of inland waterway transport is various forms of support for this mode of transport as environmentally friendly. However, the countries where this occurs (e.g. the Netherlands or Germany) apply instruments to promote inland waterway transport, such as: • the use of special fuel prices for shipping companies (much lower than those offered to other modes of transport) • no fees or very low fees for the use of waterways, e.g.: in the Netherlands, the use of waterways is free (shipowners do not bear any costs associated with passage of ships through locks, canal fees, etc.). • 11 TEN-T PRIORITY AXES AND PROJECTS 2005. Priority axis No 30 – Ongoing Inland waterway Seine-Scheldt [online],

http://ec.europa.eu/ten/transport/priority_projects_minisite/PP30EN.pdf [access: 20.06.2015]. 12 Economical and Ecological Comparison of Transport Modes: Road, Railways, Inland Waterways, PLANCO Consulting GmbH, Essen in co-operation with Bundesanstalt für Gewässerkunde, Essen, November 2007, pp. 29–30.

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Transport route

Distance using transport (km)

from

Hamburg

Decin (Czech Republic)

Cargo

road

rail

inland waterway

Food

558

532

635

Hamburg

Salzgitter

Coal

211

194

200

Rotterdam

Duisburg

Coal

243

267

227

Rotterdam

Groβkrotzenburg (Main)

Coal

524

557

568

Rotterdam

Dillingen (Saar)

Iron ore

457

515

671

Linz

Nuremberg

Ore and steel

337

331

384

Hamburg

Hannover

Mineral oils

145

176

259

Antwerp

Ludwigshaven

Chemicals

423

488

659

Rotterdam

Duisburg

Containers

243

488

229

Rotterdam

Basel

Containers

773

767

838

Hamburg

Berlin

Containers

314

284

357

Hamburg

Decin (Czech Republic)

Containers

558

532

635

Rotterdam

Stuttgart

Containers

650

642

763

Tab. 4. Examined routes for transport of selected goods using different modes of transport / source: Economical and Ecological Comparison of Transport Modes: Road, Railways, Inland Waterways, PLANCO Consulting GmbH, Essen in co-operation with Bundesanstalt für Gewässerkunde, Essen, November 2007, p. 31

• other forms of assistance provided to this mode of transport in some countries, e.g. in Germany, if a ship stays in port due to reasons beyond the control of the shipowner (freezing, low or high water levels, etc.), the crew receives compensation from the state, similar to unemployment benefits . In all modes of transport the transit costs are determined by the assortment and distance structure of transport. Therefore, the most accurate results of comparisons are provided by analysis of transit costs for similar goods at the same routes, since the distance degression varies in respective modes of transport, and the path length is different in selected routes (Tab. 4). The research takes into account some empty runs and various parameters of means of transport. Although the costs calculated for rail and inland waterway transport included the costs of supply and handling, a direct transport by road turned out to be the most expensive (except for one of the examined routes: Rotterdam – Duisburg, where rail transport is the most expensive option). On all the examined routes, transit of bulk cargo using road transport was characterised by the highest costs: EUR 36.29/t on average, which was 3.7 times more than the average cost of rail transport and 4.9 times more than the average cost of waterway transport. Rail transport was the cheapest option on three routes, but the average cost of inland waterway transport were 25% lower than the cost of rail transport (Fig. 12).

Unit costs of transport This difference was much greater in the case of road transport: • the smallest difference – 2.5-fold was found for the Hamburg – Hannover route • the largest difference – more than 8-fold: the Rotterdam – Duisburg route. The advantage cost of inland waterway transport compared to rail transport regarding transit of containers ranged from 17% (Hamburg – Berlin) to 43% (Rotterdam – Duisburg). On average, transit of containers by inland waterway on all the analysed routes was 30% cheaper than by rail transport (Fig. 13).

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 12. Comparison of the cost of transport of bulk cargo on selected routes (EUR/t) / source: own work based on: Economical and Ecological Comparison of Transport Modes: Road, Railways, Inland Waterways, PLANCO Consulting GmbH, Essen in co-operation with Bundesanstalt für Gewässerkunde, Essen, November 2007, p. 36

Fig. 13. Comparison of the cost of transport of containers on selected routes (EUR/TEU) / source: own work based on: Economical and Ecological Comparison of Transport Modes: Road, Railways, Inland Waterways, PLANCO Consulting GmbH, Essen in co-operation with Bundesanstalt für Gewässerkunde. Essen, November 2007, p. 37

The differences in transport costs for transit of containers were lower and amounted to: • on average, transit of containers using rail transport and road transport was 43% and 120% higher, respectively, than the cost of waterway transport • the smallest difference was recorded on the Hamburg – Berlin route: 17% compared to rail transport and nearly 40% compared to road transport • the greatest difference compared to rail transport and road transport occurred on the Rotterdam – Duisburg route (66%) and the Rotterdam – Basel route (over 200%), respectively. The above-discussed external costs of transport increase the advantage of inland waterway transport over rail and road transport.

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Transport costs

External costs

Total

Large river vessel

EUR 12/tonne

EUR 3/tonne

EUR 15/tonne

Small river vessel

EUR 17/tonne

EUR 4/tonne

EUR 21/tonne

Car

EUR 21/tonne

EUR 12/tonne

EUR 33/tonne

Train

EUR 22/tonne

EUR 5/tonne

EUR 27/tonne

Tab. 5. Transport cost over a distance of 350 km using different modes of transport and including external costs / source: own work based on: Inland Navigation in Europe, Market observation 2011, nr 2, Central Commission for Navigation on the Rhine, Strasbourg 2011, p. 39

Fig. 14. Ship that carries drinks to the riverside restaurants / source: materials of the City Council of Utrecht

Research conducted in France to assess the economic effects of the construction of the Seine – Scheldt canal showed that in the case of transit over a distance of 350 km the cost of inland waterway transport is approx. 55% of the cost by rail and road transport for a large ship and approx. 80% (Tab. 5) if the transit is carried out using a small river vessel. After taking into account the advantage of inland waterway transport in external costs, the advantage of this mode over the others increases.

Inland waterway transport in urban logistics Another area of accumulation of problems associated with transport is cities. Implementation of the principles of sustainable development of transport in urban logistics is extremely important for improving the quality of inhabitants’ lives. Inland waterway transport can also be used to a larger extent in this regard, and often without any big investments. Just as in many EU countries, cities located on waterways may begin to implement both passenger and cargo transport, thus reducing congestion in cities and facilitating access to the areas closed for transport13. In the case of cargo transport in large metropolitan areas, the reduction of congestion on roads may be provided through the everyday supply of cities from logistics centres located in river ports using inland waterway transport (Fig. 14). Another new area of use of inland waterway transport in urban areas is waste transport. The European Union produces 2.3 billion tonnes of waste per year, of which 60% is currently transported by trucks. Thinking 13 K. Wojewódzka-Król, Śródlądowy transport wodny w Polsce w świetle europejskiej polityki transportowej [Inland water trans-

port in Poland in the light of European transport policy], "Logistyka" 2012, No. 1.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

about long-term solution to this problem, cities such as Brussels, Lille, Liege, London, Paris, The Hague and others are trying to increase the transport of this type of cargo by water, thereby reducing the congestion in cities, transport costs and CO2 emissions. In the Amsterdam region of the Netherlands, transport of 140,000 tonnes of waste to the landfill in Alkmaar reduces the number of trucks on the roads by 5,500 per year. In the UK, barges carrying garbage replace 100,000 trucks per year14. Another niche that is already used in some countries by inland waterway transport is the transport of paper to supply cities and of waste paper for recycling on the way back. The development of inland waterway transport in the presented areas will not only mitigate the transport problems that are particularly severe in those regions, but also reduce the external costs of transport, which naturally has an impact on the quality of life of societies and the costs of socio-economic development.

Sustainable growth of passenger transport

Inland waterway transport can play an important role as a link in public transport. Evidence for the development of this type of transport is as follows: • location of most major cities at waterways • small requirements for passenger vessels in respect of waterways (great ability to adapt fleets to local conditions) • relatively low requirements for passenger ports • problems with parking lots in city centres • high prices of parking • congestion on the roads • high risk for road safety • closing the centres of many cities for car traffic. As previously mentioned, waterways run through the most crowded areas of cities – their centres, which makes it possible to use them for transport on selected routes. The use of waterbus as an alternative means of public transport is not that much determined by high parameters of the particular waterway. Waterbuses are in fact relatively small passenger ships of shallow draught, often approx. 40 cm, so that they can be used on waterways with technical parameters as well as during summers characterised by low water levels. As a result, the implementation of this concept requires a relatively small capital expenditure on waterways. The use of waterbuses for transport purposes also contributes to mitigation of congestion problems and improvement of traffic flow and safety on urban roads.

Waterbus The condition for success is to treat inland waterway transport in the same way as other modes of transport, in terms of both prices, which must be attractive and comparable to those in other means of transport, and coordination of schedules with the transport needs. This type of transport is generally not large, but can play an important role during periods of peak traffic. In Poland, transport by waterbus is available mainly in cities such as: Bydgoszcz (Fig. 15), Warsaw, Wrocław, Szczecin, Kraków, Gdańsk and Szczecinek. In many cities, waterbuses are treated as part of the urban public transport system as well as one of the main tourist attractions. The popularity of this means of transport can be proven, for example, by 1570 hours of cruises per year in Bydgoszcz, involving more than 40 thousand people15. Commuting to work can also be an important area of use of inland waterway at seaports and shipyards. Shipping often provides the best links in these regions, and the use of passenger ships for this purpose would substantially reduce the peak traffic and associated inconveniences. This type of transport is relatively easy to plan, as the demand is predictable and it can be carried out in cooperation with the economic entities concerned. Regional transport 14 Waste over water, Inland Navigation Europe [online], www.inlandnavigation.org.2008 [access: 10.12.2008]. 15 Bydgoski tramwaj wodny [Waterbus in Bydgoszcz] [online], http://tramwajwodny.byd.pl/ [access: 16.03.2014].

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 15. Solar-powered waterbus / source: K. Wojewódzka-Król

Fig. 16. Water bus stop in Gdańsk / source: materials of ZTM Gdańsk Another form of transit provided through inland waterways is regional transport, where the waterway is shorter than the route of road or rail transport, which ensures shorter time of waterway transport. In Poland, this occurs on the Tri-City – Hel (Fig. 17) and Szczecin – Świnoujście routes. On the Tri-City – Hel route, the ships of Żegluga Gdańska (Gdańsk Navigation) (Fig. 18) carry 0.5 million passengers per season, thus reducing traffic on one of the most congested roads in the Tri-City by approx. 200 thousand cars on 20 sunny days in the season on average.

2.1.2. Seaports

One of the important areas of benefits arising from the development of the lower Vistula River (dolna Wisła) is the ability to solve the escalating problems associated with handling the hinterland of ports in Gdańsk and Gdynia.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 17. Routes of passenger transport from the Tri-City to Hel / source: materials of ZTM Gdańsk

Fig. 18. Catamarans providing regional transport / source: own work

The efficiency of links between ports and hinterland is currently considered a major determinant of competitiveness and, as a result, the chances for further development of the port. Ports that are not sufficiently connected to the hinterland lose some of cargo – as it is taken over by the ports with better connections to the hinterland. In addition, the efficiency of transport in the hinterland is an important factor affecting the cost and safety in transport.

Position of the ports at the mouth of the Vistula River (Wisła) on the Baltic Sea (Bałtyk)

In Poland, it should be a priority to ensure a proper quality of transport in the hinterland of the ports at the mouth of the Vistula River (Wisła). The seaports in Gdańsk and Gdynia currently play a key role in Poland, especially in the handling of containers and dry bulk cargo. As shown in Fig. 19, the ports at the mouth of the Vistula (Wisła) currently account for 66.5% of total turnover. The share of this ports in the handling of containers and dry bulk cargo is as follows: 96.2% and 54.3% (Fig. 20). 32

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 19. The structure of cargo turnover by seaports in Poland in 2014 / source: own work based on: Gospodarka morska w Polsce w 2014 r. [The maritime economy in Poland in 2014], GUS, Warsaw 2015

Fig. 20. The structure of turnover of seaports in Poland in 2014 / source: own work based on: Gospodarka morska w Polsce w 2014 r. [The maritime economy in Poland in 2014], GUS, Warsaw 2015

The seaports in Gdańsk and Gdynia also have a strong position in the port service market in the Baltic Sea (Bałtyk) Basin. In terms of container handling, the Seaport of Gdańsk is ranked second (behind St. Petersburg), whereas the Seaport of Gdynia is fourth among the ports of the Baltic Sea (Tab. 6). With respect to dry bulk cargo, they are ranked 6th and 11th, respectively (Tab. 7). In addition, the Seaport of Gdańsk is the only seaport in Poland on the list of the 20 largest Baltic ports used for handling oil (Tab. 8).

Increase of turnover in ports Seaports at the mouth of the Vistula (Wisła) also belong to the group of the most promising ports of the Baltic Sea. While in the group of the 10 largest container ports the average container handling in the first half of 2014 was 1.4% higher compared to the same period in the previous year, such handling was by 7.4% and 21.9% higher in Gdańsk and Gdynia, respectively. With regard to dry bulk cargo, in 2012–2013 the Seaport of Gdańsk recorded an increase 33

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Seaport (country)

2013

2014

Change (%)

St. Petersburg (Russia)

1270.0

1205.0

–5.1

Gdańsk (Poland)

579.4

622.0

+7.4

Gothenburg (Sweden)

463.0

424.0

–8.4

Gdynia (Poland)

344.4

419.8

+21.9

HaminaKotka (Finland)

323.9

291.8

–9.9

Aarhus (Denmark)

206.5

238.4

+15.5

Klaipeda (Lithuania)

196.7

218.6

+11.1

Helsinki (Finland)

213.1

204.6

–4.0

Riga (Latvia)

183.9

185.9

+1.1

Kaliningrad (Russia)

154.4

179.8

+16.5

Total

3935.2

3988.4

+1.4

Tab. 6. 10 largest container ports in the Baltic Sea (thousand TEU) in 2013–2014 / source: Cathy Isaac, Worth its salt – Gdańsk port’s container traffic development, “Baltic Transport Journal” 2014, No. 5 [online], http://baltictransportjournal. com/pdf-archive/btj-free-on-line-archive,179.html [access: 10/11/2015]

2012

2013

Change (%)

Riga (Latvia)

Seaport (country)

21.4

21.3

–0.5

Ust – Luga (Russia)

16.9

20.0

18.3

Klaipeda (Lithuania)

14.1

14.0

–0.7

Szczecin – Świnoujście (Poland)

10.4

11.7

12.5

Ventspils (Latvia)

11.2

10.2

–8.9

Gdańsk (Poland)

7.3

8.7

19.2

St. Petersburg (Russia)

7.3

8.5

16.4

Rostock (Germany)

6.6

7.6

15.2

Lulea (Sweden)

7.4

7.3

–1.4

Kokkola (Finland)

6.4

6.8

6.3

Gdynia (Poland)

5.6

6.4

14.3

Vysotsk (Russia)

3.3

4.9

48.5

Enstedvaerket (Denmark)

5.0

4.6

–8.0

Raahe (Finland)

4.7

4.2

–10.6

HaminaKotka (Finland)

4.6

4.1

–10.9

Tallinn (Estonia)

4.0

3.3

–17.5

Pori (Finland)

2.7

3.2

18.5

Kaliningrad (Russia)

3.0

0.0

Liepāja (Latvia)

4.6

2.8

–39.1

2.3

2.6

13.0

148.8

155.6

4.6

Oxelösund Total

Tab. 7. Ranking of the 20 largest ports at the Baltic Sea - dry bulk cargo handling (million tonnes) / source: M. Błuś, P. Myszka, Bulkin – The Baltic dry & oil landscape [online], “Baltic Transport Journal” 2014, No. 5 [online], http://baltictrans-portjournal.com/pdf-archive/btj-free-on-line-archive,179.html [access: 10.11.2015]

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

2012

2013

Change (%)

Primorsk (Russia)

Seaport (country)

75.8

63.8

– 15.8

Ust – Luga (Russia)

26.9

39.7

47.6

Sköldvik (Finland)

22.2

22.0

– 0.9

Gothenburg (Sweden)

22.5

20.6

-8.4

Tallinn (Estonia)

19.3

19.0

– 1.6

Brofjorden * (Sweden)

21.3

17.8

– 16.4

Ventspils (Latvia)

16.1

15.5

– 3.7

St. Petersburg (Russia)

14.0

0.0

Vysotsk (Russia)

10.3

11.2

8.7

Gdańsk (Poland)

10.7

11.0

2.8

Būtingė (Lithuania)

8.5

9.0

5.9

Fredericia (Denmark)

8.6

8.2

– 4.7

Statoil-Havnen (Denmark)

7.5

7.4

– 1.3

Riga (Latvia)

7.8

7.1

– 9.0

Klaipeda (Lithuania)

8.3

7.1

– 14.5

Sillamäe (Estonia)

4.1

5.2

26.8

Kaliningrad (Russia)

5.3

4.3

– 18.9

Naantali (Finland)

3.7

4.2

13.5

Oljehamn Nynashamn (Sweden)

2.8

3.1

10.7

Malmo (Sweden)

3.4

2.8

– 17.6

299.9

292.3

– 2.5

Total * estimates

Tab. 8. Ranking of the 20 largest ports at the Baltic Sea – oil handling (million tonnes) / source: M. Błuś, P. Myszka, Bulkin – The Baltic dry & oil landscape [online], “Baltic Transport Journal” 2014, No. 5 [online], http://baltictrans-portjournal.com/ pdf-archive/btj-free-on-line-archive,179.html [access: 10.11.2015]

in cargo handling of 19.2% (higher increase was recorded only in the Port of Vysotsk in Russia), with an average increase of 4.6% in the 20 largest ports of the Baltic Sea. In light of growing turnover, the condition for the seaports at the mouth of the Vistula River (Wisła) to keep a strong position in the port service market is largely to increase the efficiency of transport in the hinterland. This in turn requires increasing the infrastructure potential in the hinterland of these ports. Currently, only road and rail transport is utilised to support those ports’ hinterland (Fig. 21).

Transport in seaport hinterland Road transport has a dominant position in transport to and from the seaports in Gdańsk and Gdynia. Therefore, the growing turnover at ports causes an increase in traffic on roads. As indicated in Tab. 9, it is estimated that in 2005–2014 the number of trucks used in container handling in the analysed seaports increased 3 times (from 176.4 thousand in 2005 to 535.1 thousand in 2014). Taking into account the number of trucks used for the transport of dry bulk cargo, liquid bulk cargo and ro-ro cargo, the number of trucks used for transport from and to seaports in Gdańsk and Gdynia increased from 688.8 thousand in 2005 to 1106.2 thousand in 2014.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 21. The modal share in container handling at seaports in Gdańsk and Gdynia (%) / source: E. Pastori, Modal share of freight transport to and from EU ports, European Union, Directorate-General for Internal Policies, March 2015 [online], http://www.europarl.europa.eu/studies [access: 12.11.2015]

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Container transport

Item

176.4

202.4

268.5

298.5

232.1

258.3

334.0

392.9

450.2

535.1

Transport of dry bulk cargo

304.6

268.2

252.0

211.6

270.0

287.6

297.4

301.8

360.0

345.0

Transport of liquid bulk cargo

153.4

176.9

169.3

143.3

134.1

194.1

148.2

141.1

143.2

160.4

ro-ro transport

54.4

65.1

70.2

68.0

54.1

62.8

63.0

62.2

64.3

65.7

Total

688.8

712.6

759.9

721.5

690.3

802.9

842.6

898.0

1017.7

1106.2

Tab. 9. The estimated number of trucks used to support the ports at the mouth of the Vistula River (Wisła) in the transport with the hinterland in 2005– 2014 by groups of cargo (thousand vehicles) / source: own work based on the data: Roczniki Statystyczne Gospodarki Morskiej [Maritime Economy Statistical Data], GUS, Szczecin

This means over 4,600 vehicles per day during 250 working days. Considering the significant traffic on the Tri-City roads, especially during the summer, this creates a high safety risk. In fact, the number of trucks used for support of ports in the transport with the hinterland may be higher due to the low technical standard of surface of public road network in Poland. This situation means that it is not always possible to make full use of vehicle capacity. Moreover, it is not always possible to reach the destination in a truck using main roads – in accordance with the law on public roads, traffic is allowed for vehicles with the maximum axle load of 11.5 tonnes. Since the middle of 2015, the axle load standard up to 11.5 tonnes has been met by merely 34% of national roads, whereas the axle load standard up to 10 tonnes is met by 53% of the roads. The maximum axle load of 10 tonnes is now met by 48% of regional roads16. Currently, this type of problem occurs, for example, on the Kwiatkowski Overpass (local government road), which leads to the container port in Gdynia, with restrictions to 8 tonnes per axis. This means limited utilization of vehicle capacity. It is estimated that in the case of reduction of axle load to 8 tonnes, the capacity of vehicles is utilised only in 50%17. Considering the weight of transport, this means an increase in the number of runs. 16 The Regulation of the Minister of Infrastructure and Development of 13 May 2015 on the list of national roads and regional

roads that can be used by vehicles with the maximum axle load of 10 t, and the list of national roads that can be used by vehicles with the maximum axle load of 8 t, Journal of Laws 2015, item 802; 2015: gdzie pojadą, a gdzie nie pojadą tiry? [2015: wherewhere trucks can or can not go] [online], http://edroga.pl/prawo/2015-gdzie-pojada-a-gdzie-nie-pojada-tiry-090111305 [access: 02.10.2015]. 17 Polska: kraj pustych ciężarówek. Jest skarga na ograniczenia drogowe [Poland: the country of empty trucks. There is a complaint regarding road restrictions], "Gazeta Prawna" [online], http://m.dziennik.pl/auto/news-auto/polska-kraj-pustych-ciezarowekjest-skarga-na-ograniczenia-drogowe [access: 15.10.2015].

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 22. The average daily increase in traffic on the national roads in 2010 by province (2005 = 100%) / source: own work based on: K. Opoczyński, Synteza wyników GPR 2010 [Synthesis of GPR 2010 results], Transprojekt – Warszawa sp. z o.o., Warsaw 2011 [online], http://www.gddkia.gov.pl/userfiles/articles/g/GENERALNY_POMIAR_RUCHU_2010/0.1.1.5_ Synteza_GPR_2010.pdf [access: 12.11.2015]

Fig. 23. Average daily load of roads in the hinterland of ports in Gdańsk and Gdynia / source: Strategia transportu i mobilności obszaru metropolitalnego do roku 2030. Diagnoza systemu transportowego [Transport and mobility strategy in the metropolitan area by 2030. Diagnosis of the transport system], Fundacja Rozwoju Inżynierii Lądowej, Gdańsk, 2014, p. 64

Congestion on the roads Considerable intensity of vehicle traffic in connection with support of the ports at the mouth of the Vistula River (Wisła) causes considerable intensity of use of the road infrastructure in the Pomerania Province, which is confirmed by tests measuring the average daily traffic on the national road network carried out by GDDKiA. In 2010, the average daily traffic on these types of roads in the Pomerania Province was 10,436 vehicles per day, and a higher rate was recorded only in five provinces18. However, in 2005–2010 an increase in traffic of 31% was recorded in the Pomerania Province, and as shown in Fig. 22, it was one of the highest rates. In the immediate vicinity of seaports traffic exceeds 50 thousand vehicles per day (Fig. 23). 18 K. Opoczyński, Synteza wyników GPR 2010 [Synthesis of GPR 2010 results], Transprojekt – Warszawa sp. z o.o. Warsaw 2011

[online], http://www.gddkia.gov.pl/userfiles/articles/g/GENERALNY_POMIAR_RUCHU_2010/0.1.1.5_Synteza_GPR_2010. pdf [access: 12.11.2015].

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Rail transport The hinterland of the examined ports also shows an increased use of the railway infrastructure (Tab. 10). It is estimated that the number of trains used in container transport to support the seaports at the mouth of the Vistula River (Wisła) increased from 2.4 thousand in 2005 to 7.1 thousand in 2014. However, with regard to handling of dry bulk and liquid bulk cargo, the number of trains increased in 2005–2014 from 11.5 thousand to 12.6 thousand. Therefore, during the analysed period the number of trains required to support the seaports increased from 13.9 thousand to 19.7 thousand in total. As a result, the capacity of railway lines, even in off-peak hours, is fully used (Fig. 24). Under such a dynamic increase of load of the road and rail infrastructure, both these modes already have problems with ensuring a sufficient standard of services, and if the forecast of handling is true, the intensity of use of the road and rail transport infrastructure will be even greater in the hinterland of ports.

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Container transport

Item

2.4

2.7

3.6

4.0

3.1

3.4

4.5

5.3

6.0

7.1

Transport of dry bulk cargo

6.6

5.7

5.4

4.6

5.8

6.1

6.4

6.5

7.7

7.4

Transport of liquid bulk cargo

4.9

5.6

5.4

4.6

4.3

6.2

4.7

4.5

4.6

5.2

Total

13.9

14.0

14.4

13.2

15.8

15.5

16.3

18.3

19.7

Tab. 10. The estimated number of trains used to support the ports at the mouth of the Vistula River (Wisła) in the transport with the hinterland in 2005– 2014 by groups of cargo (thousand trains) / source: own work based on the data: Roczniki statystyczne gospodarki morskiej (Maritime Economy Statistical Data), GUS, Szczecin

Fig. 24. Utilization of railway capacity in 2013 in off-peak hours / source: Strategia transportu i mobilności obszaru metropolitalnego do roku 2030. Diagnoza systemu transportowego [Transport and mobility strategy in the metropolitan area by 2030. Diagnosis of the transport system], Gdańsk 2014, p. 105

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Forecast of turnover in ports Forecasts for 2050 predict a fourfold increase of turnover in seaports. Polish seaports are preparing for multiple increase in cargo handling by making serious investments, building new terminals and deepening ports, so that the largest ships used around the world can call at them. However, their position in the future will be determined by hinterland transport.

Problems in hinterland The increase in road transport will result in: more congestion on the roads, significant difficulties in passing through the port cities, reduced road safety, an increase in operating costs, as well as an increase in emissions, which in turn will lead to more adverse climate changes. This risk is even more serious as there are fears that rail transport, which is a mode with clearly less degrading impact on the environment, will not be able to ensure a sufficient standard of services for such a large demand for cargo transport in the hinterland of seaports. The existing restrictions on railway will be a barrier to increase of use of this mode of transport. Therefore, there are serious concerns that road and rail transport will not be able to competitively handle the expected demand for transport from and to seaports. These problems largely apply to the Pomerania Province, where the main inbound and outbound traffic is focused in respect of the routes to and from the seaports at the mouth of the Vistula River (Wisła). The region of the Pomerania Province is characterized by a relatively low infrastructure potential, as compared to the other provinces. In most provinces the density of public roads is considerably higher than in the Pomerania Province. This problem is even more visible with respect to public roads with paved and improved paved surfaces (Fig. 25). The capacity of railway lines is determined mainly by the share of double-track and larger lines in the total length of the lines in operation. As shown in Fig. 26, the density of multi-track lines in the Pomerania Province is 2.1 km per 100 km2 and is lower than in most provinces.

Fig. 25. The density of public roads with hard surface and improved hard surface in 2013 (km/100 km2) / source: Transport – wyniki działalności w 2013 roku [Transport performance in 2013], GUS, Warszawa 2014

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

In this case inland waterway transport should be included in support of the hinterland of the seaports at the mouth of the Vistula River (Wisła). The use of this mode to support the ports at the mouth of the Vistula River (Wisła) would significantly contribute to relieve traffic on the roads.

Inland navigation Inland waterways are not affected by congestion; they have large reserves of traffic capacity, and a large carrying capacity of the fleet and its mass character allow for quick relief of congestion in ports. One large sea vessel can be handled by 60 river vessels (225 trains and 9000 cars), which makes it possible to further increase the handling efficiency (Fig. 27). Assuming the minimum number of layers of containers (2 layers) on each ship, which defines the threshold of profitability, e.g. a “Europe” type barge (Johann Welker) can carry 48 TEU, and a large self-propelled barge (Groβmotorschiff, GMS) – 104 TEU. Assuming that 1 container corresponds to an average of 1.6 TEU, the aforementioned vessels can replace: 30 and 65 trucks, respectively. However, modern container ships, for example, a large container self-propelled barge (Jowi-Klasse) with 2 layers on board has a transport capacity corresponding to 204 TEU, which allows replacing 127 trucks (Tab. 11). Significant benefits in relieving roads can also be achieved by using inland waterway transport of bulk cargo to and from the seaports. For example, the previously mentioned standard self-propelled barge (Johann Welker)

Fig. 26. The density of double-track and larger railway lines in 2013 (km/100 km2) / source: Transport – wyniki działalności w 2013 roku [Transport performance in 2013], GUS, Warszawa 2014

Fig. 27. The potential of inland waterway transport to support the increased turnover of seaports / source: Inland Water Transport by numbers 2015, INE 2015

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Width (B)

Max. draught (T)

Number of container layers on board

Number of TEU per layer

80–85 m

9.5 m

2.5–2.8 m

2–3

48–72

110 m

11.45 m

2–5

104–260

135 m

11.45 m

2–5

13–340

135 m

17 m

2–6

102

204–612

270 m

22.8 m

2–3

180

360–540

193 m

34.2 m

2–3

180

360–540

Length (L) Europe type barge (Johann Welker) Large self-propelled barge (GMS) Very large self-propelled barge (ÜGMS) Large container self-propelled barge (Jowi-Klasse) Push-tow (pushing vessel + 2 barges pushed in each of 3 rows) Push-tow (pushing vessel + 3 barges pushed in each of 2 rows)

TEU in total

Tab. 11. The carrying capacity of inland waterway vessels used for container transport / source: Eignung der Binnenwasserstraßen für den Containertransport Suitability of Inland Waterways for Container Transport, Verein für europäische Binnenschiffahrt und Wasserstraßene. V. Association for European Inland Navigation and Waterways, Duisburg 2011/2012 [online], www.vbw-ev.de [access: 21.10.2015]

has a carrying capacity of 1,500 tonnes, and the tonnage of a GSM large self-propelled barge is 3000 tonnes19. The carrying capacity of these vessels can therefore replace 60 and 120 trucks, respectively, each with a load capacity of 25 tonnes. On the other hand, push-tows used on the Rhine (Ren), consisting of a pushing vessel and 4 or 6 pushed barges, can carry 11 and 16 thousand tonnes, respectively20. Such push-tow can replace 440 to 640 trucks. Currently, inland waterway transport does not play any role in the support of the seaports in Gdańsk and Gdynia, in handling of both bulk cargo and general cargo21. A different situation is observed in countries of Western Europe. In these countries, inland waterway transport plays an important role in the support of seaports. The position of inland waterway transport is particularly strong in the largest European ports in terms of container handling: Rotterdam, Hamburg, Antwerp and Bremerhaven (Fig. 28).

Inland navigation in support of the EU ports In Europe’s largest container port – Rotterdam, container handling in 2014 amounted to 12.1 million TEUs, of which 8.0 million TEUs were transported to and from the hinterland (Fig. 29). As shown in Fig. 30, in 2002 to 2014 the share of inland navigation in container handling in the Port of Rotterdam strengthened and increased from 32.8% to 35.7%, while the share of road transport in the analysed period decreased from 57.9% to 53.4%. As shown in Fig. 30, according to the development strategy, by 2020 inland navigation in Rotterdam will support 41% of container turnover, and in 2035 this share will increase to 45%, while decline in the share of road transport to 35% is expected by 35%. Inland waterway transport in the hinterland of the seaport in Antwerp also has a strong position. In 2014, the share of this mode of transport in support related to container transit was 36%, that is by 4.7 pp (percentage point) higher than in 2002. It is expected that by 2020 this share will increase to 42%. A different trend can be observed in road 19 Verkehrswirtschafftlicher und ökologischer Vergleich der Verkehrsträger Schiff, Straβe, Schiene, Teil B: Besondere Aspekte der

Binnenschifffahrt, PLANCO Consulting GmbH, Essen 2007, p. 78. 20 The power of inland navigation. The future of freight transport and inland shipping in Europe 2010–2011, Inland Shipping Information Agency (BVB), Rotterdam. 21 Currently, inland waterway transport in Poland is relatively more important only in support of the hinterland of the set of seaports in Szczecin - Świnoujście. It is estimated that for many years this share has been approx. 8% on average.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

transport. In 2002–2014 the share of this mode in support of container turnover at the Port of Antwerp decreased from 60.2% to 57%, and it is expected that in 2020 it will fall to 43% (Fig. 31). In the Seaport of Bremerhaven about 40% of the total handled cargo is carried to and from the hinterland (Fig. 32). Inland waterway transport also plays an important role in support of the hinterland of this port. In 2005– 2014 this transport increased from 35 to 92 thousand TEU. In contrast to road transport, inland waterway transport is strengthening its position in support of the port. As shown in Fig. 33, in 2005–2014 the share of this mode in container handling increased from 2.6% to 3.9%, while the share of road transport decreased from 60.1% to 49.3%. In the discussed ports – Rotterdam, Antwerp and Bremerhaven – there is a clear tendency for strengthening of the position of inland waterway transport in support of container turnover, and its share in this area of use is increasing, although it is different in respective ports. At the same time, the share of road transport in support of container turnover is decreasing. These trends are in line with the policy of sustainable development of transport in Europe and can clearly be an example for solutions for Poland. The relatively small share of inland waterway transport in respect of containers is observed in the Port of Hamburg, which is the second most important point in terms of container handling. It is currently 2% and it is expected that this number will be maintained until 2025. In 2014, inland waterway vessels transported 116 thousand TEU (Fig. 34, 35) while supporting the hinterland of the Port of Hamburg. However, the forecasts show that in

Fig. 28. The largest container ports in Europe in terms of container handling in 2014 (million TEU) / source: Port statistics. A wealth of information. Make it happen [online], https://www.portofrotterdam.com/en/the-port/facts-figures-about-theport [access: 14.11.2015]

Fig. 29. Container handling in Rotterdam and the modal share in container transport in the hinterland in 2014 (million TEU), source: Port of Rotterdam. Modal split martieme containers [online], https://www.portofrotterdam.com/sites/default/ files/Modal%20split%20maritieme%20containers%202014-%202011.pdf [access: 14.11.2015]

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

* forecast Fig. 30. Trends of changes and forecast of the share of road and inland waterway transport in container handling at the Port of Rotterdam / source: Europääische Binnenschifffahrt Marktbeobachtung 2006-2; Port of Rotterdam. Modal split maritime containers [online], https://www.portofrotterdam.com/sites/default/files/Modal%20split%20maritieme%20containers%20 2014-%202011.pdf [access: 29.07.2015]; P. Langen, Towards efficient and sustainable transport chains: the case of the port of Rotterdam [online], http://dev.sefacil.com/sites/sefacil.com/files/Toward%20efficient%20and%20sustainable%20transort%20 chains%20-%20DE%20LANGEN.pdf [access: 29.07.2015]

* forecast Fig. 31. Trends of changes and forecast of the share of inland waterway and road transport in container handling at the Port of Antwerp / source: Europääische Binnenschifffahrt Marktbeobachtung…; 2012 Facts & figures. Antwerp Port Authority, June 2013 [online], www.portofantwerp.com [access: 26.04.2014]; Annual Report 2012 – Foreland and Hinterland [online], www.portofantwerp.com/en/foreland-and-hinterland [access]: 26.04.2014; 2014 Facts & Figures. Port of Antwerp, June 2014, [online] http://www.portofantwerp.com/sites/portofantwerp/files/Cijferboekje_2013_UK.pdf [access]: 25.11.2014; [online] http://www.havn.no/SiteAssets/Lists/News/EditForm/Antwerp%20Sustainability%20Report%20Kris%20de%20Kraene.pdf [access: 14.11.2015]

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 32. Container handling in Bremerhaven and the modal share in container transport in the hinterland in 2014 (thousand TEU) / source: Facts Figures 2014 the ports of Bremen/Bremerhaven [online], http://www.bremenports.de/en/location/statistics/port-facts-and-figures [access: 14.11.2015]

Fig. 33. Trends of changes of the share of inland waterway transport in container handling at the Port of Bremerhaven / source: Facts Figures 2014 the ports of Bremen/Bremerhaven [online]; http://www.bremenports.de/en/location/statistics/portfacts-and-figures [access: 14.11.2015]

Fig. 34. Container handling in Hamburg and the modal share in container transport in the hinterland in 2014 (thousand TEU) / source: Port of Hamburg. Statistiken. Modal-Split im Container-Hinterlandverkehr [online], http://www.hafenhamburg.de/de/statistiken/modalsplit [access: 20.10.2015]

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 35. Trends of changes in the share of road and inland waterway transport in container handling at the Port of Hamburg / source: Hafen + Transport Intermodal. Containerticker, “Schiffahrt Hafen Bahn und Technik” 2014, nr 7; 2006, nr 1; 2008, nr 1 [online] http://www.schifffahrtundtechnik.de/index.php?id=6 [access: 31.07.2015]; Port of Hamburg [online], http://www.hafen-hamburg.de/de/statistiken/containerumschlag [access: 31.07.2015]; Hamburg halt Kurs. Der Hafenentwicklungsplan bis 2025, Hamburg 2012 [online], http://www.hamburg-port-authority.de/de/presse/broschuerenund-publikationen/Documents/Hafenentwicklungs-plan.pdf [access: 31.07.2015]; Der Hafen Hamburg auf einen Blick, Hamburg, May 2015 [online], https://www.hk24.de/blob/hhihk24/standortpolitik/downloads/1145192/d36f01d7beae8996d2019552c50cf9b5/Hafen_Hamburg_Zahlen_und_Fakten_Stand_Februar_200952063-data.pdf [access: 31/07/2015]

Fig. 36. The share of inland waterway transport in support of the Port of Hamburg in 2013 by groups of cargo (%) / source: Prognose des Umschlagspotenziales und des Modal Splits des Hamburger Hafens für die Jahre 2020, 2025 und 2030, Intitut für Seeverkehrswirtschaft und Logistik, Bremen, May 2015

2025, compared to transport in 2010, the transport of containers using inland navigation will increase 3-fold (to 300 thousand TEU)22 in the hinterland. Compared to container handling, the role of inland waterway transport is incomparably greater in support of the Port of Hamburg in the transport of ro-ro, dry bulk and liquid bulk cargo. As shown in Fig. 36, in 2013 17% of ro-ro cargo, 24% of dry bulk cargo and 41% of liquid bulk cargo were supported by the port using waterway transport. Inland waterway transport in Western Europe has an important position in multimodal logistic chains, particularly in the hinterland of seaports. There is even a belief that without cooperation with inland waterway transport the largest ports in Europe would not have such a strong position on the port service market. 22 Hamburg hält Kurs. Der Hafenentwicklungsplan bis 2025, Hamburg, Oktober 2012 [online], http://www.hamburg-port-

authority.de/de/presse/broschueren-und-publikationen/Documents/HEP_2025_Summary_g.pdf [access: 20.10.2015].

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

These experiences should therefore be an argument for including inland navigation into support of seaports’ hinterland also in Poland. In particular, significant benefits can be achieved by incorporating this mode of transport into support of the hinterland of the seaports at the mouth of the Vistula River (Wisła). In light of the above-presented problems in connection with excessive overload of the road and rail transport infrastructure, the use of inland waterway transport in the hinterland of seaports in Gdańsk and Gdynia would make it possible to achieve additional benefits related to reduction of the following costs: • effective costs of transport • of accidents in connection with the improvement of safety on the roads • of environmental degradation • of maintenance of roads in connection with the reduction in the rate of their destruction.

2.1.3. Logistics centre Logistics centres in river ports The construction of the cascade at the lower section of the Vistula River (Wisła) will make it possible to incorporate inland waterway transport into support of seaports in Gdańsk and Gdynia, including transport of containers, and will contribute to the development of the river ports located at the waterway and to a change of their functions. As demonstrated by the European experience, as a result of an active participation of inland navigation in handling of container cargo, the river ports as natural hubs began to transform into multifunctional centres that provide logistics services, including for: • transport, handling • warehouse management • sorting, picking shipments • processing • customs clearance, transport insurance. Among the river ports in Europe, the Port of Duisburg has the biggest role in the fulfilment of logistics functions. However, the European experience shows that logistics functions are also fulfilled in ports located at waterways of lower technical parameters. River ports in Europe are increasingly adapted to the role of tri-modal logistics centres (Ger. Trimodalen Logistikzentren). 750 river ports are located on inland waterways in the EU, of which over 100 are equipped with container terminals, and this number is still growing.

Inner ports Moreover, river ports in Europe are perceived as an attractive place to create the so-called inner ports, which are used for concentration of cargo and further distribution (Fig. 37). Intermodal terminals, situated far away from sea ports, are directly connected to seaports through a mode of transport of high capacity23. The lack of reserves of available space in the biggest European seaports often prevents the expansion of intermodal terminals in their area. Therefore, it is necessary to limit the logistical operations at sea ports as much as possible and transfer the distribution operations outside the direct port area, particularly in relation to container handling24. 23 S. Grulkowski, Analiza celowości i możliwości budowy "suchego portu" w pobliżu Trójmiasta [Analysis of usefulness and ability

to build a "dry port" near the Tri-City] [online], http://www.innowrota.pl/sites/default/files/images/S.Grulkowski1.pdf [access: 05.02.2014]. 24 In accordance with the dry port concept in the region of the Lower Rhine (dolny Ren), there are plans to construct a river port by 2016 for EUR 100 million, with a capacity of 1 million TEU, which would integrate the streams of containers from sea ports and inland terminals (including those located in river ports). This port is to be adapted to support push-tows with a capacity of 1000 TEU, which would be divided into homogeneous groups of containers and then transported to sea terminals. A. Beyer, Nouvelle étape dans le développement du conteneur Renan, “Navigation Ports & Intermodalité” 2012, No. 1; Transport morski i śródlądowy [Maritime and inland transport], "Biuletyn Informacyjny" 2012, No. 7–8.

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 37. Inner port as a buffer for seaports at the mouth of the Vistula River / source: own work

Solec Kujawski This type of logistics platform at the lower Vistula River (dolna Wisła) could be located in Solec Kujawski. This location would be supported by good infrastructure connections. This is because Solec Kujawski has: • a direct connection to international waterways E40 and E7 • a connection to expressways S5 and S10 as well as A1 motorway • access to railway line 018 Kutno – Piła. Pre-assessments show that the impact of the logistics functions of the port in Solec Kujawski would cover cities such as: Poznań, Łódź, the Tri-City, and locations within a radius of 200 km from Solec Kujawski25. The creation of a multimodal platform in the area of Solec Kujawski – Bydgoszcz Łęgnowo was entered into the development strategy for the Kuyavia-Pomerania Region for 2014–2020 and for the County of Bydgoszcz26. At the first stage of construction there are plans to develop land with an area of approx. 25–30 ha (in the final version: 70–90 ha). The area of inland port is to include approx. 3 ha; its annual handling capacity is to be 750 thousand tonnes, with the handling capacity of the container terminal of 1,700 TEU27.

Benefits for the region The construction of the logistics centre in Solec Kujawski would naturally improve the handling of container cargo arriving to seaports in Gdańsk and Gdynia, and also represents a significant opportunity for the development of the Kuyavia-Pomerania Region.

25 J. Kajda, Plany budowy terminalu multimodalnego w Solcu Kujawskim [Plans to build a multimodal terminal in Solec

Kujawski], "Polska Gazeta Transportowa" 2015, No. 14. 26 Strategia rozwoju województwa kujawsko-pomorskiego do roku 2020 – Plan modernizacji 2020+ [Development strategy for the Kuyavia-Pomerania Province by 2020 – Modernisation plan 2020+], Toruń, 21 October 2013. 27 Śródlądowy terminal w Solcu Kujawskim? [Inland terminal in Solec Kujawski?] [online], http://www.zegluga.wroclaw.pl/news. php?readmore=1633 [access: 04.08.2015].

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 38. The average share of renewable energy in final energy consumption in the EU countries (%) / source: Sustainable development in the European Union. 2013 monitoring report of the EU sustainable development strategy, Eurostat, Statistical Books, 2013 Edition, European Union, Luxembourg 2013

It is expected that the creation of the logistics centre in Solec Kujawski can contribute to: • reduction of unemployment (it is assumed that the demand for labour to develop the land for the modal integrated logistics centre28 with an area of 100 ha ranges from 837 to 1013 workers)29 • increase in the investment attractiveness of the region and, as a result, new production and trade investments made in the region • solving the problems with transport in the region resulting from the excessive dispersion of transport, forwarding and logistics services, the excessive number of transits using road transport and poor use of other modes of transport • increase in the use of production facilities, including a loading dock (a length of 60 m) and the area of storage yards (3000 m2)30, which are currently a financial burden for the local budget • growth of income to the local budget.

2.2. Hydropower generation

The idea of comprehensive modernization of the lower Vistula River (dolna Wisła) is also supported by the ability to obtain green electricity. This project is very clearly in line with the directions of contemporary climate and energy policy of the EU. As already mentioned, one of the primary objectives of this policy is to increase by 2020 the share of renewable energy to 20% (Fig. 38) in the final energy consumption.

EU energy policy The share of energy from renewable sources of 20% in final energy consumption is an average value for the whole EU. With regard to the individual member states there are different lower limits of the share of energy from 28 In contrast to distribution centres, integrated logistics centres (ILCs) are equipped with infrastructure for intermodal

handling. ILCs are therefore connected with the infrastructure of various modes of transport and equipped with a container terminal. Distribution centres are supported only by road transport. 29 L. Mindur, G. Szyszka, Metodyka oceny i wyboru uwarunkowań ekonomicznych budowy i eksploatacji Zintegrowanych Centrów Logistycznych [Methodology for assessment and selection of economic conditions for the construction and use of Integrated Logistics Centres] [in:] Technologie transportowe [Transport technologies], ed. L. Mindur, Instytut Technologii Eksploatacji – Państwowy Instytut Badawczy, Warszawa – Radom 2014, pp. 442, 460. 30 A. Bolt, P. Jerzyło, Uwarunkowania żeglugi śródlądowej na Wiśle od Warszawy do Gdańska [Conditions of inland navigation on the Vistula from Warsaw to Gdańsk], "Acta Energetica" 2013, No. 2/15.

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 39. Changes in the share of renewable energy in final energy consumption in Poland in 2004–2013 (%) / source: Share of renewable energy in gross final energy consumption, Eurostat [online], http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=t2020_31&plugin=1 [access: 31.07.2015]

renewable sources, which depend on the existing structure of energy carriers, the existing use of renewable energy carriers and the potential needed for the production of renewable energy in the particular country. Because of the conditions in Poland31, the lower limit of the share of renewable energy in final energy consumption was set at 15%, which is lower than the average for the EU-28. Assumptions of the 2020 climate and energy policy are not final, because according to the current policy conditions should be created for further reductions, including further long-term improvement of energy efficiency32. In October 2014, the Council of Europe agreed a new framework for climate and energy policy of the European Union for 2020–2030. With regard to renewable energy sources it was decided that in 2030 the share of energy from renewable sources in final energy consumption in the EU should be at least 27% (an increase by 7 pp compared to 2020). This objective is binding for the whole EU, but it is not obligatory for individual member states33.

Renewable energy in Poland In 2013, the energy target of increasing the share of renewable energy in final energy consumption in Poland was realized at 11.3% (Fig. 39), while the average in the EU countries reached the level of 15%, and in countries such as Estonia – 25.6%, Lithuania – 37.1%, Latvia – 37.1%, and Sweden – 52.1%34.

Hydropower In light of the need to increase energy production from renewable sources, the development of hydropower can be considered one of solutions. This solution is one of the ways to achieve green electricity while providing many other benefits: • reducing the consumption of raw materials such as coal or oil • providing savings on the cost of transport of energy resources and external costs • reducing the environmental pollution; hydropower does not emit harmful substances such as dust and 31 80.4% of energy production in Poland is currently based on the use of coal and lignite, while the average share in the EU

countries is 20.7%, acc. to: EU Energy in figures, Statistical Pocketbook 2014, Luxembourg 2014. 32 Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, OJ L 315/1 of 14.11.2012. 33 Konkluzje w sprawie ram polityki klimatyczno-energetycznej do roku 2030 [The 2030 climate and energy framework, the European Council conclusions], Rada Europejska, Bruksela, 23 October 2014. SN 79/14 [online], http://www.consilium.europa. eu/uedocs/cms_data/docs/pressdata/PL/ec/145369.pdf [access: 16.03.2015]. 34 Share of renewable energy in gross final energy consumption, Eurostat [online], http://ec.europa.eu/eurostat/tgm/table.do? tab=table&init=1&language=en&pcode=t2020_31&plugin=1 [access: 31.07.2015].

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

greenhouse gas, does not produce waste and pollution (of soil and water) and noise (each MWh of electricity generated in a hydropower plant reduces the annual environmental burden by approx. 15 kg of sulphur dioxide, 7 kg of nitric oxide and 150 kg of fly ash, which are generated by coal combustion in thermal power plants) • ensuring the availability of energy from flowing or raised water regardless of weather conditions, changing according to the time of day or seasons • unlike other renewable energy sources (wind or solar), hydro energy can be accumulated in reservoirs and processed multiple times (cascades of barrages, pumped storage plants) • the average time of use of installed capacity in hydropower plants is approx. 4,000 h/year and is twice higher than in wind turbines • the technology of energy production in hydropower plants, which has been perfected for many years, is characterized by high efficiency of devices (80–90%), unattainable in the processing of other renewable energy sources, and a very long service life of devices (there are turbines operating continuously for over 100 years) • energy production through the use of water is many times cheaper than in conventional power plants • hydropower plants can operate with variable loads, and their activation or deactivation takes a very short time (up to a few minutes); therefore, they can be used to control a power system to provide rational use of installed capacity in thermal power plants • they are of great importance as a contingency reserve • in the case of the Lower Vistula Cascade, power plants would supply mainly the areas located in the northern and north-eastern parts of the country, which would significantly reduce the losses on transmission of energy from the southern Poland, where the main sources of electricity generation are located35. So far, the share of hydropower in total energy obtained from renewable sources is small. In 2013 it was 2.46% in Poland (Fig. 40), while the average in the EU-28 was significantly higher and amounted to 16.6% in the analysed period36. Also, the share of hydropower in installed capacity of power plants (MW) in Poland is significantly lower than in most of the EU countries (Fig. 41). This is primarily a consequence of the fact that Poland makes the least use of energy potential of rivers in Europe. It is estimated that Poland uses approx. 11% of technical hydropower potential, compared to almost 100%, 84% and 80% in France, Norway and Germany, respectively37.

Capital expenditure The results of research on the capital expenditure necessary for the construction of hydropower plants is not always presented in an objective manner in relation to the expenditure for the construction of power plants based on other technologies used for obtaining renewable energy. As shown in Fig. 42, capital expenditure per 1 MW of installed capacity in hydropower plants are the highest compared with other technologies applied in plant construction, e.g. these costs are 2.8 times higher than in the case of onshore wind turbines, and by 36% higher than for offshore wind turbines. However, the high level of capital expenditure per 1 MW in the case of hydropower plants is a consequence of connections with water management and inclusion in these expenditure of other expenses not directly associated with hydropower, but with other water users and consumers (for example, the construction of the barrage is of importance for the power sector as well as inland waterways, agriculture, forestry, flood protection and water supply for municipal economy and industry). 35 D. Gronek, I. Ankiersztejn, Wykorzystanie potencjału hydroenergetycznego dolnej Wisły w świetle 60-letniego doświadczenia

firmy Hydroprojekt [The use of hydropower potential of the lower Vistula in light of 60 years of experience of Hydroprojekt], "Energetyka Wodna" 2012, No. 1. 36 Primary production of renewable energy by type. Eurostat [online], http://ec.europa.eu/eurostat/tgm/refreshTableAction. do?tab=table&plugin=1&pcode=ten00081&language=en [access: 31.07.2015]. 37 Hydrodynamiczny model dolnej Wisły z uwzględnieniem koncepcji kaskady stopni piętrzących [Hydrodynamic model of the lower Vistula considering the concept of cascade of barrages], collective work edited by M. Szydłowski, Gdańsk, April 2014.

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 40. The share of renewable energy carriers in total energy obtained from renewable sources in 2013 in Poland / source: Energia ze źródeł odnawialnych w 2013 r. [Energy from renewable sources in 2013], GUS, Warsaw 2014

Fig. 41. The share of hydropower in installed capacity of power plants in the EU countries in 2012 (%) / source: EU Energy in figures. Statistical Pocketbook 2014, Luxembourg 2014

As previously mentioned, hydropower plants are characterized by a significant advantage in terms of unit costs of operation. They have the lowest operating cost of generation of 1 MWh (without depreciation). The advantage of hydropower plants is almost 14.3-fold over agricultural biogas power plants, and 5.5-fold over onshore wind turbines, as shown in Fig. 43. As a result, the total unit cost (Fig. 44), including the annual cost of capital and depreciation as well as operating costs for electricity generation in hydropower plants, is PLN 484/MWh and is comparable with the unit costs of energy from other renewable sources, even when the capital expenditure takes into account expenses relating to water management. The actual unit cost of electricity generation by hydropower plants in the case of separation of costs related to water management would be much lower.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 42. Capital expenditure per 1 MW of installed capacity (million/MW) / source: Wpływ energii wiatrowej na wzrost gospodarczy w Polsce [The impact of wind energy on economic growth in Poland], a report prepared by Ernst & Young in cooperation with Polskie Stowarzyszenie Energetyki Wiatrowej and European Wind Energy Association, March 2012

Fig. 43. The unit cost of operation in PLN/MWh / source: Wpływ energii wiatrowej na wzrost gospodarczy w Polsce [The impact of wind energy on economic growth in Poland], a report prepared by Ernst & Young in cooperation with Polskie Stowarzyszenie Energetyki Wiatrowej and European Wind Energy Association, March 2012

Fig. 44. The unit cost of electricity generation in PLN/MWh / source: Wpływ energii wiatrowej na wzrost gospodarczy w Polsce [The impact of wind energy on economic growth in Poland], a report prepared by Ernst & Young in cooperation with Polskie Stowarzyszenie Energetyki Wiatrowej and European Wind Energy Association, March 2012

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

The research carried out in 201538 shows that in 2020 none of the analysed renewable energy technologies will meet the condition of the positive difference between LACE and LCOE39, but considering the energy policy and other non-economic considerations, it is possible to select the best renewable energy technologies under the given conditions. Hydropower is ranked second after wind energy in these comparisons. By 2040 the analysed indicators will improve, primarily because of lower capital expenditure, but the relations will remain unchanged – hydropower will still be ranked second on average, which, considering the regional specificity, i.e. twice better possibilities of utilization of installed capacity in hydropower plants than in wind farms in Poland40, and other previously discussed advantages of hydropower plants, puts them in a very good position among renewable energy sources.

Energy potential of the lower Vistula (dolna Wisła) Taking into account the advantages of hydropower plants and considering the numerous controversies associated with the use of nuclear power plants in Poland, the energy potential of rivers must not be underestimated. More than 80% of the energy resources of inland waters are connected with the Vistula River (Wisła) and its tributaries (the Oder River (Odra) basin has approx. 18% of the national hydropower potential)41. The Lower Vistula Cascade may play a big role in increasing the share of hydropower in the national power system. This is because the lower Vistula (dolna Wisła) represents 50% of the total hydropower potential in Poland42. Significant energy potential of the lower Vistula (dolna Wisła) is a result of the larger water resources at this section thanks to the fact that it is supplied with waters of the Bug River and the Narew River. It is estimated that the implementation of the Lower Vistula Cascade (KDW) will enable the production of electricity (without taking into account the existing barrage in Włocławek) in the amount of 2,895.2 GWh (at the maximum flow rate through the power plant of 900 m3/s) to 3,558.2 GWh (at the maximum flow rate of 1800 m3/s). The total production of electricity with the energy generated by the power plant in Włocławek would be 3428.4–4221.1 GWh. In 2013, renewable energy carriers in Poland were used to produce 17,066.5 GWh of electricity, including 2439.1 GWh in hydropower plants, as shown in Fig. 45. The volume of electricity produced through the cascade would increase more than twice, to 5334.3 or 5997.3 GWh. Taking into account the current electricity consumption in households (2014 – 28 429 GWh)43, for example, this would make it possible to secure their demand for electricity even in 21%. The Lower Vistula Cascade would contribute not only to obtaining green electricity and more efficient securing of the energy needs in Poland, but also to more effective implementation of the targets of the modern climate and energy policy.

38 Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2015, EIA,

Independent Statistics & Analisis, USEnergy Information Administration, June 2015. 39 LCOE (Levelized Cost Of Energy) shows the average unit cost of energy generated. It takes into account many factors, i.e. capital expenditure, costs of fuel, operation and maintenance of facility and funding. This method is commonly used to compare different ways of obtaining energy. The result is usually expressed in dollar/megawatt-hour. A more useful tool for making specific decisions at the project level may be the LACE [Levelized Avoided Cost of Electricity] method, which compares the final cost and the average annual production of a new power plant at the expense of the existing generation assets. By comparing LACE and LCOE, it is possible to get a more accurate image of the resource value to the grid. When LACE for a specific technology exceeds LCOE at a specific time and place, it means that the technology will be generally more attractive in economic terms; if the difference between LACE and LCOE is negative, the investment would have a lower value for the power grid. 40 Levelized Cost... 41 W. Kułakowski, Hydroenergetyka w Polsce – stan obecny, perspektywy rozwoju [Hydropower generation – the current status and development prospects], "Gospodarka Wodna" 2001, No. 3. 42 Hydrodynamiczny model dolnej Wisły... 43 Mały rocznik statystyczny Polski 2015 [Concise Statistical Yearbook of Poland 2015], GUS, Warsaw 2015.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 45. Production of electricity in hydropower plants in Poland in 2005–2013 / source: Energia ze źródeł odnawialnych w 2013 r. [Energy from renewable sources in 2013], GUS, Warsaw 2014

2.3. Flood protection

The number of various catastrophic events around the world is increasing and is associated with both human activity and natural conditions (Fig. 46).

Flood risk In Poland, the most severe threats are hydrological phenomena such as floods and long-lasting droughts, as well as weather phenomena: strong winds in the form of storms or tornadoes, and landslides. According to the data of the Government Security Centre, in 1990–2010 98.5% of all losses caused by various crisis phenomena in Poland were the effects of floods44. Poland is among the countries with a high risk of flooding and has been suffering increasing losses on this account. The reasons for the increasing flood losses are related to: • climate changes causing more and more violent phenomena • the poor condition of hydraulic structures and insufficient development of flood protection at rivers • the growing development of riverside areas. Poland was sixth in the ranking of the countries with the highest compensation for flood losses in the world of 2011 in connection with the compensations after the flood of 1997 (Tab. 12).

Flood losses The size of flood losses in Poland is very difficult to determine, as there are no reliable statistics. Yearbooks of the Central Statistical Office (GUS) take into account flood losses only in some years and the most “important” ones, but when compared with the data of the Ministry of the Interior and Administration (MSWiA), they are sometimes several times lower. Losses indicated in different publications can vary considerably. Tab. 13 shows that the total losses caused by floods listed in this table amounted to approx. PLN30 billion, but the list does not include some minor floods, and also the losses are expressed at current prices. Therefore, the data of the National Water Management Authority (KZGW) seems more reliable; this is shown in Fig. 47 at prices of 2010. In 1997–2010 the flood losses amounted to almost PLN 44 billion, but those are only measurable direct losses, which include primarily: • the destruction of transport infrastructure (roads, railway lines, inland waterways, bridges, flyovers, etc.) • the destruction of municipal infrastructure (water supply systems) • damage to homes, factories, offices, schools, kindergartens and other facilities.

44 R. Pajewska-Kwaśny, Zagrożenie katastrofami naturalnymi w Polsce [The threat of natural disasters in Poland], "Wiadomości

Ubezpieczeniowe" 2012, No. 3

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 46. The number of major catastrophic events around the world in 1970–2011 / source: R. Pajewska-Kwaśny, Zagrożenie katastrofami naturalnymi w Polsce [The threat of natural disasters in Poland], “Wiadomości Ubezpieczeniowe” 2012, No. 3

Compensation in USD billions

The share of compensation in property insurance premiums (%)

Damage total as % of GDP

Thailand

12,000

1 864

8.6

08.2002

Germany and the Czech Republic

2,886

0.5

06.2007

United Kingdom

2,697

0.1

08.2006

Switzerland

2,444

0.9

01.2011

Australia

2,255

0.4

Poland, the Czech Republic

2,241

213

2.3

07.2007

United Kingdom

2,158

0.1

12.2010

Australia

2,114

0.4

04.1973

USA

1,873

0.1

07–08.1993

USA

1,600

0.2

Date 6–11.2011

07–08.1997

Country

Tab. 12. Ranking of the 10 largest compensations for flood damage in the world by dollar value in 2011 / source: own work based on: Zagrożenie katastrofami naturalnymi w Polsce [The threat of natural disasters in Poland], “Wiadomości Ubezpieczeniowe” 2012, No. 3

In addition to the direct losses, floods cause indirect losses, which are often long-term and very severe, and immeasurable losses (Fig. 48). The amount of measurable indirect losses is calculated as a percentage of direct losses. In the 80s of the 20th century it was typically approx. 60% of direct losses. Today, due to the increasing development of land according to other principles of development, which involve more limited production reserves with the frequently used just in time delivery methods, i.e. greater dependence of the economy on the continuity of supplies, they are incomparably higher and a 100% overhead on direct losses seems to be very balanced.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Year

Estimated material losses

GUS yearbooks

1997

PLN 12 billion

1998

PLN 58.5 million

–

2001 a) July b) July/August

PLN 200 million (in the city infrastructure) PLN 4 billion

PLN 3.4 billion

July 2008

PLN 160 million

PLN 673 million

June 2009

PLN 47.7 million

PLN 842 million

2010 a) May and June b) August

a) PLN 12 billion b) PLN 225 million

PLN 4.4 billion

2011

PLN 1426 million (insurance damage)

–

Total direct losses for 1997-2011

PLN 30.1172 billion

–

PLN 625.5 million

Tab. 13. Chronological summary of the floods and losses generated by them in Poland in 1997–2010 / source: R. PajewskaKwaśny, I. Tomaszewska, Prawno-ekonomiczne dylematy wprowadzenia ochrony przed skutkami powodzi na przykładzie ubezpieczeń katastroficznych [Legal and economic dilemmas related to the introduction of flood protection exemplified by catastrophic insurance] [online], http://jmf.wzr.pl/pim/2013_2_5_15.pdf [access: 16.10.2015]

Fig. 47. Flood losses in Poland in 1997–2010 in PLN billion (at prices of 2010) / source: Plany zarządzania ryzykiem powodziowym dla obszarów dorzeczy i regionów wodnych, część I [Flood risk management plans for the areas of river basins and water regions], part I, KZGW [online], http://warszawa.rzgw.gov.pl/OKI/upload/browser/aktualnosci/Prezentacja1%20 dla%20Warszawy.pdf [access: 20.07.2015]

In summary, it can be assumed that direct and indirect measurable losses in 1997–2010 amounted to PLN 87.4 billion, which means PLN 6.7 billion per year at prices of 2010. Using the estimation that the cost of construction of a single barrage on the lower Vistula River (Wisła) is approx. PLN 3.5 billion, it can be concluded that the lack of development of the lower Vistula River means flood losses corresponding to the costs of construction of almost two barrages per year. 56

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 48. Types of flood losses / source: own work based on: Plany zarządzania ryzykiem powodziowym dla obszarów dorzeczy i regionów wodnych, część I [Flood risk management plans for the areas of river basins and water regions], part I, KZGW [online], http://warszawa.rzgw.gov.pl/OKI/upload/browser/aktualnosci/Prezentacja1%20dla%20Warszawy.pdf [access: 20.07.2015]

Fig. 49. Communes affected by floods in 1997, 2001 and 2010 / source: Plany zarządzania ryzykiem powodziowym dla obszarów dorzeczy i regionów wodnych, część I [Flood risk management plans for the areas of river basins and water regions], part I. KZGW [online], http://warszawa.rzgw.gov.pl/OKI/upload/browser/aktualnosci/Prezentacja1%20dla%20Warszawy.pdf [access: 20.07.2015]

Flood losses occurred in the basin of both the Oder (Odra) and the Vistula (Wisła), including a large part in the region of the lower Vistula (dolna Wisła). Fig. 49 shows the communes affected by the largest floods in 1997, 2001 and 2010. The floods that passed through Poland in May and June 2010, affected 14 of 16 provinces: • 25 died in Poland as a result of the flood of 2010 • 69,961 families were affected and 14,565 families were evacuated • 811 communes and approx. 1.4 thousand companies suffered losses • 18,194 residential buildings and more than 800 schools and 160 kindergartens were destroyed • the flood damaged more than 10 thousand km of municipal, county and regional roads, 1,625 bridges, 166 sewage treatment plants, over 210 km of water supply system, 50 km of power grid and 196 km of telecommunication network 57

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 50. The areas at risk of flooding in the region of the lower Vistula / source: Wstępna ocena ryzyka powodziowego, Mapa obszarów narażonych na ryzyko powodzi [Preliminary flood risk assessment. The map of areas at risk of flooding] KZGW [online], http://www.kzgw.gov.pl/files/file/Materialy_i_Informacje/WORP/Polska/1.jpg [access: 26/07/2015]

• 105,152 farms were destroyed • water flooded 682 894 ha of land, including agricultural land, pastures and meadows • 8927 km of levees, riverbeds and watercourses were damaged45.

Flood risk in the lower Vistula area The flood risk at the lower Vistula basin is high (Fig. 50), and especially in the estuary developed section and in the vicinity of large cities (Fig. 51), including Warsaw, losses are particularly severe, not to mention the threat to human life and health, which is difficult to accept. The areas with the highest flood risk include Żuławy Wiślane. They are an area of great natural and economic value: • they are inhabited by over 250 thousand people, of which nearly 100 thousand are rural population • they are an area of very fertile soils used mainly for agriculture • in the area of Żuławy there are plants with important functions in the Polish economy, such as the Lotos Group refinery and the Phosphate Fertilizer Plant in Gdańsk, and Alstom Power, the power plant and the Żywiec Group brewery in Elbląg • they have large resources of surface water 45 T. Walczykiewicz, Monografia powodzi – Wisła maj-czerwiec 2010 [Flood monograph – Wisła May-June 2010], Instytut

Meteorologii i Gospodarki Wodnej, Państwowy Instytut Badawczy [online], http://shp.org.pl/Seminaria/20_04_2011/Wisla_10. pdf [access: 20.10.2015].

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 51. The flood in Grudziądz / source: [online] http://www.pomorska.pl/apps/pbcs.dll/article?AID=/20100524/ GRUDZIADZ01/304777456 [access: 26.7.2016]

• the area of Żuławy contains important water and wastewater facilities, such as the water intake in Lipce, the Central Waterworks of Żuławy, the sewage treatment plant “Wschód” in Gdańsk and the sewage treatment plant in Elbląg • Żuławy Wiślane is a region of exceptional cultural heritage, landscape and natural heritage values, which emphasize its tourist attractiveness • important transport routes run through the area of Żuławy, including national road No. 7 and the Tri-City – Warsaw railway line; the valley of the lower Vistula is an important infrastructure and transport corridor, which is used also for the movement of energy and fuel. In the case of specific weather conditions, the flood risk in the area can accumulate. An important feature of the floods occurring in depressed areas is stagnant flood waters, which do not return to the riverbed after the passage of flood waves and breaking through levees. Some water can be drained to the Gdańsk Bay (Zatoka Gdańska) and the Vistula Lagoon (Zalew Wiślany), but the remaining water from the depression polders must be discharged using pump stations. This specificity and very varied causes and potential consequences of the flood risk in the area makes it very important to provide a comprehensive flood protection adjusted to the local conditions. Without such protection the further social and economic development of the region will still be slowed down, and the natural, landscape and tourism potential will continue to be insufficiently protected and used46. As previously mentioned, a particularly large losses are caused by floods in the cities where the number of people exposed to the risk is high; very high losses are suffered in infrastructure, industry, and there is also a high epidemiological risk. There are many cities vulnerable to flooding in the area of lower Vistula (dolna Wisła) – from Warsaw to Gdańsk.

2.4. Tourism Tourism in the economy The tourism sector is one of the most dynamically growing areas of the modern world economy. The economic importance of international tourism can be estimated on the ratio of tourism revenue to the GDP; this data comes from the statistics of balance of payments and includes both business trips and personal travel. In 2013 the highest ratio of tourism revenue to the GDP was recorded in Croatia (16.7%), Malta (14.5%) and Cyprus (13.2%), which 46 Żuławy, Regional Water Management Authority in Gdańsk [online], http://www.gdansk.rzgw.gov.pl/index.php?mod=con-

tent&path=2,329,331#zulawy [access: 20.07.2015].

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Revenue Country

Expenses

Net revenue in € million

EU-28

101,352

in relation to GDP (%) 0.8

87,504

in relation to GDP (%) 0.7

Belgium

10,166

2.7

16,420

4.3

–6,254

Bulgaria

3,057

7.7

1,151

2.9

1,906

The Czech Republic

5,307

3.6

3,462

2.3

1,845

Denmark

5,247

2.1

7,552

3.0

–2,305

Germany

31,030

1.1

64,677

2.4

–33,647

Estonia

1,049

5.6

703

3.8

346

Ireland

3,335

2.0

4,603

2.8

–1,268

Greece

12,115

7.7

1,835

1.0

10,280

Spain

45,505

4.4

12,248

1.2

33,257

France

42,239

2.1

31,892

1.5

10,347

Croatia

7,182

16.7

679

1.6

6503

Italy

33,063

2.1

20,309

1.3

12,754

Cyprus

2,181

13.2

919

5.6

1,262

Latvia

652

2.8

539

2.3

113

Lithuania

1,105

3.2

728

2.1

377

Luxembourg

3,629

8.0

2,876

6.3

753

Hungary

3,848

3.9

1,464

1.5

2,384

Malta

1,056

14.5

289

4.0

767

Netherlands

11,732

1.9

15,430

2.6

–3,698

Austria

15,139

4.8

7,738

2.5

7,401

Poland

8,594

2.2

6,866

1.8

1,728

Portugal

9,250

5.6

3,120

1.9

6,130

Romania

1,083

0.8

1,499

1.1

–416

Slovenia

2,101

6.0

703

2.0

1,398

Slovakia

1,884

2.6

1,724

2.4

160

Finland

3,042

1.6

3,985

2.1

–943

Sweden

8,647

2.1

13,227

3.1

–4,580

United Kingdom

30,565

1.6

39,574

2.1

–9,009

EUR million

13,848

Tab. 14. Revenue from tourism and expenditure on tourism in the EU-28 in 2013 / source: Statistics Explained, File: Travel receipts and expenditure in balance of payments, 2005–2013 YB15.png, Eurostat [online], http://ec.europa.eu/eurostat/statistics-explained/images/0/0a/Travel_receipts_and_expenditure_in_balance_of_payments%2C_2005%E2%80%9313_YB15. png [access: 10.08.2015]

confirms the importance of tourism for these countries (Tab. 14). In absolute terms, the highest tourism revenue in 2013 was in Spain (45.5 billion) and France (42.2 billion), followed by Italy, Germany and the United Kingdom (in these countries the revenue ranged from 31 to 33 billion). The highest expenditure on international tourism in 2013 were recorded in Germany, where they amounted to a total of EUR 64.7 billion, followed by the United Kingdom (EUR 39.6 billion) and France (EUR 31.9 billion). Among the EU member states, the highest net revenue from tourism in 2013 was observed in Spain (EUR 33.3 billion), while Germany recorded the largest deficit (EUR – 33.6 billion – Tab. 14 and 15). 60

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Tourists most often visited North and South Europe and the countries of Mediterranean Europe (+7%), while the increase was small in Western Europe (+2%). In relation to Central and Eastern Europe, after three years of significant growth, there has been stagnation, largely affected by the unstable political situation in Russia and Ukraine. It should be noted that in the case of Poland the number of visits of foreign tourists may be higher by approx. 4% than in the previous year. United Nations World Tourism Organization (UNWTO) said that “thanks to these results, tourism is a major contributor to the European economic recovery”47. The tourism industry in Europe directly generates over 5% of the GDP in Europe. Approx. 1.8 million enterprises in this sector employ almost 9.7 million people, which represent almost 5.2% of the total number of employees in all European countries. If the sectors associated with tourism are taken into account, it generates approx. 12% of employment in Europe in total48.

Benefits of tourism in Poland Poland does not have a good position as a tourist destination compared to other European countries. In light of the last report of the World Economic Forum on the competitiveness of tourism in over 130 analysed countries, Poland was ranked 42nd in 2013 (this index is based on 14 specific indicators included in three areas). However, a steady progress should be noted in this area: Poland was 58th in 2009 and 49th in 2011. For many years, the share of tourism economy in Poland has been maintained on a quite steady level of 5–6% of GDP. In 2008, it was 5.9%; then there was a decline to 5.2% in 2009 and 2010, which reached 4.8% in 2011. In 2012 the share of tourism in GDP was significantly revived – it increased to 6%, and further to 6.4% in 2013. The revenue from visits of foreigners in Poland reaches EUR 8–9 billion per year, of which about half is the revenue from visits of foreign tourists. The revenue from foreign tourism in 2013 was 6.1% of all export revenue49. At the same time, it is estimated that the number of people working in the tourism industry is approx. 760 thousand, which is 4.7% of total employment. According to expert estimates one job in the tourism sector generates additionally 3–4 jobs in the tourism-related infrastructure50. For a few years, a gradual increase has been observed in the area of visits of foreign tourists to Poland, so that their number increased from less than 13 million in 2008 to 15.8 million in 2013, thus reaching the volume projected for as late as 2016. It can be assumed that the number of foreign tourists and the amount of the revenues from their visits to Poland in 2014–2017 will reach a much higher level than projected by the Institute of Tourism (Fig. 52). In 2013, the most frequently visited provinces were: Lesser Poland (17.5%), Lower Silesia (15%), Pomerania (12%), West Pomerania (11%) and Mazovia (9%)51. Two of the above-mentioned provinces are located in the area of the lower Vistula River (dolna Wisła) and are visited by a total of 21% of tourists coming to Poland. The potential of the third province – Kuyavia-Pomerania and the Warmia-Masuria Province, connected with the lower Vistula River (dolna Wisła) through waterways – remains unused. Hence a good opportunity for activation of tourism in these extremely attractive tourist regions. In various provinces the tourist spending was on a different level in 2013 and was higher in the region of the lower Vistula River (dolna Wisła) – USD 380 to 420 per person (Fig. 53). 47 The number of international tourists in 2014 exceeded 1.1 billion [online], http://www.msport.gov.pl/badania-rynku-tury-

stycznego/liczba-turystow-miedzynarodowych-w-2014-r-przekroczyla-11-mld [access: 18.10.2015]. 48 A New Industrial Revolution, European Union 2013, p. 15; as cited in: Program rozwoju turystyki do 2020 roku [Tourism development programme by 202], Warsaw, 25 June 2014. 49 Program rozwoju turystyki do 2020 roku [Tourism development programme by 2020], Warsaw, 25 June 2014. 50 Ibid. 51 K. Janczak, K. Patelak, Zagraniczna turystyka przyjazdowa do Polski w 2013 roku [Foreign inbound tourism to Poland in 2013], Łódź, June 2014, p. 43.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Region/country Europe Northern Europe Denmark Finland Iceland Ireland Norway Sweden United Kingdom Western Europe Austria Belgium France Germany Luxembourg Netherlands Switzerland Central and Eastern Europe Armenia Azerbaijan Belarus Bulgaria The Czech Republic Estonia Georgia Hungary Kazakhstan Kyrgyzstan Latvia Lithuania Poland Moldova Romania Russia Slovakia Ukraine Uzbekistan Southern Europe and the Mediterranean region Albania Bosnia and Herzegovina Croatia Cyprus Macedonia

2000

2005

2010

2011

2012

2013

231,689 36,054 3,696 1,412 229 2,633 2,163 4,064 21,857 83,716 9,784 6,592 32,978 18,693 1,806 7,217 6,645 20,390 38 63 93 1,074 2,973 510 141 3,753 356 15 131 391 5,677 39 359 3,429 433 394 27

350,461 53,645 5,278 2,186 413 4,806 3,495 6,792 30,675 123,224 16,054 9,868 44,021 29,173 3,613 10,475 10,020 32,804 220 78 253 2,412 4,813 975 241 4,101 701 73 341 921 6,274 103 1,061 5,870 1,210 3,125 28

41,2129 61,726 5,853 3,051 559 4,118 4,707 8,663 32,404 144,159 18,596 12,146 47,013 34,679 4,119 12,883 14,724 48,082 411 657 440 3,637 7,121 1,073 659 5,381 1,005 284 640 958 9,526 173 1,140 8,831 2,233 3,788 121

466,585 69,400 6,783 3,820 750 4,190 5,308 10,404 35,069 162,885 19,860 13,114 54,753 38,879 4,831 14,348 17,100 56,024 448 1,287 487 3,967 7,628 1,249 955 5,580 1,209 640 771 1,323 10,683 195 1,418 11,328 2,429 4,294 –

454,047 67,631 6,566 3,881 863 3,883 5,442 40,768 36,228 157,934 18,894 13,014 53,550 38,136 4,617 13,743 16,979 56,297 454 2,433 685 3,748 7,035 1,226 1,411 4,845 1,347 435 745 1,317 10,938 213 1,468 10,758 2,299 4,842 –

489,253 74,210 6,967 4,014 1,055 4,429 5,661 11,485 40,597 156,916 20,106 13,500 56,098 41,211 4,819 15,580 16,547 59,928 458 2,365 722 4,059 7,050 1,393 1,720 5,107 1,460 – 864 1,467 10,938 226 1,438 11,988 2,556 5,083 –

91,529

140,788

159,767

179,502

172,185

187,254

389 233 2,758 1,941 38

860 521 7,370 2,318 89

1,626 594 8,259 2,108 197

1,628 631 9,211 2,570 240

1,471 622 8,812 2,599 234

1,470 698 9,555 2,917 267

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Greece

9,219

13,349

12,742

14,623

13,416

15,930

Israel

4,114

2,866

5,106

5,305

5,494

5,667

Italy

27,493

35,398

38,786

43,000

41,185

43,912

Malta

587

755

1,079

1,268

1,270

1,403

–

276

732

862

826

884

5,243

7,712

10,077

11,339

11,056

12,284 1,053

Montenegro Portugal Serbia

–

308

798

992

906

965

1,805

2,552

2,749

2,685

2,791

Spain

29,967

47,970

52,525

60,031

56,263

60,435

Turkey

7,636

19,191

22,585

25,054

25,345

27,997

Slovenia

Tab. 15. Revenue from inbound tourism in the European countries in 2000–2013 (in USD million) / source: World Tourism Barometer and Statistical Annex, April 2014, UNWTO [in:] K. Janczak, K. Patelak, Zagraniczna turystyka przyjazdowa do Polski w 2013 roku [Foreign inbound tourism to Poland in 2013], Łódź, June 2014

* forecast Fig. 52. The revenue from visits of foreign tourists and forecast to 2017 / source: Own work based on data from the Ministry of Sport and Tourism, the Institute of Tourism and the Department of Tourism

Tourism on inland waterways The growing wealth of the society and the associated increasing mobility and demand for tourism can be largely satisfied by inland waterways. Tourist transport using inland waterways play an increasingly important role, mainly because today, in addition to the traditional 3xS model of tourism (sun, sand and sea), a new model of recreation is starting to play a significant role: 3xE (entertainment, excitement, education). This trend will result in both the expansion of the areas used for tourism and the creation of new tourist attractions. Inland waterway transport fits perfectly into this scenario, as it is no longer limited to transportation functions associated with the movement of persons and arrival at a particular destination. Today is also used for active rest and recreation.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 53. The average tourist spending in 2013 by visited province (in USD per person) / source: own work based on: K. Janczak, K. Patelak, Zagraniczna turystyka przyjazdowa do Polski w 2013 roku [Foreign inbound tourism to Poland in 2013], Łódź, June 2014

Tourist and recreational transport through inland waterways has been known for a long time, but the new phenomenon is the huge diversity of the offer and the appearance of new comprehensive services, which are adjusted to the contemporary expectations and combine many traditional forms of tourism and recreation. The use of certain means of transport or routes may be a tourist attraction in itself. The process of movement using a means of transport can be perceived as a tourism product. Inland waterway transport is the mode of transport particularly attractive from this point of view. The attractiveness of waterways as a tourism product is a result of the sightseeing values of the areas located in the vicinity of waterways as well as, to a large extent, of the historic nature of hydraulic solutions applied on waterways, such as ship canals, canal bridges, sluices, ramps and ship lifts.

Types of tourist transport in inland navigation In the process of passenger transport carried out using waterways as a tourism product, some quality characteristics of the transport service, such as time and punctuality, become virtually meaningless. However, the use of inland waterway transport for leisure and tourism travels is primarily associated with the need to ensure the safety of transport and high travel comfort. Therefore, passenger ships used on waterways and built with special emphasis on the requirements of river tourism not only function as means of transport, but also provide catering and accommodation services. From the tourism aspect, inland navigation takes the three forms: • recreation transport • all-day travel transport • round trips with the use of ports of call – cruise transport (Ger. Kreuzfahrt) provided by ships with hotel facilities (Fig. 54). An additional tourist attraction offered by inland navigation may include communications transport carried out through waterways (the above-discussed waterbuses and regional transport). Both forms of transport provided in the most attractive tourist areas can facilitate tours in the city centre or access to the resting areas in a pleasant and safe manner, and may also help to avoid congestion and therefore reduce the time of transport. The use of inland waterways to handle tourist traffic may be an important factor in economic stimulation of regions located in the vicinity of waterways.

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 54. Passenger ship with hotel facilities / source: Is Amadeus setting a new standard for European river cruises? [online], http://www.cruisemyrivers.com [access: 17.03.2014]

55. Foreign tourist spending in Poland per person and per day of stay in USD, in 2009–2013 / source: own work based on: Program rozwoju turystyki do 2020 roku [Tourism development programme by 2020], 25 June 2014

Revenue from water tourism Revenue from the use of inland waterways is an important source of income from the development of the tourism sector. For example, the turnover of shipping companies in Germany obtained from transport performed as part of a multi-day cruises of 2.6 million passengers exceeded EUR 250 million in 2005. Since ships call at intermediary ports of call located on the cruise routes, it is possible to stimulate the economy of the towns and cities visited by tourists. It is estimated that this type of benefits generated by the segment of one-day tourist transport market in the Netherlands amount to EUR 28.6 million per year. It is estimated that a tourist travelling through waterways in the countries of Western Europe spends approx. EUR 32 on average to visit cultural, recreational, and food and beverage facilities.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

In Poland, these benefits can be higher in the case of foreign tourists, as shown by research (Fig. 55) – in 2013 it was USD 401 per person. A million tourists transported by inland vessels in 2013 could spend at least EUR 32 million in the area of waterways. European examples show that the expected effects of the use of inland waterways for tourism purposes often encourage governments and local self-governments to invest in the development of modern tourism products and structures for the creation and maintenance of the inland waterway infrastructure, as well as the revitalization of inland waterways. For example, Falkirk Wheel, a rotating boat lift in Scotland, shows a positive intervention of the state not only to rebuild the old waterways, but also to create new water structures designed as potential tourist attractions. According to estimates of British Waterways, 1 pound of government grant invested in the revitalization of inland waterways means a return of 6 pounds on such an investment52. Passenger transport for tourism and recreation provide many socio-economic and ecological benefits in the region in which they are carried out, thereby stimulating the regional development: • reduction of unemployment • stimulation of underdeveloped regions • reduction of uncontrolled devastation of the environment by adapting valuable landscape areas to the needs of tourists • economic effects. Tourism economy can to a large extent contribute to improving the economic, territorial and social coherence in Poland. Sustainable growth of the high-quality tourism sector is one of the directional development priorities of the European Union. This raises the challenge of strengthening of the economic and social potential, which favours the growth of the tourism sector understood as an element of economic competitiveness of European regions. Tourism is a factor in the diversification of the economy, which raises the demand for qualified personnel, innovative services and modern management tools, including Information and Communication Technologies – ICT, as well as research and analysis that support sustainable economic growth based on tourism. All this creates new opportunities to approach the development of tourism as a part of regional policy that strengthens the competitiveness of the particular territory53.

2.5. Regional development Diversification of regional development Globalization is accompanied by the phenomenon of increasing diversity in standards of life. At the end of 2013, GDP per capita ranged from USD 102 thousand in Qatar to USD 400 in the Democratic Republic of Congo, which accounted for less than 4% of GDP per capita in Qatar. Forecasts indicate that these changes will not favour the equalization of the existing differences. For example, countries with the highest GDP per capita will have much higher growth than countries with lower GDP per capita by 2020; for example, it is expected that by 2020 the growth should reach almost USD 4,000 in China, USD 3,000 in the United States, more than USD 2,000 in Japan, almost USD 2,000 in Poland, USD 500 in India, whereas the growth in Somalia is estimated at USD 554.

52 K. Wojewódzka-Król, R. Rolbiecki, A. Gus-Puszczewicz, Analiza popytu na przewozy ładunków i pasażerów drogą wodną

E-70 [Analysis of demand for cargo and passenger transport using waterway E-70], Expert opinion for the Marshal's Office in Gdańsk, Sopot, September 2011, p. 109. 53 Program rozwoju turystyki do 2020 roku [Tourism development programme by 2020], 25 June 2014. 54 Own calculations based on: [online] http://pl.tradingeconomics.com/ [access: 15.02.2015].

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 56. GDP per capita in EU regions by purchasing power parity (% of the EU average, the EU-28 average = 100) in 2013 / source: Eurostat, [online] http://ec.europa.eu/eurostat/statistics-explained/index.php/ GDP at regional_ level/pl [access: 15.08.2015]

Regionalization Globalization is closely associated with regionalization; both these processes cannot be analysed without consideration of regional conditions. Regions, the main beneficiaries of globalization and regionalization, have a significant impact on the shape and development of these processes55. The growing importance of regions is the result of the weakening position of the state as a body too large to effectively solve regional problems. Region as a more efficient structure is better than the state in coping with the management process in the conditions imposed by the globalization processes56. The preamble to the Treaty of Rome already assumed for the EU countries that one of the objectives of the European Economic Community (EEC) is the harmonious development by reducing the differences existing between the various regions. However, the Community decided to take more specific measures in this regard as late as in 1975. This was connected with their expansion by adding new member states and the resulting regional problems (Ireland and the industrialized regions of the UK). Significant changes in the field of regional policy took place after the adoption of the Single European Act in 1986. A new section – “economic and social cohesion” was added to the Treaty of Rome, which declared that the aim of the Community is to equalize the differences between the poorest and the richest regions and to create the basis for common structural policy57.

55 J. Kot, R. Jedlińska, Integracja i nowe zjawiska w procesie regionalizacji i globalizacji [Integration and new phenomena in the

regionalization and globalization processes], Studies and Materials "Miscellanea Oeconomicae" 2013, year 17, No. 1, Faculty of Management and Administration at the Jan Kochanowski University in Kielce. 56 S. Sala, Wpływ procesów globalizacji na region [The influence of globalization processes on the region], works by the Industry Geography Committee, Warszawa – Kraków 2008, No. 10. 57 S. Łodziński, Polityka regionalna w Unii Europejskiej – Fundusze Strukturalne i Fundusz Spójności [Regional policy in the European Union – Structural Funds and the Cohesion Fund], Biuro Studiów i Ekspertyz, Warsaw 1998.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

No.

Region

Country

% of average GDP/capita in the EU in 2013

The richest regions of the European Union in 2013 1.

Inner London

United Kingdom

325

Luxembourg

258

Brussels Region

Belgium

207

Hamburg

Germany

195

Groningen

Netherlands

187

Bratislava Country

Slovakia

184

Stockholm

Sweden

179

Ile-de-France

France

175

Prague

The Czech Republic

173

10.

Upper Bavaria

Germany

172

The poorest regions of the European Union in 2013 1.

Mayotte

France

Severozapaden

Bulgaria

Severen tsentralen

Bulgaria

Yuzhen tsentralen

Bulgaria

Nord-Est

Romania

Severoiztochen

Bulgaria

Yugoiztochen

Bulgaria

Eszak-Magyarorszag

Hungary

Sud-Vest Oltenia

Romania

Sud-Muntenia

Romania

11.

Észak-Alföld

Hungary

12.

Dél-Dunántúl

Hungary

12.

Sud-Est

Romania

15.

Nord-Vest (RO)

Romania

16.

Lublin Province

Poland

16.

Podkarpackie Province

Poland

16.

Warmia-Masuria

Poland

17.

Podlasie Province

Poland

17.

Świętokszyskie Province

Poland

Tab. 16. Differentiation of GDP per capita in the European Union / source: Regional GDP per capita in the EU in 2013: seven capital regions among the ten most prosperous, Eurostat, 90/2015 – 21 May 2015

EU regional policy Regional policy is based on the principle of co-financing and partnership between the central and regional authorities of the member states. The EU provides financial support for regional projects undertaken in these countries and directs their actions towards the harmonious integration that benefits the entire organization. Despite measures taken in this regard for many years, the diversity in standards of life in the European Union is increasing with the growing trends of globalization and expansion of the EU, although it is not as drastic as on the 68

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

GDP per capita PPS, EU28=100 100

GDP EUR million 13,518,112

GDP per capita EUR 26,600

GDP million PPS * 13,518,112

GDP per capita PPS 26,600

POLAND

396,111

10,300

689,253

17,900

Central Region

111,045

14,200

193,224

24,700

Łódź Province

24,172

9,600

42,060

16,700

Mazovia Province

86,873

16,400

151,164

28,500

107

Southern Region

79,866

10,000

138,971

17,500

Lesser Poland

30,508

9,100

53,085

15,800

Silesia Province

49,358

10,700

85,886

18,600

Eastern Region

49,776

7,400

86,613

12,800

Lublin Province

15,693

7,300

27,306

12,600

Podkarpackie Province

15,578

7,300

27,107

12,700

Świętokszyskie Province

9,544

7,500

16,607

13,100

Regions (NUTS) EU28

Podlasie Province

8,961

7,500

15,593

13,000

North-West Region

62,177

10,000

108,190

17,400

Greater Poland

38,486

11,100

66,968

19,300

West Pomerania

14,887

8,700

25,903

15,100

Lubuskie Province

8,804

8,600

15,319

15,000

South-West Region

41,953

10,700

73,000

18,600

Lower Silesia

33,581

11,500

58,432

20,100

Opole Province

8,372

8,300

14,568

14,500

Northern Region

51,294

8,800

89,253

15,300

Kuyavian-Pomeranian Province Warmia-Masuria

17,759

8,500

30,901

14,800

10,727

7,400

18,665

12,900

Pomerania

22,808

9,900

39,687

17,300

* purchasing power standard, in short PPS, is an artificial currency unit. Theoretically, the same amount of goods and services can be bought for one PPS in the particular country Tab. 17. GDP per capita in 2013 in Polish regions / source: Eurostat

global scale (Fig. 56). In 2013 the difference between the richest and the poorest region in the EU was significant – from 27% of the average in the 28 EU countries in the French department of Mayotte in the Indian Ocean to 325% of the average in Inner London58. 76 EU regions had GDP per capita less than 75% of the EU average in 2013. This group included 14 Polish provinces, without the Mazovia and Lower Silesia (Tab. 16), of which five were among the last twenty regions, from 44% of the EU average in the Lublin and Podkarpackie Province to 49% in the Świętokrzyskie Province (Tab. 17). The average GDP per capita in Poland was 67% of the EU average in 2013, and the richest province (Mazovia) reached 107% of the average in 2013.

58 Regional GDP per capita in the EU in 2013: seven capital regions among the ten most prosperous, Eurostat, 21 May 2015.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 57. Multimodal potential accessibility of EU regions in 2011 / source: [online] http://www.espon.eu/export/sites/default/ Documents/Publications/SynthesisReport/ Third September2014/map6.png [access: 08.10.2015]

Transport accessibility

One of the conditions to compensate for the imbalance in regional development is the transport accessibility in regions. Analysis of the availability of EU regions shows a very high coincidence with the regional GDP per capita. The poorest regions, with the lowest GDP per capita, are often regions of low transport accessibility, such as the regions of the countries of Central and Eastern Europe, the western part of Spain, Portugal and southern Italy (Fig. 57). The exception may be regions that are difficult to access because of their terrain. Ensuring efficient and timely transport of both cargo and passengers in the appropriate standard is one of the basic factors determining the investment attractiveness and the location of the investments allows for increasing the number of jobs and thereby reducing unemployment and raising the region’s wealth. The role of accessibility in the development of investment attractiveness results from the following capabilities: • reduced costs of transportation and materials necessary for production, namely costs of supplies and increase of the process reliability • reduced distribution costs and improved quality of such services • facilitating contacts with suppliers, subcontractors and business partners59.

59 Atrakcyjność inwestycyjna województw i podregionów Polski 2013 [Investment attractiveness of Polish provinces and subregions

2013], ed. M. Nowicki, Gdańsk 2013.

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 58. EU regional competitiveness index, RCI in 2013 by NUTS 2 (EU-28 = 0) / source: Regional competitiveness for the innovation sub-index, by NUTS 2 regions, 2013, Eurostat [online], http://ec.europa.eu/eurostat/statistics-explained/index. php/ [access: 26/03/2015]

Tourism in the economy Many economically underdeveloped regions have high natural values. These regions could build its future based on tourism, but the current trends in tourism, characterised by strong demand for short and active recreation make tourist attractiveness of locations dependent on its transport accessibility. It also determines the inhabitants’ quality of life, the ability to satisfy their aspirations regarding mobility, access to work, education and culture.

Regional competitiveness Therefore, an increase of transport accessibility may be one of the basic ways to increase the competitiveness of regions and fulfilment of the EU policy to reduce differences in regional development. Regional Competitiveness Index (RCI) is an indicator that enables a synthetic representation of territorial competitiveness for each of the regions at NUTS 260 level established on the basis of the Global Competitiveness Index (GCI) developed at the World Economic Forum. RCI includes 11 categories in three groups: basic, efficiency and innovation. The index shows the level of development of selected regions by emphasizing the basic problems in less developed regions and highlighting the innovative capacity in more developed regions. These 11 categories make it possible to measure the intensity of phenomena that are relevant not only for businesses, but also important for

60 NUTS (Fr. Nomenclature des Unites Territoriales Statistique, Eng. Nomenclature of Territorial Units for Statistics) – the UE

territorial unit established for statistical purposes – Nuts 2 includes areas with a population of 800 thousand to 3 million.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 59. Regional competitiveness index in the regions at the lower Vistula / source: own work based on Fig. 58

the inhabitants of the particular region and affecting their quality of life. One of the factors in the basic group is the transport infrastructure61, which determines transport accessibility. Transport accessibility is determined by many factors, including the quality of the transport infrastructure, the frequency of transport links, transport cots, the ability to choose a mode or means of transport, the quality of transport services, and user preferences. However, the basic condition for accessibility is the creation of the proper quality of the transport infrastructure, preferably of multiple modes, which gives choice to users and enables a flexible adjustment of supply of transport services to needs. This is a prerequisite for socio-economic development, but it is not sufficient. The comparison of the RCI in 2013 (Fig. 58) and the transport accessibility index (Fig. 57) reveals good agreement, which confirms the role of transport in development of a region’s competitiveness.

Regional competitiveness index for the lower Vistula River Fig. 59 shows that the regions located at the lower Vistula River (dolna Wisła) are characterized by a diversified competitiveness index: • highest: Mazovia Province (–0.5–< 0,00 of the average of 28 EU countries) • medium: Pomerania Province (–1–< 0.5 of the average of 28 EU countries) • lowest: Kuyavia-Pomerania Province (<–1 of the average of 28 EU countries) The following indicators are considered in the analysis of this factor for the purposes of the EU regional competitiveness index: • motorway potential accessibility • railway potential accessibility • daily number of passenger flights (accessible within 90’ drive)62. This confirms the thesis of insufficient potential of these modes of transport and the need to support them by inland waterway transport at the lower Vistula River (dolna Wisła). The development of various forms of water tourism is also important for regional development, as it increases the tourist attractiveness of regions.

61 L. Dijkstra, P. Annoni, K. Kozovska, A New Regional Competitiveness Index: Theory, Methods and Findings, European Union

Regional Policy Working Papers 2011, No. 2. 62 P. Annoni, L. Dijkstra, EU Regional Competitiveness Index RCI 2013, Report EUR 26060 EN, Join Research Centre , European Union 2013, p. 45.

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 60. Lower Vistula Cascade and regional development / source: own work

Lower Vistula Cascade and regional development In summary, it can be concluded that the construction of the Lower Vistula Cascade as an investment in infrastructure can significantly affect regional development by contributing to, among others: • mitigation of socio-economic problems like unemployment by creating high demand for labour force necessary for the implementation of investments in infrastructure; long duration of implementation of such investments means that the demand for labour force in this sector is relatively stable and contributes to: –– reduction of the negative social impact of unemployment (pathologies, increase in crime, etc.). –– reduction of funding for unemployment benefits –– increase of effective demand in the market and therefore stimulation of economic growth • reduction of disparities in the socio-economic development of regions through: –– creating favourable conditions for investors (the prospect of new beneficial transport links affects the increase of investment attractiveness of land in the region) –– the need for implementation of investments accompanying infrastructure projects, for example: the development of the tourism infrastructure, resulting in an increase in the attractiveness of backward regions to counteract the depopulation of these regions and causing beneficial changes in the employment structure – employment growth in non-agricultural activity –– facilitating the migration of skilled labour force –– stimulating the development of local building material industry by creating significant long-term demand for this type of material –– growth in market demand associated with implementation of investments • reduction of external costs of transport through: –– development of environmentally friendly modal split of transport systems 73

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 61. Water resources in Poland per capita compared to selected EU countries (m3) / source: own work based on: Ochrona środowiska 2014 [Environmental Protection 2014], GUS, Warsaw 2014; Mały rocznik statystyczny Polski 2015 [Concise Statistical Yearbook of Poland 2015], GUS, Warsaw 2015

Fig. 62. Water resources in Poland per area unit compared to selected EU countries (thousand m3/km2 of area) / source: own work based on: Ochrona środowiska 2014 [Environmental Protection 2014], GUS, Warsaw 2014; Mały rocznik statystyczny Polski 2015 [Concise Statistical Yearbook of Poland 2015], GUS, Warsaw 2015

–– reduction of congestion –– increase in the degree of safety as a result of improved modal structure of transport and reduced road traffic • development of water tourism, which will create additional jobs and generate tourism revenue • reduction of flood risk (Fig. 60).

2.6. Meeting the water needs Water Exploitation Index

An important argument for development of the lower Vistula River (dolna Wisła) is the capacity to improve the water balance. The current state of development of water resources in Poland does not guarantee that the water needs are properly met. This issue cannot be underestimated, since Poland is one of the poorest countries in Europe in terms of water resources per capita (Fig. 61) and area unit (Fig. 62). Average total renewable resources in Poland over the past 20 years have been just over 63 billion m3. This is approx. 1.6 thousand m3 per capita, which means almost three times less than the average in Europe (4.6 thousand m3)63.

63 Mały rocznik statystyczny Polski 2015 [Concise Statistical Yearbook of Poland 2015]...

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 63. The level of dependence of the economy on water resources in selected EU countries measured by the Water Exploitation Index / source: own work based on: Ochrona środowiska 2014 [Environmental Protection 2014], GUS, Warsaw 2014; Water Exploitation Index, Eurostat [online], http://ec.euro-pa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=tsdnr310&language=en [access: 20.10.2015]

Fig. 64. Water resources according to regional water management authorities in thousand m3 per capita per year / source: Diagnosis of the current status of water management. Annex 1 to the National Water Policy Project 2030 (including stage 2016), Ministry of Environment, National Water Management Authority, Warsaw 2010

Poland also belongs to the group of countries under considerable pressure associated with the need for rational water management (Fig. 63)64. The scale of this pressure, and therefore the economy’s dependence on water resources, can be measured by the Water Exploitation Index, which is the ratio of the volume of water consumption for the needs of the economy and population to the volume of water resources. In Poland, this index decreased from 24% to 17.9% in 1990–2013. However, it is still too high, because according to the European Environment Agency the maximum critical value that ensures a “stress-free” use of water resources is 16%65.

64 Water exploitation index, Eurostat [online], http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&p-

code=tsdnr310&language=en [access: 20.10.2015]. 65 M. Gutry-Korycka et al., Zasoby wodne a ich wykorzystanie [Water resources and their use], "Nauka" 2014, No. 1.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 65. The spatial distribution of total annual precipitation in Poland / source: Mały rocznik statystyczny 2001 [Concise Statistical Yearbook 2001], GUS, Warsaw 2014; Mały rocznik statystyczny Polski 2015 [Concise Statistical Yearbook of Poland 2015], GUS, Warsaw 2015

In Poland, there is an actual risk of intensification of the issue of water deficit. This is because the Polish water resources are characterised by large spatial imbalance. The areas least rich in water per capita, as shown in Fig. 64, include the areas belonging to the regional water management authorities in Gliwice, Wrocław, Poznań and Warsaw. The areas with the highest shortages of surface water resources per unit area include the region of the Water Management Authority in Poznań (0.13 million m3 per km2), Kraków (0.30 million m3 per km2), Wrocław (0.30 million m3 per km2) and Warsaw (0.33 million m3 per km2)66. Therefore, the areas at risk of water deficit in Poland are as follows: Mazovia, Kuyavia, Greater Poland, the Łódź Province and the Świętokrzyskie Province. The problem of water resources also applies to the regions located along the lower Vistula River (dolna Wisła). One of the main factors determining the volume of water resources is precipitation. In Poland, there is a very large diversity of annual precipitation in different areas. As shown in Fig. 65, the region of the lower Vistula River (dolna Wisła) (especially the Kuyavia region) is one of the areas with the lowest precipitation, which ranges from 500 to 600 mm. Therefore, there is a risk of increasing water deficit in this area.

Available resources Relatively small available water resources in Poland are also a consequence of the lack of proper management of surface water. The current state of management of the main surface waters in Poland does not guarantee sufficient protection of the economy against a water deficit, and does not ensure an adequate protection during water excess, 66 Ochrona środowiska 2014 [Environmental Protection 2014], GUS, Warsaw 2014.

II. SOURCES OF BENEFITS FROM THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 66. Water consumption for production purposes and for irrigation in agriculture and forestry in million m3 / source: own work based on: Ochrona środowiska 2014 [Environmental Protection 2014], GUS, Warsaw 2014; Mały rocznik statystyczny Polski 2015 [Concise Statistical Yearbook of Poland 2015], GUS, Warsaw 2015

as previously mentioned. Management of surface water, including through the cascade at the lower Vistula River (dolna Wisła), is all the more justified because surface water is the main source of supply of the national economy. The consumption of surface water allowed to cover more than 85% and more than 84% of the water needs of the economy in 2011 and 2013, respectively67, especially for production purposes68. The main part of surface water resources (95.5%) flows directly into the Baltic Sea69. Thus, one way to increase the available water resources is the storage of runoff water. The current water storage capacity in Poland is far too low and as a result has little importance for the improvement of the national water balance. The total capacity of storage reservoirs in Poland is approx. 4 billion m3 and corresponds to less than 6% of the average annual runoff in a multi-year period70 (approx. 11% of runoff is stored in the world on average). A significant increase in the storage capacity can be achieved, among others, through the cascade development of rivers. Water reservoir above the barrage in Włocławek has a total capacity of 370 million m3 at the maximum damming level (PP); a total forced (short-term) capacity is 450 million m3. Construction of successive barrages at the lower Vistula River (dolna Wisła) would allow for storage of approx. 1.2 billion m3 of water. In 2013, for the purposes of production and irrigation in agriculture and forestry, approx. 8.6 billion m3 of water was used in Poland, of which 7.2 billion m3 came from surface water. As shown in Fig. 66, water consumption for these purposes in the provinces directly connected with the lower Vistula River (dolna Wisła) was nearly 2.7 billion m3 in total. The stored water resources at successive barrages at the lower Vistula River (dolna Wisła) would therefore allow to meet these needs more effectively by reducing the dependence on supplies on natural conditions. As a result, the increased water resources through the development of the lower Vistula River (dolna Wisła) may help to reduce pressure on water saving and reduce the economy’s dependence on water resources. In Poland, there is an actual need for a comprehensive development of the lower Vistula River (dolna Wisła). 67 Ochrona środowiska 2012 [Environmental Protection 2012], 2014. 68 Groundwater, characterised by much better quality, is used primarily for the purpose of supplying the population with

drinking water. 69 M. Gutry-Korycka et at., op. cit. 70 Diagnoza aktualnego stanu gospodarki wodnej [Diagnosis of the current water management], Annex 1 to the National Water Policy Project 2030 (including stage 2016), Ministry of Environment, National Water Management Authority, Warsaw 2010.

III. Risks associated with abandonment of Implementation the Lower Vistula Cascade 3.1. Flood losses

Abandonment of comprehensive development of the waterway at the lower Vistula River (dolna Wisła) would limit the scope of the functions of watercourses and thus reduce the socio-economic benefits, which is called abandonment costs. They mean the loss of benefits that would be achieved by the economy and society if the economic project was implemented. These benefits are associated with both avoiding the losses and expenses incurred by the economy and society and the ability to obtain additional benefits that could not be achieved in the case of abandoning the development of the lower Vistula River (dolna Wisła). Risks associated with flood protection resulting from abandonment of the construction of the Lower Vistula Cascade apply to: • threat to the barrage in Włocławek. • wasted expenditure on temporary means to save that barrage • potential flood losses, which could have been avoided if the Lower Vistula Cascade was constructed. The greatest threat of abandonment of the Lower Vistula Cascade is associated with the barrage in Włocławek. The barrage was built in 1962–1970 as one of the integral elements of the Lower Vistula Cascade, and created the largest flow-through reservoir in Poland with the water plant with a capacity of 160 MW. In that period, cascades of barrages were generally built on all the major rivers of Europe (Rhone, Rhine, Main, Danube, Vltava, Labe, Wag, Volga, Dnieper), but in other countries the cascade developments of rivers have been comprehensively completed, unlike at the lower Vistula River (dolna Wisła) in Poland71.

71 W. Depczyński, Włocławek, 40 lat stopnia wodnego – fakty i mity o zagrożeniu [Włocławek, 40 years of barrage - facts

and myths about the threat], [online] http://www.inzynierbudownictwa.pl/technika,materialy_i_technologie,artykul,wloclawek__40_lat_stopnia_wodnego_-_fakty_i_mity_o_zagrozeniu,3146 [access: 02.08.2015].

III. RISKS ASSOCIATED WITH ABANDONMENT OF IMPLEMENTATION THE LOWER VISTULA CASCADE

Distance from the dam (km)

Number of farms

Number of inhabitants

Time of wave front reach (hrs, min)

Average thickness of flood layer (m)

Włocławek Szpetal Dolny

4÷7

100

410

2.12 min

1.5

Korabniki

8÷13

172

2.36 min ÷3.54 min

3.0

Bógpomórz Stary

4.18 min

2.0

Bobrowniki

4.54 min

3.0

Przypust Dolny

5.30 min

1.0

Siarzewo

120

7.18 min

1.5

III

Aleksandrów Kujawski Otłoczyn

8.42 min

2.0

III

Wielka Nieszawka

Brzoza

8.50 min

2.0

III

Lubicz

Grabowiec

1.0

Total

191

804

Zone:

Commune

I Włocławek I II II II

Szpetal Górny Nieszawa

Town

Tab. 18. Towns threatened by flooding after a dam failure / source: S. Gawłowski, Odpowiedź sekretarza stanu w Ministerstwie Środowiska – z upoważnienia ministra – na interpelację nr 16249 w sprawie stanu technicznego tamy na Wiśle we Włocławku [Response of the Secretary of State at the Ministry of Environment – by the authority of the Minister – to interpellation No. 16249 on the technical condition of the dam at the Vistula River in Włocławek], Warsaw, 6 July 2010

Threat to the dam in Włocławek The dam in Włocławek has been used for almost 45 years as a single damming structure, without the planned support with another barrage. Therefore, the working conditions of the structure differ significantly from those adopted in the design. The existing sizes of erosion at the lower section have already exceeded the design predictions several times, and the resulting lowering of the water level in the river by approx. 2.5–3.0 m has created the conditions to which the dam facilities as well as buildings and equipment located below are not adjusted. The barrage structures must maintain water pressure with a height of 14 m, i.e. more than 25% higher than the designed level. Poor working conditions of the dame in Włocławek cause the deterioration of the general condition of its facilities and reduce the safety of its operation, therefore posing a threat of collapse of the dam72.

Effects of disaster In the event of a disaster at the water level close to the regular damming level (NPP) and the destruction of the head dam of the dam in Włocławek, the areas located in the Vistula River Valley below the dam will be flooded. Areas under threat below the dam in Włocławek are divided into three zones: a. 1st zone – covers the area from the dam in Włocławek (674.85 km) to the lower border of the City of Włocławek (682.00 km) (the zone is 7 km long); the threat of damage within the City of Włocławek applies to the lower terrace of the right-bank district Szpetal b. 2nd zone – a section of the river from 682.00 km to 703.0 km (the zone is 21 km long); this zone includes areas located on both sides of the river, mainly agricultural land with utility buildings and low-lying buildings of the Town of Nieszawa

72 Threat to the dam at the Vistula River in Włocławek: statement of Prof. Wojciech Wolski, PhD. Eng., the President of the

Hydrotechnical Structure Section at the Civil Engineering Committee of the Polish Academy of Sciences (PAN). ENERGIA XXI – Privatization of Polish energy sector, part 4. Advertising supplement to "Rzeczpospolita" No. 62 (5532), 14 March 2000.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Zone

Agricultural land area (ha)

Cattle* (pcs)

Pigs * (pcs)

190

126

243

III

1210

805

1548

Total

1432

952

1832

* According to the statistical yearbook for livestock status at 100 hectares of agricultural land for the former Włocławek

Province (horses – 10.7, cattle – 66.5, pigs – 127.9) Tab. 19. Agricultural land currently in use and the number of livestock in the areas under threat / source: S. Gawłowski, Odpowiedź sekretarza stanu w Ministerstwie Środowiska – z upoważnienia ministra – na interpelację nr 16249 w sprawie stanu technicznego tamy na Wiśle we Włocławku (Response of the Secretary of State at the Ministry of Environment – by the authority of the Minister – to interpellation No. 16249 on the technical condition of the dam at the Vistula River in Włocławek), Warsaw, 6 July 2010

c. 3rd zone – from the borders of the Town of Nieszawa (703.00 km) to the City of Toruń (731.00 km) (the zone is 28 km long), in which a wave loses its destructive properties; in this zone there are low developed areas of residential and utility buildings, agricultural areas and low-lying urban areas in Toruń (mainly allotment gardens and transport routes). Towns/cities and agricultural land at risk of flooding are shown in Tab. 18 and 19. The cited data comes from 1998 and is characterised by an upward trend as a result of further building development in the areas at risk of disaster. Passage of a disaster wave can also cause the following: • serious disruptions in water consumption • time limit of operation of the equipment in manufacturing facilities located below the barrage • destruction of road infrastructure and transport interference: –– in the 2nd zone: at 0.4 km of national roads –– in the 3rd zone: at 2.1 km of national roads • destruction of crossing through the damin Włocławek • temporary inability to use the road bridge in Włocławek73. In order to reduce the adverse effects occurring in the region of the dam in Włocławek, various types of preventive measures have been carried out over the entire period of operation, such as the construction of a check dam below the weir and hydropower plant. They are, however, purely temporary measures, effective only for a limited period74. The most important works include: • construction of a temporary check dam below the weir and hydropower plant (1997–2000) in order to ensure their proper operation (the check dam generally required repairs after every flood water and ice floe passing through the weir); the check dam was rebuilt in 2007 • strengthening the ground under the foundations of the weir retaining walls (2000)

73 S. Gawłowski, Odpowiedź sekretarza stanu w Ministerstwie Środowiska – z upoważnienia ministra – na interpelację nr 16249

w sprawie stanu technicznego tamy na Wiśle we Włocławku [Response of the Secretary of State at the Ministry of Environment - by the authority of the Minister – to interpellation No. 16249 on the technical condition of the dam at the Vistula River in Włocławek], Warsaw, 6 July 2010 74 Threat to the barrage on the Vistula River in Włocławek...

III. RISKS ASSOCIATED WITH ABANDONMENT OF IMPLEMENTATION THE LOWER VISTULA CASCADE

• • • • • • •

strengthening the ground under the weir panels (2003–2004) drainage of the abutment zone of the weir in the form of gravel screen (2003) repair of potholes in the area of the pillars of the road bridge in Włocławek (2003) reconstruction of the Vistula River (Wisła) section between the barrage and the city (2004–2005) modernization of the supporting dam, including installation of concrete slabs (2007) construction of an additional embankment along the downstream base of the earth dam scarp (2008) implementation of the “Improvement of the technical condition and flood safety of the Włocławek Dam” programme (the cost of the program was PLN 123 million); the first stage was completed in 2014, the second phase of work is in progress75.

These works and related costs, which are aimed at the safe use of the barrage in Włocławek, are a result of the lack of a dam in Ciechocinek or Nieszawa. Another barrage should be built instead of incurring huge annual costs to ensure the safe use of the dam in Włocławek to protect it from a construction disaster76. Additional costs have also been incurred for the construction of the bridges over the Vistula River (Wisła) which would run through the dam crest if the cascade was built. Construction of these bridges in the areas designated for the construction of the dam is now an additional obstacle to the design of the cascade – it makes it necessary to change the location of barrages.

Expenditures on reduction of losses The abandonment costs should also include a large part of flood losses. Admittedly, because of the changing natural conditions characterised by more frequent extreme weather events, in the case of a set of adverse conditions a flood risk may occur even where the flood protection is very good, but this risk should be mitigated. The current status in the region of the lower Vistula (dolna Wisła) certainly does not meet the today’s expectations in respect of flood protection. Expenditures incurred to cover flood losses only partially compensate for these losses, and usually the initial condition cannot be achieved on flooded areas for many years after major floods. These funds do not improve the state of emergency. If the same funds would be invested in the comprehensive development of the waterway, the flood losses could be eliminated or at least greatly reduced.

3.2. Transport problems, the threat to competitive position of seaports

The lower Vistula waterway runs in an important north – south transport corridor, which is already affected by severe congestion problems. Is it possible to meet the transport needs on this route without inland waterway transport? Because of the large range of substitution in transport, on many routes waterway transport can be replaced by other modes of transport; however, there are also routes where there is no longer any capacity for both road and rail transport. Thus, although ultimately the demand will be satisfied, the lack of support from inland waterway transport contributes to congestion and, as a result, to the reduction of the quality of transport services and the increase in transport costs, safety risks and the loss of attractiveness of the regions affected by the problems that may be most severe in seaport areas, therefore threatening their market position.

75 Materials of the Regional Water Management Authority for Warszawa Włocławek, 40 lat stopnia wodnego fakty i mity o

zagrożeniu [Włocławek, 40 years of barrage – facts and myths about the threat] [online], http://www.inzynierbudownictwa.pl/ [access: 10.10.2015]. 76 W. Depczyński, op. cit.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Fig. 67. The number of fatalities in road transport per 1 million of inhabitants in Poland compared to the EU-28 average in 2005â&#x20AC;&#x201C;2014 / source: Road Safety 2014. How is your country doing? Published by: European Commission, Mobility and Transport DG, Brussels, European Union, 2015

Fig. 68. The number of fatalities in road transport per 1 million of inhabitants in Poland compared to the EU-28 in 2014 / source: Road Safety 2014. How is your country doing? Published by: European Commission, Mobility and Transport DG, Brussels, European Union, 2015

Safety risk One of the major problems in Poland is the high fatality rate in road transport. The number of fatalities in this mode of transport in Poland per 1 million of inhabitants in 2014 was 84, while it was much lower in the EU countries â&#x20AC;&#x201C; 51 (Fig. 67). As shown in Fig. 68, it is also one of the highest rates in the EU countries. A higher fatality rate in road transport in 2014 was recorded only in Lithuania, Romania, Bulgaria and Latvia. 82

III. RISKS ASSOCIATED WITH ABANDONMENT OF IMPLEMENTATION THE LOWER VISTULA CASCADE

Fig. 69. The number of accidents in road transport per 100 thousand inhabitants in Poland by province in 2013 / source: Transport drogowy w Polsce w latach 2012 i 2013 [Road transport in Poland in 2012 and 2013], GUS, Warsaw 2015

The high rate of accidents in road transport results in significant costs incurred in this respect. In 2013, these costs in Poland accounted for 2.1% of GDP, including the costs of road traffic collisions – 2.99% of GDP77. In 2013, GDP in Poland at current prices was PLN 1,662.7 billion 78, which means that the total costs of road accidents in Poland were PLN 49.7 billion, i.e. PLN 1.39 million per accident (35,847 accidents in 2013)79. In 2013, a total of 8,402 road traffic accidents were recorded in the Pomerania, Kuyavia-Pomerania and Mazovia provinces80, and therefore the costs incurred in this respect by the economy amounted to PLN 11.7 billion. Therefore, there is a risk that the limited scope of intermodal shifts in the modal distribution of transport tasks in support of seaports will not be conducive to the improvement of road traffic safety in Poland and reduction of the costs of accidents in road transport. The above-mentioned transport-related difficulties associated with overloaded road and rail transport in support of seaports can also contribute to the deterioration of their competitive position, and consequently prevent some of the potential demand for cargo handling at seaports from being fulfilled. This situation would have certain financial consequences for both seaports and the national economy. In seaports in Poland in 2013, handling of 1 tonne of cargo was the source of revenue of approx. PLN 31.3 and net profit of PLN 2.6 (Tab. 20). While these relations are maintained, this means as a result that the loss of 1 million tonnes of port turnover is equivalent to the loss of revenues of PLN 31.3 million and net income of PLN 2.6 million. Improvement of the competitiveness of seaports is also important from the point of view of the national income. As indicated in Tab. 21, in recent years handling of 1 tonne of cargo generates PLN 0.5 of revenue to the state budget due to income tax. Therefore, as previously indicated, the decline in turnover by 1 million tonnes means that the revenue to the state budget due to income tax are reduced by PLN 500 thousand. 77 M. Sikorski, Koszty wypadków drogowych [Costs of road accidents], "Polska Gazeta Transportowa" 2015, No. 8. 78 Roczne wskaźniki makroekonomiczne. Rachunki narodowe ESA 2010 [Annual macroeconomic indicators. National accounts

ESA 2010] [online], stat.gov.pl/obszary-tematyczne/rachunki-narodowe/roczne-rachunki-narodowe/ [access: 04.08.2015]. 79 Transport drogowy w Polsce w latach 2012 i 2013 [Road transport in Poland in 2012 and 2013], GUS, Warsaw 2015. 80 Transport – wyniki działalności w 2015 [Transport performance in 2015], GUS, Warsaw 2015.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Year

Cargo turnover at seaports in Poland (million tonnes)

Net revenue from sales (PLN million)

Gross profit (PLN million)

Net profit (PLN million)

Net sales revenue in relation to cargo turnover (PLN/tonne)

Gross profit in relation to cargo turnover (PLN/tonne)

Net profit in relation to cargo turnover (PLN/tonne)

2005

54.8

799.2

76.1

59.3

14.6

1.4

1.1

2006

53.1

809.8

84.5

66.9

15.2

1.6

1.3

2007

52.4

818.0

95.3

75.8

15.6

1.8

1.4

2008

48.8

818.3

–12.3

–9.3

16.8

–0.2

2009

45.1

1460.9

36.6

21.6

32.4

0.8

0.5

2010

59.5

1631.4

111.6

65.5

27.4

1.9

1.1

2011

57.7

1460.1

70.3

7.6

25.3

1.2

0.1

2012

58.8

1587.2

137.2

53.3

27.0

2.3

0.9

2013

64.3

2010.2

210.7

165.1

31.3

3.3

2.6

Tab. 20. Cargo turnover and selected financial results (at current prices) of seaports in respect of activities related to handling, warehousing and storage of goods in seaports in Poland / source: own work based on: Roczniki statystyczne gospodarki morskiej. Roczniki branżowe [Statistical Yearbook of Maritime Economy. Branch Yearbooks], GUS, Szczecin 2014, 2013, 2012, 2011, 2010, 2009, 2007, GUS, Warsaw

Years

Cargo turnover at seaports in total (million t)

Income tax* (PLN million)

Income tax/ handling ratio (PLN/t)

2005

54.8

17.5

0.3

2006

53.1

17.6

0.3

2007

52.4

19.4

0.4

2008

48.8

–3

–0.1

2009

45.1

0.3

2010

59.5

22.8

0.4

2011

57.7

9.8

0.2

2012

58.8

27.1

0.5

2013

64.3

34.5

0.5

* Obligatory charges in gross profit due to income tax with respect to handling, warehousing and storage of goods in seaports Tab. 21. Obligatory charges in gross profit due to income tax on activity related to handling, warehousing and storage of goods in relation to the turnover at seaports in Poland / source: own work based on: Roczniki statystyczne gospodarki morskiej. Roczniki branżowe [Statistical Yearbook of Maritime Economy. Branch Yearbooks], GUS, Szczecin 2014, 2013, 2012, 2011, 2010, 2009, 2007, GUS, Warsaw

The development of seaports is also of specific importance from the point of view of the situation on the regional labour market. As indicated in Tab. 22, in 2005–2013 there were 112.6 employees per million tonnes of turnover. There is a risk that the decline in the turnover at seaports would lead to a reduction of employment in activity related to handling, warehousing and storage of goods. 84

III. RISKS ASSOCIATED WITH ABANDONMENT OF IMPLEMENTATION THE LOWER VISTULA CASCADE

Years 2005 2006 2007 2008 2009 2010 2011 2012 2013

Cargo turnover at seaports in total (million tonnes) 54.8 53.1 52.4 48.8 45.1 59.5 57.7 58.8 64.3

Average employment in handling, warehousing and storage of goods at seaports 5391 5275 5011 4779 7768 6584 6452 7024 6927

Average employment in relation to handling (number of employees/million tonnes) 98.4 99.3 95.6 97.9 172.2 110.7 111.8 119.5 107.7

Tab. 22. Employment related to activity in handling, warehousing and storage of goods in relation to the turnover at seaports in Poland / source: own work based on: Roczniki statystyczne gospodarki morskiej. Roczniki branżowe [Statistical Yearbook of Maritime Economy. Branch Yearbooks], GUS, Szczecin 2014, 2013, 2012, 2011, 2010, 2009, 2007, GUS, Warsaw

Improvement of transport in the hinterland of the ports at the mouth of the Vistula River (Wisła) is therefore important also from the point of view of maintaining a good financial condition of seaports, increase in the national income and improvement of the situation on the labour market. Inland navigation must therefore be perceived as crucial in the congestion reduction process in the hinterland of seaports and necessary for the further development of the seaports in Gdańsk and Gdynia.

3.3. Problems with water quantity and quality

One of specific threats associated with abandonment of the Lower Vistula Cascade would be the intensification of the problem of water deficit. As previously mentioned, the average surface water resources in Poland are 62 billion m3, but in a very dry year they may be less than 40 billion m3. Assuming that inviolable resources in Poland are 23 billion m3, the available resources in an average year and in a very dry year are 40 billion m3 and less than 17 billion m3, respectively. The lack of proper guarantees that available resources are secure means that 3/4 of Polish territory is threatened by periodic water deficits81; apart from Greater Poland, this problem is most frequent and most severe in the regions located at the lower Vistula River (Mazovia and Kuyavia). Considering the climate changes, there is a serious threat that the problem of supply of various consumers and users in the sufficient amount of water of proper quality will be intensified in these regions and will occur more and more often. A consequence of drought is a reduction of flow of water in rivers and ultimately lowering of groundwater levels and drying of the soil.

Forestry In forestry, the problem with water causes drying of forest floor and more frequent fires, which lead to significant material losses. In 2013, fires covered a total of 1,289 hectares of forest in Poland, including 26.5 ha in the Kuyavia-Pomerania Province, 39.6 ha in the Pomerania Province and 296.3 ha in the Mazovia Province82. Based on the estimates of losses caused by fires of forests managed by the State Forests (in 2013, PLN 5.9 thousand per ha of forest fire)83 , it can be estimated that in 2013 the losses suffered as a result of forest fires within the region of the lower Vistula River (dolna Wisła) amounted to PLN 2.1 million. 81 Zasoby wodne [Water resources], Department of Hydrology and Water Management at the University of Łódź [online], http://

hydro.geo.uni.lodz.pl/index.php?page=zasoby-wodne [access: 04.08.2015]. 82 Leśnictwo [Forestry], GUS, Warsaw 2014. 83 See Leśnictwo [Forestry], GUS, Warsaw 2014.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

Agriculture In agriculture during the growing season drought may also result in serious losses. According to the Institute of Soil Science and Plant Cultivation (IUNG) in the period from 1 May to 30 June 2015, the threat of agricultural drought in Poland occurred in 206 communes (6.7% of communes in the country), i.e. in 2.0% of arable land, including in the Kuyavia-Pomerania and Mazovia provinces. In respect of spring grain, the drought affected 4.2% and 4.6% of arable land in the Kuyavia-Pomerania Province and the Mazovia Province, respectively84. There was a threat that yields within those provinces in 2015 would be lower than 20–30% of the long-term average85. Assuming that: • the area of grain crops in the Pomerania, Kuyavia Pomerania and Mazovia provinces is 1900 thousand ha86 • the average yield of basic grains for total households in total in Poland is 3.5 tonnes per ha (average for 2001–2013)87 • the average price of basic grains in 2015 was PLN 570/tonne88; losses caused by drought in the region of the lower Vistula River can reach PLN 758.1–1137.1 million. Therefore, the Lower Vistula Cascade is one of important factors in reducing the risk of drying of the soil and reduction of the resulting losses for the economy.

3.4. Environmental degradation, uncontrolled devastation of riverside areas

Today the demand for tourism is associated with the need for investment preparation of tourism regions so that they can receive and service tourists. The lack of such infrastructure will result in: • reduced number of potential tourists • decrease in revenue from tourism • destruction and devastation of nature by tourists who decide to engage in water tourism despite the lack of infrastructure. Because of the lack of waste collection points, toilets, food and beverage facilities, shops, bike paths, swimming areas and beaches prepared for tourist, these areas are devastated by people who want to enjoy the values of water tourism.

84 Pomoc dla rolników poszkodowanych w wyniku suszy. Informacja o obszarach zagrożonych suszą rolniczą [Aid for farmers

affected by drought. Information about the areas at risk of agricultural drought], the Agency for Restructuring and Modernisation of Agriculture [online], http://www.arimr.gov.pl/aktualnosci/artykuly/informacja-o-formach-pomocy-dla-rolnikow-poszkodowanych-w-wyniku-niekorzystnych-zjawisk-atmosferycz.html [access: 04.08.2015]. 85 Ziemia sucha jak pieprz, uprawy marnieją w oczach, a rolnicy liczą straty [Land as dry as a bone, crops wither rapidly and farmers count losses], StrefaAgro [online], http://www.strefaagro. nto.pl/artykul/ziemia-sucha-jak-pieprz-uprawy-marnieja-w-oczach-rolnicy-licza-straty [access: 04.08.2015]; Susza w rolnictwie: niewiele komisji oszacowało straty [Drought in agriculture: few commissions have estimated the losses] [online], http://www. polskieradio.pl/42/3166/Artykul/1483202,Susza-w-rolnictwie-niewiele-komisji-oszacowalo-straty [access: 04.08.2015]. 86 In the period of 2010–2012 and in 2013, the average area of grain crops in the analysed provinces was 1934.8 thousand ha [in:] Rocznik statystyczny rolnictwa [Statistical Yearbook of Agriculture], GUS, Warsaw 2014. 87 Rocznik statystyczny Rzeczpospolitej Polskiej 2009, 2014 [Statistical Yearbook of the Republic of Poland 2009, 2014], GUS, Warsaw 2009, 2014. 88 Ceny zbóż [Grain prices] [online], http://agrobiznes.money.pl/ceny-zboz/ [access: 04.08.2015].

III. RISKS ASSOCIATED WITH ABANDONMENT OF IMPLEMENTATION THE LOWER VISTULA CASCADE

Increase in transport costs Difficul es in support of hinterland of seaports, the risk of reduced turnover at seaports

In transport

Collapse of amateur enterprises, loss of skilled specialist staff Reduc on of passenger transport on waterways

EFFECTS of abandonment of the development of inland waterways

Flood losses In water management

Abandonment of the cheapest control power, increase in energy costs High cost of "single-purpose" water investments

The amount of energy consump on of transport

Environmental effects

Increase in degrading impact of transport on the environment, increase in external costs of transport Energy structure unfavourable for the environment – failure to use renewable energy Uncontrolled destruc on of protected areas over water by tourists in the absence of tourism infrastructure

Fig. 70. The effects of the cancellation of the development of inland waterways / source: own work

Nowadays, the protection of valuable landscape areas cannot rely only on restricted entry, but requires their adjustment to the needs of tourists in such a way as to prevent their degradation. As demonstrated by many examples (the Żuławy Loop, Greater Poland Loop or foreign experience), it is possible for the benefit of both nature and visitors.

3.5. Problems with regional development

Negligence of the lower Vistula River (dolna Wisła) – which adversely affects the growth of transport and other sectors related to water management as well as the environment, the protection of which is usually an argument against the development of waterways (Fig. 70) – as a result reduces the chances for development of the regions along the Vistula River. Abandonment of the construction of the Lower Vistula Cascade should also be seen as an abandonment of the use of an essential instrument of economic policy, which involves the use of large investment projects in the process of creating multiplier effects. As previously mentioned, especially large infrastructure projects mean employment growth not only directly in relation to investment work, but also in other sectors, including in particular in the construction sector, because of the increase in demand for building materials. Multiplier effects of investments therefore involve the creation of additional effective demand and, consequently, the stimulation of the economy. Abandonment of this project may also mean the deprivation of opportunities for domestic construction companies to appear in the construction market in Poland. Experience shows that the market is dominated by foreign companies89. In the long term, cancellation of the construction of the Lower Vistula Cascade as one of the important factors influencing the infrastructural potential of regions may mean the deprivation of opportunities to accelerate the economic growth in the regions located at the waterway, and could even deepen the disparities in the level of 89 http://www.forbes.pl/polski-rynek-budowlany-liderem-wzrostu-w-europie,artykuly,198854,1,1.html# [access: 23.04.2016].

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

economic growth compared to other fast-growing regions. As previously mentioned, especially the region of the Kuyavia-Pomerania Province belongs to the group of regions with low growth compared to the average in the EU countries. The low level of economic activity may in turn lead to an increase in unemployment in these regions and to many associated negative effects. The specific risks of unemployment include pathological behaviour, usually associated with an increase in alcoholism and crime rate. The effects of unemployment do not apply only to the unemployed themselves, but they have a social and economic impact. For the economy, the cancellation of the Lower Vistula Cascade would mean the deprivation of opportunities to: • reduce public expenditure on benefits and other social services for the unemployed and spending on unemployment prevention programmes • obtain additional national income due to personal income tax. As shown by the European experience, construction of a waterway in a region gives two types of effects on employment: • temporary employment associated with the implementation of the water investment project • long-term employment associated with the development of the TSL sector and the development of other sectors of the economy. The ongoing construction of a 106 km long canal on the Seine – Northern Europe route involves the employment of 4,500 workers, and it is projected that by 2025 the canal will contribute to the creation of 25 thousand permanent jobs in various sectors of the economy90.

3.6. Conclusions Benefits of comprehensive development The benefits of comprehensive development of the lower Vistula River (dolna Wisła) are significant and appear in many areas of the economy. Transport, including in particular seaports and logistics centres, flood protection, water supply for population, industry, agriculture and forestry, energy sector and tourism are fields in which tangible and intangible effects could be achieved, which improve the quality of life to build the wealth of a modern, environmentally friendly energy efficient economy and to be the basis for the development of regions associated with the lower Vistula River (dolna Wisła), thus meeting the contemporary criteria for the development of the EU regions. A question arises, why in the face of so many benefits and experiences of the European Union in the area of comprehensive utilization of water, is the process of comprehensive development of the lower Vistula River (dolna Wisła) being delayed, and what’s more – why does this intention cause controversy in some circles? The main argument against the development of the waterway at the lower Vistula River (dolna Wisła) is environmental considerations. The so-called defenders of nature consider the development of the lower Vistula River to be a violation the natural environment. It even seems that their activity is particularly strong in environmentally friendly projects.

Violation of the environment Any investment and other activity it causes a violation of the environment, which as a matter of fact has not been natural for a long time. Comprehensive investments also affect the balance in the environment, but their advantage over fragmentary development of watercourse is based on consideration of all the consequences of such a project, which makes it possible to restore the balance in the environment after the completion of the investment, although in changed conditions. The Vistula River (Wisła) has been developed for many years; unfortunately, this usually involved intervention or fragmentary investments. Even when a comprehensive development program was prepared for the lower Vistula River (dolna Wisła), it was implemented only partially. This caused many negative consequences in various areas of the economy, which are often very expensive, threaten the safety of life and reduce its quality in the region of the lower Vistula River (dolna Wisła). Unfortunately, often no conclusions are drawn from these experiences and there 90 Inland Navigation in Europe, "Marketobservation" 2011, No. 2.

III. RISKS ASSOCIATED WITH ABANDONMENT OF IMPLEMENTATION THE LOWER VISTULA CASCADE

are still opinions of the need for the so-called single-task development, whose negative effects could be suffered by the entire economy for years.

Natura 2000 Some opponents of the development of the lower Vistula River (dolna Wisła) believe that Natura 2000 Programme does not allow for any investments in the protected areas, especially for the development of inland waterways, which is necessary for the growth of inland waterway transport. This argument is not true, because: • nature conservation within the Natura 2000 network does not need to be conflicting with the development • “investments with potential adverse impact on Natura 2000 sites are subject to mandatory assessment of their impact on natural habitats and species for the protection of which the site was established; as a rule, all investments that do not have a significant impact on the protected species and natural habitats are acceptable” • “even a negative assessment does not absolutely exclude the possibility of investment” • “the state can allow to carry out the investment, if there is no reasonable and feasible alternative, and the investment is to made in the best public interest” • “however, it is necessary to minimise the adverse impact, and when it is not possible – to compensate for losses suffered by the nature, so as to maintain the integrity of the network (e.g. by establishing habitats favourable for protected species in other location)”91. On 18 October 2012 the European Commission issued new recommendations called “Guidance document on sustainable inland waterway development and management in the context of the EU Birds and Habitats Directives”. The document highlights the importance of inland waterways for sustainable development of transport and explains what the best way is to ensure the compliance of the development of inland waterway transport with the EU policy in respect of environmental protection, in particular the provisions on nature conservation92. It was stressed that the Natura 2000 sites do not have be areas excluded from development, and that the development of inland waterways is possible under the condition that a sufficient level of nature conservation is ensured. The document provides examples of good practices that show how to reconcile the development and management of inland waterways with nature conservation. It demonstrates the benefits of planning in which environmental protection requirements are taken into account at every stage of infrastructure development and an active participation of various stakeholders is ensured, including NGOs and civil society, which guarantees that solutions beneficial to both parties are achieved. In the compilation of “European Good Practices Report for Inland Waterway” published in 2011 under the EU Platina project, which shows projects implemented in different countries as examples of how to develop and introduce innovations in this mode of transport, the page on to Poland indicates the following: “POLAND – No good practices for Poland were identified”93. It is significant that in the case of other investments in infrastructure, including those that affect flow or cross waterways, such arguments do not apply; predetermined measures necessary for nature conservation are simply implemented and the investment is carried out. In the case of inland waterways, we usually deal with the “best public interest”, because comprehensive development of waterways for the purposes of inland navigation at the same time has many important functions in the field of economy. Therefore, many investments on inland waterways are carried out in EU countries, including: 91 P. Pawlaczyk, A. Jeremaczek, Natura 2000 – narzędzie ochrony przyrody. Planowanie ochrony obszarów Natura 2000 [Natura

2000 - tool for nature conservation. Planning of protection of Natura 2000 sites], WWF Polska, Warsaw 2004, p. 35. 92 Guidance document on Inland waterway transport and Natura 2000. Guidance document on sustainable inland waterway development and management in the context of the EU Birds and Habitats Directives, European Commission, Brussels 2012. 93 Good Practices in European Good Practices Report for Inland Waterway, Platina, March 2011.

SECTION I. SOCIO-ECONOMIC CONDITIONS FOR THE DEVELOPMENT OF THE LOWER VISTULA

• The Seine-Nord Europe Canal with a length of 106 km • The Niederfinow Boat Lift • intersection of infrastructure of three modes of transport with the canal bridge in Eberswalde. Unfortunately, these problems (water needs, flood protection) in Poland, i.e. both social and economic aspect of sustainable development, are neglected or presented in a very unreliable way in the case of inland waterway transport. For example, by accepting the fact that this mode is least degrading to the environment, the lack of investment on inland waterways is justified by huge costs of their development, but the multi-tasking of inland waterways is not mentioned, whereas it makes a large part of the capital expenditure apply to non-transport functions the effects of which are also considerable, and the losses associated with the lack of development may exceed the expenditures on the development of waterways.

Loss of opportunity

Abandonment of the development of inland waterways can mean a definite loss of opportunity for: • sustainable economic growth (sustainable development of transport, use of renewable energy, prevention of devastation of the natural environment in the areas of rivers and flood protection) • a dominant position in the Baltic Sea achieved by dynamically growing Polish seaports • stimulation of regional development. The risk that the loss of opportunity may be irretrievable is increasing with the growing decapitalisation of water infrastructure, the renewal of which will require more and more expenditure. Considering the fact that the opportunity for obtaining additional EU funds for the development of inland waterways is decreasing, it can be problematic to make up for years of negligence in the future.

SOCIO-ECONOMIC IMPACT OF THE DEVELOPMENT OF THE LOWER VISTULA

SECTION II STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Table of Contents I.

ANALYSIS OF AVAILABLE STUDIES OF DEMAND FOR CARGO TRANSPORT.........................................93 1.1. Importance of studies of demand for cargo transport.........................................................................................93 1.2. Methods of study of transport demand .................................................................................................................94 1.3. Review of demand forecasts.....................................................................................................................................98

II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER.....110 2.1. Methodology of study of demand for waterway transport at the lower Vistula River.................................110 2.2. Factors determining the demand for cargo transport in the area of the lower Vistula River......................113 2.2.1. Handling forecasts for Polish sea ports......................................................................................................113 2.2.2. Economic activity in the region..................................................................................................................118 2.2.3. Capacity to satisfy the demand by other modes of transport................................................................128 2.2.4. Forecast of demand for transport at the lower Vistula River.................................................................131 2.3. Analysis of study results – conclusions.................................................................................................................142 III. ANALYSIS OF THE DEMAND FOR PASSENGER TRANSPORT USING INLAND NAVIGATION IN THE AREA OF THE LOWER VISTULA RIVER ..............................................................................................144 3.1. Types of passenger transport in inland navigation.............................................................................................144 3.2. Trends in the development of passenger transport in Europe..........................................................................146 3.3. Passenger transport in Poland...............................................................................................................................150 3.4. Forecast of passenger transport using inland navigation in the area of the lower Vistula River waterway ...........................................................................................................................................156

I. Analysis of available studies of demand for cargo transport 1.1. Importance of studies of demand for cargo transport

The studies of demand for transport services are essentially systematic forecasts of transport development. In fact, these studies initiate the process of transport system development forecasting. This is due to the fact that these studies provide an important basis for the preparation of other derivative forecasts and projections of future investment activities. Studies of demand for transport are crucial for planning the directions of development of not only linear infrastructure, but also transport points whose location and handling capacity must be adapted to the spatial distribution of the demand for transport. The importance of studies of transport is due to the fact that the optimal arrangement of locations of transport points is even greater than it seems at first, this is because the role of transport points is not only limited to providing access to services within the particular mode of transport. The functions of transport points are much broader than that, especially in the case of river ports, which – according to international experience – are being converted into multi-purpose logistics centres, and therefore play an important role in extending the intermodal integration of transport and are an important factor in the development of towns/cities and regions1. Thus, knowledge of transport needs is relevant from the point of view of developing an ability to optimize the transport system and to rationalize the transport processes. The reliability of estimates of present levels of demand and forecasts of future transport demand are also important from the point of view of financial feasibility of investment projects. This is because the reliability and validity of the data on the volume and structure of transport demand considerably affects the results of evaluations of the economic viability of planned infrastructure investments.

K. Wojewódzka-Król, R. Rolbiecki, W. Rydzkowski, Transport wodny śródlądowy [Inland waterway transport], Gdańsk 2007, pp. 86–88. 1

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

1.2. Methods of study of transport demand

Depending on the available information, estimations of the actual and potential demand can be made using different techniques. From the point of view of the formalization of research procedures, examination of economic conditions and phenomena, and forecasts of changes in these processes, estimates can be carried out using quantitative techniques and qualitative techniques. Quantity-based studies of transport demand can be performed with the use of the following methods, among others: • simple trend extrapolation • comparative (index) method • econometric modelling. Estimation of transport demand using the simple trend extrapolation method is based on the assumption that in the future, transport demand will show a trend similar to the current trend, and the factors determining the demand will occur in the same proportions. This method utilises a technique involving regression analysis, in which the fundamental factor affecting the projected variable is time. The simplest assumption is a linear connection between these variables. In this case, the projected variable results from the following function:

where: Y – projected variable, a – absolute term, b – directional factor, t – time. The assumption that transport demand is only a time function is too simplistic an approach to economic reality. Therefore, this tool should be practically excluded from the long-term change forecasting methods. A trend extrapolation model based on a constant growth rate is applied much more often in practice. In this case, the transport demand is a result of the following dependency2:

where: Y – projected variable, p – base variable, g – growth rate, t – time.

Trend extrapolation The trend extrapolation method assumes that the trends observed in the past will continue in the future. Due to the fact that this is definitely a simplification, this method can be used primarily for studies of transport demand volume in general. The use of this method for studies of demand for transport using a specific mode of transport requires the assumption that the current structure of modal share is maintained3. One of the primary goals of modern transport policy is a sustainable development of transport by increasing the role of modes less detrimental to the environment in the transport system, including inland waterway transport. Thus, a clear improvement of waterway navigability at the lower Vistula River (dolna Wisła), for example, could significantly contribute to breaking the current trends in the development of demand for this mode of transport by taking over some of the transport tasks from road transport. Comparative (index) methods can be applied in studies of transport demand; they make it possible to establish the correlation between the specific economic factors and transport volume. According to the assumptions of comparative methods, these factors determine the scale and pace of growth in transport, since an increase

Przewodnik do analizy kosztów i korzyści projektów inwestycyjnych [Guide to analysis of costs and benefits of investment projects], European Commission, Directorate-General for Regional Policy, 2008. 3 W. Morawski, Metody prognozowania przewozów ładunków [Methods of forecasting cargo transport], Warsaw 1976, pp. 51, 77. 2

I. ANALYSIS OF AVAILABLE STUDIES OF DEMAND FOR CARGO TRANSPORT

Years

Transport work (billion tkm)

Cargo transport** (million tonnes)

GDP at current prices (billion EUR)

2005 2006 2007 2008 2009 2010 2011 2012 2013

2,358 2,435 2,522 2,481 2,195 2,314 2,309 2,250 2,280

18,494.2 19,255.0 19,722.2 19,460.4 17,107.0 17,079.5 17,238.2 16,217.5 16,132.9

11,510.1 12,177.0 12,909.4 12,993.6 12,249.6 12,794.3 13,177.3 13,429.0 13,541.7

Transport intensity of GDP tkm/thousand EUR 204.9 200.0 195.4 190.9 179.2 180.9 175.2 167.5 168.6

tonnes/thousand EUR 1.61 1.58 1.53 1.50 1.40 1.33 1.31 1.21 1.19

* road, rail and inland waterway transport * some data are estimates Tab. 1. The relationship between GDP and transport work and transport volume* in the 28 EU countries / source: own work based on: Gross domestic product at market prices, Eurostat [online], http://ec.europa.eu/eurostat/tgm/refreshTableAction. do?tab=table&plugin=1&pcode=tec00001&language=en [access: 9.09.2015]; EU transport in figures. Statistical pocketbook 2015, Publications Office of the European Union, Luxembourg 2015

in transport (transport needs) is treated as being the result of changes in economic factors applied in these methods. Such studies can be conducted based on: • transport intensity indices, which show the relationship between the transport volume and gross domestic product (GDP) or global production • transport activity indices, showing the relationship between the transport volume and production volume or value. Demand for cargo transport is directly related to demand on the commodity market. Demand for transport services is therefore strongly dependent on the level of economic activity. Particularly strong relationships exist between transport demand and changes in GDP. It is estimated that in 1995–2013 the correlation between changes in transport work in cargo transport and changes in gross domestic product (GDP) – for year 2000 prices – was 0.92, compared to 0.98 in passenger transport. This means that changes in GDP make up almost 85% of the explanation for changes in demand for cargo transport and it also explains 96% of the changes in passenger transport. One of the conditions necessary to maintain proper economic order in a sustainable development process is the rational use of transport services by the economy and society. Therefore, the demand for transport services should be the result of the economically justified needs of the national economy. It is thus important to break the direct relationship between growth in transport and GDP growth, and to decrease the transport intensity of GDP. Longterm analysis shows that this phenomenon has been observed in the 28 EU countries. 205 tkm and 1.6 tonnes of cargo per 1 thousand EUR in GDP was observed in those countries in 2005, compared to 168.6 tkm and 1.2 tonnes of cargo in 2013 (Tab. 1). In the light of the relationships indicated, the observed trends in basic macroeconomic proportions (in particular the level of transport intensity of GDP) and changes occurring in the various sectors of the economy are of particular importance in studies of transport needs. However, studies of transport demand do not have to be based solely on exogenous variables describing the changes in regional economic development. This is because the inter-transport factors are relevant for such studies. Omission of the inter-transport factors, especially the parameters determining future transport supply, can cause a serious distortion of the results of demand studies in terms of modal share. 95

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 1. Seine-Nord Europe Canal / source: Transport fluvial en Ile-de-France: de belles perspectives de croissance sur le long terme [online],http://www.rsenews.com/public/secteurs/transport-fluvial-idf.php [access: 20.10.2015]

Item Newly built Seine-Nord Europe Canal Current Seine-Nord Europe Canal

2020

2050

13.8–14.9

16.3–27.7

5.1

5.0

Tab. 2. Cargo transport on the north – south route through the Seine-Nord Europe Canal in million tonnes / source: Inland Navigation in Europe, “Market Observation” 2011-2, Central Commission for the Navigation of the Rhine, Strasbourg 2011

Seine-Nord Europe Canal An example could be the expected benefits of the construction of the Seine-Nord Europe Canal (Fig. 1). This channel is a larger version of the existing canal, which can support ships with a maximum capacity of 600 tonnes. The new canal will be able to support vessels with a tonnage of 4,500 tonnes, and the increased bridge span on the waterway will facilitate the transport of containers in three layers on board. It is expected that the change of infrastructure conditions achieved this way within the regions located in the immediate vicinity of the canal (Ile-de-France, Nord-Pas-de-Calais, Picardy and Upper Normandy) will significantly affect the position of inland waterway transport and modal share in northern France and border regions. Thanks to the canal, cargo transportation on the north – south route in 2020 will be almost 3 times higher than if the existing canal had been left in place (Tab. 2). It is expected that in 2020, transport on the new canal will reach 13.5 to 15 million tonnes, including container transport (250 thousand TEU), and in the year 2050 it may even reach 27.7 million tonnes (of which 2/3 will be the transit traffic). By 2020, the existing transport demand of the canal will represent just 34% of total transport demand (Fig. 2). In contrast, more than half of the total transport on the canal will result from the acquisition of some cargo from road (36%) and rail (20%) transport. The newly generated demand for cargo transport through the construction of the canal will constitute 10% of the total transport demand. This demand will mainly come from the industrial sector, particularly the chemical and automotive industries.

I. ANALYSIS OF AVAILABLE STUDIES OF DEMAND FOR CARGO TRANSPORT

Fig. 2. The structure of sources of demand for cargo using inland waterway transport on the north – south route through the Seine-Nord Europe Canal in 2020 (%) / source: Inland Navigation in Europe, “Market Observation” 2011-2, Central Commission for the Navigation of the Rhine, Strasbourg 2011

It may be expected that the creation of a modern Seine-Northern Europe waterway will contribute to an increase in the importance of inland waterway transport in neighbouring regions. Currently, the north – south routes represents a 3% share of the total inland waterway transport. For comparison, the share of inland waterway navigation in the regions located at the Seine River reaches 13%4. Therefore, the expected changes in the availability of transport infrastructure and its traffic capacity (inter-transport factor) are of importance for the future modal and spatial distribution of transport needs. This factor should therefore be taken into account in every relevant study of transport demand.

Econometric modelling

In the demand study process, econometric modelling techniques are also used based on the preparation of single- or multi-dimensional cause and effect models. The models facilitate the identification of the relationship between one or more of the analysed phenomena (explained variables, dependent variables) and other factors (explanatory variables, independent variables), and make it possible to determine their course in the future. Quantitative methods can have a relatively high informative value in terms of studying the total transport volume in the national economy. These methods are of limited significance in the study of qualitative changes in transport needs, as well as in studies on the structure of these needs (modal structure of transport needs, product range, relational and spatial structure). Limitations associated with the use of quantitative methods can be eliminated by using qualitative techniques to study the demand for cargo transport. Qualitative research techniques rely on the observation of facts as a basis for formulating statements and discovering patterns of a general nature5. Qualitative studies of demand for cargo transport are based on the use of: • demoscopy methods • expert methods.

Inland Navigation in Europe, "Market Observation" 2011-2, Central Commission for the Navigation of the Rhine, Strasbourg 2011. 5 S. Stachak, Podstawy metodologii nauk ekonomicznych [Fundamentals of methodology of economics], Warsaw 2006, p. 159. 4

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 3. Factors determining the transport demand / source: own work

Demoscopy methods

The best-known demoscopy methods6 are interviews (surveys). Demoscopy methods involve the direct acquisition of knowledge about the volume and structure of transport needs as well as information on the subjective motives of transport users, this includes the transport preferences of business entities7. However, the use of the survey method involves some problems, including primarily a limited ability to verify the information obtained. Nevertheless, this method has numerous practical applications in the study of socio-economic processes, including the volumes and directions of changes in the transport needs of the economy. These studies are subjective, and therefore they naturally belong to the group of non-exhaustive methods (they do not include the entire population of transport users). This is because generally the studies using this method involve major business entities that generate transport needs. Therefore, these are point-based studies. This study approach is justified by the fact that the demand for transport in general does not occur as such, but rather, it is generated at specific points in different areas of the economy. The point-based category of studies of transport demand is particularly justified in studies on specific economic areas.

Expert methods

Expert methods involving a logical analysis of the problem by an expert team is very often applied in studies of demand. Diagnoses and forecasts of transport demand volume and structure constructed on the basis of this method are the result of their knowledge, experience, imagination and intuition8.

1.3. Review of demand forecasts

As is apparent from the considerations discussed above, the demand for transport by waterway at the lower Vistula River (dolna Wisła) is a result of the impact of changes occurring in the economy. On the other hand, demand can be generated through the use of various tools of economic and transport policy, the aim of which is to stimulate socio-economic development or the creation of a comprehensive structure of transport systems (Fig. 3).

Demoscopy – the study of public opinions and moods carried out for diagnostic and prognostic purposes. W. Grzywacz, Metody badań potrzeb przewozowych [Research methods for transport needs] [in:] J. Burnewicz, W. Grzywacz, Transport economics, Warszawa 1989, p. 168. 8 Cf. Zarządzanie strategiczne. Systemowa koncepcja biznesu [Strategic management. System business concept], ed. M. Roszkiewicz, Warszawa 2005, p. 232. 7

I. ANALYSIS OF AVAILABLE STUDIES OF DEMAND FOR CARGO TRANSPORT

Fig. 4. Levels of transport demand studies / source: own work

Fig. 5. The dynamics of economic development and transport work in cargo and passenger transport in the EU-28 between 1995 and 2013 (1995 = 100) / source: EU transport in figures 2015. Statistical pocketbook 2015, Publications Office of the European Union, Luxembourg 2015

Therefore, the analysis of previous studies of transport demand will be carried out at various levels: • global • European • seaports • regional (Fig. 4).

Globalization Because of economic development and globalization, at current trends in the development of trade in goods, the increase in transport needs have been running ahead of GDP growth for many years (this situation lasted until the economic crisis in 2008, which marked the breakdown of those trends). Since 2010 these trends have returned with greater intensity; with decreasing GDP, transport volumes of both passengers and cargo began to increase rapidly (Fig. 5). According to the research of the OECD, GDP growth in 2050 compared to 2010 will be as follows: • OECD countries – over 111% • emerging economies – over 466%9 • rest of the world – almost 437% (Fig. 6). 9

Emerging economies include the countries of the former Soviet Union and non-EU countries of South-Eastern Europe.

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 6. The forecast of GDP changes in OECD countries, emerging economies and other countries (2010 = 100) / source: Transport Outlook 2014, International Transport Forum, OECD 2014

* The rate of growth in transport demand will not change in 2010–2050 ** The rate of growth in transport demand in all countries will decrease down to 0.7 by 2030. *** The rate of growth in demand will evolve according to GDP growth – if the GDP per capita increases, the rate of growth in demand will also increase Fig. 7. Forecast of transport demand in tkm (2010 = 100) / source: own work based on: Transport Outlook 2014, International Transport Forum, OECD 2014

According to the research of the International Transport Forum, globalization and the economic growth associated with it in many regions of the world and the activation of foreign trade will result in the following situation in 2050: • 4-fold increase in demand for transport • increase in the average transport distance by 12% because of changes in the geographical structure of trade (transport in the North Pacific will surpass transport on the North Atlantic) • more than 4-fold (rate = 4.3) increase in international cargo transport. Fig. 7 shows three variants of transport demand in OECD countries, non-OECD countries and the average for all countries of the world. The variants vary depending on the rate of growth in transport demand in relation to GDP. 100

I. ANALYSIS OF AVAILABLE STUDIES OF DEMAND FOR CARGO TRANSPORT

Fig. 8. The forecast of growth in the transport volume in 2010â&#x20AC;&#x201C;2050 by region / source: Transport Outlook 2015, International Transport Forum, OECD 2015

1. North America; 2. North Atlantic; 3. Europe; 4. Mediterranean Sea and Caspian Sea; 5. Asia; 6. North Pacific; 7. South Pacific; 8. South America; 9. South Atlantic; 10. Africa; 11. Indian Ocean; 12. Oceania Fig. 9. International cargo transport in tkm by region of the world in 2010 and 2050 / source: Transport Outlook 2015, International Transport Forum, OECD 2015

In the highest variant it is expected that the current rate of growth in transport demand in relation to GDP will be maintained in 2010â&#x20AC;&#x201C;2050, whereas the lowest variant assumes a declining demand growth down to 0.7 in 2030, and the base variant assumes that the rate of growth in demand will evolve according to the income increase among the populations; if the GDP per capita increases, the rate of growth in demand will also increase. As a result of changes in demand, by 2050 the CO2 emissions from cargo transport will increase by 290%. The share of national transport in the international flow of goods is established as 10% of the international transport of goods, but at the same time, this part of transport generates as much as 30% of CO2 emissions. Hence, the huge role of the transport policies of individual countries in the development of an ecological modal structure of transport systems and in the implementation of innovative, environmentally friendly solutions in transport. New forecasts from 2015 indicate that by 2050 the growth in transport demand in Europe will be 216% compared to 2010 (Fig. 8). 101

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 10. The dynamics of growth in cargo transport in the EU countries (2005 = 100) / source: Sustainable development of the EU transport policy and planning for TEN-T, an opinion of the European Economic and Social Committee on sustainable development of the EU transport policy and planning for TEN-T (exploratory opinion requested by the forthcoming Polish presidency), European Economic and Social Committee, Brussels 2011: Transport 2050: The major challenges, the key measures, MEMO/11/197, Brussels, 28 March 2011

Fig. 11. The forecast of growth in cargo transport in 27 EU countries (2007 = 100) / source: own work based on: M. Quispel, Medium and long term perspectives in Inland Waterway Transport in the European Union, NEA, Brussels, 2011.

Growth in transport in tonne-kilometres, estimated for respective regions, is shown in Fig. 9

European studies

According to EU estimates, the demand for cargo transport will increase between 2005 and 2020 and will increase by 40% and by more than 80% by 2030 and 2050, respectively (Fig. 10)10. This growth will be slightly slower in passenger transport: 34% by 2030 and 51% by 205011. Studies conducted by Western European research institutes predict a slightly faster growth in transport demand. In 27 EU countries, the demand could increase by 81% in 2007â&#x20AC;&#x201C;2040, but it would vary significantly between different categories of cargo (Fig. 11). More recent EU forecasts have shown variable growth in transport demand. By 2030, the demand for cargo transport will show a strong correlation with GDP (Fig. 12). Completion of the TEN-T by 2030 and of the comprehensive network by 2050 will lead to an improvement of transport infrastructure, concentration of international transport and an extension of their transport routes. The following factors are also assumed: 10 Transport 2050: The major challenges, the key measures, MEMO/11/197, Brussels, 28 March 2011. 11 Ibid.

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I. ANALYSIS OF AVAILABLE STUDIES OF DEMAND FOR CARGO TRANSPORT

Fig. 12. The trends of growth in transport demand in the EU countries (1995 = 100) / source: EU energy, transport and GHG emissions trends to 2050, Publications Office of the European Union, Luxembourg 2014, p. 40

• logistics development • improvement of intermodal cooperation (rail, road and inland waterway transport) through intelligent transport systems (ITS), which are a part of the transport network • reduction in transport time by reducing congestion on the roads.

Modal share

Car transport will increase by approximately 55% between 2010 and 2050 (1.1% per year on average), but this growth will not be even across the EU. The highest increase in car transport will take place in the new EU countries (72% in 2010–2050, 1.4% per year on average). A strong relationship between transport and GDP will still be noticeable there. However, the share of this mode of transport will gradually decrease from 71% in 2010 to 70% in 2050 in terms of total transport needs. By 2050, rail transport will show the highest growth in cargo transport (79%, an increase of 1.5% per year on average), and its share will increase from almost 16% in 2010 to 18% in 2050. This will take place because of the completion of the railway lines in the base and comprehensive network, which will improve the competitiveness of this mode of transport. GDP growth, the completion of the base and comprehensive network and the improvement of integration of transport modes will also affect inland waterway transport, which is expected to increase by 41% between 2010 and 2050 (0.9% per year on average). However, the relatively faster growth in road and rail transport will lead to a slight decrease in the share of this mode of cargo transport – from 13% in 2010 to 12% in 205012.

Passenger transport

By 2030, the demand for passenger transport will increase more slowly as a result of slower GDP growth and stagnation, and then, after 2040, because of the decrease in population and saturation of demand for cars. It is expected that car transport will maintain its dominant position in passenger transport. Despite its growth being slower in comparison to other means of transport, the share of cars in total transport will be approximately 67% of total transport by 2050, meaning 7 pp less than in 2010. The reason for these trends will be the aforementioned saturation of the car market, but also congestion, increasing prices of fossil fuels and the ageing of the EU population. Passenger transport by bus and motorcycle will grow somewhat faster than by car (0.7% per year and 1.1% 12 EU energy, transport and GHG emissions trends to 2050, Publications Office of the European Union, Luxembourg 2014, p. 40.

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SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

per year). In total, the share of road transport will be reduced from approximately 84% in 2010 to 76% in 2050. Passenger air transport will be characterized by the highest growth rate – it will grow by 133% between 2010 and 2050 (2.1% on average), mainly because of the rapid increase in international travel. Higher growth rate of passenger air transport (3.1% per year on average in 2010–2050) is expected in the new EU countries because of the development of international tourist trips and faster growth of GDP per capita in these countries. It is expected that the share of this mode will increase by approximately 5 pp, from 8% in 2010 to 13% in 2050. Passenger rail transport will increase by 79% in 2010–2050 (an increase of 1.5% per year on average), and the share of this mode of passenger service will increase by 2 pp (from 8% in 2010 to 10% in 2050) thanks to the completion of the TEN-T in 2030 and the comprehensive network and high-speed railways in 2050. Approximately 37% of rail passengers will be transported by high-speed trains by 2050. Transport by inland waterways, including coastal shipping, have a small share in passenger transport, but moderate growth in the use of this mode of transport is expected in the EU (0.7% per year in 2010–2050)13. The rate of growth in passenger transport by inland waterways will be more rapid than by private car transport, which is estimated at 0.6% per year on average. Inland waterway transport will be primarily connected with the development of tourism.

Seaports Currently, more than 80% of world trade volume is moved by water. The share of water transport is more than 90% of global trade in goods calculated as transport work14. The increase in transport demand will therefore have a significant impact on how much the turnover of seaports needs to be increased, including the ports in Europe. In 2011, EU ports handled 3.7 billion tonnes of cargo. According to forecasts, in the slow growth scenario it is anticipated that by 2030, the turnover of seaports will increase by 50%15. However, this growth will vary significantly depending on, among other factors, the location of the port, its equipment, the quality of the services provided, but also, to a very large extent, on hinterland transport. There are significant performance differences between the European ports. Currently, the three European ports with maximum performance – Rotterdam, Hamburg and Antwerp – handle one fifth of all goods that reach Europe by sea. The differences in performance lead to significant losses – extended routes, significant changes in traffic, extended maritime and land transport, as well as increased emissions from transport and increased traffic intensity, which has a harmful impact on EU citizens and the economy. With an increase in transport volume, the situation may deteriorate, so it is necessary to take action aimed at increasing the competitiveness of other seaports. Turnover forecasts prepared by the most competitive seaports confirm the expected significant increase in turnover, especially container turnover. The Port of Rotterdam has prepared a forecast in four variants (Fig. 13). Assuming a slow growth rate, the turnover in ports would increase by 45 million tonnes by 2030 – from 430 million in 2010 to 475 million, meaning growth of approximately 10%. However, turnover had reached 445 million tonnes already by 2014, so it can be assumed that the forecasts of faster growth in port cargo handling are more realistic. The Port of Hamburg also expects a significant increase in turnover, mainly in the container category, compared with much smaller growth in dry bulk cargo (Fig. 14). A considerable increase in turnover is also expected in the other German ports by 2030, including: • by 173 million tonnes in the ports of the North Sea (by 80%), including: –– 90 million tonnes (about 86%) in Hamburg –– 41.9 million tonnes (by 91%) in Bremerhaven –– 22.9 million tonnes (by 93%) in Wilhelmshaven –– 2.9 million tonnes (by 22%) in Bremen 13 Ibid., p. 39. 14 A.S. Grzelakowski, Rozwój globalnego handlu i systemu logistycznego i ich wpływ na rynek morskich przewozów kontenero-

wych [Development of global trade and logistics system and their impact on the maritime container transport market], "Biznes Międzynarodowy w Gospodarce Globalnej" 2013, No. 32. 15 Europe's Seaports 2030: Challenges Ahead, European Commission, Brussels, 23 May 2013.

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I. ANALYSIS OF AVAILABLE STUDIES OF DEMAND FOR CARGO TRANSPORT

Fig. 13. Forecast of cargo handling in the Port of Rotterdam by 2030 / source: Port vision 2030. Port compass. Direct the future. Start today, Port of Rotterdam Authority, Rotterdam 2011

Fig. 14. Forecast of handling in the Port of Hamburg by 2030 (base variant) / source: Cargo handling potential forecast and modal share forecast of the Port of Hamburg for the years 2020, 2025 and 2030. Vol. 1: Cargo handling potential forecast], Institute of Shipping Economics and Logistics, Bremen, May 2015

• by 25.9 million tonnes (by over 49%) in the ports of the Baltic Sea, including: –– 10.1 million tonnes (by 56%) in Lübeck –– 5.3 million tonnes (by 27%) in Rostock The growth will be even greater in container handling. Container handling is facilitated in selected ports of the North Sea, where the growth in 2010–2030 will be as follows: • 17 million TEU in total in the ports of the North Sea – by 133%, including: by 8.5 million TEU in Hamburg – by 108% by 4.9 million TEU in Bremerhaven – by 100% by 3.4 million TEU in Wilhelmshaven, in which such handling is currently carried out (Fig. 16). 105

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 15. Forecast of handling in the major German ports by 2030 / source: own work based on: M. Makait, Traffic integration forecast 2030. – See traffic forecast – Benchmarks of harbour cargo handling potential forecast, Berlin, July 2013

Fig. 16. Forecast of container handling in the major German ports on the North Sea (million TEU) / source: Own work based on: M. Makait, Traffic integration forecast 2030. – See traffic forecast – Benchmarks of harbour cargo handling potential forecast, Berlin, July 2013

Hinterland transport As previously mentioned, such a significant increase in handling cargo using seaports will require changes in hinterland transport, because even considering the fact that only some of the goods handled are moved into the hinterland, without modernization of hinterland transport it would be impossible to carry out the planned handling. Different ports cope with this issue in various ways, some (Rotterdam, Amsterdam and Antwerp) predict an increase in the share of inland waterway and rail transport with a clear dominance of inland waterway transport, while others, such as Hamburg, focus mainly on rail transport, although according to forecasts waterway transport to and from the Port of Hamburg will also increase. In Rotterdam, an increase in the share of inland waterway and rail transport in container turnover is expected by 2035 – up to 45% and up to 20%, respectively (Fig. 17).

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I. ANALYSIS OF AVAILABLE STUDIES OF DEMAND FOR CARGO TRANSPORT

Fig. 17. Changes in the hinterland modal share in the Port of Rotterdam by 2035 / source: Port Vision 2030, Havenbedrijf Rotterdam N.V., Rotterdam 2011

Warsaw

Poznań

Łódź

Rotterdam (Maasvlakte)

Route from/to

1,290

985

1,187

Hamburg (Altenwerder)

873

562

764

Gdańsk (DCT)

344

308

353

Tab. 3. Transport distances from seaports to selected cities in the hinterland in km / source: B. Wenzel, DCT Gdansk deepwater gateway to central and eastern Europe, Polish Australian Business Seminar, September 13th 2012

Currently, the share of inland waterway transport in the hinterland of Hamburg is 11%16, however, due to more rapid growth in the role of rail transport in support of this port, which will make it possible for rail transport to achieve a 45 percent share in container turnover by 2030 (64,000 container trains per year), the increase in waterway transport will not be reflected in the hinterland modal share. Polish seaports Western European ports are more competitive than Polish seaports, but the cargo handled in them could in part be taken over by the Polish ports, provided that they gain competitive advantage. The advantage of Polish seaports is their favourable location in relation to the hinterland in the area of Poland and Eastern European countries (Tab. 3). The biggest weakness of the Polish seaports is hinterland transport, as it currently considerably reduces their competitiveness, which will be intensified by an increase in port turnover. Therefore, the future of Polish seaports will largely depend on finding a solution to the issue of hinterland transport, including the incorporation of inland waterway transport into their operation. This is one of the reasons why forecasts of turnover in Polish seaports vary widely. The analysis of these forecasts will be discussed in Chapter 2.

Regional forecasts The transport development strategy in Poland is very conservative with respect to inland waterway transport17. It is expected that by 2030 this mode of transport on all waterways will increase to 14 million tonnes in total, while in 1979 23 million tonnes were transported using Polish inland waterways. A provision in this document restricts the regional strategies for the development of this mode of transport. However, the strategies for the provinces with access to the lower Vistula River (dolna Wisła) recognize the need for its development. 16 Hamburg Port at a glance], Handelskammer Hamburg, May 2015. 17 Transport Development Strategy to 2020 (with the prospect of 2030), Warsaw, 22 January 2013.

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The “Development Strategy for Mazovia Province to 2030. Innovative Mazovia” (Warsaw, 2013) indicates that: “The potential of water transport in the province is not used. Waterway E-40, which connects the Baltic Sea to the Black Sea, runs through the province. It is a part of the European system of waterways designated by the United Nations Economic Commission for Europe, which presents an opportunity to use water transport for regional development. However, a major obstacle is difficult navigability. Most sections of the Vistula (Wisła), the Narew and the Bug do not meet the requirements of class IV and require the reconstruction of infrastructure and hydraulic works, which should allow for the realisation of the hydropower potential of the river, mitigate the effects of droughts and improve flood safety while taking into account the need to ensure ecological balance and sustainable development of the regions located at the Vistula River”. According to the “Development Strategy for the Kuyavia-Pomerania Province by 2020 – Modernisation Plan 2020+” (Toruń, 21 October 2013): “A very serious problem is also the condition of the waterways and the lack of proper infrastructure for inland water (intermodal) transport. The National Transport Policy adopted by the Government states that the prospects for the development of inland waterway transport are dependent on the modernization of the infrastructure of inland waterways. This mode of transport plays an important role in the EU strategy for the transfer of cargo from road transport to other, more environmentally friendly modes of transport.” The “Development Strategy for Pomerania Province 2020” (Gdańsk 2012) indicates the following desired direction of change: • “full integration of the region into the trans-European transport and energy networks (...) • increase in the share of intermodal transport used to transport cargo • increase in energy efficiency • improvement of the condition of the environment and environmental living conditions • increase in flood safety”. The Marshal of the Pomerania Province, Mieczysław Struk, defines the role of the lower Vistula River more precisely: “Restoration of navigation on the Vistula River would primarily benefit the seaports of Gdańsk and Gdynia, which are important links of development in our region (...). We can be pleased with the dynamics of cargo handling that have been recorded in our ports; however, the efficiency of the entire transport logistics system must be ensured to maintain this trend. It may turn out that in 2020, transport of up to 15 thousand TEU per day between container terminals and the hinterland using only road and rail channels will be simply unfeasible and it will be necessary to use an alternative mode of transport. Inland navigation provides such an alternative.”

Conclusions The analysis of current forecasts shows that: • globalization will contribute to a more than 4-fold increase in demand for transport work by 2050 • the growth in transport demand will be varied depending on the regions of the world • approximately 2-fold increase in cargo transport is expected in the EU countries, but this varies between the different categories of cargo transport – with the highest increase in container transport: 4.4-fold • slower growth is expected in passenger transport, but inland waterway transport (despite its small scale) will grow faster than car transport • 90% of cargo transport work is carried out by sea, which will mean a growth in the cargo turnover of seaports, especially those engaged in container handling • European seaports expect very varied cargo handling levels, depending on the development scenario: –– the Port of Hamburg forecasts an increase in container handling by almost 8 million TEU (from 7.9 million in 2010 to 16.4 million in 2030) in the base variant –– The Port of Rotterdam expects that by 2030 in the so-called European variant there will be an increase in container transport of more than 17 million TEU (9 million TEU in the minimum variant, over 22

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million TEU in the maximum variant18 – the range of forecasts is therefore 13 million TEU) compared to 2010 • large European seaports that projected changes in turnover at the same time are planning changes in hinterland transport structure – to make it more environmentally friendly: –– The Port of Rotterdam plans an increase in the share of inland navigation and rail transport by 6 percentage points (to 45%) and 7 percentage points (to 35%) respectively, from 2010 to 2035. –– The Port of Hamburg primarily assumes an increase in the share of rail transport (to 45%) by 2030; the volume of transport by inland waterways serving this port will also increase considerably, but it will not be reflected in the modal structure of hinterland transport • European trends of changes in sea ports and in the hinterland should determine the directions of changes in Poland • the regional strategies of areas located at the lower Vistula River (dolna Wisła) raises the issue of the role of transport in the development of seaports and regions, and includes measures aimed at mitigating transport problems through the development of the lower Vistula River (dolna Wisła) waterway.

18 10 tonnes/TEU on average are assumed.

109

II. Analysis of demand for cargo transport at the lower Vistula River 2.1. Methodology of the study of demand for waterway transport at the lower Vistula River By convention, the area of the lower Vistula River (dolna Wisła) is located in three provinces: Pomerania, KuyaviaPomerania and Mazovia – with a total area of 71840 km2 and a population of 9,726,600. In relation to the whole country, it includes 22.98% of area and 25.3% of the population of Poland19. The level of development of these provinces is very diverse; in 2013 GDP per capita by purchasing power parity in these provinces ranged from 56% of the average of the 28 EU countries in Kuyavia-Pomerania to 107% in Mazovia. The Warmia-Masuria Province is located in the vicinity of the lower Vistula River (dolna Wisła); its GDP per capita is 48% of the EU average and in 2013 it was one of the 20 poorest regions in the EU (Fig. 18).

Expert method The expert method was applied to study transport demand in the area of the lower Vistula River (dolna Wisła), this method makes use of interviews for verification, supported by the analogy method. The interview was conducted among major business entities which potentially generate transport needs and the analysed waterway runs through the provinces where they are located. The following criteria were used in the process of selection of companies: • load volume • production structure – oversize, heavy and bulk loads, containers • location on the lower Vistula River (dolna Wisła) waterway. The application of the interview method involves some disadvantages, due to the difficulty in obtaining information about transport on the routes whose cargo dispatch points are situated outside the analysed area.

19 Polska w liczbach 2015 [Poland in numbers 2015], GUS, Warsaw 2015.

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II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Fig. 18. The area of the lower Vistula River (dolna Wisła) and GDP/capita in 2013 in EUR (by purchasing power parity) and in % (28 EU countries = 100) / source: own work based on: Regional GDP per capita in the EU in 2013: seven capital regions are among the ten most prosperous, Eurostat – News release, 90/2015 – 21 May 2015

Transport routes Transport only in the area of the Kuyavia-Pomerania Province

2010

2011

2012

2013

2014

420

478

462

476

501.4

Transport from the Kuyavia-Pomerania Province to the Warmia-Masuria Province

–

Transport from the Warmia-Masuria Province to the Pomerania Province

–

Transport from the Mazovia Province to the Kuyavia-Pomerania Province

–

455

483

476

481

501.4

Transport in total

Tab. 4. Cargo transport on the lower Vistula River (dolna Wisła) in 2010–2014 by routes (thousand tonnes) / source: own work based on: Transport – wyniki działalności w 2015 [Transport performance in 2010], GUS, Warsaw 2011–2015

2010

2011

2012

2013

2014

Transport only in the area of the Kuyavia-Pomerania Province Transport from the Kuyavia-Pomerania Province to the Warmia-Masuria Province Transport from the Warmia-Masuria Province to the Pomerania Province

Transport routes

1,045.0

1,121.0

1,439.0

1,606.2

1,622.9

–

384.0

–

964.0

140.0

–

Transport from the Mazovia Province to the Kuyavia-Pomerania Province

–

960.0

–

2,009.0

1,261.0

1,823.0

2,566.2

1,622.9

Transport work in total

Tab. 5. Transport work on the lower Vistula River (dolna Wisła) in 2010–2014 by routes (thousand tkm) / source: own work based on: Transport – wyniki działalności w 2015 [Transport performance in 2010], GUS, Warsaw 2011–2015

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Fig. 19. The average distance of cargo transport on the lower Vistula River (dolna Wisła) in 2010–2014 / source: own work based on: Transport – wyniki działalności w 2015 [Transport performance in 2010], GUS, Warsaw 2011–2015

Therefore, the expert method is essential in studies of demand for waterway transport. Its use is even more justified since the importance of the Vistula River (Wisła) in transport is currently limited, making it impossible to utilise the extrapolation method in studies, for example.

Transport at the Vistula River Cargo transport levels on the lower Vistula River (dolna Wisła) are currently incidental, e.g. in 2014 they were 0.5 million tonnes (1.6 million tkm). These operations were performed primarily in the area of the KuyaviaPomerania Province (Tab. 4 and 5). Due to improper navigation conditions, they are local in nature, as shown by the average distance of transport of 1 tonne, which is approximately 4 km (Fig. 19). As a result of the incidental nature of cargo transport on the lower Vistula River (dolna Wisła) it is impossible to make use of quantitative methods to forecast the future transport needs for this mode of transport. Demand for operations using this mode of transport should therefore be estimated by the expert method based on the results of studies conducted using quantitative methods to estimate the overall cargo demand in the region according to other source materials, in particular regarding the forecasts of cargo handling in seaports at the mouth of the Vistula River (Wisła). In addition, the application of the expert method is justified by the fact that – according to European experience – the construction of new facilities or the upgrading of existing transport infrastructure does not always mean an immediate increase in transport. Because of patterns in transport and previously concluded contracts, new transport may only appear gradually and apply to all modes of transport (e.g. tunnel under the English Channel, A1 motorway, etc.). In inland waterway transport, this process may be associated with the construction of a new fleet or nodal infrastructure elements. For example, in the first year after the completion of a sewage system at the Moselle River (1964), cargo transport on this waterway was 1.5 million tonnes, according to observations at the sluice in Koblenz. In 1965–1967 transport ranged from 5 to 7 million tonnes per year. But a significant increase in the use of this waterway was recorded in a later period. Transport was approximately 12 million tonnes per year in the 70s, 15–16 million tonnes in the 80s, and currently ranges from 13 to 14 million tonnes20. Naturally, the current development of logistics and demand pressure make it necessary to better co-ordinate the projects that determine the shift of operations in transport. Therefore, this process is accelerated.

20 Traffic report for the Rhine area (upper and middle Rhine – Neckar – Mosel – Saar – Lahn) WSV.de] [online], http://www.

wsd-suedwest.wsv.de/wir_ueber_uns/service/Publikation/pdf/Verkehrsbericht_2013_Lesezeichen.pdf [access: 24.08.2015].

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II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Analogy method Due to the limited scope of base information on the current trends of changes in the analysed phenomenon, the space and time analogy method is often used in expert studies. The method involves the forecasting of the phenomena by applying the regularity in respect of its development at a particular time from a specific economic space to other areas where this phenomenon does not occur. A reliable basis for the application of the analogy method in estimating and forecasting both quantitative and qualitative changes in demand for cargo transport using the lower Vistula River (dolna Wisła) waterway could be European trends in the transport-related utilisation of inland waterways. An especially good example are the trends in changes taking place in the hinterland of seaports, since the lower Vistula River (dolna Wisła) is an attractive link between the seaports in Gdańsk and Gdynia and the hinterland (due to the low rate of route extension and water abundance).

2.2. Factors determining the demand for cargo transport in the area of the lower Vistula River

Demand for cargo transport in the area of the lower Vistula (dolna Wisła) is determined by the following factors: • projected cargo handling at seaports in Gdańsk and Gdynia • projected handling capacity of ports, which will make it possible to assess the feasibility of forecasts from the point of view of the handling capability of ports • product range structure of handling, which determines the potential to transport cargo on waterways • maritime transit, which determines how much of the projected demand for port turnover will be transported to and from the hinterland • the level of economic activity in the area of the lower Vistula River (and the countries using land and sea transit) as a factor affecting the demand for cargo transport through the ports in Gdańsk and Gdynia • the ability to meet the demand for transport to and from the hinterland of the seaports in Gdańsk and Gdynia by other modes of transport • the willingness of companies to use the lower Vistula River (dolna Wisła) waterway for transport (survey studies). The reliability of the forecast of cargo transport using the lower Vistula River (dolna Wisła) will be verified by the analogy method – comparing the possibilities for development of transport on the Vistula River (Wisła) with the German experience.

2.2.1. Cargo handling forecasts for Polish sea ports

The effectiveness of the analysis of transport demand is essentially determined by the choice of input information treated as variables affecting the transport demand. As previously mentioned, on the one hand these factors result from the general trends of economic development, and on the other hand, from factors characterizing the trends of changes within the transport sector. In the case of studies of transport demand at the lower Vistula River (dolna Wisła), it should be assumed that the key and direct factor affecting the demand for transport on this waterway are the trends of changes in terms of turnover at seaports on the mouth of the Vistula River (Tab. 6 and 7). This is an inter-transport factor, because it involves the need to make changes in the modal share in support of the hinterland of seaports. Forecasts are characterised by different time periods (the forecast of the Ministry of Transport, Construction and Maritime Economy provides data for 2020) and different scope – (in the forecast for the Port of Gdańsk there is no data for Gdynia). Therefore, the comparison includes the highest values of other forecasts in the most likely scenario and their lowest values in the pessimistic scenario for Gdynia.

113

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

2020 Port

2016

2017

Forecast for the Port of Gdańsk *** scenario Likely Pessimistic

2018

2019

2020

41.6

2014

Development programme**

Gdańsk

32.3

41.8

54.7

48.3

36.7

38.3

40.0

Gdynia

19.4

20.2

23.5*

20.2**

19.1

20.0

21.1

22.2

23.5

Total

51.7

78.2

68.5

54.1

56.7

59.4

62.2

65.1

Actia Forum *

* M. Matczak, B. Ołdakowski, Żegluga śródlądowa na Wiśle w obsłudze portów morskich Trójmiasta – wstępna ocena potencjału rynkowego (Inland navigation on the Vistula in operation of the Tri-City seaports – a preliminary assessment of market potential) [in:] Żegluga śródlądowa. Wisła [Inland navigation. Vistula], Global Compact 2015 ** Program rozwoju polskich portów morskich do roku 2020 (z perspektywą do 2030 roku) [The development programme for Polish seaports by 2020 (with the prospect of 2030)], Ministerstwo Transportu, Budownictwa i Gospodarki Morskiej [Ministry of Transport, Construction and Maritime Economy], Warsaw 2013. *** Development strategy for the Port of Gdańsk to 2027, Materials of the Port of Gdańsk, 2015 Tab. 6. Comparison of turnover forecasts for the ports in Gdańsk and Gdynia by 2020 (million tonnes) / source: own work based on the above sources

The comparison of forecasts shows: • significant differences: –– for 2020 – from 62 million tonnes in the forecast of the Ministry of Transport to 78.2 million tonnes in the most likely scenario of the strategy for the Port of Gdańsk –– for 2030 (Gdynia 2037) – from 84,8 million tonnes according to the forecast of Actia Forum to 131.6 million tonnes in the most likely scenario of the strategy for the Port of Gdańsk • compliance with forecasts of economic development and European seaports: –– turnover growth of 39 million tonnes to 85 million tonnes is expected for the Polish ports by 2030 –– in the ports of Western Europe, these values were similar and are as follows: for Hamburg – 90 million tonnes, for Bremerhaven – 41 million tonnes –– taking into account a dynamic development of the Port of Gdańsk and its position in the transport market, especially a very dynamic development of container terminals, as justified by forecasts of transport demand (according to global forecasts the estimated increase in demand for container transport is 442% by 2040), these forecasts can be considered reliable, even in the highest variant • the highest values for Gdańsk are found in forecasts developed by the management board of seaports; these are at the same time the most reliable values, because the management board has the closest contact with the customer, knows the prevailing conditions, and the forecasts prepared by the port are the basis for investment decisions, and therefore such values are a ssumed in the studies for further analysis (Tab. 8) • the highest values for Gdynia are stated in the forecasts of Actia Forum, which are considered likely for 2030 in the study (Tab. 8). The overall aim of work is to show that hinterland transport should not restrict the competitiveness of seaports, even in the most optimistic scenario of port turnover. Therefore, the previously mentioned highest values of forecasts prepared by ports and port environments are applied.

Cargo handling capacity The reliability of the presented forecasts from the viewpoint of cargo handling capability is confirmed by the current investment projects, whose aim is to adapt the existing infrastructure and superstructure in the ports to new needs. 114

II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Port

2014

Gdańsk

32.3

Gdynia Total

Gdańsk 2030 Gdynia 2037*

2030

Actia Forum**

Forecast for the Port of Gdańsk *** scenario Likely

Pessimistic 67.8

99.6

47.7

99.6

19.4

37.1

37.1**

51.7

131.6

84.8

136.7

99.8

* Opracowanie studium techniczno-ekonomiczno-środowiskowego rewitalizacji i przywrócenia żeglowności dolnej Wisły na odcinku Warszawa – Gdańsk [Development of technical, economic and environmental study of revitalization and restoration of the navigability of the lower Vistula River at the Warsaw – Gdańsk route], Gdynia Maritime University, Partner Agencja Rozwoju Mazowsza S.A. (PP10), Gdynia 2014 * M. Matczak, B. Ołdakowski, Żegluga śródlądowa na Wiśle w obsłudze portów morskich Trójmiasta – wstępna ocena potencjału rynkowego (Inland navigation on the Vistula in operation of the Tri-City seaports – a preliminary assessment of market potential) [in:] Żegluga śródlądowa. Wisła [Inland navigation. Vistula], Global Compact 2015 *** Development strategy for the Port of Gdańsk to 2027, Materials of the Port of Gdańsk, 2015 Tab. 7. Comparison of turnover forecasts for the ports in Gdańsk and Gdynia by 2030 (2037) in million tonnes / source: own work based on the above sources

2014

2020

2030

Gdańsk

Port

32.3

54.7

99.6

Gdynia

19.4

23.5

37.1

Total

51.7

78.2

136.7

Tab. 8. The forecast values for turnover of the ports in Gdańsk and Gdynia accepted for further analysis of demand (million tonnes) / source: own work based on Tab. 6 and 7

After the completion of the investment projects the handling capacity of the Port of Gdańsk will be increased by 71% in 2020 and by 81% in 2030, with an increase of 33% in Gdynia. An operating reserve is required to maintain safe operation, and it is provided at the Port of Gdańsk (Fig. 20). In the Port of Gdynia, this provision complies with the European standards in 2020 (Fig.21). The reserve for 2030 shown in Fig. 20 may be the minimum, but it is due to the fact that the indicated capacity for the Port of Gdynia is valid for 2020, and it will probably be increased by 2030. Seaports in Western European countries are often characterised by considerable reserves of cargo handling capacity compared to ongoing demands. The use of the total potential cargo handling capacity for containers is currently at 65% and 64% for the Seaport of Hamburg and for the average value produced by the major seaports of the North Sea, respectively (Fig. 21).

Product range structure Changes in turnover of the ports in Gdańsk and Gdynia will vary for different categories of cargo. Forecasts of product range structure for the Port of Gdańsk were adopted in further studies according to the “Development strategy for the Port of Gdańsk.” Forecasts of product range structure for Gdynia were developed by the Ministry of Transport, Construction and Maritime Economy to 2020, and so the studies for 2030 assume that the product range structure of 2020 will be maintained for 2030. 115

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

* M. Matczak, B. Ołdakowski, Żegluga śródlądowa na Wiśle w obsłudze portów morskich Trójmiasta – wstępna ocena potencjału rynkowego (Inland navigation on the Vistula in operation of the Tri-City seaports – a preliminary assessment of market potential) [in:] Żegluga śródlądowa. Wisła [Inland navigation. Vistula], Global Compact 2015 **Development strategy for the Port of Gdańsk to 2027, Materials of the Port of Gdańsk, 2015 Fig. 20. The use of handling capacity at the ports in Gdańsk and Gdynia in 2020 and 2030 / source: own work based on: M. Matczak, B. Ołdakowski, op.cit.; Development strategy for the Port of Gdańsk to 2027, materials of the Port of Gdańsk, 2015

Fig. 21. The handling capacity for containers and its use in selected seaports in Western Europe (%) / source: Cargo handling potential forecast and modal share forecast of the Hamburg Port for the years 2020, 2025 and 2030, Hamburg Port Authority, Bremen, May 2015; Top 20 ports – Volume (in TEUs) of containers handled in each port, by loading status, Eurostat [online], http://appsso.eurostat.ec.europa.eu/nui/show.do [access: 9.09.2015]

Just like in the estimates of the overall turnover of seaports, the variance of forecasts for different ports is quite significant. However, the following are consistently assumed: • the forecast shown in the “Development strategy for the Port of Gdańsk” is the most likely future scenario for Gdańsk • the product range structure shown in the forecast of the Ministry of Transport, Construction and Maritime Economy, converted into values adopted in the overall turnover forecast. The calculation results are presented in Tab. 9.

116

II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Gdynia

Product range

Gdańsk

2014

2020

2030

2014

2020

2030

Containers

8.1

11.4

18.0

10.4

22.3

45.9

Dry bulk

6.5

8.5

13.5

8.5

10.0

18.6

Liquid bulk

0.2

0.8

1.3

12.5

20.2

28.4

Other

4.6

2.8

4.3

0.9

2.2

6.7

Total

19.4

23.5

37.1

32.3

54.7

99.6

Tab. 9. The forecast of product range structure for turnover of the ports in Gdynia and Gdańsk in 2020 and 2030 (million tonnes) / source: own work based on: Tab. 8 and the previously analysed forecasts and materials of the ports in Gdynia and Gdańsk

Item

2014

2020

2030

Total turnover in Gdańsk and Gdynia

51.7

78.2

136.7

Sea transit

5.8

9.2

20.5

Hinterland transport

33.6

50.8

88.9

Tab. 10. Demand for transport between the hinterland and the seaports in Gdańsk and Gdynia (million tonnes) / source: own work based on: Statistical Yearbook of Maritime Economy 2014, GUS, Warsaw – Szczecin 2014

In summary, the most important item in the product range structure of projected cargo handling in 2030 will be as follows: • containers – 46% of cargo handling in Gdańsk and 49% in Gdynia • bulk dry cargo – 18.7% in Gdańsk and 36.4% in Gdynia • bulk liquid cargo – 28.4% in Gdańsk and 3.5% in Gdynia All of these categories of cargo are predestined for transport by inland waterways, but some of the indicated volume handled at seaports is intended for sea transit.

Sea transit Sea transit is undergoing quite big changes, in terms of both volume and product range structure. On the basis of information obtained from seaports it is assumed that sea transit is 35% on average of the total turnover of the seaports in Gdańsk and Gdynia. Therefore, the volume of cargo weight intended for the hinterland will be reduced by this value (Tab. 10).

Transport between Gdańsk and Gdynia and the hinterland The presented values mean the following: • 2020 – 50% higher than in 2014 – transport between the hinterland of the seaports in Gdańsk and Gdynia; the growth will be 23.1 million tonnes • in 2030 – 2.5-fold higher – transport between the ports in Gdańsk and Gdynia and their hinterland; the growth will be 70.3 million tonnes compared to 2014 (Fig. 22).

117

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 22. The potential demand for transport between the seaports in Gdańsk and Gdynia and the hinterland / source: own work based on Tab. 10

2.2.2. Economic activity in the region

In addition to conditions connected with the development of seaports, non-transport conditions will also have a significant impact on the demand for transport using the lower Vistula River (dolna Wisła) as a result of changes in the economic growth of the hinterland, this includes the countries that use the land-sea and sea-land transit through the ports in Gdańsk and Gdynia. The need to take into account changes in economic activity in studies of demand for cargo transport is a consequence of the logical link between the level of this activity and transport volume. Because of the complementary nature of transport in relation to the national economy, a growth in economic activity causes an increase in cargo transport.

Businesses entities

A study of the overall size and structure of transport needs in the area of the lower Vistula River (dolna Wisła) was based on the analysis of the following factors describing the changes in the economic activity of the region: • the number of business entities • the volume of production of enterprises in the industries that are the basic generators of transport needs • changes in production structure • population centres in the region • GDP value • transport intensity in the economy. The scale of transport needs is to a large extent determined by the number of business entities, which are considered to be generators of transport needs and cargo management. 1.2 million business entities currently operate in the analysed region (Tab. 11). In 2005, the share of business entities in the region as a percentage of the total number of business entities in Poland was 28.1%, and this figure increased to 29.4% in 2014. It can therefore be concluded that the region has prospects for development.

Production volume

The volume of transport needs is also determined by the volume of production in economic sectors such as industry, construction and agriculture. The area of the lower Vistula River (dolna Wisła) currently supports 32.3% of sales produced by industry (Tab. 12), 34.1% of construction and assembly production (Tab. 13) and 31.7% of agricultural production (Tab. 14). In summary, there are positive changes observed in relation to the number of business entities, the region is capable of growth, there are also changes in terms of the above-mentioned economy sectors, all of these changes affect transport demand. The changes in the economic activity observed over the years affect the demand for transport services, but are also important from the point of view of changes in the structure of transport needs. Therefore, the studies assume that 118

II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Province Years

Poland

2005 2006

area of the lower Vistula

Mazovia

Kuyavia-Pomerania

Pomerania

region in total

% number of entities in Poland

3615621

601,721

187,231

226,421

1,015,373

28.1

3636039

609,601

186,949

229,010

1,025,560

28.2

2007

3685608

627,277

188,531

232,806

1,048,614

28.5

2008

3757093

649,354

192,182

240,496

1,082,032

28.8

2009

3742673

646,696

182,031

249,262

1,077,989

28.8

2010

3909802

681,012

186,007

260,202

1,127,221

28.8

2011

3869897

675,099

184,365

258,197

1,117,661

28.9

2012

3975334

699,212

187,996

265,033

1,152,241

29.0

2013

4070259

724,997

191,252

271,784

1,188,033

29.2

2014

4119649

742,172

192,078

275,990

1,210,240

29.4

Tab. 11. Business entities of the national economy in the REGON register in 2005–2014 (in absolute numbers) / source: own work: Statistical Yearbook of the Regions, GUS, Warsaw 2006–2015; Local Data Bank [online], stat.gov.pl [access: 21.09.2015]

Province Years

Poland

2005

Area of the lower Vistula

Mazovia

KuyaviaPomerania

Pomerania

PLN million

% production in Poland

687,810.1

134,376.6

30,859.4

42,280.0

207,516

30.2

2006

775,521.5

158,084.5

33,180.1

49,961.5

241,226

31.1

2007

873,470.7

170,849.6

38,339.3

54,451.8

263,641

30.2

2008

918,281.9

184,379.9

40,183.9

59,542.2

284,106

30.9

2009

896,379.8

181,570.0

39,369.1

55,623.9

276,563

30.9

2010

985,715.9

199,318.9

44,788.4

63,217.3

307,325

31.2

2011

1,137,372.8

229,106.8

49,566.3

77,902.1

356,575

31.4

2012

1,178,303.6

241,044.8

49,831.6

84,431.1

375,308

31.9

2013

1,182,963.9

251,307.1

49,935.4

81,082.6

382,325

32.3

Tab. 12. Production sold in total in the processing industry (PLN million) / source: own work: Statistical Yearbook of the Regions, GUS, Warsaw 2006–2014; Local Data Bank [online], stat.gov.pl [access: 21.09.2015]

changes in the mode, product range and relational structure of transport needs in the area of the lower Vistula River (dolna Wisła) will affect qualitative changes in the economic structure in the region. Therefore, forecasts of the structure of transport needs will reflect changes to the extent of: • the structure of gross value added by type of business activity • the structure of business entities by business activity • the layout of the largest population centres in the region.

119

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Province

Area of the lower Vistula

Mazovia

KuyaviaPomerania

Pomerania

PLN million

43,053.9

10,734.3

1,958.6

2,507.5

15,200

% of construction production in Poland 35.3

53,516.6

13,572.9

2,318.6

3,106.4

18,998

35.5

2007

66,632.8

17,682.7

2,681.1

4,102.3

24,466

36.7

2008

79,703.3

18,608.3

3,470.8

5,030.8

27,110

34.0

2009

83,676.4

20,793.3

3,716.6

5,327.2

29,837

35.7

2010

85,874.5

21,130.7

3,639.9

5,562.3

30,333

35.3

2011

103,228.2

26,361.9

4,566.5

6,559.9

37,488

36.3

2012

96,364.4

23,836.9

4,227.4

5,710.8

33,775

35.0

2013

84,803.6

19,433.5

4,063.9

5,390.2

28,888

34.1

Years

Poland

2005 2006

Tab. 13. Construction and assembly production carried out by construction entities employing more than 9 people and based in the province (PLN million) / source: own work: Statistical Yearbook of the Regions, GUS, Warsaw 2006–2014; Local Data Bank [online], stat.gov.pl [access: 21.09.2015]

Province Years

Poland

2005 2006

Area of the lower Vistula % production in PLN million Poland 11,383 26.9

Mazovia

Kuyavia-Pomerania

Pomerania

42,366.5

6,295.0

3,341.9

1,746.0

41,749.3

7,128.9

3,382.7

1,660.9

12,172

29.2

2007

43,772.2

6,715.3

3,417.6

1,861.2

11,994

27.4

2008

51,057.5

9,345.3

3,436.9

2,165.0

14,947

29.3

2009

53,272.2

8,640.6

4,228.1

2,454.4

15,323

28.8

2010

51,331.7

8,621.5

4,027.1

2,555.8

15,204

29.6

2011

56,727.7

10,019.3

4,126.0

2,817.0

16,962

29.9

2012

65,598.8

11,123.9

5,149.7

3,414.5

19,688

30.0

2013

72,447.7

13,009.1

6,338.8

3,591.0

22,939

31.7

* since 2010 according to the new definition of household Tab. 14. Agricultural cargo production* at fixed prices of the previous year (PLN million) / source: own work: Statistical Yearbook of the Regions, GUS, Warsaw 2006–2014; Local Data Bank [online], stat.gov.pl [access: 21.09.2015]

In 2000–2012, the structure of the Polish economy clearly changed, this includes the area of the lower Vistula River (dolna Wisła) (Tab.15). A decline in the share of agriculture in gross value added is being observed. This share decreased from 5% to 3.1% in Poland, compared with 4.8% to 3.3% on average in the area of the lower Vistula River (dolna Wisła). In the period analysed there was a significant increase in the gross value added for other sectors considered to be the basic generators of transport needs, sectors such as industry and construction. The share of industry increased by 5.7 pp in Poland, and by 4 pp on average in the area of the lower Vistula River (dolna Wisła). The share of construction increased by 0.8 pp and 0.9 pp, respectively.

120

II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Area of the lower Vistula Poland

Gross value added by economy sector

KuyaviaPomerania

Mazovia

Pomerania

2000

2012

2000

2012

2000

2012

2000

2012

Agriculture, forestry, hunting and fishing

5.0

3.1

4.1

2.8

7.0

4.6

3.3

2.5

Industry

20.5

26.2

14.7

17.6

22.7

27.2

21.7

26.4

Construction

7.1

7.9

6.2

7.1

8.1

7.8

8.6

Market and non-market services Including: transport, warehouse management*

67.4

62.8

75.0

72.5

63.2

60.1

67.2

62.5

–

47.4

–

49.6

–

47.2

–

47.7

*transport and warehouse management; trade; repair of motor vehicles; accommodation and catering; information and communication Tab. 15. The share of core business activities in gross value added (%) / source: own work: Statistical Yearbook of the Regions, GUS, Warsaw 2011, 2013; Local Data Bank [online], stat.gov.pl [access: 21.09.2015]

Area of the lower Vistula Enterprises by industry

Poland

Mazovia

KuyaviaPomerania

Pomerania

2000

2014

2000

2014

2000

2014

2000

2014

Agriculture, forestry, hunting and fishing

2.8

1.8

2.1

1.2

4.6

2.3

2.7

1.6

Mining

0.1

Industrial processing

11.5

9.0

12.1

8.0

10.8

9.1

12.7

10.8

Construction

10.8

11.6

10.8

9.7

10.2

11.6

11.3

12.3

Market and non-market services

74.9

77.5

75.0

81.0

74.3

76.9

73.3

75.2

Tab. 16. The structure of business entities entered into the REGON register by business activity (% of enterprises in total) / source: own work: Local Data Bank [online], stat.gov.pl [access: 21.09.2015]

Production structure Changes in the structure of the economy are also reflected by changes in the structure of business entities (Tab. 16). For example, there is a growing importance in the area of services, in particular the number of entities in this economic category is increasing. Conversely, the share of enterprises operating in agriculture, forestry, hunting and fishing as well as in the processing industry is decreasing. In 2000–2014 an increase in the share of the number of enterprises in the construction sector was observed (except for the Mazovia Province). This situation is a result of increased investment activity in the country which followed the achievement of greater access to EU aid funds after 2004. The creation of construction companies is a favourable circumstance for inland navigation. Inland waterway transport is in fact particularly well suited to supporting the transport needs of this sector of the economy. Another important generator of transport needs are the most populated urban areas. Studies assume that towns/ cities with more than 20 thousand residents are essential for the development of the area of the lower Vistula River (dolna Wisła). This criterion is met by 47 towns/cities, with the most of them located in the Mazovia Province – 24 towns/cities (Fig. 23).

121

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 23. The number of towns/cities in the area of the lower Vistula River (dolna Wisła) in 2013 by population / source: own work based on: Statistical Yearbook of the Regions 2014, GUS, Warsaw 2015

Fig. 24. Economic centres in the area of the lower Vistula River / source: own work

Populated Areas From the point of view of the transport needs for the lower Vistula River (dolna Wisła) waterway, the urban centres with direct access to the waterway are essential. The following towns/cities meet the criterion in the Pomerania Province: Gdańsk, Kwidzyn, Tczew, Gniew, in the Kuyavia-Pomerania Province: Bydgoszcz, Toruń, Grudziądz, Świecie, Włocławek, and in the Mazovia Province: Płock, Nowy Dwór Mazowiecki, Legionowo and Warsaw (Fig. 24). 122

II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Years

Poland

Province

Area of the lower Vistula

Mazovia

Kuyavia-Pomerania

Pomerania

PLN million

% GDP in Poland

2005

984,919

204,460

46,171

56,088

306,719

31.1

2006

1,065,209

222,714

49,980

60,712

333,406

31.3

2007

1,186,773

249,183

55,530

67,743

372,456

31.4

2008

1,277,322

265,567

59,479

70,993

396,039

31.0

2009

1,361,850

289,434

61,981

78,137

429,552

31.5

2010

1,437,357

311,278

65,035

81,392

457,705

31.8

2011

1,553,582

336,370

69,183

88,183

493,736

31.8

2012

1,615,894

353,348

71,526

93,859

518,733

32.1

2013

1,662,678

364,513

74,515

95,701

534,729

32.2

2014

1,728,677

–

556,634*

32.2

* it is assumed that in 2014 in the area of the lower Vistula River (dolna Wisła), that GDP is 32.2% of national GDP as it was in 2013 Tab. 17. Gross domestic product in the area of the lower Vistula River (dolna Wisła) in 2005–2014 in PLN million (current prices) / source: own work based on: Statistical Yearbook of the Regions, GUS, Warsaw 2006–2015; Local Data Bank [online], stat.gov.pl [access: 21.09.2015]; Wstępne szacunki produktu krajowego brutto według województw w 2013 r. Notatka informacyjna [Preliminary estimates of gross domestic product by provinces in 2013. Information note], GUS, Warsaw 2015; Roczne wskaźniki makroekonomiczne. Rachunki narodowe [Poland – macroeconomic indicators. Annual macroeconomic indicators], stat.gov.pl [access: 20.10.2015]

GDP Gross domestic product (GDP) is considered to be the most realistic measure of economic growth. The study of the relationship between the volume of transport demand and changes in GDP is all the more justified since the transport demand in Poland shows a significant sensitivity to changes in GDP. This sensitivity is reflected by the relationship resulting from the formula:

where: – demand elasticity with respect to GDP, %∆Demand – relative change in demand, %∆GDP – relative change in GDP. In 2000–2005,the average annual real rate of economic growth in Poland was 3.32%, compared to 3.91% in 2006– 201421. In the area of the lower Vistula River (dolna Wisła) the growth was higher and amounted to 3.63% and 4.00%, respectively22. According to the preliminary estimates of the Central Statistical Office (GUS), GDP in 2013 (at current prices) in the area of the lower Vistula River (dolna Wisła) was PLN 534.7 billion and accounted for 32.2% of GDP in Poland (Tab. 17). Long-term forecasts of economic growth show that Poland will be ranked among the group of countries with the highest rate of real GDP growth. It will be impossible to maintain the current rate of GDP growth in the long 21 Polska – wskaźniki makroekonomiczne.Roczne wskaźniki makroekonomiczne [Poland – macroeconomic indicators. Annual

macroeconomic indicators] [online],http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 20.10.2015]. 22 Local Data Bank [online], stat.gov.pl; Wstępne szacunki produktu krajowego brutto według województw w 2013 r. Notatka informacyjna [Preliminary estimates of gross domestic product by provinces in 2013. Information note], GUS, Warsaw 2015; Roczne wskaźniki makroekonomiczne. Rachunki narodowe [Poland – macroeconomic indicators. Annual macroeconomic indicators] [online], stat.gov.pl [access: 20.10.2015].

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Years

Poland 2014 1,728,677 2020 2,112,696 2025 2,425,508 2030 2,784,635 2035 3,196,935 2040 3,670,282 Real GDP growth in the following years: 2014–2020 – 3.4% 2021–2040 – 2.8%

GDP (PLN million) Area of the lower Vistula 556,164 679,714 780,354 895,895 1,028,544 1,180,833

Tab. 18. The forecast of economic growth in Poland and the area of the lower Vistula River (dolna Wisła) by 2040 / source: own work based on: Świat w 2050 r. Polska najszybciej rozwijającą się gospodarką w UE [The world in 2050. Poland as the fastest growing economy in the EU] [online], http://www.pwc.pl/pl/media/2015/2015-02-10-swiat-w-2050.html [access: 20.10.2015]; Polska – wskaźniki makroekonomiczne, Roczne wskaźniki makroekonomiczne [Poland – macroeconomic indicators. Annual macroeconomic indicators] [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 20.10.2015]; Wstępne szacunki produktu krajowego brutto według województw w 2013 r. [Preliminary estimates of gross domestic product by provinces in 2013] [online], http://stat.gov.pl/obszary-tematyczne/rachunki-narodowe/rachunkiregionalne/wstepne-szacunki-produktu-krajowego-brutto-wedlug-wojewodztw-w-2013-r-,4,2.html [access: 20.10.2015]

term because of the declining population, and mainly because of the growing number of people in retirement age compared to the number of people in working age. This phenomenon to a certain extent reflects the dependency ratio23, which increased from 41.9% to 43.4% in Poland in 2005–2014. According to the latest forecasts, the average annual real GDP growth in Poland will be approximately 2.7% by 2050 compared to 2014. In particular periods this growth rate will be at a different level. It is expected that in 2014–2020 the economy in Poland will grow at a rate of 3.4% per year in 2021–2040 – 2.8% per year and approximately 2.0% per year in 2041–205024. So it may be assumed that the GDP in Poland will be PLN 2,112.7 billion and PLN 2,784.6 billion in 2020 and 2030, respectively. Assuming that the average annual real growth rate of GDP in the area of the lower Vistula River (dolna Wisła) will be the same as in the rest of the country, it can be expected that in the analysed region (Tab. 18) GDP will increase from PLN 556.2 billion in 2014 to PLN 679.7 billion in 2020, to PLN 895.9 billion in 2030 and to PLN 1,180.8 billion in 2040. To sum up, we can say that the economic situation of the hinterland of the ports in Gdańsk and Gdynia located at the lower Vistula River (dolna Wisła) will be beneficial for the development of transport. Forecasts for land-sea transit are similar, for example, by 2025 the growth of transit potential for cargo passing through the DCT Gdańsk is estimated at 841 thousand TEU, which will create opportunities for Polish transport companies. Countries interested in land-sea transit through the ports in Gdańsk and Gdynia are primarily Russia, Ukraine, Belarus, Austria, Slovakia, Hungary and the Czech Republic25. 23 The ratio of the population aged 14 years and 65 years and older to the population aged 15–64 years. 24 Świat w 2050 r. Polska najszybciej rozwijającą się gospodarką w UE [The world in 2050. Poland as the fastest growing economy

in the EU], PwC Polska [online], http://www.pwc.pl/pl/media/2015/2015-02-10-swiat-w-2050.html [access: 20.10.2015]. 25 D. Landa, Aktualna sytuacja i prognozy rozwoju przeładunku kontenerów w polskich portach morskich [Current situation and forecasts for the development of container handling in Polish seaports], Conference: Jak utrzymać pozycję polskiego transportu drogowego? [How to maintain the position of the Polish road transport?], Gdańsk, 1 March 2013 [online], http://zmpd.pl/aktualnosci_pliki/f-GLOWNY-461-413-9513.Prezentacja_DCT_Gdansk_Dominik_Landa.pdf [access: 20.10.2015].

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II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Fig. 25. Transport intensity of GDP in Poland against the average for all EU countries – GDP at current prices compared to transport work / source: own work based on: Gross domestic product at market prices, Eurostat [online], http://ec.europa.eu/ eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=tec00001&language=en [access: 9.09.2015]; EU transport in figures. Statistical pocketbook 2015, Publications Office of the European Union, Luxembourg 2015; Transport – wyniki działalności w 2014 (Transport performance in 2014), GUS, Warsaw 2015

Fig. 26. Transport intensity of GDP in Poland against the average for all EU countries – GDP at current prices compared to transport volume / source: own work based on: Gross domestic product at market prices…; EU transport in figures. Statistical pocketbook 2015 Transport – wyniki działalności, GUS, Warszawa 2010–2015; Gross domestic product at market prices [online], http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=tec00001&language=en [access: 9.09.2015]; EU transport in figures. Statistical pocketbook 2015, Publications Office of the European Union, Luxembourg 2015; Transport – wyniki działalności w 2014 (Transport performance in 2014), GUS, Warsaw 2015

Transport intensity Economic growth in Poland is strongly linked to transport demand. In 2005–2014 nominal GDP growth by 1% meant an increase in cargo transport by 0.41% and transport work by 1.11%. The economy in Poland shows a much higher level of transport intensity than the average of the EU-28. The studies show that transport intensity of GDP in Poland compared to transport work in cargo transport (Fig. 25) is currently 4.7 times higher, and from the point of view of transport volume – 3.8 times higher than the average in the EU-28 (Fig. 26). A significant dependence of economic growth on transport is shown by the observed trend of increasing transport intensity of GDP compared to transport work. The transport intensity of GDP with respect to transport work is 125

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 27. The level of transport intensity of GDP in Poland in 2005–2014 and the forecast for 2040 (the reference point is GDP at fixed prices of 2014) / source: own work based on: Polska – wskaźniki makroekonomiczne. Roczne wskaźniki makroekonomiczne. Rachunki narodowe [Poland – macroeconomic indicators. Annual macroeconomic indicators. National accounts] [online], stat.gov.pl [access: 20.10.2015]; Transport – wyniki działalności [Transport performance], GUS, Warsaw 2010–2015

currently higher than in 2005. While in 2005 it was 698.5 tkm per EUR 1 thousand, in 2013 the rate was 786.1 (in 2014 this rate fell to 759.61 tkm/EUR). Projection of future demand for transport services should be associated with the transport intensity of GDP. Due to the fact that the point of reference for long-term forecasts of economic growth is the GDP value in 2014, studies of future transport demand was based on retrospective economic and transport intensity data, calculated according to GDP and expressed in the fixed prices of 2014. In 2005–2014 the transport intensity of GDP in Poland decreased from 1.11 tonnes/1,000 PLN to 1.032 tonnes/1,000 PLN. In the analysed period the average annual rate of change was 99.19%, which means a decrease in transport demand compared to GDP by 0.81%. Assuming that the current rate of change in demand for cargo transport compared to GDP (99.19%) is maintained, it can be expected that transport intensity in 2040 will be 0.835 tonnes/1,000 PLN (Fig. 27), i.e. 3.373 tonnes/1,000 EUR26. Therefore, even in 2040 transport intensity in Poland would still be much higher than it is currently in the 28 EU countries, since transport intensity (cargo transport compared to GDP) in these countries in 2013 was 1.19 tonnes/1,000 EUR.

Cargo transport in the region Demand for transport services should be the result of economically feasible needs generated in the course of business and service activity of the entire national economy. There is therefore, a need for the justification of transport volume, through better coordination between the providers of logistics services and the focus of resources in logistics centres. So it should be expected that the future rate of decline in transport intensity in Poland will be greater than it has been so far. In a further analysis of future transport needs it was assumed that the rate of decline in the transport intensity of GDP in Poland will correspond to the dynamics of decline in transport intensity observed in all of the EU countries. The volume of cargo transport that can be estimated according to available statistics in 2014 in the area of the lower Vistula River (dolna Wisła) includes 373.5 million tonnes transported by road (Tab. 19) and only 0.5 million tonnes of cargo transported by inland waterways. Assuming that the share of road transport and inland waterway transport to support transport needs in the analysed region is at a similar level as throughout the rest of the country, i.e. 84% and 0.4% respectively, it can be assumed that 70 million tonnes of cargo transport is moved by rail. As a result, the current level of cargo transport in the area of the lower Vistula River (dolna Wisła) 26 Calculations are based on the average PLN/EUR exchange rate in 2000–2014, which is PLN 4.04/EUR 1.

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II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Item

2005

2008

2010

2012

2013

2014

Province Kuyavia-Pomerania

58,555

67,147

91,143

77,471

85,038

84,957

Mazovia Province

125,159

169,052

177,634

187,589

182,516

188,763

Pomerania Province

60,661

79,877

86,548

76,918

91,846

99,744

area of the lower Vistula

244,375

316,076

355,325

341,978

359,400

373,464

Tab. 19. Road transport in the area of the lower Vistula River (dolna Wisła) in 2005–2014 (thousand tonnes) / source: Transport – wyniki działalności w 2015 [Transport performance in 2010], GUS, Warsaw 2010–2015

*excluding pipeline transport Fig. 28. The estimated modal share in the area of the lower Vistula River (dolna Wisła) in 2014 / source: own work based on: Transport – wyniki działalności [Transport performance], GUS, Warsaw 2010–2015

can be estimated at 440 million tonnes (Fig. 28). This represents 24.5% of total cargo transport in Poland in 2014 (1808.5 million tonnes)27. If it is assumed that the existing relationship between the volume of cargo transported and GDP is maintained, cargo transport in the area of the lower Vistula River (dolna Wisła) by 2030 would increase to more than 800 million tonnes and to over 900 million tonnes after 2035. Due to the assumption of too high a level of transport intensity this forecast should be considered unlikely. Assuming that the transport intensity in Poland decreases at the same rate as in the UE, then by 2040 it would be 0.547 tonnes/1,000 PLN (2.21 tonnes/1,000 EUR). Therefore, the analysis shows that even in 2040 the transport intensity of GDP in Poland would continue to be 1.84 times higher than the current average level in the EU-28. Under this assumption of the future dynamics of transport intensity in Poland it could be expected that transport in the area of the lower Vistula River (dolna Wisła) after 2020 would reach 620 to 650 million tonnes (Tab. 20).

27 Without shunting operations in rail transport and pipeline transport, see Transport – wyniki działalności w 2014 roku

[Transport performance in 2013], GUS, Warszawa 2015.

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Years

2020

Projected volume of cargo transport in million tonnes depending on the rate of decline in transport intensity of GDP The rate of decline in transport intensity in The decline in transport intensity in Poland at Poland in 2005–2014 is maintained the current average level for the EU-28 (–0.81%) (–2.41%) 668 606

2025

736

616

2030

811

628

2035

895

636

2040

986

646

Tab. 20. The forecast of demand for cargo transport in the area of the lower Vistula River (dolna Wisła) depending on the rate of changes in transport intensity assuming the real GDP growth in 2014–2020 – 3.4% and in 2021–2040 – 2.8% / source: own work based on: Gross domestic product at market prices, Eurostat [online], http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=tec00001&language=en [access: 9.09.2015]; Świat w 2050 r. Polska najszybciej rozwijającą się gospodarką w UE [The world in 2050. Poland as the fastest growing economy in the EU] [online], http://www. pwc.pl/pl/media/2015/2015-02-10-swiat-w-2050.html [access: 20.10.2015]

2.2.3. Capacity to satisfy the demand by other modes of transport Hinterland transport In the seaports at the mouth of the Vistula River (Wisła), 51.7 million tonnes of cargo in total were handled, of which 45.9 million tonnes can be associated with hinterland transport, as indicated above. Cargo transport in support of the hinterland of the seaports at the mouth of the Vistula River (Wisła) is carried out by road and rail transport. Rail transport was used primarily on the routes to and from the Greater Poland Province and the Łódź Province in land-sea and sea-land transit (Fig. 29, Tab. 21). Approximately 79% of rail transport supports seaports on routes in line with the layout of the lower Vistula River (dolna Wisła). Approximately 62% of the overall road transport for the hinterland of the ports is in line with the layout of the lower Vistula River (dolna Wisła).

Rail transport Both modes of transport that dominate the support of seaports face serious barriers to development, which currently hinder the fulfilment of transport needs. The main difficulties in rail transport are as follows: • problems with the availability of rail routes running through the Tri-City metropolitan area (the priorities of passenger carriers are taken into account first when preparing schedules)28 • bottlenecks in the rail network in the Tri-City metropolitan area (Fig. 30) • insufficient capacity of alternative routes • problems with capacity of the lines located further away from the ports. According to estimates of the Railway Transport Office29 the development of turnover at the ports in Gdańsk and Gdynia and the construction of the Pomeranian Logistics Centre near the Port of Gdańsk, with the modern trends of transport development focused on the systematic shift of cargo from road transport to environmentally friendly 28 Dostępność transportem kolejowym do Portu Gdynia – diagnoza problemów i rekomendacje odnośnie zagwarantowania odpow-

iedniej przepustowości tego połączenia [Availability of rail to the Port of Gdynia – diagnosis of problems and recommendations to ensure proper capacity of the link], Team of Experts TOR, Warsaw, March 2014. 29 Analiza zapotrzebowania na przepustowość w węzłach kolejowych w Trójmieście i na Śląsku [Analysis of demand for capacity in railway junctions in the Tri-City and Silesia], UTK, Warsaw, June 2014.

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II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Fig. 29. Transport links of the seaports in Gdańsk and Gdynia to hinterland in 2014 (share in transport using the particular mode on seaport routes) / source: own work based on: Materials of the Port of Gdańsk; K. Wojewódzka-Król, Uwarunkowania rozwoju przewozów intermodalnych w żegludze śródlądowej [Conditions for the development of intermodal transport in inland waterway] [in:] Rozwój transportu w świetle współczesnych wyzwań [Development of transport in light of modern challenges], “Zeszyt Naukowy ETiL” 2015, No. 55

Transport

Route seaports – province

rail (%)

road (%)

Greater Poland

Kuyavia-Pomerania

Łódź Province

Mazovia

27 22

Pomerania

Other provinces

Total

100

Tab. 21. The share of individual provinces in road and rail transport to and from the ports in Gdańsk and Gdynia / source: own work based on Materials of the Port of Gdańsk

modes of transport, including rail transport through the development of combined transport, by 2020 will cause a 5-fold increase in cargo weight transported by rail to and from seaports. However, as previously mentioned, the fulfilment of transport needs is already facing serious limitations.

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Fig. 30. Bottleneck in the rail network in the Tri-City railway junction / source: own work based on: Analiza zapotrzebowania na przepustowość w węzłach kolejowych w Trójmieście i na Śląsku (Analysis of demand for capacity in railway junctions in the Tri-City and Silesia, UTK, Warsaw, June 2014

Road transport Investment projects have been made to increase access to seaports: • Słowacki route • tunnel under the Dead Vistula (Martwa Wisła), Yet, despite this investment, road transport is also unable to meet the growing transport needs in accordance with contemporary problems. The main problems of this mode of transport are as follows: • too much traffic (exceeding 50 thousand vehicles per day) on the sections leading to seaports and on the Tri-City ring road • high share of trucks on national roads, reaching 32% (this share is much higher than the average value for Poland, i.e. 7.2%) 30; the largest share occurs on: –– A1 motorway (23–32%) –– national road No. 7 (10–18%) –– road No. 91 (10–17%) –– express road S6 (9–18%) • the improvement in the standard of living accompanied by a growing level of individual transport and the associated increase in mobility, which cause an increase in car traffic and safety hazard on roads. The expected growth in turnover of seaports is an important factor contributing to the increase of demand for transport in the hinterland of ports. This produces a need to increase the capacity of the hinterland of seaports. The port capacity is determined by the following: • handling capacity of the wharf, resulting from its length and the number of mooring points and equipment • the capacity of other elements of infrastructure and superstructure of ports (e.g. storage yards, warehouses, port transport infrastructure) • handling capacity of hinterland transport.

30 Strategia transportu i mobilności obszaru metropolitalnego do roku 2030. Diagnoza systemu transportowego [Transport and

mobility strategy in the metropolitan area by 2030. Diagnosis of the transport system], Gdańsk 2014, p. 62.

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The actual port handling capability is a result of the capacity of the weakest link. As previously mentioned, this link in Poland is the hinterland transport at seaports. Therefore, it can be assumed that the volume of cargo handling at seaports in Poland (with the exception of handling in the so-called sea transit) will depend largely on this factor. There is therefore an urgent need for its improvement so that the handling capacity of ports, increased through the current investment projects implemented within the ports can be utilized in full. Improvement of hinterland transport at seaports will be important for increasing the handling capability at seaports, and can also contribute to “regaining” the demand taken over by the Port of Hamburg. In 2012, a total of 3.54 million tonnes of cargo (including 123.2 thousand TEU) was transported by road between Hamburg and Poland, which was the equivalent of 252 thousand trucks with an average load weight of 14.1 tonnes each. In 2012, 96.9 thousand TEU transported to Poland by rail were handled in Hamburg31. Because of the limited area capability of development of rail and road infrastructure, congestion on the access roads to ports and the strong negative impact of road transport on the environment, the best solution is to use the inland water transport at the lower Vistula River (dolna Wisła) in the hinterland.

2.2.4. Forecast of demand for transport at the lower Vistula River Survey In order to identify the transport needs of the lower Vistula River (dolna Wisła) waterway, we selected 40 companies whose location, production volume and structure are the basis for concluding that their transport needs should be satisfied by inland waterway transport. Because 6 of the selected companies refused to fill in the survey at the stage of preliminary talks, and 13 companies did not return a filled survey, the final analysis of transport needs that could be satisfied by inland waterway transport was conducted on a sample of 21 companies. According to the authors, these companies, selected from among all the selected entities, best meet the criteria for choosing a research sample and, at the same time are most likely to cooperate with inland waterway transport providers. Studies show that the production of these companies largely depends on transport on the routes to the seaports at the mouth of the Vistula River (Wisła). This is because transport carried out by this group of companies on the routes to the seaports in Gdańsk and Gdynia constitute: • 45% of the total bulk cargo transport • 2% of the total cargo transported in containers • 53% of the total oversized cargo transport. The analysis of the responses to the survey indicate that the surveyed companies engaged in transport to and from the seaports generate a total demand of 7769 thousand tonnes (Tab. 22), including 110 thousand containers (Tab. 23), 7653 thousand tonnes of bulk cargo (Tab. 24) and 5.4 thousand tonnes of oversized cargo (Tab. 25). Therefore, the sample can provide a reliable basis for conclusions about the demand for transport by the lower Vistula River (dolna Wisła) waterway. The survey shows that currently the companies are relatively uninterested in the use of inland water transport in the area of the lower Vistula River (dolna Wisła). Only 4.76% of the surveyed companies declare that they cooperate with inland waterway transport, while all of them use road transport. The surveys show that the current annual total cargo transport in the supply of raw-materials and distribution of finished products in the surveyed companies is 24.5 million tonnes (7.8 million tonnes in supply and 16.7 million tonnes in distribution). Assuming that in recent years the share of inland waterway transport in Poland in cargo transport was 0.3% on average (the surveyed companies even declare a share of 0.5%), it would mean that 0.73 million tonnes are transported by inland waterway. This volume is higher than the figures indicated by the official statistics of the Central Statistical Office (GUS) on cargo transport on the lower Vistula River (dolna Wisła) (see Tab. 4). 31 M.O. Teuber et al, Przewozy towarów między portem w Hamburgu i Polską – perspektywy rozwoju Unii Izb Łaby i Odry (KEO)

[Transport of goods between the port in Hamburg and Poland – prospects for development of the Elbe/Oder Chamber Union (KEO)], Hamburgisches Weltwirtschafts Institut, Hamburg 2015, pp. 49, 54.

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SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Transport routes from

to Pomerania Province

Seaports of Gdańsk and Gdynia

Transport in thousand tonnes 3,243

Kuyavia-Pomerania Province

Mazovia Province

Pomerania Province

3,596

Kuyavia-Pomerania Province

Seaports of Gdańsk and Gdynia

Mazovia Province

886 12

Total

7,769

Tab. 22. Total cargo transport to and from the seaports in the area of the lower Vistula River (dolna Wisła) (thousand tonnes) / source: own bade based on surveys

Transport routes from Seaports of Gdańsk and Gdynia

Transport in thousand tonnes

Pomerania Province

Kuyavia-Pomerania Province

Mazovia Province

Pomerania Province

Kuyavia-Pomerania Province

Seaports of Gdańsk and Gdynia

Mazovia Province

108 0

Total

110

Tab. 23. Container transport to and from the seaports in the area of the lower Vistula River (dolna Wisła) (thousand tonnes) / source: own bade based on surveys

Transport routes from

to Pomerania Province

Seaports of Gdańsk and Gdynia

Kuyavia-Pomerania Province Mazovia Province

Pomerania Province Kuyavia-Pomerania Province Mazovia Province Total

Transport in thousand tonnes 3,243 28 2 3,596

Seaports of Gdańsk and Gdynia

777 7 7,653

Tab. 24. Bulk cargo transport to and from the seaports in the area of the lower Vistula River (dolna Wisła) (thousand tonnes) / source: own bade based on surveys

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II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Transport routes from Seaports of Gdańsk and Gdynia

to Pomerania Province

Kuyavia-Pomerania Province

Mazovia Province

Pomerania Province Kuyavia-Pomerania Province Mazovia Province Total

Transport in thousand tonnes

0 Seaports of Gdańsk and Gdynia

0.4 5 5.4

Tab. 25. Oversized cargo transport to and from the seaports in the area of the lower Vistula River (dolna Wisła) (thousand tonnes) / source: own bade based on surveys

It turns out that the potential interest of the surveyed companies in the use of water transport services is much higher than the present interest. The surveys show that: • as many as 76.19% of the surveyed companies would be willing to cooperate with inland waterway navigation • 23.71% would even be interested in building their own river handling point. Therefore, if there were good navigation conditions and a sufficient supply of water transport services, with the indicated declaration of interest in inland waterway transport, operations using that mode of transport for only the current transport needs of the surveyed companies could transport 11.6 million tonnes. However, the realisation of this demand involves the need for a thorough reconstruction of that waterway. The development of the lower Vistula River (dolna Wisła) through construction of a cascade would also contribute to a change of preferences in relation to the use of services concerning the mode of transport among other smaller business entities that are not included in the survey. As a result, this would mean an additional demand for cargo transport through the lower Vistula River (dolna Wisła) waterway. The demand estimates for inland water transport presented here apply to the current transport needs of the lower Vistula River (dolna Wisła) and result from the potential to take over some of the operations from other modes of transport. A further increase in the economic activity of companies in the region, and the increased attractiveness of inland navigation achieved after development of this section of the Vistula River (Wisła) will consequently mean the emergence of a newly generated demand for the inland waterway transport of cargo. The survey conducted shows that after the development of the lower Vistula River (dolna Wisła), cargo transport on this section of the Vistula River (Wisła) can be estimated to reach the level of 12 million tonnes at the very least. There is a need to gradually improve inland waterway transport for the purposes of making adequate waterway transport services available in the region, including especially the seaports in Gdańsk and Gdynia.

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SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 31. The concept of an inner port supported by inland waterway transport on the Vistula River (Wisła) and rail and road transport – first and second stage / source: own work

The concept of an inner port Due to a lack of free space in ports, which is necessary to support an increased turnover, the best solution proposed to date would be to build a logistics centre at the lower Vistula River (dolna Wisła) in Solec Kujawski area, which would function as an inner port; this would make it possible to: • transfer the land consuming cargo handling facilities at seaports to the hinterland, thereby conserving the valuable port areas, which are necessary to perform cargo handling functions • bypass the overloaded road and rail transport network located in the Tri-City area • highly effective waterway transport to and from seaports – logistics centre – at the first and second stage of the implementation of the concept of an inner port. At the first stage it is expected to restore the transport previously carried out on the lower Vistula River (dolna Wisła) this would amount to 5 million tonnes per year, and – with the improvement of navigation conditions and the extension of the inner port – an increase of transport through the lower Vistula River (dolna Wisła) waterway of up to 7 million tonnes (Fig. 31) at the second stage. It is important to begin the development of the lower Vistula River (dolna Wisła) from the mouth of the river (except for the barrage in Siarzewo, which should be built first because of the threat to the barrage in Włocławek). The gradual improvement of navigation conditions from the seaports towards Warsaw will make it possible to develop inland waterway transport in stages in the hinterland of the seaports. The Lower Vistula Cascade, which would make it possible to ensure navigability throughout the area, would create conditions for the construction of a second logistics centre – in the Warsaw area – to take over transport support for the Mazovia Province and transit to Lithuania and Belarus at the third stage – 5 million tonnes, with 7 million tonnes still to be handled in the Solec Kujawski area (Fig. 32). Total demand for transport through the lower Vistula River (dolna Wisła) was estimated at 12 million tonnes. 134

II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Fig. 32. The concept of inner port and logistics centre in the Warsaw area supported by inland waterway transport on the Vistula River (Wisła) and rail and road transport – third stage / source: own work

With a 300 day of navigation period, the average daily traffic of vessels on the lower Vistula River (dolna Wisła) would range from 26 to 33 ships.

Verification by analogy The feasibility of the presented forecasts has been verified by analogy through comparison of the transport development capability on the Vistula with the inland navigation experience on the Elbe River (Łaba) (length of 1165 km, including 808 km in Germany, Fig. 33). In the absence of national experience in the use of inland waterway transport to serve the transportation needs of the national economy, the analogy method can provide an important basis for studies examining the possible utility of inland waterway transport. The example was selected because of the similarities in development conditions, although differences are also significant. The similarity in conditions for the navigational development of the Elbe River (Łaba) are connected with: • support of the Seaport of Hamburg • the navigational conditions on the waterway are similar to the lower Vistula River (dolna Wisła) waterway, even though the potential of the lower Vistula River (dolna Wisła) as a waterway is greater than that of the Elbe River (Łaba). The differences are caused by the following: • rail transport is much better developed than it is in Poland; it supports the Port of Hamburg, and as a result it delivers a greater competitive advantage of this mode of transport compared to inland waterway transport • different transport routes, many of which do not coincide with the waterway layout on the Elbe River (Łaba). Therefore, while the lower Vistula River (dolna Wisła) has an advantage over the Elbe River (Łaba) in terms of both potential navigational conditions and the layout in relation to transport demand, the analogies with regard to the transport volume on the Elbe River (Łaba) waterway could be an important way of verifying the forecasts of demand on the lower Vistula River (dolna Wisła). 135

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 33. The Elbe in the inland waterway system in Germany categorized by navigability class / source: Conceptual study on traffic shift from trucks to inland vessels and strengthening hinterland traffic, UNICONSULT Universal Transport Consulting GmbH, Hamburg 2009 [online], http://www.hamburg.de/contentblob/1547242/data/studie-binnenschifffahrt.pdf [access: 22.10.2015]

Due to varying and unstable technical parameters, push tows are mainly used on the Elbe River (Łaba). This is because they introduce the possibility of adjusting the size of the barges to suit various navigation conditions. Relatively speaking, the best conditions on this waterway occur in the section between the Ports of Wittenberg and Hamburg, which allow for the use of push tows with a length of 190 m and a width of 24 m, with a total tonnage of 4 thousand tonnes (Tab. 26, Fig. 34). In 2013, the total volume of transport on the Elbe River (Łaba) was 17.6 million tonnes (in 2012 – 16.3 million tonnes)32; however, due to the aforementioned varying navigation conditions, the Elbe River (Łaba) is most intensively used for transport purposes on its lower section, above Hamburg (9–10 million tonnes per year)33. The highest rate of transport and the most intense traffic level of vessels (Fig. 35) can be observed at the Geesthacht Lock (585.86 km), on which transport of 9.8 million tonnes was recorded in 2013, of which 6.4 million and 3.4 million tonnes were carried upstream and downstream, respectively. As shown in Fig. 36, this transport has remained at a stable level since 2004. 32 Inland Navigation in Europe, "Marketobservation" 2014, Central Commission for the Navigation of the Rhine,

Strasbourg 2014. 33 Inland Navigation in Europe, "Marketobservation" 2012–1, Central Commission for the Navigation of the Rhine, Strasbourg 2012.

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II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Push tow length and width Waterway section

upstream navigation

The border with the Czech Republic (0.00 km) – Port of Roßlau (264.10 km)

170 m x 11.45 m

Port of Roßlau (264.10 km) – Port of Wittenberg (454.80 km)

110 m x 22.90 m 137 m x 19.70 m 172 m x 11.45 m 172 m x 19.70 m 190 m x 11.45 m

Port of Wittenberg (454.80 km) – Port of Hamburg (607.50 km)

190 m x 24 m

downstream navigation 137 m x 11.45 m 110 m x 18 m 145 m x 11.45 m 145 m x 22.90 m 165 m x 18 m

190 m x 24 m

Tab. 26. Availability of the Elbe River (Łaba) waterway for push tows / source: Date tables for inland water route listed below in the area of General Directorate for Shipping, Eastern Branch][online], https://www.elwis.de/Binnenwasserstrassen/ Technische-Daten/index.htm l [access: 24.08.2015]

Fig. 34. Push tows used on the Elbe River (Łaba) for container transport / source: Conceptual study on traffic shift from trucks to inland vessels and strengthening hinterland traffic], UNICONSULT Universal Transport Consulting GmbH, Hamburg 2009 [online], http://www.hamburg.de/contentblob/1547242/data/studie-binnenschifffahrt.pdf [access: 22.10.2015]

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Fig. 35. Transport streams and traffic of vessels on the Elbe River (Łaba) waterway and neighbouring waterways in 2013 / source: Traffic report 2013 inland waterway transport in numbers between the Elbe and the Oder [online], http://www. wsd-ost.wsv.de/service/Downloads/Statistischer_Verkehrsbericht_2013.pdf [access: 24.08.2015]

Fig. 36. Cargo transport recorded at the Geesthacht lock (585.86 km) in 2004–2013 (million tonnes) / source: Traffic report 2013 inland waterway transport in numbers between the Elbe and the Oder [online], http://www.wsd-ost.wsv.de/service/ Downloads/Statistischer_Verkehrsbericht_2013.pdf [access: 24.08.2015]

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II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Item

2008

2009

2010

2011

2012

2013

Upstream

51.6

44.8

44.4

52.3

43.9

46.7

Downstream

48.3

42.8

43.0

49.2

41.7

43.7

Total

100.0

87.7

87.4

101.5

85.60

90.4

Tab. 27. Container transport recorded at the Geesthacht Lock in 2008–2013 (thousand TEU) / source: Traffic report 2013 inland waterway transport in numbers between the Elbe and the Oder [online], http://www.wsd-ost.wsv.de/service/ Downloads/Statistischer_Verkehrsbericht_2013.pdf [access: 24.08.2015]

2012

2013

Vessels of up to 900 tonnes (inclusive)

Item

3,258

2,571

Vessels of up to 1200 tonnes

4,996

4,852

Vessels of up to 1500 tonnes

4,774

5,505

Vessels of up to 2000 tonnes

3,029

3,236

Vessels of up to 2500 tonnes

438

572

0 16,495 8,229 8,266

2 16,738 8,347 8,391

Vessels of more than 2500 tonnes Total including: upstream downstream

Tab. 28. Ship traffic in cargo transport at the Geesthacht Lock (number of vessels) / source: Traffic report 2013 inland waterway transport in numbers between the Elbe and the Oder [online], http://www.wsd-ost.wsv.de/service/Downloads/ Statistischer_Verkehrsbericht_2013.pdf [access: 24.08.2015]

A significant intensity of operations at this lock is also observed in container transport. In 2013, the Geesthacht lock handled 90 thousand TEU (Tab. 27). In cargo transport, 16.5 thousand vessels (8.3 thousand upstream and 8.2 thousand downstream) and 16.7 thousand vessels (8.3 thousand upstream and 8.4 thousand downstream) were handled at the lock in 2012 and 2013, respectively. Those are vessels with a tonnage of 1200 and 1500 tonnes (Tab. 28). To compare, transport volume is much smaller on the Elbe River (Łaba) in the Magdeburg area (Fig. 37). In 2013, the level of cargo transport recorded in the region was 770 thousand tonnes, including 15.3 thousand TEU (Tab. 29). These operations were therefore 12 times and almost 6 times lower than at the Geesthacht Lock, respectively. As a consequence, the traffic of ships in the Magdeburg region in 2013 was almost 7 times lower. 2,496 ships were recorded in the Magdeburg region in 2013, including 349 vessels with a tonnage of 1,500 tonnes or more (Tab. 30). There are smaller transport streams on the middle section of the Elbe River (Łaba) (Fig. 38) caused by the fact that ships can avoid this section through the Elbe Side Canal (Elbe-Seiten-Kanal). This is an alternative waterway to the Elbe River (Łaba) between Hamburg and Magdeburg. The guaranteed depth on this waterway is 4.0 m, which allows for the use of ships with a draft of 2.5 metres with a full load throughout the year. In 2013, a transport volume of 9.5 million tonnes was recorded on the Uelzen Lock on this canal, including 6.6 million upstream and 2.9 million tonnes downstream. That alternative waterway is used more and more for inland navigation. In 2014, a record high level of transport occurred on the canal – 11 million tonnes of cargo, meaning 16% more than in the previous year34. 34 No development is needed for Elbe, only water [online], http://www.elbeinsel.de/info/info_2015/15-03-11_Der-Elbe-fehlt-

kein-Ausbau.html [access: 24.08.2015]; Traffic report 2013 inland waterway transport in numbers between the Elbe and the Oder, [online] WSV.de http://www.wsd-ost.wsv.de/service/Downloads/Statistischer_Verkehrsbericht_2013.pdf [access: 24.08.2015].

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Fig. 37. Transport streams on the Elbe River (Łaba) waterway in the Magdeburg area in 2013 / source: Traffic report 2013 inland waterway transport in numbers between Elbe and Oder [online], http://www.wsd-ost.wsv.de/service/Downloads/ Statistischer_Verkehrsbericht_2013.pdf [access: 24.08.2015]

Item

Cargo transport in thousand tonnes

Container transport in thousand TEU

2011

809.7

13.8

2012

784.2

13.2

2013

770.0

15.3

Tab. 29. Transport streams on the Elbe River (Łaba) in the Magdeburg region / source: Traffic report 2013 inland waterway transport in numbers between Elbe and Oder [online], http://www.wsd-ost.wsv.de/service/Downloads/Statistischer_ Verkehrsbericht_2013.pdf [access: 24.08.2015]

To sum up, between 2012 and 2013: • overall transport on the Elbe River (Łaba) in Germany was 16–17 million tonnes • the highest transport load was on the lower Elbe River (dolna Łaba): 9–10 million tonnes at the Port of Hamburg • the forecast of transport on the lower Vistula River (dolna Wisła) anticipates 5–12 million tonnes at various stages • ship traffic at the lock with the highest transport volume (Geesthacht) was 16–17 thousand vessels, mainly with a tonnage of 1200–1500 tonnes • assuming that ships of a similar size (1200–1500 tonnes) will be used on the lower Vistula River (dolna Wisła), this will ultimately mean a traffic volume of ships similar to that found on the lower Elbe River (dolna Łaba). Comparing the transport volume on the lower Elbe river (dolna Łaba) to the estimates of demand for the lower Vistula River (dolna Wisła) shows that the values adopted for the forecast are feasible even in conditions of strong competition from rail transport. 140

II. ANALYSIS OF DEMAND FOR CARGO TRANSPORT THROUGH THE LOWER VISTULA RIVER

Item

2012

Vessels of up to 900 tonnes (inclusive)

874

908

Vessels of up to 1200 tonnes

1,238

1,239

Vessels of up to 1500 tonnes

325

275

Vessels of up to 2000 tonnes

Vessels of up to 2500 tonnes

Vessels of more than 2500 tonnes

2,510

2,496

1,255 1,255

1,255 1,241

Total including: upstream downstream

2013

Tab. 30. Ship traffic in cargo transport on the Elbe River (Łaba) in the Magdeburg region (number of vessels) / source: Traffic report 2013 inland waterway transport in numbers between Elbe and Oder [online], http://www.wsd-ost.wsv.de/service/ Downloads/Statistischer_Verkehrsbericht_2013.pdf [access: 24.08.2015]

Fig. 38. Cargo transport on the Elbe Side Canal and on neighbouring waterways in 2013 / source: Traffic report 2013 inland waterway transport in numbers between the Elbe and the Oder [online], http://www.wsd-ost.wsv.de/service/Downloads/ Statistischer_Verkehrsbericht_2013.pdf [access: 24.08.2015]

Therefore, the German experience on the Elbe River (Łaba) waterway confirm the feasibility of using the adopted forecasts of demand on the lower Vistula River (dolna Wisła) including quite large transport capacity reserves to be used in the future. 141

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

2.3. Analysis of study results – conclusions

1. The conducted analysis of available studies of transport demand shows that: • globalization will contribute to more than a 4-fold increase in demand for transport work by 2050 • the growth in transport demand will be varied depending on the regions of the world • almost 2-fold increase in cargo transport is expected in EU countries, but this varies between different categories of cargo – with the highest increase in container transport: 4.4-fold • 90% of cargo transport work is carried out by sea, which will mean a growth in the turnover of seaports, especially those engaged in container handling • European seaports expect a widely varying volume of cargo handling, depending on the development scenario: in the category of containers the estimated growth rate range varies from a few to several million TEU • large European seaports that projected changes in turnover are simultaneously planning changes in the modal structure of hinterland facilities – to make them more environmentally friendly: • European trends of changes in sea ports and in the hinterland should determine the directions of changes in Poland. 2. The following method was adopted as the primary research method for demand transport in the lower Vistula River (dolna Wisła): • the expert method, which uses the following for verification • the analogy method, supported by • the interview method, interviews were conducted among major business entities which could potentially generate transport needs and the analysed waterway runs through the provinces where they are located. It was assumed that demand for cargo transport in the area of the lower Vistula River (dolna Wisła) is determined mainly by trends of changes in the seaports in Gdańsk and Gdynia: • projected handling • projected cargo handling capacity of ports, which will make it possible to assess the feasibility of forecasts from the point of view of the cargo handling capability of the ports • product range structure of cargo handling, which determines the potential to transport cargo on waterways • maritime transit, which determines how much of the projected demand for port turnover will be transported to and from the hinterland. These studies made it possible to identify the transport demand between seaports and the hinterland, estimated as follows: • 69 million tonnes in 2020 (an increase of 23.1 million tonnes, i.e. 50% compared to 2014) • 116.2 million tonnes in 2030 (an increase of 70.3 million tonnes compared to 2014 – 250% compared to 2014). 3. An important role in establishing the importance of seaport links to the hinterland is played by the economic activity in the area of the lower Vistula River (dolna Wisła) as a factor determining the demand for cargo transport in the region and the demand of countries benefiting from land-sea transit through the ports in Gdynia and Gdańsk. Therefore, the next element of the study was to determine the transport needs in the area of the lower Vistula River (dolna Wisła), based on the analysis of the following factors describing changes in the economic activity of the region: • the number of business entities • the volume of production of enterprises in the industries that are the basic generators of transport needs • changes in production structure • population centres in the region • GDP value • transport intensity in the economy.

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These studies made it possible to estimate transport volume in the area of the lower Vistula River (dolna Wisła) in 2020–2040. Depending on the rate of change in transport intensity, these estimates can range from 620 to 650 million tonnes (176–206 million tonnes more than in 2014). 4. A significant projected growth in transport demand in the area of the lower Vistula River (dolna Wisła), including an increase in demand for routes between seaports and the hinterland, requires an assessment of the ability to satisfy those needs by the modes of transport which have provided transport on those routes up to the present time. Because of the limited area capability of development of rail and road infrastructure, congestion on the access roads to seaports and a strong negative impact of road transport on the environment, the best solution is to develop the inland water transport at the lower Vistula River (dolna Wisła). Failure to use these opportunities could threaten the strategic position of the seaports. 5. The next stage of the study was to use the survey method to assess the willingness of companies to use lower Vistula River (dolna Wisła) waterway for transport purposes in supply and distribution. The survey conducted proves that after the development of the lower Vistula River (dolna Wisła), cargo transport on this section of the Vistula River (Wisła) could be estimated to reach a level of at least 10 million tonnes, as transport needs have already achieved a similar level. 6. The result of the study conducted was a forecast assuming the development of transport on the lower Vistula River in stages: • construction of an inner port in the Solec Kujawski area, which would partially take over from seaports the handling of cargo which would be brought to the inner port via waterway transport • at the first stage – restoration of transport previously conducted on the lower Vistula River (dolna Wisła) at a level of 5 million tonnes per year, and – with the improvement of navigation conditions and extension of the inner port – an increase of transport through the lower Vistula River (dolna Wisła) waterway up to 7 million tonnes at the second stage. • after the construction of the Lower Vistula Cascade (KDW), which would make it possible to ensure the navigability of the waterway throughout the sector, and the completion of a second logistics centre – in the Warsaw area – which would take over transport support for the Mazovia Province and transit to Lithuania and Belarus at the third stage – an increase in transport by approximately an additional 5 million tonnes. 7. The feasibility of forecasts for transport through the lower Vistula River (dolna Wisła) was verified by analogy, through the analysis of the German experience in the use of the seaport in Hamburg for inland waterway transport on the Elbe River (Łaba). Studies have shown that: • overall transport on the Elbe River (Łaba) in Germany reached levels of 16–17 million tonnes • the highest transport load was on the lower Elbe River (dolna Łaba): 9–10 million tonnes at the Port of Hamburg • ship traffic at the lock with the highest transport volume (Geesthacht) was 16–17 thousand vessels, mainly with a tonnage of 1200–1500 tonnes • in light of the German experience it can be assumed that the adopted forecast is a minimum variant, which could be doubled if necessary.

143

III. Analysis of the demand for passenger

transport using inland navigation in the a rea of the lower Vistula River 3.1. Types of passenger transport in inland navigation

In addition to cargo transport, an important area of use of inland waterway transport is the fulfilment of passenger transport needs. Passenger navigation along inland waterways is differentiated depending on the basis of the purpose of the journey: • tourist • communication. In estimating the demand for passenger transport it was assumed that this type of transport is dominated by optional operations associated with leisure and tourism. Both international and national observations show that this mode is also often perceived as a link to support the operation of public urban transport. However, such operations are a minor part of inland waterway transport activity; although they may play an important role in fulfilling the transport needs of cities. Their feasibility depends on the activity of local governments, while the potential demand will depend primarily on the location of the waterway in relation to the urban areas and population.

Tourist transport The studies of demand for passenger transport focus on tourist transport, and the basis for examination of demand in this respect is the analysis of trends in quantitative and qualitative changes in global tourism, with particular emphasis on the position of the European market in these processes. Trends in the development of tourist transport are a major challenge for inland waterway navigation. The growing wealth of the society and the associated increasing mobility and demand for tourism can be largely satisfied by inland waterways.

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III. ANALYSIS OF THE DEMAND FOR PASSENGER TRANSPORT USING INLAND NAVIGATION IN THE AREA OF THE LOWER VISTULA RIVER

The very use of inland waterways can be a tourist attraction. The attractiveness of waterways as a tourism product is a result of the sightseeing values of the areas located in the vicinity of waterways as well as, to a large extent, of the historic nature of hydraulic solutions applied on waterways, such as ship canals, canal bridges, sluices, ramps and ship lifts. The market for tourist transport through inland waterways consists of three categories: • recreation transport • all-day travel transport • round trips with the use of ports of call – cruise transport (Ger. Kreuzfahrt). Recreation transport is a traditional waterway transport that has been known for a long time, but is now experiencing a renaissance, this category includes canoeing, rowing, sailing, motor boat cruises and rafting. All-day travels using river ships means transport on waterways, and the cruise time does not exceed one day. The passenger fleet used in this category is not generally equipped with cabins. The market of all-day travel using waterways transport is varied and includes: • round trip cruises scheduled to follow a specific route • party cruises, conference and theme travels (e.g. dinner cruises, for example related to wine tasting, etc.). • cruises using a chartered luxury ship with food and beverage services (the offer is addressed primarily to people interested in the organisation of large family or corporate events on such ships). Due to the nature of the event charter transport market, the one-day tourist transport market is less and less dependent on weather conditions. In addition to this, an important innovation observed within this market category which is used to acquire new customers, is the sale of tickets combined with a specific cruise ship, associated with other cultural attractions, such as tours around museums, monuments and participation in concerts35. Multi-day round cruises with the use of ports of call are a relatively new category in the market, which, within its narrow definition includes round trips only within inland waterways (river cruising), whereas in a broader definition it means inland transport at sea coasts (sea cruising). In contrast to one-day trips, this market category uses ships equipped with cabins, and even properly adapted ships that are like floating hotels. 75% of round cruises with the use of ports of call are at least one-week cruises, which are carried out in Europe on the following routes, among others: • Passau – Budapest – Passau • Basel – Amsterdam – Basel • Dresden – Prague – Dresden • Passau – Vienna – Passau • Budapest – Belgrade – Constanta – Belgrade – Budapest36.

Communication transport In addition to tourism, inland navigation plays an important role in passenger transport. This includes these three groups: • ferry rides • urban transit (individual and public transport – water taxis) • regional transit. Ferry rides (the so-called called floating bridges) due to the development of modern transportation infrastructure (roads, railroad, bridges, tunnels) they have become a thing of the past. Urban transit by water has long been popular, under especially favourable conditions, among workers commuting to shipyards and harbours. However, privatization of this sector, together with the rise of the automotive industry, led to a gradual decline in these services. At present, in light of increasing traffic congestion, for the sake of the 35 European Organisation for Inland Navigation, "Market monitoring" 2012–2, Central Committee for Rhine Navigation,

European Commission, Strasbourg 2012. 36 European Organisation for Inland Navigation, "Market monitoring" 2010–1, Central Committee for Rhine Navigation, European Commission, Strasbourg 2010.

145

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

sustainable development of transportation in cities, it is extremely important for these services to be restored. In large urban metropolitan areas that have access to inland waterways, the concept of water buses has appeared lately as a service complementary to public transport. Waterways, often running through big cities, help passengers to reach the districts that are often off-limits to road traffic. This kind of transport is becoming more and more popular in Europe and is used in cities such as: Venice, Stockholm, Paris and others. The highest share of inland navigation among passengers travelling via public transport is in Venice, where water buses are used not only within the city, but also in suburban areas. Since 1999, inland navigation has been an important link in the public transport of Paris. The trimarans with a capacity of 200 passengers make it possible to transport over 0.5 million passengers each year. Another form of passenger transport service is the regional transit, which are often also characterised by tourism and recreational values. They are provided mainly on the routes where the inland or coastal waterway is shorter or more competitive (in terms of the journey time) than the routes followed by cars or trains. In the summer, such transit routes provide an additional tourist attraction. According to the types of passenger transport on inland waterways presented in particular market categories, specific types of passenger fleet vessels are used. The structure of the passenger fleet used in passenger navigation consists of: • cruise ships used for one-day trips and the organisation of events • hotel-type ships, generally of a high standard, used for the organisation of multi-day trips on inland waterways • water buses, used both as a means of public transport and for organising trips of several hours to explore the city from the river37.

3.2. Trends in the development of passenger transport in Europe One-day tourist trips

One-day tourist trips hold the dominant position among tourist attractions based on the inland waterways of Europe. These cruises are often combined with tours around monuments and museums in the cities visited. In Europe, there are no official statistics regarding the number of tourists who embark on one-day trips on inland waterways. Hence, the data are provided according to the status of respective fleets. This type of transport is very popular especially in Germany, France and the Netherlands. Currently, 1541 ships are used in these countries in the market of one-day trips on inland waterways (Tab. 31). These ships are becoming more and more luxurious, and as a result they provide an increasingly high comfort level to tourists38. In Germany, 820 vessels with a total capacity of 168.5 thousand passengers are currently used in the market of one-day tourist trips. The number of tourists embarking on one-day trips is estimated at no less than 30 million people. These trips are carried out mainly on the Rhine (Ren), the Danube (Dunaj) and the Elbe (Łaba). Trips between Hamburg and Dresden are particularly popular in the area of the Elbe River (Łaba) because of the unique landscape and historic values of those cities. It is estimated that currently 233 passenger ships with an average capacity of 171 passengers each are used in the region (Tab. 32). One-day tourist trips are also quickly becoming popular on inland waterways near Berlin, Brandenburg and Mecklenburg. One-day cruises are offered in France by 237 shipping companies, which have over 420 ships with a total passenger capacity of more than 49,000. Over 10 million tourists go on one-day trips on French waterways (Fig. 39). This category of the tourist transport market is growing actively, mainly in the Paris area. It is estimated that tourist transport in this region currently represents 76% of all tourists transported during one-day trips on the waterways in France. 20% of the fleet and 50% of total passenger capacity of the ships used in this segment of the market are operated in the region (Tab. 33). 37 J. Kulczyk, J. Winter, Śródlądowy transport wodny [Inland waterway transport], Wrocław 2003, p. 128 [online], (http://www.

dbc.wroc.pl/Content/1322/srodladowy_transport_wodny.pdf [access: 7.11.2015]. 38 It is estimated that the cost of construction of a new single deck cruise ship with a capacity of 80 passengers is approx. EUR 1.5 million, while a double-deck vessel designed for 350 people costs approx. EUR 7 million. The lifetime of cruise ships is estimated at around 25 years, but older vessels are also used because of their historical value.

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III. ANALYSIS OF THE DEMAND FOR PASSENGER TRANSPORT USING INLAND NAVIGATION IN THE AREA OF THE LOWER VISTULA RIVER

Number of vessels

Passenger capacity (thousand)

Germany

Country

820

168.5

France

421

49.1

Netherlands

300

–

Hungary

11.6

Austria

16.3

Belgium

3.0

Slovakia

1.4

Switzerland

–

Tab. 31. Passenger ships used in the segment of one-day tourist trips on inland waterways / source: European Organisation for Inland Navigation “Market monitoring” 2014, Central Committee for Rhine Navigation. European Commission, Strasbourg 2014

Region Germany in total, including: Elbe

Number of vessels

Fleet capacity (passenger capacity in thousands)

Average passenger capacity of ship

820

168.5

205

233

39.8

171

Rhine

123

31.8

259

Berlin

112

19.5

174

Brandenburg and Mecklenburg

18.7

210

Tab. 32. The fleet operated in the market of one-day tourist trips on inland waterways in Germany by region / source: European Organisation for Inland Navigation “Market monitoring” 2012, Central Committee for Rhine Navigation. European Commission, Strasbourg 2012

Fig. 39. The number of tourists transported during one-day trips in France between 2002 and 2011 in million people / source: European Organisation for Inland Navigation “Market monitoring” 2012, Central Committee for Rhine Navigation. European Commission, Strasbourg 2012

The market of one-day tourist trips is also developing quickly in the Netherlands and Belgium, especially in the network of canals and within the major cities such as Amsterdam (80 km of canals and 1,250 bridges), Ghent, Bruges and Wallonia. It is estimated that 3–4 million passengers are transported annually on the canals in the Amsterdam area in this category of tourist transport39. 39 European Organisation for Inland Navigation, "Market monitoring" 2012-2, Central Committee for Rhine Navigation,

European Commission, Strasbourg 2012.

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SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Region France in total, including: Paris Languedoc-Roussillon Alsace Land of the Loire

Number of vessels

Fleet capacity (passenger capacity in thousands)

Average passenger capacity of ship

421

49.1

116.6

86 34 14 20

24.1 2.4 1.6 1.8

280.4 65.7 113.7 88.1

Tab. 33. The fleet operated in the market of one-day tourist trips on inland waterways in France by region / source: European Organisation for Inland Navigation “Market monitoring” 2012, Central Committee for Rhine Navigation. European Commission, Strasbourg 2012

Circular cruises

Compared with one-day trips, the category of round trips with the use of ports of call (cruise transport) is of less importance in Europe. The number of ships used within this market category in Europe is estimated at 265 vessels with an average capacity of 143 people each. It is estimated that currently approximately 840 thousand passengers are transported annually in Western Europe in this category40. Despite the smaller scale of transport, it is estimated that the market for round trips with the use of ports of call is characterized by much greater prospects for development, as proven by the observed dynamics of such transport. For example, in 1999–2008 the number of tourists transported within this market category in Germany increased almost 2-fold41. In addition, the number of vessels in this market category increased by approximately 60% in 2004–201342. The most popular waterways used in this type of transport include: the Elbe (Łaba), the Seine (Sekwana), the Moselle (Mozela), the Rhine (Ren), the Danube (Dunaj), the Rhone (Rodan), the Douro (Portugal) and the Guadiana (Portugal/Spain). This type of transport is used in the period from March to October, and in the slack season hotel ships are often chartered for residential purposes. In December, particularly attractive offers in this market category also include the services provided to increase the appeal of Christmas cruises43. Not only European tourists are interested in circular cruises, an important group of travellers are tourists from the United States (Fig. 40), and their number is increasing every year. In addition to tourists from the United States, other non-European tourists interested in such cruises come from Australia, Canada and New Zealand. Because hired transport is growing more dynamically in the market of round trips with the use of ports of call than in the one-day trip market, more hotel ships than cruise ships are currently put into operation. The number of newly constructed ships designed for one-day cruises has been decreasing since 2008 (Fig. 41). While 20 new vessels of this type were put into operation in 2008, this number dropped to 2 vessels in 2013. Meanwhile, in 2008–2013 the number of newly constructed hotel ships put into operation increased from 4 to 23 vessels. Based on orders for new ships it is estimated that in 2014 the number of vessels used for tourist transport as part of circular cruises increased by an additional 30 vessels equipped with 3500–4500 beds44. 40 European Organisation for Inland Navigation, "Market monitoring" 2014, Central Committee for Rhine Navigation, European

Commission, Strasbourg 2014. 41 European Organisation for Inland Navigation, "Market monitoring" 2010–1, Central Committee for Rhine Navigation, European Commission, Strasbourg 2010. 42 European Organisation for Inland Navigation, "Market monitoring" 2014… 43 Europäische Binnenschifffahrt. Marktbeobachtung 2010–1… 44 European Organisation for Inland Navigation, "Market monitoring" 2014, Central Committee for Rhine Navigation, European Commission, Strasbourg 2014.

148

III. ANALYSIS OF THE DEMAND FOR PASSENGER TRANSPORT USING INLAND NAVIGATION IN THE AREA OF THE LOWER VISTULA RIVER

Fig. 40. Tourists who use tourist transport as part of circular cruises with the use of ports of call by country of origin (%) / source: European Organisation for Inland Navigation “Market monitoring” 2014, Central Committee for Rhine Navigation. European Commission, Strasbourg 2014

Fig. 41. The number of newly constructed passenger ships by type in Western Europe / source: Own work based on: European Organisation for Inland Navigation “Market monitoring” 2014, Central Committee for Rhine Navigation. European Commission, Strasbourg 2014

To sum up, it can be concluded that: • passenger transport is an important and vigorously growing category of the inland waterway transport market • this type of transport is less dependent on the quality of the waterway – it may be carried out on lower-quality routes, but it is necessary to ensure permanent navigation conditions • In France, this type of transport is provided by over 420 ships with a total capacity of 49 thousand passengers • these numbers are much greater in Germany – passenger transport is carried out by 820 ships with a capacity of 168.5 thousand passengers, including 233 ships with a capacity of 40 thousand passengers on the Elbe River (Łaba) • very large transport volume is observed in the cities located at waterways: –– in Paris – 86 ships with a capacity of 24 thousand, regularly transport passengers –– in Berlin – 112 ships offer a passenger capacity of almost 20 thousand • transport via hotel ships is currently a smaller part of the market (approximately 840 thousand passengers annually in Western Europe), but it is characterized by the most rapid growth • passenger transport by inland navigation in numbers: –– Paris: over 10 million passengers per year (one-day trips) –– the canals in the Amsterdam area: 3 to 4 million passengers –– Germany: at least 30 million passengers (one-day trips).

149

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Disposable income (PLN)

Total expenditure (PLN)

Expenditure on recreation and culture (PLN)

2006

834.68

744.81

2007

928.87

809.95

2008

1,045.52

2009

Years

The share of expenditure on recreation and culture (%) in disposable income

in total expenditure

53.20

6.37

7.14

61.54

6.63

7.60

904.27

71.86

6.87

7.95

1,114.49

956.68

76.35

6.85

7.98

2010

1,192.82

991.44

79.80

6.69

8.05

2011

1,226.95

1,015.12

81.81

6.67

8.06

2012

1,278.43

1,050.78

85.55

6.69

8.14

2013

1,299.07

1,061.70

69.22

5.33

6.52

2014

1,340.44

1,078.74

70.13

5.23

6.50

Tab. 34. The average monthly expenditure on recreation and culture per capita in household compared to disposable income and total expenditure / source: own work based on: Budżety gospodarstw domowych [Household budgets], GUS, Warsaw 2007–2015

3.3. Passenger transport in Poland

The presented trends of development of tourism on the waterways of Western Europe will also promote tourist activity in Poland. The reasons for the wider use of inland waterways in Poland in tourist transport result from geographical and natural as well as socio-economic factors. The list of geographical and natural factors which are stimulating the development of Polish inland waterways includes: • vast network of waterways available for tourism, due to low and varied requirements for waterways with tourism potential • location of many inland waterways in attractive tourist destinations • unique character of selected water trails and hydraulic structures The basic socio-economic reasons for stimulating the development of inland waterways from the point of view of tourist transport include: • steady growth of the interest in water-based tourism due to the increasing wealth and mobility of Polish citizens • benefits related to the economic stimulation of regions in the vicinity of waterways with the potential for tourism • Local government interest in the development of tourism infrastructure along inland waterways

Revenues and tourism The increase in income per capita in households affects an increase in the willingness of Poles to use tourism products. Despite the decrease in the share of expenditure for tourism purposes in the average income per capita and total expenditure of households, the long-term average expenditure on recreation and culture is increasing. While in 2006, the average expenditure on recreation and culture per capita in household per month was PLN 53.2, in 2014 it was higher and amounted to PLN 70.13 (Tab. 34 and 35). However, the tourist activity has clearly increased in the case of more wealthy people. The data of the Central Statistical Office (GUS) for 2013 show that with an income per capita of PLN 600, 537 people and 57 people embarked on short national trips and trips abroad lasting at least 2 days, when the income per capita exceeded PLN 1700, 2,840 people and 1,884 people embarked on short national trips and trips abroad, respectively (Tab. 36).

150

III. ANALYSIS OF THE DEMAND FOR PASSENGER TRANSPORT USING INLAND NAVIGATION IN THE AREA OF THE LOWER VISTULA RIVER

Average monthly Average expendiexpenditure in total ture on recreation (PLN) and culture (PLN)

Dynamics of income and expenditure (previous year = 100) expenditure on disposable total recreation income expenditure and culture – – –

Years

Average monthly disposable income (PLN)

2006

834.68

744.81

53.2

2007

928.87

809.95

61.54

111.28

108.75

115.68

2008

1,045.52

904.27

71.86

112.56

111.65

116.77

2009

1,114.49

956.68

76.35

106.60

105.80

106.25

2010

1,192.82

991.44

79.80

107.03

103.63

104.52

2011

1,226.95

1,015.12

81.81

102.86

102.39

102.52

2012

1,278.43

1,050.78

85.55

104.20

103.51

104.57

2013

1,299.07

1,061.70

69.22

101.61

101.04

80.91

2014

1,340.44

1,078.74

70.13

103.18

101.60

101.31

Tab. 35. The dynamics of average monthly disposable income and expenditure per capita in household / source: own work based on: Budżety gospodarstw domowych (Household budgets), GUS, Warsaw 2007–2015

672

Participants of tourist trips abroad (at least 2 days, i.e. 1 night) 57

600.1–900.0

902

1,132

216

900.1–1200.0

1,136

1,665

410

1200.1–1700.0

1,907

2,604

733

More than 1700.0

2,840

3,236

1,884

Income per person in PLN To 600.0

Participants of national short trips (no more than 4 days) 537

Participants of long national trips (at least 5 days, i.e. 4 nights)

* The study covered 4,548 households (12,571 people living in these households); then the results were generalized to the overall number of households in Poland (13,572 thousand households) and 38,171 thousand people Tab. 36. The number of people going on trips by income per capita in PLN in 2013* / source: own work based on: Turystyka i wypoczynek w gospodarstwach domowych w 2013 r. [Tourism and recreation in households in 2013], GUS, Warsaw 2014

The trend of the improving wealth of society should therefore be seen as a factor contributing to the demand for tourist services and associated transport. The increase in the wealth of society entails a change in its lifestyle. This results in an increase in mobility and demand for tourism as well as the development of new higher needs, including weekend recreation, which may be largely met by inland navigation. The development of the lower Vistula River (dolna Wisła) waterway for tourism purposes should also be prompted by the increasing interest of foreign tourists in Poland. In 2010–2014 the number of foreigners travelling to Poland increased from 58.3 million to 73.7 million people, of which the number of foreign tourists increased from 12.5 million to 16.0 million (Fig. 42).

International tourism The study of tourism traffic indicates that among the total number of foreigners visiting Poland 41.0% are Germans; on the other hand, tourists from Germany are 35.9% of all foreign tourists coming to Poland (Tab. 37). The development of the lower Vistula River (dolna Wisła) for tourism purposes could contribute to increasing the tourist attractiveness of Poland and, as a result, to increasing the interest of foreign tourists in travelling to Poland. This in turn would make it possible to increase the income from the development of this sector in Poland. It is 151

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

* Tourist – visiting the country, with accommodation ** Foreigner – visiting the country, with or without accommodation Fig. 42. Visits of foreigners and foreign tourists to Poland in 2010–2014 / source: Turystyka w Polsce 2014 [Tourism in Poland 2014], Warsaw 2015 [online], https://d1dmfej9n5lgmh.cloudfront.net/msport/article_attachments/attachments/77500/ original/ulotka_polska.pdf?1440580707 [access: 15.10.2015]

Item

Foreigners in thousand

Including foreign tourists in thousand

Total

73,750

16,000

Germany

30,260

5,743

Czech Republic

11,374

266

Ukraine

8,732

1,072

Slovakia

5,769

159

Belarus

4,066

811

Russia

2,807

1,003

Lithuania

2,605

605

United Kingdom

862

664

Latvia

742

363

Netherlands

487

399

Tab. 37. Visits of foreigners and foreign tourists to Poland in 2014 by country (10 countries with the largest number of visitors) / source: Turystyka w Polsce 2014 (Tourism in Poland 2014), Warsaw 2015 [online], https://d1dmfej9n5lgmh.cloudfront.net/ msport/article_attachments/attachments/77500/original/ulotka_polska.pdf?1440580707 [access: 15.10.2015]

estimated that the expenditure of foreigners in Poland increased from EUR 7.2 billion in 2010 to EUR 10.8 billion in 2014 (Fig. 43).

Supply of tourist services One of the largest carriers in terms of tourist navigation in coastal waters is Żegluga Gdańska Sp. z o.o. based in Gdańsk, which offers: • regular cruises on the Vistula Lagoon on the following routes: Krynica Morska – Frombork and Frombork – Krynica Morska • cruises around the port in Gdynia, Gdańsk and in Westerplatte • excursion cruises across the Baltic Sea from Ustka, Łeba and Darłowo 152

III. ANALYSIS OF THE DEMAND FOR PASSENGER TRANSPORT USING INLAND NAVIGATION IN THE AREA OF THE LOWER VISTULA RIVER

Fig. 43. Expenditure of foreigners in Poland in 2010–2014 / source: Turystyka w Polsce 2014 [Tourism in Poland 2014], Warsaw 2015 [online], https://d1dmfej9n5lgmh.cloudfront.net/msport/article_attachments/attachments/77500/original/ulotka_polska. pdf?1440580707 [access: 15.10.2015]

• regular links via water bus in the Bay of Gdańsk from Gdańsk, Gdynia, Sopot and Hel • duty-free cruises from Gdynia to Baltiysk (special offer). In addition to regular links in the Bay of Gdańsk or cruises, the ship owner also offers to charter barges for the organisation of conferences and events. Ships can be chartered on any of the selected lines, i.e. from the following ports: Gdańsk, Gdynia and Sopot, within the Bay of Gdańsk to any specified destination port45. In contrast, the major inland navigation ship owners in Poland engaged tourist traffic services in the field of scheduled and unscheduled passenger transport on inland waterways, this includes the following: • Żegluga Ostródzko-Elbląska (Ostróda-Elbląg Shipping Company) based in Ostróda (since 1993 a Branch of the Department of Public Transport in Ostróda), which from May to 30th of September provides tourist transport on the canals and lakes of the Ostróda-Iława Lake District, in particular on the Elbląg Canal46 • Żegluga Augustowska sp. z o.o. (Autustów Shipping Company) based in Augustów, which carried out tourist and sightseeing cruises on the Augustów Canal and in the area of adjacent lakes • Żegluga Mazurska sp. z o.o. (Masuria Shipping Company) in Giżycko, which provides passenger shipping services on the Great Masurian Lakes. In addition to this, a number of small private carriers operate in the market of tourist and excursion transport, they usually have one or sometimes, they have several river vessels. On the Oder River (Odra), passenger transport is arranged mainly in Wrocław and near Szczecin and Świnoujscie. On the Vistula River (Wisła), tourist transport is offered by private carriers mainly in Kraków, Sandomierz, Warsaw and Toruń. As experience shows, inland waterways in Poland are not sufficiently used for tourism purposes. While in 1980 inland and coastal shipping was used to transport over 9 million people, such transport is now used by around 1.6 million passengers (Tab. 38).

Structure of transport Transport is generally used to travel short distances – currently approximately 12 km. It can be assumed that these are generally one-day tourist trips. Because of the lack of local passenger harbours that guarantee a safe stop for passenger ships, the lack of proper hotel, catering and sanitation facilities in the waterway areas, and, above all, the variability of parameters of inland waterways which are attractive for tourists, multi-day circular tourist cruises are arranged in Poland only occasionally; as previously mentioned, they are characterised by high dynamics of development in Western Europe. 45 Żegluga Gdańska (Gdańsk Shipping Company), http://www.zegluga.pl/index.html [access: 13.10.2015]. 46 Polish and foreign tourists are particularly interested in the offer of the Ostróda-Elbląg Shipping Company dedicated to

tourist cruises on the Elbląg Canal.

153

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Years

Passengers transported in thousand

Transport work in million passenger-kilometres

Average transport distance for one passenger in km

1980

9,355

127

13.6

1985

6,471

15.3

1990

3,816

7.3

1995

1,208

20.7

2,000

1,265

20.5

2005

1,444

14.0

2010

1,396

17.0

2011

1,519

16.0

2012

1,515

16.0

2013

1,540

13.0

2014

1,579

11.8

*including coastal shipping Tab. 38. Passenger transport using inland navigation* in Poland in 1980–2014 / source: own work based on: Roczniki statystyczne GUS [Statistical Yearbooks], Warsaw; Transport – wyniki działalności w 2014 r. [Transport – performance in 2014], GUS, Warsaw 2015

Years

Number of passenger ships

Passenger capacity

Average size of ship (passenger capacity)

1980

17,330

177

1985

16,754

186

1990

11,167

196

1995

9,168

164

2,000

9,436

116

2005

124

13,615

110

2010

120

13,355

111

2011

124

13,143

106

2012

128

13,598

106

2013

135

13,221

2014

125

12,789

102

*including coastal shipping Tab. 39. Changes in the passenger fleet in inland navigation* in Poland in 1980–2014 / source: Roczniki statystyczne GUS [Statistical Yearbook]; Transport – wyniki działalności [Transport performance], GUS, Warsaw 2010–2015

Changes in the development of passenger transit in inland waterway transport is accompanied by certain trends in the number and size structure of the passenger fleet vessels. As previously mentioned, while the current level of passenger transport is significantly lower than in 1980–1990, the number of operated passenger ships is now even greater. However, we can observe a decreasing total number of seats on ships. In 1980, including coastal shipping, 98 white fleet vessels were used in Poland with a total passenger capacity of 17.3 thousand (Tab. 39). In 2014, 125 passenger ships were used – with a total passenger capacity of approximately 12.8 thousand.

154

III. ANALYSIS OF THE DEMAND FOR PASSENGER TRANSPORT USING INLAND NAVIGATION IN THE AREA OF THE LOWER VISTULA RIVER

*forecast Fig. 44. The development of international tourism globally and in Europe (number of tourists) / source: Tourism Towards 2030. Global Overview, World Tourism Organization UNWTO [online], http://ictur.sectur.gob.mx/descargas/Publicaciones/ Boletin/cedoc2012/cedoc2011/unwto2030.pdf [access: 20.10.2015]

Passenger fleet In 2014, the passenger ships in operation had 102 passenger seats on average, including 85 and 167 seats in inland navigation and coastal navigation ships, respectively. In the 80s and 90s, passenger ships in Poland were characterized by a much higher average number of seats. In those years, some of passenger fleet vessels used in the Szczecin Lagoon had a passenger capacity of up to 200.

Conditions However, the increase in benefits associated with the activation of tourism combined with the use of inland waterways in Poland depends on the improvement of the navigability of waterways. As previously mentioned, effective functioning of tourist transport on inland waterways also requires certain standards to be met in respect of equipment in ports and harbours. From the point of view of activation of tourist traffic on waterways, it is primarily necessary to build equipment for locking small vessels, build local passenger harbours that guarantee a safe stop for passenger ships, and to provide hotel, catering and sanitary facilities in the areas of waterways that are attractive to tourists. Professionalism of the services offered will in fact, be an essential foundation for the attractiveness of passenger waterway transport as tourism products. Another very important factor that determines the use of created tourism infrastructure is the offers of travel agencies adjusted to various needs. While travel agencies often meet the expectations of collective tourists by combining boat trips with sightseeing of interesting places, sports and entertainment events, this offer is insufficient for individual tourists. And the standard of the offer is what often determines the development of individual tourism and the degree of utilisation of ports and passenger harbours.

Tourism development Despite the ongoing economic downturn, the global tourism industry has been recording a steady moderate level of growth. According to the data of the World Tourism Organization (UNWTO), record tourism revenues were achieved globally in 2012 – EUR 837 billion, which means an increase of 4% compared to 2011, while the number of foreign tourists exceeded 1 billion47. It is expected that this trend will also continue in the future. According to the data prepared by the United Nations World Tourism Organization (UNWTO), in 2010–2030 the average annual rate of growth in international tourism will be 3.3% globally. It is projected that in 2030 the number of foreign tourists will reach 1.8 billion people globally (Fig. 44). 47 Resolution No. 143/2015 of the Council of Ministers dated 18 August 2015 on the adoption of the "Programme for Tourism

Development by 2020", p. 28.

155

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 45. International tourism in 2030 by region / source: Tourism Towards 2030. Global Overview, World Tourism Organization UNWTO [online], http://ictur.sectur.gob.mx/descargas/Publicaciones/Boletin/cedoc2012/cedoc2011/ unwto2030.pdf [access: 20.10.2015]

Tourism in Europe Europe will continue to be the most visited region in the world. Despite the fact that the average annual rate of growth in international tourism in 2020–2030 (2.3%) was lower than in other regions, it is expected that the number of trips in the region will increase from 475.3 million in 2010 to 744.0 million in 2030, with a 41.1-percent market share (Fig. 45). It is expected that among the regions of Europe, the highest rate of tourism development will be observed in Central and Eastern Europe. According to forecasts, the average annual rate of growth in tourism traffic in this part of Europe in 2010–2030 will be 3.1% and the number of tourists in that period could increase from 95 million to 176 million48.

3.4. Forecast of passenger transport using inland navigation in the area of the lower Vistula waterway Transport in the area of the lower Vistula In connection with an increased tendency to consume tourism services, it can be expected that in the long term the interest in tourist transport on inland waterways, including the lower Vistula River (dolna Wisła) waterway, will also increase. Assuming that the parameters of this waterway provided for in the Regulation of the Council of Ministers of 7 May 2002 on the classification of inland waterways will be restored, it can be concluded that the minimum goal is to restore the transport volume of 1975, i.e. 3.1 million passengers in Poland (Tab. 40, Fig. 46).

Factors determining development

Below, there is a list of factors that can influence the increase of these values, together with the already discussed beneficial developing trends in the tourism industry and in passenger transport: • contemporary development trends in water-based tourism • new concepts regarding the comprehensive tourism offer, inland navigation as a vital link of this offer’s chain is included 48 Tourism Towards 2030. Global Overview, World Tourism Organization UNWTO [online], http://ictur.sectur.gob.mx/

descargas/Publicaciones/Boletin/cedoc2012/cedoc2011/unwto2030.pdf [access: 20.10.2015].

156

III. ANALYSIS OF THE DEMAND FOR PASSENGER TRANSPORT USING INLAND NAVIGATION IN THE AREA OF THE LOWER VISTULA RIVER

Years

Poland in total

1970

7,967

2,017

605

2,708

1975

9,144

2,473

119

486

3,078

1980

9,355

2,174

128

245

2,547

1985

6,471

1,909

114

161

2,184

Gdańsk Shipping Bydgoszcz Shipping

Warsaw Shipping

Lower Vistula River total

Tab. 40. Passenger transport using inland and coastal navigation in the area of the lower Vistula River (number of passengers) / source: own work based on: L. Hofman, W. Rydzkowski: Ekonomika transportu wodnego śródlądowego [Inland Water Transportation Economics], WKiŁ, Warsaw 1987, p. 39

Fig. 46. The volume of passenger transport using inland and coastal navigation in the area of the lower Vistula River in 1975 by passenger number / source: own work based on: L. Hofman, W. Rydzkowski: Ekonomika transportu wodnego śródlądowego [Inland Water Transportation Economics], WKiŁ, Warsaw 1987, p. 39

• • • •

craze for outdoor recreation, favourable to the development of water sports climate changes favourable to water tourism great involvement of local governments in the promotion of the modern water-based tourism local government involvement in investment in the development of tourism infrastructure, which creates ideal conditions for the expansion of tourism services • as for the existing statistics, absence of such transportation services as: cruises by yacht, by small boat chartered by a family or a group of tourists, by kayak or by another small vessel • positive, or at least not negative, impact of water-based tourism on our environment. Poland is a country with a relatively underdeveloped tourism sector. However, in light of contemporary trends, where active recreation is preferred in areas characterised by a temperate climate, Poland may be perceived as an attractive holiday destination, especially by foreign tourists, there are good opportunities for an accelerated development of tourism. Understanding the importance of this challenge, local governments actively participate in the development of water tourism, but often there is the lack of a comprehensive offer from travel agencies which combines water tourism with other tourist attractions. Despite considerable progress, there is also an insufficient 157

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Fig. 47. Inland ports on the lower Vistula River / source: own work based on: Transport Development Strategy to 2020 (with the prospect of 2030), the Ministry of Transport, Construction and Maritime Economy, Warsaw 2015

tourism infrastructure available, good infrastructure is necessary for the development of water tourism. Many inland ports are located along the lower Vistula River (dolna Wisła) (Fig. 47); many of them are now inactive and they are usually not properly adapted to the needs of tourists. Passenger harbours are located in all major cities along the Vistula River (Wisła) and are used mainly for short cruises lasting approximately 1 hour, since the unpredictability of navigation conditions makes it difficult to go on cruises over greater distances. Analysis of the location of ports and marinas in the area of the lower Vistula River (dolna Wisła) (Fig. 48) shows a very uneven distribution of those structures. A high density is visible in the estuary section of the Vistula River (Wisła), but many such structures are also located on the Włocławek Reservoir (Fig. 49). Therefore, it can be assumed that the construction of barrages on the Vistula River (Wisła) will be conducive to the development of water tourism and water sports in the reservoirs.

Barriers Below, there is the list of factors that limit transportation along inland waterways, together with the abovementioned conditions on inland waterways, especially the factors that limit long-distance cruises (aboard hotel ships) and the ones that limit the activity of private ship owners: • access to transport in selected regions with potential for water tourism • price structure in different modes of transport, a result of inconsistent policies in support of passenger services, which puts inland shipping in an unfavourable position when compared to competing road/rail transport. These adverse effects are, however, compensated by the development of urban and regional transport as well as implemented or planned attractive tourist venues. Investment projects such as harbours, marinas, hotels, sports facilities, etc. which have been put in place in some regions (Żuławy Waterway Loop) will support a significant increase in demand for passenger transport on waterways.

Demand on MDW (International Waterway) E-70 The study of demand for tourist transport in the region of MDW (International Waterway) E-7049 takes into account the planned investments in tourism infrastructure in the region of MDW E-70, consisting of 49 K. Wojewódzka-Król, R. Rolbiecki, A. Gus-Puszczewicz, Analiza popytu na przewozy ładunków i pasażerów drogą wodną

E-70 (Analysis of the demand for passenger and cargo shipping along waterway E70), Sopot 2011.

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III. ANALYSIS OF THE DEMAND FOR PASSENGER TRANSPORT USING INLAND NAVIGATION IN THE AREA OF THE LOWER VISTULA RIVER

Fig. 48. Ports and marinas in the area of the lower Vistula River / source: http://porty24.pl/region/mazowsze,9.html [access: 7.11.2015]

Fig. 49. Ports and marinas at the Włocławek Reservoir / source:http://porty24.pl/region/mazowsze,9.html [access: 7.11.2015]

159

SECTION II. STUDY OF DEMAND FOR THE LOWER VISTULA WATERWAY TRANSPORT

Collective shipping Characteristics

Number of ports and harbours

Passenger harbour for large ships

Passenger harbour for ships up to 15 m

Average number of cruises 5

Average number of passengers

Navigation period

Total projected number of passengers

450,000

18,000

Ports and harbours for individual tourism Harbour for large vessels, vessels up to 15 m, waterbuses Small tourist vessels and kayaks Other auxiliary structures Total

0 101

303,000

108,000

–

169

879,000

Tab. 41. Projected number of passengers in new and modernised harbours on MDW E-70 / source: K. Wojewódzka-Król, R. Rolbiecki, A. Gus-Puszczewicz, Analiza popytu na przewozy ładunków i pasażerów drogą wodną E-70 [Analysis of the demand for passenger and cargo shipping along waterway E70], Sopot 2011, p. 134

169 structures in total, designed for tourist sailing, including 33 structures dedicated to facilitating mass tourist shipping, and the structures designed for mass tourism will also usually have harbours for smaller vessels50. Assuming much understated parameters for the use of these structures: • the following are assumed for vessels providing mass transport (large units with a length of over 15 m and maximum passenger capacity of 200–1200): an average of 5 trips a day, 50 passengers per cruise, a 60 day navigation period • the following are assumed for vessels with a length of up to 15 m (a maximum passenger capacity of 36) and at least 50 and 20 docking points in the base tourist port and the tourist harbour, respectively51): an average of 10 cruises a day, 5 passengers per cruise and a 60 day navigation period • the following is assumed for small vessels and kayaks (at least 50 and 20 docking points in the base tourist port and the tourist harbour, respectively): an average of 10 cruises (calling at ports), 3 passengers per cruise and a 60 day navigation period. Additional demand for passenger transport generated by the new investment projects can be estimated at 0.9 million passengers (Tab. 41)

Forecasts assumptions Tourism in the area of the lower Vistula River (dolna Wisła) waterway is not limited to the very lower Vistula River (dolna Wisła) itself – the tourist offer can and should include tributaries of the Vistula River (Wisła) and routes connected with the lower Vistula River (dolna Wisła), which provide additional attractions. Therefore, the following assumptions were made in the study of demand for passenger transport in the area of the lower Vistula River (dolna Wisła):

50 Ibid, pp. 113–133. 51 Koncepcja programowo-przestrzenna rewitalizacji śródlądowej drogi wodnej relacji wschód-zachód [Programme and spatial

concept of revitalization of the east-west inland waterway], Urząd Marszałkowski Województwa Pomorskiego [Marshal’s Office of the Pomerania Province], Gdańsk 2011

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Collective shipping Characteristics

Number of ports and harbours On MDW E-70

Excluded structures on the Warta and the Noteć

New structures on the Vistula in the Mazovia and KuyaviaPomerania provinces

Existing on the Włocławek Reservoir and Zegrze Reservoir*

Total in the area of the lower Vistula

Passenger harbour for large ships

Passenger harbour for ships up to 15 m

Harbour for large vessels, vessels up to 15 m, waterbuses

101

Small tourist vessels and kayaks

Other auxiliary structures

–

Ports and harbours for individual tourism

Total

169

150

217

*on the Vistula and the Zegrze Reservoir, based on: http://porty.jachtowe.pl/category/porty-mariny-w-wojewodztwach/porty-mariny-w-wojewodztwie-mazowieckim [access: 6.11.2015] Tab. 42. Projected number of new and modernised ports and harbours in the area of the lower Vistula River / source: own work based on: K. Wojewódzka-Król, R. Rolbiecki, A. Gus-Puszczewicz, op. cit.; MDW E-70 – polski odcinek [MDW E-70 – Polish section], the Marshal’s Office of the Pomerania Province, Gdańsk 2011

• a part of the demand for MDW (International Waterway) E-70 should be taken into account; the calculations do not include some of the structures located on the Warta River (2 passenger ports and 6 other structures), the Noteć River (4 passenger harbours and 28 other structures); however, the structures located at the Włocławek Reservoir (3 passenger harbours and 7 marinas) and on the Zegrze Reservoir (5 passenger ports and 15 marinas) are taken into account • at least two passenger harbours for large vessels and 4 marinas will be constructed on each new reservoir above every barrage; with 9 new barrages this means 18 new passenger harbours and 36 marinas; this is the minimum variant, because the much higher water quality compared to the Włocławek Reservoir will provide much more attractive conditions for the development of water tourism above successive barrages • the number of harbours for small tourist vessels and kayaks is increased by 40%. It is estimated that the number of water tourism structures in the area of the lower Vistula River will be 217 in total (Tab. 42), and the projected number of tourists who may arrive as a result of the construction of new structures and the modernization of existing ports and passenger harbours is estimated at 1.3 million people (Tab. 43).

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Collective shipping Characteristics Passenger harbour for large ships Passenger harbour for ships up to 15 m

Number of ports and harbours

Average number of passengers

Navigation period

Total projected number of passengers

750,000

18,000

150

450,000

106,200

–

50 3

Average number of cruises 5

Ports and harbours for individual tourism Harbour for large vessels, vessels up to 15 m, waterbuses Small tourist vessels and kayaks Other auxiliary structures Total

217

0 1,324,200

Tab. 43. Projected number of passengers in new and modernised ports and harbours in the area of the lower Vistula River / source: own work

Forecast of demand in the area of the lower Vistula River In summary, the following assumptions were made to calculate the demand for tourist transport on waterways in the area of the lower Vistula River (dolna Wisła: • the volume of passenger transport achieved in the mid-70s will be restored – 3.1 million passengers per year, according to estimates • the forecast demand includes the category of passengers of yachts and kayaks, which has not been considered in statistics so far and is estimated at 0.6 million people • scheduled investment projects: harbours for passenger ships above 15 m, harbours for tourist vessels up to 15 m and harbours for small tourist vessels and kayaks will make it possible to service an additional 1.3 million passengers during a short 60-day tourist season. In the future, after restoration of the waterway parameters and ensuring permanent navigation conditions, and also while taking into account: • development of the charter of barges to individual tourists • introducing transport via hotel ships (currently not available) • activation of transport in the cities located at the lower Vistula River (seasonal tourist and sightseeing tours, using ships of various standards, including luxury vessels with catering services, scientific conferences on water, business meetings, weddings), it will be possible to achieve approximately 5 million passengers in the area of the lower Vistula River (Fig. 50). It should be borne in mind that the estimated demand also includes coastal transport, which will be provided by the same companies (e.g. Gdańsk Shipping Company) and using the same fleet, and therefore they are very difficult to separate. Therefore, the estimates don’t include the coastal transport provided on the routes to Gdańsk, Gdynia, Sopot – Hel Peninsula and between those cities, carrying an estimated 0.5 million passengers per year. Overall it can be assumed that tourist transport on waterways in the area of the lower Vistula will amount to approximately 4.5 million passengers per year in the minimum variant.

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Fig. 50. Demand for passenger transport in the area of the lower Vistula River – minimum variant / source: own work

Assessing the feasibility of the presented forecast of demand for passenger transport generated through the new investments in the region, based on the experience so far, it can be concluded that the forecast is very careful and can be considered the minimum variant. With the development of tourism, the emergence of attractive and comprehensive tourist offers and the tourist season extended to at least 90 days, there will be a good chance to achieve a passenger transport volume higher than that anticipated in the forecast. Comparing the results – 5 million passengers in the area of the lower Vistula River (excluding transport between Gdańsk and Hel: 4.5 million) – to transport carried out on the waterways of Germany (30 million in one-day trips, out of an approximately 9 million passengers in the area of the Elbe River (Łaba)), it can be concluded that the forecast is very cautious and there are very large development reserves.

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SOCIO-ECONOMIC IMPACT OF THE DEVELOPMENT OF THE LOWER VISTULA

SECTION III ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Table of Contents I. METHODS FOR ANALYSING THE ECONOMIC PERFORMANCE OF INVESTMENTS ........................167 1.1. Methods for analysing the profitability of investment projects.......................................................................167 1.2. The nature of water management investments as a factor determining the choice of method for analysing the profitability of the development of the lower Vistula River ..............................................171 1.3. Time horizon, discount rate and residual value .................................................................................................173 1.4. Investment profitability analysis indicators ........................................................................................................177 1.5. Sensitivity analysis in investment risk assessment .............................................................................................179 II. COST ESTIMATE FOR THE DEVELOPMENT OF THE LOWER VISTULA RIVER .....................................181 2.1. Maintenance costs ...................................................................................................................................................181 2.2. Capital expenditure for the development of the lower Vistula River..............................................................187 III. ESTIMATE OF BENEFITS ...........................................................................................................................................193 3.1. Transport ..................................................................................................................................................................193 3.2. Hydropower generation .........................................................................................................................................212 3.3. Flood protection ......................................................................................................................................................213 3.4. Meeting the water needs.........................................................................................................................................218 3.5. Tourism .....................................................................................................................................................................222 3.6. Difficult to measure benefits..................................................................................................................................232 IV. ANALYSIS OF RESULTS................................................................................................................................................237 4.1. Estimate of the costs and benefits for the development of the lower Vistula River......................................237 4.2. Ratio analysis for the profitability of the development of the lower Vistula River .......................................238 4.3 Investment sensitivity analysis................................................................................................................................244

I. Methods for analysing the economic performance of investments 1. Methods for analysing the profitability of investment projects Investment profitability analysis indicators The essence of every business activity is to meet human needs by producing goods and providing services. This activity is inherent to the decision-making process, involving the need to choose those solutions that bring the best results. This type of decision is supported by economic calculation, which in general is a set of methods and means that make it possible to take a decision on the use of available resources to achieve the best results in accordance with the principle of rational management. Investment decisions are one of the most difficult, risky and responsible types of decision. The effects of poor investment decisions, such as in transport, affect not only the carriers themselves, but also transport users, the national economy and society. Therefore, one of the key areas of application for economic calculation involves investment activities. The calculation of an investmentâ&#x20AC;&#x2122;s economic performance can be defined as a formalised method of comparing quantified expenditure items and the effects related to the particular investment plan.

Fig. 1. The process of identification, measurement and appraisal of costs and benefits in assessment of the performance of investments / source: W. Rogowski, Rachunek efektywnoĹ&#x203A;ci inwestycji. Wyzwania teorii i potrzeby praktyki [Calculation of the performance of investments. Theoretical challenges and practical needs], Oficyna Wolters Kluwer Business, Warsaw 2013, p. 110

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The correctness of this type of calculation largely depends on the proper identification of costs and effects, their measurement and appraisal (Fig. 1). It is assumed that the subject of a basic economic calculation in terms of investment profitability should be the direct effects, not the indirect effects, occurring in secondary markets influenced by the implementation of the particular project. The main reason for not taking indirect effects into consideration is the fact that their identification is usually very difficult, and adding them to the main effects of the project usually results in double counting of the benefits. On the other hand, indirect effects can be the basis for additional complementary analysis of investment profitability. The method for calculating the investment profitability clearly depends on the nature of the particular investment project. This calculation can be in the form of: • financial analyses • consolidated analyses • economic analyses.

Financial analysis Financial analysis is conducted from the point of view of a specific business entity (company, managing entity) using a standard method of appraisal of the benefits generated by the project. This method involves identifying the benefits based on the cash (financial) flows generated by the project in the investment period and its lifetime. These flows are a result of the differences between the expenses and the revenues obtained from the investment. Financial analysis can therefore be applied only when the purpose of the project implementation is to generate revenue, which together with capital expenditure can be linked directly to a specific business entity. In the case of infrastructure investments, a financial analysis can be conducted only from the point of view of the infrastructure owner/manager for which revenues are generated by the fees for the use of infrastructure. The primary objective of this type of analysis is to assess the financial profitability of the investment by determining financial performance indicators for the project.

Consolidated analysis A special type of financial analysis is the consolidated analysis, applied to projects implemented by several entities. In business practice, several entities are often involved in the implementation of investment projects (multiple entity system). For example, the construction of a municipal road running through two communities can be of interest for the neighbouring communities as the owners and managers of the road. In this case, it is recommended to conduct financial analyses of the project separately, from the point of view of all the parties concerned, and then to prepare a consolidated (overall) analysis to include the total net cash flows for all the entities involved.

Economic analysis In a situation where it is necessary to analyse the project profitability not only from the point of view of a particular economic entity, but from the point of view of the economy and society, an economic analysis of the project should be conducted. The purpose of this analysis is to assess the project’s contribution to the general welfare of society. The need for the use of such an analysis occurs when capital expenditure and maintenance costs cannot be directly referred to specific groups of benefits, for example, in the case of a comprehensive development of a waterway. Economic analysis of investment profitability is then based on the economic values that reflect the values that society would be willing to pay to obtain specific benefits.

Externalities

Unlike a financial analysis, an economic analysis takes into account any externalities1 generated by the project. A typical example of such effects involves the environmental effects, such as the costs of environmental pollution Guide to the Cost-Benefit Analysis of Investment Projects. Economic appraisal tool for Cohesion Policy 2014–2020, European Commission Directorate-General for Regional and Urban policy, Brussels, European Union, 2015. 1

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resulting from exhaust gas emissions. Such effects are not subject to market transactions; therefore, they are not appraised by the market, which means in practice that the beneficiary does not recognise them in the financial analysis. As previously mentioned, appraisal of externalities is, however, subject to economic analysis. The purpose of an economic analysis is to assess the project profitability based on economic flows identified as economic benefits achieved at the level of: • consumers, e.g. in the case of investments in transport infrastructure – transport users • manufacturers, e.g. in the case of investments in transport infrastructure – transport carriers • owners/managers, e.g. in the case of investments in infrastructure – the institution that manages the infrastructure • budgets, e.g. additional budget revenues from taxes • externalities, e.g. a reduction in pollutant emissions, noise and accidents2. Economic flows are therefore not estimated as in a financial analysis (using the standard method), but rather by applying the differential (incremental) method. Economic flows are reflected by the surplus resulting from the comparison of the socio-economic impacts of two scenarios: • “economic activity without the project” (“work as usual”, “do nothing”) – the zero investment option (W0) • “economic activity with the project” (“do something”) – the investment option (W1)3.

Incremental principle

The incremental principle is one of the basic rules for calculating the investment profitability. According to this principle, the calculation of investment performance must not be based on nominal values, but individual costs (including expenditure) and the benefits associated with the project implementation should be considered between two conditions: the current condition and the new condition – the current condition is the condition that would exist if the investment project was not implemented, whereas the new condition is a condition expected as a result of the project implementation. The size of the costs and effects must therefore be determined as the difference between these two conditions. Sometimes, the principle of incremental recognition of costs and benefits makes it easier to establish whether the particular type of cost or benefit should be taken into account when assessing project performance4. This type of approach allows the use of a simplified calculation for the net value of the project. Therefore, the procedure is to calculate the following: • net costs(NC) • benefits(B) • net value (NV)5.

Net costs The net costs (incremental costs) of the project represent the difference between the maintenance and repair costs incurred in the zero investment option (W0) and the total capital expenditure and maintenance costs in the investment option (W1), which are calculated as follows: Guide to the Cost-Benefit Analysis of Investment Projects, European Commission, Directorate-General for Regional Policy, 2008. 3 Commission Delegated Regulation (EU) No. 480/2014 of 3 March 2014 supplementing Regulation (EU) No 1303/2013 of the European Parliament and of the Council, laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund, Article 15 [online], http://eur-lex.europa.eu/legal-content/ PL/TXT/PDF/?uri=CELEX:32014R0480&from=PL [access: 23.11.2015]. 4 W. Rogowski, Rachunek efektywności inwestycji. Wyzwania teorii i potrzeby praktyki [Calculation of the performance of investments. Theoretical challenges and practical needs], Warsaw 2013, pp. 105–106. 5 A benefit analysis does not include VAT. 2

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Fig. 2. Classic distribution of streams of net costs and benefits / source: own work

where: NCE – net costs of the project in year t, Ctw0 – maintenance and repair costs in year t, zero investment option, Ctw1 – expenditure and maintenance costs in year t, investment option. Therefore, the values of the stream of net costs in the investment period are negative.

Benefits The economic benefits of project implementation in accordance with the incremental method result from the difference between the costs incurred by the consumer, the manufacturer, the economy and society in the zero investment option (W0), and the costs incurred in the investment option (W1), which are calculated as follows:

where: – benefits of the project in year t, BtW0 – costs incurred by consumers, manufacturers, the economy and society in year t, the zero investment option; BtW1 – costs incurred by consumers, manufacturers, the economy and society in year t, the investment option. Economic benefits may also result from the difference between the income obtained by certain groups of entities (e.g. manufacturers, owners/managers) in the investment option and in the absence of the investment project. Since it is assumed that the purpose of investment project implementation is to reduce costs (e.g. transport costs, accident costs) or to increase income, the values streams of the benefits are positive.

Net value Net value is understood as economic flows generated by the project, which is reflected in the total net costs of the project (incremental investment costs) in the particular year and the economic benefits of the investment project implementation. These values are calculated as follows:

where:

– net value in year t, other symbols remain the same.

Fixed prices should be used throughout the analysis period, and investment costs should not include VAT6. The stream of net value calculated in this way forms the basis for calculating the economic performance indicators of the investment project. 6

Guide to the Cost-Benefit Analysis of Investment Projects...

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I. METHODS FOR ANALYSING THE ECONOMIC PERFORMANCE OF INVESTMENTS

Fig. 3. Classic distribution of streams of net value (NV) / source: own work

Fig. 4. Unusual distribution of streams of net value / source: own work

In a classic distribution in the investment period the streams of net costs are higher than the benefits of the project, whereas in the operating period the streams of benefits are higher than the net costs of the project (Fig. 2). As a result, the net value (NV) of the project is negative in the investment period and positive in the operating period (Fig. 3). There are also projects with a very unusual distribution of net value â&#x20AC;&#x201C; those projects that generate only negative or only positive streams of net value throughout the reference period.

1.2. The nature of water management investments as a factor determining the choice of method for analysing the profitability of the development of the lower Vistula River The need to distinguish projects with an unusual distribution of streams of economic benefits is a result of the fact that it is difficult to apply some of economic performance indicators to the investment project. In this case it is also necessary to use performance indicators in a modified version. A specific feature of inland waterways is their versatility; in addition to the natural functions related to water supply for municipal services, industry and agriculture, inland waterways can be used for transport, production in the field of electricity generation, as well as for tourism and recreation. Furthermore, the suitable development of watercourses supports the protective function in connection with increased flood safety. A successful implementation of these functions means that it is necessary to carry out comprehensive investment projects on inland waterways. The versatility of investment projects in the field of water management makes it possible to separate the items that would be clearly assigned to specific users and consumers of water from the total capital expenditure and operating costs. In addition, the stakeholders of such investment projects are not only those users directly involved in production and service activities (e.g. owners of inland waterway vessels, power plants), but also the entire economy (e.g. benefits from the reduction of: accident costs, flood losses, periodic water deficits).

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The beneficiaries of the benefits from water investment projects include society (particularly the residents in the areas located in the vicinity of the waterway and roads), which is a result of the reduction of negative externalities due to the transfer of truck traffic from roads to the inland waterway.

Economic analysis As already mentioned, these benefits are economic rather than being purely financial in nature, as perceived from the perspective of a business entity. Therefore, financial analysis of the profitability of an investment project based on the standard method for estimating the benefits generated by the project is not applicable to projects in the field of water management7. Calculation of the profitability of the Lower Vistula Cascade (KDW) must be based on economic analysis and incremental estimation of net value generated as a result of implementation of this investment project. Therefore, two options should be distinguished in the economic analysis of the performance of the investment involving the development of the lower Vistula River: • maintaining the current condition of the lower Vistula waterway (option – W0) • development of the lower Vistula River (option – W1).

Stakeholders Analysis of the distribution of economic benefits requires the identification of the relevant groups of effects as well as the project stakeholders. As already mentioned, an economic analysis of a project should take into account only the typical and direct groups of benefits. In addition, it is assumed that among the other indirect effects, externalities form the main element of a project having an impact on the welfare of society.

Groups of benefits Direct groups of benefits are identified in reference to the following typical stakeholder groups for the development of the lower Vistula River (dolna Wisła): • consumers (transport users) • manufacturers (energy companies, owners of inland waterway vessels) • waterway owners/managers (regional water management authorities) • economies • societies. Therefore, the direct benefits for particular groups of stakeholders are as follows: • for consumers (transport users): –– reduced transport costs • for manufacturers (energy company, owners of inland waterway vessels): –– income growth (incremental revenue) from electricity production –– increase in profits for ship owners from increased tourist transport on the lower Vistula River waterway and related waterways • for the lower Vistula River waterway owners/managers (regional water management authorities): –– revenue growth (incremental revenue) from increased profits for the use of the waterway and hydraulic equipment by cargo and passenger ships • for the economy: –– benefits of reduced costs of transport accidents –– benefits of reduced losses in agriculture and forestry due to mitigation of the water deficit problem –– benefits of reduced flood losses –– benefits of additional revenue to the budget

Wytyczne w zakresie zagadnień związanych z przygotowaniem projektów inwestycyjnych, w tym projektów generujących dochód i projektów hybrydowych na lata 2014–2020 [Guidance on issues related to the preparation of investment projects, including revenue-generating projects and hybrid projects for 2014–2020], Minister Infrastructure and Development, Warsaw 2015. 7

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• for society: –– benefits of reduced externalities, e.g. reduced pollutant emissions and noise. Economic benefits of the Lower Vistula Cascade estimated using the incremental method and adjusted by net capital expenditure are the basis for determining the net value of this investment project. Implementation of the investment project will affect the reduction of the current cost of transport by waterway, and will mean an increase in revenue (profit) for the ship owners because of the transfer of traffic from other modes of transport. Therefore, if the lower Vistula River is developed, the potential net value for carriers in other modes of transport will decrease, as the loss of traffic taken over by the inland water transport will cause a specific loss. Therefore, the economic analysis of net value generated by the KDW does not take into account the benefits for providers of transport services (owners of inland waterway vessels) due to increased cargo transport.

Maintenance costs

The calculation of net value as a result of construction of the KDW should take into account the future maintenance costs of the waterway. The ability to provide transport using inland waterways instead of road transport will help to reduce the traffic on roads. Thus, despite the fact that the maintenance costs of the lower Vistula River (dolna Wisła) will increase after the project implementation, the maintenance costs of the road transport infrastructure will be reduced because of the lower rate of degradation of the roads, particularly on the routes corresponding to the layout of the lower Vistula River waterway. As a matter of fact, from the point of view of the economy, the net costs of maintaining the lower Vistula River (dolna Wisła) after its development will result from the difference between the expenses on the maintenance of the waterway incurred in respective years of use and that for reduced maintenance costs of the road transport infrastructure and the expenses on maintaining the lower Vistula River (dolna Wisła) in the absence of the investment project. The net costs of maintaining the lower Vistula River (dolna Wisła) are therefore calculated as follows:

where: Ck – net costs of maintaining the lower Vistula River after its development, CkW1 – expenditure on maintenance of the developed lower Vistula River waterway incurred in respective years of use, CSW1 – lower maintenance costs of the road transport infrastructure because of reduced traffic, CkW0 – expenses incurred to maintain the lower Vistula River in the absence of the investment project. Because of small benefits of reducing the expenditure on the maintenance of the road transport infrastructure due to reduced traffic, the benefits will not be taken into account in the calculation of the net costs of the analysed project.

Waterway fees The primary source of funding of expenditure related to the maintenance of inland waterways is the fees charged for their use. On the other hand, the fees for the use of the waterway and hydraulic structures are revenue for infrastructure managers. Therefore, the economic analysis of the profitability of the KDW should also take into account the surplus of the entities managing the lower Vistula River waterway – the Regional Water Authority (RZGW) in Gdańsk and the RZGW in Warsaw, which is a result of an increased revenue from the use of the waterway and hydraulic structures, as compared to the zero investment option.

1.3. Time horizon, discount rate and residual value Reference period The estimate of the costs and benefits generated by the analysed project must be made for a specified time horizon that takes into account the period during the project implementation and after its completion, i.e. the investment and operational phase (phase of use). In the case of both financial and economic analysis of the investment project profitability, the reference period is the same. 173

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Sector Energy Water and environment Railways Roads Ports and airports Telecommunications Industry Other sectors

Reference period / number of years 25 30 30 25 25 15 10 15

Tab. 1. Reference periods for calculating the investment performance in 2007–2013 / source: Przewodnik do analizy kosztów i korzyści projektów inwestycyjnych [Guide to Cost-Benefit Analysis of Investment Projects], European Commission, Directorate-General for Regional Policy, 2008, p. 39

It is assumed that an analysis of investment projects is carried out for a long-term prospect, including at least 10 and no more than 30 years, depending on the sector in which the investment project is carried out. The reference periods recommended by the European Commission are shown in Tab. 1 for the budget perspective in 2007–2013 and in Tab. 2 for the budget period of 2014–2020. Based on the specified reference periods, the economic analysis of the development of the lower Vistula River has been conducted for a 30 year period.

Discount factor Because monetary value changes in time, the cash flows (or net value) calculated for each year covered by the analysis should be discounted, i.e. adjusted for comparability by adjusting the value of cash flows in individual periods to the present value (the investment project start year). Therefore, the purpose of discounting is to multiply the cash flows (or net value) of individual periods by the discount factor. Since the base year (year zero) in both financial and economic analysis should be the project start year assumed in the calculation, i.e. the year of commencement of construction works, the discount factor in this period is 1. The discounting process therefore covers the period from year zero to year n, where n is the number of reference years minus 1. The discount factor is calculated according to the following formula:

where: at – discount factor, r – assumed discount rate, t – value from 0 to n (n – number of years in the reference period). A discount rate is used to adjust future values to the present value, and its choice is determined by the type of project profitability analysis. In the case of: • financial analysis – a financial discount rate (FDR) is used • economic analysis – the so-called social discount rate (SDR) is used.

Financial discount rate Financial discount rate is equated with opportunity cost of capital. This means that in case of use of a specific capital for the implementation of a specific project, the same capital cannot be used for other projects. Therefore, the use of capital for a specific project causes hidden costs, understood as profits lost because of the decision not to pursue the best among the alternative projects. 174

I. METHODS FOR ANALYSING THE ECONOMIC PERFORMANCE OF INVESTMENTS

Sector Railways Water supply / sanitation Roads Waste management Ports and airports Urban transport Energy Research and innovation Broadband Business infrastructure Other sectors

Reference period / number of years 30 30 25–30 25–30 25 25–30 15–25 15–25 15–20 10–15 10–15

Tab. 2. Reference periods for calculating the investment performance in 2014–2020 / source: Commission Delegated Regulation (EU) No. 480/2014 of 3 March 2014 supplementing Regulation (EU) No 1303/2013 of the European Parliament and of the Council, laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund, Article 15(2) (Annex I) [online], http://eur-lex.europa.eu/legal-content/PL/TXT/PDF/?uri=CELEX:32014R0480&from=PL [access: 23.11.2015]

In 2007–2013, the European Commission proposed a financial discount rate of 5%8. On the other hand, in the programming period 2014–2020, the Member States should apply a financial discount rate of 4%. The use of another financial discount rate is possible only in justified cases and when a Member State secures the use of a discount rate other than the recommended one in relation to similar projects in the chosen sector9.

Social discount rate The purpose of the social discount rate is to ensure the comparability of the streams of net value generated by the project from the perspective of the social impact assessment. According to the guidelines of the European Commission, two reference social discount rates were used in 2007–2013: • 5.5% – in those states benefiting from the Cohesion Fund • 3.5% – in other states10. In the programming period 2014–2020, the European Commission recommends use of a social discount rate of 5% for major projects11 in the Member States under the cohesion policy and to use a rate of 3% in other Member States. The use of another social discount rate must be justified, and it must be ensured that it is applied consistently in relation to similar projects in the particular country, region or sector. Przewodnik do analizy kosztów i korzyści projektów inwestycyjnych... [Guide to the Cost-Benefit Analysis of Investment Projects], p. 14. 9 Commission Delegated Regulation (EU) No. 480/2014 [...], Article 19... 10 Przewodnik do analizy kosztów i korzyści projektów... [Guide to the Cost-Benefit Analysis of Investment Projects], p. 15. 11 According to Art. 100 of the Regulation (EU) No. 1303/2013 a major project is an investment "comprising a series of works, activities or services intended in itself to accomplish an indivisible task of a precise economic or technical nature which has clearly identified goals and for which the total eligible costs exceeds EUR 50 000 000." The total eligible costs are a part of the investment costs eligible for co-funding from the EU. In the case of the projects aimed at "promoting sustainable transport and removing bottlenecks in key network infrastructures" the financial threshold for identifying major projects was set at EUR 75 million. 8

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SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Residual value When the lifetime of a structure exceeds the reference period assumed in an economic analysis and when the net benefits of the investment project are generated after the forecast period, the later benefits are reflected by residual value (RV)12. In the programming period 2007–2013, this value could be calculated as follows: • in financial analysis – using the income method as a NPV of future net value, with the simplified assumption of an infinite lifetime • in economic analysis – as net asset value, i.e. the remaining potential of fixed assets whose economic lifetime has not been completely expired13. • Profitable residual value is calculated based on the last net value assumed in the reference period (NVF). Three options for streams of net value can be assumed after the adopted reference period: • stream of fixed net value • decreasing stream • increasing stream The calculation of residual value using the income method is based on the use of the concept of perpetuity. If it is assumed that after the reference period the net value will be fixed, then the residual value (RV) is calculated as follows:

where: RV – residual value, – net valuein the last reference period p, rp – discount rate for the last forecast period. If after the end of the reference period the net value increases at a specific annual rate, the residual value is calculated as follows: , when: q<rp where: q – annual growth rate of net value. If it is expected that the net value of the project after the reference period will decrease at a specific annual rate, then the residual value is calculated as follows14:

In the 2014–2020 budget perspective it is recommended, both in financial and economic analysis, to calculate the residual value of the project as the net present value (NPV) of net (financial or economic) benefits generated by the project from the last year of the reference period to the end of the project lifetime, assuming that the structure is used at the level in the last year of the analysis. If the project lifetime is 40 years, and a 30-year reference period is assumed in the economic (or financial) analysis, it should be assumed that the net (economic or financial) benefits for the next 10 years will occur at the level in the last year of the analysis. This value will be zero or negligible if the selected time horizon is equal to the period of economic lifetime of the project15.

12 W. Rogowski, op. cit., p. 283. 13 Najlepsze praktyki w analizach kosztów i korzyści projektów transportowych współfinansowanych ze środków unijnych [Best

practices in the cost-benefit analyses of transport projects co-funded by the European Union], Centre of EU Transport Projects, Warsaw 2014, p. 83. 14 W. Rogowski, op. cit., p. 283. 15 Najlepsze praktyki w analizach kosztów i korzyści projektów transportowych [Best practices in the cost-benefit analyses of transport projects]..., p. 83

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I. METHODS FOR ANALYSING THE ECONOMIC PERFORMANCE OF INVESTMENTS

1.4. Investment profitability analysis indicators

The most popular indicators in the process of investment profitability analysis are dynamic performance indicators, which take into account the impact of the time factor on the monetary value. In practice, the following are the most common indicators in this group, which enable the calculation of the economic result of the project: • net present value (NPV), which is the total net cash flows (NCF) • internal rate of return (IRR) reflected by the discount rate for which the net present value of the investment project is equal to zero, i.e. NPV = 0 • benefits/costs ratio (B/C), calculated as the relation of discounted revenue to discounted project costs16. In classic terms, the above-mentioned performance indicators are based on the net cash flows, and therefore they are used in both financial and consolidated analysis of the profitability of investment projects. In an economic analysis of the investment profitability, these indicators are based on the economic flows that express the socio-economic benefits of the project. These indicators are expressed in the form of: • economic net present value (ENPV) • economic rate of return (ERR) • benefits/costs ratio17 (B/C).

Economic net present value of a project Economic net present value of an investment project is calculated as follows:

where: at – discount rate, NVE – balances of streams of the costs and benefits (net value) generated by the project in individual years of the assumed reference period, n – the number of years in the reference period minus 1, SDR – social discount rate. It is assumed that: the development of the lower Vistula River will enable the generation of net benefits also beyond the adopted 30-year forecast period, and the net benefits of the project after this period will tend to increase. Hence, to calculate the total net benefits throughout the economic lifetime of the investment project, a discounted income residual value should be added to the discounted economic net present values in the forecast period adopted in the analysis18.

It is assumed that a project is profitable from the point of view of society if its economic net present value is positive (ENPV > 0). A negative value indicates that the project implementation requires the involvement of too many valuable economic resources to achieve too small benefits for society. So, a negative ENPV means that the resources that would be used in the project should be used for other, more useful development projects. In the case of multiple alternative projects (which exclude each other), the net present value of the project does not always allow the determination of which one is more effective. The ENPV criterion is an absolute (quota) measure, and the higher level of the ENPV for the investment plan can, but does not have to, mean that it is more profitable.

16 M. Sierpińska, T. Jachna, Ocena przedsiębiorstwa według standardów światowych [Business rating according to global stan-

dards], Warsaw 2004, p. 345, 360; B/C ratio [online], http://mfiles.pl/pl/index.php/Wska%C5%BAnik_B/C [access: 27.11.2015]. 17 Guide to the Cost-Benefit Analysis of Investment Projects... 18 Cf. W. Rogowski, op. cit., p. 117.

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SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Economic rate of return (ERR) The same mathematical equations are used for both ENPV and ERR, except that in the case of the ENPV the discount rate r is set, whereas in estimation of the ERR the discount rate is determined in such a way that the ENPV is equal to 0. Therefore, the ERR is calculated as follows:

where: – balances of streams of the economic costs and benefits (net value) generated as a result of the project implementation in individual years t of the assumed reference period, n – the number of years in the reference period minus 1.

The problem of multiple ERRs To assess the project profitability, the economic internal rate of return (ERR) should be referred to the reference rate – in this case the social discount rate (SDR). The project is profitable if the ERR value is greater than the social discount rate (ERR > SDR). If not, then the project should be rejected. In contrast to the ENPV, the economic rate of return (ERR) is independent of the size of the project. However, the practical application of this tool in assessment of the investment profitability can be hindered in some cases. This problem occurs in the case of an unusual distribution of cash surplus (or economic surplus, accordingly). As already mentioned, the classic form of the distribution of surplus occurs when a series of negative net value in the investment period is followed by a series of positive net flows in the operating period (lifetime) of the structure. In contrast, when in the operating period for a series of positive net values there would be a negative net flow, there are at least two economic rates or returns for such a distribution of benefits (multiple rates of return), whereas in the case of the previously mentioned completely unusual investment projects there is no economic rate of return. In this situation, it seems reasonable to ask the question as to which of the assigned economic rates of return should be considered relevant for the particular investment project. So, if an investment project has more than one ERR, that tool is not suitable for use in assessing the investment performance. In the case of projects with a classic distribution of streams of net value there is only one ERR value19.

Economic benefits/costs ratio The economic efficiency of the project can also be measured using the benefits/costs ratio, according to the following formula:

where the symbols have the meanings as above. According to this assessment criterion, the project is accepted if the ratio is equal to or greater than one (B/C ≥ 1). Among the presented indicators, the economic net present value (ENPV) is considered the most significant and reliable indicator in investment profitability analysis20, even though it depends on the size of the project.

19 Infrastruktura transportu. Współczesne wyzwania rozwojowe [Transport infrastructure. Contemporary development challenges],

ed. S. Grzelakowski, M. Matczak, Gdańsk 2015, pp. 207, 211. 20 Guide to the Cost-Benefit Analysis of Investment Projects…

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I. METHODS FOR ANALYSING THE ECONOMIC PERFORMANCE OF INVESTMENTS

1.5. Sensitivity analysis in investment risk assessment Investment risk Investment decisions are always based on a forecast of the future operating conditions that might not be the same as those assumed, so they do not guarantee that the expected benefits are achieved. In general, all investment decisions are accompanied by risk. Therefore, any analysis of the investment project economic profitability must be accompanied by risk measurement. The need for assessment of the risk in investment projects is associated primarily with the fact that: • today, in a turbulent environment, investments cannot be based on intuition • risk measurement reduces the chances of irrational actions in a dynamic and complex future • the knowledge of risk factors and scale is a prerequisite for minimising or even avoiding the risk • reliable risk analysis is an expression of the professionalism of the people who analyse an economic project. Generally, the investment risk is “the risk of an investment effect that is inconsistent with expectations. This effect can be worse (risk of loss) or better (higher benefits) than the expected result”21. In practice, however, the main objective of risk analysis is to identify the risk of loss.

Sensitivity analysis One of the primary methods for assessing the risk associated with implementation of investment projects is a sensitivity analysis, whose essence is to modify the selected variables (risk factors) used in calculating the investment performance and identifying the impact of such changes on the investment profitability. In this method, it is assumed that the values determining net cash flows (or net economic flows, accordingly) in the investment and operating period may differ from those expected. The sensitivity analysis method is based on the assumption that the impact of one particular factor on the investment performance is examined at a time, whereas the remaining variables determining the net benefits remain unchanged. The purpose of sensitivity analysis is to show the impact of a change in the particular risk factor on the performance of the examined project. The main objectives of that analysis are as follows: • identification of the variables determining net flows of the project (financial flows and economic flows) that should be considered “critical” (these are variables with the greatest impact on the project profitability) • establishing whether the project is still profitable with a change in the particular variable. The most preferred method of assessment of investment projects is a sensitivity analysis carried out in connection with the net present value. However, a sensitivity analysis can be also conducted in relation to other indicators of investment performance assessment, such as internal rate of return (or economic rate of return), and benefits/costs ratio (or economic costs/benefits ratio). In a sensitivity analysis, the ENPV, ERR or E-B/C values are the so-called explained variables (dependent variables). The variables that determine the net economic flows of the project are treated as explanatory variables (independent variables).

Sensitivity study method In the case of investment projects verified according to an economic analysis of profitability based on the ENPV, a sensitivity analysis can be conducted using the following study methods: • a study to identify the change in ENPV caused by the modification of a specific explanatory variable by 1% or some other percentage value • a study to set the ENPV for a particular explanatory variable value • a study to identify the “critical” project variables • a study to set the limit (threshold) values of variables for which the project is still profitable (ENPV > 0) • a study to set an acceptable level of deviation of basic explanatory variables for which the project is still profitable. The most popular among those methods is the sensitivity analysis aimed at identifying the “critical” variables of the project and threshold values. 21 E. Ostrowska, Ryzyko projektów inwestycyjnych [Risk related to investment projects], Warsaw 2002, p. 28.

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SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

“Critical” variables In the process of determining the “critical” variables the leading criterion is the assumption that such variables are those where a ± 1% change compared to the base level causes a change of more than 1% in the ENPV. In this study it should be ensured that the variables are independent of each other and disaggregated as much as possible. Otherwise, there is a risk of double counting of the same variables, hence distorting the results.

Project threshold values A particularly important element of the sensitivity analysis is to set the threshold values – the values of the explanatory variables of the project for which the project’s ENPV would fall below the acceptable level, i.e. below zero22.

22 Przewodnik po analizie kosztów i korzyści projektów inwestycyjnych. Narzędzie analizy ekonomicznej polityki spójności

2014–2020 [Guide to the Cost-Benefit Analysis of Investment Projects. Economic appraisal tool for Cohesion Policy 2014–2020], European Commission, December 2014.

180

II. Cost estimate for the development of the lower Vistula River 2.1. Maintenance costs

The primary basis for analysing the investment profitability is the calculation of the net costs of the project. Therefore, in order to calculate the net costs of the development of the lower Vistula River (dolna Wisła) it is necessary to establish the projected costs of maintaining the waterway in the absence of its development and in the conditions occurring after the project implementation. The projection of the costs of maintaining the waterway in the zero investment option can be based on the costs that have been incurred to maintain the inland waterways in Poland.

Water Law The need to maintain inland waterways in a suitable condition is primarily a requirement of the Water Law and the Inland Navigation Law. The “Water Law” refers to the maintenance of surface waters from the point of view of various consumers and road users. As indicated in Art. 22.1 of the Law, in order to maintain inland waterways, it is necessary to preserve the condition of the bottom or banks, and to provide repairs or maintenance of the existing hydraulic structures so as to ensure: • flood protection or removal of the effects of floods • ice flow and the prevention of adverse ice events • the conditions for the use of water, including the preservation of the water table at a level that allows the operation of water facilities, bridges, pipelines, power lines, telecommunications lines and other equipment • operating conditions on inland waterways, as defined in the navigation regulations issued pursuant to the Inland Navigation Law • proper technical and functional condition of water facilities23.

23 The Act of 18 July 2001 Water Law, Journal of Laws of 2001 No. 115, item 1229 (consolidated text, developed according to:

Journal of Laws of 2015, items 469, 1590, 1642).

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SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Inland Navigation Law In the Inland Navigation Law inland waterways are treated as a type of transport infrastructure that requires systematic maintenance and repairs necessary to ensure safe waterway navigation. Regarding the maintenance of inland waterways, the Law states that the following should be ensured: • maintaining the proper technical condition of hydraulic buildings and facilities used for navigation and providing the correct operation thereof • systematically improving the operating conditions according to the waterway class • proper navigational marking of the waterway route, hydraulic building and facilities, navigational obstructions, and buildings and transmission lines crossing the waterway. The minister responsible for water management – the Minister of Environment – is responsible for maintaining the inland waterways owned by the Treasury in a condition that ensures safe navigation; he or she carries out these tasks through relevant regional water management authorities24.

Capital expenditure in the EU In the early 1970s the states of the Community decided that adequate knowledge of the expenditure on both development and maintenance of transport infrastructure was necessary for the effective implementation of the common policy of fees for the use of infrastructure. Therefore, it was concluded that the most appropriate way to obtain such knowledge was to introduce a standard and permanent accounting system for expenditure on infrastructure in respect of transport by rail, road and inland waterway25. The system was introduced in all Member States by regulation in 1 January 197126.

Capital expenditure in Poland As a result, the expenditure incurred on inland waterways and their infrastructure is also recorded in Poland. The Water Law states (Art. 64) that the cost of maintaining water facilities are incurred by the entities that receive benefits from them (the costs are determined and allocated at the request of the owner of the water facility by the decision of the authority authorised to issue a water permit)27. This principle also applies to all expenditure on the maintenance of the barrage in Włocławek on the lower Vistula River (dolna Wisła), for example. The costs of maintaining the barrage, with the exception of the lock, are co-financed by ENERGA Hydro Sp. z o.o. According to the water permit, all proportions of the cost allocation for maintaining the barrage are set as follows: 65% – ENERGA Hydro sp. z o.o. and 35% – RZGW28. The detailed method of recording the expenditure is defined in the regulation on maintenance of the records of expenditure on inland waterways and their infrastructure. The regulation indicates that the records do not include the expenditure on inland waterways that allow only for shipping traffic of vessels with a deadweight of less than 250 tonnes and classified as Class Ia or Ib based on the Regulation of the Council of Ministers of 7 May 2002 on the classification of inland waterways (Journal of Laws No. 77, item 695). Regardless of the source of funding, expenditure on the maintenance of inland waterways and their administration, include: • current expenditure – directly related to work, services and supplies associated with the repair, maintenance and operation of inland waterways and their infrastructure, as well as expenses related to the use of special equipment, floating vessels and means of transport to use inland waterways and their infrastructure

24 The Inland Navigation Law of 21 December 2000, Journal of Laws of 2001 No. 5, item 43. 25 Irrespective of the accounting rules applied in Member States, this expenditure does not include amortisation of, and interest

on, loans contracted for the purpose of financing infrastructure expenditure. These data are provided as separate information. 26 Regulation (EEC) No. 1108/70 of the Council of 4 June 1970 introducing an accounting system for expenditure on infrastructure in respect of transport by rail, road and inland waterway, OJ L 130/4, 15.6.1970. 27 The Act of 18 July 2001 Water Law… 28 A. Tersa, Stopień wodny we Włocławku [Barrage in Włocławek], "Acta Energetica" 2013, No. 3/16.

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II. COST ESTIMATE FOR THE DEVELOPMENT OF THE LOWER VISTULA RIVER

Navigation locks with equipment and land under the infrastructure Lifts and ramps with equipment and land under the infrastructure Outer ports of locks, lifts and ramps with their equipment, port basins with land Marinas and docks on the waterway, mooring devices (dolphins, fenders, mooring bitts), river crossings and land under the infrastructure Ship canals, cuts and land Weirs and dams on the waterway, used only to maintain the shipping depth and land Deepening the navigation route for navigation needs Securing the banks of ship canals Guides on the waterway outside locks (e.g. under the bridges) Water level controllers in ship canals Reservoirs for the exclusive alimentation of the waterway and land Aqueducts (canal bridges) and canal tunnels Equipment for supplying the ship canal stations Navigational marking of waterways (installation, signalling devices) Communication equipment (including for the ship – shore communication) Warning devices and equipment for measuring the navigable water level Buildings or separate premises for the waterway administration departments and land Tab. 3. Expenditure on infrastructure with an exclusive transport function / source: Regulation of the Minister of Environment of 15 December 2006 on maintaining of the records of expenditure on inland waterways and their infrastructure, Journal of Laws 2006, No. 240, item 1747

Damming structures (weirs, dams and fish ladders, relief channels) on the waterway or directly connected to it, used for maintaining the shipping depth and by other users Hydraulic structures needed to concentrate the channel (spurs, longitudinal dams, trims) Securing the waterway shores Dredging to maintain the river bed, including to concentrate the navigation route Levees along the ship canals and coastal berms Safety gates at ship canals, including flood gates Tab. 4. Expenditure on infrastructure whose function is shared with the transport function / source: Regulation of the Minister of Environment of 15 December 2006on maintaining of the records of expenditure on inland waterways and their infrastructure, Journal of Laws 2006, No. 240, item 1747

• expenditure related to the activity of local inland navigation administration authorities (RZGW), including expenditure on buildings, banks and floating vessels • general expenditure – on the activity of the regional water management authorities, the units competent for administration and inspection of inland waterways, the use of inland waterways and their infrastructure, as well as the supervision of investments and acceptance of works, in particular: –– remuneration for employees with social insurance contributions and Labour Fund contributions, as well as other benefits arising from employment –– expenditure related to the buildings used by organisational units competent for administration and use of inland waterways and their infrastructure, technical buildings and warehouses 183

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Years

Current expenditure (PLN million)

Expenditure related to the activity of local inland waterway administration authorities (PLN million)

General expenditure (PLN million)

2007

8.3

3.8

2008

8.4

3.7

2009

13.4

2010

29.5

2011

68.4

2012

73.5

Expenditure on the maintenance of inland waterways in Poland total (PLN million)

per km of waterway (PLN thousand)

36.2

48.3

28.7

38.2

50.3

29.9

4.1

38.3

55.8

33.2

4.4

39.2

73.1

43.5

9.2

41.0

118.6

70.5

11.5

43.1

128.1

76.2

Tab. 5. Expenditure on the maintenance of inland waterways (Class II and higher) in Poland in 2007–2012 (PLN million) / source: own work based on: Informacja o wynikach kontroli – funkcjonowanie żeglugi śródlądowej [Information on control results – functioning of inland navigation], Supreme Audit Office, Warsaw 2014, p. 32; Transport wyniki działalności w 2014 r. [Transport – performance in 2014], GUS 2015

–– expenditure related to management, administration and use of inland waterways and their infrastructure not included in the current expenditure. In addition to the expenditure incurred by waterway administration units, a summary statement should take into account the expenditure incurred by plants or other organisational units, which use their own funds to finance work on inland waterways or work for inland navigation. Records of current expenditure on maintaining inland waterways are kept for each waterway class, with an indication of its utility functions. Thus, current expenditures are classified as: • expenditure on infrastructure with an exclusive transport function • expenditure on infrastructure whose function is shared with the transport function. This information is supplemented with general expenditure provided in total for all inland waterways covered by the record keeping. The statements of expenditure on the development and maintenance of inland waterways are submitted by regional water management authorities on 31 March for the previous calendar year to the President of the National Water Management Authority, who then submits them to the minister responsible for water management29.

Expenditure on the maintenance of waterways in Poland The analysis of expenditure on the maintenance of inland waterways that meet at least the requirements specified for technical Class II shows that in Poland they increased from PLN 48.3 million in 2007 to PLN 128.1 million in 2012. The length of the inland waterways that meet the standards of at least Class II is 1681.7 km. This means that the expenditure increased from PLN 28.7 thousand to PLN 76.2 thousand per kilometre of waterway. Between 2010 and 2012 these expenditures were PLN 63.4 thousand per kilometre of waterway on average (Tab. 5). In relation to the actual needs, the expenditure on maintenance of roads and water facilities in Poland is assessed as insufficient, since it covers merely 20–30% of the financial needs in this regard30. Therefore, this situation has contributed to the increasing degradation of inland waterways in Poland.

29 Regulation of the Minister of Environment of 15 December 2006 on maintaining of the records of expenditure on inland water-

ways and their infrastructure, Journal of Laws 2006, No. 240, item 1747. 30 Informacja o wynikach kontroli – funkcjonowanie żeglugi śródlądowej [Information on control results – functioning of inland navigation], Supreme Audit Office, Warsaw 2014, p. 33.

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II. COST ESTIMATE FOR THE DEVELOPMENT OF THE LOWER VISTULA RIVER

Vistula section

Waterway class

Section length (km)

Sanna River confluence to Płock

324.8

Płock to the Włocławek barrage

55.0

Włocławek barrage to the Tążyna River confluence

43.0

Tążyna River confluence to Tczew

190.5

Tczew to the line of internal sea waters

III

32.7

Tab. 6. Technical class of the Vistula River from the confluence of the Sanna River to the line of internal sea waters / source: own work based on: The Regulation of the Council of Ministers of 7 May 2002 on the classification of inland waterways, Journal of Laws 2002, No. 77, item 695

Maintenance costs in the zero investment option The maintenance costs of the Vistula River waterway in the zero investment option were estimated using two methods: • based on the average maintenance costs of inland waterways in Poland • based on the data obtained from ENERGA SA in Gdańsk on the expenditure incurred by the RZGW and the Włocławek Hydropower Plant (EW Włocławek). The length of the section of the lower Vistula River from the confluence of the Narew (550 km) to the cut into the sea at Świbno (941.4 km) is 391.4 km31. Along this length, 278.2 km meet the Class II parameters (Tab. 6). Therefore, based on the average expenditure on inland waterways in Poland, it can be estimated that the expenditure on the maintenance of the lower Vistula River is approx. PLN 17.6 million. The expenditure has been estimated based on historical data (2010–2012) and does not include the share in the costs of participation of the Włocławek Hydropower Plant in the maintenance of the barrage and the maintenance costs of the water reservoir. According to the current data obtained from ENERGA SA in Gdańsk, it can be estimated that the annual costs of maintaining the lower Vistula River (dolna Wisła) include the expenditure incurred by: • RZGW for the waterway at an average level of PLN 5.0 million (wages – PLN 3.0 million and repairs – PLN 2.0 million) • RZGW to maintain the barrage – PLN 5.25 million (35% of the total barrage maintenance costs) • the hydropower plant to maintain the barrage – PLN 9.75 million (65% of the total barrage maintenance costs) • the hydropower plant to maintain the water reservoir, resulting from the product of the reservoir length and the unit cost of maintenance per 1 km of the reservoir (PLN 0.296 million/km)32. Under these assumptions, the cost of maintaining the water reservoir above the Włocławek is PLN 16.8 million (56.8 km x PLN 0.296 million/km). As a result, in the zero investment option the average annual cost of the maintenance of the lower Vistula River waterway plus the maintenance of the water reservoir in Włocławek can be estimated at PLN 36.8 million33. In the absence of the construction of the KDW, that cost will be borne only until the construction of another barrage in Siarzewo, which is necessary for the safety of the barrage in Włocławek. When the construction of the barrage in Siarzewo is complete, the costs of maintaining the waterway in the zero investment option will increase; the amount being estimated at PLN 61.6 million (Tab. 7).

Maintenance costs in the investment option The investment option assumes that the barrage in Siarzewo takes priority over the other nine planned barrages. Therefore, in the analysis it is considered that construction of that barrage will begin first. The following barrages to 31 M. Michalski, Żegluga śródlądowa w Unii Europejskiej i w Polsce – szanse rozwoju [Inland navigation in the European Union

and in Poland – opportunities for development], "Gospodarka Wodna" 2003, issue 2. 32 Internal materials of ENERGA SA, Gdańsk 2015. 33 The costs do not include the costs of maintaining the hydropower plants and the costs of electricity generation, which affect the financial result of the Włocławek Hydropower Plant.

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SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Maintenance costs in the investment option

Maintenance costs in the zero investment option

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

36.8 36.8 36.8 36.8 61.6 61.6 84.6 84.6 113.5 113.5 136.8 136.8 136.8 164.6 164.6 164.6 164.6 194.5 194.5 194.5 194.5 194.5 219.5 219.5 219.5 247.7 247.7 247.7 247.7 277.5

36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6

Tab. 7. The calculation of the costs of maintaining the lower Vistula River waterway in the zero investment and investment option (PLN million) / source: own work

be constructed will be from Tczew upstream. This means that the costs of maintaining the KDW in the investment option will gradually increase with the commissioning of successive barrages. It is estimated that when the construction of the KDW is complete, the total annual costs of maintaining the waterway will be PLN 277.5 million, that is: • PLN 5.0 million – general costs incurred by the RZGW for the lower Vistula River waterway • PLN 52.5 million – costs incurred by the RZGW to maintain the ten barrages (35% of the total maintenance costs) • PLN 97.5 million – costs incurred by the hydropower plants to maintain the ten barrages (65% of the total maintenance costs) • PLN 122.5 million – costs incurred by the hydropower plants to maintain the ten water reservoirs (413 km . PLN 0.296 million/km), Tab. 7. 186

II. COST ESTIMATE FOR THE DEVELOPMENT OF THE LOWER VISTULA RIVER

The costs do not include expenditure on the maintenance of levees, which includes the removal of damage caused by beavers, foxes, mowing of embankments, repair of roads near the levees and the crests of the dams, and maintenance of drains from the levee locks. These costs will be incurred on the existing levees in both the zero investment and investment options. In the investment options the expenditure will be slightly higher than in the zero investment option, but the difference is not significant from the point of view of the calculation of the net maintenance costs for the KDW. In addition, the expenditure on the maintenance of the KDW does not take into account the costs of operation, maintenance and current repairs of the hydropower plants installed on the barrages, and does not take into account the costs of electricity production. The costs are not charged to the state budget or local government budgets, but they are recognised in the financial result of the energy company. The assumption implies the specific method for calculating the benefits of the ability to increase electricity production adopted later in the analysis. Thus, the benefits have not been identified according to the cash flows in the hydropower plants, but as incremental benefits, which are reflected in the difference between the costs of energy production in coal power plants (zero investment option) and the costs of energy production in hydropower plants at the new barrages (investment option).

2.2. Capital expenditure for the development of the lower Vistula River

As in the case of the costs of maintaining the lower Vistula River waterway, it is necessary to estimate the net capital expenditure as the difference between the expenditure incurred on the waterway if its development is cancelled and the expenditure necessary for its development. Capital expenditure for the development of inland waterways includes those expenses directly related to works, services and supplies in connection with: • construction, expansion, reconstruction and modernization of “waterways and their infrastructure” and preparation of documentation related thereto • purchase of equipment and special equipment, classified as fixed assets, including floating vessels and means of transport to support inland waterways and their infrastructure. Similar to the expenditure on the maintenance of inland waterways, capital expenditures are recorded and divided into: • expenditure on infrastructure with an exclusive transport function – marked as IN-tr • expenditure on infrastructure whose function is shared with the transport function – marked as IN-wp. The expenditure on the construction of a new “inland waterway and its infrastructure” is posted separately as capital expenditure, marked as IN-nd34.

Capital expenditure in the zero investment option The amount of the expenditure for the restoration, modernization and creation of new fixed assets in respect of the development of the lower Vistula River waterway has been estimated according to three elements: • data of the Central Statistical Office on the expenditure on water management in Poland, including in the provinces and counties located on the lower Vistula River waterway • capital expenditure incurred by the RZGW, which is recorded by the National Water Management Authority (KZGW) • assumptions of the Implementation Document to the “Transport Development Strategy [SRT] in Poland to 2020 (with the prospect to 2030)”.

Capital expenditure according to the Central Statistical Office According to the data of the Central Statistical Office (GUS), in Poland currently approx. 50% of the total investment expenditure on water management is allocated to investments directly related to the development of waterways (water reservoirs, regulation and development of rivers and construction of flood embankments), compared to approx. 30% in 2010. As a result, in 2010–2014 the expenditure increased from PLN 1.0 billion to PLN 1.9 billion 34 The Regulation of the Minister of Environment of 15 December 2006 on maintaining of the records of...

187

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Item

2010

2011

2012

2013

2014

Expenditure on water management (PLN million)

Province

Pomerania

242.3

189.4

270.6

234.0

161.0

Kuyavia-Pomerania

265.3

151.4

121.6

107.9

153.4

Mazovia

597.5

299.9

267.9

257.2

421.7

total Poland

1,105.1

640.7

660.1

599.1

736.1

3,565.4

3,136.2

2,787.9

3,059.3

3,801.2

Expenditure on water reservoirs, regulation and development of rivers and flood embankments (PLN million)

Province

Pomerania

27.8

39.1

154.0

84.5

67.4

Kuyavia-Pomerania

20.1

26.7

29.8

44.9

97.4

Mazovia

38.2

51.1

52.5

61.2

48.2

total

86.1

116.9

236.3

190.6

213.0

1,037.9

1,345.5

1,224.6

1,495.0

1,898.6

Poland

Expenditure on water reservoirs, regulation and development of rivers and flood embankments compared to overall expenditure on water management (%)

Province

Pomerania

11.5

20.6

56.9

36.1

41.9

Kuyavia-Pomerania

7.6

17.6

24.5

41.6

63.5

Mazovia

6.4

17.0

19.6

23.8

11.4

total

7.8

18.2

35.8

31.8

28.9

29.1

42.9

43.9

48.9

49.9

Poland

Tab. 8. Capital expenditure on water management in Poland and the provinces located on the lower Vistula River / source: own work based on: Ochrona Środowiska 2015 [Environmental Protection 2015], GUS 2015

(Tab. 8). The annual investment expenditure on water reservoirs and the regulation and development of rivers and construction of flood embankments is also increasing in the provinces located on the lower Vistula (dolna Wisła). In 2010–2014 this expenditure increased from PLN 86.1 million to PLN 213 million. In order to increase the accuracy of the estimates related to expenditure directly associated with the lower Vistula River, an analysis has been conducted to examine the expenditure on water management in counties and cities with county rights located directly on the waterway. In 2014, the total expenditure on water management in the examined region was PLN 414 million (Tab. 9). Since the calculations for the expenditures on water management at the county level do not separate the expenditures related to the development of inland waterways, it is assumed that the proportion of the capital expenditures on water reservoirs, the regulation and development of rivers and the construction of flood embankments to the total expenditure on water management is the same as in the case of the respective provinces. As a result, it has been estimated that the annual investment expenditures on water reservoirs, the regulation and development of rivers and flood embankments in counties and cities with county rights located on the lower Vistula River increased from PLN 50.8 million to PLN 133 million in 2010–2014 (Tab. 10). However, the expenditure estimated this way cannot be directly related to the lower Vistula River waterway. These expenditures take into account only the capital expenditure incurred on waterways managed by the RZGW (including the lower Vistula River), but also the expenditure incurred on the waters used for regulating the water balance in agriculture. In relation to this category of water, according to the Regulation of the Council of Ministers on

188

II. COST ESTIMATE FOR THE DEVELOPMENT OF THE LOWER VISTULA RIVER

Item

Pomerania Province

KuyaviaPomerania Province

Mazovia Province

Gdańsk City of Gdańsk County / City with Tczew county rights Kwidzyń total Grudziądz City of Grudziądz Świecie Chełm County / Toruń City with City of Toruń county rights Aleksandrów Włocławek City of Włocławek total Płock City of Płock Sochaczew Płońsk County / City with Nowy Dwór county rights East Warsaw Legionowo Capital City of Warsaw total

Counties on the lower Vistula River in total

2010

2011

2012

2013

2014

5.9 171.1 5.9 10.8 193.7 23.5 0 10.7 1.3 7.5 14.1 1.2 3.9 3.1 65.3 27.9 1.8 5.3 1.4 3.6 7.2 59.2 263.2 369.6

16.5 59.9 8.3 8.4 93.1 7.5 5 15 7 14.1 19.5 0.4 2.6 8.1 79.2 22.2 7.4 8.3 9.6 31 9.4 9.8 40.5 138.2

38.4 120.5 7.2 4.1 170.2 1.8 2.8 23.6 7.7 7.3 13.3 1.5 8.6 11.7 78.3 18.2 4.9 7.6 5.8 3 8.1 6.8 65.9 120.3

26.0 15.6 23.8 1.6 67.0 8.2 1.4 5.5 5.2 10.5 7.5 9.8 21.1 4.3 73.5 20 3.7 7.3 2.2 2.1 3.4 2.6 36.4 77.7

10.5 37.5 14.8 1.7 64.5 1.7 1.4 22.5 4.1 6.3 12.7 11.4 64.9 1.9 126.9 9.2 6.9 5.9 1.2 1.5 10.7 3.0 184.2 222.6

628.6

310.5

368.8

218.2

414.0

Tab. 9. Capital expenditure on water management in counties and cities with counties rights located on the lower Vistula River (PLN million) / source: own work based on: Ochrona Środowiska 2015 (Environmental Protection 2015), GUS 2015

inland surface waters, the authority of the State Treasury is exercised by the Province Marshals35 through the provincial drainage, irrigation and infrastructure authorities (WZMiUW).

Capital expenditure of the National Water Management Authority Therefore, in the absence of the development of the lower Vistula River, the basis for estimating the capital expenditures is the data from the records of capital expenditures of the KZGW. This shows that the capital expenditures allocated for the development of inland waterways in Poland have been systematically increasing. In 2007–2012 this type of expenditure increased from PLN 48.5 million to PLN 156.7 million (Fig. 5). As already mentioned, the records do not take into account expenditure incurred on waterways that do not meet the conditions of at least Class II. Therefore, it can be estimated that in 2012 the average investment costs in Poland per km of inland waterway with parameters of at least Class II (1681.8 km) were PLN 93.2 thousand. This means we can estimate that in 2012 the capital expenditure on the lower Vistula River (excluding the sections with parameters of Class Ia and Ib) 35 Regulation of the Council of Ministers of 17 December 2002 on inland surface waters or parts thereof owned by the public,

Journal of Laws of 2003 No. 16, item 149.

189

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Item

2010

2011

2012

2013

2014

22.2

19.2

96.9

24.2

27.0

5.0

14.0

19.2

30.6

80.6

23.6

23.5

23.6

18.5

25.4

50.8

56.7

139.6

73.3

133.0

Gdańsk Pomerania Province

County / City with county rights

City of Gdańsk Tczew Kwidzyń Grudziądz City of Grudziądz Świecie

KuyaviaPomerania Province

County / City with county rights

Chełm Toruń City of Toruń Aleksandrów Włocławek City of Włocławek Płock City of Płock Sochaczew

Mazovia Province

County / City with county rights

Płońsk Nowy Dwór East Warsaw Legionowo Capital City of Warsaw

Counties on the lower Vistula River in total

Tab. 10. Estimated capital expenditures on water reservoirs, regulation and development of rivers and flood embankments in the counties located on the lower Vistula River in 2010–2014 (PLN million) / source: own work based on: Ochrona Środowiska 2015 [Environmental Protection 2015], GUS 2015

Fig. 5. Capital expenditure on inland waterways in Poland in 2007–2012 (PLN million) / source: Own work based on: Informacja o wynikach kontroli – funkcjonowanie żeglugi śródlądowej [Information on control results – functioning of inland navigation], Supreme Audit Office, Warsaw 2014, p. 32.

190

II. COST ESTIMATE FOR THE DEVELOPMENT OF THE LOWER VISTULA RIVER

amounted to approx. PLN 25.9 million. This amount, estimated according to the average expenditure in Poland, cannot be a reliable basis for estimates of capital expenditure for the lower Vistula River in the zero investment option. This is because the expenditure incurred so far in connection with the development of inland waterways in Poland has been primarily associated with the Oder River waterway. Therefore, it is assumed that, relative to the importance of this waterway in inland waterway transport in Poland, the capital expenditures associated with the lower Vistula River waterway amounted to PLN 13 million.

Expenditure on the lower Vistula River in the Transport Development Strategy Cancellation of the KDW construction would make it necessary to increase the capital expenditures needed to ensure the safe operation of the barrage in Włocławek and to modernise the hydraulic structures (over a total length of 215 km). Thus, the capital expenditures needed in the absence of the barrage project on the lower Vistula River are based on the Transport Development Strategy in Poland. The “Implementation Document to the Transport Development Strategy” indicates that the modernisation of the hydraulic structures and the construction of the barrage below Włocławek should begin in 2016 and 2019, respectively (the project is to be continued after 2022). The value of the investment projects involving the modernisation of the hydraulic structures was estimated in the SRT at PLN 264 million (the project is to be completed by 2022), whereas the planned expenditure for the construction of the barrage below Włocławek by 2022 is PLN 170 million36. It is currently estimated that the construction of a barrage that meets the modern technical, economic and environmental standards costs approx. PLN 3.5 billion; this means that the completion of the barrage will require an additional PLN 3.33 billion after the year 2022. Since the deadline for the completion of this barrage has not been set, it is assumed that it will be constructed over the following eight years, i.e. until 2030. Therefore, it can be estimated that the average capital expenditures in the zero investment option would be as follows: • PLN 13 million – in the first year of the reference period • PLN 37.7 million – in the next three years of the reference period (expenditure to regulate the lower Vistula River) • PLN 80.2 million – in the next four years of the reference period (expenditure to regulate and construct the barrage in Siarzewo) • PLN 416.25 million – in the next eight years of the reference period (to complete the construction of the barrage in Siarzewo) • PLN 20 million (value estimated on the basis of the past experience) – over the next 14 years of the reference period.

Capital expenditure in the investment option In this study it is assumed that the investment option means the construction of all the planned nine barrages on the Vistula River waterway. In the light of current economic, technical and environmental requirements it is established that at current prices the cost of construction of a barrage is PLN 3.5 billion. Furthermore, for the purpose of distributing the investment expenditures over time, it is assumed that the construction periods of no more than two barrages may overlap, and that 5 years is a realistic construction period per barrage37.

Net costs of the project As already mentioned, the net cost of the project (incremental costs) is the difference between the maintenance costs and capital expenditure incurred in the zero investment option and the total maintenance costs and capital expenditure in the investment option. The distribution of net costs for the KDW is shown in Tab. 11. In accordance with the principle of sustainable growth, the development of the lower Vistula River should be assessed from the economic, environmental and social point of view. The comprehensive development of the 36 Dokument implementacyjny do „Strategii rozwoju transportu do 2020 r. (z perspektywą do 2030 r.)”, [Implementation

Document to the “Transport Development Strategy (SRT) in Poland to 2020 (with the prospect of 2030)”], Ministerstwo Infrastruktury i Rozwoju [Ministry of Infrastructure and Development], Warsaw 2014. 37 The distribution is shown in Tab. 38.

191

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Investment option (PLN million) Year 0 1 2 3 4 (Siarzewo) 5 6 (Tczew) 7 8 (Gniew) 9 10 (Grudziądz) 11 12 13 (Chełmno) 14 15 16 17 (Solec Kujawski) 18 19 20 21 22 (Płock) 23 24 25 (Wyszogród) 26 27 28 29 (Warsaw)

Zero investment option (PLN million)

Net costs of Total the project expenditure (PLN million) and costs 49.8 –487.0 74.5 –462.3 74.5 –962.3 74.5 –1,462.3 117.0 –1,444.6 117.0 –1,444.6 117.0 –1,467.6 117.0 –1,467.6 453.1 –1,160.5 453.1 –1,160.5 453.1 –1,183.8 453.1 –683.8 453.1 –683.8 453.1 –1,211.6 453.1 –711.6 453.1 –711.6 81.6 –1,083.0

capital expenditure 500.0 500.0 1,000.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,000.0 1,000.0 1,500.0 1,000.0 1,000.0 1,000.0

maintenance costs 36.8 36.8 36.8 36.8 61.6 61.6 84.6 84.6 113.5 113.5 136.8 136.8 136.8 164.6 164.6 164.6 164.6

Total expenditure and costs 536.8 536.8 1,036.8 1,536.8 1,561.6 1,561.6 1,584.6 1,584.6 1,613.5 1,613.5 1,636.8 1,136.8 1,136.8 1,664.6 1,164.6 1,164.6 1,164.6

capital expenditure* 13.0 37.7 37.7 37.7 80.2 80.2 80.2 80.2 416.3 416.3 416.3 416.3 416.3 416.3 416.3 416.3 20.0

maintenance costs 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 36.8 61.6

1,000.0

194.5

1,194.5

20.0

61.6

81.6

–1,112.9

500.0 500.0 500.0 1,000.0 1,000.0 500.0 1,000.0 1,500.0 500.0 500.0 1,000.0 1,500.0

194.5 194.5 194.5 194.5 219.5 219.5 219.5 247.7 247.7 247.7 247.7 277.5

694.5 694.5 694.5 1,194.5 1,219.5 719.5 1,219.5 1,747.7 747.7 747.7 1,247.7 1,777.5

20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0

61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6 61.6

81.6 81.6 81.6 81.6 81.6 81.6 81.6 81.6 81.6 81.6 81.6 81.6

–612.9 –612.9 –612.9 –1,112.9 –1,137.9 –637.9 –1,137.9 –1,666.1 –666.1 –666.1 –1,166.1 –1,695.9

* ponoszone w przypadku zaniechania kompleksowego zagospodarowania drogi wodnej Tab. 11. Distribution of the net costs of the development of the lower Vistula River (PLN million) / source: own work

waterway can bring benefits in many areas; these may be measurable benefits, benefits difficult to measure or even immeasurable benefits. They occur in areas such as: • transport and tourism • hydropower generation • flood protection • meeting water needs • socio-economic development, including regional development. 192

III. Estimate of benefits

3.1. Transport Cargo transport The benefits of the development of the lower Vistula River waterway will be largely a result of the increased transport function of the waterway. Once the investment on the lower Vistula is initiated (investment option), the transport users will become increasingly interested in using the waterway. The research on the socio-economic impact of the development of the lower Vistula River show that we can expect a gradual increase in cargo transport of up to 5 million tonnes at the end of Stage I (10 years), up to 7 million tonnes in Stage II, and up to 12 million tonnes in Stage III (when the waterway is developed)38. As a result, it can be assumed that cargo transport on the waterway in the next 30 years will increase annually by approx. 12% on average. The analysis of changes in transport in the area of the lower Vistula River, as shown during Stage II of the research into the socio-economic impact of the development of the lower Vistula River, indicates that the current cargo transport on the lower Vistula River is approx. 0.5 million tonnes, and in 2010–2014 it increased by 2.5% on average39. However, the lack of significant improvement in the navigation conditions on the waterway will result in a decrease in cargo transport in the future. Therefore, in the zero investment option, i.e. in the absence of the comprehensive development of the lower Vistula River, only a slight increase in the volume of transport (0.5%) is planned, with the average transport distance of 1 tonne maintained in the range of 2–3 km. The distribution of cargo transport on the lower Vistula River over the reference period of 30 years for both investment and zero investment option has been based on the above-mentioned assumptions (Tab. 12).

38 Cf. K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 2.

Badanie popytu na przewozy drogą wodną dolną Wisłą [Analysis of the Socio-Economic Impact of the Development of the lower Vistula, stage 2. Analysis of Demand for Transport through the Inland Waterway], Energa SA, Sopot 2015, pp. 51–53. 39 Ibidem, p. 27.

193

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Investment option

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Projected volume of transport (thousand tonnes)

Zero investment option

Projected Projected Projected average transport work volume of transtransport (thousand port (thousand distance (km) tkm) tonnes)

Projected average transport distance (km)

Projected transport work (thousand tkm)

500

1,500

500

1,500

600

3,000

498

1,493

600

3,000

495

1,485

1,000

20,000

493

1,478

1,000

50,000

490

980

1,000

100

100,000

488

975

1,500

100

150,000

485

970

3,000

150

450,000

483

966

4,000

200

800,000

480

961

5,000

200

1,000,000

478

956

5,000

200

1,000,000

476

951

5,000

200

1,000,000

473

946

5,000

200

1,000,000

471

942

5,000

200

1,000,000

468

937

6,000

200

1,200,000

466

932

7,000

200

1,400,000

464

928

7,000

200

1,400,000

461

923

7,000

200

1,400,000

459

918

7,000

200

1,400,000

457

914

7,000

200

1,400,000

455

909

7,000

200

1,400,000

452

905

7,000

200

1,400,000

450

900

7,000

200

1,400,000

448

896

7,000

200

1,400,000

446

891

7,000

200

1,400,000

443

887

8,000

300

2,400,000

441

882

10,000

300

3,000,000

439

878

12,000

300

3,600,000

437

873

12,000

300

3,600,000

435

869

12,000

300

3,600,000

432

865

Tab. 12. Forecast of cargo transport if the lower Vistula River is developed and in the absence of the investment project / source: own work

The benefits of the development of the lower Vistula River for transport users, water management authorities and society will therefore result from an increase in cargo transport on the waterway compared to the zero investment option (Tab. 13). 194

III. ESTIMATE OF BENEFITS

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Projected increase in volume of transport (thousand tonnes)

Projected increase in transport work (thousand tkm)

103

1,508

105

1,515

507

18,522

510

49,020

512

99,025

1,015

149,030

2,517

449,034

3,520

799,039

4,522

999,044

4,524

999,049

4,527

999,054

4,529

999,058

4,532

999,063

5,534

1,199,068

6,536

1,399,072

6,539

1,399,077

6,541

1,399,082

6,543

1,399,086

6,545

1,399,091

6,548

1,399,095

6,550

1,399,100

6,552

1,399,104

6,554

1,399,109

6,557

1,399,113

7,559

2,399,118

9,561

2,999,122

11,563

3,599,127

11,565

3,599,131

11,568

3,599,135

Tab. 13. Projected increase in cargo transport on the lower Vistula River compared to the zero investment option / source: own work

Calculation of savings for transport users The benefits for transport users result mainly from the reduction of the transport costs due to the ability to use incremental traffic flows on inland waterways instead of roads (incremental benefits). Savings for transport users result from the difference between the unit costs between road transport and inland waterway transport. Because of the need for the sustainable development of transport, it is assumed that there will be no take-over of cargo from railway transport by inland water transport. 195

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Unit cost of transport Road (PLN/tkm)

0.25

Inland waterway as % of the cost of road transport

40%

Inland waterway transport (PLN/tkm)

0.1

Tab. 14. Unit costs of transport / source: own work based on: materials of transport companies; Trump cards of inland navigation [online], http://www.binnenvaart.be/en/binnevaartinfo [access: 10.03.2014]

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Projected increase in transport work (thousand tkm)

Costs of transport users in the investment option

Costs of transport users in the zero investment option

Savings for transport users

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0 1,508 1,515 18,522 49,020 99,025 149,030 449,034 799,039 999,044 999,049 999,054 999,058 999,063 1,199,068 1,399,072 1,399,077 1,399,082 1,399,086 1,399,091 1,399,095 1,399,100 1,399,104 1,399,109 1,399,113 2,399,118 2,999,122 3,59,127 3,599,131 3,599,135

0 151 151 1,852 4,902 9,902 14,903 44,903 79,904 99,904 99,905 99,905 99,906 99,906 119,907 139,907 139,908 139,908 139,909 139,909 139,910 139,910 139,910 139,911 139,911 239,912 299,912 359,913 359,913 359,914

0 377 379 4,631 12,255 24,756 37,257 112,259 199,760 249,761 249,762 249,763 249,765 249,766 299,767 349,768 349,769 349,770 349,772 349,773 349,774 349,775 349,776 349,777 349,778 599,779 749,781 899,782 899,783 899,784

0 226 227 2,778 7,353 14,854 22,354 67,355 119,856 149,857 149,857 149,858 149,859 149,859 179,860 209,861 209,862 209,862 209,863 209,864 209,864 209,865 209,866 209,866 209,867 359,868 449,868 539,869 539,870 539,870

Tab. 15. Savings for transport users resulting from the reduction in transport costs after the development of the lower Vistula River (PLN thousand) / source: own work

196

III. ESTIMATE OF BENEFITS

Type of fee for use of the waterway

Rate

Rate for transport of goods

gr 0.6/1 tkm

Rate for navigation of empty cargo ships

gr 0.12/1 tkm

Rate for 1 lockage for cargo ships and large passenger or cruise ships (PLN/lockage)

PLN 16.0/lockage

*the rates applicable in 2015 have been maintained in 2016. Tab. 16. The rates of navigation fees for cargo transport on the lower Vistula River assumed in the analysis* / source: own work based on: Obwieszczenie Ministra Środowiska z dnia 20 listopada 2014 r. [Announcement of the Minister of Environment of 20 November 2014], “Monitor Polski” [Official Gazette] 2014, No. 0, item 1120.

As shown in the first section of the research on the socio-economic conditions for the development of the lower Vistula River, in Western Europe countries the transport costs, even taking into account the costs of pick-up and delivery transport, are clearly lower for inland waterway transport40. In order to analyse the savings obtained by transport users it is assumed that the cost of 1 tkm in Poland is PLN 0.25 for road transport and 40% of road transport for inland waterway transport: PLN 0.1/tkm (Tab. 14). The calculation of savings for transport users over 30 years is shown in Tab. 15. As shown in the analysis, the value of savings for transport users resulting from the reduction in the cost of use of additional transport on the lower Vistula River waterway will be approx. PLN 540 million at constant prices in the final year of the investment project.

Calculation of benefits for Regional Water Management Authorities The source of the benefits resulting from the development of the lower Vistula River will also be higher revenues for regional water management authorities because of the increased use of the waterway for transport purposes. Incremental benefits for the waterway managers result from the differences in the revenue obtained from waterway fees between the two conditions: development of the waterway (investment option) and the current condition (zero investment option). In the process of calculation of this group of benefits it has been assumed that the administrative costs associated with the operation of the RZGW are the same in both options.

Cargo transport In cargo transport the incremental benefits are the result of increased revenues from the fees for (Tab. 16): • completed transport work • navigation of empty ships • lockage. The increase in the traffic of cargo vessels has been estimated based on the projected increase in transport and the average ship size (currently 500 tonnes, 1,200 tonnes after improving the navigation conditions) and the average use of capacity (80%). The number of empty ships and the number of push tows passing through the locks have been estimated based on the European experience in respect of the number of floating vessels passing through locks at selected barrages between the basin of the Elbe (Łaba) and the Oder (Odra) (Tab. 17). For the purposes of the analysis it is established that the number of empty ships used on the lower Vistula River compared to the cargo ship total will be 50% in the first years, 35% in the later period, while push tows will be 15% of the total number of ships.

40 K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 1.

Społeczno-ekonomiczne przesłanki zagospodarowania dolnej Wisły [Analysis of the Socio-Economic Impact of the Development of the lower Vistula, stage 1. Socio-Economic Reasons for the Development of the lower Vistula River], Energa SA, Sopot 2015, p. 20.

197

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Ships with cargo

Empty cargo ships

Cargo ships in total

The share of empty ships in the total number of cargo ships (%)

Push tows

The share of push tows in the total number of cargo ships (%)

Geesthacht

12,277

5,650

17,927

31.5

1,879

10.5

Lauenburg

900

560

1,460

38.4

4.2

Lock

Büssau

670

423

1,093

38.7

5.9

Rothensee

3,748

2,596

6,344

40.9

900

14.2

Hohenwarthe

5,102

1,509

6,611

22.8

959

14.5

Niegripp

1,221

1,066

2,287

46.6

607

26.5

Parey

196

712

908

78.4

4.2

Zerben

6,373

2,737

9,110

30.0

1,620

17.8

Wusterwitz

5,642

2,393

8,035

29.8

1,008

12.5

Brandenburg

5,432

2,815

8,247

34.1

397

4.8

Schönwalde

703

398

1,101

36.1

186

16.9

Bahnitz

180

54.4

105

58.3

Rathenow

100.0

130.0

Grütz Spandau

100.0

2,388

2,318

4,706

49.3

2,087

44.3

Tab. 17. The number of cargo ships passing through the selected locks between the basin of the Elbe and the Oder in 2014 / source: Güterverkehrsströme zwischen Elbe und Oder, Freizeitverkehre in den Regionen Berlin, Brandenburg, SchleswigHolstein und Mecklenburg Vorpommern, WSV.de, Stand December 2014 [online], http://www.wsd-ost.wsv.de/service/ Downloads/Gueterverkehrsstroeme_zwischen_Elbe_und_Oder_2014.pdf [access: 12.12.2015]

Furthermore, it is assumed that the number of lockages per ship will depend on the progress in the construction of barrages and will range from 0 in the first years of the analysed period to 10. The estimated increase in the number of ships and the increase in the number of lockages if the waterway is developed and in the zero investment option are shown in Tab. 18. The calculation of the increase in revenues for the RZGW for the use of the waterway in cargo transport is shown in Tab. 19. For passenger transport the benefits for the managers of the lower Vistula River waterway will be the result of increased income from the fees for navigation and lockage of passenger and cruise ships, sport and tourist boats, kayaks and rowboats. For the purposes of the analysis of income from the use of the lower Vistula River waterway in passenger transport, additional assumptions have been made regarding the sizes of ships and the number of passes through a sluice or ramp (Tab. 20). The number of lockages for passenger ships based on the specified assumptions is shown in Tab. 21. Ultimately, after the development of the lower Vistula River, there may be 690 lockages for large passenger and cruise ships, approx. 4,600 sport and tourist boats and approx. 540 kayaks and other rowboats per lock. The numbers above do not differ from the European standards (Tab. 22). The calculation of the incremental income for the RZGW based on the rates set out in Tab. 23 is show in Tab 24. At constant prices, the value of this income in the final year of the project (implemented for thirty years) can be estimated at PLN 1.6 million. 198

III. ESTIMATE OF BENEFITS

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Projected increase in volume of transport (thousand tonnes)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0 103 105 507 510 512 1,015 2,517 3,520 4,522 4,524 4,527 4,529 4,532 5,534 6,536 6,539 6,541 6,543 6,545 6,548 6,550 6,552 6,554 6,557 7,559 9,561 11,563 11,565 11,568

Estimated Estimated Estimated Estimated Estimated increase increase in increase in the increase in increase in in the the number of total number lockages of lockages of number of empty cargo of cargo ships cargo ships push tows ships ships 0 107 109 529 531 534 1,057 2,622 3,666 4,710 4,713 4,715 4,718 4,720 5,764 6,809 6,811 6,813 6,816 6,818 6,821 6,823 6,825 6,828 6,830 7,874 9,959 12,045 12,047 12,050

0 53 55 185 186 187 370 918 1,283 1,649 1,650 1,650 1,651 1,652 2,018 2,383 2,384 2,385 2,386 2,386 2,387 2,388 2,389 2,390 2,390 2,756 3,486 4,216 4,217 4,217

0 160 164 714 717 721 1,427 3,540 4,950 6,359 6,363 6,366 6,369 6,372 7,782 9,192 9,195 9,198 9,201 9,204 9,208 9,211 9,214 9,217 9,220 10,630 13,445 16,261 16,264 16,267

0 0 164 1,427 1,434 1,441 5,708 14,159 39,596 50,873 63,625 63,658 63,692 63,725 77,820 91,916 91,948 91,981 92,013 92,045 92,077 92,109 92,140 92,172 92,203 106,297 134,453 162,609 162,639 162,670

0 24 25 107 108 108 214 531 742 954 954 955 955 956 1,167 1,379 1,379 1,380 1,380 1,381 1,381 1,382 1,382 1,383 1,383 1,594 2,017 2,439 2,440 2,440

Estimated increase in tonne-kilometres for the navigation of empty ships (thousand). 0 133 137 4,440 11,155 22,416 44,398 165,194 307,970 395,680 395,889 396,097 396,304 396,510 484,215 571,919 572,122 572,324 572,525 572,724 572,923 573,121 573,318 573,514 573,709 992,104 1,254,894 1,517,682 1,517 968 1,518 254

Tab. 18. Estimated increase in the ship traffic on the lower Vistula River after the development of the lower Vistula River waterway / source: own work

Calculation of the savings resulting from lower pollutant emissions from transport The development of the lower Vistula River will be an important source of benefits for society, obtained from an increase in the savings from reduced air emissions (the difference between the cost of emissions caused by transport in the zero investment option and the costs of emissions generated by inland waterway transport if the lower Vistula River is developed). These studies were conducted in relation to the total emission of basic pollutant substances that contribute to the greenhouse effect. Therefore, the level of these emissions is expressed as a CO2 equivalent using the global warming potential (Tab. 25). 199

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Incremental Incremental amounts for navigaamounts for tion of empty ships performed transin the investment port work option 0 9 9 110 293 593 893 2,693 4,793 5,993 5,992 5,992 5,992 5,992 7,192 8,391 8,391 8,391 8,391 8,390 8,390 8,390 8,390 8,390 8,389 14,389 17,989 21,588 21,588 21,588

0 0 0 5 13 27 53 198 370 475 475 475 476 476 581 686 687 687 687 687 688 688 688 688 689 1,191 1,506 1,821 1,822 1,822

Incremental amounts for lockage of ships

Incremental amounts in total

0 0 3 25 25 25 95 235 645 829 1,033 1,034 1,034 1,035 1,264 1,493 1,493 1,494 1,494 1,495 1,495 1,496 1,496 1,497 1,497 1,726 2,184 2,641 2,641 2,642

0 9 12 140 331 645 1,041 3,126 5,808 7,297 7,501 7,501 7,502 7,503 9,036 10,570 10,571 10,572 10,572 10,573 10,573 10,574 10,574 10,575 10,575 17,306 21,678 26,050 26,051 26,052

Tab. 19. Calculation of incremental revenues for the RZGW for the use of the lower Vistula River waterway in cargo transport (PLN thousand) / source: own work

Emissions of pollutants from trucks The basis for the projection of unit pollutant emissions from trucks in Poland for the reference period assumed in the analysis (30 years) is the emission level observed in 2005â&#x20AC;&#x201C;2012 (Tab. 26). The appraisal of the costs of air emissions is based on the unit cost of the carbon dioxide equivalent. Since the effects of emissions will be more important in the future, it is assumed that for each year the cost will be higher. The assumed initial level is the unit cost of emissions at EUR 7.5 / tonne of CO2, compared to EUR 39 / tonne of CO2 in the last year of the reference period; assuming a PLN/EUR exchange rate of 4.2 gives PLN 31.5 and PLN 163.8 respectively (Tab. 27). 200

III. ESTIMATE OF BENEFITS

Type of ship Passenger and cruise ships

Assumption Average distance of transport of 1 passenger (km)

Average ship size (number of seats)

Number of lockages compared to the total number of ships

Sport and tourist boats

Average boat size (number of seats)

Kayaks and other rowboats

Average size (number of seats)

Number of lockages compared to the total number of boats Number of lockages compared to the total number of boats

from 0.1 at Stage I to 0.3 at Stage III 5 from 0.03 at Stage I to 0.2 at Stage III 3 from 0.01 at Stage I to 0.07 at Stage III

Tab. 20. Average transport distance, the size of passenger ships and other watercraft, and the frequency of lockages / source: own work

The calculation of the savings for society as a result of the reduction in air emissions due to the ability to provide transport on the Vistula River is shown in Tab. 28. However, it can be expected that the savings for society from the reduction of emissions will be lower in the future. This is a consequence of technical progress aimed at the production of means of transport that are less degrading to the environment.

Benefits from the reduced number of accidents The increased use of the lower Vistula River waterway for transport (resulting in less traffic on roads in the context of cargo transport) would make it possible to reduce the costs related to road accidents incurred by society. The analysis of incremental benefits takes into account the costs of both accidents and road traffic collisions. Therefore, the estimation of incremental benefits is based on: • unit costs of accidents • costs of road traffic collisions, distributed by the number of road accidents • projected level of accidents, corresponding to the accident probability rates and the projected volume of transport.

Unit cost of accident Road traffic accidents are considered to be events that lead to death or injury in connection with the movement of vehicles on public roads. Hence, the unit costs of accidents take into account property damage and losses arising from injuries and deaths of the victims of accidents, including: • losses due to reduced productivity of labour, reflected in the decrease in gross domestic product (decline of GDP in consumption) • property costs resulting from the reduced value of vehicles and road infrastructure • costs of treatment, rehabilitation and disability pensions for very seriously injured people: –– administration costs –– costs of funerals of victims –– costs of emergency medical services (ambulance) –– costs related to the participation of the police in removing the effects of accidents, costs of investigations, and legal costs –– costs of the participation of firefighters in removing the effects of accidents. In 2013, the cost of road traffic accidents in Poland amounted to 2.1% of the GDP (i.e. PLN 34.9 billion), which means that the cost of a single road traffic accident in Poland was PLN 974 thousand. According to a study of the Road and Bridge Research Institute, in the long term, in 2001–2011 the costs of road traffic accidents in Poland at current prices increased by 5.40% on average. However, at constant prices the costs of road traffic accidents show 201

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Estimated increase in Projected increase in number of seat-kilometres number of passenger of passenger ships and and cruise ships cruise passing through the (thousand) sluice or ramp (thousand) 0 2,113 4,224 6,334 8,443 10,551 12,657 14,762 16,866 18,969 21,071 23,171 25,271 27,369 29,466 31,562 31,657 31,751 31,844 31,936 32,027 34,117 36,206 38,293 40,380 42,466 44,551 46,635 48,718 50,800

0.0 0.1 0.2 0.3 0.4 0.5 0.9 1.1 1.3 1.4 1.7 1.9 2.0 2.2 2.8 3.0 3.0 3.0 3.0 3.0 3.0 3.2 3.4 3.6 3.8 4.2 4.5 7.0 7.3 7.6

Estimated increase in lockages of sport and tourist ships passing through the sluice or ramp (thousand)

Estimated number of kayaks and rowboats passing through the lock or ramp (thousand)

0.0 0.6 0.4 0.7 1.1 1.4 3.5 4.1 4.8 5.5 7.9 9.4 10.9 12.4 13.1 13.2 16.0 16.1 18.2 18.3 18.4 20.5 21.6 21.8 22.9 34.4 36.1 36.2 50.5 50.7

0.00 0.01 0.01 0.02 0.03 0.37 0.38 0.77 0.78 0.80 1.71 1.73 1.75 1.77 1.79 1.81 1.83 1.85 1.87 1.89 3.18 4.04 4.07 4.10 4.13 4.99 5.02 5.05 5.93 5.97

Tab. 21. Projected increase in the number of passenger and cruise ships, sport and tourist ships, kayaks and rowboats passing through the lock / source: own work

a downward trend, these expenditures decreasing by 1.16% in the analysed period41. To a large extent, the decline results from the tendency towards reduced numbers of road traffic accidents. 41 Cf. K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap

1. Społeczno-ekonomiczne przesłanki... [Analysis of the Socio-Economic Impact of the Development of the lower Vistula, stage 1. Socio-Economic Reasons for the Development of the lower Vistula River], p. 92; Metodologia i wycena kosztów wypadków drogowych na sieci dróg w Polsce na koniec 2011 r. [Methodology and appraisal of costs of road traffic accidents on roads in Poland at the end of 2011], Road and Bridge Research Institute 2012.

202

III. ESTIMATE OF BENEFITS

Lock Geesthacht Lauenburg Büssau Rothensee Hohenwarthe Niegripp Parey Zerben Wusterwitz Brandenburg Schönwalde Bahnitz Rathenow Grütz Spandau

Passenger ships 278 68 37 140 598 460 38 214 240 397 34 68 172 46 817

Sport boats 5,654 3,936 3,601 178 2,386 1,546 1,705 2,880 4,404 11,395 2,768 5,548 815 3,433 14,747

Other watercraft 1,226 254 304 130 340 1,083 222 327 323 739 123 238 280 259 1,237

Tab. 22. The number of passenger ships passing through the selected locks between the basin of the Elbe and the Oder in 2014 / source: Güterverkehrsströme zwischen Elbe und Oder, Freizeitverkehre in den Regionen Berlin, Brandenburg, SchleswigHolstein und Mecklenburg Vorpommern,WSV.de, Stand December 2014 [online], http://www.wsd-ost.wsv.de/service/ Downloads/Gueterverkehrsstroeme_zwischen_Elbe_und_Oder_2014.pdf [access: 12.12.2015]

Type of fee Rate for navigation of passenger and cruise ships

Rate* gr 1.80/seat-kilometre

Rate for 1 lockage for passenger or cruise ships

PLN 16.0/lockage

Rate for 1 lockage for sport and tourist boats

PLN 11.0/lockage

Rate for 1 lockage for kayak or rowboat

PLN 7.0/lockage

*the rates applicable in 2015 have been maintained in 2016. Tab. 23. The rates of navigation fees for passenger transport on the lower Vistula River assumed in the analysis* / source: own work based on: Announcement of the Minister of Environment of 20 November 2014, “Monitor Polski” [Official Gazette] 2014, No. 0, item 1120

Costs of road traffic collisions As already mentioned, the analysis of incremental benefits is based on the unit cost of a road traffic accident, which also includes the costs of road traffic collisions, meaning the costs incurred as a result of a traffic incident that did not lead to the injury or death of its participants, but only to damage to property (e.g. a car). In 2013, the costs of road traffic collisions in Poland amounted to 0.89% of the GDP, i.e. PLN 14.8 billion.

Estimated unit cost of a road traffic accident and collision So, the total costs of road traffic accidents and collisions in 2013 was PLN 49.7 billion, which is PLN 1.39 million per accident. Based on the observed trends it has been estimated that in the first year of the investment project involving the development of the lower Vistula River the cost will be PLN 1.52 million. The analysis of the reduction in road traffic accidents as a result of the inclusion of inland waterway transport to support the transport needs of the economy is based on the indicators reflecting the number of accidents per 1 million tkm. 203

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Amounts for navigation of passenger and cruise ships (PLN thousand)

Amounts for the passage of passenger and cruise ships through the lock or ramp (PLN thousand)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0 38 76 114 152 190 228 266 304 341 379 417 455 493 530 568 570 572 573 575 577 614 652 689 727 764 802 839 877 914

0 2 3 5 7 8 15 18 20 23 27 30 32 35 45 48 48 48 48 49 49 52 55 58 61 68 71 112 117 122

Amounts for the passage of sport and tourist ships through the lock or ramp (PLN thousand) 0 7 4 8 12 15 38 46 53 61 87 103 120 136 144 145 176 177 200 201 202 226 238 239 251 379 397 399 556 558

Amounts for the passage Total of kayaks and amount other rowboats (PLN through the lock thousand) or ramp (PLN thousand) 0 0 0 0 0 3 3 5 6 6 12 12 12 12 13 13 13 13 13 13 22 28 29 29 29 35 35 35 42 42

0 47 84 127 171 216 284 334 382 430 505 562 619 676 732 774 807 810 835 838 850 920 973 1,015 1,069 1,246 1,305 1,385 1,591 1,636

Tab. 24. Calculation of incremental income for the RZGW from passenger and tourist transport / source: own work

Substance Common name Methane Nitrous oxide

Chemical designation CH4 N2O

Global warming potential 25 298

Tab. 25. Global warming potential / source: Regulation of the European Parliament and of the Council No 517/2014 of the European Parliament and of the Council of 16 April 2014 on fluorinated greenhouse gases and repealing Regulation (EC) No. 842/2006 Text with EEA relevance

204

III. ESTIMATE OF BENEFITS

Years

2005 2006 2007 2008 2009 2010 2011 2012

Carbon dioxide (CO 2) in thousand tonnes 9,196 9,772 10,401 11,490 13,501 12,709 13,303.0 12,797.7

Methane (CH4) emissions

Nitrous oxide (N2O) emissions

CO2 equivaCO2 equivathousand thousand lent (thousand lent (thousand tonnes tonnes tonnes) tonnes) 0.41 0.42 0.66 0.65 1.11 1.04 1.09 1.06

10.3 10.5 16.5 16.3 27.8 26.0 27.3 26.5

0.324 0.340 0.354 0.371 0.554 0.520 0.545 0.530

96.552 101.32 105.492 110.558 165.092 154.96 162.41 157.94

Emissions in total as CO2 equivalent (thousand tonnes)

Transport work (thousand tkm)

Emissions per 1 tkm (tonnes)

9,302.8 9,883.8 10,523.0 11,616.8 13,693.8 12,890.0 13,492.7 12,982.1

119,740,000 136,490,000 159,527,000 174,223,000 191,484,000 223,170,000 218,888,000 233,310,000

0.00007769 0.00007241 0.00006596 0.00006668 0.00007151 0.00005776 0.00006164 0.00005564

Tab. 26. Emissions from trucks with GVW over 3.5 tonnes in Poland / source: own work based on: Transport drogowy w Polsce w latach 2012 i 2013 [Road transport in Poland in 2012 and 2013], GUS 2015; Regulation of the European Parliament and of the Council No 517/2014 of the European Parliament and of the Council of 16 April 2014 on fluorinated greenhouse gases and repealing Regulation (EC) No. 842/2006 Text with EEA relevance

Years

Cost of CO2 emissions (PLN/tonne)

Years

Cost of CO2 emissions (PLN/ tonne)

Years

Cost of CO2 emissions (PLN/ tonne)

0 1 2 3 4 5 6 7 8 9

31.5 31.5 31.9 32.8 47.9 63.0 67.2 71.4 75.6 79.8

10 11 12 13 14 15 16 17 18 19

84.0 88.2 92.4 96.6 100.8 105.0 109.2 113.4 117.6 121.8

20 21 22 23 24 25 26 27 28 29

126.0 130.2 134.4 138.6 142.8 147.0 151.2 155.4 159.6 163.8

Tab. 27. Unit cost of CO2 emissions/ source: IMF World Energy Outlook 2015 [online], http://www.worldenergyoutlook.org [access: 12.04.2016]

According to the long-term objective of the European Union known as ‘vision zero’, established in a White Paper in 2011, it is assumed that the number of fatalities by 2050 will be almost zero42. Therefore, it can be expected that the number of road traffic accidents in Poland will continue to decrease. Currently, in Poland there are 0.133 road traffic accidents per million tkm. Observations show that in 2000–2014 the accident rate per million tkm will decrease by 11.7% annually on average (Tab. 29). Hence, in the further analysis it is assumed that the average annual rate of reduction of accidents over the next 30 years will continue (although at a slower rate) at approx. 7.4% (the average annual decline recorded in Poland in 2010–2014). 42 Transport WHITE PAPER: Roadmap to a single European transport area – Towards a competitive and resource-efficient trans-

port system, Publications Office of the European Union, Luxembourg, 2011.

205

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Projected increase in transport work (thousand tkm)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0 1,508 1,515 18,522 49,020 99,025 149,030 449,034 799,039 999,044 999,049 999,054 999,058 999,063 1,199,068 1,399 072 1,399,077 1,399,082 1,399,086 1,399,091 1,399,095 1,399,100 1,399 104 1,399 109 1,399 113 2,399 118 2,999 122 3,599 127 3,599 131 3,599 135

Costs of pollutant Costs of pollutant emissions in the zero emissions in the investinvestment option (PLN ment option (PLN thousand) thousand) 0.0 2.5 2.4 29.3 107.9 273.5 418.6 1,277.7 2,295.3 2,888.2 2,898.6 2,901.8 2,898.5 2,889.1 3,449.8 3,997.7 3,964.0 3,924.8 3,880.7 3,832.1 3,779.7 3,723.8 3,665.0 3,603.5 3,539.8 5,957.5 7,303.5 8,588.6 8,410.0 8,229.4

0.0 0.4 0.4 4.2 15.6 39.5 60.4 184.4 331.3 416.8 418.4 418.8 418.3 417.0 497.9 577.0 572.1 566.5 560.1 553.1 545.5 537.5 529.0 520.1 510.9 859.8 1,054.1 1,239.6 1,213.8 1,187.8

Savings on the reduced costs of pollutant emissions (PLN thousand) 0.0 2.1 2.0 25.1 92.3 234.0 358.2 1,093.3 1,964.0 2,471.3 2,480.2 2,483.0 2,480.2 2,472.1 2,951.9 3,420.7 3,391.9 3,358.3 3,320.6 3,279.0 3,234.2 3,186.3 3,136.0 3,083.4 3,028.9 5,097.7 6,249.4 7,349.0 7,196.2 7,041.6

Tab. 28. Savings resulting from the reduction in pollutant emissions / source: own work

However, the risk of a road traffic accident will be still much higher than in inland waterway transport. In Poland, 9, 7, 5, 12 and 10 cases of accidents were recorded in 2010, 2011, 2012, 2013 and 2014, respectively, in inland waterway transport43. Considering the transport work performed by this mode of transport44, it can be estimated that in the analysed years the average accident risk rate in cargo transport using inland waterways in Poland was 0.00963 accidents per million tkm.

43 Transport wodny śródlądowy w Polsce w 2010 r. [Inland waterway transport in Poland in 2010], [see also: Water transport…

in 2011; …2012; …, 2013; …2014], GUS [online http://stat.gov.pl/cps/rde/xbcr/gus/tl_transport_wodny_srodladowy_w_ Polsce_w_2010r.pdf [access: 22.12.2015]. 44 Transport wyniki działalności w 2014 r. [Transport performance in 2014], GUS, Warsaw 2015

206

III. ESTIMATE OF BENEFITS

Years

Number of accidents

Transport work (million tkm)

Number of accidents per million tkm

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

57,331 53,799 53,559 51,078 51,069 48,100 46,876 49,536 49,054 44,196 38,832 40,065 37,062 35,847 34,970

75,023 77,228 80,318 85,989 110,481 119,740 136,490 159,527 174,223 191,484 214,204 218,888 233,310 259,708 262,860

0.764178985 0.696625576 0.666836824 0.59400621 0.462242377 0.401703691 0.34343908 0.310517969 0.281558692 0.230807796 0.18128513 0.183038814 0.158853028 0.138028093 0.133036597

Tab. 29. Road accidents in Poland / source: own work

The marginal importance of this mode in the Polish transport system means that a forecast of accidents in this mode after the development of the lower Vistula River waterway is not justified. Therefore, the European experience is used as the basis for estimating the accident risk rate in inland waterway transport. In the Netherlands, 96 accidents with more serious effects were recorded in 2005, compared to 161 such accidents in 201245. Taking into account the transport work performed in this mode, in 2005–2012 the average rate for the risk of a serious accident per million tkm was 0.003096 in that country46. Under these assumptions regarding the number of accidents in road transport and inland waterway transport, the number of accidents has been estimated for the next 30 years from the commencement of the investment project (Tab. 30): • in road transport in the absence of the development of the lower Vistula River waterway • on the lower Vistula River waterway in the investment option. Estimates show that the cost of a road accident in Poland, including the costs of traffic road collisions, per tkm is PLN 0.1778 (Tab. 31). According to European studies, the economic consequences of accidents in inland waterway transport per tkm are more than 126 times lower than in road transport (Tab. 32). It can be assumed that these costs are similar in Poland, and therefore the cost of an accident in inland waterway transport in Poland is PLN 0.0014/tkm. The cost in the later part of the study is the basis for estimating the cost of an accident in this mode of transport, which is PLN 0.105 million according to the calculations (Tab. 33). As a result, the appraisal of incremental benefits due to the reduced accident costs in connection with the development of the lower Vistula River was made (Tab. 34) on the assumption of the aforementioned unit cost of a road accident and road traffic collision of PLN 1.52 million (in the zero investment option) and the unit cost of an accident in inland waterway transport of PLN 0.105 million (in the investment option). 45 R. Rolbiecki, K. Wojewódzka-Król, Miejsce transportu wodnego śródlądowego w intermodalnych łańcuchach logistycznych

[The Place for Inland Navigation in the Intermodal Logistics Chain] [in:] Rozwój transportu w świetle współczesnych wyzwań [Development of transport in light of modern challenges], ed. R. Rolbiecki, "Zeszyty Naukowe UG Ekonomika Transportu i Logistyka" [Research Journal of the University of Gdansk. Transport Economics and Logistics] 2015, issue 55. 46 Own calculations based on: Eurostat [online], http://appsso.eurostat.ec.europa.eu/nui/show.do [access: 22.15.2015].

207

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Projected increase in transport work (thousand tkm)

Projected increase in the number of car accidents in the zero investment option

Projected increase in the number of accidents in inland waterway transport in the investment option

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0 1,508 1,515 18,522 49,020 99,025 149,030 449,034 799,039 999,044 999,049 999,054 999,058 999,063 1,199 068 1,399 072 1,399 077 1,399 082 1,399 086 1,399 091 1,399 095 1,399 100 1,399 104 1,399 109 1,399 113 2,399 118 2,999 122 3,599 127 3,599 131 3,599 135

0 0 0 2 5 9 12 35 57 66 61 57 53 49 54 58 54 50 46 43 40 37 34 31 29 46 53 59 55 51

0 0 0 0 0 0 0 1 2 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 4 7 9 11 11 11

Tab. 30. Projected increase in the number of road accidents in the absence of the development of the lower Vistula Rover and in the investment option / source: own work Number of accidents in Poland Cost per accident, including the costs of road traffic collisions (PLN million)

32,367 1.52

Costs of road traffic accidents and collisions in total (PLN million)

49,197.84

Transport work in million tkm

276,661.5

Cost per accident, including the costs of road traffic collisions per tkm (PLN)

0.1778

Tab. 31. Estimate of the cost of a road accident in Poland per tkm in 2015. / source: Own work based on: Transport wyniki działalności w 2014 r. [Transport performance in 2014], GUS, Warsaw 2015

208

III. ESTIMATE OF BENEFITS

Unit costs

PLN/tkm

Unit cost of accidents in road transport according to European studies – PLANCO

0.1588

Unit cost of inland waterway transport according to European studies – PLANCO

0.00126

Unit cost of inland waterway transport compared to road transport – 0.00793 Tab. 32. Unit costs of accidents in road and inland waterway transport in Western Europe / source: own work based on: Trump cards of inland navigation [online], http://www.binnenvaart.be/en/binnevaartinfo [access: 10.03.2014]

Item Cost of accident in inland waterway transport per tkm (PLN)

Value 0.0014

Transport work in million tkm

750

Costs of accidents in total (PLN million)

1.05

Number of accidents in Poland Cost of a single accident (PLN million)

10 0.105

Tab. 33. Estimated cost of an accident in inland waterway transport in Poland / source: own work based on: Transport wyniki działalności w 2014 r. [Transport performance in 2014], GUS, Warsaw 2015

Taxes paid by the ports The development of the lower Vistula River is one of the essential conditions for growth in turnover of the seaports in Gdańsk and Gdynia. As previously shown,47 the ability to satisfy the increasing demand on the turnover of these ports is limited by the transport network in their hinterland. Therefore, the takeover of some tasks in the hinterland by inland waterway transport on the lower Vistula River will create opportunities to increase the state revenues from higher turnover in the ports. The taxes paid by the seaport in Gdańsk in 2014 were PLN 16 billion. Since 2010, the taxes per million tonnes of handled cargo have been increasing by an average of PLN 65 million annually (Tab. 35). The increase in the amount of taxes paid by the port is associated with an increase in the value of the port turnover (Fig. 6), which in turn is a consequence of changes occurring in the commodity structure of the port turnover, reflected by an increase in the share of general cargo in the total turnover of the port (Fig. 7).

Increase in national income According to the forecasts the share of containers in the turnover of the Port of Gdańsk will increase to 46% by 2030, so the trend of increasing taxes per million tonnes of cargo handled by the port will continue. If we assume that: • the increase will be smaller in the future – PLN 20 million annually • in the first year of the analysed period the national income from taxes will amount to PLN 500 million/tonne of handled cargo (in 2014 it was PLN 495.4/tonne of cargo) • increases in transport by the lower Vistula River at the Port of Gdańsk will be gradual: –– transport carried by the waterway until the third year of the investment project will not involve the seaports (transport of aggregates) –– beginning from the third year the volume not related to the seaports will gradually increase to 2 million tonnes in the eighth year of the project (mainly to satisfy the needs of the investment project implemented on the lower Vistula River) and will remain at that level until the end of the analysed period 47 K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 2.

Badanie popytu na przewozy... [Analysis of the Socio-Economic Impact of the Development of the lower Vistula, stage 2. Analysis of Demand for Transport], pp. 45–48.

209

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Costs of accidents in the zero investment option (PLN thousand)

Costs of accidents in the investment option (PLN thousand)

Savings on the reduction of accidents (PLN thousand)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0.0 282.1 262.4 2,968.9 7,272.4 13,597.2 18,940.1 52,819.0 86,992.4 100,670.0 93,176.1 86,240.0 79,820.2 73,878.4 82,067.3 88,627.6 82,030.0 75,923.5 70,271.6 65,040.5 60,198.7 55,717.4 51,569.7 47,730.7 44,177.6 70,113.7 81,123.7 90,105.8 83,398.0 77,189.5

0.0 0.5 0.5 6.0 15.9 32.2 48.4 146.0 259.8 324.8 324.8 324.8 324.8 324.8 389.8 454.8 454.8 454.8 454.8 454.8 454.8 454.8 454.8 454.8 454.8 779.9 975.0 1170.0 1170.0 1170.0

0.0 281.6 261.9 2,962.9 7,256.4 13,565.0 18,891.6 52,673.1 86,732.6 100,345.2 92,851.3 85,915.2 79,495.4 73,553.6 81,677.5 88,172.8 81,575.2 75,468.7 69,816.8 64,585.6 59,743.9 55,262.6 51,114.9 47,275.9 43,722.7 69,333.8 80,148.7 88,935.8 82,228.0 76,019.5

Tab. 34. Incremental benefits from the reduction of the cost of road accidents / source: own work

2010 2011 2012 2013 2014

Turnover in million tonnes

VAT, customs and excise PLN million

Taxes / million tonnes in PLN million

27.2 25.3 26.9 30.3 32.3

3,758 6,479 6,264 13,970 16,001

138 256 233 461 495

Tab. 35. The national income from the port in Gdańsk in 2010–2014 / source: materials of the Port of Gdańsk [online], www.portgdansk.pl/o-porcie/port-gdansk-dla-polski [access: 13.12.2015]

210

III. ESTIMATE OF BENEFITS

Fig. 6. Changes in the volume and value of turnover of the Port of Gdańsk / source: own work based on materials of the Port of Gdańsk

Fig. 7. Changes in the commodity structure of turnover of the Port of Gdańsk / source: own work based on materials of the Port of Gdańsk

–– the remaining transport will involve the sea ports at that point, the national income from additional turnover as a result of the ability to support the seaports in the hinterland through inland waterway transport would amount to: • PLN 2 billion annually after completion of Stage I • PLN 4.9 billion annually after completion of Stage II • PLN 10.8 billion annually after completion of Stage III of the development of the lower Vistula. However, it was decided to assume the option of a 3 percent growth in the taxes per million tonnes of cargo handled at the port annually. Very similar results have been obtained under the other assumptions without changes. However, the revenues would increase more slowly in the first years, but more quickly in later years. As a result, the estimated annual national income would be as follows (Tab. 36): • PLN 2 billion after completion of Stage I • PLN 5 billion after completion of Stage II • PLN 11.8 billion after completion of Stage III. 211

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Option I Option II assumed for the study Projected volume of transport Taxes / million Additional national Taxes / million Additional national Lower Vistula through the lower tonnes, income from transtonnes, income from transdevelopment Year Vistula River to increase by PLN 20 port through the increase of 3% per port through the stage and from seaports million annually lower Vistula year lower Vistula (million tonnes) (PLN million) (PLN million) (PLN million) (PLN million) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0 0 0 0.5 0.5 0.5 1 2 2 3 3 3 3 3 4 5 5 5 5 5 5 5 5 5 5 6 8 10 10 10

500 520 540 560 580 600 620 640 660 680 700 720 740 760 780 800 820 840 860 880 900 920 940 960 980 1,000 1,020 1,040 1,060 1,080

0 0 0 280 290 300 620 1,280 1,320 2,040 2,100 2,160 2,220 2,280 3,120 4,000 4,100 4,200 4,300 4,400 4,500 4,600 4,700 4,800 4,900 6,000 8,160 10,400 10,600 10,800

500 515 530 546 563 580 597 615 633 652 672 692 713 734 756 779 802 826 851 877 903 930 958 987 1,016 1,047 1,078 1,111 1,144 1,178

0 0 0 273 281.5 290 597 1,230 1,266 1,956 2,016 2,076 2,139 2,202 3,024 3,895 4,010 4,130 4,255 4,385 4,515 4650 4790 4935 5080 6282 8624 11,110 11,440 11,780

Tab. 36. The increase in national income from taxes through the increased port turnover as a result of support of the hinterland by inland waterway transport on the lower Vistula River / source: own work

3.2. Hydropower generation Benefits of hydropower plants The benefits of the development of hydropower generation can be perceived on many different levels â&#x20AC;&#x201C; its role in the national power system, as well as its environmental and economic advantages. Unlike other renewable energy sources, hydropower: 212

III. ESTIMATE OF BENEFITS

• can be accumulated in tanks and processed multiple times • can meet the peak demand (activation or deactivation takes a very short time – up to several minutes) • provides a contingency reserve for the power system. The environmental benefits of the development of hydropower: • reducing the consumption of raw materials such as coal or oil • savings on the cost of transport of energy resources and external costs • reduced environmental pollution. Hydropower generation: • does not emit harmful substances such as dust and greenhouse gas • does not generate waste and pollution (solids, water) • does not emit noise. Economic advantages of hydropower generation involve: • increased efficiency of comprehensive water management investments • long service life of equipment – approx. 100 years • high use of installed capacity • lowest operating costs compared to other types of renewable energy48.

Costs of energy production Regardless of the other above-mentioned benefits (for the power system, environmental benefits, and other economic benefits), the lower cost of electricity production in hydropower plants compared with the coal power plants dominant in Poland would make it possible for the KDW to provide 95% savings on the cost of energy production (compared with coal power plants), assuming the unit cost of operation estimated by Ernst & Young at PLN 14/MWh in hydropower plants and PLN 303/MWh in coal power plants49 (Tab. 37). The total cost of production of 4,221.1 GWh in hydropower plants would be PLN 59 million, while in coal power plants the production of the same amount of energy would be PLN 1,279 million. This means that the production costs in hydropower plants are less than 5% of the production costs in coal power plants. The total annual savings in the case of the operation of all 10 hydropower plants would be PLN 1.2 billion. Assuming the order of barrage construction shown in Tab. 38: • Siarzewo first, because of the need to ensure the safety of the barrage in Włocławek • Tczew, Gniew, Grudziądz, Chełmno – providing a gradual improvement in navigability on the Vistula River from the seaports, enabling a gradual increase in the use of the waterway for transport and tourism over an increasingly extended section • Solec Kujawski, Płock, Wyszogród – extending the navigable section of the Vistula River to Warsaw • Warsaw barrage. This ensures the ability to gradually increase the production of hydropower, thereby achieving better results in the form of savings on the costs of energy production, as shown in Tab. 39.

3.3. Flood protection

The area of the Lower Vistula is at the risk of flooding caused by: • rainfall • snowmelt • blockages 48 Wpływ energii wiatrowej na wzrost gospodarczy w Polsce [The impact of wind energy on economic growth in Poland], Report

by Ernst & Young in cooperation with Polskie Stowarzyszenie Energetyki Wiatrowej and European Wind Energy Association, March 2012 49 K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 1. Społeczno-ekonomiczne przesłanki zagospodarowania dolnej Wisły [Analysis of the Socio-Economic Impact of the Development of the lower Vistula, stage 1. Socio-Economic Reasons for the Development of the lower Vistula River], Sopot 2015, p. 51.

213

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Savings on the cost of electricity production Hydropower plant

Annual production (GWh/year)

Hydropower plants

Coal power plants

Unit cost of production (PLN/MWh)

Annual cost of production (PLN thousand)

Unit cost of production (PLN/MWh)

Annual cost of production (PLN thousand)

Savings on the cost of electricity production (PLN thousand) 191,567

Włocławek

662.86

9,280

303

200,847

Siarzewo

287.93

4,031

303

87,243

83,212

Tczew

414.57

5,804

303

125,615

119,811

Gniew

491.73

6,884

303

148,994

142,110

Grudziądz

424.98

5,950

303

128,769

122,819

Chełmno

463.32

6,486

303

140,386

133,899

Solec Kujawski

547.56

7,666

303

165,911

158,245

Płock

316.95

4,437

303

96,036

91,599

Wyszogród

319.80

4,477

303

96,899

92,422

Warsaw

291.40

4,080

303

88294

84215

1,278 993

1,219,898

Total

59,095

Tab. 37. Annual savings on the cost of energy production in hydropower plants on the lower Vistula River compared in coal power generation / source: own work based on: Hydrodynamiczny model dolnej Wisły z uwzględnieniem koncepcji kaskady stopni piętrzących [Hydrodynamic model of the lower Vistula considering the concept of cascade of barrages], Gdańsk University of Technology 2014; Wpływ energii wiatrowej na wzrost gospodarczy w Polsce [The impact of wind energy on economic growth in Poland], Report by Ernst & Young in cooperation with Polskie Stowarzyszenie Energetyki Wiatrowej and European Wind Energy Association, March 2012

• storms • floods inside the Żuławy polders, which operate economically through flood protection • mixed floods caused by sea backwater50.

Flood losses Floods cause significant losses in the area of the lower Vistula River. The estimates of average annual losses in the area show that they amount to more than PLN 105 million per year. In the absence of measures taken to ensure flood protection – if we assume that these losses will increase only by 2% annually (increase of land development), add indirect losses of 100% for the direct losses and expect them to increase by 5%, then after 30 years the loss would rise to PLN 619 million annually (Tab. 40). The estimates are very conservative, as the value specified the average losses over a very long period. In order to present the threat that would actually exist in the area in the case of a flood, Tab. 41 shows a summary of the direct and indirect losses as a result of flooding with a medium or small probability. Under unfavourable conditions they are estimated at PLN 12,869 million and PLN 15,613 million in total, respectively. Therefore, we can assume that if over the 30 years assigned for the construction of the KDW there was one such flood, the benefits of the comprehensive development of this section to increase retention, improve the waterway parameters and enable the operation of icebreakers would provide savings on flood losses of approx. PLN 13 and 16 billion respectively.

50 Plany zarządzania ryzykiem powodziowym dla obszarów dorzeczy i regionów wodnych [Flood risk management plans for the

areas of river basins and water regions], KZGW, WBS No.: 1.8.12.2, Warsaw 2014.

214

III. ESTIMATE OF BENEFITS

Lower Vistula development stage

Year

Barrage – power plant

STAGE III

STAGE II

STAGE I

0 1

Siarzewo

Tczew

Gniew

Grudziądz

Chełmno

Solec Kujawski

Płock

Wyszogród

26 27

Warsaw

Tab. 38. Assumed schedule for the construction of the Lower Vistula Cascade / source: own work

Since the climate changes intensify negative extreme events, such as storms, prolonged droughts or heavy rain etc., while the neglected infrastructure of the lower Vistula River waterway has been deteriorating for years now, if the chances to protect the adjacent areas against the aforementioned events are reduced then we could assume a scenario in which similar flooding could occur twice in the analysed period, thereby increasing the losses to PLN 26 and 32 billion, i.e. PLN 0.9 and 1 billion annually, respectively. 215

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Power plant

Savings on the costs of electricity production in individual hydropower plants (PLN million)

Total savings on the cost of energy production in individual years of construction (PLN million)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Włocławek

191

Siarzewo Tczew Gniew Grudziądz

83 119 142 122

Chełmno Solec Kujawski

133

Płock

Wyszogród

191 191 191 191 274 274 393 393 535 535 657 657 657 790 790 948 948 948 948 948 948 948 1,039 1,039 1,039 1,131 1,131 1,131 1,131 1,219

158

Warsaw

Tab. 39. Savings on the cost of electricity production in hydropower plants compared to carbon power plants / source: own work based on: Tab. 37 and 38.

Comparing these estimates with the flood losses that occurred in Poland in 1997–2010 (including the indirect losses of approx. PLN 87.4 billion, i.e. an average of PLN 6.7 billion annually in 1997–2010 at the 2010 prices), it can be concluded that such a scenario should be considered when making the decision on the need to develop the lower Vistula River. The losses would still be much lower than those actually recorded in 1997–2010, of which approx. 30% (approx. PLN 2 billion annually) could be associated with the lower Vistula River. However, it has been ultimately assumed in the study that in the zero investment option there would be one flood with a medium probability on the lower Vistula River in the 30-year period, and its cost in the area has been estimated at PLN 13 billion (Tab. 41), meaning PLN 433 million annually in the 30 years of the investment project. With unchanged assumptions of Tab. 40, the total flood losses, including indirect losses, would be:

216

III. ESTIMATE OF BENEFITS

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Direct 105

Loss (PLN million) Indirect 105

Total 210

107

110

217

109

116

225

111

122

233

114

128

241

116

134

250

118

141

259

121

148

268

123

155

278

125

163

288

128

171

299

131

180

310

133

189

322

136

198

334

139

208

346

141

218

360

144

229

373

147

241

388

150

253

403

153

265

418

156

279

435

159

293

452

162

307

469

166

323

488

169

339

508

172

356

528

176

373

549

179

392

571

183

412

594

186

432

619

Year

Tab. 40. Average annual flood losses in the area of the lower Vistula River in the absence of the investment project, with a probability of 1% (one flood per 100 years) / source: own work based on: Plany zarządzania ryzykiem powodziowym dla obszarów dorzeczy i regionów wodnych [Flood risk management plans for the areas of river basins and water regions], KZGW, WBS No.: 1.8.12.2, Warsaw 2014

• from PLN 1.2 billion annually after completion of Stage I • through PLN 2.1 billion annually after completion of Stage II to PLN 2.6 billion annually when the development of the lower Vistula River is complete (Tab. 42).

217

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Cost of flood with medium probability* on the lower Vistula River

Cost of flood with small probability* on the lower Vistula River

Direct losses related to flooding rivers

509

867

Indirect losses related to flooding rivers

509

867

Direct losses related to flooding from the sea

1,403

2,417

Indirect losses related to flooding from the sea

1,403

2,417

9,689

3,430

3430

12,869

15,613

Item

Potential losses in Żuławy as a result of destroyed embankments Losses associated with the destruction of or damage to protective structures in the coastal strip Total

* small probability – areas where the probability of flooding is once every 500 years (Q 0.2%), medium probability – areas where the probability of flooding is once every 100 years (1%), high probability – areas where the probability of flooding is once every 10 years (Q 10%) Tab. 41. Amount of flood losses in the areas with medium and little probability of flooding on the lower Vistula River (PLN million) / source: own work based on: Plan zarządzania ryzykiem powodziowym dla Regionu Wodnego Dolnej Wisły [Flood risk management plan for the Lower Vistula Water Region], summaries of individual drafts and final versions of plan in Polish No. WBS: 1.8.12.4, p. 9

3.4. Meeting the water needs

As shown in the first part of the “Analysis of the Socio-Economic Impact of the Development of the Lower Vistula”51, Poland is one of the countries having low water resources: • Poland is one of the poorest countries in Europe in terms of water resources per capita and per unit area • there is a risk that the water deficit will increase in the area of the lower Vistula River (especially in the area of Kujawy, which is one of the areas with the lowest precipitation) • small disposable water resources in Poland are the result of low precipitation and the lack of proper development of surface water, which are the main sources to satisfy the water needs • one way to increase the disposable water resources is the storage of runoff water, which is too low in Poland (the total capacity of reservoirs in Poland is approx. 4 billion m3 and corresponds to less than 6% of the average annual runoff in a multi-year period – approx. 11% of runoff is stored on average globally). • The effects of low resources and minimal capability to regulate them are as follows: • problems with meeting the water needs of the population and industry (including the energy sector) • reduction of yield in agriculture by 20–30% on average in the case of drought • forest fires.

Risk of drought in agriculture A drought is a long period without precipitation, or with low precipitation compared to the long-term average values. The types of droughts are:

51 K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 1,

Społeczno-ekonomiczne przesłanki... [Analysis of the Socio-Economic Impact of the Development of the lower Vistula, stage 1, Socio-Economic Reasons for...], op. cit., pp. 80–85.

218

III. ESTIMATE OF BENEFITS

Lower Vistula development stage STAGE I STAGE II STAGE III

Year

Loss (PLN million) Direct

Indirect

Total

433

866

442

455

896

450

477

928

460

501

961

469

526

995

478

553

1,031

488

580

1,068

497

609

1,107

507

640

1,147

517

672

1,189

528

705

1,233

538

741

1,279

549

778

1,327

560

816

1,377

571

857

1,429

583

900

1,483

594

945

1,540

606

992

1,599

618

1,042

1,660

631

1,094

1,725

643

1,149

1,792

656

1,206

1,863

669

1,267

1,936

683

1,330

2,013

696

1,396

2,093

710

1,466

2,177

725

1,540

2,264

739

1,617

2,356

754

1,697

2,451

769

1,782

2,551

Tab. 42. Average annual flood losses in the area of the Lower Vistula River in the absence of the investment project, assuming that over 30 years there is one flood with a probability of 1% / source: own work

• atmospheric – when precipitation does not occur for 20 successive days • soil (agricultural) – as a consequence of increasing atmospheric drought • hydrological – when water losses occur in the deeper layers of the soil (manifested by low levels of water in rivers). • In Poland, droughts occur every 4–7 years on average52: • 23 atmospheric droughts were recorded in 1951–2000 (every 2 years on average) 52 Zagrożenia okresowe w Polsce [Periodical threats in Poland], Government Security Centre 2013.

219

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

• 11 hydrological droughts in 1951–1970 (every 2 years), including: –– 1951–1960: 6 hydrological droughts –– 1961–1970: 5 hydrological droughts • no hydrological droughts were recorded in 1971–1980 • 4 hydrological droughts occurred in 1981–1990 (every 2 years) • 2 hydrological droughts were recorded in 1991–2000 (every 5 years). In 2015, agricultural losses caused by drought were estimated by the National Council of Agricultural Chambers at 20–30% of agricultural production in Poland; the total production value is estimated at PLN 100 billion53. Assuming that: • a drought occurs in Poland every 5 years on average • losses in agriculture amount to PLN 30 billion in a year affected by a drought • agricultural production in the area of the lower Vistula River in the provinces of Pomerania, Kuyavia-Pomerania and Mazovia is approx. 28% of agricultural production in Poland (approx. PLN 28 billion) • losses caused by droughts in the three provinces in the area of the lower Vistula River in 2015 can be estimated at PLN 8.4 billion, including approx. a third of the amount in the area of impact of the Vistula River waterway, which is PLN 2.8 billion • during the construction of the barrages on the Vistula (30 years) the probability of a drought is 6 times (every 5 years) • total losses caused by drought in that period in the area of impact of the lower Vistula River are PLN 16.8 billion (assuming the amount of losses according to the data of 2015). Under these assumptions, the average annual agricultural losses caused by drought can be estimated at approx. PLN 0.56 billion (at the 2015 prices). Construction of successive barrages and accompanying land reclamation would result in a gradual increase in retention and provide tools to combat the effects of drought in agriculture, which would initially reduce the loss caused by drought in the first period of construction of the Lower Vistula Cascade; then the effects would be gradually removed. Therefore, it can be assumed that: • agricultural losses during the construction of the KDW would amount to approx. PLN 3.16 billion, including: –– the first drought would cause 50% less losses than in 2015 (PLN 1.4 billion) –– the second one – 60% less losses (PLN 1.2 billion) –– another one – 80% less losses (PLN 0.56 billion) • this means savings on the losses caused by drought in agriculture during the construction of the KDW of approx. PLN 13.64 billion at the 2015 prices, which is PLN 0.45 billion annually on average. The investment project on the Vistula River would make it possible to prevent droughts and associated losses by providing the tools to fight them in agriculture (except for extreme cases). Therefore, the ultimate conclusion is that the benefits related to removing the losses associated with droughts in agriculture in the area of the Lower Vistula River would be PLN 0.45 billion on average.

Forest fires Poland is ranked third in Europe (after Portugal and Spain) in terms of the average annual number of occurring fires, and is ranked eighth in terms of the area affected by them54. The studies of conditions conducive to fires show that a significant increase in the risk of fire is observed at low relative humidity (≤40%), with a lack of precipitation and low humidity in the litter (≤12%). According to the Forest Research Institute, forest fires cause: • direct losses of approx. PLN 17 thousand per ha of burnt area • environmental (indirect) losses of PLN 96 thousand/ha. 53 Krajowa Rada Izb Rzemieślniczych: straty w rolnictwie z powodu suszy mogą sięgać nawet 20–30 mld zł [National Council Agricultural

Chambers: Losses in agriculture caused by drought may reach even PLN 20–30 billion], “Puls Biznesu”, 28.08.2015 [online], http://www. pb.pl/4270613,19145,krir-straty-w-rolnictwie-z-powodu-suszy-moga-siegac-nawet-20-30-mld-zl [access: 13.12.2015]. 54 Pożary lasów [Forest fires], Państwowe Gospodarstwo Leśne Lasy Państwowe [online], http://slideplayer.pl/slide/431471/ [access: 10.10.2016].

220

III. ESTIMATE OF BENEFITS

Losses

Years

direct

indirect

Total

2000

8.6

65.9

2001

2.9

22.2

2002

4.4

33.7

2003

15.7

105

120.4

2004

3.5

26.8

2005

3.5

26.8

2006

5.1

39.1

2007

53.7

2008

23.0

2009

2.4

18.4

2010

2.9

22.2

2011

2.1

16.1

2012

5.8

44.5

2013

1.7

13.0

Total 2000–2013

68.6

457

525.9

Tab. 43. Losses caused by forest fires in Poland in 2000–2013 (PLN million) / source: own work based on: Czerwona księga pożarów [Red Book of Fires], Józefów 2014

Item

2005

2006

2007

2008

2009

2010

2011

Pomerania Fire area in the province Kuyavia-Pomerania (ha) Mazovia

111

109

231

111

1,680

Total area (ha)

2,021

2012

2013

2014

240

104

103

149

195

1,155

395

517

987

1,374

681

683

1241

281

411

1,359

296

450

375

550

1,585

362

578

Direct losses (PLN million)

Indirect losses (PLN million)

194

132

119

152

Losses in total (PLN million)

228

155

140

179

Losses in the area of direct impact of the lower Vistula River (PLN million) (1/3 of losses in the area of the Lower Vistula River)

Tab. 44. Losses as a result of forest fires in the area of the lower Vistula River / source: own work

According to the State Forests, in 2000–2013 the direct losses caused by fires were more than PLN 68.6 million. Taking into account the indirect losses, the total losses caused by forest fires were approx. PLN 426 million (Tab. 43)55. 55 Ibid.

221

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

In the area of the lower Vistula River, the provinces of Pomerania, Kuyavia-Pomerania and Mazovia belong to the areas with a high risk of fire. In 2014, fires covered 578 ha in the area of the lower Vistula River: • 66 ha in the Kuyavia-Pomerania Province • 61 ha in the Pomerania Province • 450 ha in the Mazovia Province This means 10 million of direct losses and PLN 55 million of indirect losses, i.e. PLN 65 million losses in those provinces in total (Tab. 44). In 2005–2014 the average annual fire losses in the forests located in the area of direct impact of the lower Vistula River were PLN 35.8 million, and this is the amount assumed in the study. Naturally, these are only some of the losses caused by drought. Other losses result from water deficits, such as: • interruptions in the supply of water for the population • deteriorated quality of the supplied water and the associated risk to health of the residents of the areas affected by drought • interruptions in production. These are difficult to measure, often because of the lack of information on such occurrences. However, the greatest threat can be associated with the risk of blackout in the energy sector. The ability to prevent the consequences of such risk through the construction of hydropower plants is basically a sufficient reason to construct the KDW. If this effect is additionally accompanied by the fulfilment of Poland’s obligations to increase the share of renewable energy sources, all the above-mentioned effects of reducing the losses in agriculture, forestry, municipal services or industry can be considered as additional benefits of project implementation.

3.5. Tourism Passenger transport

The development of the lower Vistula River will also result in a gradual increase in passenger transport. The analysis assumes that the average annual rate of transport growth on the waterway will be as follows, in respect of: • passenger transport using passenger and cruise ships – approx. 6% • transport using sport and tourist boats – approx. 4% • transport using kayaks and other rowboats – approx. 2.5%. To compare, the zero investment option would mean a continuation of the previously observed regression in passenger (tourist) transport on this waterway. The analysis assumes that this decline will be 1.1% for all types of passenger and tourist transport, which corresponds to the observed decrease in passenger transport on inland waterways in Poland in 2009–2014. The distribution of passenger transport on the lower Vistula River for the investment and zero investment option over 30 years is shown in Tab. 45. The benefits of the development of the lower Vistula River for transport users, water management authorities and society will therefore result from an increase in passenger transport on the waterway compared to the zero investment option (Tab. 46).

Calculation of benefits for the Regional Water Management Authorities In passenger transport the benefits for the managers of the lower Vistula River waterway will result from the increased income from the fees for navigation and lockage of passenger and cruise ships, sport and tourist boats, kayaks and rowboats. For the purposes of the analysis of income from the use of the lower Vistula River waterway in passenger transport, additional assumptions have been made regarding the sizes of ships, and the number of passes through the sluice or ramp (Tab. 47). The number of lockages for passenger ships based on the specified assumptions is shown in Tab. 48. Ultimately, after the development of the lower Vistula River, there may be 690 lockages of large passenger and cruise ships, 222

III. ESTIMATE OF BENEFITS

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Investment option Tourists Tourists using Passengers of using sport kayaks passenger and and tourist and other cruise boats rowboats ships (thousand) (thousand) (thousand) 500 600 200 600 700 200 700 650 200 800 700 200 900 750 200 1,000 800 300 1,100 850 300 1,200 900 300 1,300 950 300 1,400 1,000 300 1,500 1,100 350 1,600 1,200 350 1,700 1,300 350 1,800 1,400 350 1,900 1,450 350 2,000 1,450 350 2,000 1,500 350 2,000 1,500 350 2,000 1,500 350 2,000 1,500 350 2,000 1,500 350 2,100 1,500 400 2,200 1,550 400 2,300 1,550 400 2,400 1,600 400 2,500 1,600 400 2,600 1,650 400 2,700 1,650 400 2,800 1,700 400 2,900 1,700 400

Zero investment option Passengers of Tourists Tourists using passenger and using kayaks sport and cruise and other tourist boats ships rowboats (thousand) (thousand) (thousand) 500 600 200 494 593 198 489 587 196 483 580 193 478 573 191 472 567 189 467 561 187 462 554 185 457 548 183 452 542 181 446 536 179 441 530 177 436 524 175 432 518 173 427 512 171 422 506 169 417 501 167 412 495 165 408 489 163 403 484 161 399 478 159 394 473 158 390 468 156 385 462 154 381 457 152 377 452 151 372 447 149 368 442 147 364 437 146 360 432 144

Tab. 45. Forecast of passenger transport if the lower Vistula River is developed and in the absence of the investment project / source: own work

approx. 4,600 sport and tourist boats and approx. 540 kayaks and other rowboats per lock. The numbers above do not differ from the European standards (Tab. 49). The calculation of the incremental income for the RZGW based on the rates set out in Tab. 50 is shown in Tab 51. They will gradually increase to: • PLN 430 thousand annually after completion of Stage I • PLN 1 billion annually after completion of Stage II • PLN 1.6 billion annually after completion of Stage III.

223

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Passengers of passenger and cruise ships (thousand)

Tourists using sport and tourist boats (thousand)

Tourists using kayaks and other rowboats (thousand)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0 106 211 317 422 528 633 738 843 948 1054 1159 1264 1368 1473 1578 1583 1588 1592 1597 1601 1706 1810 1915 2019 2123 2228 2332 2436 2540

0 107 63 120 177 233 289 346 402 458 564 670 776 882 938 944 999 1005 1011 1016 1022 1027 1082 1088 1143 1148 1203 1208 1263 1268

0 2 4 7 9 111 113 115 117 119 171 173 175 177 179 181 183 185 187 189 191 242 244 246 248 249 251 253 254 256

Tab. 46. Projected increase in passenger and tourist transport on the lower Vistula River compared to the zero investment option / source: own work

Other income from tourism The studies assume that inland vessels will pay fees similar to the fees charged in seaports that are not critical to the national economy, which are located in the competence area of the Maritime Office in Gdynia (Tab. 52). Such ports include the non-municipalized ports of the Vistula Lagoon (Zalew Wiślany) located on the internal sea waters. The following fees are charged at those ports: • tonnage fee • wharfage • passenger fee.

224

III. ESTIMATE OF BENEFITS

Type of ship Passenger and cruise ships Sport and tourist boats

Assumption Average distance of transport of 1 passenger (km) Average ship size (number of seats) Number of lockages compared to the total number of ships Average boat size (number of seats) Frequency of lockages compared to the total number of boats

Average size (number of seats) Kayaks and other rowboats Frequency of lockages compared to the total number of boats

20 50 from 0.1 at Stage I to 0.3 at Stage III 5 from 0.03 at Stage I to 0.2 at Stage III 3 from 0.01 at Stage I to 0.07 at Stage III

Tab. 47. Average transport distance, the size of passenger ships and other watercraft, and the frequency of lockages / source: own work

Tonnage fee As a matter of fact, a tonnage fee is typical of seaports, but it can be assumed that with the development of inland waterways and the development of passenger shipping new fees will be introduced in an amount similar to the fees applicable in seaports of a local character. The rates set out in the “Tariff of port fees at seaports that are not critical to the national economy in the sea ports and harbours of the Maritime Office in Gdynia” are assumed as the basis for calculating the tonnage fee, i.e. an annual fee of EUR 6/1. The corresponding tariff prepared by the Maritime Office in Szczecin specifies much higher fees (Tab. 53). The study assumes that tonnage fees will be: • introduced for passenger and cruise ships • for sea and inland ports and harbours, similar to those specified the Maritime Office in Gdynia – 6 EUR/GT per year, meaning PLN 25/GT at an exchange rate of PLN 4.2/EUR • 300 GT for an average ship tonnage. Because of the lack of information on the gross tonnage of inland barges, the following formula has been used to determine their GT: 1 GT = 0.25 m3 V, while: V = L x B x H, where: L – total length, B – width H – height of the vessel. An average capacity of 300 GT per vessel has been assumed based on the above formula and the average sizes of inland vessels56.

Wharfage The analysis of the wharfage for passenger fleet vessels is based on the studies on International Waterway E-70. It is assumed that:

56 Analiza społeczno-ekonomiczna dla przedsięwzięcia pn. "Rewitalizacja śródlądowej drogi wodnej relacji zachód-wschód obej-

mującej drogi wodne: Odra, Warta, Noteć, Kanał Bydgoski, Brda, Wisła, Nogat, Szkarpawa oraz Zalew Wiślany (planowana droga wodna E70 na terenie Polski)" [Socio-Economic Analysis for the Project titled "Redevelopment of the inland waterway: east – west, which comprises the following watercourses: Oder, Varta, Noteć, Bydgoszcz Canal, Brda, Vistula, Nogat, Szkarpawa and Vistula Lagoon (planned E70 waterway in Poland)"], Vectum – Analizy Transportowe, Szczecin-Gdańsk 2011, p. 42.

225

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Projected increase in number of passenger and cruise ships (thousand)

Estimated increase in the number of seat-kilometres of passenger ships and cruise passing through the sluice or slipway (thousand)

Estimated increase in lockages of sport and tourist ships passing through the sluice or ramp (thousand)

Estimated number of kayaks and rowboats passing through the lock or ramp (thousand)

0.0

0.00

2113

0.1

0.6

0.01

4224

0.2

0.4

0.01

6334

0.3

0.7

0.02

8443

0.4

1.1

0.03

10,551

0.5

1.4

0.37

12,657

0.9

3.5

0.38

14,762

1.1

4.1

0.77

16,866

1.3

4.8

0.78

18,969

1.4

5.5

0.80

21,071

1.7

7.9

1.71

23,171

1.9

9.4

1.73

25,271

2.0

10.9

1.75

27,369

2.2

12.4

1.77

29,466

2.8

13.1

1.79

31,562

3.0

13.2

1.81

31,657

3.0

16.0

1.83

31,751

3.0

16.1

1.85

31,844

3.0

18.2

1.87

31,936

3.0

18.3

1.89

32,027

3.0

18.4

3.18

34,117

3.2

20.5

4.04

36,206

3.4

21.6

4.07

38,293

3.6

21.8

4.10

40,380

3.8

22.9

4.13

42,466

4.2

34.4

4.99

44,551

4.5

36.1

5.02

46,635

7.0

36.2

5.05

48,718

7.3

50.5

5.93

50,800

7.6

50.7

5.97

Year

Tab. 48. Projected increase in the number of passenger and cruise ships, sport and tourist ships, kayaks and rowboats passing through the lock / source: own work

• passenger and cruise ships lease the dock over the entire year • average size of a leased area is 100 m2 • wharfage for passenger and cruise vessels being established according to the fees for the available flooded area (de facto area of water at the wharf leased by the owner), as defined in the Regulation of the Council of Ministers of 18.01.2006, Journal of Laws 2006 No. 13, item 90 (PLN 0.20 annually per m2). 226

III. ESTIMATE OF BENEFITS

Lock

Passenger ships

Sport boats

Other watercraft

Geesthacht

278

5,654

1,226

Lauenburg

3,936

254

Büssau

3,601

304

Rothensee

140

178

130

Hohenwarthe

598

2,386

340

Niegripp

460

1,546

1,083

Parey

1,705

222

Zerben

214

2,880

327

Wusterwitz

240

4,404

323

Brandenburg

397

11,395

739

Schönwalde

2,768

123

Bahnitz

5,548

238

Rathenow

172

815

280

Grütz

3,433

259

Spandau

817

14747

1,237

Tab. 49. The number of passenger ships passing through the selected locks between the basin of the Elbe and the Oder in 2014 / source: Güterverkehrsströme zwischen Elbe und Oder, Freizeitverkehre in den Regionen Berlin, Brandenburg, SchleswigHolstein und Mecklenburg Vorpommern, WSV.de, Stand December 2014 [online], http://www.wsd-ost.wsv.de/service/ Downloads/Gueterverkehrsstroeme_zwischen_Elbe_und_Oder_2014.pdf [access: 12.12.2015]

Type of fee

Rate*

Rate for navigation of passenger and cruise ships

gr 1.80/1 seat-kilometre

Rate for one lockage of passenger or cruise ships

PLN 16.0/lockage

Rate for one lockage of sport and tourist boats

PLN 11.0/lockage

Rate for one lockage of kayak or rowboat

PLN 7.0/lockage

* the rates applicable in 2015 have been maintained in 2016. Tab. 50. The rates of navigation fees for passenger transport on the lower Vistula River assumed in the analysis* / source: own work based on: Announcement of the Minister of Environment of 20 November 2014, “Monitor Polski” [Official Gazette] 2014, No. 0, item 1120

• revenue of the owners of marinas and harbours for handling passenger and cruise vessels for the lower Vistula River has been estimated at PLN 50 per day of stay at the wharf • the revenue of the owners of marinas and harbours for handling sport and tourist vessels for the lower Vistula River in the first year has been estimated at PLN 30 per day of stay at the wharf57 • with the development of tourist traffic58, a passenger fee will be charged, as in the case of seaports; it is assumed that a passenger fee of an amount similar to that applied to cruisers (EUR 0.2/passenger, i.e. PLN 0.84 at the 57 The rates have been estimated on the basis of the research conducted for the International Waterway E-70 using bench-

marking (assuming the fees charged in 2011 as the basis) – PLN 27 per day of stay at the wharf; in addition a small increase in the fee up to PLN 30 has been assumed. (Socio-Economic Analysis for the Project...). 58 Ibid.

227

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Amounts for navigation of passenger and cruise ships

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0.0 38.0 76.0 114.0 152.0 189.9 227.8 265.7 303.6 341.4 379.3 417.1 454.9 492.6 530.4 568.1 569.8 571.5 573.2 574.9 576.5 614.1 651.7 689.3 726.8 764.4 801.9 839.4 876.9 914.4

Amounts for the Amounts for the Amounts for the passage of passenger passage of sport passage of kayaks and cruise ships and tourist ships and other rowboats through the lock or through the lock or through the lock or ramp ramp ramp 0.0 1.7 3.4 5.1 6.8 8.4 15.2 17.7 20.2 22.8 27.0 29.7 32.3 35.0 44.8 48.0 48.1 48.3 48.4 48.5 48.7 51.9 55.0 58.2 61.4 67.9 71.3 111.9 116.9 121.9

0.0 7.0 4.2 7.9 11.7 15.4 38.2 45.6 53.1 60.5 86.9 103.2 119.5 135.9 144.4 145.3 175.9 176.9 200.1 201.2 202.3 225.9 238.1 239.3 251.4 378.8 397.0 398.7 555.7 557.9

Amounts in total

0.0 0.1 0.1 0.2 0.2 2.6 2.6 5.4 5.5 5.6 12.0 12.1 12.3 12.4 12.6 12.7 12.8 13.0 13.1 13.2 22.2 28.3 28.5 28.7 28.9 34.9 35.1 35.4 41.5 41.8

0.0 46.8 83.7 127.2 170.6 216.3 283.9 334.4 382.4 430.3 505.1 562.1 619.0 675.9 732.2 774.1 806.7 809.6 834.8 837.8 849.7 920.2 973.3 1,015.4 1,068.5 1,246.1 1,305.3 1,385.4 1,591.1 1,636.0

Tab. 51. Calculation of incremental income for the RZGW from passenger and tourist transport (PLN thousand) / source: own work

Fee Tonnage fee Wharfage Passenger fee

daily 0.1 0.04

Rate (EUR/GT) monthly 1.0 0.4 EUR 0.2/passenger

annual 6.0 2.4

Tab. 52. The fees for handling passenger vessels with a length up to 50 m charged in those ports that are not critical to the national economy in the competence area of the Maritime Office in Gdynia / source: own work based on: Tariff of port fees at the seaports that are not critical to the national economy in the sea ports and harbours of the Maritime Office in Gdynia, Gdynia 2005

228

III. ESTIMATE OF BENEFITS

Ship length in m Up to 5.5 m 5.5–8 8–10 10–13 13–17 17–20 More than 20

Fee in EUR daily

monthly

annual

2 3 4 5 6 8 10

30 45 60 75 90 120 150

180 270 360 450 540 720 900

Tab. 53. Tonnage fees for sport and recreational ships in the competence area of the Maritime Office in Szczecin / source: own work based on: Taryfa opłat portowych w portach morskich niemających podstawowego znaczenia dla gospodarki narodowej oraz przystaniach morskich [Tariff of port fees at the seaports that are not critical to the national economy and seaports] [online], http://www.ums.gov.pl/pdf/zw/ZW_4z.pdf [access: 8.01.2016]

exchange rate of PLN 4.2/EUR) will be charged from Stage II of the development of the Vistula River waterway from the passengers of passenger and cruise ships • navigation season will be 60 days. Under these assumptions, the following have been calculated: • port revenues from passenger and cruise ships (Tab. 54) • revenue of the owners of marinas and harbours for handling sport and tourist ships (Tab. 55) • total revenue of ports from water tourism in the area of the lower Vistula River, amounting to: –– after completion of Stage I of the development of the lower Vistula River – PLN 1,882 thousand annually –– after completion of Stage II – PLN 5,059 thousand annually –– after completion of Stage III – PLN 5,890 thousand annually (Tab. 56).

Tourist spending Revenues from spending by tourists who use the waterway (Tab. 57) were adopted at the level estimated by the EU at EUR 32 (PLN 134.4 at an exchange rate of PLN 4.2/EUR 1)59.

Tourist multiplier The initial tourist spending begins an additional series of expenditure and income, which provides additional benefits in the sectors directly and indirectly associated with the tourist services, thus supporting the local economy. Therefore, tourism has an impact on many different areas of socio-economic life, it stimulates economic growth and thereby employment in other sectors of the economy (tourism multiplier effect). In this way, tourism helps to stimulate regional development. The direct economic effect is obtained in the part of the local economy that directly meets the demand of tourists visiting the particular location. Tourist expenditures on accommodation, meals, sightseeing, transport, souvenirs etc. form revenues for local tourism companies and wages (income) for their employees (residents). Therefore, any growth in tourist spending (tourist demand) increases local profits and wages. On the other hand, the indirect economic effect includes the revenue for the part of the local economy only indirectly related to tourism, and finally it is often difficult to link the induced effect to tourism.

59 K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 1,

Społeczno-ekonomiczne przesłanki... [Analysis of the Socio-Economic Impact of the Development of the lower Vistula, stage 1, Socio-Economic Reasons for....], Sopot 2015, p 69.

229

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development Year stage 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Port revenues from passenger and cruise ships (PLN thousand)

Number of passenger ships (thousand)

Number of passengers (thousand)

Tonnage fee

Revenue from wharfage

Revenues from wintering fees

Passenger fee

Total

33 40 47 53 60 67 73 80 87 93 100 107 113 120 127 133 133 133 133 133 133 140 147 153 160 167 173 180 187 193

500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 2,000 2,000 2,000 2,000 2,000 2,100 2,200 2,300 2,400 2,500 2,600 2,700 2,800 2,900

250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1,000 1,000 1,000 1,000 1,000 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 1,450

100 120 140 160 180 200 220 240 260 280 300 320 340 360 380 400 400 400 400 400 400 420 440 460 480 500 520 540 560 580

1 1 1 1 1 1 1 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4

0 0 0 0 0 0 0 0 0 0 1,260 1,344 1,428 1,512 1,596 1,680 1,680 1,680 1,680 1,680 1,680 1,764 1,848 1,932 2,016 2,100 2,184 2,268 2,352 2,436

351 421 491 561 631 701 771 842 912 982 2,312 2,466 2,620 2,774 2,929 3,083 3,083 3,083 3,083 3,083 3,083 3,237 3,391 3,545 3,699 3,853 4,007 4,162 4,316 4,470

Tab. 54. Port revenues from passenger and cruise ships / source: own work

A tourism multiplier category (M) can be applied to estimate the total effects caused by the initial tourist spending.

where: – marginal propensity to spend beyond the basic expenditure for tourism purposes, ∆C – increase in consumer spending beyond the basic expenditure for tourism purposes, ∆Y – increase in income of the population. The tourism multiplier applies to the direct tourism spending. The tourism multiplier calculated for 2006–2014 (Tab. 58) in Poland was 2.67. The study assumes a multiplier of 2.7 (Tab. 59). 230

III. ESTIMATE OF BENEFITS

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Annual revenues of the owners of marinas Annual revenue from servicing and harbours for handling sport and kayaks and other rowboats tourist ships Number of passenger Number of kayaks Annual Annual revenue ships with a length and other revenue (PLN thousand) of 15 m rowboats (PLN thousand) 200 360 111 200 233 420 111 200 217 390 111 200 233 420 111 200 250 450 111 200 267 480 167 300 283 510 167 300 300 540 167 300 317 570 167 300 333 600 167 300 367 660 194 350 400 720 194 350 433 780 194 350 467 840 194 350 483 870 194 350 483 870 194 350 500 900 194 350 500 900 194 350 500 900 194 350 500 900 194 350 500 900 194 350 500 900 222 400 517 930 222 400 517 930 222 400 533 960 222 400 533 960 222 400 550 990 222 400 550 990 222 400 567 1,020 222 400 567 1,020 222 400

Total (PLN thousand) 560 620 590 620 650 780 810 840 870 900 1,010 1,070 1,130 1,190 1,220 1,220 1,250 1,250 1,250 1,250 1,250 1,300 1,330 1,330 1,360 1,360 1,390 1,390 1,420 1,420

Tab. 55. Revenue of the owners of marinas and harbours for handling sport and tourist ships / source: own work

With a 60-day navigation period, the benefits for the area, including direct, indirect and induced effects, would range from PLN 472 million in the first year of construction to PLN 1814 million after its completion. However, considering the fact that the development of tourism would extend the tourist season to at least 90 days, the benefits would increase by 50% compared to the 60-day season, and would amount to: • PLN 708 million in the first year of the development of the lower Vistula River • PLN 1.6 billion in the 10th year • PLN 2.1 billion in the 20th year • PLN 2.7 billion in the year of completion. 231

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Port income for handling ships (PLN thousand) passenger and cruise ships

sport and tourist ships

total

351 421 491 561 631 701 771 842 912 982 2,312 2,466 2,620 2,774 2,929 3,083 3,083 3,083 3,083 3,083 3,083 3,237 3,391 3,545 3,699 3,853 4,007 4,162 4,316 4,470

560 620 590 620 650 780 810 840 870 900 1,010 1,070 1,130 1,190 1,220 1,220 1,250 1,250 1,250 1,250 1,250 1,300 1,330 1,330 1,360 1,360 1,390 1,390 1,420 1,420

911 1,041 1,081 1,181 1,281 1,481 1,581 1,682 1,782 1,882 3,322 3,536 3,750 3,964 4,149 4,303 4,333 4,333 4,333 4,333 4,333 4,537 4,721 4,875 5,059 5,213 5,397 5,552 5,736 5,890

Tab. 56. Port revenue from water tourism in the area of the lower Vistula River / source: own work

3.6. Difficult to measure benefits

In addition to the previously mentioned benefits, the development of the lower Vistula River would generate many different results with an impact on the development of those areas located on the waterway. These effects, which are usually difficult to measure, may be important in the evaluation of the project, although the significance of individual effects can vary with the development priorities. The additional effects could be grouped according to their purpose, namely benefits aimed at: • implementation of EU standards in Poland • acceleration of economic growth • meeting of social needs.

232

III. ESTIMATE OF BENEFITS

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Passengers of passenger and cruise ships (thousand)

Tourists using sport and tourist boats (thousand)

Tourists using kayaks and other rowboats (thousand)

Number of tourists in total (in thousand)

Tourist spending (PLN million)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 2,000 2,000 2,000 2,000 2,000 2,100 2,200 2,300 2,400 2,500 2,600 2,700 2,800

600 700 650 700 750 800 850 900 950 1000 1100 1200 1300 1400 1450 1450 1500 1500 1500 1500 1500 1500 1550 1550 1600 1600 1650 1650 1700

200 200 200 200 200 300 300 300 300 300 350 350 350 350 350 350 350 350 350 350 350 400 400 400 400 400 400 400 400

1,300 1,500 1,550 1,700 1,850 2,100 2,250 2,400 2,550 2,700 2,950 3,150 3,350 3,550 3,700 3,800 3,850 3,850 3,850 3,850 3,850 4,000 4,150 4,250 4,400 4,500 4,650 4,750 4,900

175 202 208 228 249 282 302 323 343 363 396 423 450 477 497 511 517 517 517 517 517 538 558 571 591 605 625 638 659

2,900

1700

400

5,000

672

Tab. 57. Spending by tourists who use the waterway in the area of the lower Vistula River / source: own work

All these groups are closely linked to each other, but in each of them it is possible to distinguish the effects of the development of the lower Vistula River specific to that particular group.

EU standards The group of effects aimed at implementing the EU standards include primarily the following: • levelling the differences in regional development60 • fulfilment of Poland’s obligations to increase the share of renewable energy sources 60 More on the subject in: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania

dolnej Wisły, etap 1. Społeczno-ekonomiczne przesłanki [Analysis of the Socio-Economic Impact of the Development of the lower Vistula, stage 1, Socio-Economic Reasons for.

233

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Years

Disposable income per capita in household – Y (PLN)

Total expenditure per capita in household (PLN)

Expenditure on recreation and culture per capita in household (PLN)

Consumer spending beyond the basic expenditure on recreation and culture per capita in household – C (PLN)

2006

834.68

744.81

53.2

691.61

2014

1,340.44

1,078.74

70.13

1,008.61

Tourism multiplier in 2006–2014 Increase in consumer spending beyond the basic expenditure on recreation and tourism – ∆C

317

Increase in disposable income – ∆Y Marginal propensity toward consumer spending beyond the basic expenditure on recreation and culture – ∆C/∆Y

505.76

Tourism multiplier – M

0.6267795 2.679381225

Tab. 58. Estimated tourism multiplier in the area of the lower Vistula River / source: own work based on: K. WojewódzkaKról, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 2, Badanie popytu na przewozy drogą wodną dolną Wisłą [Analysis of the Socio-Economic Impact of the Development of the Lower Vistula, stage 2. Analysis of Demand for Transport through the Lower Vistula River waterway], Energa SA, Sopot 2015

• the need to increase energy security • improvements in transport safety.

Economy The development of the lower Vistula River can accelerate the economic growth in the regions primarily through: • development of the building material industry by generating long-term demand for this type of product • development of river shipyards, which after years of huge success have been left with mainly foreign orders; the development of inland waterway transport generating a constant demand for an inland fleet is an opportunity to restore the shipbuilding industry in Poland to its former position and to ensure its growth • development of tourism and tourist infrastructure.

Society The most important social effects are: • employment growth • removal of the pathologies resulting from unemployment • increased wealth of society. Adaptation of Poland to the EU standards is a challenge resulting from the policy of the European Union, presented in various documents – as a member of the EU, Poland is committed to fulfilling the mutually agreed obligations. Even though most of them can be achieved in various ways, the fact that the development of the lower Vistula River makes it possible to achieve several objectives at the same time is in favour of this project. The last of the above-mentioned objectives (increased transport safety) has been taken into account in the calculation of benefits, but the others are difficult to measure, although their importance in the socio-economic development of Poland should not be underestimated.

Energy security In the light of recent experiences, energy security has become one of the most urgent tasks. As already mentioned, a drought may result in a lack of water (or too high temperature thereof) for cooling purposes in the coal power plants located at the Vistula River. If one large power plant shuts down for this reason, it poses serious problems for 234

III. ESTIMATE OF BENEFITS

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Tourist spending

Economic effect including the tourism multiplier

175

472

202

544

208

562

228

617

249

671

282

762

302

816

323

871

343

925

363

980

396

1,070

423

1,143

450

1,216

477

1,288

497

1,343

511

1,379

517

1,397

517

1,397

517

1,397

517

1,397

517

1,397

538

1,452

558

1,506

571

1,542

591

1,597

605

1,633

625

1,687

638

1,724

659

1,778

672

1,814

Tab. 59. Direct, indirect and water tourism-induced income in the area of the lower Vistula River (PLN million) / source: own work

the entire power system. This is because a shutdown of one power plant overloads another, which in turn can also be shut down, leading to a chain reaction called a blackout. The reach of this occurrence can be regional, but also international. The consequences in the scenarios look quite dramatically and are extremely expensive. The power plant must be restarted in such a situation, but it requires a large amount of energy, which cannot be obtained from the deactivated coal power plants. Hydropower plants can be of help under such circumstances, as they can be activated in a short time to transfer the electricity needed to run the coal power plants. 235

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

The current intervention works to mitigate the effects of drought for the power system do not solve the problem in a comprehensive manner. For example, there are plans to build a temporary barrage on the Vistula below the power plant in Kozienice, which struggled with the lack of water for cooling in 2015; this is supposed to temporarily prevent the recurrence of problems with meeting the needs of the plant. This type of short-term measure is a waste of funds that should be dedicated to a comprehensive solution to the problem of threats to the energy sector in connection with droughts. The KDW provides such a solution – aimed at enabling stable water levels to meet the water needs of the thermal energy sector.

Economy The EU’s regional policy is closely linked to the opportunities for accelerating economic growth, especially in poorer regions. Some effects of developing tourism in the regions located on the lower Vistula River have already been estimated, but many of them are not reflected in the calculations, including in particular the creation of the hotel and catering infrastructure. Other opportunities important for the regions in connection with the development of the lower Vistula River are the construction industry and reactivation of the shipbuilding industry. Creation of infrastructure always attracts investors in need of efficient transport routes, so the additional effect could be the development of industry, particularly an industry that requires transport routes involving seaports. Another effect very important for the local communities is to ensure socio-economic ties thanks to the new infrastructure links (road or railway routes running along the crest of the dam).

Employment All the previously mentioned measures related to the management of the lower Vistula River generate demand for labour, which may be a priority for the socio-economic policy due to high unemployment. As already mentioned: • the demand for labour to develop the land for the modal integrated logistics centre with an area of 100 ha ranges from 837 to 1013 workers61 • it is estimated that the number of people working in the tourist industry is approx. 760 thousand, which represents 4.7% of all employees; according to expert estimates one job in the tourism sector generates 3–4 additional jobs in the tourism-related infrastructure62. If we also consider employment in the growing shipbuilding industry, the already mentioned construction industry and the operation of newly established water infrastructure, then the effect of employment growth, not included in the previous calculations, may prove to be a factor determining the investment decision. This is mainly because employment growth would be accompanied by specific savings on unemployment benefits.

61 Ibidem, p. 45. 62 Ibidem, p. 66.

236

IV. Analysis of results

4.1. Estimate of the costs and benefits for the development of the lower Vistula River The analysis of costs shows that the zero investment option would generate costs for maintenance and investments, in some years reaching almost 50% of the expenditure that must be incurred in the investment option (Fig. 8). The net cost of the project with the agreed construction schedule at constant prices will range from PLNÂ 462.3Â million to PLN 1666.1 million in the 30-year period of the project implementation (Fig. 9). The measurable benefits of the development of the lower Vistula River are very diverse and show an upward trend with continuing progress of the project (Tab. 60 and 61, Fig. 10).

Benefit structure The benefit structure in the 30th year of the development of the lower Vistula River is shown in Fig. 11. A summary of the total net costs, benefits and net value of the Lower Vistula Cascade in the baseline scenario covering the 30-year reference period is shown in Tab. 62. The analysis shows that the project can generate positive streams of net value already in the first year of the investment project. The summary of net costs and benefits shows that in no year of the investment project are the costs higher than the benefits (Fig. 12, 13).

237

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Fig. 8. Summary of the total capital expenditures and maintenance costs in the investment and zero investment options for the development of the lower Vistula River in PLN million (names of the barrages are marked in the years of their commissioning) / source: own work

4.2. Ratio analysis for the profitability of the development of the lower Vistula River Economic net present value (ENPV) of the KDW in the analysed period (30 years) at a discount rate of 5% is estimated at PLN 83.8 billion, while the benefits/costs ratio (B/C) is estimated at 6.11 (Tab. 63). These numbers prove the high profitability of the project for the general public. This high profitability of the investment is primarily caused by the significant impact of the project on: • an increase in turnover of the seaports at the mouth of the Vistula River and the related significant additional income to the state budget (the present value of income achieved in this respect over 30 years of the project implementation is estimated at PLN 40.7 billion) • a reduction of losses resulting from the lower risk of flooding (the present value of the savings is estimated at PLN 21.8 billion) • an increase in income from tourism (the present value of this income is estimated at PLN 17.0 billion) 238

IV. ANALYSIS OF RESULTS

Fig. 9. Net costs of the project (PLN million) / source: own work

• an increase in income from increased electricity production (it is estimated that as a result of lower production costs the present value of additional income over 30 years will be PLN 9.7 billion) • a reduction of losses related to drought in agriculture (the present value of the savings is estimated at PLN 7.3 billion). A relatively less important role in developing the economic net present value (ENPV) of the KDW is played by the benefit resulting from the ability to use inland waterway transport instead of road transport, as well as the benefits of the lower cost of the risk of fire in forests. The present value of the benefits achieved in this respect over the 30 years covered by the economic analysis is estimated at: • PLN 2.2 billion – for the reduction in transport costs • PLN 0.6 billion – for the reduction in fire loss in forests • PLN 7.88 million – for the reduction in accident costs • PLN 32.9 million – for the reduction in air emissions.

239

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Savings for transport users

Income for the RZGW from the use of the waterway by cargo ships

Income for the RZGW from the use of the waterway by passenger and tourist ships 0

226

282

227

262

2,778

140

127

2,963

273,000

7,353

331

171

7,256

281,500

14,854

645

216

234

13,565

290,000

22,354

1,041

284

358

18,892

597,000

67,355

3,126

334

1,093

52,673

1,230,000

119,856

5,808

382

1,964

86,733

1,266,000

149,857

7,297

430

2,471

100,345

1,956,000

149,857

7,501

505

2,480

92,851

2,016,000

149,858

7,501

562

2,483

85,915

2,076,000

149,859

7,502

619

2,480

79,495

2,139,000

149,859

7,503

676

2,472

73,554

2,202,000

179,860

9,036

732

2,952

81,678

3,024,000

209,861

10,570

774

3,421

88,173

3,895,000

209,862

10,571

807

3,392

81,575

4,010,000

209,862

10,572

810

3,358

75,469

4,130,000

209,863

10,572

835

3,321

69,817

4,255,000

209,864

10,573

838

3,279

64,586

4,385,000

209,864

10,573

850

3,234

59,744

4,515,000

209,865

10,574

920

3,186

55,263

4,650,000

209,866

10,574

973

3,136

51,115

4,790,000

209,866

10,575

1,015

3,083

47,276

4,935,000

209,867

10,575

1,069

3,029

43,723

5,080,000

359,868

17,306

1,246

5,098

69,334

6,282,000

449,868

21,678

1,305

6,249

80,149

8,624,000

539,869

26,050

1,385

7,349

88,936

11,110,000

539,870

26,051

1,591

7,196

82,228

11,440,000

539,870

26,052

1,636

7,042

76,020

11,780,000

Year

Savings on the Additional reduced costs Savings on the national income of pollutant reduction of from an increase emissions in accidents in the turnover transport of seaports

Tab. 60. Summary of individual groups of benefits for the KDW in the 30-year reference period in PLN thousand / source: own work

Net value after the implementation of the KDW It should be borne in mind that the KDW will be an especial source of benefits after the completion of the project. This is because a characteristic feature of infrastructure facilities is usually an increase in the intensity of their use observed over time and the related increase in overall efficiency.

240

IV. ANALYSIS OF RESULTS

Revenues from handling passenger ships in ports and marinas

Income from tourism, including the tourism multiplier

Total benefits of the development of the lower Vistula River

35,800

911

472,000

2,015,711

35,800

1,041

544,000

2,118,717

450,000

35,800

1,081

562,000

2,168,344

960,755

450,000

35,800

1,181

617,000

2,534,769

274,000

995,007

450,000

35,800

1,281

671,000

2,723,791

274,000

1,030,697

450,000

35,800

1,481

762,000

2,873,492

393,000

1,067,890

450,000

35,800

1,581

816,000

3,404,200

393,000

1,106,655

450,000

35,800

1,682

871,000

4,212,718

535,000

1,147,067

450,000

35,800

1,782

925,000

4,575,392

535,000

1,189,200

450,000

35,800

1,882

980,000

5,408,282

657,000

1,233,136

450,000

35,800

3,322

1,070,000

5,718,452

657,000

1,278,958

450,000

35,800

3,536

1,143,000

5,890,613

657,000

1,326,754

450,000

35,800

3,750

1,216,000

6,068,259

790,000

1,376,618

450,000

35,800

3,964

1,288,000

6,380,446

790,000

1,428,645

450,000

35,800

4,149

1,343,000

7,349,852

948,000

1,482,937

450,000

35,800

4,303

1,379,000

8,507,839

948,000

1,539,601

450,000

35,800

4,333

1,397,000

8,690,941

948,000

1,598,748

450,000

35,800

4,333

1,397,000

8,863,952

948,000

1,660,497

450,000

35,800

4,333

1,397,000

9,045,038

948,000

1,724,969

450,000

35,800

4,333

1,397,000

9,234,242

948,000

1,792,293

450,000

35,800

4,333

1,397,000

9,426,691

948,000

1,862,605

450,000

35,800

4,537

1,452,000

9,682,750

1,039,000

1,936,047

450,000

35,800

4,721

1,506,000

10,037,232

1,039,000

2,012,767

450,000

35,800

4,875

1,542,000

10,291,257

1,039,000

2,092,922

450,000

35,800

5,059

1,597,000

10,568,044

1,131,000

2,176,674

450,000

35,800

5,213

1,633,000

12,166,539

1,131,000

2,264,196

450,000

35,800

5,397

1,687,000

14,756,642

1,131,000

2,355,668

450,000

35,800

5,552

1,724,000

17,475,609

1,131,000

2,451,279

450,000

35,800

5,736

1,778,000

17,948,751

1,219,000

2,551,227

450,000

35,800

5,890

1,814,000

18,506,537

Savings on the cost of energy production

Savings on flood losses

Savings on losses caused by drought in agriculture

Savings on fire losses in forests

191,000

866,000

450,000

191,000

896,310

450,000

191,000

927,876

191,000

Tab. 60. Summary of individual groups of benefits for the KDW in the 30-year reference period in PLN thousand / source: own work

Residual value In the analysis of profitability of the KDW the completion of the last barrage in Warsaw is planned for the last (30th) year of the analysis. Thus, it is expected that the net value of the project will be even greater in the period of actual operation, which will begin after the 30th year of the analysis. As mentioned in the first chapter, the benefits generated from the last year of the reference period until the full depreciation of the barrages (i.e. until the end of the project life cycle) correspond to the residual value of the project. After this period, it will be necessary to

241

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula Transport in Year development total stage 0 0 1 519 2 503 3 278,906 4 296,532 5 319,298 6 639,645 7 1,354,247 8 1,480,361 9 2,215,970 10 2,268,689 11 2,321,757 12 2,378,336 13 2,435,388 14 3,297,526 15 4,207,025 16 4,315,400 17 4,429,261 18 4,548,573 19 4,673,302 20 4,798,415 21 4,928,888 22 5,064,691 23 5,205,800 24 5,347,194 25 6,733,606 26 9,181,944 27 11,772,204 28 12,095,345 29 12,428,984

Tourism 472,911 545,088 563,165 618,308 672,452 763,697 817,865 873,016 927,164 982,312 1,073,827 1,147,098 1,220,369 1,292,640 1,347,881 1,384,077 1,402,140 1,402,143 1,402,168 1,402,171 1,402,183 1,457,457 1,511,694 1,547,890 1,603,128 1,639,459 1,693,702 1,730,937 1,785,327 1,821,526

Savings on the cost of energy production 191,000 191,000 191,000 191,000 274,000 274,000 393,000 393,000 535,000 535,000 657,000 657,000 657,000 790,000 790,000 948,000 948,000 948,000 948,000 948,000 948,000 948,000 1,039,000 1,039,000 1,039,000 1,131,000 1,131,000 1,131,000 1,131,000 1,219,000

Savings on flood losses 866,000 896,310 927,876 960,755 995,007 1,030,697 1,067,890 1,106,655 1,147,067 1,189,200 1,233,136 1,278,958 1,326,754 1,376,618 1,428,645 1,482,937 1,539,601 1,598,748 1,660,497 1,724,969 1,792,293 1,862,605 1,936,047 2,012,767 2,092,922 2,176,674 2,264,196 2,355,668 2,451,279 2,551,227

Savings on losses caused by drought in agriculture 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000

Savings on fire losses in forests

Total

35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800 35,800

2,015,711 2,118,717 2,168,344 2,534,769 2,723,791 2,873,492 3,404,200 4,212,718 4,575,392 5,408,282 5,718,452 5,890,613 6,068,259 6,380,446 7,349,852 8,507,839 8,690,941 8,863,952 9,045,038 9,234,242 9,426,691 9,682,750 10,037,232 10,291,257 10,568,044 12,166,539 14,756,642 17,475,609 17,948,751 18,506,537

Tab. 61. Benefits by type – baseline scenario in PLN thousand / source: own work

incur new capital expenditure on modernization and replacement of the fixed assets that constitute the barrages. However, the estimation of the residual value of the KDW is very complex. The difficulties arise from: • the fact that the barrages are constructed in stages and are put into operation successively, so the operating period of some barrages will overlap with the investment period for other barrages • diverse operating periods of the barrages after the 30-year reference period (assuming that the period of normal operation of the barrage is 40 years, it would mean that the residual value after the reference period should be calculated for a 15 year period for the barrage in Siarzewo, whereas in Warsaw it would be calculated for a 40 year period) • no information on the rules and methods of depreciation of fixed assets constituting the barrage. 242

IV. ANALYSIS OF RESULTS

Fig. 10. Structure of benefits from the development of the lower Vistula River in PLN million / source: own work

Fig. 11. Structure of benefits from the development of the lower Vistula River in the last year of the investment project (%) / source: own work

Therefore, the benefits generated after the completion of the KDW are estimated in a simplified manner. As already demonstrated, in the last year of the forecast the net value of the Lower Vistula Cascade will amount to PLN 16.8 billion. Assuming that during the 15 year period after the completion of the investment project the net value will increase, by 3% on average, it is possible to estimate them at PLN 254.3 billion for the last year of the reference period, i.e. the 30th year of the investment (while maintaining the current social discount rate). On the other hand, the present net value in the first year of the construction of the Lower Vistula Cascade is estimated at PLN 61.8 billion. 243

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

STAGE III

STAGE II

STAGE I

Lower Vistula development stage

Year

Net costs

Benefits

Net value

Discount factor*

Discounted net costs

Discounted benefits

Discounted net value

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

–487,000 –462,000 –962,000 –1,462,000 –1,445,000 –1,445,000 –1,468,000 –1,468,000 –1,160,000 –1,160,000 –1,184,000 –684,000 –684,000 –1,212,000 –712,000 –712,000 –1,083,000 –712,000 –712,000 –1,083,000 –1,113,000 –613,000 –613,000 –613,000 –1,113,000 –1,666,000 –666,000 –666,000 –1,166,000 –1,696,000

2,015,711 2,118,717 2,168,344 2,534,769 2,723,792 2,873,492 3,404,200 4,212,719 4,575,392 5,408,283 5,718,452 5,890,613 6,068,260 6,380,446 7,349,852 8,507,839 8,690,941 8,863,953 9,045,037 9,234,242 9,426,691 9,682,751 10,037,232 10,291,258 10,568,044 12,166,539 14,756,643 17,475,609 17,948,752 18,506,537

1,528,711 1,656,717 1,206,344 1,072,769 1,278,792 1,428,492 1,936,200 2,744,719 3,415,392 4,248,283 4,534,452 5,206,613 5,384,260 5,168,446 6,637,852 7,795,839 7,607,941 8,151,953 8,333,037 8,151,242 8,313,691 9,069,751 9,424,232 9,678,258 9,455,044 10,500,539 14,090,643 16,809,609 16,782,752 16,810,537

1.0000 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.7107 0.6768 0.6446 0.6139 0.5847 0.5568 0.5303 0.5051 0.4810 0.4581 0.4363 0.4155 0.3957 0.3769 0.3589 0.3418 0.3256 0.3101 0.2953 0.2812 0.2678 0.2551 0.2429

–487,000 –440,000 -872,562 –1,262,931 –1,188,805 –1,132,195 –1,095,444 –1,043,280 –785,134 –747,746 –726,873 –399,921 –380,877 –642,749 –359,608 –342,484 –496,135 –310,643 –295,851 –428,580 –419,478 –220,032 –209,554 –199,575 –345,106 –491,974 –187,306 –178,387 –297,439 -412,037

2,015,711 2,017,826 1,966,752 2,189,629 2,240,870 2,251,456 2,540,266 2,993,901 3,096,805 3,486,227 3,510,634 3,444,119 3,379,034 3,383,687 3,712,174 4,092,416 3,981,420 3,867,313 3,758,400 3,654,303 3,552,821 3,475,549 3,431,226 3,350,538 3,276,811 3,592,813 4,150,169 4,680,813 4,578,612 4,496,095

1,528,711 1,577,826 1,094,189 926,698 1,052,065 1,119,261 1,444,822 1,950,620 2,311,672 2,738,481 2,783,760 3,044,199 2,998,157 2,740,937 3,352,566 3,749,932 3,485,285 3,556,670 3,462,549 3,225,723 3,133,343 3,255,518 3,221,673 3,150,963 2,931,706 3,100,838 3,962,863 4,502,426 4,281,173 4,084,058

* a discount rate of 5.0% is used in the calculations Tab. 62. Calculation of net value for the Lower Vistula Cascade – baseline scenario (PLN thousand) / source: own work

4.3. Investment sensitivity analysis Critical variables of the KDW As already mentioned in the first chapter, the critical variables of the project are considered those variables whose change by ±1% results in a change of the ENPV by at least 1%. This type of variable should be the most disaggregated values to avoid their cumulative impact on the project profitability. The following are assumed as critical values in the sensitivity analysis for the KDW: • volume of traffic on the lower Vistula River • amount of capital expenditure. 244

IV. ANALYSIS OF RESULTS

Fig. 12. Net costs and benefits of the development of the lower Vistula River (PLN billion) / source: own work

In the case of this project a change in these parameters by 1% does not significantly reduce the profitability of the analysed investment project. Assuming that the transport on the lower Vistula River is 1% lower than in the baseline scenario, this would mean a reduction of the ENPV by only 0.81%. In contrast, a growth in capital expenditure by 1% would decrease the ENPV compared to the baseline scenario by only 0.37% (Tab. 64).

Sensitivity analysis for the KDW According to the recommendations contained in the “Guide to Cost-Benefit Analysis of Investment Projects”63, the sensitivity analysis for the KDW has been performed for the following levels of deviations: • decrease in the volume of cargo transport by 20% • increase in capital expenditure by 25% • simultaneous decrease in cargo transport by 20% and increase in capital expenditure by 25% (Tab. 65). The studies show that the analysed project is not significantly sensitive to changes in the aforementioned variables.

63 Przewodnik po analizie kosztów i korzyści projektów inwestycyjnych. Narzędzie analizy ekonomicznej polityki spójności

2014–2020 [Guide to the Cost-Benefit Analysis of Investment Projects. Economic...

245

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Fig. 13. Discounted net costs and benefits (PLN billion) / source: own work

Item

Value

Total discounted benefits (PLN million)

100,168.4

Total discounted net costs (PLN million)

16,399.7

Economic net present value (PLN million)

83,768.7

Benefits/costs ratio (B/C)

6.11

* since the estimated net values of the project throughout the forecast period are always positive, it is impossible to calculate the economic rate of return (ERR); in this case there is no discount rate that would allow the matching the total benefits with net costs of the project. Tab. 63. Economic analysis indicators for the development of the lower Vistula River / source: own work

246

IV. ANALYSIS OF RESULTS

Baseline scenario

Decrease in transport by 1% compared to the baseline scenario

Increase in expenditure by 1% compared to the baseline scenario

Total discounted benefits (PLN million)

100,168.4

99,489.3

100,168.4

Total discounted net costs (PLN million)

16,399.7

16,708.8

Economic net present value (ENPV) (PLN million)

83,768.7

83,089.6

83,459.6

6.11

6.07

5.99

Item

Benefits/costs ratio (B/C)

Tab. 64. Impact of decrease in transport by 1% and increase in capital expenditure by 1% on the profitability of the KDW / source: own work

Baseline scenario

Decrease in the volume of transport by 20%

Increase in capital expenditure by 25%

Simultaneous decrease in cargo transport by 20% and increase in capital expenditure by 25%

Total discounted benefits (PLN million)

100,168.4

91,206.4

100,168.4

91,206.4

Total discounted net costs (PLN million)

16,399.7

20,932.5

Economic net present value (ENPV) (PLN million)

83,768.7

74,806.7

79,235.9

70,273.9

6.11

5.56

4.79

4.36

Item

Benefits/costs ratio (B/C)

Tab. 65. Sensitivity analysis for the development of the lower Vistula River / source: own work

Total discounted benefits (PLN million)

100,168.4

Total discounted net costs (PLN million)

51,730.6

Economic net present value (ENPV) (PLN million)

48,437.8

Economic benefits/costs ratio (B/C)

1.94

Tab. 66. Impact of decrease in capital expenditure by 300% on the profitability of the KDW / source: own work

Total discounted benefits (PLN million)

70,887.1

Total discounted net costs (PLN thousand)

16,399.7

Economic net present value (ENPV) (PLN million)

54,487.4

Economic benefits/costs ratio (B/C)

4.32

Tab. 67. Impact of 3-fold decrease in transport on the profitability of the KDW / source: own work

247

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

Fig. 14. Benefits of the development of the lower Vistula River by type and without selected sources of benefits (PLN million) / Source: own

With a decline in transport by 20%, the KDW investment project is still profitable (ENPV = PLN 74.8 billion, B/C = 5.56). In comparison to the baseline scenario, this means a decrease in the ENPV and the costs/benefits ratio by 10.7% and by 8.9%, respectively. Assuming that the capital expenditure increased by 25%, the net economic net value and the costs/benefits ratio of the project would decrease by 5.4% and 21.7%, respectively. While taking into account the negative deviations from the baseline scenario, the volume of transport (declined by 20%) and capital expenditure (increased by 25%) the project is still effective. If these negative changes occur simultaneously, the ENPV of the KDW is estimated at PLN 70.3 billion and the costs/benefits ratio at 4.36.

248

IV. ANALYSIS OF RESULTS

Threshold values If we assume that the investment project costs increased even 3-fold, the project would still be profitable and would be characterised by a discounted value of benefits nearly twice higher than the discounted net cost of the project (Tab. 66). The profitability of the project would also be maintained if transport decreased 3-fold compared to the baseline scenario (Tab. 67). Therefore, in the analysed investment project there are no threshold values for the aforementioned critical variables (values at which ENPV = 0). This is because, in practice, it is assumed that for most variables their negative deviation even by Âą 100% from the base value is impossible. Therefore, the sensitivity analysis shows that the investment project involving the construction of barrages on the lower Vistula River waterway is affected by only a small risk. The analysis also considered an unlikely option that some groups of benefits will not appear for various reasons. The analysis assumes the lack of benefits in those groups with the greatest impact on the profitability of the investment project - seaports, flood losses, agriculture, tourism, the energy sector and forestry. If the successive largest groups of benefits are eliminated, the costs also do not exceed the benefits in any year of the analysed project (Fig.Â 14). Naturally, this fact is not an argument for not taking into account one of the sectors of the economy in the comprehensive development of the lower Vistula River, it only shows that a change in the situation on global markets that would affect transport, especially sea transport, or favourable hydrological and weather conditions changing the risk of drought or flood, would not disqualify the investment project from the point of view of its profitability. To sum up, it can be concluded that the KDW is an investment project of very high profitability, even if only the measurable effects are taken into account. If we add the effects difficult to measure, as shown in par. 3.6, which under specific socio-economic circumstances may be essential for the economy, the profitability of the project would increase even more. With the presented results of the costs/benefits analysis this project can be fully recommended for implementation, not only as an investment much needed for the economy, but also as highly profitable one.

249

SECTION III. ESTIMATE OF COSTS AND BENEFITS OF A COMPREHENSIVE DEVELOPMENT OF THE LOWER VISTULA

250

SOCIO-ECONOMIC IMPACT OF THE DEVELOPMENT OF THE LOWER VISTULA

SECTION IV IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Table of Contents I. GROSS DOMESTIC PRODUCT AS A SYNTHETIC MEASURE OF ECONOMIC DEVELOPMENT ......253 1.1. The essence of gross domestic product.................................................................................................................253 1.2. GDP calculation methods ......................................................................................................................................254 II. ANALYSIS OF CHANGES OF GDP IN REGIONS LOCATED AT THE LOWER VISTULA .......................260 2.1. GDP in Poland..........................................................................................................................................................260 2.2. GDP in regions located at the lower Vistula River.............................................................................................265 III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA.....................................................................................270 3.1. Estimated GDP growth using expenditure approach........................................................................................270 3.2. The issue of distribution of expenditure on comprehensive development of the lower Vistula.................280 3.3. Estimated GDP growth using gross value added................................................................................................283 3.3.1. Transport ........................................................................................................................................................284 3.3.2. Agriculture and forestry...............................................................................................................................292 3.3.3. Energy sector .................................................................................................................................................295 3.3.4. Tourism...........................................................................................................................................................296 3.3.5. Construction..................................................................................................................................................298 3.4. Taxes...........................................................................................................................................................................306 3.5. Conclusions ..............................................................................................................................................................308

I. Gross domestic product as a synthetic measure of economic development 1.1. The essence of gross domestic product The concept of GDP Gross domestic product (GDP) illustrates the final result of activity of all entities in the national economy. This measure reflects the total final output generated by the production factors inside a country, regardless of who owns them. Gross domestic product can be defined as: • total expenditure on the purchase of final goods1 by economic entities located in the particular country2 • total value added generated by economic entities • total income from production factors achieved by the participants of the production process.

GDP and GNP Another way to measure economic activity is gross national product (GNP), which is also referred to as gross national income (GNI). Gross national product (gross national income) corresponds to the GDP value adjusted by net income from ownership abroad3, meaning the value of final goods and services generated by production factors that are owned only by citizens of the particular country. If we assumed that the economy is closed and is in no way connected with foreign countries (all production factors of the country are located inside its territory and there are no production factors of other countries inside its territory), GDP and GNP would be equal.

Final goods are those that are not used as components or semi-finished products in the production process, but are purchased by end users. 2 P.A. Samuelson, W.D. Nordhaus, Ekonomia [Economics], Vol. 2, Warsaw 2007, p. 33. 3 D. Begg, S. Fischer, R. Dornbusch, Makroekonomia [Macroeconomics], Warsaw 2007, p. 38.

253

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

It is widely recognised that GDP is more reliable than GNP in assessing a country’s economic activity. This is because GDP reflects the value of output generated in the economy of the country, regardless of who owns the production factors located inside a country4, i.e. generated by all the factors within the country. Currently, GDP is recognised by the UN as a standard system for national account, which makes it possible to compare the economic development of different countries. The replacement of GNP with GDP was determined primarily by the following factors: • closer ties to production and employment inside a country • more and more extensive ties between economic activity carried out inside a country and the economy of other countries5.

Nominal and real GDP GDP can be presented as a nominal and real value. Nominal GDP is the output calculated at current (variable) prices, i.e. at prices applied in subsequent years. On the other hand, real GDP is expressed in constant prices in the base year, and therefore it corresponds to nominal values corrected for inflation6. As a result, real GDP is a measure that reflects the physical output volume produced in the economy7, and the annual percentage change in its level is a source of information about the rate of economic growth.

Disadvantages of GDP However, it should be borne in mind that GDP is not a perfect measure, as it does not fully reflect the macroeconomic efficiency of the economy. The primary disadvantages of GDP are associated with the fact that it does not take account of: • external effects of economic development, such as the impact of environmental pollution • value of goods and services produced free of charge (own work capitalised) • country’s public debt8 • the number and structure of population and the structure of income distribution between different social groups • qualitative changes in the economy • information about the quality of life and information about the value of free time. Despite these disadvantages, GDP is currently considered to be the most important concept in macroeconomics and the most synthetic measure of economic activity of countries and regions, which takes into account a wide range of the society’s economic activity.

1.2. GDP calculation methods

The gross domestic product account can be calculated in three ways: • expenditure approach • value added approach • income approach. In terms of expenditure, GDP is the total expenditure on final goods, i.e. goods acquired by the end user – household spending on consumer goods, business spending on the purchase of capital goods (investments) and government spending on the purchase of goods and services. In addition to domestic demand (expenditure on

Ibid., p. 25. Regulowana gospodarka rynkowa. Wybór materiałów do studiowania polityki gospodarczej [Regulated market economy. Selection of materials for economic policy studies], ed. U. Kalina-Prasznic, Kraków 2007, p. 106. 6 The result of division of nominal GDP by real GDP is the so-called GDP deflator, which reflects general prices in the economy. 7 P.A. Samuelson, W.D. Nordhaus, op. cit., p. 40. 8 Wyzwania dla polityki makroekonomicznej na początku XXI wieku [Challenges for macroeconomic policy at the beginning of the twenty-first century], ed. H. Ćwikliński, Gdańsk 2012, p. 59. 5

254

I. GROSS DOMESTIC PRODUCT AS A SYNTHETIC MEASURE OF ECONOMIC DEVELOPMENT

Fig. 1. Gross domestic product account using expenditure approach / source: own work

Item

2010

2011

2012

2013

2014

1,166,323

1,246,100

1,294,672

1,310,108

1,348,616

2. Indirect gross capital formation, of which: gross fixed capital formation

308,040

351,592

342,031

314,498

348,393

293,168

324,075

322,452

311,695

337,526

3. Export of goods and services

578,491

666,408

723,638

766,933

815,639

1. Consumption

4. Import Gross domestic product (1 + 2 + 3 – 4)

607,794

697,543

731,349

735,198

793,551

1,445,060

1,566,557

1,628,992

1,656,341

1,719,097

Tab. 1. GDP account in Poland using expenditure approach for years 2010-2014 at current prices (PLN million) / source: Polska – wskaźniki makroekonomiczne. Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Poland – macroeconomic indicators. Annual macroeconomic indicators PART III], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 23.02.2016]

Fig. 2. Gross domestic product account using value added approach / source: own work based on: Rachunki kwartalne produktu krajowego brutto, zasady metodologiczne [Quarterly accounts of gross domestic product, methodological principles], “Zeszyty metodyczne i klasyfikacje” [Methodological Papers and Classifications], GUS, Warsaw 2010

255

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Item

2010

2011*

2012*

2013

2014

1. Global output

2,902,544

3,204,178

3,307,707

3,350,573

3,438,723

2. Intermediate consumption

1,628,915

1,825,560

1,862,717

1,879,729

1,913,530

3. Gross value added (1-2)

1,273,629

1,378,618

1,444,990

1,470,844

1,525,193

4. Taxes on products less subsidies on products Gross domestic product (3 + 4)

171,431

187,939

184,002

185,497

193,904

1,445,060

1,566,557

1,628,992

1,656,341

1,719,097

* because of the updating of national accounts the data on global output may differ slightly from the values shown in the main statistical yearbook of GUS Tab. 2. GDP account in Poland using value added approach for years 2010-2014 at current prices (PLN million) / source: Polska – wskaźniki makroekonomiczne. Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Poland - macroeconomic indicators. Annual macroeconomic indicators PART III], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 23.02.2016]

consumption9, capital formation), gross domestic product (Fig. 1) also includes the balance of foreign trade (net exports)10 in terms of expenditure.

Expenditure approach The GDP account in Poland is shown based on the macroeconomic categories indicated in Tab. 1.

Value added approach GDP can also be calculated as the total value added resulting from the increase in the value of goods manufactured in the production process, corrected for taxes on products and product subsidies (Fig. 2). At the level of national economy, gross value added is the difference between global output11 and intermediate consumption12. The GDP account in Poland is shown based on the macroeconomic categories indicated in Tab. 2. The scheme for calculating gross domestic product (GDP) shown in Fig. 2 is applied at the level of national economy, since the taxes on products less subsidies on products are presented only at the level of national economy in general. These operations include:

Expenditures consist of expenditure incurred by resident institutional units on goods or services that are used for the direct satisfaction of individual needs or wants or the collective needs of members of the community. Consumption is divided into individual consumption (households sector) and collective consumption (consumption of non-profit institutions and consumption of government and self-government institutions), see: Terms used in public statistics [online], http://stat.gov.pl/ metainformacje/slownik-pojec/pojecia-stosowane-w-statystyce-publicznej/467,pojecie.html [access: 23.02.2016]. 10 Rachunki kwartalne produktu krajowego brutto, zasady metodologiczne [Quarterly accounts of gross domestic product, methodological principles], "Zeszyty metodyczne i klasyfikacje" [Methodological Papers and Classifications], GUS, Warsaw 2010; P.A. Samuelson, W.D. Nordhaus, op. cit., p. 34. 11 Global output is the whole output generated in the particular economy during a year. In the business sector, global output consists mainly of the total value of products and services sold, whereas in the financial and insurance institution sector it is revenue from commissions and financial intermediation services, for example. More detailed explanation can be found in: Quarterly accounts of gross domestic product... 12 Intermediate consumption (value transferred) – the value of materials, raw materials, semi-finished products and external services (e.g. transport services, rental of equipment, telecommunications services) purchased by enterprises, which are (material) expenditure in subsequent processes. More detailed explanation can be found in: Quarterly accounts of gross domestic product...

256

I. GROSS DOMESTIC PRODUCT AS A SYNTHETIC MEASURE OF ECONOMIC DEVELOPMENT

Fig. 3. The share of gross value added in GDP (%) / Source: Polska – wskaźniki makroekonomiczne. Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Poland – macroeconomic indicators. Annual macroeconomic indicators PART III], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 23.02.2016]

Fig. 4. The structure of value added in Poland in 2014 by the Polish Classification of Activities PKD-2007 / source: own work based on: source: Polska – wskaźniki makroekonomiczne. Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Poland – macroeconomic indicators. Annual macroeconomic indicators PART III], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 23.02.2016]

• value-added tax – VAT (on both domestic and foreign products) • taxes and duties on imports (including excise tax) • other taxes on products (excise tax on domestic products and taxes on certain types of services, such as games of chance and betting) • subsidies on products. At the level of institutional sectors, only transactions relating to the following are taken into account: • taxes associated with production (tax on means of transport and property used for business purposes) • subsidies for manufacturers in the framework of EU funds13. 13 Rachunki narodowe według sektorów i podsektorów instytucjonalnych w latach 2010–2013 [National accounts by institutional

sectors and sub-sectors for the years 2010–2013], GUS, Warsaw, August 2015, p. 26.

257

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Fig. 5. Calculation scheme for gross value added in enterprises / source: own work

Fig. 6. The structure of value added in households / source: own work based on: Wartość dodana (Rachunkowość) [Added value (Accounting)] [online], https://mfiles.pl/pl/index.php/Warto%C5%9B%C4%87_dodana_(Rachunkowo%C5%9B%C4%87) [access: 12.03.2016]

At the level of institutional sectors, the production and income account is based only on gross value added, which is the main factor determining GDP. The analysis shows that the share of gross value added in GDP is almost 90% (Fig. 3), and the largest generator of value added is industry, trade and repair of motor vehicles (Fig. 4). In 2014, the share of industry in total value added in Poland was 25%, whereas the share of trade and repair of motor vehicles was 18.4%. 258

I. GROSS DOMESTIC PRODUCT AS A SYNTHETIC MEASURE OF ECONOMIC DEVELOPMENT

The source of value added is labour; at the level of activity of economic entities (Fig. 5) it is the difference between the total revenue and the total costs of goods and services consumed in the production process and purchased from external suppliers (raw materials, energy and external services related to the production).

The share of gross value added in GDP (%) GDP value also corresponds to the total income of the owners of production factors. In these terms, GDP consists mainly of: • household income from work (salaries plus other income from work, such as benefits, pensions) • income from capital (e.g. earnings, rents, financial income) • national income from indirect taxes (e.g. VAT, excise duty) • depreciation and amortisation, i.e. expenses incurred for restoration of used fixed assets14. The impact of the Lower Vistula Cascade on GDP will be examined using the expenditure approach and the value-added approach.

14 P.A. Samuelson, W.D. Nordhaus, op. cit., pp. 36, 41.

259

II. Analysis of changes of GDP in regions located at the lower Vistula 2.1. GDP in Poland

Despite many imperfections, GDP is a measure commonly used to assess and compare the economic development of countries. Fig. 7 shows the real change of GDP growth rate in Poland on a quarter-to-quarter basis. Despite the world economic downturn in 2008–2009 (“the first wave of the crisis”) and after 2012 (“the second wave of the crisis”), there was no real GDP decrease in Poland compared to the previous period. Theoretically, it can be assumed that a recession occurs when the GDP growth dynamics is negative in two quarters in a row (on a quarter-to-quarter basis). Such a situation did not take place in Poland in 2008–2015, and a recession scenario is unlikely in Poland in the near future.

GDP dynamics in Poland Therefore, according to the analysis of the rate of changes in economic growth, the economy in Poland shows a significant level of “resistance” to external economic turmoil. After a weaker economic situation in 2013, since Q1 2014 the economic situation in Poland has clearly improved. In Q3 2015 a real GDP growth of 3.5% was recorded in Poland. In terms of economic growth Poland has maintained its position as one of the leading EU countries. International comparisons show that Poland was the only EU country which managed to avoid recession in 2009 and 2012. Moreover, GDP dynamics in Poland is much higher than GDP dynamics in the EU-28 (Fig. 8).

GDP per capita Because the GDP growth rate in Poland has been higher than the average in the EU countries, the gap between Poland and the average GDP per capita in the EU-28 has decreased (Tab. 3). At the end of 2014, this rate was 68%, whereas in 2015 it probably exceeded 70%. Despite this positive trend, Poland is ranked rather low compared to the average among other EU countries in terms of GDP per capita (Fig. 9).

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II. ANALYSIS OF CHANGES OF GDP IN REGIONS LOCATED AT THE LOWER VISTULA

Fig. 7. GDP dynamics at constant prices by quarters (corresponding quarter of the previous year = 100) / source: own work based on: Polska – wskaźniki makroekonomiczne. Kwartalne wskaźniki makroekonomiczne CZĘŚĆ III [Poland – macroeconomic indicators. Quarterly macroeconomic indicators PART II], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 19.02.2016]

Fig. 8. The rate of changes of GDP in Poland compared to the EU / source: Eurostat, Real GDP growth rate – volume [online], http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1&language=en&pcode=tec00115 [access: 19.02.2015]

Infrastructure and competitiveness Further reduction of the gap in economic development in Poland, and thereby of the disproportion between GDP per capita, will largely depend on the creation of a proper infrastructure potential, including in respect of transport 261

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Item GDP per capita in Poland as % of the EU average (EU-28)

1995

2000

2005

2010

2011

2012

2013

2014

Tab. 3. GDP per capita in Poland compared to the average in the EU-28 in the purchasing power parity / source: own work based on: Polska – wskaźniki makroekonomiczne. Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Poland – macroeconomic indicators. Annual macroeconomic indicators PART III], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 23.02.2016]

Fig. 9. GDP per capita in the EU-28 in the purchasing power parity in 2014 (EU-28 = 100) / source: GDP per capita in PPS, Eurostat [online], http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=tec00114&plugin= 1 [access: 19.02.2016]

infrastructure, which is one of the key factors determining the competitiveness of the economy. The ongoing studies assume that the conditions for the development of enterprises and the competitiveness of the economy are very dependent on transport infrastructure, especially at the lowest stage of development of the economy, where “development is controlled by production factors.” It is estimated that at this level of economic development the share of technical infrastructure in determining the competitiveness of the economy is 15% among the 12 so-called pillars of competitiveness15. The criterion for breakdown of economies into groups, as shown in Fig. 10, is GDP/ capita, according to which Poland is between an economy controlled by investments and an economy based on knowledge and innovation, but in terms of the development of transport infrastructure it is among the countries with the lowest rate in the EU-28. Despite investments, the quality of infrastructure in Poland is still far from the European level, and as a result it poses big problems in activity of enterprises and reduces their competitive capability. As indicated in Tab. 4, while in 2005–2006 the average railroad infrastructure received 3.7 points at a 7-point scale, in 2011–2012 this score was reduced to 2.4 points (the lowest score in the years 2005-2015). Currently, the development of railway 15 Measurement of competitiveness is based on 12 pillars consisting of: Basic requirements: 1. Institutions, 2. Infrastructure,

3. Macroeconomic environment, 4. Health and primary education; Efficiency enhancers: 1. Higher education and training, 2. Goods market efficiency, 3. Labour market efficiency, 4. Financial market development, 5. Technological readiness, 6. Market size; Innovation and sophistication factors: 1. Business sophistication, 2. Innovation.

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II. ANALYSIS OF CHANGES OF GDP IN REGIONS LOCATED AT THE LOWER VISTULA

Fig. 10. The share of technical infrastructure in the structure of the factors determining the competitiveness of economy according to economic development / source: own work based on: K. Schwab, X. Sala-i-Martin, The Global Competitiveness Report 2015–2016, World Economic Forum, Geneva 2015

Item Place in the world ranking Place in the EU ranking Score on a scale from 1 to 7* Average number of points for the EU

2005– 2006

2006– 2007

2007– 2008

2008– 2009

2009– 2010

2010– 2011

2011– 2012

2012– 2013

2013– 2014

2014– 2015

3.7

3.1

2.6

2.9

2.7

2.5

2.4

2.6

2.9

3.1

3.7

4.0

4.1

4.0

4.1

4.3

*1 – underdeveloped, 7 – among the best in the world Tab. 4. The development of railroad infrastructure in Poland according to the studies of the World Economic Forum / source: own work based on: The Global Competitiveness Report 2015–2016, World Economic Forum, Geneva 2015

infrastructure in Poland is estimated at 3.1 points. This level is not only lower than the average in the EU countries, but even lower than the measured quality of rail infrastructure in Poland in the years 2005–2006. Among the EU countries, the railroad infrastructure is considered worse only in Greece, Romania and Croatia (Fig. 11). A significant gap also exists between the quality of road network in Poland and other EU countries. Despite investment in road infrastructure, the gap has not been reduced. In 2005–2006, the quality of road infrastructure in Poland received 1.1 points less than the average for the EU countries, and this did not change in 2014–2015 (Tab. 5). Currently, only in Malta, Bulgaria, Lithuania and Romania is the quality of road infrastructure lower than in Poland (Fig. 12). Infrastructure facilities are used not only to secure the conditions for a stable socio-economic development. Investments in such facilities should also be perceived as an important tool of economic policy, involving the use of large investment projects to receive multiplier effects. Large infrastructure projects mean employment growth not only directly in relation to investment work, but also in other sectors, including in particular in the construction sector, because of the increase in demand for building materials. Therefore, investment multiplier effects involve the creation of additional effective demand and, consequently, the growth of GDP. 263

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

* Malta and Cyprus excluded Fig. 11. The development of railroad infrastructure in Poland compared to the EU-28 (average in 2014–2015) / source: K. Schwab, X. Sala-i-Martin, The Global Competitiveness Report 2015–2016, World Economic Forum, Geneva 2015

Item Place in the world ranking Place in the EU ranking Score on a scale from 1 to 7 Average number of points for the EU

2005– 2006

2006– 2007

2007– 2008

20082009

2009– 2010

2010– 2011

2011– 2012

2012– 2013

2013– 2014

2014– 2015

127

131

134

124

105

3.2

2.6

1.9

2.1

2.2

2.3

2.6

3.0

3.5

3.8

4.3

4.2

4.0

4.1

4.2

4.3

4.4

4.6

4.9

Tab. 5. The development of road infrastructure in Poland according to the studies of the World Economic Forum / source: own work based on: The Global Competitiveness Report 2015–2016, World Economic Forum, Geneva 2015

The investment involving the construction of the Lower Vistula Cascade can play a significant role in this process. In the long term, the Lower Vistula Cascade (KDW) as one of the important factors determining the infrastructural potential of regions may have a positive impact on the economic growth in the regions located at the waterway and on equalling the level of economic development compared to other fast-growing regions. As already mentioned in earlier studies, the region of the Kuyavia-Pomerania Province belongs to the group of regions with low growth compared to the average in the EU countries. Failure to implement this project would not only make it impossible to use the opportunities to stimulate the economy, but would also reduce the chance for domestic construction companies to appear in the Polish market. Previous experience shows that the market is currently dominated by foreign companies.

264

II. ANALYSIS OF CHANGES OF GDP IN REGIONS LOCATED AT THE LOWER VISTULA

Fig. 12. The development of road infrastructure in Poland compared to the EU-28 (average in 2014-2015) / source: K. Schwab, X. Sala-i-Martin, The Global Competitiveness Report 2015–2016, World Economic Forum, Geneva 2015

2.2. GDP in regions located at the lower Vistula River Regional competitiveness index for the lower Vistula River As indicated earlier, the European Union’s regional policy aims at compensating for the differences in regional development, which have been growing with globalization16. It was also shown that the regions located at the lower Vistula River (Fig. 13) are characterised by a diversified competitiveness index (which takes into account the potential accessibility by road, potential accessibility by railroad transport and the number of air passengers): • highest – Mazovia Province (–0.5–< 0.00 of the average of the EU-28 EU) • medium – Pomerania Province (–1–< 0.5 of the average of EU-28) • lowest – Kuyavia-Pomerania Province (<–1 of the average of EU-28). This confirms the thesis of insufficient potential of these modes of transport and the need to support them by inland waterway transport at the lower Vistula River (dolna Wisła). Nevertheless, the development of various forms of water tourism is important for regional development, as it increases the tourist attractiveness of regions17.

GDP of regions at the lower Vistula River Research of GDP in the provinces located along the lower Vistula River (dolna Wisła) shows that although GDP has been steadily growing in all the analysed provinces since 2000, the values per capita are diversified compared to the national average: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 1 [Analysis of socio-economic impact of the development of the lower Vistula, stage 1]. Społeczno-ekonomiczne przesłanki zagospodarowania dolnej Wisły [Socio-economic reasons for the development of the lower Vistula River], Energa SA, Sopot 2015, p. 78. 17 Ibid., p. 78. 16

265

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Fig. 13. Regional competitiveness index in the regions at the lower Vistula River / source: own work based on: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 1 [Analysis of socio-economic impact of the development of the lower Vistula, stage 1]. Społeczno-ekonomiczne przesłanki zagospodarowania dolnej Wisły [Socio-economic reasons for the development of the lower Vistula River], Energa SA, Sopot 2015, p. 78.

Fig. 14. Changes of GDP in the Kuyavia-Pomerania Province in the years 2000–2013 / source: own work based on the data of the GUS

• the lowest values are in the Kuyavia-Pomerania Province, where GDP per capita has decreased from 90% of the national average in 2000 to 81% and 82% in 2012 and 2013, respectively (Fig. 14) • values are variable in the Pomerania Province, in which GDP per capita has decreased from 101% of the national average in 2001 to 97% in 2013 (Fig. 15); • the highest GDP per capita compared to the national average is in the Mazovia Province, although its value is also variable in this province, showing periodic decreases of even 3% (e.g. 2000–2003), large increases of even 6% (2008-2010) and stagnation (2010–2013) (Fig. 16).

266

II. ANALYSIS OF CHANGES OF GDP IN REGIONS LOCATED AT THE LOWER VISTULA

Fig. 15. Changes of GDP in the Pomerania Province in the years 2000–2013 / source: own work based on the data of the GUS

Fig. 16. Changes of GDP in the Mazovia Province in the years 2000–2013 / source: own work based on the data of the GUS

Gross value added in these provinces shows an upward trend, although the rate of growth varies (the highest rate is in the Mazovia Province). However, differences in the value added are significant (4–5 times the difference). In 2013, gross value added was as follows: • in the Kuyavia-Pomerania Province: nearly PLN 66 billion • in the Pomerania Province: over PLN 84 billion • in the Mazovia Province: over PLN 325 billion (Fig. 17). Total value added in the three provinces in 2013 was PLN 475 billion (Tab. 6, Fig. 18). GDP in the analysed provinces located at the lower Vistula River (dolna Wisła) in total in 2013 was PLN 536 billion, which means that the value added accounted for 88.6% of GDP, meaning that its share was similar to the national average (Fig. 3).Construction of the Lower Vistula Cascade will be reflected in GDP calculated using both the expenditure approach (Fig. 19) and the value-added approach.

267

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

* Trade; repair of motor vehicles; transportation and storage; accommodation and catering; information and communication Fig. 17. Gross value added by activities and provinces (current prices) PLN million / source: own work based on: Produkt krajowy brutto. Rachunki regionalne w 2013 r. [Gross domestic product. Regional accounts in 2013], GUS, Katowice 2015

Province

KuyaviaPomerania Province

Mazovia

Pomerania

Provinces at the lower Vistula River in total

Year

Total

Agriculture, forestry

Industry

Construction

Services*

Financial and insurance actiOther vities; real estate services activities

2010

57,558

2,413

15,197

4,976

16,252

4,901

13,818

2011

61,345

2,768

16,762

5,292

16,991

4,986

14,545

2012

63,918

2,818

17,634

5,244

17,907

4,781

15,534

2013

65,577

3,271

18,252

5,115

17,986

4,993

15,960

2010

276,487

7,351

45,137

20,555

97,135

34,666

71,643

2011

299,252

8,901

50,271

23,551

102,433

38,239

75,858

2012

316,465

8,574

56,370

23,512

112,046

37,901

78,060

2013

325,394

9,942

56,569

22,349

114,450

41,114

80,970

2010

72,069

1,628

17,745

6,968

21,447

6,652

17,629

2011

78,320

1,870

20,095

7,356

22,956

7,235

18,808

2012

83,834

1,961

22,592

7,275

24,612

7,563

19,831

2013

84,365

2,050

21,689

6,930

25,063

7,961

20,673

2010

406,114

11,392

78,079

32,499

134,834

46,219

103,090

2011

438,917

13,539

87,128

36,199

142,380

50,460

109,211

2012

464,217

13,353

96,596

36,031

154,565

50,245

113,425

2013

475,336

15,263

96,510

34,394

157,499

54,068

117,603

* Trade; repair of motor vehicles; transportation and storage; accommodation and catering; information and communication. Tab. 6. Gross value added by activities and provinces (current prices) PLN million / source: own work based on: Produkt krajowy brutto. Rachunki regionalne w 2013 r. [Gross domestic product. Regional accounts in 2013], GUS, Katowice 2015

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II. ANALYSIS OF CHANGES OF GDP IN REGIONS LOCATED AT THE LOWER VISTULA

* Trade; repair of motor vehicles; transportation and storage; accommodation and catering; information and communication. Fig. 18. Gross value added in the provinces located in the area of the lower Vistula in PLN million / source: own work based on: Produkt krajowy brutto. Rachunki regionalne w 2013 r. [Gross domestic product. Regional accounts in 2013], GUS, Katowice 2015

According to the expenditure approach, the GDP growth as a result of the construction of the KDW will result from the increase in: â&#x20AC;˘ capital expenditure (business expenditure on the purchase of capital goods) â&#x20AC;˘ household spending on the purchase of goods and services associated with the development of water tourism.

269

III. Impact of the Lower Vistula Cascade on GDP in Poland and regions located at the lower Vistula 3.1. Estimated GDP growth using expenditure approach

The study assumes that the construction of the KDW is possible and advisable to be carried out through the resources produced in the country, i.e. without imports. Therefore, import is not taken into account in the expenditure approach.

Investment multiplier Economic research often uses the investment multiplier category, as it reflects the effects of income (GDP) increase obtained as a result of the increase in investment, which in turn start a series of further expenditure. The multiplier shows that a rise in investment will increase GDP by multiplied amount18. The multiplier value is greater than 1, because every change in the investment demand “starts” further changes in the consumer demand19. Construction of the KDW would significantly contribute to GDP growth through the investment project’s multiplier effects. In order to estimate the investment multiplier, the analysis refers to the GDP calculation in terms of expenditure. As previously demonstrated in accordance with this approach, an important element determining the GDP (income – Y) is domestic demand, including consumption expenditure (C) and capital formation (especially gross fixed capital formation – I). Therefore, it can be written as follows: Y=I+C The definitional formula for the investment multiplier is as follows:

where: ∆Y – income increase, ∆I – investment increase, m – investment multiplier.

18 P.A. Samuelson, W.D. Nordhaus, op. cit., p. 126. 19 D. Begg, S. Fischer, R. Dornbusch, Ekonomia [Economics], Vol. 2, Warsaw 1995, p. 60.

270

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Fig. 19. The impact of the construction of the KDW on GDP in Poland, calculated using the expenditure approach / source: own work

Thus, income increase due to investment increase results from:

Many transformations were made to estimate the multiplier. If: Y = I + C, then ΔY = ΔI + ΔC, so ΔI = ΔY – ΔC When we substitute it into the formula for the basic multiplier, we get the following:

So, after dividing the numerator and denominator of the equation by ∆Y, the result is as follows:

where: is the marginal (increased) propensity to consume (the part of the additional income spent on additional consumption).

271

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Multiplier effects Investment multiplier effects are caused by “starting” subsequent expenditures. As indicated in the equation, these effects are determined by the marginal propensity to consume20 in such a way that the greater the propensity to consume is, the higher the multiplier effects are21. The multiplier level can also be set through the marginal propensity to invest. Because:

therefore:

where:

is the marginal (increased) propensity to invest.

As a result, the investment multiplier is always the inverse of the marginal propensity to invest, which can be written as:

Change in GDP resulting from the investment increase is therefore a result of the following equation:

where:

– the planned increase in capital expenditures.

The essence of the presented simplified investment multiplier model does not change even when the analysis takes into account the government’s fiscal policy, monetary policy and foreign trade. Even in the case of public expenditure the specified multiplier for this type of expenditure (at the particular propensity to consume) has the same numerical value as the investment multiplier. The multiplier analysis can be used only when there are unused resources available, meaning when the actual GDP is less than its potential level. This is because an increase in total demand (in terms of consumption and investment) results in a GDP growth only if unused resources are available. If the economy generates GDP close to its potential level, the ability to obtain a further GDP growth through the multiplier is limited22.

Middle income trap Poland is currently at the level of an average GDP growth rate. The authors of the “Directions 2016. Poland in the middle income trap” report – DNB Bank Polska SA and Deloitte – believe that the problem lies in the depletion of the growth potential of production factors and the structure of the Polish economy. “In the industrial sector, whose percentage share in the creation of value added in Poland is similar to that in Germany, a Polish worker generates EUR 19 thousand per year, as compared to 64 thousand generated by a German worker, which is over three times as much, and so are the differences in net salaries. While a Pole earns EUR 7 thousand on average, a German earns 20 For example, with the propensity to consume of 0.7 the multiplier is 3.33. This means that in the case of investment decrease

by 9 units, the output (income) decreases by 9x3.33, i.e. by 30 units. In the case of investment increase by 9 units, the income increases by 9x3.33, i.e. by 30 units. 21 D. Begg, S. Fischer, R. Dornbusch, Ekonomia... [Economy...], p. 62. 22 P.A. Samuelson, W.D. Nordhaus, op. cit., pp. 129–130, 137.

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III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Fig. 20. Total productivity by sectors of the economy / source: A. Tomaszewski, President of the Board of DNB Bank Polska SA, Polska może uciec z pułapki średniego dochodu [Poland can escape the middle income trap], Warsaw, 18 February 2016 [online], http://www2.deloitte.com/pl/pl/pages/press-releases/articles/kierunki-2016-Deloitte-i-DNB.html [access: 20/03/2016]

almost EUR 27 thousand. Growth in developed countries is not a result of the same harder labour, but “smarter” labour, which means the use of better technology and production methods to generate more value-added per worker – without increasing the labour and capital resources, which are limited by nature”23. The authors of the report have evaluated the efficiency of 19 major sectors of the Polish economy (according to Polish Classification of Activities), and divided the results into four groups: • the first (most desirable) group includes sectors in which the total factor productivity (TFP) is increasing and there is a growing trend (industries such as accommodation and catering, health, agriculture and the so-called other services - their total share in the gross value added in the economy is only approx. 10%) • the second group consists of sectors characterised by stable increase of TFP, but a decreasing trend (manufacturing, information and communication, financial and insurance activities, administrative and support service activities – over 29% of gross value added in total) • the third group, in which in recent years the growth of productivity is close to zero, includes water sector, construction, transportation and storage, and real estate activities (approx. 21% of gross value added in total) • the fourth, least efficient and most numerous group with a share of gross value added of as much as 40%, consists of the sectors where TFP is declining increasingly fast; this group includes trade, education, energy sector and public sector, including public administration (Fig. 20).

Structures to be restructured The analysis indicates the directions of the strategies for restructuring of sectors characterised by negative economic indicators, which will be the way for Poland to break out of the middle income trap. According to the authors of the report, this requires appropriate labour and capital resources as well as skilful use thereof, which will improve the effectiveness of many sectors of the economy that are currently ineffective, and will consequently provide a faster economic growth. 23 A. Tomaszewski, President of the Board of DNB Bank Polska SA, Polska może uciec z pułapki średniego dochodu [Poland can

escape the middle income trap], Warsaw, 18 February 2016 [online], http://www2.deloitte.com/pl/pl/pages/press-releases/articles/kierunki-2016-Deloitte-i-DNB.html [access: 20.03.2016].

273

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Fig. 21. Changes in consumption at constant prices (previous year = 100) / source: own work based on: Polska – wskaźniki makroekonomiczne. Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Poland – macroeconomic indicators. Annual macroeconomic indicators PART III], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 23.02.2016]

Through a comprehensive development of the lower Vistula River (dolna Wisła), the completion of the KDW gives a real opportunity to improve the efficiency of sectors such as water sector, construction, transportation and energy sector.

Propensity to consume As already mentioned above, the primary factor in determining the investment multiplier value is the marginal propensity to consume. The studies show that consumption expenditure in Poland is an important factor determining the growth of GDP. From 2000 to 2015 no decrease in consumption expenditure was recorded in Poland compared to the corresponding period in the previous year (Fig. 21). Only 2012 and 2013 were the worst in this regard, as consumption expenditure in this period grew only by 0.5% and 0.7%, respectively. Therefore, the advantage of the economy in Poland is a relatively high propensity to consume. First of all, this element of the internal market (not investments) meant that in 2008-2009, and then during the global crisis in 2012-2013, no economic recession was observed in Poland – there was only a period of economic slowdown. In order to estimate the annual effects of GDP growth, the analysis assumed the marginal propensity to consume of 0.82, and the resulting multiplier of 5.6 (Tab. 7).

Investments and GDP However, as previously mentioned, one way out of the middle income trap are investments, which of course should be properly used to improve the efficiency of currently inefficient sectors of the economy through new technologies. Consistent economic growth is not possible without investments. Thus, the opportunities for economic development can be assessed, among others, according to the extent and nature of investments. The most important in this process are investments in infrastructure, as the lack thereof is a serious obstacle for many other investments and can significantly hinder economic development as well as considerably deteriorate the conditions for functioning of economic entities. As already demonstrated, investments in infrastructure are very much needed in Poland because of the insufficient development and low quality of such facilities. The KDW is an investment project that meets such requirements as: • it is an investment in infrastructure, carried out in regions with significant underinvestment in this type of facilities • through its comprehensive character it can improve the efficiency of currently inefficient sectors of the economy; this is a modern approach to solving problems of different sectors of the economy, rarely used in Poland so far due to the fact that investment work on waterways is often done as intervention

274

2014 1,348,616 337,526

Marginal propensity to consume (the average in the years 2000–2014)

0.821710638

1,686,142 64,339 38,508

2013 1,310,108 311,695 1,621,803 4,679

2012

15,436

52,735

1,294,672 322,452 1,617,124 46,949

2011

48,572

Average increase in consumption expenditure in the years 2000-2014

1,246,100 324,075 1,570,175 110,684 79,777

2010 1,166,323 293,168 1,459,491 74,970 69,429

64,177

Investment multiplier

2009 1,096,894 287,627

Average income increase in the years 2000-2014

1,384,521 67,340 67,883

2008 1,029,011 288,170 1,317,181 125,430 97,356

2007 931,655 260,096 1,191,751 125,200 75,552

2006 856,103 210,448 1,066,551 82,212 55,242

2005 800,861 183,478 984,339 54,523 38,796

2004 762,065 167,751 929,816 67,041 52,982

2003 153,692 862,775 24,541 20,362

709,083

2002 149,513 838,234 30,650

688,721

2001 647,828

40,893

Income as the sum of consumption and capital expenditure

159,756 807,584 19,914

Increase in consumption expenditure

37,496

177,338 –

Gross fixed capital formation

787,670

Income increase

–

Consumption expenditure (current prices)

610,332

Item

2000

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

5.60885959

Tab. 7. Estimated marginal propensity to consume and investment multiplier in Poland / source: own work based on: Polska – wskaźniki makroekonomiczne. Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Poland – macroeconomic indicators. Annual macroeconomic indicators PART III], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 23.02.2016]

• it is a big investment that ensures long-term economic growth through gradually generated and increasing effects in various areas of the economy • it is an investment that stimulates many other investment activities in the region • at the same time, it is an investment that requires relatively small capital expenditure per year (the expenditure are distributed over many years of implementation), which makes it realistic to carry it out in the current difficult budgetary situation.

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SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

KDW in GDP As shown in Tab. 8, the average annual expenditure on the completion of the KDW at current prices is PLN 915 million. In 2014, the gross fixed capital formation in Poland was PLN 338 billion, so investments in the KDW would constitute approx. 0.3% of capital formation in 2014 and 0.00005% of GDP in 2014. When analysing the impact of the KDW on GDP in terms of expenditure, the following should be considered in addition to the capital expenditure: • the aforementioned investment multiplier effect • tourism spending generated through the development of tourism, stimulating the socio-economic development in the regions located at the lower Vistula River (dolna Wisła) • the multiplier effect in tourism obtained thanks to the development of multiple areas associated with tourism.

Multiplier effects of investments in the KDW Based on the data already presented in Tab. 7 it has been estimated that the annual expenditure in Poland incurred as a result of the multiplier effects of investments in the KDW will amount to PLN 4,208 million per year on average (Tab. 8).

Expenditure related to tourism and GDP Development of the lower Vistula River will also contribute to the GDP growth due to the increase in household expenditure on the purchase of goods and services associated with the development of water tourism. This increase will result from the increase in expenditure directly related to tourism services (in particular accommodation, catering, sightseeing, communications, souvenirs), but also from the start of an additional stream of the following: • indirect expenditure related to the need to make purchases in other sectors of the economy associated with the tourist traffic services (e.g. increased demand for catering or hotel services leads to an increase in expenditure associated with the supply of food, drinks, furniture, cleaning products, etc. to these sectors). • induced expenditure (increase in expenses of persons employed directly and indirectly in tourism market services thanks to higher income obtained).

Multiplier effects of tourism The total GDP growth as a result of the expenditure incurred on tourism was estimated by referring to the tourism multiplier shown in previous studies24, estimated at 2.7 (Tab. 9). Expenditure related to the development of tourism and associated with the completion of the KDW will increase along with the development of the lower Vistula River waterway, and will reach the following in the 30th year of the investment project: • tourism spending – PLN 672 million (annual average of PLN 449 million), tourism multiplier – PLN 1,142 million (annual average of PLN 764 million) • total of PLN 1,814 million (annual average of PLN 1,213 million). The overall effect of the comprehensive development of the lower Vistula River according to the expenditure approach is presented in Tab. 10.

24 K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, p. 82

276

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Year

Capital expenditure Capital expenditure in the investment in the zero investment option option

Increase in capital expenditure

Multiplier effect of investments in the KDW

Total - expenditure resulting from investments and multiplier effects

500.0

13.0

487.0

2240.2

2,727.2

500.0

37.7

462.3

2126.6

2,588.9

1,000.0

37.7

962.3

4426.6

5,388.9

1,500.0

37.7

1,462.3

6726.6

8,188.9

1,500.0

80.2

1,419.8

6531.1

7,950.9

1,500.0

80.2

1,419.8

6531.1

7,950.9

1,500.0

80.2

1,419.8

6531.1

7,950.9

1,500.0

80.2

1,419.8

6531.1

7,950.9

1,500.0

416.3

1,083.7

4985.0

6,068.7

1,500.0

416.3

1,083.7

4985.0

6,068.7

1,500.0

416.3

1,083.7

4985.0

6,068.7

1,000.0

416.3

583.7

2685.0

3,268.7

1,000.0

416.3

583.7

2685.0

3,268.7

1,500.0

416.3

1,083.7

4985.0

6,068.7

1,000.0

416.3

583.7

2685.0

3,268.7

1,000.0

416.3

583.7

2685.0

3,268.7

1,000.0

20.0

980.0

4508.0

5,488.0

1,000.0

20.0

980.0

4508.0

5,488.0

500.0

20.0

480.0

2208.0

2,688.0

500.0

20.0

480.0

2208.0

2,688.0

500.0

20.0

480.0

2208.0

2,688.0

1,000.0

20.0

980.0

4508.0

5,488.0

1,000.0

20.0

980.0

4508.0

5,488.0

500.0

20.0

480.0

2208.0

2,688.0

1,000.0

20.0

980.0

4508.0

5,488.0

1,500.0

20.0

1,480.0

6808.0

8,288.0

500.0

20.0

480.0

2208.0

2,688.0

500.0

20.0

480.0

2208.0

2,688.0

1,000.0

20.0

980.0

4508.0

5,488.0

1,500.0

20.0

1,480.0

6808.0

8,288.0

915

4,208

5,123

Annual average

Tab. 8. Estimated investment expenditure and multiplier effects of capital expenditure on the development of the lower Vistula River in PLN million / source: own work based on: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, p. 35

277

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

GDP using expenditure approach Year

Direct tourism spending

Spending as a result of tourism multiplier effects

Total

175

297

472

202

342

544

208

354

562

228

389

617

249

422

671

282

480

762

302

514

816

323

548

871

343

582

925

363

617

980

396

674

1,070

423

720

1,143

450

766

1,216

477

811

1,288

497

846

1,343

511

868

1,379

517

880

1,397

517

880

1,397

517

880

1,397

517

880

1,397

517

880

1,397

538

914

1,452

558

948

1,506

571

971

1,542

591

1,006

1,597

605

1,028

1,633

625

1,062

1,687

638

1,086

1,724

659

1,119

1,778

672

1,142

1,814

Annual average

449

764

1,213

Tab. 9. Estimated GDP growth resulting from direct household spending and the stream of multiplier expenditure as a consequence of comprehensive development of the waterway of the lower Vistula River waterway (PLN million) / source: own work based on: Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, p. 83

278

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Expenditure Year

As a result of investments and multiplier effects of investments in the KDW

As a result of direct expenditure and multiplier effects of tourism spending

Total

2,727.2

472

3,199.2

2,588.9

544

3,132.9

5,388.9

562

5,950.9

8,188.9

617

8,805.9

7,950.9

671

8,621.9

7,950.9

762

8,712.9

7,950.9

816

8,766.9

7,950.9

871

8,821.9

6,068.7

925

6,993.7

6,068.7

980

7,048.7

6,068.7

1,070

7,138.7

3,268.7

1,143

4,411.7

3,268.7

1,216

4,484.7

6,068.7

1,288

7,356.7

3,268.7

1,343

4,611.7

3,268.7

1,379

4,647.7

5,488.0

1,397

6,885.0

5,488.0

1,397

6,885.0

2,688.0

1,397

4,085.0

2,688.0

1,397

4,085.0

2,688.0

1,397

4,085.0

5,488.0

1,452

6,940.0

5,488.0

1,506

6,994.0

2,688.0

1,542

4,230.0

5,488.0

1,597

7,085.0

8,288.0

1,633

9,921.0

2,688.0

1,687

4,375.0

2,688.0

1,724

4,412.0

5,488.0

1,778

7,266.0

8,288.0

1,814

10,102.0

1,213

6,335

Annual average 5,123

Tab. 10. Estimated GDP growth using the expenditure approach as a result of comprehensive development of the lower Vistula River waterway (PLN million) / source: own work

279

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

When analysing GDP estimated using the expenditure approach, we can conclude that the amount of spending in various sectors of the economy related to the completion of the KDW, including capital expenditure, will amount to PLN 3.2–10.1 billion in the last year of the investment. This means that the annual average expenditure during the construction of the KDW will be as follows: • on investments and its multiplier effects – PLN 5.1 billion • on expenditure of tourists and multiplier effects of tourism spending – PLN 1.2 billion • total – PLN 6.3 billion. The impact of these expenditures on GDP should be considered very positive.

3.2. The issue of distribution of expenditure on comprehensive development of the lower Vistula The variety of use of inland waterways causes great difficulty in the allocation of costs incurred for investments in infrastructure to individual water users and consumers (transportation, industry, municipal services, agriculture and forestry, flood protection, sports and tourism). The costs of comprehensive investments attributable to respective users are intertwined so that they create a kind of “common costs”. As a matter of fact, in investment projects of this type it is possible to separate certain elements utilised by only one user, such as the energy sector – power plant, navigation – locks, agriculture – irrigation channels, etc. Still, a large part of the investments is utilised by all users (water dam, embankments).

Cost allocation methods Common facilities utilised simultaneously by multiple users are usually a significant part of the whole comprehensive investment project – approx. 50% of expenditure on average. Hence, it is especially important to break down these expenditures between all sectors of the economy interested in the facility. The issue of allocation of comprehensive investment costs applies to two issues: • allocation of capital expenditure for comprehensive management of water resources • allocation of operating costs between the sectors using the particular facility (e.g. waterway). It is very difficult to determine the share of respective sectors of the economy in expenditure and maintenance costs of comprehensive water investments. Different distribution methods are used in different countries for different investments; in addition, they do not always reflect the actual share of respective sectors of the economy in the project. The expenditure is distributed according to an unofficially specified key, and the applied allocation methods are very diverse, for example: • some effects are established as basic effects and charged with all common expenditure • common expenditure is allocated in proportion to the amount of expenditure justified as alternative for achieving respective effects, meaning in proportion to the amount of expenditure on alternative facilities for only one purpose, so-called single-purpose investments • common expenditure is allocated in proportion to the amount of separable direct expenditure • common expenditure is allocated in proportion to the amount of consumed or retained water • common expenditure is allocated in proportion to the difference in production value and direct expenditure related to respective effects25 • total expenditure is divided between individual branches of the economy that benefit from the comprehensive water investment project in a way that ensures equal economic efficiency for all users (the same economic efficiency of capital expenditure can be achieved when the total expenditure per user decreases to the same extent in comparison with the alternative option)26. 25 L. Hofman, A. Kortylewska, Ekonomiczne problemy gospodarki wodnej Polski [Economic problems of water management in

Poland], Warsaw 1971, pp. 54–55. 26 K. Wojewódzka-Król, Współzależności ekonomiczne w rozwoju infrastruktury śródlądowych dróg wodnych [Economic correlation in the development of infrastructure for inland waterways], Wydawnictwo UG, Gdańsk 1987, p. 150.

280

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Depending on the adopted key, the share of various sectors of the economy in expenditure varies, even in the case of similar investments. This unofficial nature of the division of expenditure and the related differences in results depending on the adopted method make it very difficult to compare the cost-effectiveness of development of inland water transport with other modes of transport, for example.

Method evaluation Unfortunately, it is impossible to determine which of the presented methods is the most appropriate. Under different circumstances, with different priorities and limitations, different allocation methods are better for the development of waterway infrastructure and management. Therefore, it seems that each case should be considered individually against current and future problems related to transport, energy, water, environmental protection, etc. in the region. The use of unwarranted allocation methods, such as in proportion to separable direct expenditure, can lead to serious distortion of the actual relations, thereby leading to wrong conclusions. Even the last of the mentioned methods, which is apparently the best solution, does not always provide the specifics of relations occurring in the field of water management. For example, river canalization economically justified with good energy effects can at the same time create the conditions for navigation on the river, where previously such a possibility was not considered because of the huge cost of its adaptation to the needs of navigation. Charging inland waterway transport with costs in proportion to alternatively justified (extremely high) costs may compromise the cost-effectiveness of the navigation development. Wherever possible, a comprehensive investment project should be assessed as a whole, without using artificial divisions that distort the essence of the project; after all, it is not a sum of single-purpose investments, but rather a single investment pursuing different goals. The Lower Vistula Cascade can provide measurable benefits in: • transportation • flood protection • tourism • energy sector • agriculture (Fig. 22). The complexity of comprehensive water investments is, however, due to the fact that in addition to measurable benefits they generate immeasurable benefits, which in the particular situation may be as important, or even more important, than the measurable ones. In the case of the KDW, such benefits include: • fulfilment of the basic assumptions of the Polish economic policy, involving the stimulation of socio-economic development through investments; the KDW has the advantage over other investments as it is a long investment in infrastructure carried out over a long period, providing long-term effects that prompt development during the implementation as well as very good effects during and especially after the completion of the investment project • energy security; this effect may be the most important in face of the risk of blackouts caused by drought and lack of water for cooling purposes • employment; in the case of such long-term investment and its effects this can increase permanently, thus solving many problems, especially in regions, by lowering the costs of unemployment • meeting the water needs of municipal services and industry • stimulating regional development by creating favourable conditions (transportation, water, etc.) for the location of industry and services.

281

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Fig. 22. The structure of the current benefits of the KDW over 30 years of its construction in PLN billion / source: own work based on: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, p. 96

Ministries interested in the KDW To sum up, it can be concluded that the beneficiaries of numerous effects of completion of the KDW will be the following ministries: • transportation (implementation of sustainable transport development policy by relieving road transport and developing environment-friendly modes) • maritime economy and inland waterways • environment (air protection, water resources) • energy sector • tourism and sport • agriculture and forestry. Some of expenditure attributable to energy will be incurred by a company interested in the energy-related results; let’s assume that it will be approx. 30%. This will give an annual average charge of approx. PLN 0.3 billion (PLN 0.9 billion of net average annual capital expenditure on the KDW at current prices – Tab. 8). Therefore, approx. PLN 0.6 billion still remains to be incurred by the budget, broken down between different ministries at current prices. In summary, it can be concluded that the construction of the KDW fits into the concept of exit from the middle income trap: • since it will be a long-term investment generating significant effects • it creates transport infrastructure, which is one of the key factors determining the competitiveness of the economy • it concerns the areas that are considered to be “dragging the economy down”, with their productivity close to zero (water sector, construction, transportation and storage) or even quickly decreasing TFP (energy sector); 282

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Fig. 23. The impact of the construction of the KDW on GDP in Poland, calculated using the value added approach / source: own work

only tourism and agriculture are sectors with a growing trend for TFP, but the share of this sector in the value added of the economy is only 10%; comprehensive development offers an opportunity to reverse the negative trends in the productivity of capital expenditure • the burden on GDP due to capital expenditure is relatively small, which even in the current not very good budgetary situation creates a real opportunity to finance the project • it creates many jobs - the appropriate use of labour resources may improve the efficiency of many sectors of the economy that are currently ineffective, and can consequently provide a faster economic growth. • it generates many additional effects in the form of: –– investment multiplier effect –– tourism spending –– tourism multiplier effect.

3.3. Estimated GDP growth using gross value added

The analysis assumes that the GDP growth resulting from the development of the Lower Vistula River (dolna Wisła) will be primarily the effect of increased gross value added, generated in sectors such as: • transportation and storage: –– as an increase in the value added resulting from the difference between the value added obtained from cargo transport using inland waterways and the value added obtained if the construction of the lower Vistula Cascade is cancelled and cargo transport is taken over from inland waterways by road transport –– as an increase in the value added resulting from increased tourist transport supported by inland waterway transport • agriculture (as increase in the value added obtained through the ability to avoid losses in agricultural production) • production and supply of electricity (as increase in the value added obtained through an increased production of electricity) • Arts, entertainment and recreation (as increase in the value added obtained in the tourism sector through an increased tourist activity in the area of the lower Vistula River) • construction (as increase in the value added obtained through an increased production of construction materials and services) Fig. 23 and taxes. 283

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Item

2010

2011

2012

2013

2014

1,273,629

1,378,618

1,444,990

1,470,844

1,525,193

Agriculture, forestry, hunting and fishing

37,085

44,365

43,404

47,602

44,797

Production and supply of electricity, gas, steam and hot water

44,434

46,116

51,153

52,245

51,132

Transportation and storage

67,183

76,776

85,230

88,357

97,790

Arts, entertainment and recreation

11,081

11,207

11,323

10,689

10,756

Total gross value added of which:

Tab. 11. Gross value added in selected areas and sections of the Polish Classification of Activities in PLN million (current prices) / source: Rachunki narodowe według sektorów i podsektorów instytucjonalnych w latach 2010–2013 [National accounts by institutional sectors and sub-sectors in 2013–2013], GUS, Warsaw, August 2015; Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Annual macroeconomic indicators, PART III] [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 19.02.2016]

As regarding the transportation industry, the GDP growth as a result of the increase in the value added obtained through increased freight and tourist transport using the lower Vistula River waterway has been estimated according to: • unit revenue per unit of transport work • analysis of costs by type to separate the part of the costs applicable to “purchases of goods and services from external suppliers.”

Unit value added rate Unit value added rates (UVA) was used in the estimation of the GDP growth in relation to other sectors of the economy (construction, agriculture, energy sector, tourism) to define the value added attributable to: • unit of global output • output unit. The rate was calculated based on the following formula:

where: WD – gross value added, P – global output in PLN or output volume.

3.3.1. Transportation

The analysis shows that among the presented sectors of the economy, transportation and storage have the largest share in value added (Tab. 11, Fig. 24). In 2014, transportation and storage generated gross value added of PLN 97.8 billion, which accounted for 6.4% of the value added obtained in the entire national economy.

Sales revenue of ship owners As indicated in the considerations above, the gross value added of enterprises is the part of sales revenue after deducting the cost of “purchase of goods and services from external suppliers.” Increase in sales revenue from cargo transport on the lower Vistula River (dolna Wisła) was estimated based on previously observed changes in revenue obtained through inland waterway transport per unit of transport work (Tab. 12). Studies show that revenues from sales of services in cargo transport using inland waterways at constant prices obtained per tkm increased from PLN 0.14 in 2010 to PLN 0.23 in 2014. Sales revenue of PLN 0.1833 was obtained

284

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Fig. 24. The share of transportation and storage in the gross value added (%) / source: Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Annual macroeconomic indicators, PART III], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 19.02.2016]

Item

2010

2011

2012

2013

2014

Revenues from sales of services at current prices (PLN million) Prices of services in cargo transport using inland navigation (%) Revenues from sales of services at constant prices of 2014 (PLN million)

132

123

125

170

180

98.7

101.4

105.4

105.8

100.9*

151

138

133

172

180

Transport work in cargo transport (million tkm)

1030

909

815

768

779

Revenues from sales of services in PLN per tkm (at constant prices)

0.146215

0.152250

0.163730

0.22335

0.231065

*including passenger transport Tab. 12. Revenues from sales per tkm in cargo transport using inland waterways in Poland / source: own work based on: Prices in the national economy in 2013 and 2014, GUS, Warsaw [online], stat.gov.pl [access: 08.01.2016]

per tkm on average in the analysed period at constant prices of 2014. Revenue per tkm estimated this way was assumed to be the basis for calculating the increase in revenue from sales of cargo transport services at the lower Vistula River (Tab. 13). An analysis of the structure of costs by type in shipping companies in Western Europe (Tab. 14) and in Poland (Tab. 15) was conducted to separate the gross value added from the sales revenue from cargo transport using the lower Vistula River (dolna Wisła). On the basis of the analysis it is assumed that in Poland the costs incurred by shipping companies in connection with the purchase of goods and services (materials, energy and outsourced services) from external suppliers are 50% of prime costs. Similar conclusions can be drawn from an analysis of the structure of costs by type in this mode of transport conducted on the basis of the “Statistical Yearbook of Transportation” (Tab. 16) prepared by the GUS in Poland in the 1980s.

285

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Year

Projected increase in transport work (thousand tkm)

Increase in sales revenue in inland waterway transport thousand, PLN thousand

1,508

276

1,515

278

18,522

3395

49,020

8,986

99,025

18,153

149,030

27,320

449,034

82,318

799,039

146,481

999,044

183,146

999,049

183,147

999,054

183,148

999,058

183,149

999,063

183,150

1,199,068

219,815

1,399,072

256,480

1,399,077

256,481

1,399,082

256,482

1,399,086

256,483

1,399,091

256,484

1,399,095

256,484

1,399,100

256,485

1,399,104

256,486

1,399,109

256,487

1,399,113

256,488

2,399,118

439,810

2,999,122

549,804

3,599,127

659,798

3,599,131

659,798

3,599,135

659,799

Tab. 13. Account of the increase in revenues from cargo transport using the lower Vistula River waterway (at constant prices) / source: Own work based on: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, p. 39

286

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Cost type

Depreciation and amortisation

Fuels and lubricants

Personnel costs with statutory liabilities

Other costs (including insurance of vessels, shipping charges, maintenance and repair costs)

Tab. 14. The structure of costs by type of shipping companies in Western Europe (%) / source: Cf. Ekonomiczne i organizacyjne aspekty transportu [Economic and organizational aspects of transport], collective study, ed. I. Urbanyi-Popiołek, Academic Publishing of the University Economy in Bydgoszcz, Bydgoszcz 2013, pp. 99–100

Cost type

Depreciation and amortisation

Fuels and lubricants

40-45

Personnel costs with statutory liabilities

Finance costs

Other costs (including insurance of vessels, shipping charges, maintenance and repair costs)

10-15

Tab. 15. The structure of costs by type of shipping companies in Poland (%) / source: Cf. Ekonomiczne i organizacyjne aspekty transportu [Economic and organizational aspects of transport], collective study, ed. I. Urbanyi-Popiołek, Academic Publishing of the University of Economy in Bydgoszcz, Bydgoszcz 2013, pp. 99–100; J. Kulczyk, J. Winter, Śródlądowy transport wodny [Inland waterway transport], Wrocław 2003, p. 50; Żegluga śródlądową w Polsce w latach 2010–2013 [Inland navigation in Poland in 2010–2013], GUS, Warsaw 2014

Tangible costs Years

Intangible costs

materials

depreciation/ amortisation

outsourced transport services

outsourced repair services

other tangible costs

Costs of purchase of goods and services from external suppliers

Total

1975

34,9

25,5

18,1

0,9

14,1

6,5

100.0

1980

42,9

19,1

16,9

1,4

3,7

40,2

100.0

1985

39,1

23,3

11,3

0,9

5,4

49,6

100.0

Tab. 16. Costs by type in shipping companies in Poland (%) / source: own work based on: Roczniki statystyczne transportu [Statistical Yearbook of Transport] [online], http://stat.gov.pl/obszary-tematyczne/transport-i-lacznosc/ [access: 08.01.2016]

287

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Item Revenues from sales of services at current prices in commercial transport (PLN million) Changes in the prices of services in cargo road transport (previous year = 100) Revenues from sales of services in commercial transport at prices of 2014 (PLN million) Transport work in commercial cargo transport (million tkm) Revenues from sales of services in commercial transport, PLN per tkm (at constant prices of 2014)

2010

2011

2012

2013

2014

59,843

64,705

71,916

73,863

82,648

101.2

103.6

101.7

103.7

103.1

67,411

70,355

76,889

76,153

82,648

173,126

178,426

193,860

216,155

220,483

0.3894

0.3943

0.3966

0.3523

0.3748

Tab. 17. Revenues from sales per tkm in commercial cargo transport by road in Poland / source: own work based on: Transport – wyniki działalności [Transport – performance], GUS, Warsaw 2001–2015; Ceny w gospodarce narodowej 2013 i 2014 [Prices in the national economy in 2013 and 2014], GUS, Warsaw, stat.gov.pl [access: 08.01.2016]

In 2010-2013, the share of prime costs of services sold in sales revenues of shipping companies in Poland was 98.6% on average27. In accordance with the standards applicable in economic analysis, it is assumed that this rate should be below 90%28. However, it can be expected that the creation of a modern waterway through the construction of the KDW will contribute to a significant reduction of operating costs incurred by ship owners. Therefore, it is assumed in the analysis that the rate: • the share of the costs of “purchase of goods and services from external suppliers” will decrease to 45% • the share of the costs of services sold in sales revenues will decrease to 85%. Under these assumptions, the share of the costs incurred for “purchase of goods and services from external suppliers” projected for inland waterway ship owners operating on the lower Vistula River waterway in sales revenue is 38.2% (0.45 x 0.85). This value was determined based on the following relation:

where: KZZ – costs incurred for the purchase of goods and services from external suppliers, S – revenues from sales of services, K – prime costs. The value added of cargo transport using inland waterways will therefore constitute the remaining part of revenues from sales of services, i.e. 61.8%.

Motor carriers The study assumes that if the construction of the KDW is cancelled, the increased demand for transport in the area of this waterway would be taken over by road transport, which would mean additional overload of this mode of transport and an increase in operating costs. The analysis shows that revenue from sales of cargo transport services through commercial road transport per tkm in 2014 was PLN 0.3748 (Tab. 17). 27 Żegluga śródlądowa w Polsce w latach 2010–2013 [Inland waterway transport in Poland in 2012–2013], GUS, Warsaw 2014. 28 M. Sierpińska, T. Jachna, Ocena przedsiębiorstwa według standardów światowych [Enterprise rating by global standards],

PWN, Warsaw 2004, p. 179.

288

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Year

Projected increase in transport work (thousand tkm)

Increase in sales revenue in road transport (PLN thousand)

1,508

575

1,515

578

18,522

706 6

49,020

18,701

99,025

37,777

149,030

568 54

449,034

171,303

799,039

304,827

999,044

381,128

999,049

381,130

999,054

381,132

999,058

381,133

999,063

381,135

1,199,068

457,435

1,399,072

533,735

1,399,077

533,737

1,399,082

533,739

1,399,086

533,741

1,399,091

533,743

1,399,095

533,744

1,399,100

533,746

1,399,104

533,748

1,399,109

533,750

1,399,113

533,751

2,399,118

915,245

2,999,122

1,144,142

3,599,127

1,373,040

3,599,131

1,373,041

3,599,135

1,373,043

Tab. 18. Account of the increase in sales revenues in road transport if the construction of the Lower Vistula Cascade is cancelled (at constant prices) / source: own work based on: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, p. 39

PLN 0.3815 per tkm was the average sales revenue in commercial road transport in 2010–2014 at constant prices (prices of 2014). This amount was assumed to be a basis to estimate the increase in revenues from sales of services in road transport, provided that the demand for cargo transport is taken over from the lower Vistula River (dolna Wisła) waterway. The calculation of the increase in sales revenues in road transport is shown in Tab. 18. 289

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Item

2005

2006

2007

2008

2009

2010

2011

2012

2013

Consumption of materials and energy

27.6

27.3

25.8

25.6

23.6

24.6

26.6

27.3

26.6

Outsourced services

28.4

31.3

34.3

35.4

35.1

36.8

36.5

36.1

Gross salary including employee benefits

28.2

25.6

24.6

24.1

24.9

23.4

21.4

20.9

21.0

Depreciation and amortisation

8.1

7.5

7.2

7.3

6.8

6.2

6.3

6.6

Other costs

7.7

8.3

8.1

7.7

9.1

8.4

8.8

9.0

9.7

100.0

Total

*data refer to entities employing more than 49 people Tab. 19. Costs by type in road transport companies* in Poland / source: own work based on the GUS: Transport drogowy w Polsce w latach 2010 i 2011 [Road transport in Poland in 2010 and 2011] [online], http://stat.gov.pl/cps/rde/xbcr/gus/ TL_transport_drogowy_2010-2011.pdf, 2012 i 2013 [online], http://stat.gov.pl/obszary-tematyczne/transport-i-lacznosc/ transport/transport-drogowy-w-polsce-w-latach-2012-i-2013,6,3.html [access: 08.01.2016]

An analysis of the structure of costs by type in road transport companies in Poland (Tab. 19) was conducted to separate the gross value added from the sales revenue from commercial cargo transport by road. This analysis shows that the costs incurred by motor carriers in connection with the purchase of goods and services from external suppliers constitute 70% of prime costs in Poland29. To compare, in 2010-2013 the average share of prime costs in sales revenues of road transport companies was 98.3%. However, it can be expected that in the conditions of traffic congestion growing as a result of the fact that the demand for cargo transport is taken over from the lower Vistula River waterway, the operating costs of motor carriers will increase. Therefore, the analysis assumes that in respect of motor carriers supporting transport in the area of the lower Vistula River (dolna Wisła), the share rate of: • costs of “purchase of goods and services from external suppliers” in prime cost will increase compared to the current level by approx. 5 pp, i.e. to 75% • costs in sales revenues will increase to 99%. This was the basis for estimating the expected share of the costs incurred to “purchase goods and services from external suppliers” in the sales revenues of motor carriers at 74.2% (0.75 x 0.99). As a result, the value added in cargo road transport, if the construction of the KDW is cancelled, will constitute 25.8% (100% – 74.2%) of revenues from sales. The actual increase in gross value added in transport and storage because of the development of the lower Vistula River (dolna Wisła) is therefore a result of the difference between the gross value added achieved in cargo transport using the lower Vistula River waterway and the gross value added achieved by motor carriers if the construction of the Lower Vistula Cascade is cancelled. These effects will be insignificant in the first period of the investment project. However, they will increase together with the progress in the development of the waterway, and at the last stage of the investment project they may reach PLN 55 million.

29 The average costs of consumption of materials and energy, outsourced services and 75% of the average of other cost item in

2010–2013.

290

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Year

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Projected increase in transport work (thousand tkm)

Projected increase in sales revenues (PLN thousand)

0 1,508 1,515 1 8522 4 9020 9 9025 149,030 449,034 799,039 999,044 999,049 999,054 999,058 999,063 1,199 068 1,399 072 1,399 077 1,399 082 1,399 086 1,399 091 1,399 095 1,399 100 1,399 104 1,399 109 1,399 113 2,399 118 2,999 122 3,599 127 3,599 131 3,599,135

Projected increase in value added (PLN thousand)

in inland waterway transport

in road transport

in inland waterway transport

in road transport

Net effect of the increase in value added (PLN thousand)

0.0 276.4 277.7 3,395.5 8,986.4 18,153.4 27,320.4 82,317.6 146,481.1 183,146.3 183,147.2 183,148.1 183,148.9 183,149.8 219,815.0 256,480.0 256,481.0 256,481.9 256,482.6 256,483.5 256,484.3 256,485.2 256,485.9 256,486.8 256,487.6 439,810.0 549,803.7 659,797.5 659,798.3 659,799.0

0.0 575.3 578.0 7,066.0 18,700.8 37,777.3 56,853.8 171,303.1 304,827.4 381,127.8 381,129.7 381,131.6 381,133.1 381,135.0 457,435.4 533,735.4 533,737.4 533,739.3 533,740.8 533,742.7 533,744.2 533,746.1 533,747.7 533,749.6 533,751.1 915,245.5 1,144,142.5 1,373,039.9 1,373,041.4 1,373,042.9

0 171 172 2,098 5,554 11,219 16,884 50,872 9 0525 113,184 113,185 113,186 113,186 113,187 135,846 158,505 158,505 158,506 158,506 158,507 158,507 158,508 158,508 158,509 158,509 271,803 339,779 407,755 407,755 407,756

0 148 149 1,823 4,825 9,747 14,668 44,196 78,645 98,331 98,331 98,332 98,332 98,333 118,018 137,704 137,704 137,705 137,705 137,706 137,706 137,707 137,707 137,707 137,708 236,133 295,189 354,244 354,245 354,245

0 22 23 275 729 1,472 2,216 6,676 11,880 14,853 14,854 14,854 14,854 14,854 17,827 20,801 20,801 20,801 20,801 20,801 20,801 20,801 20,801 20,801 20,802 35,669 44,590 53,511 53,511 53,511

Tab. 20. Calculation of the increase in gross value added in transport and storage as a result of the Lower Vistula Cascade / source: own work

A direct contribution of the transport sector to GDP is generally low. Therefore, there is even a belief that it is not justified to calculate the contribution of transport. This is because other sectors of the national economy can not function without transport30.

30 G.W. Kołodko, Dokąd zmierza świat. Ekonomia polityczna przyszłości [Whither the World: The Political Economy of the

Future], Warsaw 2013, p. 333.

291

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Item Revenues from sales of products and services at current prices (PLN million) Price growth rate in passenger transport (%) Revenues from sales of products and services at constant prices of 2014 (PLN million) Transport work in passenger transport* (million tkm) Revenues from sales of services in PLN per pkm (at constant prices) * including cargo transport

2010

2011

2012

2013

2014

17.0

16.8

17.0

26.9

29.0

100.6

102.2

102.3

101.6

100.9*

18.2

17.6

17.4

27.1

29.0

18.6

0.791304

0.733333

0.725000

1.355000

1.559140

Tab. 21. Revenues from sales of 1 passenger-kilometre (pkm) in inland waterway transport in Poland / source: Own work based on: Ceny w gospodarce narodowej 2013 i 2014 [Prices in the national economy in 2013 and 2014], GUS, Warsaw [online], stat.gov.pl [access: 24.03.2016]

Passenger transport As previously mentioned, GDP growth caused by an increase in passenger transport on the lower Vistula River (dolna Wisła) is estimated as an increase in the value added obtained through improved tourist attractiveness of the lower Vistula River waterway and is a result of the increased tourist traffic on this waterway. Using prices of 2014 as base prices, 1 passenger-kilometre (pkm) in inland waterway transport in 2010 was a source of PLN 0.79 sales revenue, compared to PLN 1.56 in 2014 (Tab. 21). PLN 1.03 per pkm was the average sales revenue in passenger transport using inland waterways in 2010–2014 at constant prices of 2014. This amount was assumed to be a basis to estimate the increase in revenues from sales of services in inland waterway transport due to the increased passenger transport at the lower Vistula River (Tab. 22). According to the analysis the costs incurred by shipping companies in connection with the purchase of goods and services (materials, energy and outsourced services) from external suppliers are 40% of prime costs, and therefore are lower than in the case of cargo transport. In addition, it is assumed that this type of transport is characterised by higher profitability. Therefore, it is assumed that the share of costs in sales revenue from passenger transport using inland waterways fluctuates around 0%. This was the basis for estimating that the share of the costs incurred to “purchase goods and services from external suppliers” in the sales revenues from passenger transport using inland waterways at 32.0% (0.40 x 0.80). As a result, the value added of passenger transport using inland waterways was estimated at 68% (100% – 32.0%) of revenue from sales. The calculation of the projected increase in sales revenues and the projected increase in the value added of increased passenger transport on the lower Vistula River (dolna Wisła) is shown in Tab. 22. The studies show that over 30 years from the moment of the start of the investment project, the additional GDP generated by passenger transport on the lower Vistula River waterway will range from PLN 1.5 million in the second year of implementation of the investment to PLN 35.6 million in the last year of completion of the investment.

3.3.2. Agriculture and forestry GDP growth in agriculture Currently, the share of agriculture, forestry, hunting and fishing in generating the value added of the entire Polish economy is estimated at approx. 3% (Fig. 25). The development of the lower Vistula River (dolna Wisła) will result in a visible increase in available water resources (through retention) in the immediate vicinity of the waterway, and will therefore contribute to a decrease in losses suffered in agricultural production because of drought and to a reduction in the loss of benefits in the form of value added. In an earlier analysis it was demonstrated that the mitigation of the effects of drought in the area of 292

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Passenger transport Year

number of passengers (thousand)

transport work* (thousand tkm)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0 106 211 317 422 528 633 738 843 948 1,054 1,159 1,264 1,368 1,473 1,578 1,583 1,588 1,592 1,597 1,601 1,706 1,810 1,915 2,019 2,123 2,228 2,332 2,436 2,540

0 2,120 4,220 6,340 8,440 10,560 12,660 14,760 16,860 18,960 21,080 23,180 25,280 27,360 29,460 31,560 31,660 31,760 31,840 31,940 32,020 34,120 36,200 38,300 40,380 42,460 44,560 46,640 48,720 50,800

Projected increase in sales revenues (PLN thousand)

Projected increase in value added (PLN thousand)

0 2,184 4,347 6,530 8,693 10,877 13,040 15,203 17,366 19,529 21,712 23,875 26,038 28,181 30,344 32,507 32,610 32,713 32,795 32,898 32,981 35,144 37,286 39,449 41,591 43,734 45,897 48,039 50,182 52,324

0 1,485 2,956 4,441 5,911 7,396 8,867 10,338 11,809 13,280 14,764 16,235 17,706 19,163 20,634 22,105 22,175 22,245 22,301 22,371 22,427 23,898 25,354 26,825 28,282 29,739 31,210 32,667 34,123 35,580

* 20 km is the assumed average distance of transport of 1 passenger Tab. 22. Projected increase in sales revenues and value added in passenger transport on the lower Vistula River / source: own work based on: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, p. 73

the lower Vistula River (dolna Wisła) will help to reduce the average annual loss by PLN 450 million31. Assuming that the agricultural production will be sold, this means an increase in sales revenues and, consequently, an increase in the value added.

31 K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3..., p. 67.

293

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Fig. 25. The share of agriculture, forestry, hunting and fishing in gross value added (%) / source: Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Annual macroeconomic indicators, PART III], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 19.02.2016]

Unit value added Existing relations between global output in agriculture and the value added generated in this sector of the national economy are assumed to be a basis for research into the increase in the value added in agriculture, obtained as a result of increased sales of agricultural output (Tab. 23). However, as already demonstrated, the statistics of the Central Statistical Office (CSO) in accordance with the Polish Classification of Activities (PKD 2007) contain data on the value added including not only agriculture, but also forestry, hunting and fishing. The studies show that the share of forestry in total value added of the whole sector is 11%32. Assuming that 1% of the value added can be attributed to hunting and fishing, agriculture is considered to produce 88% of the total value added of this sector of the economy. In 2014, PLN 0.374 of gross value added accounted for one unit of gross agricultural output in Poland. In 2010– 2014, every PLN 1 of global output in agriculture was a source of value added of PLN 0.381 on average. This amount was assumed to be a basis to calculate the increase in value added in agriculture, obtained from increased agricultural output as a result of reduced losses caused by drought. Therefore, it can be assumed that the average annual increase in value added in agriculture in the 30-year reference period will be PLN 171.5 million (PLN 450 million x 0.381).

Fires in forests and GDP Previous studies have shown that in 2014 forest fires affected 578 ha in the area of the lower Vistula River (dolna Wisła) 578 ha, of which: • 66 ha in the Kuyavia-Pomerania Province • 61 ha in the Pomerania Province • 450 ha in the Mazovia Province. Total fire loss in forests in the area of direct impact of the lower Vistula River (dolna Wisła) in 2005–2014 was PLN 35.8 million per year on average33. But it cannot be concluded with certainty that the benefits from forestry lost because of fires would be sold. Therefore, the analysis assumes that the potential benefits of value added from the sale of timber and other forest products will be negligible and will not have a significant impact on GDP in Poland. 32 Leśnictwo 2015 [Forestry 2015], GUS, Warsaw 2015; Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Annual macroeconomic

indicators, PART III] [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 22.02.2016]. 33 K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3..., pp. 68–69.

294

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Years

Global agricultural output* (PLN million)

Value added (PLN million) in agriculture, forestry, hunting and fishing

of which in agriculture

Value added in agriculture per unit of global output

2010

84,484.2

37,085

32,634.8

0.386

2011

100,674.4

44,365

39,041.2

0.388

2012

103,114.0

43,404

38,195.5

0.370

2013

107,810.8

47,602

41,889.8

0.389

2014

105,345.0

44,797

39,421.4

0.374

* Global agricultural output includes: crop output, i.e., raw (not processed) products of plant origin (harvests for a given year); animal output, i.e., production of animals for slaughter, raw (not processed) animal-based products of animal origin as well as the increase in farm animal stocks (livestock – the basic and working herd), which include: cattle, pigs, sheep, horses and poultry. Tab. 23. Gross value added per unit of global output in agriculture in Poland in the years 2010–2014 (at current prices) / source: own work based on: Rocznik statystyczny rolnictwa 2014 [Statistical Yearbook of Agriculture 2014], GUS, Warsaw 2015, Leśnictwo 2015 [Forestry 2015], in: Rocznik statystyczny Rzeczypospolitej Polskiej 2015 [Statistical Yearbook of the Republic of Poland 2015], GUS, Warsaw 2015 [online], http://stat.gov.pl/obszary-tematyczne/roczniki-statystyczne/roczniki-statystyczne/rocznik-statystyczny-rzeczypospolitej-polskiej-2015,2,10.html [access: 19.02.2016]; Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Annual macroeconomic indicators, PART III] [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 19.02.2016]

Fig. 26. The share of production and supply of electricity, gas, steam and hot water in the gross value added (%) / source: Roczne wskaźniki makroekonomiczne CZĘŚĆ III (Annual macroeconomic indicators, PART III), GUS [online], http://stat.gov. pl/wskazniki-makroekonomiczne/ [access: 22.02.2016]

3.3.3. Energy sector GDP growth in energy sector Currently, the share of production and supply of electricity, gas, steam and hot water in generating the value added of the national economy in Poland is estimated at approx. 3.5% (Fig. 26).

295

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

The construction of the KDW will allow producing extra electricity (excluding the existing barrage in Włocławek) in the last year of the 30-year reference period (Tab. 24) in the range of 2,895 GWh (at the maximum flow rate of 900 m3/s) to 3,559 GWh (at the maximum flow rate of 1800 m3/s).

Unit value added The unit value added of electricity production is assumed to be a basis for analysis of the increase in the value added in the energy sector. Since the statistics of the Central Statistical Office do not distinguish what part of the value added is the share of activity related to the production and distribution of electricity, it was assumed in the studies that the share is in line with the structure of the global consumption in terms of: • production, transfer and distribution of electricity – 88.7% • production and supply of steam, hot water and air conditioning – 11.0% • production of gas fuels – 0.3%34. It is assumed in the studies that the share of activity related to the production and supply of electricity in the total value added of the entire energy sector in Poland is 89%. It can therefore be assumed that the value added in 2014 in respect of the production and supply of electricity in Poland was PLN 45.5 billion, and 1 GWh was a source of value added of PLN 0.2637 million (Tab. 25). In 2010–2014, the unit value added was PLN 0.2613 million on average; this value was adopted as a basis for calculating the increase in value added as a result of the production of electricity at the barrages of the lower Vistula River (Tab. 26). It can be expected that the increase in value added in the energy sector as a result of the construction of the KDW will grow with launches of successive hydropower plants, and will range from PLN 75 million in the fifth year of the construction to PLN 930 million in the last year of the investment project.

3.3.4. Tourism GDP growth in tourism Currently, the share of arts, entertainment and recreation in the gross value added of the national economy in Poland is estimated at 0.7% (Fig. 27).

Unit value added The unit value added from global output in the field of arts, entertainment and recreation is assumed to be a basis for analysis of the increase in value added as a result of increased tourist activity in the area of the lower Vistula River (dolna Wisła) after the development of the waterway. Value added of PLN 0.463 on average was obtained from PLN 1 of global output in this sector in Poland in 2014 (Tab. 27). For the purposes of further calculation of the increase in the value added as a result of the increase in revenues from tourism in the area of the lower Vistula River (dolna Wisła), a unit value added from the global output in relation to arts, entertainment and recreation is assumed for the period of 2010–2014, i.e. PLN 0.459 on average. Revenues from spending by tourists who use the waterway (Tab. 28) were adopted at the level estimated by the EU at EUR 32 (PLN 134.4 at exchange rate of PLN 4.2/EUR 1)35. 34 Gospodarka paliwowo-energetyczna w latach 2013 i 2014 [Fuel and energy management in 2013 and 2014], GUS, Warsaw

2015. 35 K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 1. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3]. Społeczno-ekonomiczne przesłanki zagospodarowania dolnej Wisły [Socio-economic reasons for the development of the lower Vistula River], Energa SA, Sopot 2015, p. 69.

296

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Year of construction

Siarzewo

Tczew

Gniew

Grudziądz

Chełmno

Solec Kujawski

Płock

Wyszogród

Warsaw

Total

288

415

288

415

288

415

492

703 703 1,195

288

415

492

288

415

492

425

1,195 1,620

288

415

492

425

1,620

288

415

492

425

288

415

492

425

463

2,083

288

415

492

425

463

2,083

288

415

492

425

463

2,083

288

415

492

425

463

2,083

288

415

492

425

463

548

2,631

288

415

492

425

463

548

2,631

288

415

492

425

463

548

2,631

288

415

492

425

463

548

2,631

288

415

492

425

463

548

2,631

288

415

492

425

463

548

317

2,948

288

415

492

425

463

548

317

2,948

288

415

492

425

463

548

317

288

415

492

425

463

548

317

320

3,268

288

415

492

425

463

548

317

320

3,268

288

415

492

425

463

548

317

320

3,268

288

415

492

425

463

548

317

320

288

415

492

425

463

548

317

320

1,620

2,948

3,268 291

3,559

Tab. 24. Annual production of electricity at the barrages of the lower Vistula River (dolna Wisła), with a maximum flow rate of 1800 m3/s, without taking into account the barrage in Włocławek (GWh) / source: own work based on: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, pp. 60–61

297

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Years

Production of electricity from domestic sources (GWh)

2010

Value added (PLN million)

Value added per unit of electricity production (PLN million/1 GWh)

Production and supply of electricity, gas, steam and hot water

of which production and supply of electricity

163,968

44,434

39,546

0.2412

2011

163,548

46,116

41,043

0.2510

2012

162,139

51,153

45,526

0.2808

2013

172,381

52,245

46,498

0.2697

2014

172,566

51,132

45,507

0.2637

Tab. 25. Estimation of value added and unit value added in the production and supply of electricity in Poland in 2010–2014 (at current prices) / source: own work based on: Rocznik Statystyczny Przemysłu 2014 [Statistical Yearbook of Industry 2014], GUS, Warsaw 2015 [online], http://stat.gov.pl/obszary-tematyczne/roczniki-statystyczne/roczniki-statystyczne/rocznik-statystyczny-przemyslu-2014,5,8.html [access: 22.02.2016]; Rocznik statystyczny przemysłu 2015 [Statistical Yearbook of Industry 2015], GUS, Warsaw 2016 [online], http://stat.gov.pl/obszary-tematyczne/roczniki-statystyczne/ [access: 22.02.2016]; source: Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Annual macroeconomic indicators, PART III], GUS [online], http://stat.gov. pl/wskazniki-makroekonomiczne/ [access: 22.02.2016]

Fig. 27. The share of arts, entertainment and recreation in the gross value added (%) / source: Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Annual macroeconomic indicators, PART III], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 22.02.2016]

It can be expected that the increase in value added in arts, entertainment and recreation as a result of the construction of the KDW will grow with the progress in the process of comprehensive development of the waterway, and will range from PLN 80 million in the first year of the beginning of the investment to PLN 308 million after the completion of construction.

3.3.5. Construction Increase in value added in construction The construction sector has a significant share in GDP. Currently, the share of construction in generating the value added in Poland is estimated at approx. 7.4% (Fig. 28). 298

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Year of construction

Annual electricity production (GWh)

Increase in value added from electricity production (PLN million)

288

703

184

703

184

1,195

312

1,195

312

1,620

423

1,620

423

1,620

423

2,083

544

2,083

544

2,083

544

2,083

544

2,631

687

2,631

687

2,631

687

2,631

687

2,631

687

2,948

770

2,948

770

2,948

770

3,268

854

3,268

854

3,268

854

3,268

854

3,559

930

Tab. 26. Increase of the value added from the production of electricity in power plants at the barrages in the KDW with the unit value added of PLN 0.2613 million/1 GWh / source: own work based on: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, pp. 60–61

The construction of the Lower Vistula Cascade will mean a considerable increase in the demand for construction materials and services. The resulting increase of production in the construction sector will consequently contribute to more revenue. This is because the expenditure on the construction of the KDW incurred by the investors will correspond to the profit obtained by construction companies. The new gross value added generated in this sector of the economy will therefore contribute to GDP growth. 299

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Years

Global output (PLN million)

Value added (PLN million)

Value added per unit of global output

2010

23,219

11,081

0.477

2011

25,211

11,207

0.444

2012

25,708

11,323

0.440

2013

22,733

10,689

0.470

2014

23,225

10,756

0.463

Tab. 27. Gross value added per unit of global output in relation to arts, entertainment and recreation in Poland in 2010–2014 (at current prices) / source: own work based on: Rocznik Statystyczny Rzeczypospolitej Polskiej 2013 [Statistical Yearbook of the Republic of Poland 2013], GUS [online], http://stat.gov.pl/obszary-tematyczne/roczniki-statystyczne/ roczniki-statystyczne/rocznik-statystyczny-rzeczypospolitej-polskiej-2015,2,10.html [access: 22.02.2016]; Rocznik statystyczny Rzeczypospolitej Polskiej 2015 (Statistical Yearbook of the Republic of Poland 2015), GUS [online], http://stat.gov.pl/ obszary-tematyczne/roczniki-statystyczne/roczniki-statystyczne/rocznik-statystyczny-rzeczypospolitej-polskiej-2015,2,10. html [access: 22.02.2016]; Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Annual macroeconomic indicators, PART III] [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 22.02.2016]

Fig. 28. The share of construction in the gross value added (%) / source: Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Annual macroeconomic indicators, PART III], GUS [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 22.02.2016]

The studies show that there is a very strong correlation between the amount of capital expenditure in the economy and the value added in the economy (Fig. 29). This means that capital expenditure is seen as a very important factor determining the value added.

Unit value added The unit value added generated by global output in construction is assumed to be a basis for analysis of the increase in the value added in this sector of the economy. In 2014, PLN 1 of global output in construction was a source of value added of PLN 0.355 on average (Tab. 29). In order to estimate the GDP growth in construction, in connection 300

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Year

Increase in tourism spending at base prices (2015)

Increase in value added in arts, entertainment and recreation at base prices (2015)

175

202

208

228

105

249

114

282

129

302

139

323

148

343

157

363

167

396

182

423

194

450

207

477

219

497

228

511

235

517

237

517

237

517

237

517

237

517

237

538

247

558

256

571

262

591

271

605

278

625

287

638

293

659

302

672

308

Tab. 28. Estimated GDP growth as a result of the increase in the value added in arts, entertainment and recreation as a result of the construction of the KDW in PLN million / source: own work based on: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, p. 81

with the increased demand for materials and services in that sector, an average value of PLN 0.353 was adopted for this indicator for the period of 2010–2014. From the point of view of the construction sector, the expenditure incurred by investors in connection with the development of the lower Vistula River (dolna Wisła) corresponds to the revenues generated by the industry. 301

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Fig. 29. Changes in gross fixed capital formation and gross value added in 2000–2015 in Poland (PLN billion) / source: Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Annual macroeconomic indicators, PART III], GUS [online], http://stat.gov. pl/wskazniki-makroekonomiczne/ [access: 22.02.2016]

Years

Global output (PLN million)

Value added (PLN million)

Value added per unit of global output

2010 2011 2012 2013 2014

309,242 332,397 322,943 315,168 319,400

107,866 120,174 114,819 108,567 113,465

0.349 0.362 0.356 0.344 0.355

Tab. 29. Gross value added per unit of global output in construction in Poland in the years 2010–2014 (at current prices) / source: own work based on: Rocznik Statystyczny Rzeczypospolitej Polskiej 2013 [Statistical Yearbook of the Republic of Poland 2013], GUS [online], http://stat.gov.pl/obszary-tematyczne/roczniki-statystyczne/roczniki-statystyczne/rocznik-statystyczny-rzeczypospolitej-polskiej-2015,2,10.html [access: 22.02.2016]; Rocznik statystyczny Rzeczypospolitej Polskiej 2015 [Statistical Yearbook of the Republic of Poland 2015], GUS [online], http://stat.gov.pl/obszary-tematyczne/roczniki-statystyczne/roczniki-statystyczne/rocznik-statystyczny-rzeczypospolitej-polskiej-2015,2,10.html [access: 22.02.2016]; Roczne wskaźniki makroekonomiczne CZĘŚĆ III [Annual macroeconomic indicators. PART III] [online], http://stat.gov.pl/wskazniki-makroekonomiczne/ [access: 22.02.2016]

The increase in the value added estimated this way for the construction sector in connection with the construction of the KDW will vary in different years of the reference period, depending on the scope of investment work, and will range from PLN 172 to 522 million (Tab. 30). Because investments in infrastructure are projects characterised by a high level of capital intensity, it can be assumed that the ability to generate value added is definitely lower in their case. For example, the share of direct wages (one of the components of value added) in the structure of the costs of construction and assembly production in 2014 in Poland in relation to the selected construction works was as follows: • works related to the construction of civil engineering structures – 11.9% (of which the construction of roads and railroads – 9.1%) • construction works related to the erection of buildings – 13.4% 302

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Year

Increase in capital expenditure at base prices (2015)

Increase in the value added in the construction sector at base prices (2015)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

487.0 462.3 962.3 1,462.3 1,419.8 1,419.8 1,419.8 1,419.8 1,083.7 1,083.7 1,083.7 583.7 583.7 1,083.7 583.7 583.7 980.0 980.0 480.0 480.0 480.0 980.0 980.0 480.0 980.0 1,480.0 480.0 480.0 980.0 1,480.0

172 163 340 516 501 501 501 501 383 383 383 206 206 383 206 206 346 346 169 169 169 346 346 169 346 522 169 169 346 522

Tab. 30. Estimated GDP growth as a consequence of the increase in the value added in the construction sector resulting from the construction of the KDW based on the unit value added of PLN 0.353 (PLN million) / source: own work based on: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, p. 35

• special construction works (e.g. installation of electrical, plumbing and other building systems, finishing construction works) – 18.4%36. On the basis of the experience resulting from the completed investment projects in the field of road construction, it can be estimated that the share of value added in the estimated value of the investment is 16.36% on average

36 Budownictwo – wyniki działalności w 2014 r. [Construction – performance in 2014], GUS, Warsaw 2015

303

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Increase in capital expenditure at base prices (2015) 487.0 462.3 962.3 1,462.3 1,419.8 1,419.8 1,419.8 1,419.8 1,083.7 1,083.7 1,083.7 583.7 583.7 1,083.7 583.7 583.7 980.0 980.0 480.0 480.0 480.0 980.0 980.0 480.0 980.0 1,480.0 480.0 480.0 980.0 1,480.0

Increase in the value added in the construction sector at base prices (2015) 73 69 144 219 213 213 213 213 163 163 163 88 88 163 88 88 147 147 72 72 72 147 147 72 147 222 72 72 147 222

Tab. 31. Estimated GDP growth as a consequence of the increase in the value added in the construction sector resulting from the construction of the KDW assuming that the value added is 15% of capital expenditure (PLN million)/ source: own work based on: K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3. Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula, stage 3. Estimate of the costs and benefits of comprehensive development of the lower Vistula River], Energa SA, Sopot 2016, p. 35

(labour – 8.55%, profit – 5.81%37, depreciation/amortization – 2.0%38). Therefore, it is assumed that the share of value added in capital expenditure incurred for the construction of the KDW will be 15% (Tab. 31). 37 J. Górecki, Analiza struktury kosztów w budowlanych przedsięwzięciach inwestycyjnych [Cost Structure Analysis in the

Construction Investment Projects] "Budownictwo" 2010, issue 2 [online], https://suw.biblos.pk.edu.pl/resources/i2/i2/i7/i8/ r2278/GoreckiJ_AnalizaStruktury.pdf [access: 31.03.2016]. 38 Own estimate based on: Wyniki finansowe podmiotów gospodarczych I–XII 2014 [Financial results of economic entities I–XII 2014], GUS, Warsaw 2015.

304

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

In this scenario, the annual increase in the value added in the construction sector in individual years of the programming period will range from PLN 72 to 222 million per year (Tab. 32). To sum up, the construction of the KDW will ensure the increase in value added in various fields for the total amount of PLN 81–1272 million, with an annual average of PLN 685 million (Fig. 30). For comparison, GDP in 2014 was PLN 1,719,097 million, of which PLN 536 million was in the area of the lower Vistula River (dolna Wisła).

Increase in the value added in the case of the construction of the KDW, PLN million Year

In cargo transport

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0 0 0 0 1 1 2 7 12 15 15 15 15 15 18 21 21 21 21 21 21 21 21 21 21 36 45 54 54 54

In passenger transport 0 1 3 4 6 7 9 10 12 13 15 16 18 19 21 22 22 22 22 22 22 24 25 27 28 30 31 33 34 36

In energy In arts, entertainIn the construcproduction for In agriculture ment and recreation tion sector at the KDW at base prices (2015) base prices (2015) 0 0 0 0 75 75 184 184 312 312 423 423 423 544 544 544 544 687 687 687 687 687 770 770 770 854 854 854 854 930

172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172 172

8 9 10 11 11 13 14 15 16 17 18 19 21 22 23 24 24 24 24 24 24 25 26 26 27 28 29 29 30 31

73 69 144 219 213 213 213 213 163 163 163 88 88 163 88 88 147 147 72 72 72 147 147 72 147 222 72 72 147 222

Annual average

Total 253 251 328 406 478 481 593 600 686 691 805 733 736 934 865 870 929 1072 997 997 997 1075 1160 1087 1165 1341 1202 1213 1290 1443 856

Tab. 32. Increase in the value added in the case of the construction of the KDW (in PLN million) / source: own work

305

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Fig. 30. Increase in value added in the case of the construction of the KDW / source: own work based on Tab. 32

3.4. Taxes

The main source of benefits for GDP from transport in the area of the lower Vistula River (dolna Wisła) can be taxes on additional turnover of seaports thanks to the inland waterway transport in their hinterland. As already mentioned39, in 2014 taxes paid by the Port of Gdańsk, the main potential beneficiary of the development of the lower Vistula River (dolna Wisła), amounted to 6% of the national income and 19% of income from customs duties, VAT and excise duty. An increase in turnover of ports could increase the annual national income as follows: • PLN 2 billion after completion of the first stage • PLN 5 billion after completion of the second stage • PLN 11.8 billion after completion of the third stage (Tab. 33). In 2014, taxes on products less subsidies on products amounted to PLN 193,904 million, while GDP in the same year was PLN 1,719,097 million, which means that taxes less subsidies accounted for 11.3% of GDP calculated using value added. Taxes from the Port of Gdańsk in the analysed year were PLN 16 billion, which accounted for 8.25% of national income less subsidies and 0.9% of GDP.

39 K. Wojewódzka-Król, R. Rolbiecki, Badania społeczno-ekonomicznych skutków zagospodarowania dolnej Wisły, etap 3.

Szacunek kosztów i korzyści kompleksowego zagospodarowania dolnej Wisły [Analysis of the socio-economic impact of the development of the lower Vistula], stage 3...

306

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Projected volume of transport Year through the lower Vistula River to and from seaports 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

0 0 0 0.5 0.5 0.5 1 2 2 3 3 3 3 3 4 5 5 5 5 5 5 5 5 5 5 6 8 10 10 10

Taxes/1 million tonnes, increase of 3% per year

Additional national income from taxes on transport through the lower Vistula River

500 515 530 546 563 580 597 615 633 652 672 692 713 734 756 779 802 826 851 877 903 930 958 987 1,016 1,047 1,078 1,111 1,144 1,178

– – – 273 282 290 597 1,230 1,266 1,956 2,016 2,076 2,139 2,202 3,024 3,895 4,010 4,130 4,255 4,385 4,515 4,650 4,790 4,935 5,080 6,282 8,624 11,110 11,440 11,780

Tab. 33. The increase in national income from taxes through the increased turnover as a result of support of the hinterland by inland waterway transport on the lower Vistula River (in PLN million) / source: own work

Their increase by PLN 11.8 billion in the last year of the investment would result in the following at prices of 2014 and with the GDP structure at that time: • increase in the share of income less subsidies by 6% (up to 14% in total) – Fig. 31 • increase in the share in GDP by 0.7%, up to 1.6% in total – Fig. 32 In total, the GDP growth taking into account the increase in value added in the case of the construction of the KDW and the increase in taxes related to the increase in the turnover of ports is shown in Tab. 34 and Fig. 33.

307

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Fig. 31. The share of taxes related to turnover of seaports together with the increase of taxes after the development of the lower Vistula River in taxes less subsidies (taxes in the 30th year of the investment project compared to GDP in 2014) / source: own work

Fig. 32. The share of taxes related to turnover of seaports in generating the GDP (taxes in the 30th year of the investment project compared to GDP in 2014) / source: own work

3.5. Conclusions

As mentioned in the first chapter, GDP is widely recognised as a reliable measure of evaluation of a country’s economic activity. However, it is not perfect as it does not fully reflect the macroeconomic efficiency of the economy. The major disadvantages of GDP in connection with the construction of the Lower Vistula Cascade mean that the following are not considered: • external effects of economic development, such as the impact of environmental pollution • qualitative changes in the economy • information about the quality of life and information about the value of free time. As already mentioned, comprehensive water investments are characterised by a very large range of effects that are difficult to measure, including in relation to environmental protection (floods, fires, droughts, safety risk) and the quality of life (improvement of water supply, energy security, psychological effects for the inhabitants of the areas at risk of barrage disaster or flood).

308

III. IMPACT OF THE LOWER VISTULA CASCADE ON GDP IN POLAND AND REGIONS LOCATED AT THE LOWER VISTULA

Year

Increase in the value added in the case of the construction of the KDW, PLN million

Additional national income from taxes on transport through the lower Vistula River in PLN million

Total PLN million

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

253 251 328 406 478 481 593 600 686 691 805 733 736 934 865 870 929 1,072 997 997 997 1,075 1,160 1,087 1,165 1,341 1,202 1,213 1,290 1,443

– – – 273 282 290 597 1,230 1,266 1,956 2,016 2,076 2,139 2,202 3,024 3,895 4,010 4,130 4,255 4,385 4,515 4,650 4,790 4,935 5,080 6,282 8,624 11,110 11,440 11,780

81 80 156 507 588 600 1,019 1,659 1,780 2,476 2,650 2,637 2,703 2,965 3,717 4,593 4,768 5,031 5,081 5,211 5,341 5,553 5,779 5,851 6,073 7,451 9,655 12,151 12,559 13,052

Tab. 35. GDP growth as a result of the construction of the KDW calculated using the value added approach / source: own work

These effects, not considered or only partially considered in GDP, are often essential in such investments and at a certain level of socio-economic development the improvement of the quality of life and the reduction of environmental hazards are the factors that may determine the general benefits from the implementation of such a project. However, if the project is evaluated only from the point of view of GDP, we could indicate important reasons for its implementation: • a high increase in value added, amounting to a total of PLN 1,443 million in the 30th year of the construction of the KDW (annual average in the KDW construction period – PLN 856 million) • compliance with the economic policy aiming at overcoming the middle income trap 309

SECTION IV. IMPACT OF THE LOWER VISTULA CASCADE ON GDP EXPRESSED IN PLN MILLION

Fig. 33. GDP growth through the construction of the KDW (in PLN million) in individual years of the investment project / source: own work based on Tab. 35

• stimulating the socio-economic development of regions located at the lower Vistula River (dolna Wisła) by generating additional expenditure: –– investment multiplier (annual average of PLN 4,208 million) –– tourism spending (growing from PLN 175 million to 449 million in the 30th year of the investment project) –– tourism multiplier (growing from PLN 297 million to 764 million) • a relatively low burden on the budget due to low annual expenditure on the construction of the KDW (annual average of PLN 915 million) • long-term positive impact on GDP thanks to the scale of the investment project.

310

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ACTA ENERGETICA | ONE OF THE MOST DYNAMICALLY DEVELOPING POLISH SCIENTIFIC JOURNALS DEDICATED TO THE POWER SECTOR The scientific quarterly magazine Acta Energetica publishes papers addressing all aspects of electricity generation, distribution and consumption. Among the authors are prominent experts in technical sciences and R&D specialists, but there are also lawyers, economists and professionals involved in the everyday operations of the electricity generation and distribution market. Therefore, this quarterly publication presents a unique point of view which covers both the scientific perspective and the business practice of companies operating in the Polish and European electricity markets. The golden triangle Acta Energetica quarterly is placed within the golden triangle, as a modern platform for the exchange of knowledge and skills not only among academics but also in the business and governmental administration environment. The editors’ mission is to present the innovations and developments in the power sector taking place in Central Europe, with particular emphasis on Poland’s central position in the region. Regular issues of Acta Energetica have been published since 2009, although the publishing model has evolved. Since 2012 all papers are published not only in Polish but also in English. Regardless of its original language, every paper is professionally translated. As a result, the journal is available to foreign readers. Open Access Importantly, Acta Energetica is issued both in the basic, electronic on-line version, as well as in traditional print. The paper journals are distributed to libraries in Poland and abroad, and to interested institutions from government, business, and science, which is an additional contribution to the promotion of the authors and the knowledge exchange between Poland and the world. All papers published in the quarterly are made available online on an Open Access basis – everybody can read them and use them in their research for free. The quarterly website (www.actaenergetica.org) is a modern platform, which is also convenient to use on mobile devices. In addition to scientific papers, news from the power sector in Poland and the world are also posted there, as well as accounts of scientific and industry events and their extensive calendar. High editorial standards The editor-in-chief of the quarterly is Zbigniew Lubośny from the Power Engineering Department of the Faculty of Electrical and Control Engineering at Gdańsk University of Technology. All articles published in the journal undergo the process of a double blind review. The high linguistic quality of the publication is overseen by an editorial team consisting of those responsible for the editorial content, proofreading, and typesetting. Also important is the aesthetic side – the cover of every issue of the quarterly is provided with unique, specially designed graphic art. The authors’ relationship with the editorial team has been streamlined with the workflow electronic management system implemented in 2016. Due to this, every author submitting a paper is kept updated on the progress of the editorial work. Recognized status in the world of science Since February 2016 Acta Energetica has been indexed in the largest Open Access journal base in the world – Directory of Open Access Journals (www.doaj.org). The quarterly’s presence in the database confirms the compatibility of its papers with the requirements of open journals, and facilitates access to them for foreign readers and positively affects the ease with which content may be found by users around the world. This goal is also supported by the quarterly’s presence in other databases of abstracts and bibliographic databases. Acta Energetica papers can be found in Google Scholar, BazTech, and Index Copernicus databases. Equally important, the quarterly is on list B of magazines scored by the Ministry of Science and Higher Education. As of the beginning of 2017, a publication in the quarterly scores 7 points.

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