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Cost-Benefit Analysis for a New High-Speed Rail

A high-speed (HS) rail is designed to achieve maximum speeds exceeding 250 kph (Nash, 2015). As in any other project, ex-ante evaluation is required for the projects to kick off. The cost-benefit analysis is considered to contrast the costs and benefits of the high-speed (HS) rail considering the implications of the project in the national, regional and investment context. The cost-benefit analysis provides insights into which options are better, determining the project’s desirability. This academic literature review provides an analysis and discussion of the factors considered in the cost-benefit analysis of the new high-speed (HS) rail.

The first factor to consider in the cost-benefit analysis of new high-speed (HS) rail is the development of HS rail as a transport mode. The main motivation for constructing HS rail is to enhance the capacity of the routes. In countries such as Italy, high-speed rails are constructed to increase the route capacity, compared to minimal speed gains in the country. This benefit implies that the HS rail complements the existing routes, freeing the country’s conventional rail network. The high speed offered by HS rail indicates that the line has a higher frequency supported with advanced technology for a shorter headway between the trains while ensuring the safety of the passengers is achieved. The advanced signalling systems, high-capacity trains, and the dedicated high-speed line indicate that the new high-speed rail increases the number of passengers served daily. Another benefit of HS rail related to the development of HR rail as a transport route is that it reduces travel time (Chong et al., 2019). For example, the justification for the HS rail development in Japan was developed to reduce the travel between Osaka and Tokyo, with the new line reducing to four hours of travel between the two cities. The trend was also evident in the other high-speed rails, such as the Madrid and Seville HS rail which reduced the journey between the two cities to just two hours from a previous time of about 6 hours 30 minutes. In this case, the benefits derived from the reduced time to travel and increased capacity of routes are considered to justify the development of the HS rail. The benefits of HST mentioned above indicate that the new HS rail development is only feasible for the high-demand routes explaining why linking city centres has been the main focus of the new HS rail developments. The generation of new demand arises from the increased service levels and the shorter travel times as it changes the route’s modal share. The modal share of HS rail is based on how the high-speed train is a mode of transport compared with the available alternatives while considering the travel conditions and the cost. The capacity of the HST to achieve the modal share from the aeroplane and car transport is also considered in the cost-benefit analysis.

The second factor considered when doing a cost-benefit analysis of a new HS rail is the socio-economic and spatial impacts of the HS rail (Givoni, 2006). Developing the HS rails adds to the impacts of transport in various aspects, with the spatial impacts as the most elaborate compared to the socio-economic impacts. The socio-economic impacts of HS rail are considered based on how the potential accessibility to places due to the new HS rail creates what is considered a “shrinking continent”. These impacts arise from the shorter travel times, indicating that destinations are closer to one another when the new HS rail is developed (Chong et al., 2019). The shorter travel times indicate that socio-economic impacts are also multiplied, which are manifested in the development of the areas connected by the HS lines. The spatial impacts of the new HS rail could indicate the direct benefits from the HS rail, such as the construction of high-speed rail stations, besides other outcomes, such as the construction of more office spaces, as demand would increase due to good and improved access. However, this kind of benefit of the new HS rail depends on the conditions of the places and regions being connected. According to Givoni (2006), linking a region with unfavourable economic conditions with a region with favourable economic conditions could drain the spatial and socio-economic development in the place with unfavourable conditions compared to its neighbours, which are more endowed. Therefore, the cost-benefit analysis of the new HS rail should consider the potential for economic development critically. The analysis should consider the potential for the new HS rail to drain the economic development in other regions relative to its neighbours.

Therefore, the socio-economic benefits of the new HS rail remain a contentious issue in the cost-benefit analysis as to whether it represents an actual benefit when evaluating the factors for developing the new HS rail (Givoni, 2006). Therefore investment in a new HR rail should be supported by the other underlying conditions to complement it to invigorate economic development. In the same case, Nash (2015) stated that wider economic considerations such as equality and regional development spearhead the development of transport investments in less profitable routes indicating that economic motivations are not solely responsible for developing the HS rails. The statement above supports the argument that the new HS rails developed should be open for all people at reasonable prices and connect different places. As Nash (2015) mentioned, this factor was important in garnering support for the TGV project in France. The impacts of the new HS rail on the cities by-passed when the HS rail aims to reduce the average speed between destinations should also be considered. The places bypassed by the HS rail could potentially experience negative economic growth where the high-speed rail infrastructure is only meant to connect important cities.

The third factor considered when doing a cost-benefit analysis of the HS rail is the environmental impact of the proposed high-speed rail project (Givoni, 2006). Conventionally, high-speed rail development is often portrayed as supporting the environment. The positive impacts of HS rail development on the environment are based on how the transport mode compares to the existing alternatives, such as rail and cars, as transport is transferred from aeroplanes and cars to high-speed trains. The greater penetration of the HS rail and the traffic shift, especially from aeroplanes, is often considered beneficial. The development of HS rail, although it does not exclusively result in positive environmental outcomes. The operation of high-speed trains has often been criticised based on the local air pollution, land take, noise and climate change, which profile the negative outcomes of the development on the environment (Monzón et al., 2013). The emissions from operating the high-speed trains are based on the energy consumed, considering that these transport modes are electric powered. Therefore, the emissions that occur in the production and transmission of the energy used to operate the high-speed rail are considered. Using renewable energy reduces the emissions from the operation of high-speed trains compared to those using non-renewable fuel to generate energy. For the HS rail, the energy used is often obtained from the national grid implying that when analysing the emissions, the average electricity generation mix fed into the grid is adopted (Monzón et al., 2013). Another environmental benefit of the HS rail is that no emissions are incurred along the line considering that electricity is used to power the train.

High-speed trains’ operation emits nitrogen oxides and sulphur dioxide, responsible for local air pollution and climate change. Although high-speed rails are not associated with significant impacts on climate change, the level of sulphur dioxide produced determines the burdens of this form of development on the environment (Givoni, 2006). The new HS rail development holds potential for environmental advantages compared to the disadvantages experienced, considering that the nitrogen oxides and sulphur dioxide produced through air and road transport which it diverts traffic from, are significantly higher (Nash, 2015). The use of electricity in the powering of these trains indicates that their impact on the pollution of the local air is minimal, except for the particles from braking and the waste generated at the point of use, which should all be considered in the cost-benefit analysis.

Still, on the environmental impact assessment, noise pollution is considered the most heightened pollution generated by developing HS lines (Givoni, 2006). The higher the speed of the train using the HS rails, the higher the levels of noise pollution. Given that the trains using the HS rails travel at speeds more than 250 kph, the rolling noise levels should be included in the assessment. The railhead and the wheels’ smoothness determine the level of rolling noise. Therefore, the design incorporated in the HS rail determines this type of noise (Monzón et al., 2013). The nature and design of the HS rail are, therefore, important elements to also consider in the project’s environmental analysis. When the HS rail accommodates trains travelling at speeds above 300 kph, the noise caused by the aerodynamics should also be evaluated in line with the surrounding of the rail line. Noise is a key externality in developing high-speed rails. The speed of the HS rail in densely populated areas is often the lowest indicating that the rolling noise is the main concern and not the aerodynamic noise. The development of new HS rails involves the use of land. Land take evaluation is considered an important component in the cost-benefit analysis of high-speed rail development. Land take impacts are considered based on community severance, fragmentation and habitat loss (Givoni, 2006). The evidence provided indicated that the impacts of high-speed rail on the environment were insignificant compared to road transport and air transport. The traffic diversion from road and air reduces congestion, local air pollution, accidents and noise. Besides affecting the environment, the peak costs of road transport are much higher than those of high-speed trains. Therefore the biggest benefit derived from developing the new HS rails is the reduced environmental costs and the expansion of transportation in a scenario where air and road transport are congested, indicating that expanding them is expensive and difficult (Nash, 2015). But the costs of new HS rail development should also be recognised, i.e. the impacts of these developments on visual intrusion land take and noise should be included in the cost-benefit analysis.

The fifth factor considered in the cost-benefit analysis of new HS rail development is the general investment required for the infrastructure (Givoni, 2006). Weighing the advantages of HS rail with the investment required is important in justifying the project’s development. The cost of development depends on the country and the nature and terrain of the route. The route terrain determines the need for tunnels and bridges which inflate the investment required to actualise the development of the new HS rail (Nash, 2015). The need for a dedicated line connecting the city centre and whether the new HS rail passes through densely populated areas means additional costs are incurred in the project. The general economic nature of the country also determines the levels of investment required for the new HS rail (Givoni, 2006). Other costs in the development of the new HS rails emanate from the recognition of the environmental impacts of the development and the subsequent need to mitigate these environmental impacts. Mitigating the environmental impacts of the new HS rail also increases the investment required when developing the HS lines. The cost-benefit analysis should therefore be able to support the benefits of the new HS rail in line with the costs and investment required for the project based on the factors discussed above.


Chong, Z. & Qin, C. & Chen, Z. (2019) Estimating the economic benefits of high-speed rail in China: A new perspective from the connectivity improvement. Journal of Transport and Land Use, 12 (1). doi:10.5198/jtlu.2019.1264

Givoni, M. (2006) Development and impact of the modern high‐speed train: A Review. Transport Reviews, 26 (5): 593–611. doi:10.1080/01441640600589319

Monzón, A. & Ortega, E. & López, E. (2013) Efficiency and spatial equity impacts of high-speed rail extensions in urban areas. Cities, 30 : 18–30. doi:10.1016/j.cities.2011.11.002

Nash, C. (2015) When to invest in high-speed rail. Journal of Rail Transport Planning & Management, 5 (1): 12–22. doi:10.1016/j.jrtpm.2015.02.001


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