The Economics of Investment in High-Speed Rail
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The Economics of Investment in High-Speed Rail

High-speed trains can compete successfully with road, air and conventional rail services on densely trafficked routes where willingness to pay is sufficient at the relatively elevated fare levels needed to cover costs. High-speed rail investments can also relieve congestion on the conventional rail network, and the capacity for high-speed rail to provide fast city centre to city centre services creates new possibilities for day-return business trips and short-stay leisure trips.

The long cost recovery periods for high-speed lines imply government involvement in the financing of most investments. The high costs mean that governments can be exposed to accumulation of large debts, particularly if demand develops more slowly than expected. Where high-speed rail investments are designed to promote regional integration rather than meet commercial demand, significant subsidy from central and regional governments will be needed for the construction of infrastructure and possibly also for train operations.

This report examines the key factors that drive the costs of high-speed rail investment and reviews the economic benefits delivered by high-speed rail services on the basis of experience in countries that have developed large high-speed rail networks.

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Performance in France

From appraisal methodologies to ex-post evaluation You do not have access to this content

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Author(s):
Yves Crozet

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In 1975, France was the first European country to embark on the high-speed rail (HSR) odyssey. Regarded as something of a niche activity initially, high-speed rail has become a national priority. The lines currently under construction will bring the HSR network to 2 600 km by 2017. The French "model" gives us a basic lesson: geography (size of the cities and distance between them) is the crucial factor of success and determines the economic profitability. Due to the lack of new profitable lines, France is now facing some limits to HSR network extensions. It is not surprising; therefore, that in 2013 the French Government declared a slowdown if not a halt to all new HSR works. After 2017, only the Bordeaux- Toulouse line might see the light of day: the other lines for which local politicians lobbied so forcibly pose formidable financing problems.

 
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