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The Economic Effects of High Speed Rail Investment

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  • Ginés de Rus

    (University of Las Palmas)

Abstract

The allocation of traffic between different transport modes follows transport user decisions which depend on the generalized cost of travel in the available alternatives. High Speed Rail (HSR) investment is a government decision with significant effects on the generalized cost of rail transport; and therefore on the modal split in corridors where private operators compete for traffic and charge prices close to total producer costs (infrastructure included). The rationale for HSR investment is not different to any other public investment decision. Public funds should be allocated to this mode of transport if its net expected social benefit is higher than in the next best alternative. The exam of data on costs and demand shows that the case for investing in HSR is strongly dependent on the existing volume of traffic where the new lines are built, the expected time savings and generated traffic and the average willingness to pay of potential users, the release of capacity in congested roads, airports or conventional rail lines and the net reduction of external effects. This paper discusses, within a cost-benefit analysis framework, under which conditions the expected benefits from deviated traffic (plus generated traffic), and other alleged external effects and indirect benefits justify the investment in HSR projects. It pays special attention to intermodal effects and pricing.

Suggested Citation

  • Ginés de Rus, 2008. "The Economic Effects of High Speed Rail Investment," OECD/ITF Joint Transport Research Centre Discussion Papers 2008/16, OECD Publishing.
    • Handle: RePEc:oec:itfaaa:2008/16-en
    DOI: 10.1787/235171703148
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    3. Chen, Zhenhua & Haynes, Kingsley E., 2017. "Impact of high-speed rail on regional economic disparity in China," Journal of Transport Geography, Elsevier, vol. 65(C), pages 80-91.
    4. Kamalinia, Saeed & Shahidehpour, Mohammad & Wu, Lei, 2014. "Sustainable resource planning in energy markets," Applied Energy, Elsevier, vol. 133(C), pages 112-120.
    5. John Ward & Cameron Hepburn & David Anthoff & Simon Baptist & Philip Gradwell & Chris Hope & Max Krahé, 2012. "Self-interested Low-carbon Growth in Brazil, China, and India," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 4(3), pages 291-318, September.
    6. Westin, Jonas & Kågeson, Per, 2011. "Can high speed rail offset its embedded emissions?," Working papers in Transport Economics 2011:16, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    7. Chen, Zhenhua & Xue, Junbo & Rose, Adam Z. & Haynes, Kingsley E., 2016. "The impact of high-speed rail investment on economic and environmental change in China: A dynamic CGE analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 232-245.
    8. GEAMĂNU, Marinela & POPESCU, Barbu Bogdan, 2013. "Analysis Of Romania’S External Debt And The Implications For Foreign Relations During 2000-2013," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 4(3), pages 61-67.
    9. Campos, Javier & de Rus, Ginés, 2009. "Some stylized facts about high-speed rail: A review of HSR experiences around the world," Transport Policy, Elsevier, vol. 16(1), pages 19-28, January.
    10. Marti-Henneberg, Jordi, 2015. "Attracting travellers to the high-speed train: a methodology for comparing potential demand between stations," Journal of Transport Geography, Elsevier, vol. 42(C), pages 145-156.
    11. Vitaly Pruzhansky, 2014. "Luxury goods, vertical restraints and internet sales," European Journal of Law and Economics, Springer, vol. 38(2), pages 227-246, October.
    12. Martínez Sánchez-Mateos, Héctor S. & Givoni, Moshe, 2012. "The accessibility impact of a new High-Speed Rail line in the UK – a preliminary analysis of winners and losers," Journal of Transport Geography, Elsevier, vol. 25(C), pages 105-114.
    13. Henry Antonio Mendoza Tolosa & Carlos Andrés Yanes Guerra, 2014. "Impacto del gasto público en la dinámica económica regional," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 6(1), pages 23-41, April.
    14. Burdett, RL, 2016. "Optimisation models for expanding a railway's theoretical capacity," European Journal of Operational Research, Elsevier, vol. 251(3), pages 783-797.
    15. Mariko Utsunomiya & Kenichi Hodota, 2011. "Financial lessons from Asian experience in constructing and operating high speed train networks," Transportation, Springer, vol. 38(5), pages 753-764, September.
    16. Rassier, Dylan G. & Earnhart, Dietrich, 2015. "Effects of environmental regulation on actual and expected profitability," Ecological Economics, Elsevier, vol. 112(C), pages 129-140.
    17. Li, Hui & Dong, Xiucheng & Jiang, Qingzhe & Dong, Kangyin, 2021. "Policy analysis for high-speed rail in China: Evolution, evaluation, and expectation," Transport Policy, Elsevier, vol. 106(C), pages 37-53.
    18. Hiramatsu, Tomoru, 2018. "Job and population location choices and economic scale as effects of high speed rail: Simulation analysis of Shinkansen in Kyushu, Japan," Research in Transportation Economics, Elsevier, vol. 72(C), pages 15-26.
    19. Cobos, Carlos & Escribano, Álvaro, 2022. "High-Speed Rail: a panel data impact evaluation by Municipalities on depopulation and unemployment," UC3M Working papers. Economics 35284, Universidad Carlos III de Madrid. Departamento de Economía.
    20. Perl, Anthony D. & Goetz, Andrew R., 2015. "Corridors, hybrids and networks: three global development strategies for high speed rail," Journal of Transport Geography, Elsevier, vol. 42(C), pages 134-144.

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    Keywords

    cost-benefit analysis; investment; railways;
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