Measuring the economic and social impacts of high-speed rail

Measuring the economic and social impacts of high-speed rail

The scale of investments in high-speed rail (HSR) raises questions about the most appropriate methods of appraisal. Increasingly the reliance on conventional cost–benefit analysis, based essentially on the direct benefits to users and the direct costs to operators, has been questioned. While the focus has been for some time on the external costs and benefits of such projects, the reductions in accident and congestion costs, as well as the potential environmental effects, interest is increasing in the ways in which such projects may result in wider economic impacts. These arise from changes in accessibility and connectivity, which can impact the productivity of all firms through changes in agglomeration, rather than just impact those using a service. Such changes in productivity have an impact on a city or region’s economic performance, leading to a growth rate higher than expected. Differential effects on different cities or regions, depending on their ability to exploit new opportunities, can lead to either convergence or divergence and, hence, to the potential to rebalance regional performance in a national economy. This has been a stated aim of the development of the HSR network in the People’s Republic of China (PRC) and is also an objective of the proposed HS2 system in the United Kingdom (UK).

Identifying whether existing HSR projects have achieved such impacts is not, however, straightforward. Most analysis has focused on aggregate measures of performance, such as gross domestic product per capita, productivity, or economic growth, but changes may occur at a more micro level, affecting economic structure, relocation, or new firm creation.

Looking at simple measures of industrial specialization, European data suggest that HSR development contributed to convergence in economic structure both between major city regions and between the core cities and their hinterlands within each region. Evidence from the PRC indicates that there was an …continue reading