Economic efficiency consequences of a tunnel under the Umskaret pass

This report deals with the economic efficiency consequences and social benefits of building a tunnel under the Umskaret pass in Nordland county, near the border between Norway and Sweden. Such a tunnel would greatly improve winter road conditions. A cost-benefit analysis shows that under plausible conditions the tunnel will not be economically profitable in the strict sense, that is, the net benefit will be negative. There is no empirical basis for asserting that traffic will greatly increase if a tunnel is built. Nor are there grounds for believing that the regional effects of building a tunnel will be massive, but there may be a certain impact, particularly on the Swedish side. Several extraneous circumstances may, however, help to enhance the profitability of the tunnel, for example changes in the Swedish transport subsidy system in order to favour Swedish use of Norwegian ports.