COUNTRY | Japan
REGION | Asia
SECTOR | transport
QII Principles | Principle 1 Sustainable Growth & Development, Principle 2 Economic Efficiency, Principle 3 Environmental Considerations, Principle 4 Building Resilience, Principle 5 Social Considerations, Principle 6 Infrastructure Governance
QII Sub-Principles | 1: SDGs, 1: Paris Agreement, 1: Wider economic benefits, 2: Value for money analysis, 2: Life-cycle costing, 2: Operation and maintenance, 2: Technological innovation, 2: Risk management, 3: Environmental Impact Assessment, 3: Disclosure of environmental aspects, 3: Ecosystems, 3: Biodiversity, 3: Climate, 3: Emissions, 4: Resilience, 4: Disaster risk management, 4: Disaster risk insurance, 5: Social Impact Assessment, 5: Job creation, 5: Capacity and institutional building, 5: Gender, 5: Occupational health and safety, 5: Universal access to services, 5: Social inclusiveness, 5: Disability, 5: Low-income groups, 5: Children, 5: Elderly, 5: Vulnerable environments, 5: Marginalised groups, 6: Growth & development strategies, 6: Procurement transparency, 6: Financial & debt sustainability, 6: Anti-corruption, 6: Access to information and data, 6: Legal and Regulatory Frameworks, 6: Institutional Framework of infrastructure investment, 6: Transparency of infrastructure investment, 6: Enabling Environment, 6: Policy
Toyama City is now a global role model as a Compact City, but Toyama used to be a typical Japanese city challenged by urban sprawl with an ageing and declining population. To address urban challenges, Toyama envisioned a Compact City with light rail transit (LRT) as its backbone.
The economic evaluation conducted for this case study focuses on the construction of the city’s first LRT line. The project cost was JPY 5.9 billion (US$ 54 million).
Through the LRT construction, Toyama achieved economic efficiency by utilizing existing rail tracks and shortening the project’s construction period. In fact, Toyama had to complete the project in 3 years due to internal constraints. This was accomplished through effective governance, particularly alignment with national policies, introduction of an agile project organization, and collaboration with private sector.
2003: Commence “Compact City” initiative
2006: Commence first LRT line
Relevance to QII
Toyama’s success as a “Compact City” is characterized by its effective governance. In the LRT project, Toyama significantly shortened the construction period by creating agile institutional frameworks, and timely delivery led to higher economic efficiency. Furthermore, Toyama successfully reduced capital expenditure for the LRT project by making full use of existing rail tracks within the city. The project also captured wider benefits as described in the “Benefits” section.
LRT development increased ridership by 4% in comparison with the precedent railway line and reaped various benefits (i.e. reduction of travel time, travel costs, traffic accidents, CO2 emissions, and traffic congestion). The total benefit is evaluated as JPY 30.8 billion (US$ 280 million), and the NPV is JPY 24.9 billion (US$ 220 million).
Utilization of existing rail tracks improved the project’s NPV by JPY 16.9 billion (US$ 150 million). Of the 7.6 km of the LRT line, 6.5 km were existing rail tracks. A standard LRT would cost JPY 22.8 billion (US$ 210 million) for the same length whereas Toyama’s project cost only JPY 5.9 billion (US$ 54 million).
Timely delivery improved the project’s NPV by JPY 17.5 billion (US$ 160 million). A typical LRT construction would take 6-9 years, but Toyama completed the project in 3 years. The evaluation assumed that ridership (and thus benefits) would be reduced by 30%-50%.
Wider benefits observed include an increase in exterior activities of elder citizens, a population shift into the city’s center and along LRT corridors, and an increase in land prices.
LRT ridership, reduction in capital expenditures
Name of Institution
Ministry of Finance, Japan