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World Bank Report a Boost for Passenger Train Investment

January 30, 2013

Written By Sean Jeans Gail

World Bank

The World Bank has released a paper stating that traditional methods of evaluating infrastructure fail to capture the significant economic benefits of high-speed rail service, and that a more comprehensive form of analysis should be given serious consideration.

The paper, High-Speed Rail, Regional Economics, and Urban Development in China, defines traditional economic evaluation of transportation projects as focused on direct costs and benefits related to travel, including user time savings, operator cost savings, and a limited set of externalities, such as accidents, noise, and air pollution. The authors argue that there is an emerging consensus that “major transport investments may have significant impacts that are not well captured through conventional cost-benefit analysis.”

UsingChina’s rapidly expanding high-speed rail network as a real-world laboratory, the analysts were able to see first hand the positive impact that the modern rail network has had onChina’s public, and the economic efficiency made possible by investment in passenger trains. The World Bank is looking to use its analysis to provide more comprehensive tools for determining the return on infrastructure investment:

Based on this and other research, the Bank has begun to pilot a methodology to evaluate wider economic development benefits for several high speed rail projects, and has found them to be significant - of the same order as direct transport benefits. Crucially, these benefits of larger and better connected markets accrue to businesses and individuals even when they themselves do not travel as the flow of ideas and people accelerate. The paper highlights this research and methodology and some of the policy implications to maximize these benefits in practice.

Gerald Ollivier, World Bank’s Senior Transport Specialist working on the high speed rail program inChinagave an example. "Look at the case of Zhengzhou on the 2,298 km Beijing to Guangzhou line opened on December 26,” he said. “In the past, in a three hour conventional train journey on this line, about three million people fromAnyang,XinxiangandHandancan reachZhengzhou; today, with the opening of the new high speed line, this number will surge to 28 million people from eight cities. These cities will start to work more closely together as a return trip within a day will be within reach. The impact in terms of economic exchanges, accessibility, and productivity gains are expected to be significant, and extend beyond traditional transport savings. The scale and scope of the Chinese high speed rail program offer a unique opportunity to try to measure such impacts."

Of course, many of the benefits identified by the World Bank are not confined to high-speed rail investment. In theU.S., investment in conventional-speed rail and public transit –particularly long-distance trains and trains and transit systems serving small towns and rural areas—provides a wide array of benefits not currently accounted for in transportation planning. For that reason, the work being done by the World Bank will be crucial in moving the needle on the way transportation is funded.