Project: Oresund Bridge

1.0 Synopsis

The Öresund Bridge, linking the cities of Copenhagen, Denmark, and Malmo, Sweden, is a 16-kilometer (10 mile) combined rail and road bridge-tunnel spanning the Öresund strait. The bridge, completed in 2000, has provided a critical link between the two countries and their economies by drastically reducing the travel time from one hour (by ferry) to 10 minutes (by car or train). This resulted in the integration of the economies on both sides of the Öresund Region. Commuting between Copenhagen and Malmo has increased ten-fold since the bridge was built, creating a single labor market for the region. High unemployment on the Swedish side helped fill Copenhagen’s labor shortage. Lower land and labor costs on the Swedish side have drawn investment by multinational companies from Copenhagen. The project is responsible for an estimated 30,000 to 40,000 jobs in the region.

2.0 Background

2.1 Location & Transportation Connections

The Öresund Region represents the combined area of Scania in Southern Sweden and Eastern Denmark (including Greater Copenhagen). Copenhagen is located on Zealand, an island in Denmark, while Scania is on the southernmost tip of Sweden. Stockholm is 600 km to the northeast of the region and Gothenberg 270 km to the northwest. The region is connected by road and rail to mainland Europe through the Great Belt Bridge, which connects the island of Zealand to the peninsula of Jutland. This peninsula abuts Germany, where the closest large city is Hamburg. There is also a ferry connection from southern Zealand to Fehmarn, Germany. Other international connections are provided by Copenhagen Airport, which is the busiest in Scandanavia.

2.2 Community Character & Project Context

The Öresund Region’s population of 3.5 million makes it the largest metropolitan area in Scandinavia. A majority of this population resides in Copenhagen (the largest city in Denmark) and Malmo (the third largest city in Sweden, behind Stockholm and Gothenberg). These two cities are at the termini of the Öresund Bridge. The economies of both sides of the bridge have traditionally been quite different. Copenhagen has been a center for professional services (e.g. finance and consulting), while the Malmo side has been a manufacturing and logistics center. Before the Öresund Bridge was built, Copenhagen struggled with a tight labor force and high costs of doing business. Conversely, the Malmo area had high unemployment as it slowly adapted to a post-industrial economy. The opening of the bridge allowed for the exploitation of the complementary conditions in both countries to alleviate these problems. Both regions also benefit from the high concentration of universities, which have spurred growth in knowledge-based industries.

3.0 Project Description & Motives

Before the Öresund Bridge, the Öresund Region existed in name only. The distance between Denmark and Sweden at the Öresund Strait is 16 km via an hour-long ferry ride. Officials determined that it would be valuable to link the regions by providing a much shorter and easier commute between the countries, providing opportunities for local development.  Improvements to long distance travel times were of secondary concern. As major population and employment centers, Copenhagen and Malmo provided the most obvious points for connection. The decision to build the bridge was made in 1992 in Denmark and finalized in Sweden in 1994. Construction began in 1995 and ended in 2000, meeting its expected cost of 30 billion Danish kronas ($4 billion based on 2000 exchange rate).

The Öresund Bridge was the largest European bi-national project since the Channel Tunnel connecting France and Britain.  It is a combined two-track rail and four-lane road bridge-tunnel across the Öresund strait. To prevent interference with airplanes at Copenhagen Airport, an artificial island was built in the middle of the strait where the bridge now turns into a tunnel (four km in length). It was built and is owned and operated by a private company (Öresundsbro Konsortiet) that was formed through the cooperation of Denmark and Sweden with loans backed by the governments of both countries. These loans are being retired with toll revenues, which, at over $50 per car one-way, makes it one of the most expensive bridges in the world.  The debt is expected be retired in 30 years.

4.0 Project Impacts

4.1 Transportation Impacts

4.2 Demographic, Economic & Land Use Impacts

The Öresund Bridge caused a shift in living and commuting patterns in the region. The Danish side had a shortage of labor, while the Swedish side had high unemployment and low housing costs. The Swedish side had a more difficult time adjusting to post-industrialization in the 1990s because of its reliance on manufacturing. With the opening of the bridge, Danes moved to Sweden to take advantage of lower house prices and Swedes took jobs in Denmark. This resulted in an increase in property values on the Swedish side—prices in the Malmo area outpaced those in the rest of Sweden by nearly 20% from 1999-2006. The price differential between Malmo and Copenhagen, however, remains significant. The unemployment levels that were disparate between sides (3.6% on Danish side and 5.6% on Swedish side in 2000) have begun to converge (2.5% on Danish side and 3% on Swedish side in 2007), which is indicative of the existence of one labor market. Orestad, a new urban area, is an active business and residential neighborhood in Copenhagen that has grown rapidly since completion of the bridge. The new transit lines will serve this area as well as the airport and center city.

The increased integration between Copenhagen and Malmo has created a critical mass attractive for large-scale investments. While Stockholm was previously the largest urban area in Scandinavia, the Öresund Region has surpassed it in terms of population. This has allowed for the region to progress in terms of industry. The Swedish side had some IT operations as well as warehousing and logistics, both of which increased after the bridge opened. Denmark has gained by using the cheaper land that is more accessible in Sweden. As a result, companies will locate their offices in Copenhagen but have storage and distribution in Malmo. Thus, companies that have been limited in expansion capability in Copenhagen can move part of their operations to the other side to improve efficiency and allow for expansion.

The Öresund Region has seen significant gains in logistics activity since the bridge. The Malmo and Copenhagen ports merged in anticipation of the bridge’s opening. This has helped the region reinforce its place as a logistics hub for surrounding countries and has made it competitive with other regional hubs providing service to multiple countries. The Copenhagen side handles more containers while the Malmo side is a hub for cars coming from the U.S. and Far East. The low cost of land on the Swedish side is appealing for locating large distribution facilities. In addition to distribution, there are other value-added activities performed. Toyota now uses the port for its main distribution hub to Northern Europe.

Perhaps the most important aspect of the regional integration has been the cooperation between the local universities in both countries. Öresund University is made up of 12 schools in the region, with 150,000 students and 14,000 faculty and researchers. This is an institutional impact of the bridge that has further developed economic and land-use impacts. The unification between the schools occurred before the bridge was built, but since has founded several organizations that facilitate interaction between research and business. The Öresund Science Region, which was founded by Öresund University in 2001, works in fields such as environmental technology, biotechnology, IT, logistics and food products. The goal of this foundation is to encourage inter-disciplinary actions to bring together people that would not normally interact. Often, this means navigating the differences in the Danish and Swedish cultures, and one part of their research in food involves testing new products and observing reactions from both nationalities.

The biotechnology region, Medicon Valley, has attracted new companies that may have considered other regions like Stockholm. Currently, 60% of the biotechnology industry in both countries resides in the Öresund Region.  Biogen, an American company, has chosen the Öresund Region for its first location outside of the U.S. The company mentioned that its main reasons for picking the new location were the high concentration of research and development and access to Copenhagen Airport enabled by the bridge. Biogen should employ 1,000 when fully operational.

Currently, the Oresund Region is competing with Hungary, Germany, Spain, and the UK to house the first European Spallation Source (ESS) for studying neutrons, which are produced through high impact acceleration. There is only one such site in the world (Oak Ridge, Tennessee). However, Europe’s will be the largest facility of its kind when it is complete, employing 6,000 researchers. A source claimed that the region would not have bid for this project had the bridge not been built.

The Öresund Region has not been immune to the recent economic crisis. For instance, a business park on an artificial peninsula created for the bridge on the Denmark side, near the airport, has halted construction. Copenhagen also suffered economic losses due to its high concentration of jobs in the banking sector, while car distribution sites on the Swedish side have full lots waiting to be moved. However, people recognize that the region is less vulnerable to the crisis because of its integration. It is believed that unemployment would have risen more and property values would have fallen more in recent months without the presence of the bridge.

Measuring the economic impact of the bridge is difficult due to the complexity of the region. While the bridge represents the removal of an access barrier, the expense of crossing it mitigates its maximum potential impact. The costs for public transport over the bridge are reasonable, but the costs for freight and passenger car transportation are high. One professor that studied the impact of having tolls estimates that tolls are responsible for $2 billion in GDP lost annually.  Local research suggests that approximately 20% of the growth in the region can be attributed to the bridge, totaling 30,000-40,000 jobs from 1994, the start of construction, to 2006. 

5.0 Non-Transportation Factors

Local and regional factors have worked in conjunction with the bridge to foster growth in the region. The Öresund Region has tracked slightly above the recent growth in GDP in Europe.  Since 1995, real GDP in the region has increased by 24% compared to 23% for the EU countries. The European Union has also contributed to economic growth throughout the continent by reducing border security and effectively lowering trade barriers between countries, resulting in a nearly seamless flow of people and trade across borders.  No customs or passport control is required to cross from Denmark to Sweden over the Öresund Bridge.  The EU has also encouraged regional integration with funding for cross-border projects to encourage regional cooperation.

The region is attractive for living and working for many reasons. There is a high concentration of universities and modernized industry, which make it fertile ground for innovation. The area also offers a high quality of life. There is very low crime and many cultural offerings in Copenhagen. The Swedes now have easy access to the amenities that Copenhagen offers for shopping and entertainment, such as Tivoli Gardens. Also, the region has collaborated in drawing tourism. People visiting for conference in Copenhagen can stay in hotels on the other side with ease. The addition of accessible hotel beds has made it possible to host the UN Climate Change Conference in December 2009 in Copenhagen.

Neither country is part of the European Currency Union. This makes for disparities between sides with currency fluctuations. Recently, the currency in Sweden (kronas) has depreciated relative to the Danish currency (kroners), which has helped export growth in Sweden but also made it cheaper for Danes to live and spend their wages in Sweden.

Differences in tax and social security systems create uncertainty for people moving between the two countries. The governments are working on coordinating these systems. Because the Danish and Swedish languages are quite similar, Danes and Swedes can understand each other, but cultural differences remain. However, the bridge has created what one person called a “mental bridge” between Sweden and Denmark. 

6.0 Resources

6.1 Citations

1. Öresundsbro Konsortiet, Annual Report 2008, by Öresundsbron
2. Economic Effects of the Öresund Bridge – A Spatial Computable General Equilibrium Analysis, Marcus Sundberg, Division of Transport and Location Analysis, Department of Transport and Economics, Royal Institute of Technology - Stockholm, Sweden, October 2005.
3. The Interspace between Denmark and Sweden: The Industrial Synamics of the Öresund Cross-Border Region, Karl-John Lundquist and Lars Winther, Danish Journal of Geography 106(1),  p. 115-129.
4. http://en.wikipedia.org/wiki/%C3%96resund_Bridge
5. http://osb.oeresundsbron.dk/frontpage/?lang=1
6. http://www.oresundsregionen.org/2fa92ef4/code/1
7. www.tendensoresund.org

6.2 Interviews

Organizations

Lund University

Öresund Logistics

Royal Institute of Technology (Stockholm)

Öresund Science Region

Region Skane

University of Copenhagen

Footnotes

Case Study Developed by Economic Development Research Group, Inc.