Is Investment in High Speed Rail Socially Profitable?

The development of High Speed Rail (HSR) in Europe has been encouraged, and financially supported, by the European Commission. HSR technology is presented as a solution to congested roads and airports and as an efficient response for incremental demand in the coming years. However, the case for an HSR investment project is highly dependent on the existing volume of demand in the affected corridor. Using real construction, maintenance, and rolling stock costs of the European HSR lines in operation, potential time savings, standard values of time and expected demand growth, we estimate the minimum level of demand required from which investment in HSR could be considered profitable from a social perspective. Other benefits, such as providing long-term capacity where overcrowding is expected, could reduce the minimum demand thresholds reported in this paper. © 2007 LSE and the University of Bath