What if the Eurotunnel had never been constructed? A counterfactual analysis

The Eurotunnel is one of the largest private infrastructure projects and connects France and the United Kingdom. This paper offers a regional analysis for estimating overall economic impacts of the Eurotunnel on the directly connected regions South-East in the United Kingdom and Nord-Pas-de-Calais in France. Therefore, a counterfactual scenario is generated by using the synthetic control method based on 23 regions of France, the Netherlands and the United Kingdom (NUTS 1 level) from 1975-2015. So, the paper addresses the questions how the affected regions have economically performed compared to without the Eurotunnel. Moreover, the regional impacts due to the existence of the Eurotunnel are calculated based on this counterfactual scenario. Indeed, findings indicate that there are strong and positive impacts after the opening of the tunnel for the first years. However, these initially strong impacts are not consistent over time. Despite positive average economic impacts for the full period, the financial losses of the Eurotunnel can most likely not be compensated.