By Dr. Arjan Hijdra – Director. Waterways worldwide are commonly used for inland navigation. Additional demands are also being made on the waterways; irrigation, hydropower, nature reserves and recreation are all becoming increasingly important. Researcher and practitioner Arjan Hijdra investigated how managers can cater to all the different needs and requirements in waterway development, and thus create maximum social value. Hijdra was awarded a PhD by the University of Groningen on 16 February 2017. The full dissertation can be downloaded at: Waterways – ways of value.
Throughout history, rivers and canals have been adapted or built for the sole purpose of the shipping industry. When redeveloping waterways in the current climate, managers also want to increase their broader social value. This calls for far-reaching collaboration between the parties concerned, including waterway managers, provinces, municipalities and private parties. For his research, Hijdra analysed various waterway projects in the Netherlands and the United States of America, adapting transaction cost theory, a tried and tested method from the private sector, for use in the public infrastructural sector.
Transaction cost theory
Transaction cost theory assumes that every form of collaboration generates ‘transaction costs’: fuss, time, effort. ‘Until recently, we didn’t pay much attention to the transaction costs in public projects’, says Hijdra, ‘but they have always been there. Although parties often recognize the benefits of collaboration, there usually turn out to be all kinds of obstacles that prevent them from working together. In terms of renovating a canal, for example, everyone agrees that you must also renovate the bike path running alongside it. This means that all the parties involved (the waterway management and the municipal department in charge of bike paths) must sign contracts and make agreements about funding etc.’
‘In the long run, a comprehensive approach to renovating the waterways will pay off. The transaction costs for the parties must be carefully monitored as they often get in the way of integrality’, explains Hijdra. ‘Weighing up these costs means that every party gets the maximum benefit from the resources invested. It also helps to put a problematic situation into a broader context and encourages teams to identify and consider opportunities. However, if this causes too much ‘fuss’ (transaction costs), there is little chance of success. Conscious, structural reduction of these costs makes opportunities more viable and enables further, broader optimization.’
So how can you reduce the transaction costs? Hijdra analysed various waterway projects, including the redevelopment of the Miami river. Hijdra: ‘In the 1990s, the Miami river was being polluted by derelict areas of Miami with disused port functions. The region wanted the economic interests of the river port (Miami Dade county) reinstated, the public wanted a clean river (task of the federal government) and project developers wanted to build new apartments on an attractive river. The interrelationships between problems, ambitions, financial interests and responsibilities made it almost impossible for each separate party to get the project off the ground, although they all recognized the enormous potential.’
‘The project finally became a success when an independent, neutral platform was created, a sort of “interests broker’” This broker analysed the interests, alerted parties to opportunities and coordinated activities, reducing the demands made on the individual parties.’
Hijdra’s findings have been compiled into a five-step plan for developing infrastructure with social value. Spin-offs from this research are already being implemented in the EU ‘Smart Governance of Infrastructure networks’ project.