Padma Multipurpose Bridge Project

11.3 Traffic Forecasts6. Traffic volumes of the Project are estimated using detailed information on wider economicbenefits, especially:The resulting changes in the level of economic activity and population growth generated byPadma Bridge; andRegional economic development impacts brought about by the change in transport costs andaccessibility as a result of the new link.11.3.1 Demographic Changes7. Changes in demography due to population conglomeration and increase in households due to theconstruction of Padma Bridge will vary depending on the vicinity to the bridge. Changed demographyand labor market opportunities will mean that areas surrounding Padma Bridge will experience higherpopulation growth rates compared to what they have been achieving historically or were projected toachieve.8. In the past, migration of people from the rural belt has always been towards urban areas to seekemployment. However, it is expected that there will be decline in migration as employmentopportunities will open up in the South-West Region, and also in Dhaka – which will be much easier tocommute with the development of bridge link.9. The impact of these changes in population growth rates between the Base Case and Bridge Caseis estimated. It is estimated that Barisal and Khulna divisions of south western region are expected toexperience the greatest impact with an additional 5.9% and 5.3% in population by 2030 compared tothe situation if Padma Bridge had not been built.11.3.2 Regional Economic Development Impacts10. The operation of the Padma Bridge, will result in significant economic changes to the southwestregion. There will be changes in the relative prices of production of goods and services, relocation ofeconomic activities, and generation of new activities other than related to transport sector.11. It is foreseen that industrial growth would be elevated due to the Bridge but these will be longtermdevelopment impacts and will take time to set in with the changing transportation accessibility. Inthe short run, there may be a small amount of extra freight travel as it becomes easier for existingfirms to access networks of customers and suppliers. However, in the longer run, reductions in thegeneralized costs of transport will:Increase the profitability of local firms which may lead to higher retained profits, encouraginginvestment in capacity expansion and increased output – resulting in increased economicactivity in the region;Result in local firms having reduced costs and lead to a lowering of prices and an increase inoutput;Encourage financial institutions to expand lending to firms in the southwest region, as thecosts of doing business for the institutions are lowered from the improved communications(through reduced time and effort) – the increased working capital will lead to increasedproduction;Induce the establishment of new firms in the region through (a) the improved competitivenessof the region as a business location, with cheaper transport being substituted for other inputssuch as inventories and warehousing capital; (b) the need to service the increased movementof passenger buses to/from Dhaka and of trucks carrying goods to/from India; andFirms may also relocate to the region to reduce the transport costs, time and to avoid thenegative agglomeration effects (congestion, pollution) of locating in Dhaka.12. Figure 11-1 shows the flow of indirect economic effects. Firms respond to the costs reduction invariety of ways, such as increasing production, shifting to higher value added production and11-3