Gareth Huw Davies

Environment Blog

Study shows economic payoff for high-speed rail

As communities in southern England wrestle with the environmental implications of the proposed HS2, Britain’s second high-speed rail line, which could bring superfast trains are zipping past their homes at over 200 miles an hour, academics have produced what is claimed to be the first conclusive evidence that high-speed rail lines bring clear and significant economic benefits to the communities they serve.

A study by researchers at the London School of economics (LSE) , and the University of Hamburg , found that towns connected to a new high-speed line saw their GDP rise by at least 2.7 per cent compared to neighbouring communities not on the route.
Photo- Ivan Walsh
Their study also found that increased market access through high-speed rail has a direct correlation with a rise in GDP – for each one per cent increase in market access, there is a 0.25 per cent rise in GDP.

The findings from what is said to be the first thorough statistical study of the subject is likely to be used to support the case for high-speed networks planned in the UK (HS2 is planned initially to run from London to Birmingham, then to continue north to Leeds and Manchester and Scotland), US and elsewhere in the world. Until now, it has been little or no sound academic evidence evidence that high-speed rail brings clear economic gains along its routes .

Authors Gabriel Ahlfeld and Arne Feddersen  focused their research on the line between Cologne and Frankfurt, which opened in 2002 and carries trains running at 185mph (300 kmh).  They looked at the prosperity and growth of two towns with stations on the new line – Limburg and Montabaur – and compared them with more than 3,000 other municipalities in the surrounding regions.

The new line brought Limburg and Montabaur within a 40 minute journey of both Cologne and Frankfurt.  The researchers found that , over four years, both towns and the area  immediately around them saw their economies grow by at least 2.7 per cent more than their unconnected neighbours.

There are authors say this effect is entirely attributable to the improved access to markets for Limburg and Montabaur, and not to any external factors or inherent growth. They chose to study the two towns because both were included on the high-speed route after lobbying by regional government, and not because their economies were powerful or expanding.

Dr Ahlfeldt, from the Department of Geography and Environment at LSE, said: ‘One of the problems with identifying the impact of high-speed rail has been that lines tend to get built first between areas with strong and growing economies so that it’s difficult for economists to be sure which effects are attributable to the new rail line and which to existing factors. But because there was no economic rationale for building the line to Limburg and Montabaur, they provided the perfect “laboratory” conditions for us to measure the effect of high-speed trains.

The researchers say it is clear that the line itself brought significant and lasting benefits in access to markets, growth, employment and individual prosperity. “One of our key findings is a positive market access elasticity,” said Dr Ahlfeldt, “which means that improvements in  accessibility to other towns, cities and regions, will be reflected in economic growth.  We believe this research develops a new framework for predicting the economic effects of large-scale infrastructure projects and will help governments to define future spending priorities.’

From Periphery to Core: economic adjustments to high speed rail by Gabriel M Ahlfeldt (LSE) and Arne Feddersen (University of Hamburg) is a working paper delivered at the conference of the German Economic Association in Kiel on Friday 10 September.

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