METHODS FOR MEASURING PUBLIC AND ...

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METHODS FOR MEASURING PUBLIC AND PRIVATE BENEFITS FROM PORT SERVICES PROVISION: A COMPARATIVE STUDY

Athanasios A. Pallis and George K. Vaggelas Department of Shipping, Trade and Transport, University of the Aegean, Greece 2 Korai St, Chios 82 100, Greece. Tel. +30-22710-35275. Fax: +30-22710-35299. E-mail: [email protected]; [email protected]

ABSTRACT This paper examines the potential of different methods to measure effectively the public and private benefits resulting from the provision of services in passenger port terminals. The paper analyses the advantages and disadvantages of three different methods, namely Cost Benefit Analysis, Economic Impact Studies, Stakeholders Business Ethics, and concludes on the advantages and the disadvantages of these methods as tools in quantifying benefits resulting from port operations. In recent years, there is an interest in allocating the costs of port services production to those benefited from their provision. However, there have been limited attempts in developing a function that would measure the public and private benefits from port operations and allow for the distribution of port services production costs in a port, or in a port terminal. Via the discussion of three potential method(s) for measuring these benefits, this paper aims to contribute in the process of formatting a function, which will be then be used to quantify and measure the public and private benefits from passenger terminals operation. Keywords: Port services, public-private sector, Methodology.

Session: Port Economics

METHODS FOR MEASURING PUBLIC AND PRIVATE BENEFITS FROM PORT SERVICES PROVISION: A COMPARATIVE STUDY ABSTRACT This paper examines the potential of different methods to measure effectively the public and private benefits resulting from the provision of services in passenger port terminals. The paper analyses the advantages and disadvantages of three different methods, namely Cost Benefit Analysis, Economic Impact Studies, Stakeholders Business Ethics, and concludes on their potential use as tools in quantifying benefits resulting from port operations. In recent years, there is an interest in allocating the costs of port services production to those benefited from their provision. However, there have been limited attempts in developing a function that would measure the public and private benefits from port operations and allow for the distribution of port services production costs in a port, or in a port terminal. Via the discussion of three potential method(s) for measuring these benefits, this paper aims to contribute in the process of formatting a function, which will be then be used to quantify and measure the public and private benefits from passenger terminals operation.

1.

INTRODUCTION

Globalization of world trade, technological progress, organisational changes in manufacturing, unitisation, and the arrival of logistics have major effects on the port industry. By transforming ports to nodes of transport chains and logistics poles that act as hubs of global trading, these developments have altered the nature of the port product, the process of port services production, the perceptions of port governance, management and organisation. These trends have challenged conventional concepts as regards port ownership. The adjustment process of the port industry requires substantial funds for the construction and/or modernisation of port infrastructures and superstructures. Given the public budget constraints, the mobilisation of the private sector turn to a key issue for port modernisation. Due to the integration of ports in supply chains (Robinson, 2002), ports, or operators within ports are increasingly behaving as „industrial companies‟ (Suykens, 1986) searching for profit maximisation in wider port clusters (De Langen, 2003). As Baird (2001) emphasises, although it is hardly a new phenomenon, private sector intervention is seaports has come a long way in recent years. The latter triggered a debate, both between scholars and within the port industry itself, on the optimal distribution of the costs of port services production. As detailed in the following section, up to date this interest has focused mostly on container and/or cruise terminals (i.e. in container and transhipment terminals -and the improvement of port performance. However, there have been limited attempts to measure the public and private benefits from port operations and allow for a rational distribution of port services production costs in a port, or in a port cargo or passenger terminal. This paper examines the potential of different methods to measure effectively the public and private benefits resulting from the provision of services in passenger port terminals. 2

In particular, it analyses the advantages and disadvantages of three different methods, namely Cost Benefit Analysis, Economic Impact Studies, Stakeholders Business Ethics, and concludes on the potential use of these methods as tools in quantifying benefits resulting from port operations. Via the discussion of the potential methods for measuring these benefits, this paper aims to contribute in the process of formatting a function, which will be used to quantify and measure the public and private benefits resulting from terminals or port operation. Section 2 briefly reviews the reasons which contribute to the need for searching the distribution of the benefits from the port services production, as a mean to reach a dynamic balance between the public and the private sector in the production and provision of port services. Section 3 presents the selected three methodologies, and the criteria for this selection. Section 4 analyses the advantages and the disadvantages of the three methodologies, focusing on an assessment of the potential employment of each method as a tool for quantifying and allocating the benefits from port services provision. The paper concludes (Section 5), with some remarks on the most appropriate methodology and recommendations for further research towards the formation of a function to define the beneficiaries (whether private or public) from port operations.

2.

DISTRIBUTION OF BENEFITS FROM PORT OPERATION

The increasing presence of private firms in the market of port services production has changed the scene in the port industry worldwide. Port terminal operations are transformed by the penetration of translational companies (Slack and Fremont 2005), while shipping companies create subsidiary companies that operate port terminals, with the latter frequently serving the parental company‟s fleet. In several cases port, reform equals to the introduction of the private sector in port management and/or operation via the endorsement of various practices (i.e. privatisation, concessions, BOT practices, etc). This tendency has influence (de)regulatory reforms, (i.e. the European Union‟s search for a long-term port strategy (Chlomoudis and Pallis 2002) and attempts to advance free access to port services provision (CEU 2004). Given the notable variation of the applied „port privatization policy and practice‟ (Cullinane and Song 2002; see also: Truhillo and Nombela 1998), scholars have started to look for the determinants of private sector participation (Hoffman 2001), and for a reassessment of public sector involvement (Notteboom and Wilmemans 2001). The continuous process of change entails a rethinking of port development strategies, including the need to define a new dynamic partnership between the public and private sector involvement in the port industry more specifically it calls for a clarification of the mandate of each sector and the contribution in port services production that they would be well placed to undertake (Chlomoudis and Pallis 2000; Juhel 2001). Answers regarding the optimum interface of the public and private sectors remain difficult and the certainties limited. Given the ongoing involvement of the private sector in port services production, and not least the mixed form that this participation has taken there have already been attempts for specifying the limits and the balance between the public and the private sector in production, provision and management of the port services (for a recent review: Bichou and Grey 2005).

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Both the experiences from port reforms, and the literature highlight the presence of a „public good – private utility‟ dilemma. Challenges to the dominance of Musgrave‟s (1969) economic theory of public goods, or of the importance of the impact of a port to the region (cf. Gripaios and Gripaios 1995), have reversed what has been accurately described as the period that “few people believed at that time in free competition and survival of the fittest in the ports sector” (Suykens 1986, p. 105). However, as improved performance is not always achieved (UNCTAD 1995) and the efficiency and productivity benefits from outright privatisation are not always been identifiable (Thomas, 1994), the balance of public/private involvement depends to great extent upon national ideology (Valentine and Grey 2000). Besides, the presence, or not, of a „public good‟ element in seaports is still part of the debate (see: Baird 2004) A mean to specify this balance is to generate knowledge on the direct or indirect benefits that the production of port services results in. The quantification of these benefits would allow for the optimal distribution of the costs for producing and providing these services. Like all other industrial activities, ports generate various impacts (direct/indirect, positive/negative) either on those parties directly involved in port related transactions or third parties. The former group involves port users (shipping companies, shippers, intermediaries in the transportation process), employees, owners, co-operators, suppliers etc.. The latter group refers to the company‟s external environment such as the local community, the environment etc. However, the transformation of the port industry changes the impact that a port results in. In the recent past, a port had a strong relationship with the city in which it was located (city-port) and the effects from its operation referred mostly in the tight geographical limits of the city. Nowadays, it is acknowledged that a port economic impact spreads in many sectors, even at an international level, because of the globalization and the participation of consortiums in port services production process (Benachio et al 2000; Baird 2004). Because of the existence of a large number of beneficiaries from contemporary ports operations, the roles of public and private sector might be considered as complementary. The ultimate beneficiary from this operation is questionable, and depends on the features of each port, including its markets. To give an indication, the positive economic effects of a port are related to the employment, the revenues (local and national) from the taxation of port services, the service of trade (global or else), the attraction of industries and other business activities in the hinterland of the port, or the wider port–related area. From the public sector‟s point of view, ports have a catalytic economic contribution at the geographical region that they serve, given the socioeconomic wealth produced due to their services and operations. The benefits for urban planning and development and the feeling of safety are some other indicative benefits from port operation (Bichou and Grey 2005). On the other hand, indicative negative effects are the produced externalities such as land use, pollution from ship operation in a port, noise pollution, air pollution, and traffic congestion at the roads around the port (Helberg 1996; Weisbrod 1996). The question that arises is whether we can apply a method to measure all the benefits from a port in such a way that it will be also possible to identify who the beneficiary is. Given the diverse characteristics of the port industry, the validity of this method would increase if, following adaptations, it would be applicable to most, if not all, the ports.

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In the literature there have been some studies concerning the economic impacts of a port (Warf and Cox 1989; Castro and Cotton-Millan 1998; Gripaios 1999). Τhere has also been a similar interest from Port Authorities. This interest is mainly focused on container terminals, because of the ports‟ continuous efforts for increasing the efficiency in the particular market segment, and not least because of the high margin profits of the sector. Moreover there are some studies seeking to quantify the benefits arising from cruiseterminal operations (Port of Portland 2002; Gabe et al 2003). In the following section we explore the potential of three different methods to act as the appropriate method for identifying and measuring the benefits from port operation.

3.

SELECTING POTENTIAL METHODS

The three methods, namely Cost Benefit Analysis (CBA), Economic Impact Studies (EIS), Stakeholders Business Ethics (SBE), have been chosen because they have been used in several studies aiming to quantify the effects produced by an industry, an activity, or a policy. Moreover, they have been employed in cases of research dealing with the transport sector. Table 3.1 present an indicative list of the types of sectors, and/or the scientific fields, in which each of the three methods has been used. Table 3.1: Cases in which the selected methods have been employed Method

Cost Benefit Analysis

Stakeholder Theory

Sector of implementation

 New product development  Facilities location  Change in regulatory frameworks  Effects of transport modes  Environmental effects  Health system  Business establishment

 Public policies  Theory of common good  Corporate Social Responsibility  Retail sales  Organisation and management of companies

Economic Impact Studies  Port industry  Change in regulatory frameworks  Biology  Facilities location  Financing  Transport systems  Airline industry  Environmental effects  Cruise industry

Cost Benefit Analysis (CBA) and Economic Impact Studies (EIS) have been extensively used in measuring the effects of many transport systems and modes, including airlines, road transport, port industry and cruises. The Stakeholder Theory (ST) has been used for the distribution of the benefits resulting from the operation of private companies. The CBA method has been applied for quantifying the direct and indirect effects of an industry, while it is also used in research looking into the selection of the ideal location for a new industry, as well as for transport modes, or transport hubs. Furthermore, CBA has been used to evaluate the distribution of public sector investments in several sectors (Mishan 1988). In the transport sector, CBA has been used for measuring mostly the environmental effects of a transport mode, or a transport network (Oertli 2000, Hifnawi 2002). The ST has been used by organisations or companies in order to identify the parties, which have a (direct or indirect) interest from their operation and with the scope to

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distribute equally the benefits resulted from the specific operation. It has also been employed as an alternative model of corporate governance that directs company to operate within „ethical boundaries‟. As Donaldson and Preston (1998) note, the „stakeholder model‟ has become the focus of an effort to redefine the corporation as an entity within the economy, polity, and society. The EIS method has been used in many cases that deal with the maritime sector, mostly with the aim to measure the impact from changes in the legislative framework. For instance, Van Der Linden (2001) identifies and attempts to quantify the impact that would have a change in Germany‟s maritime legislative framework governing the maritime sector and the rules governing the national registry. This method has also been used for the quantification of the effects of shipping companies and the cruise sector (Port of Portland Maine 2002; Gabe et al, 2003). Moreover, there are some applications of this method in the port industry (Waters 1977; Davis 1983; Warf and Cox 1989; Gripaios 1999; Helling and Poister 2000). In short, each of the three methods under examination has been extensively used for measuring the effects or/and for distributing benefits and costs. This use includes applications in the transport sector, with some of these applications dealing with the port industry per se.

4.

AN ASSESSMENT OF THE POTENTIAL METHODS

4.1 Cost Benefit Analysis Cost Benefit Analysis (CBA) is a method developed in order to compare two or more of the potential solutions in a given problem, with the aim to find the most economic efficient solution among the available alternatives. Whenever such alternatives do not exist, the outcome of this process is compared with a benchmarking solution. The method examines the economic outcomes, rather than policy implications of the alternatives solutions. This is a par excellence tool for decision making for these responsible for the design of a company‟s strategy or for the application of a certain policy. The five basic steps of CBA include (a) the determination of the research application field; (b) the determination of the effects of each measurement unit; (c) the tracing of the components of the system under research; (d) quantification of the data; and (e) the comparison of the alternatives, including the selection of the most appropriate solutions, based on economically criteria. A general advantage of the CBA, derives from its widespread implementation in many sectors and for many years. The feedback produced has given the chance to identify methodological problems, and through the application of this method to resolve them. Then, the empirical evidence suggests that this method gives to the researcher a broad but accurate categorisation of the impacts arising from the operation of a system or an industry. Moreover, these impacts might be divided into direct and indirect impacts allowing for a comprehensive analysis of each of them (i.e. which sectors/activities results in what kind of impact). The CBA is also in a position to quantify negative effects, for instance those that refer to the environment. There are several researchers which use

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of the specific method for estimating the environmental effects of a given industry, policy, or system (see: Tol 2001; Van den Bergh 2004). A general disadvantage of the CBA relates mostly the process of quantification. CBA has been criticised because of the calculation of the effects resulting from non-trading issues (i.e. environmental pollution), which is in practice a very difficult process. Moreover, precisely because of the quantification process, CBA tends to underestimate or not taking into account the various quality parameters (i.e. those standards that have been statutory for the quality of the environment). Therefore, the outcome resulting from the application of this method might diverge from the real one (Campbell and Brown 2004; Kopps et al 1997). Another disadvantage results from the fact that the CBA is a very complex method, and requires from the researcher the tracing and the allocation of the impact from an economic system/activity. This contains the possible problem of not including in the quantification process some of the benefits or impacts resulting from this activity. The fact that CBA is based on statistical data stands as an additional disadvantage. This undermines, to a certain extent, the quality and the reliability of the collected data. As regards the potential application of the CBA to quantify the benefits from port services production, the main advantage is the development of a framework that groups the stakeholders. This facilitates the analysis, as it allows for the calculation of benefits for groups of stakeholders, rather than for each stakeholder. Because this method is based on statistical data, the potential to collect comprehensive data depends on the extent that national authorities responsible for port planning and/or port authorities maintain such databases. Given that a port might result in a local or regional impact, an application of the CBA in the case of ports needs to ignore the common practice to use national level data indexes to measure economic impacts and focus on the collection and analysis of lower (local/regional) level databases. Concerning the deficiencies of this method, the major one is the complicated procedure for quantifying the benefits arising from port services production. On the one hand the absence of a standardised method for quantifying costs and benefits allows for a degree of freedom as regards the choice made by the researcher. On the other hand, precisely because CBA doesn‟t determine an optimum method for impact quantification, the researcher might choose an inappropriate method. CBA also requires, in most cases, data forecasting for the estimation of the long-term impact of an economic activity. Of course, forecast has to be accurate, otherwise the whole process might result in false conclusions. Finally, one needs to focus on the fact that changes of a certain national/regional/local policy framework might cause a redistribution of the benefits resulting from port operations, and affect the benefits of specific groups of stakeholders. However, the application of the CBA implies the equal distribution of this impact to the total of the stakeholders rather than to those that are truly benefited. 4.2 Stakeholder Theory The origins of the Stakeholder Theory (ST) development have been put forward by Freeman (1984). A stakeholder might be defined as „any individual or group who can

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affect or is affected by the actions, decisions, policies, practices, or goals of the organization‟ (Carroll 1996). The core concept of ST is that every single company must keep in mind the needs, the interests, and the impact of its activities on all those who are affected from its policies and operations (Frederick 1992). The method is used for the estimation of both the external costs and the benefits arising from a company‟s operation, with the aim to inform corporate actions towards the coverage of the former or the maximisation of the latter (Buchholz and Rosenthal 2004). Overall, the ST has been mostly used as a business organisational model and as a tool for a company to demonstrate the application of ethical practices during its operations. The ST assists a company to trace the total of the social groups towards which it must demonstrate ethical and social responsible corporate actions. This is the first advantage of the method. It allows for the identification of all the stakeholders linked with the operation of a company/sector. This fact, as well as the categorisation of stakeholders (another result from the ST implementation) gives to the researcher a clear and comprehensive picture of the environment that is affected by a company‟s operation, strategy, and policy. The organisational framework implied by this method is considered as a social responsible one that enhances the efficiency and maximises the returns of investments. It is also “closer” to the community and its problems trying to give solutions through rational business operations. There is also a useful level of stakeholders‟ classification in the following categories (Greenley 1989): (a) „internal‟ stakeholders that include owners, employees, etc.; (b) „marketplace‟ stakeholders, that is customers, suppliers, etc. and (c) „external‟ stakeholders that is government, local community, organizations, etc.. This classification facilitates a detailed distribution of economics impacts on specific groups of stakeholders. The Stakeholder Theory has been strongly criticised for being an „inapplicable‟ method because of its major drawbacks. Sternberg (1997) points out that the most serious disadvantage of ST is the need for a precise determination of the stakeholders. The definition “every one who affects or is affected by a company” is loose and in case of multinational corporations turns out to a huge number of stakeholders for examination. Whenever the number of stakeholder is quite significant, the decision on which groups to investigate rests on the researcher, whether a scholar or a company manager. The main issue in this case is what criteria will the manager/researcher use for the selection of the groups, as the ST doesn‟t give a clear answer on this. Another disadvantage of the ST derives from the fact that the state counts just as one stakeholder among others. However, the state has a major role in the development of public policies, thus it affects, and is affected, more than any other group of stakeholders (Sternbeg 1997). The ST undermines the role of the state as a regulatory authority, a bias resulting from the (implicit or explicit) argument that state intervention is unnecessary and it can only undermine efforts for maximising stakeholders‟ satisfaction. Further difficulties may rise in cases that some interest parties belong to two or more stakeholders groups. The method in question doesn‟t clarify how might the researcher measure the impact of an economy activity on these stakeholders. In addition, the ST does

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not specify which variables might be quantified. Nor does this method determine which measurement units might be used in order to estimate the impact of an economic activity. Given the aforementioned difficulties, the application of ST in order to quantify and distribute the benefits resulting from port services production and provision is rather problematic. This is not only because the ST is a method more appropriately used in cases that organisational models and social responsibility are at stake. It is also because of the loose definition of stakeholders, and the consequent inclusion in the latter category of numerous individuals or groups. Given the conditions currently dominating the port industry, as well as the emerging trends (i.e. multination port operators, shipping companies‟ involvement in the port production process, globalisation of the shipping industry and communications technology development), the number of the individuals that benefit by the port operation is potentially large and might be located in a wide geographical area. Therefore the process of tracing the total of stakeholders might be time-consuming, and perhaps impossible to conclude. Another fundamental principle of ST is the absence of any categorisation as regards the distribution of benefits to stakeholders. This method assumes that the existing benefits from an economy activity are equally distributed between all of them. This would be practicable only in a closed economy and/or industry. However, the port industry is a globalised one with increasing level of private firms‟ participation. So, one needs to avoid this equally benefits distribution and weight the allocation of benefits to each group of stakeholders. Nevertheless, there are considerable advantages as well. This method facilitates the definition, as well as the categorisation of the stakeholders, thus facilitates the researcher‟s task to trace the total of the beneficiaries from port operation. The application of the ST method facilitates the making of an inclusive grouping of the different stakeholders benefited by port operations. Finally, the ST is useful the researcher whenever the port services production results in benefits that are equally distributed between all the stakeholders. In that case, ST reduces the amount of the needed work. There is no scope to measure the benefits for each group individually and the duplication of the estimation process is minimised. 4.3 Economic Impact Studies Economic Impact Studies (EIS) method aim to the detail evaluation of the significance of a specific sector/industry, or the effects of a change in a sector, by measuring the impact of an economic activity. The EIS is built on the Structure – Conduct – Performance (SCP) model developed by Edward Mason in the 1930s. The data required for the estimation of the impact from an economic activity are directly collected from the stakeholders of the specific industry. Following this collection, the data are processed in order to calculate the total impact of an industry/sector, in monetary terms. The variables that are commonly used within this process are: employment (direct and indirect), personal income, company‟s profits, tax revenues in local and national level etc. Employment, for instance, is measured in monetary terms, through the use of statistical indexes such as the income, a process allowing for certain degree of flexibility. By researching the impact on the direct users of a service or a product, the researcher can

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also identify the expenditures of the users in order to acquire the service or product (in question). These expenditures may be payable to the provider/producer of the service or product and/or to other sectors of the local or national economy. A disadvantage of EIS is that the quality of the collected data might be questionable as companies might provide false data and overestimates the indirect impact that their activities produce (Davis 1983). This might happen because several companies advocate a higher importance within the industry in order to strengthen their position and, moreover, to participate in related decision-making process. Another disadvantage is that this method is characterised a „static‟ rather than a „dynamic‟ one. The impact measured in its context refers mostly to an annual basis, not least because of the method that the data are collected (Chang 1978). It is therefore necessary either to make forecasts for the future levels of these, and ground the whole process on these forecasts. The specific data collection and processing is time-consuming and costly (Benacchio et al 2000). There is also a need to determine the boundaries of the sector in question. This introduces the danger not to include some parts of the sectors or some economic units that are affected only indirectly from the production / provision of a service or a product. Apparently, there is risk to choose a sample that does not represent the total of the sector and lead the research towards incorrect conclusions. The advantages of the method result from the fact that almost all the effects are usually directly measurable in economic terms, so there is no need for using specialised quantifying methods. Besides the validity of the collecting data is notable, because data are directly provided from the users of service or product. Another advantage is that the tracing of the stakeholders is comparatively easy, because, through market research, the researcher is in position to identify the stakeholders. The application of EIS in the process of estimating the benefits from port services production might pace method difficulties in collecting the essential data, especially in the case of ports with seasonal, or small (passenger or commodity traffic). This difficulty might extend the required time for data collection. Another disadvantage relates to the potential of collecting overvalued/undervalued data from the users of a port service, for the reasons explained above. The temptation to demonstrate significance in an industry such as the ports, wherein corporatism is a usual phenomenon, is quite high. The advantages by the endorsement of the EIS method result mostly by the practices in the research field. The researcher is in the position to trace the benefits/cost occurred for port users. With the help of the estimation of the levels of total demand, the researcher can measure the overall economic effects and conclude on the direct benefits from the port services. Data processing, i.e., transformation in terms of employment, taxation etc, can contribute to the estimation of the indirect benefits as well. An additional advantage is the fact that there is no need to identify stakeholders (i.e. users, providers, or producers of port services) in order to measure the benefits from port operation. This is because the answers of the users in the context of the research guide the researcher towards the identification of these stakeholders.

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4.4 A Comparison of the three methods Table 4.1 presents a synopsis of the aforementioned advantages and the disadvantages of each method examined. Both the advantages and the disadvantages are further classified, either as general, or as applied in the research of port benefits. Table 4.1: Major Advantages and Disadvantages of the three methods Method

Cost Benefit Analysis

Stakeholder Theory

Category

General Advantages

General Disadvantages

Advantages when applied in the research of port benefits.

Disadvantages when applied in the research of port benefits

 Time-tested method  Categorization of stakeholders  Evaluation of environmental effects

 Categorization of stakeholders  The company is concern about the problems of the society  Maximize the social utility

 Complicated method  Validity/reliability of statistical data  Doesn‟t propose a quantifying method

 Definition of stakeholders (anybody, anything, anywhere)  Difficulties in decision making process  Determination of what is quantifiable and in what terms  Categorization of stakeholders  Equal distribution: convenience in calculation

 Categorization of stakeholders  Complexity, reliability of statistical sources  Problems if a policy change benefit only a group of society  Convenience in data collection

 Organizing model  Huge number of stakeholders  The equal distribution of utility is unfair

Economic Impact Studies  Direct measurable effects  Small need for use of quantifying methods  Tracing the beneficiaries  Validity of collected data  Provision of incorrect data from respondents  Static method  Time consuming  Expensive  Determination of the area in issue  Direct total utility through the market research  Convenience in tracing the stakeholders  Difficult to apply in ports with seasonal or small traffic

Based on the consideration of the illustrated positive and negative features of each method, it seems that all the three methodologies might be applied in the stage of tracing the stakeholders that are benefited from port operation. This is because each of them embodies a (general) categorisation of the stakeholders, assisting the researcher in his effort to identify all the producers, users and providers of port services who benefited from the port services production. As regards data collection and quantification, the application of the Economic Impact Studies seems more suitable, as a method that encompasses some positive features when compared with the other two methods. These positive features refer to data quantification. The EIS method results in the availability or data direct measurable in economic terms. In the case that in some stage of the search for benefits there is a need to quantify the negative effects or the external costs caused by the port services producers or providers, then the appropriate method will be the Cost Benefit Analysis. This type of analysis gives to the researcher the freedom to choose any method for quantifying the effects, and

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moreover allows for the measurement of the environmental effects of an economic activity. Above all, the measurement of the benefits arising from the port services production/provision demands a categorisation of the ports or the port services, considering the kind of (maritime and inland) traffic, as well as the markets that the port serves. The economic impacts of a port are not the same for any category of port services.

5.

CONCLUDING REMARKS

This paper provides a comparative study of three potential methodologies for distributing and quantifying the benefits arising from port services production/ provision. The increasing presence of private firms in the market of port services production has produced a need to define a new dynamic partnership between the public and private sector involvement in the port industry, and clarify the contribution of each sector in port services production. A mean to specify this balance is to generate knowledge on the direct or indirect benefits that the production of port services results in. The quantification of these benefits would allow for the optimal distribution of the cost for producing and providing these services. The study of the features and previous applications of the three methods, as well as of those advantages and disadvantages that would prevail in the case of their application in the port industry has helped to conclude on their overally applicability. The comparison of their main features has led to the conclusion that an application of particular aspects from all the three methodologies might be useful in measuring the economic impacts from a ports operation. This is not least because such mixture will help to measure the impact in more comprehensive terms than the existing ones (i.e. traffic volume, direct income results etc). Each of the three methods can facilitate different stages of a research aiming to define and distribute the benefits from port operation, thus they should all be considered as useful.

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