How High-Speed Rail Affects Local Land Prices : Evidence From Taipei, China

This paper evaluates the effect of High-Speed-Rail (THSR) on the land prices of targeted regions (THSR regions) in Taipei, China by using prefectural-level data from 1993 to 2017. The construction of THSR was from 2000 and was finished in 2006. The first operation of the THSR line from Taipei City to Zuoying (Kaohsiung City) started in 2007. After the station construction of Miaoli, Changhua, and Yunlin was completed at the end of 2015, the entire line was open in 2016. THSR investment has been believed to play an important role in changing land usage and land value. However, such spillover effects on land prices have not been evaluated formally yet. Employing the difference-in-difference (DID) methodology, I estimate THSR’s impact on local land prices by comparing the land prices in THSR regions with other regions that are not covered by THSR. The results suggest that THSR has been positively affecting the average land prices of THSR regions from the start of its construction, and such positive effect becomes even larger after the operation begins. On the other hand, I also find an inequality of the land price growth among the THSR regions. The positive spillover effects in northern regions are larger than those in southern counterparts, which indicates that there may be some straw effects exist in southern regions. Also, since the increase in local land prices often leads to the increase in local tax revenues, this paper, by showing the positive relationship between THSR investment and land prices, may have meaningful implications for future potential High-Speed-Rail investments in other countries or regions