The Socioeconomic Context of High Speed Rail

Criteria Issues
Goals Mitigate congestion and demand along high density interurban corridors. Extending services into lower density regions for political purposes (e.g. social equity) commonly lead to economic failure.
Spatial structure Limited impacts on the spatial structure. HSR routes supporting the existing spatial structure are the most effective. Limited number of stations that are well connected to their metropolitan areas most effective. HSR stations should be hubs of regional transport systems.
Investments Very high construction and operation costs. Land (expropriation costs) are particularly high to secure a right of way. Cost overruns common. Limited or no profitability. Most costs are usually subsidized.
Demand Significant time savings compared to existing services. Initial increase in the demand, but a stabilization after 2 years. Lower demand than forecasted common. Significant impacts on air services on distances less than 700 km (modal shift). Low cost airlines able to compete.
Economic impacts Little or no generation of new economic activities. Service and touristic sectors favored. Tendency to consolidate activities in the most connected locations (large cities). Medium-sized cities usually negatively impacted.
Environmental Impacts Comparatively better than air transportation. Benefits compared to existing rail and road services marginal. Long term mitigation of environmental impacts during construction.

Source: Adapted from Albalate, D. and G. Bel (2012) The Economics and Politics of High Speed Rail: Lessons from Experiences Abroad”, Lanham, Maryland: Lexington Books. Page 172.

The setting of high speed rail (HSR) systems around the world since the 1960s has come with expectations about positive socioeconomic impacts that would further justify the intensification of existing services as well as the expansion of HSR in new locations. While some positive benefits, such as time savings, are undeniable, the socioeconomic context of HSR underlines that they tend to be more a political issue than one based on sound economics.

  • Goals. The fundamental goal of HSR is to offer high capacity services along congested intercity corridors where they offer clear transport time benefits. However, if these goals are sidetracked to service smaller cities in lower density regions for political and social engineering purposes (such as social equity), then HSR becomes a recurring economic burden for governments since these services are unlikely to be ever profitable.
  • Spatial structure. HSR has shown limited impacts on the organization of economic activities and the spatial structure in general. Therefore, expectations that the setting of a HSR system will influence the spatial structure are unwarranted. The setting of HSR is mainly relevant as a support to the existing spatial structure of the urban system and not with the goal of creating a new spatial structure. HSR stations are often expected to become important nodes impacting the organization of economic activities, an impact which is usually marginal and even coincidental. Further, having too may stations along a HSR line undermines its benefits. Stations should only service the most important locations in spite of the political pressures to have more stations to expand the territorial coverage and service smaller communities.
  • Investments. HSR, like the majority of large scale infrastructure projects, are characterized by very high construction and operating costs. Securing a right of way is particularly expensive for greenfield projects while cost overruns are more the rule than the exception. There is limited evidence that HSR result in any profitability and only two corridors (Paris-Lyon and Tokyo-Osaka) have so far been profitable. Most HSR systems thus require recurring public subsidies to be constructed, operated and maintained.
  • Demand. Many HSR corridors offer significant time benefits compared to existing services. Demand tends to be overestimated as the most significant traffic gains are usually achieved in the first two years of operation. Afterwards, demand tends to stabilize and grow at a lower rate than expected. A great deal of the demand comes from a modal shift from air transport, particularly for services of less than 700 or 800 km. In many cases, HSR has been able to almost completely replace air transportation, but low cost airlines are able to compete with HSR for many city pairs, limiting its growth potential.
  • Economic impacts. The economic impacts of HSR are often exaggerated since there is little evidence supporting the generation of new economic activities. The service and touristic sectors are benefiting since HSR provides higher levels of mobility, but this tends to be more a convenience than anything else. Like what has been observed for other transport modes, HSR usually tends to consolidate activities in the most accessible locations, often at the expense of smaller centers.
  • Environmental impacts. While HSR has a better environmental performance for a similar amount of passengers carried by air transportation, those benefits are more marginal (or even difficult to demonstrate) compared with standard rail services and even road transportation. Since the construction of HSR has important environmental impacts, these impacts must be accounted in the comparative environmental benefits of HSR in view of other modes.