Economic Impact

Proposed R300 Toll Road Project
Environmental Impact Assessment

Economics Specialist Study
Prepared by:
Barry Standish
Antony Boting
Ernst Englebrecht
Anthony Leiman
Hugo van Zyl
05 APRIL 2003
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EXECUTIVE SUMMARY
The proposal to upgrade, extend, maintain and toll sections of the R300 under a
concession agreement is the result of an unsolicited bid submitted by the Peninsula
Expressway Consortium to the South African National Roads Agency Limited. This
specialist study reports, within the context of the terms of reference, on the economic
impact of this proposed project. In this regard we examined the overall macro
economic impact of the project, its impact on road users and its impact on the local
economic environment.
It was found that many of the relevant road sections of the R300 are approaching the
end of their design life. In addition to this, current traffic volumes are congesting
certain sections of the road, leading to slower travelling time and greater risks of
accidents. This problem is further compounded as forecasts in traffic growth indicate
serious congestion along most sections of the road. This indicates that the R300
need serious rehabilitation and capacity upgrades within the near future.
There is also an apparent need for urgency. It is well known that roads do not
deteriorate steadily over time. Rather, road damage and the cost of reconstruction
accelerate as a road nears the end of its design life. Hence, given the fact that the
road is nearing the end of its design life the urgency is due to the fact that the longer
the rehabilitation is left the more it would cost to reconstruct.
Given this apparent need for urgency, three critical policy issues emerged during the
course of the study.
The first issue is that the project proposal is being examined in the absence of an
integrated and coherent transport policy for the Western Cape. This issue is of
particular importance when examining the economic impact of the greenfields
sections of the proposal. While it is possible to identify some likely structural changes
as a result of the green fields proposal, the absence of policy guidelines makes it
difficult to draw conclusions on the desirability of these changes. However the fact
that the proposed project is financially and economically desirable suggests that
there is a need for the project. In addition, the greenfields section of the road follows
generally the road alignment within the context of the planning of the City of Cape
Town.
The second issue relates to the proposed alignment of the road through the wetlands
in the south and its potential impact on the proposed False Bay Ecology Park. In the
absence of the False Bay Ecology Park it is shown that the economic benefits of the
proposed project are far greater than the existing value of the wetlands that would be
affected by the road. However, we caution that such an approach could be too
simplistic. It is not clear that one can compare the benefits of a transportation project
to that of environmental issues using purely monetary comparisons. These issues
are further complicated by the proposals to develop the False Bay Ecology Park
which would encompass the wetlands in question. This study is not able to draw firm
conclusions about the proposed alignment through the wetlands. Rather it is
recommended that alternative alignments be investigated, on the one hand, and the
decision about the alignment of the road through the wetlands is a strategic decision
that must be made by the City of Cape Town and the Western Province. Such a
decision cannot be made in a specialist study.
The third issue is how to pay for the rehabilitation and upgrading of the R300.
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The most cost-effective way to pay for this rehabilitation and upgrading is through a
combination of fuel levies and special levies for heavy vehicles. The special levies
are necessary because, while heavy vehicles do the most damage to roads, these
damages are not fully recovered in the fuel levy. The major constraint on the effective
implementation of such a scheme is the financial policy on the part of government
that fiscal integrity means that there should be no earmarking of funds. Hence all
revenues raised, including the fuel levy, go into a common revenue fund and
expenditures are made from this fund.
The political reality of extensive poverty and hardship in the country, as well as the
need to address these issues, have resulted (and would continue to result) in
budgetary allocations in favour of poverty alleviation, etc, and at the expense of other
areas of expenditure like road maintenance. In consequence while tolling is a
second best way of paying for roads, political realities suggest that it is the only likely
option.
There could be certain losses in efficiency as a result of this choice but there is also
the potential for gains in economic efficiency. The efficiency losses are the possibility
of higher financing costs, the profit made on revenue collection, the cost of running
the toll plazas and concession company, and the cost of traffic diversions. Potential
efficiency gains are the imposition of the user pay system, and the potential for
differential toll tariffs. The first differential toll could see heavy vehicles paying for
their fair share of road damage. The second is the opportunity to introduce
congestion tolling.
In addition there is the potential to correct some of the distortions in the transport
industry. Currently light vehicles subsidise heavy vehicles through the fuel levy. In
public transport urban rail and bus services are subsidised. The potential exists to
encourage a move to motorised public transport in these areas by introducing
government subsidies for tolling of taxis and buses. Such subsidies would further
help to protect the poor and marginalised from the inevitable impact of higher
transport costs.
It should be recognised that if the R300 is upgraded and tolled it would cost more to
drive on the road than it does currently. However, it should also be recognised that it
would cost more if the road is not rehabilitated because of the increased costs of
poorer quality, more dangerous and more congested road. Two key issues emerge
from this. The first is which of the alternatives costs less. The second is to identify
vulnerable communities and road users with the intention of developing mitigation
measures against any cost increases.
The following detailed findings are summarised:
It was found that, apart from a few important exceptions, most users of the
proposed toll road would have positive road user benefits from the proposed
project. It was also found that, in aggregate, the proposed toll road would
generate overall road user benefits that are greater than road user costs. Simply
put this means that road user benefits would be greater by driving on the
upgraded toll road than on the existing road. This is due in earlier years to rapid
deterioration in the existing road quality as the road nears the end of its design
life and in latter years due to increased congestion and slower travelling times.
! There are a number of key exceptions to these general conclusions. The

first is that in some cases, in the earlier years of the proposed project,
road user costs exceed benefits for light vehicles (i.e. class 1). This
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occurs before the riding quality of the road deteriorates seriously and
capacity constraints further slow vehicle flows.
! The second, and more important, exception is that certain categories of

road users would face increased costs for considerable periods of time at
the proposed toll tariffs. These relate particularly to vehicles travelling
between the N2 and Vanguard Drive.
! It was found that, given the exceptions above, the road user benefits
accrue more than proportionately to heavy vehicles rather than light
vehicles.
While there are no captive communities, there are two groups of road users who
are potentially vulnerable to tolling. First are a number of less affluent vehicle
owners who make intensive use of the road as well as communities in the
southern area of the existing R300. Second, some users of public transport are
particularly vulnerable because of their low income levels. In both cases
mitigation measures are proposed in an attempt to ease this burden.
Nevertheless it should be recognised that in the absence of upgrading and tolling
the road user costs of these vulnerable groups would increase by even more than
for the proposed project and there would be considerably less opportunity for
mitigation measures.
Access City at the Van Riebeeck Interchange is potentially vulnerable and is

quasi captive to the road.
It was found that the cumulative impact of the upgrading and tolling of the N1/N2
and R300 was positive. In other words upgrading and tolling add less to road
user costs than driving on the roads without upgrading. This is particularly true in
later years with increased traffic congestion and lack of road capacity without
upgrading.
As can be expected the northern wetlands section of the road would impact on a
number of farms, all of which would lose land to a larger or lesser extent. This is
not a financial problem as long as full compensation is paid (for which some
calculations are made). It should be noted that there will also be emotional and
social impacts. The current proposed alignment has the potential to compromise
the viability of a diary farm and puts future livelihoods and thirty jobs in jeopardy.
It is recommended that the project proponents explore alternative alignments, in
consultation with the farmers to find the least cost, least impact alignment.
The proposed project would make a substantial contribution to gross domestic

product and the creation of direct and indirect jobs.
! The proposed project has the capacity to make a contribution to GDP of

about R500m each year during the first three years of construction. By the
end of the concession period the contribution to GDP could be as high as
R940m with most of this stimulus coming from road user benefits. The
proposed project has the capacity to make a cumulative contribution to
GDP of over R17 billion by the end of the contract period.
! There is the potential to generate over 2,100 jobs annually during the
initial construction phase. Subsequent maintenance and occasional
increases in road capacity would continue to generate a limited number of
direct jobs in construction. After construction and upgrading are complete
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between 600 and 900 direct and sustainable jobs would be created in the
concession company and in operation and maintenance.
! As with the contribution to GDP, the major contributor to jobs after

construction are the potential savings in road user costs and their
resultant impact on demand. These in turn lead to increased spending
and the generation of indirect jobs. The proposed project has the potential
to generate between 2,000 and 5,000 direct and indirect jobs over the
concession period.
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Table of Contents
EXECUTIVE SUMMARY............................................................................................................2
ACKNOWLEDGEMENTS ........................................................................................................14
INTRODUCTION ......................................................................................................................15
Background and brief........................................................................................... 15
Study area ........................................................................................................... 16
Report structure................................................................................................... 16
1 APPROACH .....................................................................................................................17
1.1 Information sources................................................................................... 17
1.2 Study limitations........................................................................................ 18
1.3 Consideration of alternatives..................................................................... 18

2 DESCRIPTION OF THE AFFECTED ECONOMIC ENVIRONMENT..............................19
2.1 The Cape Town Unicity ............................................................................. 19
2.1.1 Demographics and employment......................................................... 19
2.1.2 Income levels and poverty.................................................................. 20
2.1.3 Economic sectors and production ...................................................... 21
2.2 Sector 1: Vanguard Drive to Westlake....................................................... 22
2.2.3 Economic activity along the route....................................................... 23
2.3 Sector 2: Upgrading of the existing R300 .................................................. 24
2.4 Sector 3: Stellenberg Interchange to Wellington Road .............................. 27

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2.5 Sector 3: Wellington Road to Blaauwberg ................................................. 28

3 IMPACT DESCRIPTION AND ASSESSMENT ...............................................................30
3.1 Financial viability of the project.................................................................. 31
3.2 Transport policy, Economic development and Toll roads........................... 32
3.2.1 Western Cape transport policy ........................................................... 32
3.2.2 The role of transport infrastructure in economic growth...................... 34
3.2.3 Potential land use changes from the R300......................................... 34
3.2.4 Economic efficiency ........................................................................... 36
3.2.4.1 Sources of efficiency ................................................................... 36
3.2.4.2 Sources of inefficiencies ............................................................. 38
3.2.4.3 Tolling for efficiency .................................................................... 39
3.2.4.4 Regulatory issues ....................................................................... 40
3.3 Impact on wetlands in the south and the proposed False Bay Ecology Park
(Sector 1)............................................................................................................. 42
3.3.1 Potential impact on land values.......................................................... 43
3.3.1.1 Types of environmental values.................................................... 43
3.3.1.2 Results of the open space valuation study .................................. 45
3.3.1.3 Adaptation of values to the study area ........................................ 47
3.3.2 The proposed alignment and the False Bay Ecology Park ................. 49
3.3.2.1 Tourism and international perceptions ........................................ 49
3.3.2.2 Impact on the sense of place..................................................... 49
3.3.3 Conclusions and recommendations ................................................... 51
3.4 Road user costs and benefits (Sector 2) ................................................... 53
3.4.1 Methodological approach ................................................................... 53
3.4.2 Quantifying vehicle operating costs and road users costs .................. 54
3.4.2.1 Quantifying vehicle operating costs............................................. 54

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3.4.2.2 Quantifying road user costs......................................................... 57
3.4.3 Total road user costs and benefits ..................................................... 80
3.4.4 Road network costs and benefits ....................................................... 83
3.5 Impact on road users and capacity to pay (Sector 2)................................. 87
3.5.1 The Composition of traffic on the R300 .............................................. 88
3.5.2 Private road users.............................................................................. 91
3.5.3 Impact on business ............................................................................ 93
3.5.4 Impact on public transport ................................................................ 101
3.6 Impact on Farmers on the Northern Route (Sector 3).............................. 106
3.6.1 Summary of overall impact............................................................... 107
3.6.2 Impacts on individual farms.............................................................. 108
3.6.2.1 Phisantekraal ............................................................................ 108
3.6.2.2 Loch Lynne ............................................................................... 111
3.6.2.3 Bon Mella.................................................................................. 113
3.6.2.4 Vrymansfontein ......................................................................... 116
3.6.2.5 Kuiperskraal / Welgegund ......................................................... 120
3.6.2.6 Welvergenugd........................................................................... 123
3.6.2.7 Platterug/Vissershok ................................................................. 126
3.7 The Overall Macroeconomic Impact ........................................................ 129
3.7.1 General description of macroeconomic effects................................. 130
Construction and operation......................................................................... 131
Network capacity and road user benefits .................................................... 133
3.7.2 Contribution to Gross Domestic Product .......................................... 133
3.7.3 Job creation ..................................................................................... 134
3.7.4 Contribution to Gross Geographic Product....................................... 135
3.7.5 Other macroeconomic effects .......................................................... 136
3.7.6 Comparative Macroeconomic effect ................................................. 137

4 CONSIDERATION OF ALTERNATIVES.......................................................................140
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4.1 The Do Nothing alternative .................................................................... 140

5 DISCUSSION AND CONCLUSIONS.............................................................................141
REFERENCES .......................................................................................................................145
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List of Tables
Table 1 The sectoral breakdown of formal employment in the CMA
Table 2 Percentage of households per income level in the CMA (1996)
Table 3 Population numbers and unemployment rates for areas along the route
(1996)
(1996)
(1996)
Table 7 Relative magnitudes of mainline tolls by vehicle class for November 2001
(class 1=1)
Table 8 A comparison of ecological and economic characteristics of open space
(adapted from Aylward & Barbier 1992)
Table 9 Summary of values and estimated total value of open space in the two study
areas
Table 10 Conservative value indicators for the FBEC area
Table 11 Vehicle Operating Costs per km from HDM4 Database
Table 12: The impact of different rehabilitation actions
Table 13 Equivalent E80 per vehicle type
Table 14 Road user costs for road section 5, Hindle road to the N2 without upgrading
Table 15 Road user costs for road section 5, Hindle Road to the N2 with upgrading
Table 16 Toll tariffs used in the financial and economic analysis for the R300 (2000
values)
Table 17 Costs and Benefits to vehicles travelling from the N1 to Vanguard Drive,
Morning Peak hour, Middle toll tariff (Rands 2002 values)
Offpeak traffic, Middle toll tariff (Rands 2002 values)
Offpeak traffic, High toll tariff (Rands 2002 values)
Table 20 Costs and Benefits to vehicles travelling from the N1 to the N2, Morning
Peak hour, Middle toll tariff (Rands 2002 values)
Table 21 Costs and Benefits to vehicles travelling from the N1 to the N2, Offpeak
traffic, Middle toll tariff (Rands 2002 values)
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Table 22 Costs and Benefits to vehicles travelling from the N1 to the N2, Offpeak
traffic, High toll tariff (Rands 2002 values)
Table 26 Costs and Benefits to vehicles travelling from the N1 to the Stellenbosch
interchange, Morning Peak hour, Middle toll tariff (Rands 2002 values)
interchange, Offpeak traffic, Middle toll tariff (Rands 2002 values)
interchange, Offpeak traffic, High toll tariff (Rands 2002 values)
interchange, Morning Peak hour, Middle toll tariff (Rands 2002 values)
interchange, Offpeak traffic, Middle toll tariff (Rands 2002 values)
interchange, Offpeak traffic, High toll tariff (Rands 2002 values)
Table 32 Total annual benefits to road users of the R300 (existing sections only),
Rand millions at 2002 values for Middle Toll Tariff, AADT congestion factor
Table 33 Total annual benefits to road users of the R300 (existing sections only),
Rand millions at 2002 values for Low Toll Tariff, AADT congestion factor
Table 34 Total annual benefits to road users of R300, Rand millions at 2002 values
for High Toll Tariff, AADT congestion factor
Table 35 Assumptions used for calculation of value of savings in network vehicle

hours
Table 36 Annual value of time saved from network benefits, Rand million
Table 37 Number of class 1 vehicles with high toll exposure and low income on N1
N2
Table 38 Mainline toll tariff as a percent of income for 44 and 60 monthly trips
Table 39 Road transport intensity of economic sectors
Table 40 Types of cargo carried on the R300
Table 41 Proportion of total businesses in each sector for commercial areas along
the route (source: RSC levy database 2002)
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Table 42 Toll charges per passenger for public transport on the R300
Table 43. A comparison of ecological and economic characteristics of open space
Table 44 Summary of all Financial Impacts on farms in the northern areas
Table 45 Contribution to GDP
Table 46 Total direct jobs
Table 47 Total number of direct and indirect jobs
Table 48 Distribution of jobs between different income categories
Table 49 Contribution to GGP (Western Cape)

Table 50 Contribution to Income Tax
Table 51 Indirect contribution to household income
Table 52 Comparative macroeconomic effect

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List of Figures
Figure 1Percentage of households with an annual income below R12 000 (1996)
Figure 2 Percentage of households with an annual income below R12 000 (1996)
Figure 5 Conventional classification of the values of environmental amenities
Figure 6 Increase in average network speed as a result of upgrading and tolling N1,
N2 and R300
Figure 7 Savings in overall network vehicle hours as a result of upgrading and tolling
N1, N2 and R300
Figure 8 Frequency of trip on the R300
Figure 9 Purpose of journey on the R300
Figure 10 Commuter and business travel by time of day
Figure 11 Trip frequency and trip purpose on the R300
Figure 12 Materials carried by heavy vehicles on the R300
Figure 13 Road transport intensity of economic sectors

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ACKNOWLEDGEMENTS
We would like to thank the following people for their valuable inputs into this study:
Alfred Andrag of Andrag

Jannie Bester of Kynoch
Jan Coetzee
Michiel de Kock
Jan Hanekom of Jan Hanekom Vennootskap Stadsbeplanners & Argitekte
Joanne Jackson
Wayne Klawer
Ben Krog of Kynoch
Ciaan Lochner of Ciaan Water Drilling
Eduard Loubser;
Villiers Loubser;
Melt Loubser;
Johannes Loubser
Boetie Louw
Albert Marais of Marais & Vennote
John Marteens
Bokkie Naud
Brian Nieuwoudt
Eddie Pienaar
Gerhard Prins of Gey van Pittius, J (Pty) Ltd
Theunis van Schalkwyk
Piet Viljoen; Piet Gelderblom of AIDA Real Estate
Pieter Visser of PEK Visser
Willem Willemse of Willem Willemse, Draadtrek en Skeerdiens
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INTRODUCTION
Background and brief
The construction and tolling of the Cape Town Ring Road (N21 or R300) was
proposed in October 1998 by the Peninsula Expressway Consortium (Penway) and
was submitted to the South African National Roads Agency Limited (NRA) as an
unsolicited proposal in terms of their policy.
Chand Environmental Consultants, in partnership with Econsence, was appointed to

conduct an Environmental Impact Assessment (EIA) of the proposed project. This
specialist study on economic impacts forms part of the overall EIA. The study was
conducted by Barry Standish of the UCT Graduate School of Business, assisted by
Hugo van Zyl of Independent Economic Researchers, Antony Boting and Ernst
Englebrecht, independent engineers, and Anthony Leiman of the UCT School of
Economics.
The aim of this study is to provide relevant information that would inform the project
decision and help ensure that the development impacts of the Toll Road Project are
minimised and all potential benefits are optimised.
The terms of reference for the study were:
Use existing data and original data collected, on the economic make-up of each
area, as well as the comments received through the scoping and public
participation processes, to interpret the potential economic impacts of the
proposed road.
Specifically:
Determine whether the proposed tolling negatively impacts or unfairly

discriminates against any vulnerable or disadvantaged persons/communities.
Assess the impacts of the green-fields part of the proposed project on property
values of farms and on the continuing financial viability of farms.
Comment on the financial sustainability of the project by means of reference to

documents issued by the project proponents financial advisors.
Based on the impacts identified, document practical mitigation measures that

could enhance positive economic impacts and reduce negative impacts.
Comment on the environmental economics of the proposed road going through

the proposed False Bay Ecology Park, wetlands and sensitive floral sites.
Using the evaluation method prescribed, determine the significance of the

identified impacts both before and after mitigation.
Make recommendations that would be relevant to the design, construction and

operational phases of the proposed road.
Describe the current economic profile of areas along the routes. Identify and
describe sensitive areas, including the nature of sensitivity.
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Identify and assess the likely benefits of the scheme to the regional and national
economy.
Identify and assess the benefits of the proposed toll road as compared to the toll
costs, to the various user groups, giving consideration to likely improved
efficiency and safety.
Study area
The Penway proposal is to upgrade the R300 to national road status and extend it
from the Blaauwberg area in the north to the Muizenberg area in the south. The
project is for a thirty year concession period and a thirty five year contract period
where the road must be upgraded to the extent that they need minimal maintenance
for five years after the concession period.
The proposed project duration is 30 years. In addition there is a contractual obligation

to hand over the roads at the end of the concession period such that they are
maintenance free for a further five years. The initial construction costs occur over the
first 3 years of the project, with the ongoing capital expenditure occurring over the
next 27 years. The operations and maintenance costs are expected to occur from
year 1.
Road projects of this size and complexity necessitate the assessment of impacts at
varying spatial scales. With this mind, impacts were investigated at national, regional,
provincial, sub-regional (i.e. magisterial district) and local (i.e. town or even suburb)
scales where appropriate. In order to ease assessment of local impacts these were
done only for local areas adjacent to the existing R300. In addition to this the local
impacts on the proposed False Bay Ecology Park and the impact on farmers of the
greenfields section of the proposed road were also analysed.
Report structure
This report has five sections:
Section 1 outlines the study approach including information sources, assumptions

and limitations.
Section 2 gives a description of the affected socio-economic environment.
Section 3 identifies and assesses the impacts of the proposed tolling of the R300
and is the main body of the report. This section has six subsections:
1. The financial viability of the project.

2. The economic efficiency of the project and the policy context
3. The impact on road users
4. The impact on the wetlands in the south
5. The impact on farmers in the north
6. The overall macroeconomic impact
Section 4 considers the impact of the do nothing alternative
Section 5 provides a general discussion and conclusion

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1 APPROACH
The starting point in this study was to identify the economic impacts that were to be
investigated. This was done in three ways. First was by reference to the original
scoping report on the proposed project. Second was to be guided by the letter and
spirit of the terms of reference. Third was by attending and report back from focus
group meetings.
The following impacts were identified for investigation:
Economic efficiency of the project giving consideration to various means of

raising funds compared to tolling
Impact on private and commercial road user costs and benefits
Road network cost and benefits
Impact on jobs, income and production of construction, operation and

maintenance of the routes
Impact on businesses along the routes relying on the roads for access and/or
visibility
Impact of the greenfields part of the proposed project on property values on

farmers in the northern areas.
Impact of the alignment on the west of the sewage treatment works.
Added emphasis was placed on assessing the impacts on vulnerable communities

and businesses. This was particularly important for the formulation of mitigation
measures. Care was, however, taken to ensure that this focus did not bias the overall
assessment of the impacts of the project in favour of negative aspects.
Once impacts had been identified the affected economic environment was described
in order to understand the context within which the project would be developed. This
was done using economic planning documentation, census (and other) information
and interviews with economic development officials.
1.1 Information sources
Information sources for the assessment included:
Financial projections from Peninsula Expressway
Project design and cost details from the project engineers.
Traffic flow modelling data from Steer, Davis, Gleeves of London and Goba,
Moahloli, Keeve, Steyn of Johannesburg.
Focus group meetings and report back on focus group meetings.
Interviews with various stakeholders

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1.2 Study limitations
This study suffered a number of constraints that limited the reliability of the results.
The first is the current lack of coherent and integrated transport policy in the Western
Cape. The result of this is that while we are able to determine the impacts of the
proposed projects, it is difficult to determine whether the proposed projects are
desirable or otherwise.
Second, the so-called preferred toll tariff was never revealed to the researchers. In
consequence we have had to work with the low and high toll tariffs as given in the
scoping report. The convention in this report is to consider the preferred toll tariff as
the midpoint between low and high tariff. Further to this the scoping report gives only
high and low tariffs for light vehicles but not for other classes of vehicles. These have
also had to be estimated. It is recognised that the project would still have to go
through a public tendering process and the project proponents would thus
understandably compromise their tenders by revealing their proposed toll tariffs
before tender. It should furthermore be recognised that toll tariffs are the function of
cost of finance, cost of construction, maintenance and operations, traffic volumes,
socio-economic and environmental expenditure and other project dynamics such as
rehabilitation and upgrading strategies, mitigation measures, tariff discounts, etc.
These would all be evaluated during the tender process and would thus have been
subjected to public competition. Once the preferred bidder is announced at the end
of the tender process, the actual toll tariffs would be set and announced by the
Minister of Transport. The convention in this report is to consider the preferred toll
tariff as the midpoint between low and high tariff. These were estimated based on the
average differences between light and heavy vehicles on all South African toll roads.
Third, detailed studies of impacts could not be conducted for all areas of Cape Town
and surrounds although all areas would be impacted at some level. Investigations
focused on areas along the route as they were seen as the most vulnerable.
Fourth, it was not possible to investigate the impacts of the project on each individual
business either in the Western Cape or along the routes.
1.3 Consideration of alternatives
EIA regulations require the assessment of all reasonable alternatives. For the
purposes of this study, we were asked to consider the impact of one alternative only.
This was the do nothing alternative
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2 DESCRIPTION OF THE AFFECTED ECONOMIC ENVIRONMENT
The significance of impacts is often highly dependent on the economic environment

or context within which they occur. For example, an impact such as job losses can be
highly significant in a small local community with a stagnating economy, but far less
so in a larger community with a healthy economy. With this in mind, this section
describes the economic environment with the purpose of informing the impact
assessment.
This section starts with a description of the economic environment at a provincial

scale. This is followed by a more detailed discussion of the environment at a regional
and local level. Particular emphasis is placed on areas along the routes, as they are
more likely to be sensitive to changes.
The relatively large and economically important sections of the R300 involved are an
integral part of the local and sub-regional economy. Bearing this in mind, this section
starts with a description of the economic environment at a metropolitan scale. This is
followed by a more detailed discussion of the environment at a local level. Particular
emphasis is placed on areas along the routes, as they are more likely to be sensitive
to changes.
2.1 The Cape Town Unicity
The Cape Town Unicity comprises the six former Metropolitan Local Council (MLC)
areas (Cape Town, South Peninsula, Blaauwberg, Oostenberg, Tygerberg and
Helderberg) that made up the Cape Metropolitan Area (CMA). Sections of the route
that are proposed for tolling fall within all of the former MLC areas with the exception
of the Helderberg. With this in mind a brief profile is provided of the CMA economy. It
is based mainly on information contained in two reports: Economic Trends and
Spatial Patterns in the Cape Metropolitan Area (CMC, 1998) and City of Cape Town:
Economic Trends and Analysis 1980 to 2000 (CCT, 2001).
2.1.1 Demographics and employment
The 1996 census estimated the population of the CMA to be 2.9 million. With an
annual population growth rate of 2.5% the current CMA population is probably in the
region of 3.4 million. In 1996 there were:
Informally employed people: 244 000 (18% of the labour force)
Formally employed people: 901 000 (63% of the labour force)
Unemployed people: 254 000 (19% of the labour force)
The 1996 and 2000 sectoral breakdown of formal employment in the CMA is given in
Table 1 and shows the importance of the services, trade and transport sectors. The
table also shows the relative stability over time of each sector in terms of
employment generation.
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Percentage of Percentage of
formal employment formal employment
Sector (1996) (2000)
Manufacturing 13% 12.6%
Services 23.2% 22.3%
Trade 22.2% 23.9%
Finance 10.8% 10.8%
Transport 23.2% 22.3%
Construction 7.4% 7.6%
Electricity & water 0.6% 0.5%

Table 1: The sectoral breakdown of formal employment in the CMA
Source: CCT, 2001
2.1.2 Income levels and poverty
The information in Table 2 indicates that 25% of households have incomes below
R12 000 per annum (approximately R18 000 in 2002 rand terms) in the CMA.
Relatively low income levels remain problematic particularly in the Metropolitan south
east.
Annual income Cape

Metropolitan
Area
None 7%
R1-2400 2%
R2401-6000 6%
R6001-12000 10%
R12001-18000 11%
R18001-30000 14%
R30001-42000 10%
R42001-54000 8%
R54001-72000 10%
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R72001-96000 7%
R96001-132000 7%
R132001-192000 4%
R192001-360000 3%
R360001 or more 1%
Table 2: Percentage of households per income level in the CMA (1996)

Source: Census 1996
2.1.3 Economic sectors and production
The CMA has a relatively well diversified economy leaving it less exposed to declines
in single sectors. It maintained a growth rate of 2.5% between 1991 and 1996, above
the national average of 1.5% for the same period. The following four sectors were the
main contributors to the 1999 GGP of R79 billion:
Services: 22%
Finance: 20%
Manufacturing: 19%
Trade: 13%
Growth rates above the national average were maintained between 1996 and 1998.
However, for 1998-1999 and 1999-2000 the real growth of the Cape Town economy
is estimated to have fallen behind the national average at 1% and 2.1% respectively
(CCT, 2001).
The CMA faces development challenges similar to other South African metropolitan
areas. High population growth rates of approximately 2.5% between 1980 and 1996
and 3.2% between 1996 and 2000 (partly due to in-migration), unemployment (an
estimated 18% of the labour force in 2000), poverty and housing shortages are
particularly worrying. While the CMA is not an export-lead economy, indications are
that the areas trading activities have increased significantly in recent years (CMC,
1998). Agricultural products are particularly important and make up the largest
proportion of exports (26% of total exports).
22
2.2 Sector 1: Vanguard Drive to Westlake
The following table indicates the population numbers and unemployment rates for
areas along this section of the route:
Area Population % Unemployment

Lakeside 2091 5%
Marina Da Gama 2648 3%
Muizenberg 5726 6%
Vrygrond 3245 43%
Zerilda Park 8135 18%
Kirstenhof 4169 3%
Lavender Hill 18167 25%
Montagu's Gift 18025 16%
Pelican Park 4798 18%
Zeekoevlei 2893 5%
Rocklands 24184 16%
Strandfontein 20003 8%
Weltevreden Valley 9245 11%
Westridge 20332 13%
Woodlands 20298 18%
TOTAL 163959
Table 3: Population numbers and unemployment rates for areas along the
route Source: Census 1996
The table indicates that Vrygrond and Lavender Hill are particularly vulnerable in
terms of unemployment with rates of 43% and 25% respectively. Lakeside, Marina
Da Gama, Muizenberg, Kirstenhof, Zeekoevlei and Strandfontein all have relatively
low unemployment rates of below 10%. The remaining areas have rates between
11% and 18% below the CMA average of 19%.
Figure 1 shows the percentage of households with annual 1996 incomes below
R12 000 (approximately R18 000 in todays terms) for areas along the route. It is
clear from the figure that Lavender Hill, Pelican Park and Vrygrond have the greatest
number of households in low income categories. These areas have 32%, 26% and
53% respectively of households earning less than R12 000 per month all of which are
above the Cape Metropolitan Area average of 25%. The other areas are better off by
comparison as they have fewer people below the R12 000 per annum mark when
compared to the CMA average.
23
% of households with annual income below R12 000 (1996)
60%
50%
40%
30%
20%
10%
0%
ds
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Figure1: Percentage of households with an annual income below R12 000
(1996)
2.2.3 Economic activity along the route
This portion of the road would initially run through lower income residential
areas into progressively more middle and higher income areas ending at
Westlake. The Southern alternative would start by skirting around the eastern
boundary of the Philippi agricultural area and through mostly vacant lands
currently being used for sand mining in parts. It would then pass between the
southern boundary of Philippi and Strandfontein residential area after which it
would pass through vacant land and through the settling ponds of the Cape
Flats Sewerage Works to the south of Zeekoevlei and Rondevlei. Both of
these vleis and the areas surrounding them are important areas for
conservation, recreation and environmental education. The Sewerage works
is also known for its bird-watching opportunities.
The Philippi route would start by passing through the northern portion of the
Philippi agricultural area. It would then proceed through residential areas
before heading south along Prince George Drive passing between Princess
vlei and Rondevlei. For both routes the road would then pass to the north of
Capricorn industrial park which was established in the mid 1990s initially
targeting high technology industries. Growth of the park has been slower than
was hoped for with poor access being one of the reasons for the slow growth
of the park. After crossing Prince George Drive the road would pass through
residential areas to the north of Sandvlei. It would then cross Main Road
24
where there are a few small businesses nearby before continuing to Golf Park
office and industrial park adjacent to the Westlake golf course.
2.3 Sector 2: Upgrading of the existing R300
Table 4 reports on the population numbers and unemployment rates for areas along
the route:

Belhar 48427 17%
Delft 34301 22%
Glen Haven 2582 6%
Stikland 1687 3%
Driftsands 1772 39%
Hagley 839 11%
Mfuleni 10034 30%
Sarepta 20502 14%
Bongweni 1049 21%
Browns Farm 44402 43%
Ikwezi Park 2755 23%
Lentegeur 34618 20%
Mandalay 5554 10%
Tembani 839 25%
Kuilsrivier 14351 3%
Brentwood Park 550 11%
Labiance 1510 8%
TOTAL 225772
route (1996) Source: Census 1996
Driftsands, Mfuleni and Browns Farm are particularly vulnerable in terms of

unemployment with rates of 39%, 30% and 43% respectively. Delft, Bongweni,
Ikwezi Park, Lentegeur and Tembani also have relatively high rates above the CMA
average of 19%. In the northern portion of the existing R300, Glen Haven, Stikland,
Kuilsrivier and Labiance all have relatively low unemployment rates of below 10%. All
the other areas have rates between 10% and 18% below the CMA average.
25
clear from the figure that Bongani, Tembani, Browns Farm Driftsands and Mfuleni
have the greatest number of households in low income categories. These areas have
29%, 62%, 36%, 61% and 57% respectively of households earning less than
R12 000 per month all of which are above the Cape Metropolitan Area average of
25%. Delft also have a relatively high number of households earning less than
R12 000 per annum at 23%. The other areas are better off by comparison as they
have fewer people below the R12 000 per annum mark when compared to the CMA
average.
% of households with annual incomes below R12 000 (1996)
70%
60%
50%
40%
30%
20%
10%
0%
rk
i
r
ce
rm
ds
y
y
ar
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a
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Figure 2: Percentage of households with an annual income below R12 000

(1996)
The existing R300 forms a vital link between the two most important routes for
commercial activity in Cape Town: the N1 and N2. The accessibility that it offers has
played a role in the establishment of numerous industrial and retail areas. Starting at
the Stellenberg Interchange the route passes through residential areas before
passing Stikland industrial area bordering it to the west. Brackenfell industrial area is
also relatively close by just over two kilometres to the east. South of Stikland the road
passes Access City retail area before crossing Van Riebeeck Road / Strand Street.
Van Riebeeck Road is the main retail spine for Kuilsrivier and leads to Blackheath
industrial area further to the south east but still relatively close to the R300. Strand
26
Street is also a commercial spine and heads to the north east before becoming
Voortrekker Road after approximately three kilometres.
The R300 then passes between Kuilsrivier residential area and Bellville South
Industrial / Sacks Circle industrial area before passing Belhar, Delft, Wesbank and
Driftsands residential areas and joining up with the N2. After crossing the N2 it
continues passing Mandalay, Philippi, Woodlands and Weltevreden Valley residential
areas to intersect with Vanguard Drive. Philippi industrial area is situated
approximately two kilometres north of the R300 along Stock Road. A major transport
hub for trains, buses and taxis is also in an advanced stage of construction where
Stock Road branches off from the R300.
27
2.4 Sector 3: Stellenberg Interchange to Wellington Road
Table 5 gives the population and unemployment rates in the area.

Durbanville 13234 3%
Eversdal 10909 3%
La Rochelle 1191 3%
Morning Star 1619 13%
Oak Glen 3604 2%
Stellenberg 5446 2%
Vredekloof 2449 2%
TOTAL 38452
The table indicates that the areas along this section of the route have very low
unemployment rates with the exception of Morning Star (13%) which, while it is high,
still has a rate below the CMA average of 19%.
Figure 3 shows the percentage of households with annual incomes below R12 000 in
1996 terms (approximately R18 000 in todays terms) for areas along the route. It is
clear from the figure that there are relatively few households in low income
categories along this section of the route. No areas have more than 10% of
households earning less than R12 000 per annum which is well below the Cape
Metropolitan Area average of 25%.
28
% of households with incomes below R12 000 (1996)
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Durbanville Eversdal La Rochelle Morning Star Oak Glen Stellenberg Vredekloof

(1996)
This section of the route would follow the existing road reserve starting at the
Stellenberg Interchange and would be bordered by residential areas and some open
lands.
2.5 Sector 3: Wellington Road to Blaauwberg
Table 6 reports on the population numbers and unemployment rates for areas along
the route:

Atlantis Industrial 36 14%
Melkbosstrand 6099 5%
Philadelphia 326 22%
Malmesbury Non Urban 25847 7%
TOTAL 32308
29
Philadelphia is relatively vulnerable in term of unemployment with a rate of 22%.

Melkbosstrand and Malmesbury non urban have low levels of unemployment while
Atlantis industrial has a higher level (14%) which is still below the CMA average.
clear from the figure that all the areas along this section of the route have relatively
high proportions of households in low income categories. Atlantis industrial,
Philadelphia and Malmesbury non urban have 60%, 33% and 48% respectively of
households earning less than R12 000 per month all of which are above the CMA
average of 25%. Melkbosstrand is far better off by comparison as only 10% of
households are below the R12 000 per annum mark.
% of households with annual incomes below R12 000 (1996)
70%
60%
50%
40%
30%
20%
10%
0%
Atlantis Industrial Melkbosstrand Philadelphia Malmesbury NU

(1996)
The dominant economic activity along this section of the route is farming. There are 6
relatively large commercial farms along the section: Farmers are involved in the
production of wheat and grapes and in the rearing of cattle and sheep. There is also
a dairy in the area where lucerne is grown. The farms have been established for
30
generations and while they are relatively capital intensive still provide significant
employment opportunities.
Bordering on the western side of the N7 between the northern and Table View
alternatives is Morning Star, a relatively small community of approximately 42
occupied smallholdings situated to the north of the Vissershok landfill site. Most of
the people resident in the area are attracted to its semi-rural character and
associated tranquillity. There is a particularly focus on equestrian activities in the
area.
At the western end of the section for the northern alternative is the town of
Melkbosstrand. This town is primarily geared towards tourism and recreation. Nearby
Melkbosstrand is the relatively recently established Atlantic Beach golf estate. The
western end of the Atlantis alternative is the industrial town of Atlantis while the Table
View alternative ends between Melkbosstrand and Table View.
3 IMPACT DESCRIPTION AND ASSESSMENT
This section reports on the results of the impact assessment starting with broader
impacts and then focusing on more localised impacts.
First, the overall financial viability of the proposed toll project is discussed.
This is followed by a discussion of its economic efficiency giving consideration

to various means of raising funds other than tolling. This discussion includes
an assessment of the developmental impact of the proposed project within
the context of local and provincial transport policy.
Then the findings of the modelling of the impact on road user and overall
network costs and benefits are presented.
Following this a discussion on impacts on vulnerable drivers and business is

presented.
The impact on the proposed False Bay Ecology Park are assessed, and
The impacts on property values of farms and the continual viability of farms
are assessed.
Finally, an assessment is made of the impact on jobs, income and production

of construction, operation and maintenance of the routes
31
3.1 Financial viability of the project
Description of effect
Because of its importance in the overall economic assessment, financial viability is

considered first in the impact assessment part of this report.
Assessment
An independent assessment of the financial viability of the project could not be

undertaken because the only traffic projections that the project proponents made
available to the Economic Study was for the existing sections of the R300. This was
known at the start of the study and the approach specified in the terms of reference.
In consequence resort was made to the financial assessment of the financial

advisors of the project consortium. PriceWaterhouseCoopers, the financial advisors
to the consortium have declared the project to be financially viable based on traffic
projections, cost projections and projected toll tariffs that were supplied by the
consortium.
32
3.2 Transport policy, Economic development and Toll roads
Description of affect
This study was asked to determine the impact of the R300 on economic and sub
economic units in the area adjacent to the R300 as well as the effect of the R300 on
the unlocking of potential land development and possible increased investment.
Assessment
It became apparent in the process of the investigation that it would not be possible to
give a detailed answer to these issues. This was due to at least two major
challenges. The first was theoretical there are no deterministic links between road
infrastructure and economic development. The second is pragmatic and is due to the
lack of an integrated and coherent transport policy in the Western Cape. The result of
this is that while it is possible to identify likely structural changes it is difficult to
determine whether these changes are costs or benefits. Hence while potential land
use changes and the potential for industrial expansion are identified it is not possible
to determine the desirability of these changes.
In addition to these issues it became apparent during the study that there was some
need to comment on the economic efficiencies and inefficiencies of tolling roads
rather than using alternative mechanisms of funding. These comments are included
below.
3.2.1 Western Cape transport policy
One of the key challenges to this study on the economic impact of the proposed
projects, particularly the green fields part of the R300 proposal, is the lack of policy
direction and integration. The 1997 White Paper on the Western Cape Transport
Policy states that:
There are three basic levels within which comprehensive, integrated planning should
occur:
Within the transport sector itself
Between transport and spatial planning, land use being the major determinant of
movement demand
Between transport and development planning, to achieve broader reconstruction

and development aims.
In the past there has been inadequate comprehensive, integrated planning at any of
these levels. Transport planning activity has largely concentrated on the provision of
new infrastructure with insufficient attention being given to the better management of
existing resources or improved operational performance of public transport. This has
resulted in generally poor performance in many aspects of the transport system and
the dominance of issues associated with private vehicle mobility.
Integration between transport and spatial planning has never occurred because of
the inability to engage with the underlying political dimensions of many land use
decisions and a failure to grasp the complicated macro-issues associated with the
33
functioning of such a complex system. In addition, the fragmentation of

responsibilities within and between spatial planning and transport planning agencies
has given rise to a land use-transport system that is far from economic or efficient.
Neither is it effective. Due to the priority and importance given to land use decisions,
transport is treated solely as a derived demand and consequently, the performance
of the transport system has been essentially reactionary and has never been capable
of being optimised. Because of these characteristics, anticipated economic and
population growth in urban areas would seriously compromise the situation still
further.
Integrated, comprehensive planning must now occur within a broader reconstruction

and development vision which extends beyond spatial restructuring, important though
that may be, and includes all those factors associated with meeting basic needs,
such as job creation, housing, infrastructure provision, with investments in the
transport sector being integrated with other sectoral investments in an appropriate
and well-structured development programme. In addition, the manner within which
planning occurs must recognise new realities - the importance of establishing people-
driven processes which are genuinely inclusive and empowering with all levels of
government responding to peoples development needs and aspirations. (p 7-8)
It is within this context, which is effectively a policy vacuum, that the project
proposals are being made and evaluated. On the basis of this situation it is possible
to draw conclusions about the likely developmental and structural impacts of the
proposed projects but it is difficult to determine whether or not these changes are in
the public interest.
In contrast to the province, the City of Cape Town does have in place general policy
guidelines for transport in the city. The guidelines have (according to City transport
officials) been adopted from the discussion document Moving Ahead, City of Cape
Town Transport Plan published during 1999. The guidelines in this discussion
document evolved from the Interim Metropolitan Transport Plan of 1997-1998 and
the discussion document Moving Ahead, Cape Metropolitan Transport Plan of
1998/9.
The policy guidelines as laid out in the Moving Ahead document, taking cognisance
of past spatial imbalances between places of residents and places of work, and
recognising the competitive and other disadvantages of these imbalances, seeks to
address these imbalances. However while the Moving Ahead document is very
good, balanced and important work it is currently not detailed enough to fully assess
the developmental impact of the R300 and, as above, determine whether these
impacts are in line with the policy guidelines. In this regard a number of general
comments are made below.
First, the proposed green-fields extension of the R300 is generally in line with
development of road infrastructure even if the exact alignment is not the same. This
is particularly true in the southern section of the road extension.
Second, the interim Moving Ahead discussion document opposes toll charges
because: the introduction of tolls is not recommended because it is regarded as an
inefficient method of raising funds in the CTMTA, it is difficult to administer and there
may be substantial public resistance to it. (para 3.4 no page numbers).
34
3.2.2 The role of transport infrastructure in economic growth
Some theoretical aspects of the role between transport infrastructure and economic
growth are examined in this section. It would be shown that while there are clear links
between such infrastructure and economic growth it is not clear if infrastructure leads
to economic growth or growth leads to the development of infrastructure.
It is generally accepted that the role of transport infrastructure in economic growth is

significant, positive and substantial (Gannon & Liu, 1997: 9). Transport infrastructure
helps an economy in two ways.
First, it gives consumers access to places where they can engage in income-
generating activities, consume other goods and services (including education and
health care), or engage in leisure and social activities.
Second, transport enters the economy as an intermediate input into production,

either directly or as a complement to other factors (for instance, securing inputs
or getting output to market). In urban areas, the price and quality of transportation
and other types of infrastructure significantly affect firms' decisions about where
to locate and ultimately affect firms' output. (Cavelle & Creightney, 1993: 1). In
addition to these economic benefits, transport investment contributes to
economic diversification, which enables exploitation of economies of scope and
increases the economys ability to handle shocks (Gannon & Liu, 1997: 6).
While the importance of transport in economic growth is readily accepted, its exact
role and impact has long been the subject of debate. Much of the debate has centred
on the question of whether transport plays a leading role or a complementary role in
economic growth. Transport plays a leading role when transport investments
stimulate economic growth through their market widening effect. Transport plays a
complementary role when transport investments are required to serve the growth in
demand.
While the question of leading role vs. complementary role is still largely unsettled,
there is a strong consensus that good transport is a necessary condition, for
economic growth, and economic growth increases demand for transport (Gannon &
Liu, 1997: 8).
The conclusion that can be drawn is that initiating transport infrastructure in a role
that is complementary to serve growth is less risky than in a leading role. This is
because the need (i.e. existing, proven growth) for the infrastructure can be
established as opposed to having to rely on the infrastructure to create growth an
inherently less certain exercise.
The proposed tolling of the R300 appears to fulfil this latter criteria. The financial
viability of the proposed project shows that there is a demand for the project and, in
consequence, this is infrastructural development caused by economic growth rather
than visa verse.
3.2.3 Potential land use changes from the R300
There can be little doubt that the greenfields part of the R300 proposal would bring
about potential land use changes. In this regard the Town Planning Specialist Study
for the environmental impact assessment of the proposed R300 project identified
potential land use changes:
35
Although limited access freeways do not generally result in changes in land usage
on a small scale, as they do not offer improved direct access (and hence thresholds),
on larger developments of a metropolitan scale, developments may establish
themselves due to improved city wide or macro accessibility. As previously
inaccessible areas become accessible, larger strategic tracts of land could become
attractive for development. (p42)
On a Metropolitan level, the section of the proposed road between Otto Du Plessis
Road near Melkbosstrand and the Stellenberg Interchange at the N1 may impact on
the integrity of the rural areas to the north of Durbanville, due to the potential
encouragement of Urban Development along the route, given the enhanced
accessibility and proximity to the rest of the Metropole. This may contribute to the
phenomenon of Urban Sprawl as well as eroding valuable Rural / Agricultural Land.
The land in the vicinity of Otto Du Plessis Drive would be under particular pressure
for land use changes, as this area is currently experiencing significant development
pressure. The establishment of a High Mobility east-west link would make the area
increasingly accessible and more viable as a development area. The Philippi
Horticultural Area may experience pressure for land use change due to Sector One
of the proposal passing along the southern boundary of the area, and the Sector Five
cutting through the northern extent of the area. Due to the significance of the Philippi
Horticultural Area as a metropolitan agricultural resource and green lung, erosion of
the agricultural character is likely to be a key concern. Furthermore, Sector Five of
the road may isolate the northern portion of the Philippi Horticultural Area, making
this area too small to sustain a viable agricultural threshold. In the Southern
Peninsula, it is likely that the increased traffic would place pressure on the more
accessible properties around the Main Road / Steenberg Road intersection and these
properties could become more desirable for higher order uses (i.e. Commercial). This
land use change needs to be controlled. The large areas of vacant land between
Main Road and the Prince George Drive Intersection may experience pressure for
development due to improved access to these areas. (p45)
In addition to these land use changes, there are clear indications that the proposed
R300 would open access to a number of important industrial, commercial and
residential areas. These include Westlake, Capricorn Park and Pelikan Park as well
as providing an easy link between far southern suburbs and the Mitchells Plain
areas.
In summary, the R300 Ring Road could potentially aid economic development in
Cape Town. In particular, the road should improve transport efficiency in Cape Town
through linking up the West Coast and South Peninsula and act as facilitating
infrastructure for development in the green fields areas of the project. On the other
hand, the R300 Ring Road could potentially harm economic development in Cape
Town if it encourages urban sprawl; thereby lower the chances of reaping the
benefits of densification. It would also not aid development if its cost could not be
justified by the benefits it would provide. It is difficult to determine whether the lack of
the Ring Road is a constraint to economic development as the above pros and cons
are not easily comparable. In some cases they represent conflicting economic
development policy objectives that can only be prioritised by the City and the
Province. As outlined above such choices are difficult to make in the current policy
environment.
36
3.2.4 Economic efficiency
The proposed project would generate both sources of economic efficiency and
economic inefficiency.
Assessment
Economics distinguishes between three types of economic efficiencies. These are

productive, allocative and dynamic efficiency. Productive efficiency (sometimes
called X-efficiency) occurs when the factors of production within a country are used in
their most efficient way. Allocative efficiency refers to the actual mix of production
and output. Dynamic efficiency is the degree to which productive and allocative
efficiency interact with other factors to generate economic growth. Since transport is
a derived demand (only some people drive purely for the pleasure of driving) our
focus here is on productive efficiency.
The section starts by focusing on the ways in which the proposed project would
contribute to the generation of economic efficiencies. This is followed by the
identification of source of inefficiency for the project. Finally, some key regulatory
issues are discussed.
3.2.4.1 Sources of efficiency
The proposed project has the potential to contribute to the generation of productive
efficiency in at least three ways.
User pays principle
The requirement that the tolling system be economically efficient is captured in the
government transport policy document, Moving South Africa. In the overview this
includes the objective: Recover full costs from users. This is elucidated in two parts.
The first requires that users are charged for the full cost of their use of infrastructure
and operations used, and for all externalities they generate. The second requires that
users not be charged above full costs in order to support infrastructure and
operations that do not provide them with benefits (Moving South Africa p17).
In effect this requires that each road user pay toll fees equal to the incremental costs
that user imposes on the roads and on other road users. The charge can also
incorporate an element to cover amortisation of the sunk costs involved, however no
group of users should be cross-subsidising another.
Damage and distortions from heavy vehicles
Before toll roads there was little way in which heavy vehicles could be charged fully
for the use of a road. Vehicle licences and fuel levies are not adequate here because
they do not increase in proportion between light and heavy vehicles relative to the
degree of damage that these vehicles cause. The consequence is that light vehicle
owners are subsidising heavy vehicles by paying more than their user cost portion
of the road.
This subsidy further distorts the transport system through its impact on the rail
network. Spoornet, for example, not only covers the running costs of its own haulage
operations, but is also responsible for all track construction and maintenance. In
37
addition, hauliers do not pay for road damages or any clean ups (e.g. chemical spills)
that are necessitated by accidents involving trucks while rail operators cover all of the
cost when accidents occur.
This pattern of distortions and the advantages enjoyed by road hauliers over rail are
especially marked in South Africa because of the allowable mass restrictions. Today
the maximum gross vehicle mass allowable on the roads is 56 tonnes; well above the
limit of 48 tonnes in the early 1990s, and far above the 38 tonne limit in the US.
Overloading is a further factor. The CSIR and the Road Freight Association estimate
that 15% to 20% of vehicles are overloaded, and that these are responsible for
approximately 60% of road damage (which they value at R600 million annually)
(Engineering News 2002 p17). Legally loaded heavy vehicles are doing the bulk of
remaining damage, and light vehicles virtually none.
Following from this the proposed project has the potential to address some of the
heavy vehicle damage in two ways. First, by the introduction of weigh-bridges that
are active and reliable. Second by charging a toll to heavy vehicles that reflects their
impact on the road.
The one constraint faced by the efficient tolling of heavy vehicles is the fact that,
while heavy vehicles do pay a higher toll tariff than light vehicles on other South
African roads, the toll differential is not large enough to compensate for the relative
damage to the roads. The following table shows the relative magnitudes of mainline
tolls for different vehicle classes. Light (class 1) vehicles are standardised at 1, and
the relative ratios are then computed for tolls on class 2 (2 axle heavy vehicles),
class 3 (3 and 4 axle heavy vehicles) and class 4 (5 and more axle heavy vehicles).
The table shows the highest ratios found, the lowest found, the mean and the
median. Thus the average toll paid by a heavy vehicle with five or more axles was
roughly four times that paid by a car (the range extending between a maximum of
7.63 and a minimum of 2.75).
Class 2 3 4
Upper ratio 2.68 4.5 7.63
Lower ratio 1.5 2.0 2.75
Mean 2.09 2.79 3.99
Median 1.88 2.75 3.7
(Nov 2001)
Table 7: Relative magnitudes of mainline tolls by vehicle class for November

2001 (class 1=1)
To put the toll ratios above into context one can use a common rule of thumb, the
fourth power formula which suggests that each doubling of axle loading results in a
sixteen-fold increase in road damage (Roth G. in Hakim et al. (1996) p 201). Following
this guideline, an 80,000 lbs truck on five axles (class four) does as much damage as
38
10,240 standard two axle cars each weighing 4,000 lbs. This occurs while the vehicle
pays at most 7.6 times the toll that a light vehicle pays.
Congestion tolling
Vehicles impose four main costs on the rest of society accident externalities,
environmental pollution, road damage, and congestion.
As these are costs that are borne by society but not by the driver this means that the
journey is costing the individual less than it is costing society in general. Now, while
these issues are largely irrelevant on open rural roads, they become particularly
important as road congestion increases. The incidence of accidents increases, and
the slower moving traffic increases air and noise pollution, and adds to road user
costs. It is clear that congestion is a source of economic inefficiency.
This difference between private and social costs leads to further economic distortions
in public transport:
If private road users are significantly undercharged for using the road in urban
areas, then commuters face the wrong relative prices when choosing between public
and private transport. If it is hard to raise the price of private, why not lower the price
of public transport to improve the relative price rations? There are a number of
problems with this proposal. First, it is hard to compute the second-best public
transport subsidies given the grate variation of congestion costs by time of day and
location. Second, the subsidies have to financed by taxes which have distortionary
costs elsewhere. Third, subsidies to public transport appears to be rather cost
ineffective. (Newbery 1990 p36)
The proposed project has the capacity to address these economic inefficiencies by
introducing congestion tolling. This requires a toll that varies with time of day (a form
of peak load pricing, sometimes called a Mohring tax). It may also include a specific
rush hour levy on long or slow moving vehicles that could disproportionately slow
traffic (a vehicles GVM/Power ratio and overall length are major factors, as are the
gradients of hills and the presence or absence of crawler lanes). While such
congestion tolling has not been introduced on any of South Africas toll roads to date
they do warrant consideration because of their capacity to generate economic
efficiencies.
3.2.4.2 Sources of inefficiencies
In contrast to the sources of efficiencies outlined above the proposed project also has
the capacity to generate a number of inefficiencies. These include funding
inefficiencies, the cost of toll plazas and related costs, and the cost of traffic
diversions.
Funding Inefficiency
Until comparatively recently road construction in South Africa was primarily funded by
the state, either from tax revenues or through state borrowing. These traditional
forms of fund raising were less costly than the private sector ones that replaced
them. The state, being an effectively zero risk borrower, should be able to raise funds
at a lower rate than a private sector borrower. Similarly, the collection and diversion
of tax revenues should be less expensive than the collection of toll revenues.
39
The merchant banking industry is highly competitive, and there is every reason to
believe that its fundraising is efficient. The contract between the state and the toll
concessionaire may, however, impose constraints on the fundraising approaches
open to the merchant bank. Without access to the contract, one cannot establish
whether or not there are restrictions on the banks or the concessionaire that increase
the effective cost of the moneys raised. It should be noted however, that substantial
proportions of earlier contracts have been devoted to regulation of funding.
Toll plazas and related costs
Paying for roads through taxes or a dedicated fuel fund is more efficient than
imposing physical tolls plaza on a road. The cost of collection is far lower because it
does not incur the cost of operating toll plazas and the concession company as well
as the private costs where motorists have to stop at plazas.
Diversions
The increased possibility of vehicles diverting off the proposed toll roads would
generate economic inefficiencies as social costs diverge from private costs. Tolling
an open highway may shift some costs onto the province and local residents as
heavy vehicles divert themselves onto secondary roads to avoid tolls.
Where an open access tolling system on a trunk route is combined with unmonitored,
uncontrolled and untolled side roads, there is an incentive for drivers to use them.
Since such alternate routes are generally narrower and have lighter foundations,
whenever tolling shifts a heavy vehicle to a side road it increases road damage,
reduces revenue recovery, slows traffic flows and increases accident risk. The
damage a vehicle does to a road rises exponentially with that vehicles mass and
axle loading. It also rises if the road being used has light foundations, i.e. a road not
designed for heavy vehicle use. Tolling that leads to heavy vehicle diversion to minor
roads may thus feasibly reduce efficiency.
3.2.4.3 Tolling for efficiency
This section brings together the two sections above and explores how to toll in a way
that would generate economic efficiency.
There are three clear components to full cost tolling:
Recovery of the roads sunk (construction) costs
Damage to the road - increasing exponentially with axle loading.
Congestion externalities (Mohring costs) - increasing with traffic density.

Within limits they also tend to vary directly with vehicle length and inversely
with speed.
The first of these is straightforward. In the case of a pre-existing road paid for by the
taxpayer, it should not enter into the calculation. One could, however, include an
allowance for net income to the concession company. Where improvements are
made these can be met by charging all users.
The second (and dominant) element covers amortisation of the road. To be optimal
this requires an axle toll that rises exponentially with loading, but takes into account
the axle configuration. The cost would depend on characteristics of the road such as
40
thickness and structure of the surface, foundations, substrate, presence and length of
bridges, etc. The current tolling system, which only charges on the basis of number
of axles, is fundamentally incapable of capturing the externalities involved. Its sole
advantage is that it is easy to apply and need not slow the passage of large
commercial vehicles through tollgates.
The third component requires a congestion toll that varies with time of day. This
would learn the lessons of international experiences on the use of congestion tolling
in how to monitor, market and launch such a system.
Finally, an attempt must be made to toll heavy vehicles by their axle mass rather than
number of axles. Because the tolling formulae in use at other toll roads in South
Africa are based on axle number rather than axle mass a heavily laden vehicle pays
no more than one carrying a far lighter load. The consequence of this to is to use
fewer vehicles that are more heavily laden with the resultant impact on the road life.
3.2.4.4 Regulatory issues
While a detailed investigation of regulatory issues was beyond the scope of the
study, three key issues are identified:
First, a price regulated service provider has the incentive to reduce service quality.
This is made more likely where there are low elasticitys of demand.
Second, where asset lives are long, there is a danger that, as regulatory price
ceilings are reset at periodic intervals, the ceiling is set in a way which effectively
expropriates some of the returns to these investments. The likely consequence, if
firms are risk averse, is under-investment. (Glaister, et al 1990 p16)
Third, relates to the modal scope of regulation and the case for co-operation of
investment plans. An important characteristic of highways and rail infrastructure is
that there are cross elasticitys between modes as well as significant sunk costs.
The implication is that unregulated investment decisions by enterprises in each
sector are unlikely to yield an efficient stock of infrastructure. Furthermore, decisions
on investment in transport infrastructure would often affect the development of
industrial and commercial activity at different locations. There thus may exist some
prima-facie case for the co-ordination of investment decisions but co-ordinations
raise the danger of regulatory failure. (Glaister, et al 1990 p16)
Overall assessment
The terms of reference called for a brief assessment of the issues of economic
efficiency. As may be recognised these issues proved too complex to evaluate using
the standard evaluation table called for by CCA. It was beyond the scope of this
study to attempt to quantify and compare the costs and benefits of the economic
efficiencies and inefficiencies generated by the proposed project. While a qualitative
assessment is prone to serious error on balance the contribution that the project
would make to economic efficiencies (especially if recommendations made earlier
are implemented) is probably greater than its contribution to economic inefficiencies.
Mitigation objective
Generate greater economic efficiencies and less inefficiencies.

41
Mitigation measures
Ensure heavy vehicles bear their full cost of using the roads.
Introduce congestion toll tariffs.
Encourage the use of more weigh bridges and move from axle tolling to axle mass
tolling.
Reduce heavy vehicle diversion to the minimum.

42
3.3 Impact on wetlands in the south and the proposed False Bay Ecology
Park (Sector 1)
The Economic Study was asked to comment on the environmental economics of the
proposed road going through the proposed False Bay Ecology Park, wetlands and
sensitive floral sites. Concerns have been raised about the impact of the road on the
environment surrounding Rondevlei, Zeekoevlei and the Cape Flats Waste Water
Treatment Works (CFWWTW). Other specialist studies have assessed the impacts
on this area from a variety of perspectives (i.e. noise, visual, botanical impacts, etc.).
This section provides an environmental economics perspective surrounding the road.
This part of the study was faced with three key challenges.
First, is the possible impact of the road on land values associated with the wetlands.
While it was possible to estimate the current value of land it was not possible to
determine how the road would change these values.
Second, the False Bay Ecology Park (FBEP) made analysis difficult largely because
it is at proposal stage and does not have final approval.
Third, no alternative alignments of the road were available for consideration. Under
these conditions the conclusion that is asked is whether or not this section of the
R300 should go ahead. It is likely that if this section of the road does not go ahead
the project would not be financially viable.
In addition to this two scenarios must be considered. The first is the impact of the
proposed alignment should the FBEP not go ahead. The second is the impact of the
proposed alignment should the FBEP become reality. For the purposes of the first
scenario we estimate the value of the wetlands as they currently stand and compare
these to the overall benefits of the proposed project. Assessing the impact on the
second scenario is more challenging. For these reasons we lay out the cases for and
against the proposed alignment in the context of the FBEP but cannot draw any firm
conclusions.
Two recommendations are made. The first is the need for the project proponents to
consider alternative alignments in this area and consider the costs of these for the
proponents relative to the costs and benefits for the wetlands. The second is that the
decision about the alignment of the R300 (in this area) is a strategic decision about
the relative importance of current and future transport needs compared to the costs
and benefits to the wetlands. The Economic Specialist study can inform such a
strategic decision but cannot make the decision.
This section of the Economic study has two parts. First the possible impacts on land
values are identified and quantified. These are considered within the context of the
overall economic benefit of the proposed project. Second, we investigate the
potential impact on the proposed FBEP and related issues.
43
3.3.1 Potential impact on land values1
This section sets out to determine approximate land values associated with the
wetlands. The intention of the exercise is to allow a comparison of the existing values
of the land relative to the economic benefits that could be generated by the R300
project. What this study was not able to do was determine how the R300 would
impact on the associated property values of the wetlands. Drawing such conclusions
would have necessitated conducting a major Contingent Valuation survey. It will be
shown below that not only is a Contingent Valuation survey difficult to conduct for
such areas, it can also be prone to various types of bias.
The section starts by identifying the types of environmental values associated with
the area. Following this, rough monetary indicators of these values are supplied
based on previous studies of the area along with estimates of current and future use
levels and income from the area.
3.3.1.1 Types of environmental values
A recent study commissioned by the City of Cape Town on the value of open spaces
in the city (Turpie et al., 2001) showed that open spaces create a variety of
significant economic value streams.
Open space areas serve a variety of functions, depending on their type, size and
locality. Open space areas range from large, fully functional ecosystems to small
fragments of natural systems whose ecological functioning has been reduced, to
wholly altered open space systems, such as sports fields or cemeteries, which have
little or no ecological function but do have an important social function. While many
open space areas are simply undeveloped land, others serve specific functions, such
as the protection of natural habitats (e.g. Wolfgat Nature Reserve), or the provision of
sporting areas (e.g. golf courses).
The value of open space areas lies in their supply of goods and services that are
consumed by society, and their attributes as shown in the table below. Goods are
the tangible products provided by these areas, such as firewood, and services
encompass benefits such as those associated with ecosystem functioning, for
example, water purification. Open space areas also have attributes, such as
biological diversity, ecotourism value or sense of place, which contribute to their
value and the overall quality of life for urban residents.
Ecosystem/Open space Economic characteristics

characteristics
Structural components Goods
Environmental functions Services
Biological and cultural diversity Attributes

Table 8. A comparison of ecological and economic characteristics of open
space (adapted from Aylward & Barbier 1992)
1
Note that this section borrows heavily from the findings of Turpie et al., 2001.
44
Goods, services and attributes all contribute to the total value of an environmental
amenity. In the environmental and resource economics literature, the total economic
value of environmental amenities such as nature reserves or urban open space
areas is categorised into different types of value in order to simplify the description
and measurement of value. These are illustrated in the figure below.
TOTAL ECONOMIC VALUE
USE VALUE NON-USE VALUE
Direct Use Values
Indirect use
Consumptive Non-consumptive value Option Existence
use value use value (ecosystem value value
(e.g. harvesting) (e.g. tourism) functions)
ENVIRONMENTAL GOODS & SERVICES
Figure 5. Conventional classification of the values of environmental amenities
Consumptive use value
This is the value associated with direct harvest of goods from an area. Many
products are harvested in open space areas within the CCT. These include firewood,
medicinal plants, food plants such as waterblommetjies, animals such as Steenbok,
flowers such as Arum Lilies, and building materials such as reeds Phragmites
australis. The value of this consumptive use is the gross monetary value of the
harvest net of harvesting costs.
Non-consumptive use value
Non-consumptive use value is the value obtained from any use of a resource which
does not involve the removal of goods. This includes the value of most tourism and
recreation, and also includes the value that open space areas add to property
transactions. Both recreational and property values of open space areas are
associated mainly with the attributes of open space areas.
Indirect use value - ecosystem functions
Indirect use values are the benefits obtained from ecological functions, or services,
of an open space area. Thus, in the context of open space, the magnitude of these
values is often dependent on the ecological integrity of open space areas, or the
45
degree to which they are altered or transformed. Some of the values associated with
ecosystem functions have been identified in the international literature as follows:
Gas regulation
Climate regulation
Disturbance regulation
Water regulation
Water supply
Erosion control
Soil formation
Nutrient cycling
Waste treatment
Pollination
Biological control
Option and existence value
Option value, sometimes called future use value, is the value that people place on
retaining the option to use a resource in the future, irrespective of whether it is any
use to them at present. The value is variously described as a use value or a non-use
value, although its classification is not important for valuation purposes.
Existence value is the value of knowing that a resource exists, even if that resource
is remote and is never used directly. Existence value is often expressed as peoples
willingness to pay for the conservation of endangered species in far-off places. This
would include conservation value as perceived by society.
Total economic value
Whether or not the different types of values associated with natural resources can
actually be summed is a contentious issue. In particular, expressed existence values
are fairly difficult to decouple from other types of values. It is also necessary to
recognise that many of the values identified are conflicting values or trade-offs. For
example, the recreational value of an open space area may conflict with its
conservation value.
Open space areas are not uniform, and different open spaces, even within the same
sub-category, will yield different values. The value will be a function of a number of
factors such as size, degree of ecological functioning, cleanliness, location, proximity
of substitute areas, crime risk etc. For this reason, average values yielded by a broad
valuation of open space may not reflect the variation at a local level.
3.3.1.2 Results of the open space valuation study
As a starting point to establishing land values for the proposed alignment, the results
of the open space values study for Cape Town are summarised below. In terms of
their interpretation, a number of points need to be borne in mind. The first and
second columns cannot be added, as the first column includes recreational value.
However, it is clear that Zandvlei has a higher average recreational value than the
stated value for wetlands as a whole in Metro South. Indeed, it is more utilised than
Zeekoevlei or Princess Vlei, and more utilised by adults than Rondevlei. The
Kuilsriver value for Metro South-east represents most of the wetland area for Metro
South-east. This value was not used, as it was probably overestimated. The first,
46
third and fourth columns are added to give an estimate of total value per hectare for
each open space type. Note, however, that this value is a minimum, in that property
values and indirect use values have not been estimated in many cases. The
property values in the forth column are also likely to include recreational values.
However, these are specifically for people living in close proximity to open spaces
and thus should not overlap significantly with values derived in surveys of the
broader population. Vacant land has a slightly positive value in Metro South, but its
effect on property values was not investigated.
Recreational + Recreational Property value Indirect use TOTAL R/ha

consumptive use
use + option +
existence
Metro South General survey Zandvlei survey Hedonic Replacement

CVM CVM & TCM analysis cost
Natural 5 216 5 216

vegetation
Vacant land 752 752
Wetlands 1 866 4 323 55 361 18 239 75 466
Metro South General survey Kuilsrivier Hedonic Replacement

East CVM survey CVM analysis cost
Natural 858 858

vegetation
Vacant land 233 - 4 480 - 4 246
Wetlands 4 300 21 061 41 316 20 353 65 969
Source: adapted from Turpie et al., 2001.

CVM = contingent valuation method, TCM = travel cost method.
Property values are case specific and not applicable to all open space.
Table 9. Summary of values and estimated total value of open space in the two
study areas
Validity of estimates
The results cited above are preliminary estimates based on pilot studies. Some of
the estimates are based on better quality data than others. In the study, data quality
was considered to be fair for the replacement cost and similar area (hedonic) pricing
case studies, but both need to be investigated in greater detail. The travel cost study
of recreational value of Zandvlei worked well, but only sampled winter visitors, which
means that the demand curve may be quite different from that of all visitors.
Furthermore, an accurate estimate of visitor numbers is required to confirm the value
obtained. The contingent valuation case studies of all open space areas and of the
Kuilsriver wetlands provided the least reliable result.
47
The results obtained in the study gave values in the same order of magnitude as
those estimated by Browne and Turpie in Common Ground (2000), many of these
based on Costanza et al. (1997). Natural vegetation values, estimated as R858/ha in
Metro South East and over R5000/ha in Metro South, are comparable to the average
value of Fynbos of R1363/ha. Costanza et al. (1997) valued wetlands and estuaries
at R131-153 000 per ha. Wetlands in this study were worth about half of this.
However, Costanzas values include functions such as gas regulation (e.g. CO2
sequestration), which are not included in our values.
3.3.1.3 Adaptation of values to the study area
The above results can be adjusted and used to determine a rough indication of the
value of the area in question. The first adjustment that is needed is for the property
value of wetlands in the Metro South. This value is specifically for Zandvlei and is
largely attributable to the presence of Marina Da Gama which derives substantial
value from its location and integration into the vlei. Zeekoevlei on the other hand
doesnt create comparable premiums for properties and is surrounded by far fewer
houses. For these reasons the property value for Zandvlei was adjusted downward
by seventy percent to give a reflection of the property price related value created by
Zeekoevlei. Housing nearby Rondevlei, on the other hand, has not been constructed
so as to benefit from proximity to the vlei so a property value premium for nearby
houses was not attached to it.
The areas south of Rondevlei and north of Capricorn Park can best be described as
natural vegetation. With this in mind a value of R5 216 was used for them although
this is probably an underestimation as it does not adequately capture the value of
rare species found in natural areas.
It is difficult to attach a value indicator to the sewerage works itself as it does not fall
under any of the categories for which values were estimated in the CMOSS study.
Ordinarily, one would expect people to attach little or no conservation or recreational
value to a sewerage works. However, the CFWWTW is a unique case because of the
rich bird life it supports. In the absence of any better indicators, it was decided to
estimate its per hectare value as the average between wetlands and vacant land for
the area: R2 984 ((R5 216 + R752) / 2).
Having estimated indicators of value per hectare it was possible to generate area
values through multiplication by area size. Again this is a fairly crude way of
estimating values, but is sufficient to generate indicators of value. Table 10 below
contains value indicator estimates for the area.
Value
indicator Current annual Net present value of Total Value
Area (R/ha./yr) Area size (ha.) value Rm increased value Rm Rm
Zeekoevlei R 36,713 340 R 12.5 R 15.6 R 28.1
Rondevlei R 20,105 72 R 1.4 R 1.8 R 3.3
Natural vegetation R 5,216 171 R 0.9 R 1.1 R 2.0
CFWWTW & surrounds R 2,984 675 R 2.0 R 2.5 R 4.5
Total area (excl. landfill) 1,258 R 16.8 R 21.0 R 37.8
Table 10 Conservative value indicators for the FBEC area

48
What is shown in Table 10 is that the four key areas examined have a cumulative
current value in the region of R16.8m. Clearly land values increase over time. The
net present value of these increases is estimated at R21m (land values were
increased at an annual five percent and the NPV discount made at eight percent).
The total value of land is therefore estimated somewhere in the region of R37m.
There are a number of points to bear in mind when interpreting these results:
The values for natural vegetation are conservative as they do not include
possible property price values should such areas be zoned residential.
The value for Rondevlei is conservative because it does not capture the
uniqueness of the site being based on area averages. This conservative
estimate is balanced by the fact that the proposed alignment of the road is a
considerable distance from Rondevlei and should therefore have little impact
on the value of Rondevlei (in the absence of the FBEP).
The values are for the area in its present state. If the FBEC was to be
developed along the lines proposed in the Action Plan, the value of the area
would increase substantially.
Two issues follow from this estimation of the values of the wetlands. The first is the
degree to which the proposed road alignment would impact on land values,
particularly that of Zeekoevlei. The second is a comparison of the estimated land
values relative to the road user and economic benefits of the proposal.
The best way to provide an indication of changes in the publics perception of value
would be to conduct a Contingent Valuation (CV) survey. Even if a CV was
conducted, the results are likely to be contentious due to the variety of biases that
could affect results. In addition, the survey question (i.e. how would perceptions of
value change if a road was to pass through the area?) would be relatively difficult to
administer as it relies on respondents having a reasonably accurate idea of the
roads biophysical, visual and noise impacts which are difficult concepts to convey. In
a case such as this, a wide variety of views are also likely making results less
reliable. For example, high income earners with an interest in nature and birding may
attach a very high value to preserving the site in its present state while low income
earners may have little interest in the site at all. To add to these difficulties, the
resources and time needed to conduct the extensive survey work required for a CV
were beyond the scope of this study.
In the absence of being able to determine the change in value of the wetlands, we
compare the overall value of the wetlands to that of the economic benefits of the
project. As indicated above the estimated value of the land under consideration is in
the region of R37m (in the absence of the FBEP). There are three categories of
benefits that the proposed project would generate. These are benefits to road users
of the R300. Second, benefits to other road users because of the overall increase in
network capacity. Third, benefits during construction and operation of the road.
These benefits are brought together as overall contribution to Gross Domestic
Product.
In Section 3.4.3 Table 34 it was shown that benefits to road users have a net present
value of R2,751m. Benefits to other road users because of increased network
capacity is estimated to have a net present value of R1,519m (based on calculations
for Table 35 Section 3.4.4). Finally the overall contribution to GDP of the proposed
project (which includes the two road user benefits) is estimated at R1,603, in the first
three years of the project (Section 3.7.2 Table 45). The overall net present value of
the contribution of the proposed project to GDP is estimated at R4,776m over the
project lifetime.
49
From the above, it will be realised that the estimated benefits of the proposed project
are considerably larger than the estimated land values of the area in question.
3.3.2 The proposed alignment and the False Bay Ecology Park
The above section has indicated how the proposed project generates more benefits
than the overall land value of the wetlands.
At one level the conclusion that can be drawn from these estimates is that the
proposed project delivers more benefits than costs. It is not clear, at another level,
that it is possible to compare the benefits of a transportation project to the costs of
the impact on the wetlands. This conclusion is particularly important in taking into
consideration of the proposed False Bay Ecology Park.
This section outlines what we believe to be some of the key issues with regard to the
proposed project and the proposed FBEP. We attempt to present these issues in a
balanced manner.
3.3.2.1 Tourism and international perceptions
While the FBEP has a number of objectives, one of the important underlying
motivations is to preserve the integrity of the wetlands and use this to generate local
and international tourism. The FBEP could be a showcase of the ecological
sensitivity that the City of Cape Town wishes to demonstrate to the outside world.
There can be no doubt that a major road running through a portion of the proposed
Park can only work to undermine perceptions about the ecological sensitivity that the
City wishes to demonstrate.
In contrast to this, the conclusion that is more difficult to draw is the degree to which
such changed perceptions would result in any significant loss in tourist revenues to
Cape Town. In addition to this, and a key factor that needs to be considered, is that
the proposed Ecological Park encompasses a major sewage treatment plant. While
one understands the need for the incorporation of the sewage works into the
proposed Park, it should also be recognised that this, in itself, would impact on local
and foreign perceptions about the ecological sensitivity of the proposed Park.
3.3.2.2 Impact on the sense of place
It has been argued that the proposed road would be detrimental to the sense of
place that is hoped to achieved by the proposed Park. The issue of sense of place
revolves around aesthetic impacts, particularly visual and noise impacts. These, in
turn, have the potential to undermine recreational and educational activities, as well
as some of the projected activities for the FBEP.
Current educational programmes
An environmental education programme is based at Rondevlei, but also includes

visits to Zeekoevlei and the CFWWTW. Annually between 6 000 and 8 000 children
attend the two to three hour programme presented in the area. In addition, a further
2 000 children attend the three day programme which includes a two night sleep
over. Funding for the short programme is done by the City of Cape Town while the
three day programme is funded by an educational trust which relies on donations and
contributions from recreational visitors.
50
There is the potential for the proposed road to impact on the experiences of these
children and therefore undermine the educational role of the wetlands.
Recreational uses
Recreational uses can be divided up into those for Rondevlei, Zeekoevlei and the
CFWWTW.
Recreational activities at Rondevlei Nature Reserve include birding, wildlife viewing,

walking, picnics, fishing and overnight camping. The reserve receives between 12
000 and 15 000 visitors per year each paying R5 entry. In addition to this source of
income a private tour operators uses the reserve headquarters as a base and offers
tours of the whole FBEP area. There are conference facilities, accommodation and a
kiosk. The tour operator has also helped to establish a subsidiary catering company
that caters from the reserve and takes on private catering contracts.
Given the distance of Rondevlei from the proposed road alignment, we are of the
opinion that the proposed road would have a negligible impact on Rondevlei.
Recreational uses at Zeekoevlei include sailing, windsurfing, kite-surfing, rowing,

boating, fishing and picnicking/braaiing. The main users of the vlei for sailing are the
Zeekoevlei Yacht Club with approximately 400 members and the UCT Sailing Club
with approximately 200 members. The two main rowing clubs are the UCT club with
approximately 220 members and the Alfreds Club. A number of schools also use the
vlei for rowing including SACS, Bishops, Redham, Springfield, Grassdale and
Livingstone. The boating club has roughly 100 members that use the vlei, but there
are also users who are guests of the club and people who use the public slipway.
Although usage numbers were not obtainable, the eastern shores of the vlei are used
fairly extensively for braaiing and picnicking.
The CFWWTW area is used mainly for birding and fishing. No fees are charged for
birding or fishing, but permits are required for these activities.
As the current alignment of the proposed road goes between Zeekoevlei and the
CFWWTW it clearly would have an impact on the experiences of people using the
southern end of Zeekoevlei and the northern part of the CFWWTW.
Components of the FBEP
At least two components of the FBEP could be affected by the current proposed
alignment of the road.
The first of these is the proposed construction of an eco-village on the southern

shores of Zeekoevlei with chalets (101 units) and a campsite (50 sites) revolving
around the theme of ecologically sensitive construction methods. It is expected that
the road noise and light pollution would have a significant impact on this eco-village.
The second of these is the development of mass based recreation on the eastern
shores of Zeekoevlei. Visitor numbers of 700 000 people per annum are predicted for
this site. While there would obviously be impacts on the visitor experience to the
eastern shore the impact is expected to be considerably lower than that on the eco-
village. As these visitors are day-trippers they would not be affected by the light at
night. In addition there are more likely to be recreation visitors rather than ecological
visitors. If this is the case it is likely that they would be less affected by the visual and
noise impacts.
51
3.3.3 Conclusions and recommendations
A number of important conclusions and recommendations can be drawn from the

discussion above.
One, the monetary value of the economic benefits of the proposed project outweighs
the estimated monetary value of the wetlands that would be affected by the proposed
alignment of the R300.
Two, it is not clear that a monetary comparison of costs and benefits is, in this
instance, an appropriate comparison. The societal benefits of a road project are very
different to the societal benefits of a wetlands area.
Three, the proposed FBEP seriously complicates the issues. In the absence of the
FBEP the conclusion that could be drawn is that the proposed alignment is generally
acceptable. This is indicated in many of the other specialist studies with the possible
exception of the bird and botany studies (after mitigation measures are taken into
account).
Four, should the FBEP go ahead then it is clear that the proposed project would
impact on the Park. What cannot be determined is the degree of the impact and
whether the proposed alignment constitutes a fatal flaw to the FBEP. The key issue
is whether the proposed FBEP and the proposed road can co-exist.
Five, it is concluded that the decision about the proposed alignment is a strategic
decision that must be taken at a political level. It is important to emphasise that while
a comparison of the net benefits of the road with possible environmental losses is an
important aspect to be considered in decision-making, it is obviously not the only
basis upon which to judge the desirability of the project. Ultimately, a strategic policy
decision is needed requiring political decision makers to prioritise among the
conflicting needs of transport and nature conservation/recreation. The Economic
Specialist study can inform such a strategic decision but cannot make the decision.
The table below sets out our assessment of the impact of the proposed alignment of
the R300 on the land values of the wetlands in their current state, focussing
particularly on the section of land between Zeekoevlei and the sewage plant. The
second column sets out the assessed impact on the FBEP should that Park proceed.
Assessments could not be made with mitigation measures in place because the
impact of the mitigation measures could not be determined.
Impact on land values of Impact on the proposed

wetlands, in current state False Bay Ecology Park
Extent L- M-
Duration H- H-
Intensity L- M-
Probability M M-
Significance M- H-
52
Confidence H L
Mitigation objectives
Reduce the impact on loss in land values generally. Road alignment to be planned to
reduce potential impact on FBEP.
Mitigation Measures
Following from these conclusions, two recommendations are made.
First, is the need for the project proponents to consider alternative road alignments in
this area and consider the costs for the proponents relative to the costs and benefits
in the wetlands.
Second, there is an urgent need for direction from the City of Cape Town about the
FBEP. Coupled with this is the need for the project proponents to interact with the
City to determine other alignments or mitigation measures that would reduce impacts
on the FBEP
53
3.4 Road user costs and benefits (Sector 2)
One of the most critical issues in the economic assessment of the proposed project is
how tolling the R300 would impact on people and business. There are a variety of
potential impacts.
The first and most obvious is that people would now pay a toll to use sections of
the roads.
The second is that there would be cost savings to road users because the
increased capacity and surface upgrades reduce vehicle operating costs and
accident costs.
Increased capacity would reduce traffic congestion and therefore reduce travel
times on the proposed toll roads and the costs associated with travel.
The increased capacity of the proposed toll roads could attract additional traffic to
the toll roads. If this occurs there would be less traffic on the rest of the road
network generally. This would lead to reduced congestion and lower travel costs
for road users and lower road maintenance costs for local authorities.
There is the potential for the proposed toll roads to cause traffic diversions,
particularly in the earlier years. Where this occurs there would be slower
travelling times, increased chance of accidents and the costs associated with
these changes. If there were substantial heavy vehicle deviation then there would
be increased road maintenance costs to local authorities.
The section starts with a brief description of methodology. Second, estimated costs
and benefits to individual road users are reported on. Third, the cumulative overall
costs and benefits are reported. Finally, the overall changes in road network costs
are reported. This section includes some discussion on the cost of traffic diversion.
3.4.1 Methodological approach
The approach followed was to determine the current and future road user costs for
individual and total vehicle usage for the situation where, first, the roads remain
untolled and, second, where the roads are upgraded and tolled. The difference
between these two sets of costs, less any toll tariff that would be paid, is the net
financial cost or benefit to the road user.
There are a number of factors that complicate estimating the changes in costs:
The tolled and untolled road would have different carrying capacities and different
riding surfaces. The proposed toll road makes provision for initial and ongoing
increases in carrying capacity. In turn it has been assumed that the untolled road
would have no capacity increases but sufficient maintenance to keep a reasonable
road surface. In consequence there would be different road user costs for the tolled
and untolled road.
Increased capacity would attract traffic to the upgraded roads where the toll tariff
charged determines the degree of attraction. If the toll tariff were raised too high it
would repel traffic onto the rest of the road network. The result of attracting or
54
repelling traffic affects the riding quality of the road particularly if there are changes in
flows of heavy vehicles.
Both of the issues above are further complicated by the fact that there are no
definitive toll tariffs for the proposed projects. The only available information is a
potential low tariff and high tariff for light vehicles. Given the fact that different toll
tariffs would attract or repel different numbers of vehicles and therefore impact on
road quality and congestion, the estimates of road user costs were made for various
tariffs. As mentioned before, these are defined as low, high and middle toll tariffs
where middle is the average between low and high. The traffic projection data that
was supplied as part of this study also estimated traffic volumes across three
scenarios. For a low tariff, a high tariff and the so-called preferred tariff where the
preferred tariff was not revealed to this study. Hence we caution that the estimates
reported below for the preferred tariff are not necessarily as accurate as for the
estimates made for low and high tariffs. The reason for this is that we are forced to
associate our middle tariff with the predicted traffic flows for the preferred tariff. Our
middle tariff might or might not be close to the preferred tariff eventually chosen.
Finally no information was made available to this study about the likely toll tariffs for
heavy vehicles. In consequence toll tariffs for heavy vehicles are estimated as the
ratio of the average light to heavy vehicles for all tolled roads in South Africa with this
ratio then applied to the low and high light vehicle toll and each mainline and ramp
plaza on the proposed toll road.
There are several computer software programmes available that assist in calculating
benefits to road users for alternative road transport projects. One of the most well
known is the Highway Design and Maintenance Standard Model 4 (HDM4)
(www.worldbank.org/transport/roads/rd_tools/hdm4.htm). It was developed by the
World Bank and is used extensively by traffic engineers in South Africa. The HDM4
computer model takes its starting point as the concept of pavement life cycle
analysis and is able to generate vehicle operating costs (VOC) and road user costs
(RUC) per kilometre of road for various classes of vehicles, road alignments, traffic
flows and pavement conditions.
The methodological approach used here follows the logic of the HDM4 software for
the calculation of vehicle operating costs and road user charges but does not use
HDM4 explicitly. Rather a spreadsheet modelling approach was used to replicate the
HDM4 algorithms and output. The main reason for following this approach was
because HDM4 is very black-box in its presentation and does not have the
transparency or flexibility of a spreadsheet model.
3.4.2 Quantifying vehicle operating costs and road users costs
Technically two different costs are defined in the use of a vehicle. The first are the
so-called vehicle operating costs. These are specific to the cost of using a vehicle.
Second are road user costs. Road user costs include vehicle operating costs but also
include costs of potential accidents and time costs. The methodological approaches
to these two costs are discussed below.
3.4.2.1 Quantifying vehicle operating costs
Vehicle operating costs (VOC) are direct costs incurred by the owner or driver of a
vehicle. Specifically these include fuel, capital, maintenance, tyres and oil. These
costs vary according to the type of vehicle that is operated as well as the type of road
55
and terrain covered by the road. In addition to this, the age of the road and the type
of traffic the road has been subjected to also affect operating costs. The NRA
supplied the information used in these calculations as an output from the HDM4
software.
Different types of roads in different topographical locations result in different basic

VOC and Road User Costs (RUC). In this case the existing R300 is largely two lane
bi-directional.
The VOCs for each section of road were treated separately according to the type of
road and the data was read from the HDM4 database, which is incorporated into the
model. An example of the VOCs from the database is shown in Table 11
Vehicle Class DUAL4F VOC DUAL6R VOC PAVED2PR VOC

Class I R1.81 R1.81 R1.80
Class II R4.86 R4.87 R5.39
Class III R6.46 R6.47 R7.74
Class IV R12.03 R12.07 R13.98
Table 11 Vehicle Operating Costs per km from HDM4 Database
For any given road, VOCs are determined by the quality of the road surface. Good
road surfaces result in lower vehicle operating costs while bad road surfaces result in
higher costs. The quality of the road surface is given by the so-called Present
Serviceability Index (PSI) factor. The road quality deteriorates over time due to both
vehicle usage and weather damage. Typically new or upgraded roads would have a
PSI of 4.0 and a PSI of 2.5 to 2.0 under normal traffic conditions by the end of its
design life.
For the purpose of analysis the challenge was to model the PSI of each section of
the roads. (Where road sections are consistent with the consulting engineers
specifications). This exercise was done because the PSI and carrying capacity vary
on different sections of the roads and traffic flows and traffic projections vary from
section to section. In addition, there are projected future increases in capacity and
upgrades and these also vary from section to section. The final challenge faced was
that some defined sections have multiple traffic volumes because there are
interchanges within each road section. In consequence the roads were divided into
sections and, where necessary, each section was further divided into links where a
link is the section of road between interchanges.
VOC and RUC need to be adjusted for different road qualities and congestion values.
The quality of the riding surface of the existing road is inferior to that of a newly built
or upgraded road. The PSI of a road is calculated from the following formula (CB
Roads):
PSI(t) = PSInew (PSInew PSIend) x (E80(t) / Design E80)n
Where PSI(t) is the current PSI of the riding surface

56
PSInew is the PSI of a new or rehabilitated pavement
PSIend is the desired PSI at the end of the roads design life
E80(t) is the number of equivalent 80kN (8 ton) single axle loads (E80s) that
have used the pavement over a period of time (t).
Design E80 is the number of E80s for which the pavement has been
designed, usually over a period of 20 years.
n is the pavement equivalency exponent, which for tarred roads is 4 and for
concrete roads is 6.
The various sections of the existing R300 the PSI range from 2.7 along the western
sections of the road to 3.6 on the eastern sections. The western sections of the road
are close to the end of their design life. Given the age of the road on one hand, and
the current and projected traffic growth, on the other, most sections of the roads are
expected to reach a PSI of 2.5 within the next five to eight years and many sections
reaching a PSI of 2.5 within 5 years. An assumption was made that if the R300 were
not tolled the road would be maintained at a PSI that would average around 2.5. For
the purposes of the proposed toll roads the consulting engineers have detailed
estimates about the frequency and scale of upgrades and repair work for each
section of the road. The assumed effects of the different rehabilitation actions are
given in Table 12.
Road Widening and Structural Rehab

Increase to PSIconstruct 4.0
PSIterminal 2.5
Design Life of Road Rehabilitation 20 years
n= 4
Rehabilitation and Asphalt Overlay
Increase in PSI per Rehab. & Asphalt Overlay 1.1
Increase in Service Life of Road 12 years
Rehabilitation and Single Seal
Increase In PSI per Rehab. & Single Seal 0.25
Asphalt Overlay Only
Increase in PSI per Asphalt Overlay 1
Rejuvenation
Increase in PSI 0.1
Increase in Service Life of Road per Rejuvination 5 years
Source: REACT Economic Analysis of Short-Term Rehabilitation Actions
Table 12: The impact of different rehabilitation actions

57
The traffic projections for class 1, 2, 3 and 4 vehicles have been converted into
equivalent E80 loads using the factors in Table 11 (Source TMH4 Table 6). These
E80s are then summed and inserted into the PSI formula given above to determine
the cumulative effect on the quality of the riding surface.
Equivalent E80's per Vehicle Class

Class I Class II Class III Class IV
0.0 1.2 1.8 3.5
Table 13 Equivalent E80 per vehicle type
From PSI, we can obtain QI. QI is the quarter car index and is measured by means
of a linear displacement intergrator (LDI) which measures and sums the
displacements between the rigid axle of a vehicle and the body of the vehicle as the
vehicle moves over the road (Van der Merwe & Grant 1980 as cited in Sabita
1994).
The relationship between QI and PSI is given as (Visser, 1982):
QI = 92.63 56.39 x ln(PSI)
And from QI we can obtain frl and frh, where frl is the roughness coefficient for light
vehicles and frh for heavy vehicles:
frl = 0.0081 x QI + 0.676 for light vehicles, and
frh = 0.0036 x QI + 0.856 for heavy vehicles
Finally, fr = (1-%HV) x frl + %HV x frh for 2 lane bi-directional roads, or
fr = 0.8 + 0.3 x (1-%HV) x frl + 0.9 x %HV x frh for multi lane roads
The proportion of heavy vehicles in the daily traffic is given as %HV. There is some
debate regarding the accuracy of the second formula for fr, and its impact has been
limited by changing the 0.3 factor to 0.2 for light vehicles.
By multiplying the VOC with fr, one can obtain the Vehicle Operating Costs for a
particular quality road and for a particular traffic count. The model does this for each
link for the before and after upgrading options, i.e. VOCBEFORE and VOCAFTER
per link. The VOCs are unique on each link because of the different proportion of
vehicle classes that occur there, the different type of road and the varying quality of
the riding surface.
3.4.2.2 Quantifying road user costs
Road user costs are the sum of vehicle operating costs, potential costs of accidents
and the cost of time. As has been shown above, type of road and terrain as well as
the quality of the road surface affect the vehicle operating costs. The HDM4
approach to accident costs is to allow cost changes depending on road and terrain
type. Accident costs also increase as a result of increasing traffic congestion.
Accident costs are given as a fixed value for road and terrain type and as a variable
factor (the so-called fc) for congestion where fc is the congestion factor. Finally, time
58
costs are considered because of the opportunity cost of a journey and are typically
measured as earnings foregone.
Accident costs are determined from a NRA database, based on accident related
statistics. The accident statistics are classified by the number of fatal, serious and
light accidents and the damage per 100 million vehicle kilometres for different types
of roads. This is done according to the type of intersections encountered on the road
(at grade or grade separated) and according to the type of shoulder on the road
(paved or unpaved). The length of the road link is multiplied by the appropriate
accident statistic to obtain the potential cost of an accident per commuter.
The key issue for changes in road user costs relates to traffic congestion. As
congestion increases so too does the probability of an accident and the opportunity
cost of the journey. The upgrading and capacity increases of the proposed projects
would allow these roads to carry more traffic with less congestion than would be the
case if the roads are maintained at their current capacity and riding quality. In order
to measure these changed road user costs resort was made to HDM4 type
methodology for the measurement of the cost of accidents. For measuring the cost of
time the traffic engineers supplied predicted speeds for different scenarios for each
link on the existing R300. Taking the speed saving and applying a cost of time value
and vehicle occupancy rate allowed for a value to be placed on the savings in road
user costs.
The cost of time and vehicle occupancy rates were based on the road side interviews
conducted during 1999 as part of the N1N2 traffic surveys and the 1996 Census.
(The R300 road side interviews could not be used for this purpose because they did
not ask peoples income. Income is necessary to calculate the cost of time). The time
costs have been divided into working time and non-working time costs for class 1
vehicle owners and working time costs for all other classes. According to K.W.
Gwouldiam (1997), as cited in Belli et al (1998), working time only applies to people
driving on work-related business and does not include commuting to and from work.
The same report suggests that non-working time be taken as one third that of
working time. The number of people per car during peak and off peak times is
determined from the roadside interviews to produce the total cost of time per vehicle
per hour. The traffic engineers have supplied the speed of the different classes of
vehicles over the length of the link of road under consideration, which thus
determines the time spent per length of road link. The cost of time per vehicle per
road link is then calculated. The actual values used in the cost of time calculations
are given in Table 35 In section 3.4.2 below.
Congestion also has an impact on the Road User Costs. The capacity of the road
would be increased with its upgrading, and the effect of the reduced congestion
would magnify the difference in the vehicle operating costs for the before and after
upgrading scenarios, as well as the accident costs. At low vehicle flows, there is no
magnification, but once the number of vehicles on the road starts exceeding 40% of
the road capacity then there is a difference as shown in the formulae below:
If V/C <= 0.4, then fc = 1.00
0.4 < V/C <= 1.00, then fc = (V/C + 0.6) 1.15
V/C > 1.00 then fc = 1.6 1.15
Where: V/C is the number of vehicles as a proportion of the capacity of the

road and fc is the multiplication factor for the road user costs.
59
The final Road User Costs (RUC) are then obtained from
RUC = (Accident Costs x fc + Time Costs + VOC x fr x fc) x length of road
Road User Costs can now be obtained for the before and after upgrading scenarios.
The difference in before and after, multiplied by the length of road that the user would
be commuting on, should be more than the toll fee charged if the proposal is to be of
a benefit to that road user.
It will also be recognised that as traffic congestion varies according to the day and
according to the season, allowances need to be made as to how these impact on
road user costs. To this end three types of estimates have been made. The first two
are for individual vehicles travelling in peak hour traffic and in offpeak traffic. The
second is the overall changes in costs and benefits for all road users. In the latter
case the estimates are made not for peak and offpeak traffic but rather for average
annual daily traffic (AADT) and the capacity of the road to handle the AADT.
The quantification of the change in road user costs follows from the calculations of
the road PSI and the vehicle operating cost outlined in the section above. From these
calculations we know the vehicle operating costs for the tolled and untolled roads for
each link along each road. From the traffic engineers we also know the volume of
traffic on each link and vehicle speed (again recognising that volumes and travelling
speeds differ according to the tolled and untolled option as well as at low, high and
preferred toll tariff).
Hence the difference in road user benefits are the reduced road user costs as a
result of the upgrading of each section and link. Finally, some links have mainline
plazas and/or ramp plazas on them and driving on these links involves substantial
costs. The overall change in road user costs is therefore the difference between the
cost of driving on the untolled road without upgrades and difference in road user
costs and benefits of driving on the upgraded and tolled road.
A practical example of this methodological approach is illustrated in Tables 14 and 15

These tables illustrate the VOC and RUC for section 5 on the R300, which is the link
between Hindle Road and the N2. Table 14 gives the estimated costs and benefits
for the road section without any upgrading while Table 15 conducts the identical
exercise for a road that is upgraded. The most important numbers in these tables are
those for Road User Cost per section of road. Here a comparison of the numbers
on the two tables indicates the cost savings due to upgrading. No toll tariff is
removed in these calculations because the proponents preferred location is not on
this section. For those sections where a plaza is located the benefits are reduced by
that toll.
60
Morning and Afternoon Peak Traffic, Per Hour Vehicle Operating Costs
Peak Hour AM Traffic % Heavy Road Cap Class I Class II Class III
Yrs from
Present Class I Class II Class III Class IV Total Vehicles Per Hour V/C fc Qi fr Basic Modified Basic Modified Basic Modified
0 4904 226 94 47 5271 7.0% 5,430 0.97 1.6808 25.39 1.023 1.807 1.850 4.856 4.969 6.461 6.612
1 5065 230 96 47 5438 6.9% 5,430 1.00 1.7169 27.53 1.027 1.807 1.855 4.856 4.984 6.461 6.632
2 5225 234 98 48 5606 6.8% 5,430 1.03 1.7169 30.12 1.030 1.807 1.862 4.856 5.003 6.461 6.657
3 5386 239 100 49 5773 6.7% 5,430 1.06 1.7169 33.29 1.035 1.807 1.871 4.856 5.027 6.461 6.689
4 5547 243 101 50 5941 6.6% 5,430 1.09 1.7169 37.19 1.042 1.807 1.882 4.856 5.057 6.461 6.729
5 5707 247 103 51 6108 6.6% 5,430 1.12 1.7169 40.96 1.048 1.807 1.893 4.856 5.087 6.461 6.768
6 5868 251 105 52 6276 6.5% 5,430 1.16 1.7169 40.96 1.047 1.807 1.892 4.856 5.084 6.461 6.765
7 6029 255 107 53 6443 6.4% 5,430 1.19 1.7169 40.96 1.047 1.807 1.892 4.856 5.082 6.461 6.762
8 6189 259 108 53 6610 6.4% 5,430 1.22 1.7169 40.96 1.046 1.807 1.891 4.856 5.080 6.461 6.760
9 6350 264 110 54 6778 6.3% 5,430 1.25 1.7169 40.96 1.046 1.807 1.890 4.856 5.078 6.461 6.757
10 6511 268 112 55 6945 6.3% 5,430 1.28 1.7169 40.96 1.045 1.807 1.889 4.856 5.076 6.461 6.754
Cost of Time (Rands) per Road User Costs per section of road (i.e. NOT per km)
Total accident costs per commuter per day per km Average Speed kilometre Class I Class II Class III Clas
Classes Class I Class I II, III, IV
Fatal Serious Slight Damage Total Class I II, III, IV Working non-wor non-wor Individ. Total Individ. Total Individ. Total Individ.
0.03 0.01 0.00 0.03 0.07 94.0 94.0 1.34 0.50 0.98 13.60 34.00 43.94 78.42
0.03 0.01 0.00 0.03 0.07 90.4 90.4 1.39 0.52 1.02 13.97 34.88 45.07 80.40
0.03 0.01 0.00 0.03 0.07 86.8 86.8 1.45 0.54 1.06 14.10 35.15 45.38 80.84
0.03 0.01 0.00 0.03 0.07 83.2 83.2 1.51 0.57 1.11 14.25 35.47 45.74 81.38
0.03 0.01 0.00 0.03 0.07 79.5 79.5 1.58 0.59 1.16 14.42 35.84 46.17 82.02
0.03 0.01 0.00 0.03 0.07 75.9 75.9 1.66 0.62 1.21 14.60 36.22 46.61 82.67
0.03 0.01 0.00 0.03 0.07 72.3 72.3 1.74 0.65 1.28 14.72 36.42 46.81 82.85
0.03 0.01 0.00 0.03 0.07 68.7 68.7 1.83 0.69 1.34 14.86 36.65 47.03 83.06
0.03 0.01 0.00 0.03 0.07 65.1 65.1 1.93 0.73 1.42 15.01 36.90 47.28 83.30
0.03 0.01 0.00 0.03 0.07 61.5 61.5 2.05 0.77 1.50 15.17 37.19 47.57 83.57
0.03 0.01 0.00 0.03 0.07 58.6 58.6 2.14 0.81 1.57 15.32 37.44 47.82 83.80
Table 14 Road user costs for road section 5, Hindle road to the N2 without upgrading
61
Morning and Afternoon Peak Traffic, Per Hour Vehicle Operating Costs
Peak Hour AM Traffic % Heavy Road Cap Class I Class II Clas
Yrs from
Present Class I Class II Class III Class IV Total Vehicles Per Hour V/C fc Qi fr Basic Modified Basic Modified Basic
0 4930 192 80 39 5241 5.9% 5,430 0.97 1.6739 25.39 1.016 1.807 1.837 4.856 4.936 6.461
1 5382 204 85 42 5713 5.8% 5,430 1.05 1.7169 27.53 1.019 1.807 1.842 4.856 4.949 6.461
2 5834 216 90 44 6185 5.7% 5,430 1.14 1.7169 30.12 1.023 1.807 1.848 4.856 4.966 6.461
3 6287 228 95 47 6657 5.6% 8,145 0.82 1.4934 14.46 0.995 1.807 1.799 4.871 4.847 6.474
4 6739 240 100 49 7129 5.5% 8,145 0.88 1.5638 14.46 0.995 1.807 1.797 4.871 4.844 6.474
5 7191 252 105 52 7601 5.4% 8,145 0.93 1.6347 14.46 0.994 1.807 1.797 4.871 4.842 6.474
6 7644 264 110 54 8073 5.3% 8,145 0.99 1.7059 14.46 0.994 1.807 1.796 4.871 4.839 6.474
7 8096 276 115 57 8545 5.3% 8,145 1.05 1.7169 14.46 0.993 1.807 1.795 4.871 4.837 6.474
8 8549 288 121 59 9017 5.2% 8,145 1.11 1.7169 14.46 0.993 1.807 1.794 4.871 4.836 6.474
9 9001 301 126 62 9489 5.1% 8,145 1.17 1.7169 14.46 0.992 1.807 1.794 4.871 4.834 6.474
10 9424 311 130 64 9930 5.1% 8,145 1.22 1.7169 14.46 0.992 1.807 1.793 4.871 4.832 6.474
Cost of Time (Rands) per Road User Costs per section of road (i.e. NOT per km)
Total accident costs per commuter per day per km Average Speed Section of Road Class I Class II Class III Class IV
Classes Class I Class I II, III, IV
Fatal Serious Slight Damage Total Class I II, III, IV Working non-wor non-wor Individ. Total Individ. Total Individ. Total Individ. Total
0.03 0.01 0.00 0.03 0.07 110.0 110.0 1.14 0.43 0.84 13.19 33.15 42.99 77.10
0.03 0.01 0.00 0.03 0.07 107.9 107.9 1.16 0.44 0.85 13.54 34.07 44.18 79.25
0.03 0.01 0.00 0.03 0.07 105.9 105.9 1.19 0.45 0.87 13.62 34.23 44.38 79.58
0.03 0.01 0.00 0.03 0.07 103.8 103.8 1.21 0.45 0.89 11.85 29.61 38.19 68.15
0.03 0.01 0.00 0.03 0.07 101.8 101.8 1.24 0.46 0.91 12.35 30.90 39.88 71.23
0.03 0.01 0.00 0.03 0.07 99.7 99.7 1.26 0.47 0.93 12.86 32.21 41.59 74.34
0.03 0.01 0.00 0.03 0.07 97.7 97.7 1.29 0.48 0.94 13.37 33.52 43.31 77.47
0.03 0.01 0.00 0.03 0.07 95.6 95.6 1.31 0.49 0.96 13.48 33.78 43.62 77.99
0.03 0.01 0.00 0.03 0.07 93.6 93.6 1.34 0.50 0.99 13.52 33.84 43.68 78.04
0.03 0.01 0.00 0.03 0.07 91.5 91.5 1.37 0.52 1.01 13.56 33.91 43.75 78.09
0.03 0.01 0.00 0.03 0.07 86.3 86.3 1.46 0.55 1.07 13.68 34.12 43.95 78.29
Table 15 Road user costs for road section 5, Hindle Road to the N2 with upgrading
62
Individual road user costs and benefits
This section reports on the estimated changes in road user costs for individual
journeys for certain selected locations. This exercise was performed only for the
existing sections of the R300. The reason for this is that the purpose of the exercise
is to determine whether any person would be paying more as a result of the tolling of
the R300 and is therefore being discriminated against. For people to choose to use
the proposed green field section of the R300 the cost of using the road must be less
than the cost of alternative routes. If it was not, people would choose to stick to the
alternative roads and avoid the proposed new sections of the R300.
Road user costs have been calculated for the five potential journeys. These are:
N1 to Vanguard Drive
From the N1 to the N2
N1 to the Stellenbosch interchange
N2 to the Stellenbosch interchange
The changes in road user costs are given for the four different vehicle classes
annually for the years 2006 to 2037. In addition, and largely because of the lack of
certainty about toll tariffs, the changes in road user charges are given for the middle
tariff for morning peak hour traffic and off peak traffic and for the high tariff for off
peak traffic. The intention in reporting these various permutations is to test the upper
limit of possible changes in road user costs.
The high and low toll tariffs used in this analysis are given in the table below. As
mentioned above two critical pieces of information were not made available to the
study. The first is the preferred toll tariff. The second is the toll tariff for vehicle
classes other than light vehicles. These problems have been addressed in the
following ways. Preferred toll tariffs are taken as the average of low and high tariffs
in other words the midpoint between the two tariffs. Heavy vehicle tariffs are
calculated as the average difference between light and heavy vehicles on all South
African toll roads. Table 16 gives the values of the toll tariffs that have been used for
the R300.
63
Tol tariffs used in R300 economic assessment
Class 1 Low Middle High

Stellenbosch Mainline 3.75 5.63 7.50
Van Riebeeck Ramps (North) 2.00 2.88 3.75
Stellenbosch Ramps (North) 2.00 2.75 3.50
Stellenbosch Ramps (South) 2.00 2.75 3.50
Hindle Ramps (South) 2.00 2.88 3.75
N2 Ramps (South) 2.00 2.88 3.75
Stock Ramps (South) 1.50 2.25 3.00
Table 16 Toll tariffs used in the financial and economic analysis for the R300
(2000 values)
It will be shown that, apart from a few important exceptions, most users of the
proposed toll road would have positive road user benefits at the middle and high toll
tariffs. Further to this, it will also be shown that in aggregate the proposed toll
roadsgenerates overall road user benefits that are greater than road user costs.
Simply put this means that road user benefits would be greater by driving on the
deterioration in the existing road PSI as the road near the end of its design life and in
later years due to increased congestion and slower travelling times.
There is a key exception to these general conclusions. Some road users would have
increased costs in travelling on the tolled road relative to travelling on the untolled
road. This occurs for journeys between the N2 and Vanguard Drive for all years
during morning rush hour and for many years at off peak times. [The main reason for
this is the increased traffic volumes on this section due to the new southern legs. At
the same time there is not a significant increase in PSI and the benefit of lower VOC
is therefore less. There is also not a need to increase capacity during the initial
period. V/C does however go up due to the additional traffic from the south and thus
results in higher RUC.]
It will also be shown that, given the exceptions above, the road user benefits accrue
more than proportionately to heavy vehicles rather than light vehicles. As the class of
vehicle increases so too does the increased benefit. In this case we find the
improved riding quality results in more than proportionate savings in vehicle
operating costs for heavy vehicles.
Vehicles travelling between the N1 and Vanguard Drive would have positive
increases in road user benefits for all vehicle classes. The exception to this is that
there are increased costs in the years 2009 and 2010 during morning peak hour
traffic at the middle toll.
64
In general the highest road user benefits are to be found during off peak times. This
is an indication of the differences between current and expected traffic volumes on
the proposed project.
Year Class I Class II Class III Class IV
2006 2.46 8.77 12.01 25.57
2007 1.30 5.41 7.36 16.42
2008 0.17 2.10 2.76 7.31
2009 (0.56) (0.20) (0.52) 0.57
2010 (0.45) (0.39) (1.02) (1.14)
2011 0.80 2.40 2.39 4.37
2012 1.05 2.78 2.72 4.51
2013 1.38 3.36 3.30 5.08
2014 1.67 3.81 3.71 5.33
2015 1.87 4.02 3.78 4.91
2016 3.31 7.30 7.97 11.93
2017 3.26 6.81 7.09 9.67
2018 3.81 7.79 8.17 10.92
2019 4.19 8.56 9.04 12.14
2020 4.57 9.31 9.86 13.21
2021 4.99 10.11 10.74 14.35
2022 5.38 10.82 11.48 15.19
2023 5.76 11.47 12.12 15.78
2024 6.15 12.10 12.69 16.18
2025 6.59 12.83 13.38 16.70
2026 7.15 13.79 14.33 17.61
2027 7.79 14.90 15.42 18.67
2028 8.52 16.17 16.68 19.89
2029 9.39 17.69 18.19 21.36
2030 10.42 19.48 19.97 23.11
2031 11.67 21.66 22.14 25.24
2032 13.22 24.33 24.81 27.84
2033 12.64 23.32 23.80 26.84
2034 11.66 21.62 22.09 25.14
2035 10.07 18.82 19.29 22.32
2036 7.44 14.21 14.68 17.67
2037 2.93 6.29 6.74 9.68
Table 17 Costs and Benefits to vehicles travelling from the N1 to Vanguard

Drive, Morning Peak hour, Middle toll tariff (Rands 2002 values)
65
2006 3.89 12.99 18.21 38.89
2007 5.08 15.74 21.73 45.06
2008 6.19 18.26 24.93 50.61
2009 7.11 20.23 27.38 54.75
2010 8.49 23.32 31.34 61.59
2011 9.41 25.19 33.65 65.37
2012 9.87 25.93 34.46 66.44
2013 10.32 26.61 35.20 67.33
2014 10.80 27.33 35.97 68.27
2015 11.26 27.95 36.59 68.88
2016 15.94 39.56 51.81 96.43
2017 16.41 40.13 52.34 96.79
2018 18.51 44.87 58.39 107.30
2019 18.54 44.61 57.95 106.18
2020 18.55 44.31 57.43 104.90
2021 18.38 43.48 56.22 102.29
2022 17.74 41.40 53.33 96.56
2023 17.08 39.21 50.29 90.53
2024 16.43 37.05 47.27 84.51
2025 15.81 34.92 44.28 78.52
2026 15.22 32.83 41.34 72.57
2027 14.62 30.67 38.27 66.34
2028 13.90 28.14 34.71 59.15
2029 13.24 25.69 31.22 52.03
2030 12.91 24.03 28.77 46.77
2031 12.64 22.47 26.40 41.58
2032 13.18 22.88 26.62 41.09
2033 11.97 20.78 24.20 37.55
2034 10.47 18.26 21.36 33.60
2035 8.53 15.14 17.92 29.03
2036 5.89 11.06 13.52 23.49
2037 2.08 5.39 7.51 16.31

Drive, Offpeak traffic, Middle toll tariff (Rands 2002 values)
66
2006 2.69 11.26 16.36 37.66
2007 4.26 15.01 21.20 46.28
2008 5.76 18.55 25.75 54.32
2009 7.21 21.91 30.04 61.87
2010 8.65 25.17 34.22 69.12
2011 9.97 28.10 37.93 75.49
2012 11.20 30.85 41.41 81.50
2013 12.52 33.80 45.15 87.97
2014 13.64 36.21 48.15 93.04
2015 14.54 37.99 50.32 96.52
2016 17.74 45.69 60.35 114.45
2017 18.73 47.60 62.65 118.10
2018 20.19 50.67 66.49 124.49
2019 20.73 51.76 67.82 126.64
2020 20.81 51.58 67.47 125.64
2021 20.65 50.77 66.26 123.03
2022 19.96 48.53 63.15 116.87
2023 19.20 46.07 59.75 110.14
2024 18.41 43.51 56.19 103.09
2025 17.66 40.98 52.66 96.06
2026 16.93 38.50 49.18 89.06
2027 16.19 35.93 45.56 81.78
2028 15.34 33.00 41.45 73.52
2029 14.54 30.13 37.40 65.32
2030 13.79 27.33 33.41 57.16
2031 13.40 25.37 30.49 50.90
2032 13.74 25.22 29.94 48.91
2033 11.33 19.53 22.64 35.96
2034 8.86 13.90 15.49 23.49
2035 6.80 9.68 10.33 15.01
2036 5.21 7.18 7.59 11.47
2037 3.02 3.85 4.03 7.09

Drive, Offpeak traffic, High toll tariff (Rands 2002 values)
67
N1 to the N2
Vehicles travelling between the N1 and N2 would have positive increases in road
user benefits for all vehicle classes for all years (in the permutations that were
tested). As in the previous case these benefits are generally greater for off peak
times than during morning peak hour traffic.
N1 to N2
2006 4.78 14.78 19.93 40.09
2007 3.57 11.29 15.10 30.62
2008 2.25 7.48 9.85 20.30
2009 1.27 4.51 5.67 11.89
2010 0.78 2.79 3.11 6.42
2011 2.07 5.68 6.64 12.12
2012 1.98 5.28 6.00 10.66
2013 1.91 4.91 5.39 9.22
2014 1.85 4.56 4.80 7.80
2015 1.81 4.24 4.25 6.40
2016 3.00 6.98 7.79 12.40
2017 2.70 5.92 6.23 9.06
2018 2.98 6.36 6.63 9.33
2019 3.24 6.81 7.08 9.76
2020 3.52 7.31 7.57 10.24
2021 3.84 7.85 8.12 10.77
2022 4.13 8.31 8.52 10.99
2023 4.45 8.82 8.97 11.23
2024 4.82 9.39 9.48 11.53
2025 5.24 10.07 10.10 11.93
2026 5.78 10.97 10.97 12.70
2027 6.42 12.08 12.07 13.76
2028 7.16 13.37 13.34 15.00
2029 8.03 14.90 14.87 16.51
2030 9.08 16.72 16.68 18.29
2031 10.34 18.92 18.88 20.46
2032 11.91 21.65 21.60 23.15
2033 11.84 21.54 21.49 23.05
2034 11.58 21.07 21.02 22.59
2035 11.00 20.07 20.02 21.57
2036 9.94 18.21 18.14 19.67
2037 8.08 14.93 14.85 16.32
Table 20 Costs and Benefits to vehicles travelling from the N1 to the N2,
68
N1 to N2
2006 3.80 12.88 18.10 38.79
2007 4.98 15.61 21.61 44.96
2008 6.08 18.12 24.81 50.54
2009 7.04 20.24 27.47 55.10
2010 7.62 21.31 28.73 57.02
2011 8.40 22.85 30.62 60.05
2012 8.81 23.49 31.32 60.95
2013 9.25 24.18 32.08 61.93
2014 9.71 24.90 32.87 62.94
2015 10.14 25.50 33.48 63.58
2016 14.80 37.08 48.67 91.12
2017 15.23 37.59 49.14 91.42
2018 15.70 38.16 49.66 91.76
2019 15.73 37.90 49.22 90.64
2020 15.77 37.66 48.79 89.54
2021 15.62 36.90 47.66 87.10
2022 15.00 34.88 44.85 81.54
2023 14.35 32.75 41.89 75.66
2024 13.72 30.64 38.95 69.79
2025 13.11 28.56 36.03 63.92
2026 12.53 26.51 33.14 58.09
2027 11.99 24.51 30.29 52.28
2028 11.49 22.55 27.48 46.50
2029 11.03 20.67 24.75 40.80
2030 10.91 19.59 23.06 36.96
2031 10.86 18.60 21.46 33.21
2032 10.90 17.72 19.97 29.56
2033 10.05 16.25 18.27 27.10
2034 8.97 14.45 16.25 24.30
2035 7.53 12.16 13.74 21.00
2036 5.54 9.10 10.46 16.92
2037 2.59 4.75 5.86 11.49
69
N1 to N2
2006 2.44 10.73 15.70 36.53
2007 3.82 13.99 19.91 44.02
2008 5.12 17.04 23.81 50.91
2009 6.37 19.90 27.46 57.30
2010 7.60 22.70 31.02 63.48
2011 8.71 25.12 34.06 68.65
2012 9.71 27.31 36.82 73.35
2013 10.75 29.56 39.64 78.16
2014 11.58 31.25 41.71 81.53
2015 12.19 32.30 42.92 83.29
2016 15.16 39.45 52.24 99.92
2017 16.06 41.18 54.32 103.21
2018 16.90 42.70 56.10 105.88
2019 17.16 43.06 56.46 106.23
2020 17.11 42.55 55.68 104.45
2021 16.92 41.67 54.38 101.69
2022 16.28 39.56 51.45 95.87
2023 15.56 37.24 48.22 89.48
2024 14.82 34.81 44.84 82.77
2025 14.10 32.40 41.48 76.06
2026 13.42 30.03 38.15 69.38
2027 12.76 27.70 34.86 62.71
2028 12.15 25.42 31.61 56.08
2029 11.59 23.21 28.43 49.49
2030 11.08 21.07 25.31 42.97
2031 10.94 19.76 23.27 38.35
2032 10.90 18.64 21.44 34.01
2033 9.16 14.51 16.11 24.53
2034 7.40 10.47 10.99 15.60
2035 6.02 7.75 7.70 10.30
2036 4.87 6.03 5.88 8.12
2037 3.20 3.61 3.35 5.22
70
This section of the R300 has very few road user benefits and in most cases only
increased road user costs. There are increased road user costs for all vehicles and
for all years at the middle toll tariff during morning rush hour traffic. The same
conclusion is generally true for light vehicles during off peak times at both middle and
high toll tariffs. It will be seen from the three tables below that there are some road
user benefits during off peak times and that these accrue more to heavy vehicles
than light vehicles.
The reason why this section of the proposed project has these unusually high road
user costs appears to be because of the difference in traffic projections with and
without the proposed project. This is why there is the situation where there are
increased road user costs in morning peak hour traffic while there are some road
user benefits at off peak times.
71
2002 (2.97) (5.67) (6.85) (9.36)
2003 (3.35) (6.67) (8.19) (11.86)
2004 (3.70) (7.59) (9.41) (14.13)
2005 (4.08) (8.60) (10.76) (16.64)
2006 (4.36) (9.33) (11.72) (18.45)
2007 (4.30) (9.19) (11.54) (18.12)
2008 (4.25) (9.04) (11.36) (17.79)
2009 (4.19) (8.90) (11.17) (17.45)
2010 (3.39) (6.87) (8.45) (12.49)
2011 (3.47) (7.07) (8.72) (12.99)
2012 (3.32) (6.87) (8.57) (13.02)
2013 (2.99) (6.16) (7.72) (11.71)
2014 (2.62) (5.31) (6.68) (10.01)
2015 (2.37) (4.77) (6.04) (9.02)
2016 (2.12) (4.22) (5.39) (8.00)
2017 (1.87) (3.66) (4.71) (6.92)
2018 (1.51) (2.89) (3.72) (5.35)
2019 (1.50) (2.85) (3.67) (5.23)
2020 (1.43) (2.66) (3.40) (4.69)
2021 (1.37) (2.47) (3.13) (4.15)
2022 (1.32) (2.28) (2.87) (3.61)
2023 (1.31) (2.23) (2.76) (3.35)
2024 (1.36) (2.30) (2.82) (3.36)
2025 (1.41) (2.38) (2.89) (3.38)
2026 (1.49) (2.50) (2.99) (3.41)
2027 (1.61) (2.71) (3.21) (3.64)
2028 (1.78) (3.00) (3.49) (3.93)
2029 (1.98) (3.36) (3.86) (4.31)
2030 (2.25) (3.84) (4.34) (4.79)
2031 (2.61) (4.48) (4.98) (5.44)
2032 (3.11) (5.36) (5.86) (6.36)
2033 (3.66) (6.32) (6.83) (7.34)
2034 (4.36) (7.56) (8.07) (8.60)
2035 (5.30) (9.20) (9.71) (10.25)
2036 (6.58) (11.45) (11.96) (12.50)
2037 (8.43) (14.69) (15.21) (15.76)

Drive, Morning Peak hour, Middle toll tariff (Rands 2002 values)
72
2002 (2.83) (5.26) (6.29) (8.30)
2003 (2.80) (5.21) (6.24) (8.23)
2004 (2.74) (5.10) (6.10) (8.00)
2005 (2.71) (5.05) (6.05) (7.93)
2006 (2.63) (4.86) (5.80) (7.50)
2007 (2.43) (4.37) (5.17) (6.36)
2008 (2.23) (3.88) (4.54) (5.21)
2009 (2.03) (3.39) (3.89) (4.05)
2010 (1.82) (2.92) (3.27) (2.99)
2011 (1.61) (2.41) (2.60) (1.79)
2012 (1.39) (1.85) (1.88) (0.48)
2013 (1.10) (1.15) (0.96) 1.19
2014 (0.82) (0.43) (0.03) 2.88
2015 (0.52) 0.29 0.92 4.60
2016 (0.30) 0.85 1.65 5.90
2017 (0.21) 1.03 1.86 6.26
2018 0.41 2.58 3.92 9.99
2019 0.69 3.31 4.89 11.78
2020 0.82 3.64 5.33 12.57
2021 0.85 3.71 5.41 12.72
2022 0.81 3.57 5.23 12.37
2023 0.76 3.44 5.05 12.03
2024 0.72 3.31 4.88 11.69
2025 0.68 3.19 4.71 11.37
2026 0.64 3.07 4.56 11.06
2027 0.55 2.83 4.23 10.44
2028 0.31 2.18 3.37 8.82
2029 0.07 1.53 2.50 7.20
2030 (0.17) 0.88 1.63 5.56
2031 (0.41) 0.22 0.75 3.92
2032 (0.03) 1.19 2.03 6.27
2033 (0.70) (0.36) 0.06 2.80
2034 (1.41) (1.96) (1.97) (0.73)
2035 (2.09) (3.45) (3.84) (3.91)
2036 (2.54) (4.25) (4.76) (5.28)
2037 (3.06) (5.15) (5.78) (6.75)

Drive, Offpeak traffic, Middle toll tariff (Rands 2002 values)
73
2002 (3.70) (6.90) (8.26) (10.92)
2003 (3.67) (6.85) (8.21) (10.86)
2004 (3.62) (6.74) (8.07) (10.62)
2005 (3.59) (6.69) (8.02) (10.56)
2006 (3.50) (6.50) (7.77) (10.13)
2007 (3.31) (6.01) (7.14) (8.99)
2008 (3.11) (5.52) (6.50) (7.84)
2009 (2.90) (5.03) (5.86) (6.68)
2010 (2.70) (4.56) (5.24) (5.61)
2011 (2.49) (4.05) (4.57) (4.41)
2012 (2.26) (3.49) (3.85) (3.10)
2013 (1.98) (2.79) (2.93) (1.43)
2014 (1.69) (2.08) (2.00) 0.26
2015 (1.40) (1.35) (1.04) 1.98
2016 (1.17) (0.79) (0.32) 3.28
2017 (1.09) (0.62) (0.10) 3.64
2018 (0.46) 0.94 1.95 7.36
2019 (0.18) 1.67 2.92 9.16
2020 (0.05) 2.00 3.36 9.95
2021 (0.02) 2.07 3.44 10.09
2022 (0.07) 1.93 3.26 9.75
2023 (0.11) 1.80 3.09 9.40
2024 (0.16) 1.67 2.91 9.07
2025 (0.20) 1.55 2.75 8.74
2026 (0.24) 1.43 2.59 8.44
2027 (0.32) 1.19 2.26 7.82
2028 (0.56) 0.54 1.40 6.20
2029 (0.80) (0.11) 0.53 4.57
2030 (1.04) (0.76) (0.34) 2.94
2031 (1.29) (1.42) (1.22) 1.30
2032 (0.91) (0.46) 0.06 3.64
2033 (1.58) (2.00) (1.91) 0.18
2034 (2.28) (3.60) (3.94) (3.36)
2035 (2.97) (5.09) (5.80) (6.54)
2036 (3.41) (5.89) (6.73) (7.90)
2037 (3.93) (6.79) (7.75) (9.37)

Drive, Offpeak traffic, High toll tariff (Rands 2002 values)
74
N1 to the Stellenbosch Interchange
Vehicles driving the R300 between the N1 and the Stellenbosch Interchange would
have positive road user benefits at the middle toll tariff during morning peak hour
traffic as well as off peak at both middle and high toll tariffs.
N1 to Stellenbosch I/C
2006 3.60 10.46 13.99 27.33
2007 2.97 8.63 11.45 22.31
2008 2.32 6.71 8.78 17.01
2009 1.62 4.63 5.89 11.27
2010 0.94 2.60 3.03 5.55
2011 1.99 5.08 6.15 10.83
2012 1.84 4.57 5.41 9.28
2013 1.71 4.08 4.69 7.73
2014 1.58 3.62 3.99 6.20
2015 1.47 3.18 3.31 4.70
2016 2.59 5.88 6.82 10.82
2017 2.22 4.70 5.13 7.36
2018 2.43 5.03 5.42 7.53
2019 2.58 5.30 5.69 7.81
2020 2.75 5.59 5.99 8.11
2021 2.93 5.91 6.31 8.44
2022 3.07 6.11 6.47 8.43
2023 3.22 6.32 6.62 8.39
2024 3.40 6.57 6.81 8.38
2025 3.61 6.87 7.06 8.42
2026 3.89 7.34 7.50 8.79
2027 4.24 7.94 8.10 9.37
2028 4.64 8.64 8.79 10.04
2029 5.11 9.47 9.61 10.85
2030 5.67 10.44 10.58 11.80
2031 6.34 11.61 11.74 12.95
2032 7.16 13.04 13.17 14.36
2033 7.00 12.77 12.90 14.10
2034 6.69 12.23 12.37 13.57
2035 6.16 11.28 11.42 12.63
2036 5.25 9.70 9.84 11.04
2037 3.76 7.08 7.22 8.40
Table 26 Costs and Benefits to vehicles travelling from the N1 to the

Stellenbosch interchange, Morning Peak hour, Middle toll tariff (Rands 2002
values)
75
2006 2.01 6.70 9.40 19.97
2007 2.70 8.33 11.51 23.73
2008 3.36 9.91 13.54 27.33
2009 3.92 11.19 15.17 30.19
2010 4.21 11.75 15.85 31.26
2011 4.69 12.77 17.13 33.40
2012 5.01 13.42 17.93 34.71
2013 5.36 14.12 18.78 36.09
2014 5.71 14.82 19.63 37.48
2015 6.01 15.38 20.30 38.49
2016 8.11 20.61 27.18 50.97
2017 8.50 21.37 28.08 52.41
2018 8.89 22.13 29.01 53.87
2019 9.07 22.45 29.38 54.41
2020 9.26 22.77 29.75 54.95
2021 9.28 22.65 29.53 54.39
2022 8.97 21.65 28.16 51.67
2023 8.61 20.53 26.60 48.62
2024 8.26 19.41 25.05 45.56
2025 7.92 18.29 23.50 42.50
2026 7.58 17.18 21.96 39.44
2027 7.25 16.08 20.43 36.38
2028 6.92 14.99 18.90 33.32
2029 6.61 13.91 17.39 30.28
2030 6.31 12.84 15.88 27.24
2031 6.02 11.79 14.38 24.20
2032 5.74 10.75 12.90 21.18
2033 5.23 9.81 11.79 19.46
2034 4.64 8.75 10.56 17.62
2035 3.93 7.51 9.15 15.60
2036 3.02 6.01 7.47 13.30
2037 1.77 4.04 5.32 10.52

Stellenbosch interchange, Offpeak traffic, Middle toll tariff (Rands 2002 values)
76
2006 1.60 6.19 8.90 19.94
2007 2.27 7.80 10.99 23.65
2008 2.93 9.36 12.99 27.20
2009 3.55 10.79 14.82 30.43
2010 4.18 12.24 16.68 33.68
2011 4.82 13.69 18.53 36.91
2012 5.50 15.29 20.58 40.52
2013 6.20 16.92 22.68 44.21
2014 6.91 18.58 24.79 47.93
2015 7.39 19.60 26.06 50.08
2016 8.37 21.88 29.03 55.29
2017 9.12 23.58 31.20 59.08
2018 9.88 25.31 33.39 62.90
2019 10.33 26.33 34.69 65.16
2020 10.45 26.49 34.85 65.29
2021 10.46 26.35 34.60 64.67
2022 10.16 25.36 33.24 61.97
2023 9.77 24.15 31.56 58.68
2024 9.34 22.80 29.71 55.07
2025 8.91 21.46 27.86 51.44
2026 8.49 20.13 26.02 47.81
2027 8.07 18.80 24.18 44.18
2028 7.67 17.47 22.34 40.54
2029 7.27 16.16 20.51 36.91
2030 6.88 14.85 18.69 33.27
2031 6.50 13.56 16.88 29.64
2032 6.13 12.28 15.07 26.01
2033 4.90 9.23 11.11 18.85
2034 3.62 6.12 7.09 11.60
2035 2.72 4.05 4.44 6.97
2036 2.30 3.33 3.64 5.83
2037 1.80 2.51 2.72 4.57

Stellenbosch interchange, Offpeak traffic, High toll tariff (Rands 2002 values)
77
N2 to the Stellenbosch Interchange
Vehicles travelling between the N2 and the Stellenbosch Interchange would have
positive road user benefits at the middle toll tariff during morning peak hour traffic as
well as off peak at both middle and high toll tariffs. For light vehicles there would be
increased road user costs in the years 2009 and 2010. Proposed road capacity
increases in 2011 are expected to turn these costs to benefits.
2006 1.31 4.56 6.22 13.14
2007 0.72 2.89 3.93 8.69
2008 0.06 1.01 1.35 3.66
2009 (0.22) 0.11 0.06 0.99
2010 (0.03) 0.43 0.36 1.25
2011 0.20 0.84 0.77 1.66
2012 0.26 0.94 0.87 1.76
2013 0.33 1.06 0.98 1.86
2014 0.39 1.17 1.10 1.97
2015 0.46 1.29 1.21 2.08
2016 0.53 1.33 1.26 1.95
2017 0.60 1.45 1.38 2.07
2018 0.67 1.56 1.49 2.17
2019 0.78 1.75 1.67 2.33
2020 0.90 1.95 1.87 2.51
2021 1.03 2.18 2.09 2.71
2022 1.18 2.44 2.34 2.94
2023 1.35 2.73 2.63 3.22
2024 1.54 3.06 2.95 3.52
2025 1.76 3.44 3.32 3.88
2026 2.01 3.87 3.75 4.29
2027 2.30 4.37 4.25 4.77
2028 2.64 4.96 4.83 5.34
2029 3.05 5.67 5.54 6.03
2030 3.53 6.51 6.38 6.86
2031 4.13 7.55 7.41 7.88
2032 4.87 8.85 8.71 9.16
2033 4.96 9.01 8.87 9.32
2034 5.01 9.08 8.94 9.39
2035 4.97 9.02 8.87 9.31
2036 4.81 8.74 8.58 9.00
2037 4.45 8.08 7.92 8.29

Stellenbosch interchange, Morning Peak hour, Middle toll tariff (Rands 2002
values)
78
2006 1.92 6.41 8.98 19.19
2007 2.40 7.51 10.38 21.60
2008 2.84 8.45 11.55 23.59
2009 3.24 9.28 12.58 25.29
2010 3.53 9.79 13.16 26.14
2011 3.83 10.32 13.77 27.02
2012 3.92 10.30 13.67 26.62
2013 4.01 10.30 13.59 26.22
2014 4.13 10.32 13.52 25.84
2015 4.26 10.36 13.46 25.46
2016 6.81 16.70 21.78 40.53
2017 6.86 16.46 21.34 39.38
2018 6.93 16.26 20.93 38.26
2019 6.78 15.69 20.12 36.61
2020 6.63 15.13 19.32 34.96
2021 6.47 14.49 18.41 33.09
2022 6.15 13.46 16.98 30.24
2023 5.86 12.46 15.57 27.42
2024 5.58 11.47 14.18 24.60
2025 5.32 10.50 12.80 21.80
2026 5.08 9.57 11.46 19.03
2027 4.87 8.66 10.14 16.27
2028 4.69 7.80 8.87 13.55
2029 4.55 6.99 7.65 10.89
2030 4.73 6.98 7.46 10.10
2031 4.97 7.05 7.36 9.38
2032 5.28 7.21 7.34 8.76
2033 4.94 6.68 6.76 8.01
2034 4.45 5.93 5.97 7.06
2035 3.73 4.88 4.87 5.78
2036 2.64 3.33 3.27 3.99
2037 0.95 0.94 0.82 1.34

Stellenbosch interchange, Offpeak traffic, Middle toll tariff (Rands 2002 values)
79
2006 1.34 5.48 7.92 18.09
2007 2.04 7.13 10.04 21.86
2008 2.69 8.62 11.95 25.21
2009 3.32 10.05 13.77 28.37
2010 3.93 11.40 15.47 31.30
2011 4.39 12.36 16.65 33.24
2012 4.71 12.96 17.36 34.34
2013 5.05 13.57 18.09 35.44
2014 5.17 13.61 18.04 35.10
2015 5.30 13.65 17.99 34.70
2016 7.30 18.51 24.34 46.13
2017 7.45 18.54 24.25 45.63
2018 7.52 18.33 23.83 44.48
2019 7.34 17.66 22.89 42.57
2020 7.16 17.00 21.95 40.65
2021 6.96 16.26 20.91 38.52
2022 6.62 15.14 19.34 35.40
2023 6.29 14.03 17.79 32.30
2024 5.98 12.94 16.25 29.20
2025 5.69 11.88 14.74 26.12
2026 5.43 10.85 13.26 23.06
2027 5.19 9.85 11.81 20.03
2028 4.98 8.89 10.40 17.03
2029 4.82 7.99 9.04 14.09
2030 4.71 7.15 7.75 11.20
2031 4.94 7.14 7.52 10.22
2032 5.27 7.30 7.49 9.51
2033 4.77 6.21 6.12 7.18
2034 4.27 5.29 5.03 5.50
2035 3.80 4.64 4.38 4.83
2036 3.07 3.64 3.37 3.79
2037 1.90 2.03 1.75 2.14

Stellenbosch interchange, Offpeak traffic, High toll tariff (Rands 2002 values)
80
3.4.3 Total road user costs and benefits
The section above focussed on specific journeys along the proposed toll road. This
section assesses the overall impact of the proposed tolling strategy. The objective of
this section is to determine the aggregate impact of the proposed tolling on current
and future expected users of the road. This exercise was conducted separately for
each class of vehicle. It was also done for preferred (middle), low and high toll tariffs.
Finally the total changes in road user costs were summated and a net present value
calculated at a real discount rate of 8%. The results are given in Tables 32 to 34 for a
discrete number of years.
Table 32 indicates total changes in road user benefits at the preferred toll tariff for the
existing sections of the R300. At the middle toll tariff the upgrading and tolling of the
R300 would generate savings in road user costs of over R8 billion in the next 35
years. This is the equivalent of R2 billion in net present value terms. The bulk of this
accrues to light vehicles mainly because they are the most common vehicles on the
road.
It will be seen that there are road user costs for light vehicles in year five at the
middle toll tariff (this also occurs in years 6 and 7). This is caused by the increased
road user costs for journeys between the N2 and Vanguard Drive.
Total Annual Benefits to Road Users,

Rand millions 2002 values
R300 tolled
Years
from
Present Class I Class II Class III Class IV N1 total
3 21 3 2 3 29
5 -3 0 1 1 -1
10 36 2 1 1 40
15 129 7 3 2 140
20 228 12 5 3 248
25 373 20 8 5 406
30 637 34 14 8 692
35 116 8 4 3 131
Total 7,391 389 162 110 8,052
NPV 1,916 95 40 30 2,081
Table 32 Total annual benefits to road users of the R300 (existing sections
only), Rand millions at 2002 values for Middle Toll Tariff, AADT congestion
factor
81

R300 tolled
Years
from
3 239 30 16 15 300
5 208 24 13 12 256
10 186 15 8 6 215
15 249 17 8 6 280
20 349 23 10 7 389
25 517 32 14 10 573
30 806 49 21 13 890
35 559 36 17 11 623
Total 13,719 961 444 331 15,456
NPV 4,751 375 181 147 5,453
Table 33 Total annual benefits to road users of the R300 (existing sections
only), Rand millions at 2002 values for Low Toll Tariff, AADT congestion factor
Table 33 shows total changes in road user benefits at the low toll tariff for the existing
sections of the R300. At this toll tariff the upgrading and tolling of the R300 would
generate savings in road user costs of over R15 billion in the next 35 years. This is
the equivalent of R5.4 billion in net present value terms.
Table 34 shows total changes in road user benefits at the high toll tariff for the R300
At this toll tariff the upgrading and tolling of the R300 would generate savings in road
user costs of over R8 billion in the next 35 years. This is the equivalent of R2.7 billion
in net present value terms.
82

R300 tolled
Years
from
3 111 11 6 6 133
5 89 8 4 4 106
10 68 4 2 2 76
15 107 5 2 2 116
20 183 8 3 2 197
25 326 14 6 4 349
30 592 24 10 6 633
35 334 15 6 4 360
Total 8,072 385 165 125 8,746
NPV 2,499 137 62 53 2,751
Table 34 Total annual benefits to road users of R300, Rand millions at 2002
values for High Toll Tariff, AADT congestion factor
83
3.4.4 Road network costs and benefits
From the perspective of the entire road network the benefits of the proposed projects
are their contribution to the carrying capacity of the road network generally. The costs
are the degree to which the tolling of the roads results in traffic diversions
The proposed upgrading of the N1, N2 and R300 and particularly the green-fields
part of the R300 proposal would all work to add capacity to the current road network.
As a consequence of this, many people who are using the road network would
benefit even if they do not travel on the N1, N2 or R300. This is due to the fact that
the proposed upgrading and increased capacity would work to reduce congestion on
the road network generally. This would therefore result in shorter travelling times,
less accidents and lower vehicle operating costs (largely lower fuel and tyre costs
because there would be less stop-start driving). As these lower costs are realised
people would choose to either spend these savings in other areas or may choose to
save the lower costs. In the latter case (assuming the savings occur through the
financial markets) the savings would enter the economy as increases in loanable
funds and would result in either increased consumer or investment expenditure. The
consequence of this is that not only would there be savings to users of the road
network but there would also be multiplied expenditure impacts because of this.
In order to perform these estimates the traffic engineers of the proponents of the
R300 project supplied traffic information about the number of vehicles, the number of
vehicle kilometres and average network speeds for the network. From this data the
estimated impact on the entire road network was calculated and is illustrated in
Figures 6 and 7. Figure 6 shows the difference between current and future network
speeds without both toll road schemes and estimated future network speeds with the
schemes. As was expected the N1 N2 scheme increases network speeds but the
R300 increases network speeds by a greater amount. The cumulative effect of both
proposed schemes is to increase total network speed by about 3km per hour in the
early years of the projects. These speed advantages taper off in later years as
increase traffic growth slows the network. By the end of the concession period the
combined schemes have the capacity to increase average network speed by 1.5km
per hour relative to network speeds without the schemes.
84
Increase in average network speed
3.5
3.0
Increase in network speed (km/hour)
2.5
R300 High
2.0 R300 Low
N1N2 High
N1N2 Low
1.5 All High
All Low
1.0
0.5
0.0
03
05
07
09
11
13
15
17
19
21
23
25
27
29
31
33
35
37
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Years
Figure 6 Increase in average network speed as a result of upgrading and tolling

N1, N2 and R300
Following from this, Figure 7 illustrates the total savings in vehicle hours in the
network with and without the two proposed projects. This is shown at high and low
toll tariffs but, as is clear, the impact of tariff variations is marginal on the overall
network. The conclusions to be drawn from this figure are very similar to those from
Figure 4.
Finally the value of time saved was calculated based on the assumptions stated in
Table 35. For the purposes of this exercise the cost of working time was taken as
R35 per hour for light vehicles and R22 per hour for heavy vehicles. The light vehicle
estimate is based on the average cost of time for the drivers of light vehicles of R38
per hour (2002 values) based on the 1996 national census. The number of occupants
in the different types of vehicles are based on the findings of the N1 N2 road side
interviews, as was the percentage of vehicles used for business purposes.
Bases on these assumptions the cost of time saved on the network as a result of the
proposed projects was calculated and is reported in Table 36. It is estimated that
upgrading and tolling the R300 without upgrading and tolling the N1 or N2 would
generate savings in network time of R89m in 2003 rising to R676m by 2035. Tolling
the N1 and N2 without tolling the R300 would generate network benefits of R24m in
2003 rising to R221m by the end of the concession period. Finally, with both
schemes in place there is the potential for network savings of R139m in 2003 rising
to R1 billion by 2035.
There are two important conclusions. First both of the proposed schemes would help
in increasing network speeds and therefore reduce the cost of travelling for all drivers
on the network. Second, the two schemes together add more to network savings
than the sum of the parts. In other words, in 2004 there would be network savings of
R107m from the R300 project alone or R30m from the N1 N2 project alone. The sum
85
of the parts is R137m. The combined projects generate network benefits to the value
of R167m. The sum of the whole is greater than the sum of the parts.
Savings in Vehicle hours
140,000
120,000
100,000
Savings in daily vehicle hours
R300 High
80,000 R300 Low
N1N2 High
N1N2 Low
60,000 All High
All Low
40,000
20,000
0
03
05
07
09
11
13
15
17
19
21
23
25
27
29
31
33
35
37
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Years
Figure 7 Savings in overall network vehicle hours as a result of upgrading and

tolling N1, N2 and R300
Assumptions used for calculation of value of saving in network vehicle hours
Cost of Time (Rands/hour) Total Individual No occupants

Class I Vehicles, Working Time R 63.70 R 35.00 1.82
Class I Vehicles, Non-Working Time R 23.92 R 11.67 2.05
Class II, III & IV Vehicles, Working Time R 45.32 R 22.00 2.06
Class II, III & IV Vehicles, non working time R 15.11
Percentage of Class I vehicles used for business purposes 21%
Percentage of heavy vehicles used for business purposes 80%
Percentage of heavy vehicles on network 15%
Number of working days per year 250
Number of non working days per year 260
Table 35 Assumptions used for calculation of value of savings in network

vehicle hours
86
Annual value of time saved, Rand million
R300 low toll and Existing R300 and N1

existing N1 N2 N2 low toll All tolled, low toll
2003 89 24 139
2004 107 30 167
2005 125 36 196
2010 217 67 339
2020 401 128 626
2030 584 190 913
2035 676 221 1,057
Table 36 Annual value of time saved from network benefits, Rand million
87
3.5 Impact on road users and capacity to pay (Sector 2)
The previous section has demonstrated that in almost all cases there are more
benefits to road users than there are costs in the proposed project. Hence the
general conclusion that can be drawn is that proposed tolling is good for private
motorists, business vehicles and public transport. However, at least two arguments
can be made in mitigation against some of the general conclusions that have been
drawn.
First, it can be argued that, for some people, there would not be an obvious saving in
vehicle operating costs in the early years of the toll road. It is recognised that savings
in some vehicle costs would be obvious and apparent fuel costs, time costs and
lower accident rates, for example. Other costs, however, are far less discrete over
time and tend to be lump sum costs after a period of time tyre costs, suspension
and steering repairs, etc. Hence the immediate and obvious saving in vehicle
operating costs would be for fuel, time and, possibly, accident costs. Other costs
would accumulate in the future. Hence while the above section shows road user
benefits in each year, the reality is that the savings would only be realised some
years into the future. Therefore for cash flow purposes there would be less road user
benefits in the early years of the tolled road, as these benefits would accumulate into
the future. The perception and reality would be that some drivers who currently do
and would continue to use the road on a regular basis could be vulnerable to the
proposed tolling.
Second, less affluent owners of private vehicles or those who are cash constrained
may face road user costs that are different to those used in the general calculations.
In particular, less affluent people would have lower time costs than others. In addition
such people may choose to repair their vehicles themselves or may choose simply
not to repair their vehicles at all. Hence, for example, minor accident damage may
simply be left and not repaired. Mechanical repairs may be more rudimentary or
make use of second hand or salvaged parts.
In order to explore these issues an analysis was made of the composition of traffic
currently using the R300. This was done by analysing the roadside interviews that
were conducted as part of the initial traffic study for the proposed toll roads. During
May of 2000 two road side interviews were conducted on the R300. The first of these
was on the R300 just east of the Vanguard Drive intersection. The second was
between the Stellenbosch Road interchange and the Van Riebeeck Road
interchange.
The starting point is to describe the composition of the traffic using the road. This is
followed by an analysis of three categories of road users who may be vulnerable.
These are the less affluent private vehicle owners, commercial vehicles from
depressed industries and people who use motorised public transport.
88
3.5.1 The Composition of traffic on the R300
An illustration of the composition of traffic on the R300 is given in Figures 8 to 12.
An examination of these figures reveals some clear indicators about the composition
of traffic on the existing R300.
First, a significant portion of traffic makes use of the road on a regular basis.
Forty four percent of traffic interviewed made use of the road every day and
nearly twenty percent used the road a couple of times a week.
Although work commuters are an important part of the traffic on the R300,
travel for business purpose is the dominant reason for using the R300. This is
borne out in Figures 9 and 10. Figure 9 illustrates the composition of traffic by
purpose of journey. In this figure it is clear that business travel is the most
important making up nearly half of all traffic in the road side interviews.
Recognising that the road side interviews are not a representative sample
because the interviews are not weighted by different traffic flows at different
times of the day. Figure 10 addresses this problem by illustrating the number
of commuter and business travellers interviewed at various times of the day.
The pattern that emerges, and it is to be expected, is that commuter traffic
peak in the morning and afternoon. What also emerges is that business travel
remains the most important reason that vehicles are travelling on the R300.
From a freight perspective, the most important kind of freight carried on the
R300 is building materials of some form or another. This is illustrated clearly
in Figure 12. The second most important freight is food.
Frequency of trip on R300
3000
2500
2000
1500
1000
500
0
> once a day Every day Couple of Once a week Couple of Once a month Couple of Once a year
times a week times a month times a year
Figure 8 Frequency of trip on the R300

89
Purpuse of journey on R300
3000
2500
2000
1500
1000
500
0
Commuting Business Personal business Recreation Educational Shopping
Figure 9 Purpose of journey on the R300
Commuters and Business travel by time of day
160
140
120
100
Business
80
Commuting
60
40
20
0
7.45 8.15 8.45 9.15 9.45 10.2 10.5 11.2 11.5 12.2 12.5 13.2 13.5 14.2 14.5 15.2 15.5 16.2 16.5 17.2
Time of day
Figure 10 Commuter and business travel by time of day

90
Trip frequency and purpose on R300
1400
unknown
1200 Commuting
Business
Personal business
1000
Recreation
Educational
800 Shopping
600
400
200
0
> once a day Every day Couple of times Once a week Couple of times Once a month Couple of times Once a year
a week a month a year
Figure 11 Trip frequency and trip purpose on the R300
Materials carried by heavy vehicles on R300
CHICKENS
RUBBISH
STEEL
BUILDING EQUIPMENT
CEMENT
WOOD
TOOLS
STONES
PASSENGERS
FURNITURE
FOOD
VEGETABLES
MEAT
BRICKS
EMPTY
SAND
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%
Percentage of heavy vehicles
Figure 12 Materials carried by heavy vehicles on the R300

91
3.5.2 Private road users
This section explores the degree to which private road users might be financially
vulnerable to the proposed project. One of the key limitations to this part of the study
is that while the road side interviews for the R300 asked many pertinent questions,
drivers were not asked for their incomes. Clearly this is an important question as
financial vulnerability to tolling is a function of income and trip frequency. In contrast
the N1/N2 road side interviews did ask for driver income.
Table 37 indicates the findings of N1 N2 study about the degree to which there might
be vehicle drivers/owners who have low incomes and make frequent trips on the N2.
At the R44 on the N2 the road side interviews indicated that 6.2% of drivers with
monthly incomes of less than R5,000 made more than 60 trips a month. A further
2.8% made between 20 and 60 monthly trips. At Sir Lowrys Pass these proportions
were 3.2% and 2.5% respectively. For drivers with incomes between R5,000 and
R10,000 at the R44 on the N2 4.3% indicated more than 60 monthly trips and 2.3%
between 20 and 60 monthly trips. At Sir Lowrys Pass these proportions were 1.5%
and 1.6% respectively.
Number of vehicles
R44 Sir Lowry's Pass

Current class 1 traffic count (AADT) 19,837 12,390
Percent with incomes <R5,000
making >60 trips per month 6.2% 3.2%
making 20-60 trips per month 2.8% 2.5%
Current numbers with income <R5,000
making >60 trips per month 1,235 392
making 20-60 trips per month 557 309
Percent with incomes R5,000 - R10,000
making >60 trips per month 4.3% 1.5%
making 20-60 trips per month 2.3% 1.6%
Current numbers with income R5,000 - R10,000
making >60 trips per month 845 190
making 20-60 trips per month 449 200
Source: Calculated from road side interviews conducted at R44 and Sir Lowry's Pass
Table 37 Number of class 1 vehicles with high toll exposure and low income
on N1 N2
It is important to appreciate that these results are not reflective of the N1 or N2 as a

whole or of the traffic on the R300. However some comparisons are drawn in the
Economic Specialist study for the Environmental Impact Assessment of the R300. In
this study a suburb level comparison of income and unemployment is made where
92
the suburbs along side the R300 are compared to the City of Cape Town average. It
is shown that those suburbs along the south of the existing R300 have income levels
that are lower and unemployment levels that are higher than in the city generally. As
one moves north along the existing R300 incomes increase and unemployment falls.
Incomes are higher on average and unemployment lower at the northern end of the
existing R300.
Using the N1N2 study as a foundation, Table 38 indicates the hypothetical impact on
drivers of different incomes who make frequent trips monthly through the mainline
plaza of the R300. The toll tariff used here is R6.00 per trip. For drivers with monthly
incomes of R5,000 making 60 monthly trips the toll tariff is equivalent to 7.2% of their
monthly incomes. For those making 44 monthly trips (i.e. a regular commuter) this is
equivalent of 5.3% of monthly income. For drivers with monthly incomes of R8,000
these trips are 4.5% and 3.3% respectively of monthly incomes and for incomes of
R12,000 these values are 3.0% and 2.2% respectively.
The conclusion that can be drawn from this is that there are some drivers who would
be financially vulnerable to tolling. It will be recognised that these drivers are isolated
only to drivers who currently use the R300. Other drivers who are attracted to the
R300 might be financially vulnerable but, because they are choosing to use the
R300, appreciated the benefits against the costs.
Toll tariffs as a proportion of income
Mainline middle toll tariff 6.00

Incomes = R5,000 Total cost Percent of income
making 60 trips per month 360 7.2%
Incomes = R8,000
Incomes = R8,000
Table 38 Mainline toll tariff as a percent of income for 44 and 60 monthly trips
It is clear that there are certain categories of private road users who would be
vulnerable to the proposed toll roads due to the perception that there would be more
costs than benefits in the early years of the toll roads. The mitigation objective is to
address this degree of vulnerability.
Mitigation measures
The proposed mitigation measure is to introduce substantial discounts for frequent

road users. This could be fine tuned further by allowing for a sliding scale of frequent
93
discounts where the scale is dependent both on the trip frequency and on the year of
the trip. Hence more trips receive a bigger discount. However there should also be
bigger discounts in the early years of the proposed tolling that then taper off as the
years progress. For example, there may be a frequent user discount of x% for more
than 50 monthly trips in 2006 with this reducing to y% by, for example 2008, and z%
after 2010.
IMPACT
POTENTIAL CRITERIA Short term Medium term
IMPACT Without With Without With
mitigation mitigation mitigation mitigation
Impact on low Extent L L L L
income Duration L L M M
commuters
Intensity H- M- L+ L+-
Probability H H M M
Significance H- M-/L- L L
Confidence M M M M
Long term
Without With
mitigation mitigation
Extent L L
Duration H H
Intensity M+ M+
Probability M M
Significance L L
Confidence M M
3.5.3 Impact on business
Businesses along the existing R300 could be impacted on by the toll road in two
ways each of which are assessed separately in this section:
1. Through increased road user costs leading to increased production and/or
operational costs
2. Through customer losses due to their unwillingness to pay tolls
Impact of increased road user costs
Certain categories of business could be vulnerable to tolling in the early years of the
proposed tolling.
Assessment
94
Just as private road users could initially perceive higher costs than benefits in the
early years of the proposed tolling, so too could commercial vehicles. While many
businesses probably have the capacity to absorb this changing cash flow over time
(recognising that in the long run benefits do exceed costs) there are two categories of
business that might be impacted in the early years of the proposed tolling. These are,
first, businesses that make regular use of road transport and, second, industries that
are currently economically depressed for either structural or cyclical reasons. This
section identifies such business and proposes mitigation measures.
Businesses would not be affected equally by changes in road transport costs brought
on by tolling. The extent to which net costs would adversely affect commercial road
users is dependent on their sensitivity to cost increases. One important indicator of
the impact of the proposed toll road is the degree to which specific areas are either
reliant on an industry that is particularly transport intensive. Table 39 and Figure 13
report on the degree to which road transport costs affect specific industries. Five
types of information are provided in Table 39 for each of the major industries in the
country. This information is the rand value of total road transport cost, cost of
intermediate inputs, total costs and the ratios of road transport cost to intermediate
costs and road transport cost to total cost. Intermediate costs are costs incurred in
purchases from firms. Total costs include purchases from other firms as well as
labour, land and capital costs.
It is clear from both the table and figure that the construction industry at 9.8% and
6.2% respectively has the highest road transport cost relative to both intermediate
and total cost of all the industries in the country. Agriculture has the next highest
intermediate cost ratio at 5.9% followed by manufacturing at 3.7%. The
manufacturing industry has the second highest total cost ratio at 1.9% compared to
agriculture at 0.2%.
Road transport and other costs

Rand millions 1998
Road transport Intermediate Total
cost inputs costs RTC/IC RTC/TC
Agriculture, hunting, forestry and fishing 786 13,300 315,000 5.9% 0.2%
Mining and quarrying 360 22,400 69,200 1.6% 0.5%
Manufacturing 6,610 179,000 341,000 3.7% 1.9%
Electricity, gas and water supply 57 17,800 40,000 0.3% 0.1%
Construction 2,400 24,400 38,700 9.8% 6.2%
Wholesale and retail trade 309 48,900 131,000 0.6% 0.2%
Transport, storage and communication 66 27,500 98,800 0.2% 0.1%
Financial, insurance, real estate and business services 107 18,800 50,000 0.6% 0.2%
Community, social and personal services 38 7,600 24,000 0.5% 0.2%
Source: CSIR Transportek
Table 39 Road transport intensity of economic sectors

95
Road transport cost as a % of total cost & intermediate cost
Community, social and personal

services
Financial, insurance, real estate
and business services
Transport, storage and
communication
Wholesale and retail trade
Construction RTC/TC
RTC/IC
Electricity, gas and water supply
Manufacturing
Mining and quarrying
Agriculture, hunting, forestry and

fishing
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
Figure 13. Road transport intensity of economic sectors
What follows from this is that the construction industry is likely to be most sensitive to
changes in road transport costs followed by the agriculture and manufacturing
industries. These cost ratios are now compared to the composition of cargo that was
carried on the R300 during the time of the roadside interviews.
There were a wide variety of different types of cargo carried and Table 40 reports for
those cargoes that constituted more than one percent of total freight. The most
common cargo carried during the roadside interview period was sand at 16.4% of the
sample. Bricks follow at 5%, meat at 4.7% and vegetables at 3.6%. The pattern that
emerges reflects the calculations made by Transportek. Construction related
manufactured goods and raw materials, in the form of sand, bricks, stones and
cement and agricultural products, in the form of vegetables, meat, chickens and eggs
are dominant in the list and therefore most sensitive to increased transport costs. On
the manufacturing side (and bearing in mind that there is a relatively small sample)
the industries most sensitive to increased transport costs include furniture, tools,
building equipment, pipes and machines.
96
Proportion of all vehicle carrying cargo
Total vehicles carrying cargo 580
Cargo Details Number Percent

SAND 95 16.4%
BRICKS 29 5.0%
MEAT 27 4.7%
VEGETABLES 21 3.6%
FOOD 14 2.4%
FURNITURE 13 2.2%
PASSENGERS 13 2.2%
STONES 13 2.2%
TOOLS 13 2.2%
WOOD 13 2.2%
CEMENT 12 2.1%
BUILDING EQUIPMENT 12 2.1%
STEEL 10 1.7%
RUBBISH 9 1.6%
CHICKENS 7 1.2%
EGGS 7 1.2%
PIPES 7 1.2%
COMPOST 6 1.0%
GROCERIES 6 1.0%
MACHINES 6 1.0%
Table 40 Types of cargo carried on the R300
Having identified the economic sectors that are likely to be particularly sensitive to
increased transport costs, the areas along the route where these sectors form a
significant part of the local economy need to be identified and flagged as areas of
greater potential impact. Note that this approach assumes that the sectors in
question are relatively frequent users of the R300. While this is not ideal, in absence
of detailed surveys of businesses, it seems like a reasonable assumption in order to
get an indication of impacts. In order to identify areas with relatively high proportions
of businesses in sensitive sectors, the RSC levy database was used. Table 41 below
shows the proportion of businesses from each sector out of all businesses registered
for RSC levies.
As one would expect Philippi would be particularly sensitive due to its reliance on the
agricultural sector (16.3% of businesses). Philippi also has the second highest
proportion of businesses in the construction sector (13.9%) adding to the areas
potential vulnerability. Blackheath has the highest proportion of businesses in the
construction and manufacturing sectors at 15% and 29.7% respectively making it
relatively vulnerable. Bellville South and Stikland also have strong presences in the
manufacturing sector at 28% and 28.6% of all businesses respectively.
97
Bellville
Sector South Stikland Brackenfell Blackheath Kuilsrivier Philippi
Agriculture, hunting, forestry and fishing 0.7% 0.5% 0.5% 0.3% 2.6% 16.3%
Mining and quarrying 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Manufacturing 28.0% 28.6% 17.9% 29.7% 15.2% 15.7%
Electricity, gas and water supply 0.7% 0.0% 0.0% 0.0% 0.0% 0.0%
Construction 3.5% 4.4% 7.7% 15.0% 9.2% 13.9%
Wholesale and retail trade 28.0% 37.8% 34.2% 18.0% 29.6% 23.5%
Transport, storage and communication 5.6% 3.7% 6.4% 4.2% 5.4% 4.2%
Financial, insurance, real estate and business services 24.5% 23.5% 24.2% 30.6% 24.8% 16.9%
Community, social and personal services 9.1% 1.6% 9.0% 2.1% 13.3% 9.6%
Table 41 Proportion of total businesses in each sector for commercial areas

along the route (source: RSC levy database 2002)
It is clear that there are certain categories of commercial road users who would be
vulnerable to the proposed toll roads due to the perception there would be more
costs than benefits in the early years of the toll roads. The mitigation objective is to
address this degree of vulnerability.
Mitigation measures
The proposed mitigation measure is to introduce substantial discounts for frequent

road users.
In addition, certain specific industries may need a sliding scale of frequent user
discounts where there will be a bigger discount in the early years of the proposed
tolling that then taper off as the years progress. So, for want of illustration, there may
be a frequent user discount of 70% for more than 50 monthly trips in 2006 with this
reducing to 50% by, for example 2008, and 40% after 2010.
The table below assesses the impact on the vulnerable sectors as identified as well
as the likely impact of the construction phase on these road users.
98
IMPACT
POTENTIAL CRITERIA CONSTRUCTION SHORT TERM
Impact on the Extent L L M M
construction Duration L L L L
sector,
agriculture & Intensity L- L- H- M-
manufacturing Probability H H M M
that use the
Significance L L M M
R300
Confidence H H M M
IMPACT
MEDIUM TERM LONG TERM
Without With Without With
Extent M M M M
Duration M M H H
Intensity L+ L+ L+ L+
Probability M M M M
Confidence M M M M
Impact on the willingness of customers to visit businesses
Increased transport costs in the short term could deter customers.
Assessment
It has been demonstrated in section above that vehicles using the R300 would have
greater road user benefits and lower costs for an upgraded and tolled R300 than if
the road is left without upgrading and capacity increases. In addition to this, the road
would not make communities captive to paying a toll.
However, a certain degree of discomfort may be felt by certain types of businesses

that rely on customers from outside of the local area reaching them via the R300.
Tolls not only impact on the running costs of businesses, but can also impact on the
willingness of customers to visit businesses. One can differentiate between
businesses that are more or less likely to lose customers based on the
characteristics of their products and their relationship with their customers. Those
that are more likely to lose customers would generally have the following
characteristics aside from being reliant on customers from outside the local area:
Low levels of customer loyalty
99
Low levels of specialisation (i.e. their products can be easily found elsewhere)
High levels of competition from other similar businesses
The sale of cheaper items and low volumes (e.g. businesses selling, say,
plants versus cars)
The majority of retail businesses nearby the existing R300 rely heavily on local
custom for their sales. The only retail area that seems to have been established with
easy access to the R300 in mind is Access City situated at the Van Riebeeck
Interchange.
The assessment of impacts both without and with mitigation measures for Access
City at the Van Riebeeck Interchange is presented in the table below. An assessment
is also made of the possible impact as a result of traffic disruptions due to
construction and upgrading. It is likely that there will be some impact on traffic during
construction although this is likely to be limited as additional lanes will be added
before the existing road is upgraded.
IMPACT
POTENTIAL CRITERIA CONSTRUCTION OPERATION
Impact on Extent L L L L
Access City at Duration L L M M
Van Riebeeck
Interchange Intensity L- L- M- M-
Probability M M M M
Confidence M M M M
The majority of other businesses nearby the R300 are in the Stikland, Bellville South,
Brackenfell, Blackheath and Philippi industrial areas. While there are a few factory
shops in these industrial areas, they are not retail areas and the majority of
businesses are fairly large industries whose customer bases are likely to remain
largely unaffected. Factory shop customers tend to fall into two categories neither of
which is likely to be significantly affected: local low-income individuals and small
businesses buying in bulk. An assessment is also made of the possible impact as a
result of traffic disruptions due to construction and upgrading. It is likely that there will
be some impact on traffic during construction although this is likely to be limited as
additional lanes will be added before the existing road is upgraded.
100
IMPACT
Impact on Extent M M M M
businesses in Duration L L M M
Stikland,
Bellville Intensity L- L- L- L-
South, Probability M M M M
Brackenfell,
Significance L L L L
Blackheath
and Philippi Confidence M M M M
In terms of possible positive impacts on customer bases, the extension of the R300
to Blaauwberg and Westlake could increase the market reach of businesses along
the existing R300 as customers from further a-field would be provided with easier
access. The assessment of impacts both without and with mitigation measures for
business in Westlake, Capricorn Park and Blaauwberg is presented in the table
below. An assessment of the impact is given although this is expected to be low
because of the greenfields nature of the proposed project in these areas.
IMPACT
Impact on Extent L L L L
business in Duration L L H H
Westlake,
Capricorn Intensity L- L- M+ M+
Park and Probability M M M M
Blaauwberg
Confidence M M M M
Minimise operational cost increases and loss of customers.
Mitigation measures
Allow for the sliding scale frequent user discounts mentioned in several sections
above and allow generous discounts in the early years of the proposed tolling.
101
3.5.4 Impact on public transport
Potential for increased cost of motorised public transport (taxis and buses) and the
capacity of people to bear this cost.
Assessment
It was shown above that road user benefits would be greater than road user costs for
nearly all sections of the R300. In consequence the conclusion must be drawn that
the upgrading and tolling of the R300 would be to the benefit of motorised public
transport because the cost of public transport would be even higher if the road is not
upgraded.
However, in drawing such a conclusion we must again recognise the issue pointed
out in several places above: that vehicle operating costs are not discrete over time. In
consequence there are potential cash flow and affordability issues that could create
negative impacts. Affordability is an important issue in assessing the impact on public
transport because of the relatively lower levels of income of people who use public
transport.
In assessing the possible impact of the proposed toll road on public transport an
assumption was made that any cost increases would be passed directly onto
commuters and bus and taxi owners would not bear any cost increase. It is also not
clear that public transport providers would recognise cost savings and pass these on
to their passengers in the form of lower fares. What might happen in the early years
of the toll road is that bus and taxi operators would continue to charge the same fare
as they do currently and simply add the toll charge to this. In consequence the user
of public transport may experience increased road users costs equal to the value of
the toll. We hope that in later years the operators of public transport would appreciate
the cost savings and that competition would see some of the road user benefits being
passed on to passengers.
A simulation exercise was conducted to determine the toll tariff charges to

commuters using public transport under various scenarios. These toll tariff charges
were then compared to the average income of the area in order to determine the
potential degree of impact.
The simulation exercise is based on people travelling in taxis and buses. For the
R300 toll tariffs of between 20 cents per kilometre (low) and 30 cents per kilometre
(high) were used. The assumptions underlying the calculations were that taxis would
have ten passengers on average and buses would have thirty (these assumptions
are deliberately conservative). Taxis paid class I vehicle tolls while buses paid class
II. Finally the calculations were made for twenty-two monthly return trips and fifteen
monthly return trips. In the former case this would be the impact on a regular
commuter and in the latter case a frequent but not regular traveller. In this regard it
should be noted that some of the longer regular trips that are given are probably very
rare for example, a daily commuter from Hermanus to Cape Town travelling by taxi
or bus.
Table 42 reports the results to the simulation exercise for the R300.
Commuters travelling between Browns Farm and Bellville South by taxi would pay an
extra 44 cents per trip at the high tariff and 37 cents per trip at the low tariff. If that
102
commuter makes twenty-two monthly return trips this is the annual equivalent of
R231 at the high tariff and R193 at the low tariff. As a percentage of the average
household income in the Browns Farm area, the annual high tariff is 1.13% of
average annual income and the low tariff is 0.94%. For travellers who make fifteen
monthly return trips their annual toll charge is equal to 0.77% at the high tariff and
0.64% at the low tariff. Browns Farm is one of the lowest income areas along the
route and the hypothetical journey to Bellville South covers four fifths of the entire
length of the existing R300. The impact on commuters in Browns Farm can thus be
viewed as the worst case scenario for commuters along the route. A similar impact
would be felt by low income commuters from Khayelitsha wishing to travel to work in
Bellville using the R300.
While there are no clear-cut guidelines available that indicate what a maximum toll
can be we must recognise the people using buses and taxis are generally income
constrained. Any increase in spending is at the expense of some other area of
spending. The rule of thumb that has been adopted here to is settle on the value of
1.0% and less as having a low significance, between 1% and 3% as being of a
medium significance and more than 3% as being highly significant.
The significance of the impacts on the users of public transport is given in the table
below. These are given for the construction phase as well as for commuters from
Browns Farm and Khayelitsha and for commuters from other areas.
POTENTIAL CRITERIA
IMPACT Without With
mitigation mitigation
Commuters Extent L L
using public Duration M M
transport at
high tariff Intensity M- L-
from Browns Probability M M
Farm and
Significance M L
Khayelitsha
Confidence M M
All other Extent L L
commuter Duration L/M L/M
journeys
using public Intensity L- L-
transport on Probability M M
the R300
Significance L L
Confidence M M
Reduce impact of tolling on commuters using public transport.
Mitigation measures
103
Given the conclusions drawn above there is the need to allow for some mitigation
measures to address any impact on very poor people using motorised public
transport. In taking into account the mitigation measures proposed below two factors
must be considered.
First, it has been shown Social Specialists studies for the EIA of both the proposed
N1/N2 and R300 projects that there are poorer communities who are vulnerable to
increases in the cost of living irrespective of whether or not the proposed project
reduces cost in the long run. Further, there are a few drivers of private vehicles who
are vulnerable to increased costs.
Second, there is a policy imperative to move more to public transport and an efficient
used of the transport infrastructure. Currently two branches of public transport are
subsidised in order to achieve this urban rail and buses. The major public transport
mover of people - taxis is not. A taxi subsidy would encourage more people into
public transport.
It is proposed that a mitigation measure be adopted where taxis toll tariffs on the
proposed projects are fully or partially subsidised by the fiscus. Such a subsidy would
achieve a number of simultaneous objectives.
First, it would help vulnerable communities and travellers.
Second, it would help achieve the policy objective of moving more

commuters to public transport.
Third, it would subsidise the taxi industry without the need for an
administrative infrastructure and reduces the potential for corruption
compared to alternative ways of subsidising the taxi industry.
,
104
Toll charges per passenger for public transport

Twenty two monthly trips Fifteen monthly trips
Toll per trip Percent of average income Percent of average income
Tolled Annual high Annual Annual high Annual
From To distance Mode High toll Low toll toll low toll High toll Low toll toll low toll High toll Low toll
Browns Farm Bellville South 14.6 Taxi 0.44 0.37 231 193 1.13% 0.94% 158 131 0.77% 0.64%
Bus 0.29 0.24 154 128 0.76% 0.63% 105 88 0.51% 0.43%
Delf Stellenberg 12.4 Taxi 0.37 0.31 196 164 0.54% 0.45% 134 112 0.37% 0.31%
Bus 0.25 0.21 131 109 0.36% 0.30% 89 74 0.25% 0.21%
Driftsands Stikland 11 Taxi 0.33 0.28 174 145 0.95% 0.80% 119 99 0.65% 0.54%
Bus 0.22 0.18 116 97 0.64% 0.53% 79 66 0.43% 0.36%
Ikwezi Park Brackenfell 14 Taxi 0.42 0.35 222 185 0.41% 0.34% 151 126 0.28% 0.23%
Bus 0.28 0.23 148 123 0.27% 0.23% 101 84 0.19% 0.16%
Belhar Philippi 6.5 Taxi 0.20 0.16 103 86 0.14% 0.12% 70 59 0.10% 0.08%
Bus 0.13 0.11 69 57 0.09% 0.08% 47 39 0.06% 0.05%
Kuilsrivier N2 5.4 Taxi 0.16 0.14 86 71 0.07% 0.06% 58 49 0.05% 0.04%
Bus 0.11 0.09 57 48 0.05% 0.04% 39 32 0.03% 0.03%
Stikland Vanguard Drive 20.2 Taxi 0.61 0.51 320 267 0.21% 0.18% 218 182 0.14% 0.12%
Bus 0.40 0.34 213 178 0.14% 0.12% 145 121 0.10% 0.08%
Glen Haven N2 10.5 Taxi 0.32 0.26 166 139 0.11% 0.09% 113 95 0.07% 0.06%
Bus 0.21 0.18 111 92 0.07% 0.06% 76 63 0.05% 0.04%
Table 42 Toll charges per passenger for public transport on the R300
Economic Specialist Study 105
The one area of public transport where it was difficult to draw any conclusions was
the impact of the proposed toll roads on the rail system and on rail commuters.
On the part of commuters there may well be an inclination to move to rail transport
although we believe the effect is likely to be marginal at most. There are two reasons
for this. First, because of the relatively small increase in the cost of a journey on
motorised public transport should the road be tolled. Second, because the residential
areas affected are not well served by commuter rail.
Conclusions are even more difficult to draw on the part of road freight and the
possible changes from road to rail freight.
3.6 Impact on Farmers on the Northern Route (Sector 3)
There is concern that the proposed project would impact on the value of farms on the
Northern Section of the road and could make some farms financially not viable.
Assessment
This section assesses the impacts of the green-fields part of the proposed project on
property values of farms and on the continuing financial viability of farms. This
exercise was done only for the alignment as currently proposed. This section of the
study is restricted to the seven farms that would be affected by the proposed green-
fields section of the R300 in the north of the proposed project. The impact of
alternative alignments was not part of the terms of reference and was not
investigated further. In addition, the impact on Morning Star Brick and Clay was
undertaken by Goba Moahloli Keeve Steyn, the consulting engineers to the project,
and was not repeated here.
The object was to determine the degree to which farms would be affected, the
degree to which the financial viability of farms may be affected and potential job
losses. The process was undertaken in close consultation with the farmers and
independent experts. The starting point of the exercise was to determine the type of
and extent of likely impacts. This was followed by an assessment of the value of the
identified impacts for which purpose independent experts were consulted and a
range of the value of impacts was determined. Finally the results were reported back
to farmers for comment. The only areas of disagreement related to the value of land.
In consequence three different values for overall impact are reported below. The first
two are a minim and maximum based on the opinion of independent valuators and
other experts. The third is a maximum plus that is based on the opinion of individual
farmers about the market value of their land.
The conclusions that are reached are that the financial viability of one farm is in
question. This is the farm Vrymansfontein because of the potential impact on the
dairy business of the farm. There is the potential for the loss of 32 jobs with 30 of
these being on Vrymansfontein and the other two on the farm Welvergenugd. If there
is full compensation for the impact on land and the potential loss of income this
compensation ranges between a minimum of R42m, maximum of R58m and
maximum plus of R59m. It should be noted that the estimated cost of compensation
for the farm Vrymansfontein (R6m to R12m) is more than the estimated market value
of the entire farm. The market value of the farms is estimated to be between R3m
and R3.5m by independent valuators (excluding cattle) while the owners believe a
value of R7.5m is closer to the actual market value.
Finally, is should be noted that the estimates below take account of the financial and
job loss impacts. They cannot take into account the emotional impacts that the
proposed project would have on some farmers.
This section reports on the summary of all economic impacts and on the estimated
impact on the seven individual farms.
3.6.1 Summary of overall impact
The summary of all financial impacts is given in the table below. Three categories of
costs are indicated. These are the costs of replacement land, equipment, etc, the
potential loss of income both to farmers and farm workers, and the direct cost to the
project proponents in the form of under and over passes.
The value of all replacement costs ranges from between R18m and R24m as
determined by independent opinion and R26m in the opinion of the farmers. Lost
income is valued at between R10m and R20m while the cost of under and
overpasses are estimated at R13m. The overall financial impacts range between
R42m and R59m.
Table 46 Summary of all Financial Impacts on farms in the northern areas
Min Max Max +
Replacement Costs
Value of land affected by proposed road 11,254,550 16,487,810 17,616,400
Loss of Value of land affected by proposed road 2,292,000 2,292,000 2,292,000
Cost of replacing existing anchors 59,684 59,684 59,684
Cost of replacing buildings 1,348,000 1,348,000 1,348,000
Cost of replacing boreholes 229,600 229,600 229,600
Cost of fixing irrigation 278,000 278,000 278,000
Cost of fixing internal fences 195,656 195,656 195,656
Cost of contours 314,885 314,885 314,885
Loss of value of residential property due to noise 2,325,000 3,720,000 3,720,000
18,297,375 24,925,635 26,054,225
PV Lost Income
Additional km's travelled 211,180 211,180 211,180
Transport cost of milk 1,387,000 4,161,000 4,161,000
Lost Income if Dairy Closes 1,263,000 6,431,000 6,431,000
Lost jobs 7,680,000 9,600,000 9,600,000
Total lost income 10,541,180 20,403,180 20,403,180

28,838,555 45,328,815 46,457,405
Cost to Consortium
Cost Overpasses & Underpasses 13,210,000 13,210,000 13,210,000
Total Impact 42,048,555 58,538,815 59,667,405
3.6.2 Impacts on individual farms
This section details the impact on individual farms. Typically the cost in land value of
each farm is estimated, other replacement costs, loss of income and the cost of
under and overpasses.
3.6.2.1 Phisantekraal
Phisantekraal is a diversified farm, producing grapes, wheat, meat, roll on lawn,

pumpkins, etc. Phisantekraal also borders Durbanville and is suitable for future
residential development. This has a significant impact on its value.
The future route of the R300 through Phisantekraal was proclaimed several years
ago although no compensation was paid at the time.
Land values
Most of Phisantekraal is suitable for planting vines; however, given its proximity to
Durbanville, it is also suitable for future residential development. This makes valuing
this land very difficult.
Some estimates have been made about the possible cost of land on Phisantekraal.
This exercise proved difficult because of the farms close proximity to Durbanville and
the potential for future residential development. The owner, Mr Louw has been given
a written offer of R70m for the 100 hectares bordering Durbanville. However, he
believes its true value to be closer to R 100m. The proposed road will cross the
middle of Phisantekraal taking up about 26 hectares of land. In attempting to
determine the value of this land an assumption was made that the lands value is a
linear function of the distance from Durbanville, i.e. the market value at the
Durbanville border is assumed to be between R 700 000 and R 1 000 000 per
hectare and it decreases to between R 10 000 and R 20 000 per hectare at
Spesbona road. Under these assumptions the value of the land is estimated at
between R9.2m and R13.3m. In addition to this there are some established vineyards
that would be affected by the road. One lies in the path of the road and the other
would become a severed and inaccessible piece of land (although this could be
offered for sale to the neighbouring farm).
It should be stressed that these particular values should be used for indicative
purposes only and that the services of a property valuator should be used to
determine actual compensation.
Summary of Land affected
Type of land Size Market Value/ha Market Value Expl.
Phisantekraal1 26.1ha 355k/ha - 510k/ha 9 265k- 13 311k Road

Reserve +
2 x 10m
road
Vineyards 5.68ha 65k/ha - 85k/ha 369k - 483k Road

Reserve
00.00h
a
Vineyards 1.12ha 65k/ha - 85k/ha 73k - 95k Severed

Portion
1 Average value over the 2.6km between Durbanville and Spesbona road.
Replacing Anchors
The proposed road passes through approximately 700m of vineyard. As a result

some of the vineyard row anchors would need to be replaced. The worst-case
scenario would entail replacing 1 anchor every 3.4 m of border affected by the new
road (i.e. 206 new anchors)
Summary of new anchor costs
Description N Unit Cost Total Cost
New anchor poles 206 x R 35 R 7 210
New wire anchors 206 x R 21 R 4 326
New Wire 1 x R 500 R 500
Plant anchors 206 x R 10 R 2 060
Plant anchor poles 206 x R 10 R 2 060
Total R 16 156
Irrigation
The proposed road would run through the middle of a field currently irrigated by a
pivot. The pivot would need to be moved to another field. This would also require a
new feeder pipe to be laid.
Summary of costs related to moving the existing pivot
Description Quantity Unit Cost Cost
200mm class 9 pipe 1000 m @ R 150.00/m R150 000
Trench for new pipe 1000m @ R 8.00/m R 8 000
Moving existing pivot @ R 25 000 R 25 000
Total R183 000
Contours
Contours would have to be repaired, in order to prevent soil erosion, ensure efficient
drainage, etc. Additional contours would have to be made to ensure efficient
drainage in the area currently irrigated by the pivot. Contours would also have to be
removed from the proposed pivot camp.
Summary of contour work
Description N L Individual L Total Cost/m Total Cost

Contour
s
Repairs 8 x 150m = 1200m R 7.50 R 9 000
Current Pivot Field 1000m R 5.00 R 5 000
Runoff 2400m R 5.00 R 12 000
Prop. Pivot Field 3820m R 3.00 R 11 460
Fences
Internal Fences would need to be replaced since camps would need to change. The
new pivot camp would need to be fenced ( 2km). Another 3km of fencing would be
required for other miscellaneous jobs (@ R12 000/km).
Overpasses & Underpasses
The current proposal allows for:

1 x Agricultural Underpass (3.5m x 3.5m Box Culvert) @ R1 500 000
However an overpass is actually required to allow combines harvesters and other

large equipment to access the other side of the farm.
1 x Agricultural Overpass for Harvester (6m wide) @ R2 000 000
Access Road
The contractor would either have to build another over or underpass or build an
access road across the wetland just below the dams runoff. This wetland is normally
bypassed by driving over the dam wall; however the proposed road would prevent
this.
Summary
Min Max Max +
Replacement Costs
Value of land affected by proposed road 9,707,500 13,889,000 13,889,000
Cost of replacing buildings 0 0 0
Cost of contours 37,460 37,460 37,460
10,006,119 14,187,619 14,187,619
Cost to Consortium
Total Impact 12,206,119 16,387,619 16,387,619
3.6.2.2 Loch Lynne
Loch Lynne is primarily a grape farm. The proposed road would basically run along
its southern border with the resultant loss of its main access road. This would result
in longer journeys for farm vehicles.
Land value
Type of land Size Market Value/ha Market Value Explanation
Vineyards 1.66ha 65k/ha - 85k/ha 108k - 141k Road Reserve
Other 3.05ha 5k/ha - 9k/ha 15k - 28k Road Reserve
The owner, Mr. Nieuwoudt, believes that the market price for dry-land vineyards
should be approximately R100 000 per hectare.
Replacing Anchors
Some of the vineyard row anchors would need to be replaced. The worst-case
road (i.e. 168 new anchors)
Total R 13 268
Buildings and Structures
A new electric gate would need to be installed and the electricity supply and
transformer would need to be moved. (cost R 20 000)
Added cost due to new Access Road
The new road would increase the travelling distance to Durbanville by approximately
1.4km, i.e. 2.8kms on a round trip.
Summary of additional transport costs
Description No Distance Days / Unit Cost * Annual Cost

Trips Year
Pick-up 4 2.8km 365 R 3.39/km R 13 860
5 ton lorry 4 2.8km 312 R 5.80/km R 20 270
5 ton lorry (harvest) 3 2.8km 60 R 5.80/km R 2 920
Access Road
The contractor is responsible for replacing the existing access road and gate.
Summary
Min Max Max +
Replacement Costs
Value of land affected by proposed road 179,350 255,650 290,000
Cost of replacing buildings 20,000 20,000 20,000
212,618 288,918 323,268
PV Lost Income
Additional km's travelled 211,180 211,180 211,180
Total Impact 423,798 500,098 534,448
3.6.2.3 Bon Mella
Bon Mella is primarily a dairy farm with a milk factory on its premises. The proposed
road extension would only slightly intrude on its northern border. However the major
impact on Bon Mella is the potential closure of the dairy industry on the adjacent farm
Vrymansfontein. Currently Vrymansfontein is the sole milk supplier for Bon Mella, an
agreement that is reinforced by close family connections between the owners of the
two farms. The concerns expressed by the owner of Bon Mella relate not only to the
additional cost of transport of milk but also the challenges in finding a suitable and
reliable milk supplier.
Land values
The proposed road extension would only slightly intrude on its northern border and
the impact on land values is minimal
Suitable-Vines 0.45ha 10k/ha - 20k/ha 5k - 9k Road Reserve
Mr. Coetzee believes that the market price for land suitable for dry-land vineyards
should be approximately R 30 000 per hectare.
The proposed road runs across a manure dam.
2 x dams @ R 300 000/dam R 600 000
Potential loss of income
The Dairy Factory on Bon Mella was primarily set up in order to process milk from
Vrymansfontein. They are the exclusive supplier of dairy products to the Fruit & Veg
Group. Currently approximately 2/3s (10 000l/day) of Bon Mellas daily milk
requirements are sourced directly from Vrymansfontein. Should Vrymansfontein stop
milk production the alternative would be to truck in milk from elsewhere, with the
closest alternative probably being Darling. This would result in an additional cost of
approximately R0.20/l R0.30/l, i.e. additional cost of between R730 000 and
R1 095 000 per annum.
Dust
Excessive dust could seriously affect production and quality at the milk factory. Care
would have to be taken during road construction to keep the generation of dust to a
minimum.
Summary
Min Max Max +
Replacement Costs
4,500 9,000 13,500
PV Lost Income
Transport cost of milk 1,387,000 4,161,000 4,161,000

Total Impact 1,387,000 4,170,000 4,174,500

3.6.2.4 Vrymansfontein
Vrymansfontein is a dairy farm that would be most impacted by the proposed

alignment. It would not be possible to operate a dairy so close to a major highway.
Relocating the dairy would be very expensive, partly due to the lack of another
suitable site on the farm.
While the same evaluation method is followed for Vrymansfontein as for the other
farms it has already been noted above that the estimated cost of compensation for
the farm Vrymansfontein (R6m to R12m) is more than the estimated market value of
the entire farm. The market value of the farms is estimated to be between R3m and
R3.5m by independent valuators (excluding cattle) while the owners believe a value
of R7.5m is closer to the actual market value. In addition to these cost, there could be
the loss of thirty farm labourer jobs on the diary. Given the high unemployment rates
in the area many of these labourers could be unemployed for some time. The present
value of this lost income is estimated at between R7m and R9m.
Land values
The proposed road extension would run through the centre of Vrymansfontein. While
the farm would no longer be suitable for dairy farming the farm is suitable for dry land
vineyards.
Suitable- 1.44ha 10k/ha - 20k/ha 14k - 29k Road Reserve

Vines

Vines +2 x 10m road
+2 x 10m road

Vines
+2 x 10m road
Water
Both dams and both existing boreholes would be covered by the proposed road, with
the result that another reliable source of water would need to found. There are two
ways to estimate the cost of this. First is to calculate the lost income due to the
volume of water currently being used at the new price. Alternatively one could cost of
new dams and boreholes.
The proposed road runs across 2 dams and a workers house.
1 x Workers House @ (64 m2 x R 2 000/m2) R 128 000
2 x dams @ R 300 000/dam R 600 000
Boreholes
The proposed road runs across 2 boreholes.
2 x Borehole @ R 22 000/borehole R 44 000 (assume holes are 100m deep and

a 25% success rate and extra holes cost R 20 000/100m.)
Replacing Anchors
road (i.e. (200m + 250m)/2.8m/anchor 160 new anchors)
Total R 12 660
Fences
Internal Fences need to be replaced since camps need to change. Approximately

4km of fences would be required.
Noise
Excessive noise due to road could affect residential property values by between 25%
and 40%. There are two houses (both are approximately 900m2) on Vrymansfontein
that would be affected.
Loss of income
The dairy would not be able to function with a major road running so close to it (this
has been independently confirmed.) This leaves basically two alternatives, the first
being to rebuild the dairy somewhere else on the farm. This is not a viable option
since the cost would be prohibitive. The second alternative would be to close the
dairy and dispose of the cattle. This would result in a loss of future income.
Dairy
The dairy produces approximately:
10 000l / day @ net profit R 0.10 / l - R 0.30 / l
Beef
A dairy also produces beef, e.g. excess calves, and old stock:
140 150 cattle / annum @ R 3 000 / head - R 7 000 / head
Manure
Manure is another by-product:
R 100 000 / annum
Value of livestock
The livestock is worth approximately value R 2 000 000.
Scrap Value
There is virtually no market for used dairy equipment, scrap value R100 000.
Jobs
The closure of the dairy would result in job losses and a loss of income for the
persons affected.
30 jobs @ R 2 000 / worker / month
1 x Agricultural Overpass for Harvester (6m wide) @ R 2 000 000
Summary
Min Max Max +
Replacement Costs
Cost of replacing buildings 728,000 728,000 728,000

Cost of repairing internal fences 48,230 48,230 48,230
Cost of contours 54,925 54,925 54,925
Loss of value of residential property due to noise 1,350,000 2,160,000 2,160,000
2,643,815 3,616,515 3,724,415
PV Lost Income
Lost Income if Dairy Closes 1,263,000 6,431,000 6,431,000
Lost jobs 7,200,000 9,000,000 9,000,000
8,463,000 15,431,000 15,431,000
11,106,815 19,047,515 19,155,415
Cost to Consortium
Total Impact 13,306,815 21,247,515 21,355,415

3.6.2.5 Kuiperskraal / Welgegund
On Kuiperskraal / Welgegund the main farm activities are dairy, wheat & and grapes.
The proposed road alignment would run across the most productive part the farm
and effectively divide the farm in two.
Land
The proposed road extension would cut through an existing vineyard and through
ground that has been earmarked for future vineyards. This would result in another
10m on both sides of the road being lost (i.e. to allow for a tractors and equipment to
turn.)
+2x10m road

Vines
+2x10m road

Vines
+2x10m road
Mr. De Villiers Loubser, the owner of the farm, believes that the value of their land
suitable for vineyards should be approximately R50 000 per hectare because they
already have the infrastructure in place to implement drip irrigation. He also believes
that the market value of their vineyards should be approximately R100 000 per
hectare.
Irrigation
The existing drip irrigation would need to be repaired, because the proposed road
would cut the existing vineyard in half. In the worst case scenario, the line currently
running against the East border would have to be rerouted through the proposed
underpass, an additional cluster would need to be fitted and existing drip lines would
need to be repaired on both sides.
Description Quantity Unit Cost Cost
110mm class 9 pipe 1000 m @ R 53.50/m R 53 500
Trench for new pipe 1000m @ R 8.00/m R 8 000

New cluster @ R 1500 R 1 500
Fixing existing drip irrigation 8ha @ R 4000/ha R 32 000
Total R 95 000
Replacing Anchors
road (i.e. (380m + 430m)/3.6m/anchor 225 new anchors)
Total R 17 600
Contours
Contours would need to be repaired, in order to prevent soil erosion, ensure efficient
drainage etc. Because some of the camps would have to be combined new contours
would also have to be made.
Description N L Individual L Total Cost/m Total Cost

Contours
Repairs 5 x 150 m = 750m R 7.50 R 5 625
Runoff 500m R 5.00 R 2 500
Repairs 36 x 150 m = 5400m R 7.50 R 40 500
Runoff 4250m R 5.00 R 21 250

New Contours 3200m R 5.00 R 16 000
Fences
Internal fences need to be replaced since camps would need to change.

Approximately 2km of fences would be required (@ R12 000, 00/km).
Noise
Excessive noise due to road can affect a residential propertys value by between
25% and 40%. There are 2 houses (400m2 & 250m2) on Kuiperskraal and 2 houses
(400m2 & 250m2) on Welgegund that would be affected.
1 x Agricultural Overpass for Harvester (6m wide) @ R2 000 000
1 x Agricultural Underpass (3.5m x 3.5m Box Culvert) @ R1 500 000
Summary
Min Max Max +
Replacement Costs
Value of land affected by proposed road 504,400 824,300 1,599,500
Cost of contours 85,875 85,875 85,875
Loss of value of residential property due to noise 975,000 1,560,000 1,560,000
1,703,010 2,607,910 3,383,110
Cost to Consortium
Total Impact 5,373,010 6,277,910 7,053,110

3.6.2.6 Welvergenugd
The part of Welvergenugd affected by the proposed road is largely a wheat farm,
however permission was given by the Department of Agriculture in 1995 to re-zone it
as residential area. This could potentially influence the value of the land under
consideration.
Land values
The topography the land affected is such that approximately 50 hectares would be
cut off from the rest of the farm (between the Diep River and the proposed road.)
While an underpass is currently proposed to reach this area, this is problematic
because most equipment used for wheat cultivation would not be able to pass
through the underpass. Although this area would not be accessible for wheat farming
equipment it would still be accessible for vineyard equipment.

Vines
Suitable- 0.86ha 5k/ha - 9k/ha 9k - 17k To small to

Vines farm

Vines farm

Vines farm
Wheat* 50.00ha 5k/ha - 9k/ha 250k - 450k Severed

Portion
Loss of value
Albert Marais, Michiel de Kocks lawyer, confirmed that in 1995 the Department of
Agriculture gave permission that Welvergenugd can be rezoned as a residential area
with a golf course and other amenities. Piet Viljoen from AIDA said that a rough
estimate of its market value be no more than R6m. Jan Hanekom from Jan Hanekom
en Venote value it at no more than R10m. The proposed road would however stop
any future development. I.e. the value of the farm would revert to that of a normal
wheat farm suitable for dry land vineyards.
Contours
Contours would need repairing in order to prevent soil erosion, ensure efficient
draining, etc. Because some of the camps would have to be combined new contours
would also have to be made.
Description N Contours L Individual L Total Cost/m Total Cost
Repairs 39 x 150 m = 5850m R 7.50 R 43 875
Runoff 2210m R 5.00 R 11 050
New Contours 8000m R 5.00 R 40 000
Fences
Internal fences need to be replaced since camps need to change. Approximately 3km
of fences would be required.
Jobs
The loss of the approximately 65 hectares for wheat cultivation would most probably
result in 2 people losing their jobs.
2 jobs @ R 2 500 / worker / month
The current proposal allows for one Agricultural Underpass (3.5m x 3.5m Box
Culvert) although as explained above an overpass is probably called for.
Summary
Min Max Max +
Replacement Costs
Loss of Value of land affected by proposed road 2,292,000 2,292,000 2,292,000
Cost of contours 94,925 94,925 94,925
2,823,698 3,174,298 3,174,298
PV Lost Income
Lost jobs 480,000 600,000 600,000
3,303,698 3,774,298 3,774,298
Cost to Consortium
Total Impact 4,773,698 5,244,298 5,244,298

3.6.2.7 Platterug/Vissershok
Platterug is primarily a wheat farm and the proposed road would run across some of
the wheat fields.
Land
Area I, north of the proposed road and next to the proposed agricultural overpass,
would become too small to farm economically. Area II, which is south of the
proposed road, would be completely isolated. Area III is too small to farm on its own
and area IV would also become inaccessible. An additional 20m north of the
proposed road would be needed in which to turn vehicles and is therefore also lost to
production.
Wheat 18.56ha 5k/ha - 9k/ha 93k - 167k Road Reserve +

20m road
Wheat 0.87ha 5k/ha - 9k/ha 4k - 8k Severed Portion

(I)
Wheat 1.04ha 5k/ha - 9k/ha 5k - 9k To small to farm

(II)
Wheat 3.71ha 5k/ha - 9k/ha 19k - 34k To small to farm

(III)

(IV)
Mr. Pienaar believes that the value of the land suitable for wheat should be
approximately R15 000 per hectare.
Contours
The contours would need to be repaired, in order to prevent soil erosion, ensure
efficient draining, etc.
Description N Contours L Individual L Total Cost/m Total Cost
Repairs 28 x 150 m = 4200m R 7.50 R 31 500
Runoff 2040m R 5.00 R 10 200
Fences
Internal Fences would need to be replaced since camps need to change.

Approximately 2km of fences would be required (@ R12 000, 00/km).
Boreholes
The proposed road runs across 1 borehole. 1 x Borehole @ R17 600/borehole

(assume 25% success rate and extra holes cost R20 000/100m.)
The current proposal allows for one Agricultural Overpass for Harvester (6m wide)
An additional underpass is required to allow cattle to be moved between the different

parts of the farm. Cattle should not be herded across an agricultural overpass
because there is always the possibility of one accidentally jumping over the side.
Summary
Min Max Max +
Replacement Costs
Cost of fixing irrigation 0 0 0
Cost of contours 41,700 41,700 41,700
303,615 441,375 648,015
Cost to Consortium
Total Impact 3,973,615 4,111,375 4,318,015

The impact assessment of the proposed alignment of the road is given in the table
below. In making these assessments it is assumed that full compensation is paid to
farmers for all losses as calculated above. If full compensation is paid the losses are
social and emotional rather than financial. The impact of mitigation measures could
not be established without knowing about possible alternative alignments.
Impact on farms after full Impact of 30 job losses

compensation
Extent L L
Duration H H
Intensity L- M-
Probability H H
Consequence L M
Significance L M
Confidence M M
Reduce the impact of the road on farm values and job losses
Mitigation measures
The project proponents need to explore alternative alignments that could reduce the
impacts on farms and allow the dairy at Vrymansfontein to continue to operate.
3.7 The Overall Macroeconomic Impact
Would the proposed project have positive benefits for the regional and national
economies?
Assessment
Macroeconomic studies are marked by both what they can and what they cannot
achieve. The latter usually occurs because an impact cannot be quantified in any
rigorous way. In consequence the detailed reporting on the overall macroeconomic
impact must be considered in the light of other, non-quantifiable, changes.
It is useful, in this regard, to recognise that a macroeconomic impact is triggered by

an increase in demand. As demand for some product increases stone, clothing,
food, etc so production increases, incomes increase, expenditure increases and a
multiplier process is set in motion. The overall change in income is measured as
contribution to Gross Domestic Product (GDP).
Further, it is important to appreciate that a macroeconomic impact analysis is not the

same as a cost benefit analysis. This has several implications. For example, changes
in property values are very real in themselves. They might or might not result in
changes in demand and therefore have macroeconomic impacts. A second example
of this is the impact of traffic diversions and their potential impacts on accidents,
pollution and road maintenance. This could cause increases in demand if accidents
result in more panel beating, pollution results in more medical care and there is more
spending on road maintenance. In consequence while traffic diversions are a clear
cost they could result in increases in measured GDP.
In this study four sources of demand have been included. First is the impact of road
construction. Second is the ongoing maintenance and operation of the proposed
road. Third are the road user benefits that would be generated. Forth are the network
savings that would be generated.
A number of economic impacts could not be taken into account.
First, in the case of the R300, changes in property values and environmental impacts
as a result of the greenfields part of the project are not taken into account in these
estimates.
Second, the cost of traffic diversion was not included in this part of the study. This
was the result of a lack of information about potential traffic diversion.
Technically the cost of traffic diversion would add to GDP when the secondary
roads are repaired because this is an increase in demand for road repair
services. This would be offset of course because the increased expenditure must
either be financed by increased taxes/rates (which would result in a fall in
demand) or by expenditure switching (which would also cause a fall in demand).
Hence the overall macroeconomic impact of road repair as a result of traffic
diversions would be the difference, if any, between the increased demand and
decreased demand of the above choices
Other costs of diversion cannot be accounted for as macroeconomic impacts.

Pollution and increased noise as a result of diversion clearly have social and
economic effects but their macroeconomic effects must be reduced to changes in
demand.
Third, the macroeconomic impact of potential structural economic changes was not
and could not be included in the macroeconomic estimates. It is very likely that the
proposed toll road would bring about a variety of structural economic changes. The
proposed tolling may lead to positive economic benefits in the form of structural
changes or the removal of economic constraints. The road may, for example,
promote trade if they reduce the time costs and vehicle operating costs for trucking
and transport companies. In contrast, the proposed toll road could have localised
negative effects on specific communities, business or sectors. If there is an industrial
area that is, for example, captive to the toll road, then it is likely that certain
businesses may close and some would relocate. For those that close there is clearly
a negative impact on GDP. For those that relocate there are relocation costs and
falling productivity in the intervening period. Similarly, tolling may cause a shift of
freight from road to rail shifting costs and benefits between road and rail carriers.
While we recognise these issues they have not been included in the macroeconomic
estimates.
3.7.1 General description of macroeconomic effects
While there are a number of different types of macroeconomic effects, the two most
important are contribution to GDP and creation of jobs. The importance of job
creation is obvious. Increases in GDP are synonymous with increases in peoples
economic standards of living. Increased GDP i.e. increased production is
experienced in the form of more jobs, higher wages and reduced economic hardship.
It is clearly an important measure.
The actual task of calculating the macroeconomic impact of the proposed toll road
demanded a detailed and multifaceted approach not least because of the so-called
multiplier effects. It is well recognised that the simple act of spending construction a
toll road, for example, - leads to other economic effects. Demand for steel and
cement can lead to increased production in those industries. Increased demand for
steel and cement, in turn, leads to increased demand for mining output which uses
wood, water, electricity and so on. These are the, so-called, multiplier effects.
While this process unfolds, each industry employs people and pays wages.
Employees, in turn, spend their wages and cause further multiplier effects through
the economy. Measuring this is further complicated by the fact that different
industries demand different types of skills. This leads to different wage structures
across the various industries. People earning different wages have different spending
patterns. Thus, the change in overall spending patterns is dependent on which
industries are affected.
The general formulation for the multiplier effect is (Black, Hartzenberg & Standish, 2000:298-9):
1
M=
1 MPC (1 MPT ) + MPI (1 MPT )
where M is the regional (district, provincial or national) multiplier

MPC is the marginal propensity of the region to consume
MPI is the marginal propensity of the region to import
MPT is the marginal propensity to tax
To estimate or calculate the multiplier effect of the investment in road projects, it is

necessary to take the marginal propensity to consume, the propensity to import and
the propensity to tax into account. The higher the propensity to import goods and
materials the higher would be the expenditure on purchases from other regions and
the lower the expenditure in the region to which the multiplier applies. For road
projects it is normal to find that the district multiplier is lower than the provincial or
national multipliers because of the more openness of the district and the ease with
which the factors of production can move across its borders.
In addition, the following additions and cautions apply to multiplier analysis (Botes
and Pienaar, 2001, p B-5):
MPT is the marginal propensity for taxation and accounts for:
Corporate taxes on company profit. This specific figure does not necessarily
reflect the project attributes or the region in which the road is being built.
Company overheads may result in most of the project specific profit being
wiped out. An analysis of only the project profit made by the company would
not indicate what the level of the corporate tax is.
Levies such as skills development levies, workmans compensation funds and

rates and taxes. The first two levy amounts are project specific, while the
rates and taxes are region specific and need to be determined for the region
involved.
Taxes on salaries and wages. This value is both project and region specific.
It would normally be assumed that low-income labour falls into the lower tax
brackets of around 18%. However, according to the report on Selected
Findings of the 1995 Income and Expenditure Survey (Central Statistics,
1997, p 35) households that are in the lowest quintile (lowest 20%) by
expenditure spend less than 0.5% of their annual expenditure on personal
income tax. It is therefore problematic to determine what the lowest income
labour category would pay in the form of taxes.
MPC, the marginal propensity to consume, is region specific and is equal to 1 MPS,
the marginal propensity to save. This figure can be determined from the following
deductions for the labourers:
Payments to pension funds, if any.

Payments to provident funds, if any.
Payments for life insurance.
Personal savings.
Finally, MPI, the marginal propensity to import is both project specific and region
specific. The region in which the road is constructed may not be able to supply all
the factors of production, such as labour, raw materials and machinery, and these
may have to be imported from neighbouring regions or even from overseas.
Construction and operation
Input-output analysis was used for the measurement of the macroeconomic impact of
the construction and operation of the proposed toll road. This approach demands that
all expenditure in and around the toll road be identified and estimated. This
expenditure, in turn, needs to be linked to the Standard Industrial Classification of all
Economic Activity (SIC codes). In addition, if employment is part of the expenditure
then estimates must be made of the likely items of expenditure as a result of wage
payments. Allowances must also be made for the fact that workers at different
income levels have different spending patterns.
The expenditure areas that were identified are:
Constructing and upgrading the R300, the mainline and ramp plazas and
installing the electronic tolling equipment.
Ongoing capital expenditures such as upgrading of the road and facilities.
Operating and maintaining the toll road and plazas. This includes patrolling the
road and providing emergency services.
Concession company costs, such as legal and technical advice, administration of

contracts, monitoring of the toll plazas, etc.
Five steps are required to measure the overall economic impact of the construction
and upgrade phase of the toll road and the associated plazas.
First, to identify an appropriate bill of materials. The standard composition of a Bill

of Quantities for a road construction project was used, with the proportion and
allocation of costs for the different subsections verified by the estimators for the
respective proposed projects.
Second, to determine the relative proportions of profit, labour, plant and material
for each line item in the bill of materials.
Third, to assign each item of material and plant in the bill of quantities to the
appropriate SIC code.
Fourth, to decompose labour and profit into income categories and apportion the
total wages and profits to each income category. Following this, estimates of
expenditure patterns by income category are used to determine total spending
patterns.
Finally, all the items in the SIC coded bill of materials are brought together. The
total multiplier effect of the construction phase is calculated as the aggregate
product SIC coded spending on plant and material, as well as SIC coded
spending by workers multiplied through the national multipliers. The national
multipliers are known through the South African input output tables (CSS 1993)
The overall economic impact operation and maintenance was undertaken in a

manner similar to that outlined for capital expenditure. The operation and
maintenance of the toll road is divided into:
management costs,
plaza personnel and vehicle costs,
plaza maintenance costs,
road maintenance personnel and vehicle costs,
road maintenance material costs,
patrol response personnel and vehicle costs and, finally,

general maintenance expenses.
For the purpose of determining multiplier effects each category of expenditure was
consolidated into a single financial model. Following from this all expenditure was
decomposed and classified according to its appropriate SIC classification.
Network capacity and road user benefits
It has been shown above that the proposed upgrading of the N1 and N2 as well as
the upgrading and extension of the R300 would result in increased capacity in the
road network and lower transport costs and road user costs. These cost reductions
would be felt in the economy either as changes in spending patterns (as people
spend these cost reductions) or as increased savings. The savings, in turn, would
come back into the economy as increased loanable funds and probably increased
investment. Not only do these changed spending patterns and increased investment
impact directly on GDP but they also have their own multiplier effect.
The following steps were taken to calculate the contribution to GDP of changes in
network capacity and road user benefits.
The immediate savings to road users and the immediate savings to users of the
road network were calculated in Section 3.2.2 above.
A conservative assumption was made that only fifty percent of these savings
would actually be realised as savings. These would be spent, resulting in
increased demand and a contribution to GDP.
The increased demand was distributed along the lines of the typical spending
pattern of people in the Western Cape earning between R50,000 and R100,000 a
year.
The changed spending patterns were aligned with the SIC codes and the
multiplied impact calculated.
3.7.2 Contribution to Gross Domestic Product
Gross Domestic Product is the total value of all final goods and services produced in
the country. It is clearly fundamental to the economic quality of life of people in the
country. It is also the most important and all-encompassing measure of the
macroeconomic effect of the proposed toll road. Table 45 reports on the contribution
to GDP and the composition of this change.
The proposed project has the capacity to make a contribution to GDP of about
R500m each year during the first three years of construction. By the end of the
concession period the contribution to GDP could be as high as R940m with most of
this stimulus coming from road user benefits. The proposed project has the capacity
to make a cumulative contribution to GDP of over R17 billion by the end of the
contract period. The most overwhelming factor making a contribution to GDP after
the initial construction phase is the savings in road user costs. By 2022 these make
up the bulk of the contribution to GDP.
Contribution to Gross Domestic Product - South Africa

Rand million, 2001 prices
2003 2004 2005 2012 2022 2032 2037
year 1 year 2 year 3 year 10 year 20 year 30 year 35
Construction & Upgrades 434 512 409 26 136 111 -
Operation & Maintenance 15 25 47 46 48 48 -
Concession company 71 44 45 23 22 22 -
Changes in road user costs 32 154 409 95
Network Savings 143 247 351 402
Annual Contribution to GDP 520 582 501 270 606 941 497
Cumulative Contribution 520 1,102 1,603 3,095 7,513 14,390 17,673
Table 45 Contribution to GDP
3.7.3 Job creation
The proposed toll road would result in changes to three types of jobs. The first are
the direct jobs that would be created over the 30-year concession period. These are
jobs directly on road construction and operation of the toll road. The second are the,
so-called, indirect jobs that are due to multiplier effects. The third type of change in
jobs results from the structural economic changes attributable to the proposed toll
road. There can be job increases because of greater business and commercial
opportunities and more employment. There can be job losses or job relocations as a
toll road impacts, for example, on a captive industrial area and reduces the customer
base.
As with the estimates of contribution to GDP above, only the first two types of job
affects direct and indirect - are reported in this section. Table 46 reports on the total
number of direct jobs that would be generated by the proposed project of which the
overwhelming number would be in the Western Cape. There is the potential to
generate over 2,100 jobs annually during the initial construction phase. Subsequent
maintenance and occasional increases in road capacity would continue to generate a
limited number of direct jobs in construction. After construction and upgrading are
complete between 600 and 900 direct and sustainable jobs would created in the
Total number of direct jobs in the Western Cape
2003 2004 2005 2012 2022 2032 2037

Construction & Upgrades 1,560 1,722 1,426 71 395 311 -
Total Direct Jobs 2,197 2,251 2,132 608 937 860 -
Table 46 Total direct jobs
Just as there are multiplied impacts on GDP, so too are there multiplied impacts on
jobs. These are the so-called indirect jobs. Direct and indirect jobs are reported in
Table 47. There is the potential to generate about 4,200 direct and indirect jobs
during construction.
As with the contribution to GDP, the major contributor to jobs after construction and
the potential savings in road user costs and their resultant impact on demand. These
in turn lead to increased spending and the generation of indirect jobs. The proposed
project has the potential to generate between 2,000 and 5,000 direct and indirect
jobs over the concession period.
Total number of direct and indirect jobs in South Africa
2003 2004 2005 2012 2022 2032 2037

Construction & Upgrades 2,672 3,082 2,503 143 738 594 -
Concession company 1,293 812 818 421 394 408 -
Changes in road user costs 95 463 1,230 286
Network Savings 431 742 1,053 1,209
Total Jobs 4,246 4,370 4,202 1,974 3,693 5,173 1,780
Table 47 Total number of direct and indirect jobs
One of the most pressing problems in the Western Cape is unemployment and
poverty. As demonstrated above, the proposed toll road has the capacity to
contribute to job creation. They also have the capacity to contribute to poverty
alleviation because of the significant number of jobs created at the unskilled and
semiskilled positions. Table 48 outlines the distribution of jobs between four different
income categories for both construction and operation. During the construction phase
over 77% of the total direct jobs would go to workers at the lower end of the income
spectrum. This is clearly the area where job creation is the most important. This
proportion of total direct jobs increases during operation and maintenance when over
94% of direct jobs would work towards poverty alleviation through the creation of jobs
at unskilled and semiskilled levels.
Direct job distribution in the Western Cape by Income Category
< R50 000pa R50 000 - R100 000pa R100 000 - R200 000pa >R200 000pa
Construction & Upgrades 77.3% 18.3% 3.6% 0.8%
Operation & Maintenance 94.7% 3.2% 2.1% 0.0%
Table 48 Distribution of jobs between different income categories
3.7.4 Contribution to Gross Geographic Product
Gross Geographic Product (GGP) is the provincial equivalent of national GDP. While
many of the direct benefits would be felt within the province there would be indirect
effects on other provinces. When people spend their wages, they buy materials from
all over the country and from other countries. Although the Western Cape can boast
about producing the best wine and some of the best food in the country, other
products such as paper tissues, toilet soaps and cleaning materials are often brought
in from other provinces. Hence a projects contribution to provincial GGP, in the

province that the project is located, can often be much less than its contribution to
GDP. The contribution to provincial GGP is reported in Table 49 below.
Contribution to Gross Geographic Product - Western Cape

2003 2004 2005 2012 2022 2032 2037
Changes in road user costs - - - 11 53 142 33
Network Savings - - - 50 86 122 139
Annual Contribution to GGP 180 202 174 94 210 326 33
Cumulative Contribution 180 382 556 1,073 2,604 4,988 6,126
Table 49 Contribution to GGP (Western Cape)
After taking account of all multiplier effects it is estimated that the proposed project
would make an annual contribution to GGP of between R170m and R200m for the
three years they are under construction. In the years after construction the toll road
would add to GGP. This contribution is expected to be nearly R94m by 2012, over
R200m by 2022 and R320m by 2032. GGP is important not just because it is income
but also because income has the capacity to add to wealth. Based on these
projections, the toll road would add over R6 billion to provincial GGP by the end of
the contract period.
3.7.5 Other macroeconomic effects
Apart from the key macroeconomic effects discussed above, there are many other
macroeconomic effects that would flow from the construction and operation of the
proposed toll road. These include the generation of income tax, company tax, other
capital expenditure and indirect household income. Table 50 reports on total income
tax that would be generated and Table 51 on the indirect generation of household
income.
Over R50m in income taxes would be generated annually during the initial
construction and upgrading of the proposed project. As the contribution of
construction tapers off so the contribution of road user savings makes its presence
felt. By 2022 over R110m in income tax would be generated. This rises to over
R180m by the end of the contract period.
Similarly, there is an annual R250m contribution to indirect household income during

the initial construction phase. After this time the demand effects of savings in road
user costs could stimulate indirect household income by over R500m by the end of
the contract period. Overall the proposed project has the capacity to add a
cumulative total of R8 billion by the year 2037.
Contribution to Income Tax

2003 2004 2005 2012 2022 2032 2037
Network Savings - - - 30 52 74 85
Annual Contribution to income taxes 59 65 58 54 112 184 106
Cumulative Contribution 59 124 183 459 1,277 2,649 3,343
Table 50 Contribution to Income Tax
Indirect contribution to Household Income

2003 2004 2005 2012 2022 2032 2037
Network Savings - - - 69 119 169 194
Annual Contribution to hh income 247 277 240 171 351 515 241
Cumulative Contribution 247 524 764 1,518 3,681 7,034 8,614
Table 51 Indirect contribution to household income
3.7.6 Comparative Macroeconomic effect
This final section provides some comparative data on the overall macroeconomic
effect of the proposed toll road. Here we are interested in the overall contribution of
the toll road to South African GDP and the Western Cape GGP. Table 52 illustrates
these comparative measures.
It will be appreciated that while the proposed toll road would make a macroeconomic
contribution at a national level, the effect relative to the entire economy is modest.
Nevertheless there is an effect and the effect is quantifiable. The contribution to
South African GDP is 0.06% in 2003, dropping slightly to 0.05% in 2005. During the
later years when the ongoing capital expenditure amounts reduce and the toll road is
in full operation the contribution to GDP is in the order of about 0.03%. In the case of
the Western Cape the toll road would increase GGP by about 0.1% during
construction. The contribution to Western Cape GGP levels off at between 0.04%
and 0.07% after the initial construction period.
The contribution of the proposed tolling of the R300 to GDP and GGP
Excludes capital and operating cost of R300
2001 2002 2003 2004 2005 2012 2022 2032
1
South African real GDP 844,026 869,346 895,427 922,289 949,958 1,168,329 1,570,136 2,110,132
Toll Road contribution to GDP 520 582 501 270 606 941
Percentage contribution by Toll Roads 0.06% 0.06% 0.05% 0.02% 0.04% 0.04%
Western Cape real income 145,172 150,979 157,018 163,299 169,831 223,486 330,814 489,686
Toll Road contribution to WC GGP 180 202 174 94 210 326
Percentage contribution by Toll Roads 0.11% 0.12% 0.10% 0.04% 0.06% 0.07%
Assumptions Notes and sources

1. South African GDP growth 0% 1. South Africa Reserve Bank Quarterly Bulleting Dec. 2000 p S-106
2. Western Cape growth 0% data is for 1999 scaled at 3% growth to 2001
2
3. Western Cape share of GDP in 1996 17.2% 2. Western Cape share of GDP calculated using 1996 National Census.
Data extracted with Super Table
3. Central Statistical Services Report P0351, data from TSE Explorer
Table 52 Comparative macroeconomic effect

IMPACT
POTENTIAL CRITERIA CONSTRUCTION SHORT TERM
mitigatio mitigation mitigation mitigation
n
Macro Extent M M M M
economic Duration L L L L
impact of
project Intensity H+ H+ M+ M+
Probability H H H H
Significance M M M M
Confidence H H M M
IMPACT
MEDIUM TERM LONG TERM
Without With Without With
mitigatio mitigation mitigation mitigation
n
Extent M M M M
Duration M M H H
Intensity M+ M+ M+ M+
Probability M M M M
Significance M M H H
Confidence M M M M
No mitigation necessary
4 CONSIDERATION OF ALTERNATIVES
The study terms of reference included considering six sets of alternatives. These are:
The do nothing alternative
4.1 The Do Nothing alternative
As illustrated and discussed in Section 3 the road will soon be at the end of its design
life. In the do-nothing alternative the road will become further damaged and
increasingly congested. In the face of financial constraints the SANRA only has
sufficient funding available to maintain these roads at a PSI of, for example, 2.5 with
no capacity increases. The consequence of this is that the cost of using these roads
would not only increase, but would increase by more than the cost of driving on an
upgraded toll road.
The do nothing alternative has a number of dimensions. These are:
Impact on road users. It would cost most road users more in the do nothing
alternative than if the proposed project goes ahead. Less affluent and regular users
of these roads may face some financial hardship as a result of the tolled road but
they would face even greater hardship if the road is not upgraded.
Impact on sensitive business. There are sensitive businesses in the Western Cape
that can little afford any increase in costs. The tolled roads would increase their costs
by less than if the roads are not upgraded.
Impact on other business. It is very likely that the proposed project would boost
business in areas like Westlake, Capricorn Park and Blaauwberg. This stimulus
would not occur in the absence of the project.
Impact on tourism. It has been indicated in the Tourism specialist study that the
proposed project would probably boost the tourist experience of Cape Town as it
would allow for more flexible travel arrangements..
Impact on rail transport. It is possible that the do nothing alternative could stimulate
the use of rail transport. The degree to which this would happen depends on the
relative cost of using rail as opposed to using the existing road network.
In consequence the do nothing alternative would harm the prospects for economic
growth in the Western Cape. It would reduce peoples spending power, force firms
into financial hardship, reduce tourism spending and probably undermine investment.
5 DISCUSSION AND CONCLUSIONS
The Economics specialist study draws the overall conclusion that the proposed
upgrading, extension and tolling of the R300 is a positive force in the Western Cape
and that the cumulative impacts are generally positive rather than negative. The
project is financially viable as a whole and, partly because of this financial viability, is
also economically desirable. However there are two general categories of issues that
need to be addressed. The first relates to the upgrading and tolling of the existing
sections of the R300 while the second relates to the green field sections of the road.
It was found that many of the existing road sections of the R300 are approaching the
end of their design life. In addition to this, current traffic volumes are congesting
certain sections of the road, leading to slower travelling time and greater risks of
accidents. This problem is further compounded as forecasts in traffic growth indicate
serious congestion along many sections of the road. This indicates that the R300
need serious rehabilitation and capacity upgrades within the near future.
There is also an apparent need for urgency. It is well known that roads do not
deteriorate steadily over time. Rather, road damage and the cost of reconstruction
accelerate as a road nears the end of its design life. Hence, given the fact that the
road is nearing the end of its design life the urgency is due to the fact that the longer
the rehabilitation is left the more it will cost.
Given this apparent need for urgency, three critical policy issues emerged during the
course of the study.
The first issue is that the project proposal is being examined in the absence of an
integrated and coherent transport policy for the Western Cape. This issue is of
particular importance when examining the economic impact of the greenfields
sections of the proposal. While it is possible to identify some likely structural changes
as a result of the green fields proposal, the absence of policy guidelines makes it
difficult to draw conclusions on the desirability of these changes. However the fact
that the proposed project is financially and economically desirable suggests that
there is a need for the project. In addition, the greenfields section of the road follows
generally the road alignment within the context of the planning of the City of Cape
Town
The second issue relates to the proposed alignment of the road through the wetlands
in the south and its potential impact on the proposed False Bay Ecology Park. In the
absence of the False Bay Ecology Park it is shown that the economic benefits of the
proposed project are far greater than the existing value of the wetlands that would be
affected by the road. However, we caution that such an approach could be too
simplistic. It is not clear that one can compare the benefits of a transportation project
to that of environmental issues using purely monetary comparisons. These issues
are further complicated by the proposals to develop the False Bay Ecology Park
which would encompass the wetlands in question. This study is not able to draw firm
conclusions about the proposed alignment through the wetlands. Rather it is
recommended that alternative alignments be investigated, on the one hand, and the
decision about the alignment of the road through the wetlands is a strategic decision
that must be made by the City of Cape Town and the Western Province. Such a
decision cannot be made in a specialist study.
The third issue is how to pay for the rehabilitation and upgrading.
The most cost-effective way to pay for this rehabilitation and upgrading is through a
combination of fuel levies and special levies for heavy vehicles. The special levies
are necessary because, while heavy vehicles do the most damage to roads, these
damages are not fully recovered in the fuel levy. The major constraint on the effective
implementation of such a scheme is the financial policy on the part of government
that fiscal integrity means that there should be no earmarking of funds. Hence all
revenues raised, including the fuel levy, go into a common revenue fund and
expenditures are made from this fund.
The political reality of extensive poverty and hardship in the country, as well as the
need to address these issues, have resulted (and will continue to result) in budgetary
allocations in favour of poverty alleviation, etc, and at the expense of other areas of
expenditure like road maintenance. In consequence while tolling is a second best
way of paying for roads, political realities suggest that it is the only likely option.
There could be certain losses in efficiency as a result of this choice but there is also
the potential for gains in economic efficiency. The efficiency losses are the possibility
of higher financing costs, the profit made on revenue collection, the cost of running
the toll plazas and concession company, and the cost of traffic diversions. Potential
efficiency gains are the imposition of the user pay system, and the potential for
differential toll tariffs. The first differential toll could see heavy vehicles paying for
their fair share of road damage. The second is the opportunity to introduce
congestion tolling.
In addition there is the potential to correct some of the distortions in the transport
industry. Currently light vehicles subsidise heavy vehicles through the fuel levy. In
public transport, urban rail and bus services are subsidised. The potential exists to
encourage a move to motorised public transport in these areas by introducing
government subsidies for tolling of taxis and buses. Such subsidies would further
help to protect the poor and marginalised from the inevitable impact of higher
transport costs.
It should be recognised that if the R300 is upgraded and tolled it would cost more to
drive on the road than it does currently. However, it should also be recognised that it
would cost more if the road is not rehabilitated because of the increased costs of
poorer quality, more dangerous and more congested road. Two key issues emerge
from this. The first is which of the alternatives costs less. The second is to identify
vulnerable communities and road users with the intention of developing mitigation
measures against any cost increases.
The following detailed findings are summarised:
It was found that, apart from a few important exceptions, most users of the
proposed toll road would have positive road user benefits from the proposed
project. It was also found that, in aggregate, the proposed toll road would
generate overall road user benefits that are greater than road user costs. Simply
put this means that road user benefits would be greater by driving on the
deterioration in the existing road quality as the road near the end of its design life
and in latter years due to increased congestion and slower travelling times.
! There are a number of key exceptions to these general conclusions. The

first is that in some cases, in the earlier years of the proposed project,
road user costs exceed benefits for light vehicles (i.e. class 1). This
occurs before the riding quality of the road deteriorates seriously and
capacity constraints further slow vehicle flows.
! The second, and more important, exception is that certain categories of

road users would face increased costs for considerable periods of time at
the proposed toll tariffs. These relate particularly to vehicles travelling
between the N2 and Vanguard Drive.
! It was found that, given the exceptions above, the road user benefits
accrue more than proportionately to heavy vehicles rather than light
vehicles.
While there are no captive communities, there are two groups of road users who
are potentially vulnerable to tolling. First are a number of less affluent vehicle
owners who make intensive use of the road as well as communities in the
southern area of the existing R300. Second, some users of public transport are
particularly vulnerable because of their low income levels. In both cases
mitigation measures are proposed in an attempt to ease this burden.
Nevertheless it should be recognised that in the absence of upgrading and tolling
the road user costs of these vulnerable groups would increase by even more than
for the proposed project and there would be considerably less opportunity for
mitigation measures.
Access City at the Van Riebeeck Interchange is potentially vulnerable and is

quasi captive to the road.
It was found that the cumulative impact of the upgrading and tolling of the N1/N2
and R300 was positive. In other words upgrading and tolling add less to road
user costs than driving on the roads without upgrading. This is particularly true in
later years with increased traffic congestion and lack of road capacity without
upgrading.
As can be expected the northern wetlands section of the road would impact on a
number of farms, all of which would lose land to a larger or lesser extent. This is
not a financial problem as long as full compensation is paid (for which some
calculations are made). It should be noted that there would also be emotional and
social impacts. The current proposed alignment has the potential to compromise
the viability of a diary farm and puts future livelihoods and thirty jobs in jeopardy.
It is recommended that the project proponents explore alternative alignments, in
consultation with the farmers to find the least cost, least impact alignment.
The proposed project would make a substantial contribution to gross domestic

product and the creation of direct and indirect jobs.
! The proposed project has the capacity to make a contribution to GDP of

about R500m each year during the first three years of construction. By the
end of the concession period the contribution to GDP could be as high as
R940m with most of this stimulus coming from road user benefits. The
proposed project has the capacity to make a cumulative contribution to
GDP of over R17 billion by the end of the contract period.
! There is the potential to generate over 2,100 jobs annually during the
initial construction phase. Subsequent maintenance and occasional
increases in road capacity would continue to generate a limited number of
direct jobs in construction. After construction and upgrading are complete
between 600 and 900 direct and sustainable jobs would be created in the
! As with the contribution to GDP, the major contributor to jobs after

construction are the potential savings in road user costs and their
resultant impact on demand. These in turn lead to increased spending
and the generation of indirect jobs. The proposed project has the potential
to generate between 2,000 and 5,000 direct and indirect jobs over the
concession period.
END OF REPORT
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Appendix 1: Description of the environmental valuation techniques used for

the valuation of open spaces (adapted from Turpie et al, 2001)
Restoration Cost or Replacement Cost methods
Some open space services can best be valued in terms of the costs that would be
incurred if they were lost. This is especially useful in valuing ecological services such
as the protective function of wetlands (e.g. flood mitigation). This uses the costs of
restoring ecosystem goods or services (e.g. through habitat restoration), or of
replacing them with artificial substitutes. Replacement costs are usually easier to
estimate than restoration costs.
Travel Cost Method (TCM)
This technique is used primarily for the valuation of recreational benefits of

environmental amenities, especially in cases where visitor fees are low or non-
existent. The method derives willingness to pay for the use of an area from observed
visitor behaviour. It is assumed that the money and time spent on visiting a
recreational site is a proxy for the value of that site.
Hedonic Pricing Method
Through linear modelling of the different variables that contribute to property value, it
is possible to calculate the contribution made by an environmental variable (such as
a view of an estuary). This is because the value of environmental amenities is
reflected in the prices paid for property, such that
P = f (E, X1, X2.Xn)
where E is the environmental variable and X1..Xn are variables such as size, aspect
or other building attributes.
Contingent Valuation Methods (CVM)
Contingent valuation methods elicit peoples willingness to pay for access to or the
existence of natural resources by means of direct questionnaire survey techniques.
In the survey, a hypothetical question (or set of questions) is posed to each of the
respondents which elicits their willingness to pay for the preservation of resources or
their willingness to accept compensation for the loss of resources. The method can
be applied in a number of ways, and can approach the problem directly or indirectly.
The method usually has to be tailored to suit each unique valuation situation.
Because they rely on direct questioning rather than observing peoples actual
behaviour, contingent valuation methods are open to a number of biases. Indeed
much of the academic literature on contingent valuation has paid attention to these
biases and to finding ways of minimising them. An important bias to be wary of is
strategic bias whereby respondents over- or understate their true willingness to pay
because they believe their response may influence decision making. Embedding
bias occurs when people do not see the question in the context of all their wants,
needs and budgetary constraints. Interviewer bias, Information bias, starting point
bias and hypothetical bias tend to steer the thinking of the respondents, and
decisions are also influenced by the choice of payment vehicle (e.g. taxes or
donations). Because of these biases and the difficulty in their resolution, the use of
contingent valuation methods in valuation studies is somewhat controversial.
However, if used properly in such a way as to minimise bias, it is deemed an

acceptable method of measuring value.

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Proposed R300 Toll Road Project

Environmental Impact Assessment

The following detailed findings are summarised:

! There are a number of key exceptions to these general conclusions. The

! The second, and more important, exception is that certain categories of

Access City at the Van Riebeeck Interchange is potentially vulnerable and is

The proposed project would make a substantial contribution to gross domestic

! The proposed project has the capacity to make a contribution to GDP of

! As with the contribution to GDP, the major contributor to jobs after

Background and brief........................................................................................... 15

Study area ........................................................................................................... 16

1.1 Information sources................................................................................... 17

1.2 Study limitations........................................................................................ 18

1.3 Consideration of alternatives..................................................................... 18

2.1 The Cape Town Unicity ............................................................................. 19

2.1.1 Demographics and employment......................................................... 19

2.1.2 Income levels and poverty.................................................................. 20

2.1.3 Economic sectors and production ...................................................... 21

2.2 Sector 1: Vanguard Drive to Westlake....................................................... 22

2.2.1 Demographics and employment......................................................... 22

2.2.2 Income levels and poverty.................................................................. 22

2.2.3 Economic activity along the route....................................................... 23

2.3 Sector 2: Upgrading of the existing R300 .................................................. 24

2.3.1 Demographics and employment......................................................... 24

2.3.2 Income levels and poverty.................................................................. 25

2.3.3 Economic activity along the route....................................................... 25

2.4 Sector 3: Stellenberg Interchange to Wellington Road .............................. 27

2.4.1 Demographics and employment......................................................... 27

2.4.2 Income levels and poverty.................................................................. 27

2.4.3 Economic activity along the route....................................................... 28

2.5 Sector 3: Wellington Road to Blaauwberg ................................................. 28

2.5.1 Demographics and employment......................................................... 28

2.5.2 Income levels and poverty.................................................................. 29

2.5.3 Economic activity along the route....................................................... 29

3.1 Financial viability of the project.................................................................. 31

3.2 Transport policy, Economic development and Toll roads........................... 32

3.2.1 Western Cape transport policy ........................................................... 32

3.2.2 The role of transport infrastructure in economic growth...................... 34

3.2.3 Potential land use changes from the R300......................................... 34

3.2.4 Economic efficiency ........................................................................... 36

3.2.4.1 Sources of efficiency ................................................................... 36

3.2.4.2 Sources of inefficiencies ............................................................. 38

3.2.4.3 Tolling for efficiency .................................................................... 39

3.2.4.4 Regulatory issues ....................................................................... 40

3.3.1 Potential impact on land values.......................................................... 43

3.3.1.1 Types of environmental values.................................................... 43

3.3.1.2 Results of the open space valuation study .................................. 45

3.3.1.3 Adaptation of values to the study area ........................................ 47

3.3.2.1 Tourism and international perceptions ........................................ 49

3.3.2.2 Impact on the sense of place..................................................... 49

3.3.3 Conclusions and recommendations ................................................... 51

3.4 Road user costs and benefits (Sector 2) ................................................... 53

3.4.1 Methodological approach ................................................................... 53

3.4.2.1 Quantifying vehicle operating costs............................................. 54

3.4.2.2 Quantifying road user costs......................................................... 57

3.4.3 Total road user costs and benefits ..................................................... 80

3.4.4 Road network costs and benefits ....................................................... 83

3.5 Impact on road users and capacity to pay (Sector 2)................................. 87

3.5.1 The Composition of traffic on the R300 .............................................. 88

3.5.2 Private road users.............................................................................. 91

3.5.3 Impact on business ............................................................................ 93

3.5.4 Impact on public transport ................................................................ 101

3.6 Impact on Farmers on the Northern Route (Sector 3).............................. 106