The Non-Transport Impacts of High Speed Trains on

Regional Economic Development: A Review of the

Literature

Karima Kamel and Richard Matthewman

November 2008

For Discussion

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Impact of High Speed Trains…

The Non-Transport Impacts of High Speed Trains on Regional

Economic Development: A Review of the Literature

Contents

SUMMARY ................................................................................................................................................. II
1. INTRODUCTION ................................................................................................................................... 1
2. INTRA-REGIONAL DISTRIBUTION EFFECTS ............................................................................. 1
3. INCREASED ATTRACTIVENESS OF LOCATIONS FOR OFFICE DEVELOPMENT........... 3
4. CTRL AND ASHFORD IN KENT........................................................................................................ 4
5. HIGH SPEED TRAIN INTERREG PROJECTS................................................................................ 5
6. MEASUREMENT OF NON-TRANSPORT BENEFITS FROM RAIL INVESTMENT .............. 6
7. ENVIRONMENTAL CONCERNS ....................................................................................................... 7
8. FURTHER RESEARCH ........................................................................................................................ 7
9. CONCLUSIONS ...................................................................................................................................... 7
REFERENCES............................................................................................................................................. 8
APPENDIX 1: OTHER LITERATURE NOT CITED ......................................................................... 10

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Impact of High Speed Trains…

The Non-Transport Impacts of High Speed Trains on Regional

Economic Development: A Review of the Literature

Summary
A review of key literature has been carried out to determine the current state of knowledge
about the non-transport impacts of high speed train networks on local economies and the
evidence that exists to support perceptions about impacts.
The main findings are summarised as follows:
Measuring impacts of HST: Previous evaluations have not accounted for non-transport
benefits from transport investments and more accurate methods of evaluation need to be
developed in order to measure these impacts.
Transport-related effects: Several authors have pointed out that the primary effect of high-
speed railway infrastructure is the increase in accessibility of the connected cities and regions
(i.e. transport-related effects). Such benefits accrue to passengers, particularly commuters,
international business passengers and tourists. Transport affects the location of economic
activity, but not its scale or efficiency, so that transport investment on its own is not a sufficient
condition for economic development. Since the costs of new rail links cannot be justified in
transport terms alone, it is necessary to be able to measure non-transport benefits from new
rail investments, particularly high speed rail links.
Perceptions: The importance of perceptions about high speed rail has been discussed by a
number of authors. High speed rail networks are perceived as being able to enhance the
attractiveness of an area for development, such as the positioning of offices. One author
reported that one-third of the respondents indicated that the high-speed train services had been
a factor in their location choice. Although there is the perception that being connected to a high-
speed rail link has a positive economic influence on the area, there is often no evidence for this
belief.
Non-transport benefits: Most studies agree that towns with an HST connection have regarded
being connected to a high-speed rail station as positive and an improvement to the location’s
attractiveness. They might have experienced an increase in house price; cost of office rents
and a lower vacancy rate for commercial property, though these effects cannot be (entirely)
attributed to the HST. Lille and Lyon, for example, in different ways are considered to have
prospered since the arrival of high-speed rail, Some locations on the rail network were already
experiencing economic growth at the time HST was developed, so it is difficult to determine the
specific role of HST.
Locational effects: Some studies have indicated that companies might consider the presence
of high speed rail links when considering the location of their business. Centrality and
connectivity are important factors to the location of offices, with connectivity effects resulting
from reduced travelling times. Accessibility is an important factor for the attractiveness of a
location for offices and hence the availability of high speed rail services can add to the
attractiveness and image of a location.
Property Prices: For office developments the picture is generally positive, but linking
increased prices to high speed rail developments is difficult. Price levels have risen in Ashford,
Maastricht and The Hague, while on other markets developments are neutral or expected to
become positive in the near future (e.g. St. Pancras and Stratford).
Labour market: Accessibility can enlarge a region’s labour market by increasing the maximum
acceptable commuting distance and high-speed rail may integrate formerly separated labour
markets into one functional region.
Intra-regional distributive effects: Many effects of new high-speed rail links are related to
local movements of people, companies and economic activities within a region and towards
high speed stations (i.e. intra-regional distributive effects). Such effects bring no net benefit to a
region.

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Impact of High Speed Trains…

Distributive vs. generative effects: Some studies, have argued that policy makers should
generally have no high expectations for high-speed rail as an instrument to boost a national or
regional economy. The indirect economic effects of a HST project are likely to be distributive
(i.e. leading to a different intra-regional distribution of economic activities) rather than
generative (i.e. stimulating the total regional or national level of economic activities).
CTRL in Kent: Although the Channel Tunnel resulted in significant investment and
employment at the time of construction and resulted in changes to the subsequent flows of
passengers, vehicles and freight, it did not have the expected impacts on economic
development locally or more widely in Kent. High speed rail has had only limited impact on
Ashford.
Inward investment: HST connections attract, in particular, companies with strategic or
international contacts and projects. High-speed rail makes cities more competitive for
internationally oriented offices. No studies have been able to quantify the effect of the high-
speed rail connections on inward investment.
Catalytic effects: HST investments are felt to act as a catalyst for additional investments to
transport infrastructure, stations and areas of towns around stations.

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Impact of High Speed Trains…

The Non-Transport Impacts of High Speed Trains on Regional

Economic Development: A Review of the Literature

1. Introduction
High speed train (HST) rail connections were developed first in Japan in 1964 and have been
present in Europe for the past three decades, but in the UK only for the past decade. HST
networks are found or being developed in Belgium, Holland, Spain, Italy and Russia. The
Korean HST network was opened in 2004, followed by Taiwan in January 2007. China
commenced construction at the end of 2006. It is expected that the European HST network will
expand substantially across the continent over the next few decades, connecting cities and
regions even more effectively and faster than before (HST, 2008; Nuelant, 2008). Many cities
regard a location on the HST network as crucial for their future economic development, though
the reasons for this are not as clear as might be expected.
Kent has developed its HST rail link (High Speed 1 – the new name for the Channel Tunnel
Rail Link) from the Channel Tunnel at Folkestone to London St Pancras via Ashford and
Ebbsfleet. A new fleet of 29 Hitachi Class 395 trains will be able to travel at speeds up to
140mph from 2009. High speed trains will also operate from 2009 on domestic lines from
Canterbury to Ashford at current speeds.
The growth of HST has come about because of competitive speed, safety and social effects, with high
speed trains undoubtedly benefiting commuters and other travelers, but it is not clear what
other economic benefits might accrue from the HST lines. A commonly held perception is that
HST networks have positive benefits on the local economy through non-transport impacts. In
1991, Nash concluded that there was ‘still too little evidence of high sped trains to be very
certain about their costs and benefits’. In many respects the same conclusion can still be
drawn. Givoni (2006), for example, found that the high investment in HSR infrastructure could
not be justified based on its economic development benefits, since these are not certain.
The current review provides information to determine whether this perception is justified and
whether there is a positive impact of high-speed rail connections on local economies.
Literature published about the impact of high-speed rail on the local economy and the
attractiveness of high speed rail locations for new investments over the past two or more
decades has been reviewed. Some studies have looked solely at transport benefits whereas
others have looked at the non-transport benefits to an area being connected to high speed rail.

2. Intra-regional Distribution Effects

A number of studies (Bonnafous, 1987; Sands, 1993; Haynes, 1997 and Mannone, 1997;
Vickerman, 1997; Willigers, 2006; Lewis, 2008; Preston, Larbie and Wall, 2008) have examined
the impact of high-speed rail on local economies, particularly business (i.e. office) relocations.
Regarding indirect effects of high-speed rail (i.e. non-transport effects), intra-regional
distributive effects (i.e. movement within the region) occur. Apparent benefits from the
presence of a high speed train station might originate from the movement of people and
businesses from within the same city or region, with no net benefit to the region.
Vickerman (1997) noted what he called “a mythical belief” that (high-speed rail developments)
can solve both transport and regional development problems wherever they are built, but that
this belief is not well founded in evidence. In agreement with Vickerman (1997), Willigers
(2006) concluded that policy makers should generally have no high expectations for high-speed
rail as an instrument to boost a national or regional economy. The indirect economic effects of
a HST-project are likely to be distributive (i.e. leading to a different intra-regional distribution of
economic activities) rather than generative (i.e. stimulating new regional economic activities).
Willigers concluded that despite the assumed importance of indirect effects as a reason to build
high-speed railway lines, the exact nature and extents of these effects are still not clear. Where
increased concentration of economic activities around high-speed railway stations at first sight

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Impact of High Speed Trains…

might suggest an economic development impact, closer examination reveals that much of
these effects are actually intra-regional distributive effects that bring no net gain. That is to say
that a large part of the employment had been present in another location in the same city or
region before the high-speed train service was implemented. For other high-speed railway
station locations the development plans did not result in the increase in economic activities that
was anticipated. Lewis (2008) could only conclude that “HST tends to contribute to regional
economic growth”.
Research carried out in France (Bonnafous, 1987; Sands, 1993; Haynes, 1997 and Mannone,
1997) concluded that the TGV (Train à Grande Vitesse) was of minor importance for the
location decisions of most firms. In most cases high-speed railway accessibility is only one of a
number of factors that influence location decisions (Haynes, 1997).
In a sample of entrepreneurs located near the Lyon Part-Dieu high-speed railway station,
Mannone (1997) found that about one-third of the respondents indicated that the high-speed
train services had been a factor in their location choice. This case study showed again that the
impacts of high-speed rail are to large extent intra-regional distributive effects. For example, in
Grenoble where accessibility impacts of the TGV were much smaller than in Lyon - and
therefore less important in location choices - the revitalized station area did attract several firms
and institutions from other places within the city but not from outside the region (Mannone,
1997). Sands (1993) describes the relocation of companies from small towns to cities with a
high-speed train station.
In the Netherlands, evidence to 2006 led to the view that for most cases the growth of
employment around high-speed train stations was largely the result of intra-regional distributive
effects (Willigers, 2006). The accessibility effect of high speed rail for commuting was negligible
and accessibility by train played a smaller role than accessibility by car and
bus/tram/underground transport systems.
These conclusions are supported by recent work carried out by Preston, Larbie and Wall
(2008) who reviewed the literature and made the following points:
• Most impact studies suggest that transport investments in advanced economies
will result in only modest uplifts in economic performance.
• The European Commission (European Commission, 1997) estimated that the
priority Trans European Networks (TENs - which are dominated by high speed
rail schemes) would add 0.25% to European Union GDP and 0.11% to
employment over 25 years.
• Bröcker (1998) estimated the maximum impact of TENs in any region to be 3% of
GDP.
Preston et al (2008) concluded that most economic impact studies of transport investments,
such as high speed rail lines suggest that these will only have modest economic growth
impacts, typically less than 1% of GDP overall, but as a high as 3% in the most affected
regions. Impacts on net employment are also likely to be modest. They considered that, “the
recommended uplift in benefits (typically between 20% and 80%) is not likely to change the
broad conclusion that it will be very difficult to identify an impact of high speed rail investments
on GDP. The type of impacts that might be expected would occur over a long time period and
would be swamped by the exogenous year on year changes in GDP.
These authors noted that historical studies suggested that the introduction of rail technology in
the nineteenth century led to uplifts in GDP of 10% to 30%, mainly attributed to the movement
of freight (Crafts, 2004, 2005). Incremental improvements to existing passenger services in the
early twenty first century may only be expected to provide a fraction of this economic impact.
Although the impact of high speed rail on economic growth is likely to be so modest that it will
be difficult to measure, monitoring studies of existing high speed services suggest that the
impact on patterns of economic activity may be more substantive. At certain high speed station
sites there may be expected to be large increases in commercial activity and commensurate
increases in land values. Increases in excess of 50% for both indicators have been observed
(Preston, Larbie and Wall, 2008) This report does not specify which towns an increase of 50%
had been observed. However, much of this activity will be transfers from other areas and
should not be viewed as a net gain. Moreover, these impacts may only be observed where

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Impact of High Speed Trains…

there are favourable local circumstances and will be by no means uniform across high speed
networks.

3. Increased Attractiveness of Locations for Office Development

Numerous authors (Willigers, Floor and van Wee, 2005; van den Berg and Pol, 1998; HST,
2008) have discussed the influence of high-speed rail on the attractiveness of locations and
land-use/transport interactions (the LUTI concept). Perceptions about the value of HST
connections have been discussed by a number of authors.
Brouwer, Mariotti and van Ommeren (2004) considered that the main forces driving firms to
relocate are transportation and labour costs, but they did not mention access to improved rail
transport.
The HST study (HST, 2008) concluded that it is expected that the European HST network will
expand substantially across the continent over the next few decades, connecting cities and
regions even better and faster than before. Many cities regard a location on the primary HST
network as crucial for their future economic development because of the view that places that
are connected best are places that have the greatest potential for economic growth. Being
‘linked up’ to the (primary) infrastructure networks across Europe (whether these are train, road
or air networks) is considered to be essential, because these places will attract the businesses,
tourists (and cosmopolitan residents) that want to move freely across the continent.
Cities that are directly connected to the HST network feel that they have improved their
economic position on a regional or even national scale, but whether the available data support
this is a debatable point. What is clear is that such effects take many years to become visible
within regional and national statistics and often it is the perception of the improvement that is
important. The perception removes a psychological barrier to development whilst at the same
time delivering improved station access (HST, 2008).
The Greengauge 21 report (Greengauge 21, 2006) describes how both Lille and Lyon, in
different ways, have prospered since the arrival of high-speed rail, developing their service
economies strongly. Both economic and land use trends are relevant to the development of the
high-speed line. The best impact is likely if service sector activities already form a key function
in the city. Attracting new businesses appears to be easier with a heavy existing service sector
economy. The high-speed line can then become a catalyst for continuing growth. It has to
complement an existing strategy and cannot simply generate activities in a vacuum. The station
location has to fit with the city strategy. The Greengauge 21 report (`High speed trains and the
development and regeneration of cities`) published in June 2006 states that to be effective the
high-speed rail station needs to become the focus of major redevelopment and regeneration
activities, geared to the service economy. Also effective regional and local transport is crucial to
tying together the various elements of the catchment.
The Greengauge 21 report concludes that the impact brought by high-speed trains is in fact
very real. But it is rarely measurable in any detail despite, in France and elsewhere, a very
substantial research effort with an ever-growing body of analytical evidence on which to draw.
Whatever the basis, the most effective use of high-speed access has come with those cities
demonstrating an integrated city strategy, consistently implemented over time in cooperation
with all interests and with committed political leadership.
In the Netherlands Willigers et al (2005) carried out telephone interviews with office decision
makers to determine the effect of high speed rail links on location choices. They found that both
centrality and connectivity are important factors to the location of offices. The connectivity
effects result from reduced travelling times. In general, it was concluded that accessibility is an
important factor for the attractiveness of a location for offices and that the availability of high
speed rail services can add to the attractiveness and image of a location.
HST connections attract different kinds of companies, in particular companies with strategic or
international contacts and projects. Connectivity for international high-speed train services has
a large effect on location attractiveness, but only for office establishments of which employees
regularly make international business trips. The Kent connection with London is a key influence
in this respect. High-speed rail makes cities more competitive for nationally and internationally
oriented offices, but for all offices together the effect is not very large (see also van den Berg
and Pol, 1998). Domestic high-speed train services were found to be relevant for a broader

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Impact of High Speed Trains…

group of office types, but the influence on location choices for other office types is much
smaller (Willigers, 2006).
Accessibility can enlarge a region’s labour market by increasing the maximum acceptable
commuting distance. High-speed rail may integrate formerly separated labour markets into one
functional region.
In this context, Yong Sang Lee (2007) noted that Japan’s Shinkansen railway impacted on
economic and social development linked to reduced travel times between Tokyo and Osaka
(reduced by 4 hours after the completion of the HST network), which makes more opportunities
for business and economic development. The strongest point about HSTs is the high speed.
For example, the most important reason to take a KTX train is the reduction in travel times.
Connection to the HST network does not in itself guarantee speedy or inevitable economic
development (HST, 2008). In Heerlen, which has a feeder service to the HST network, most
offices are clustered around the railway station, but compared to the rest of the region, the
rents of office space on prime locations have remained at a stable level in recent years and are
comparable with the regional average. This is in contrast to Maastricht, where office rental
prices have increased faster than in other cities nearby and office space is the most expensive
when compared to regional or provincial averages. One could state that Heerlen has not yet
become a more attractive office location, but Maastricht has, partly because of (HST-related)
investments in the station area.
The HST investments are felt to act as a catalyst for other elements of investment packages
and have brought forward improvements in the transport infrastructure that would otherwise
have taken much longer to deliver, if at all, through routine funding channels. These however
are transport benefits and not non-transport benefits.
Lewis (2008) discussed the potential for new development around HST stations, for example,
at The Hague (80,000m2 office space, 15,000m2 retail space, 565 apartments and 1,300
parking spaces), at London Kings Cross St Pancras (up to 742,275m2 mixed use development,
including business use, 1,800 new homes, social functions and refurbishment of 20 historic
buildings) and at Ebbsfleet (planned new developments including 790,000m2 mixed
development, 30,000 new jobs and 10,000 new homes).

4. CTRL and Ashford in Kent

In the UK, economic development at the intermediate towns on the Channel Tunnel Rail Link
has generally been less than expected (Hay, Meredith and Vickerman, 2004). As part of an
assessment of the Channel Tunnel after ten years of operation, these authors at the Centre for
European, Regional and Transport Economics (CERTE) of the University of Kent were
commissioned by Eurotunnel and Kent County Council to evaluate the impact of the tunnel on
Kent, the likely trends in future and relationships with the Nord-Pas de Calais.
Impacts were divided into those in the construction sector (actually building the tunnel), the
transport operations sector (e.g. markets for passengers and freight) and enterprises in other
sectors (e.g. tourism, retailing, wholesaling, manufacturing and road haulage). The study
concluded that although the Channel Tunnel resulted in significant changes to the flows of
passengers, vehicles and freight (with consequential direct effects on employment) it did not
have the expected impacts on economic development locally or more widely in Kent (Hay et al,
2004).
Is it possible that if the existence of the Channel Tunnel made Kent a more appealing location
to investors, it would have resulted in an increase in investments in Kent and in particular the
Channel Corridor Districts of Shepway and Ashford. Locate in Kent provided two sets of figures
relating to firms in Kent for this study, from April 1997 to March 2002. The conclusion was that
examination of the geographical distribution of the number of successful projects and jobs
created by these companies did not reveal that the Channel Corridor districts benefited any
more than the rest of Kent in terms of investment. It was difficult to identify any `Channel
Tunnel effects` in the data examined. Furthermore the limited time series available for the data
made it impossible to make a comparison with what was happening before the Channel Tunnel
was completed (Hay et al, 2004).

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Impact of High Speed Trains…

In a recent appraisal of the case for HST (SDG, 2004) it was considered that a number of
market factors are involved, which are:
• The case is strongest where there is a large market for travel over distances of around 200-
800km, and particularly in the range 300-600km. High speed rail offers little benefit for journeys
shorter than 150-200km.
• A high speed line can offer high capacity, but for sufficient travel demand there must either be
very large cities of approximately the right distances apart, or there must be a number of
significant population centres that can be accessed by the same high speed route.
• The existence of very good conventional rail lines reduces the incremental economic case for
high speed rail, particularly over shorter distances, although if it is possible to use existing
railway lines on final approaches to major cities, the construction costs of high speed rail can
be significantly reduced.
These results are supported by De Rus (2008) who discussed the economic effects of high
speed rail investment and considered that public funds should be allocated if its net expected
social benefit is higher than in the next best alternative. They did not consider non-transport
benefits. Data on costs and demand show that the case for investing in HSR is strongly
dependent on the existing volume of traffic where the new lines are built, the expected time
savings and generated traffic and the average willingness to pay of potential users, the release
of capacity in congested roads, airports or conventional rail lines and the net reduction of
external effects.
Preston et al (2008) examined the impact of high speed rail services on Ashford, focusing on
the meso-level (see Banister in section 6 of this report). They considered the impact of high
speed services on accessibility and the impact of accessibility on population and employment.
In addition, they looked at trends in property prices and the likely impacts of more micro level,
public realm improvements to the urban environment.
In concluding, in agreement with other authors, Preston et al (2008) noted that there are often
political expectations that access to high speed rail services will lead to large economic
development impacts and noted that their own review of the literature suggested that this was
rarely the case. Their Ashford work confirmed this conclusion. Although the opening of the
International station led to large increases in the accessibility of Paris, Lille and Brussels, these
were not centres that Ashford traditionally interacted with. Ashford has increasingly looked
towards London for economic connections, a trend which is likely to be strengthened by the
introduction of high speed domestic services in 2009. However, the current international
services do not connect Ashford with London. As a result, demand has been relatively low as
witnessed by the current low level of service (22 trains per day), which will decrease further
next year (to 8 trains per day) with the opening of Ebbsfleet. The opening of Ashford
International station coincided with an 11% increase in population, a 6% increase in
employment and a 3% increase in house prices over that of the South East a whole. However,
attribution of causation is difficult, particularly given the designation of Ashford as a Growth
Area for the South East by the Office of the Deputy Prime Minister (now the Department of
Communities and Local Government). The limited impact of high speed rail services at Ashford
should not be a surprise. Ashford is a medium sized market town, not a regional centre on a
par with Cologne, Lille, Lyon or Seville. It probably has more in common with other intermediate
stations on the TGV such Calais Fréthun, Haute Picardie, Le Creusot or Macon Loché.
However, the introduction of high speed domestic services could lead to Ashford becoming a
similar commuting centre to Ciudad Real in Spain.

5. High Speed Train InterReg Projects

One study included in this review is of the HST Integration and HST Connect projects (2008)
that have been implemented by a consortium of partners under the leadership of SEEDA and
which were co-funded by the European Regional Development Fund (ERDF) under
INTERREG IIIB for NW Europe. The projects had a total value of €48 million, which represents
some of the most significant individual INTERREG project funding to date and looked at the
added value of the HST investment and its consequences in terms of urban, economic and
social development (HST, 2008).
The HST Impact study (HST, 2008) looked at residential house prices, office costs, costs of
retail property and vacancy rates of several European locations (such as The Hague, Brussels,

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Impact of High Speed Trains…

Lille and Ashford) in an to attempt to quantify the influence of the HST connection on local
economic development. Unfortunately, the lack of availability and inconsistency of statistics on
certain indicators limited the ability of the study to draw direct conclusions about the
relationship between HST-related investments and regional economic development. The
relationship between property markets and HST investments is not a direct and straight forward
one.
This study noted that housing prices in Ashford increased at a rate that was above the average
of other south-east England towns and that this coincided with the opening of the international
station in 1996. Such an effect has not been recorded at Ebbsfleet, as this is a brown field site
and there is no current housing or commercial development adjacent to the station. However,
towns in the vicinity of Ebbsfleet (e.g. Dartford and Gravesend) showed increases in housing
property prices - around 190% since 1995. It will be interesting to see how this market develops
now that the HST station is operating.
The property markets in The Hague (specifically apartments) and Maastricht (to a lesser extent)
showed a positive performance in the Netherlands. However, it was noted that the relationship
between the property markets and HST investments is not a direct and straight-forward one
and such price increases cannot be attributed directly to the high speed rail developments in
the Netherlands.
For office developments the picture is generally positive. Price levels have risen in Ashford,
Maastricht and The Hague, while other market developments are neutral or expected to
become positive in the near future (e.g. St. Pancras and Stratford). In some cases (e.g.
Leiedal, Armentieres, Ebbsfleet) it will be some time before any effects can be identified
because work is still in progress.
Despite this, it is difficult to demonstrate that connections to the HST network have contributed
to the economic growth of regions, even in the short term, as areas such as Ashford and
Ebbsfleet were already experiencing economic growth at the time HST was developed (HST,
2008). In some cases there is something of a chicken and egg situation regarding an analysis
of which came first, the investment or the commitment to HST. However (as discussed earlier
in section 2), in large cities, the impacts, like the developments themselves, can take a long
time to evolve and often may lead to redistribution of activities within the city as much as, if not
more than, generating new economic activity.
The HST impact study noted a clear relationship between HST transport-related investments
and associated investments in the vicinity of HST stations aimed at creating an attractive
working, living, shopping and recreational environment. As such, the HST stations can be seen
as part of a regeneration package. These however, are transport-related benefits and not the
wider economic non-transport benefits expected from stimulation of the local economies.
In 2008 MVA Consultancy (MVA, 2008) carried out work for Kent County Council to achieve an
understanding and consensus about the changes and opportunities associated with the
introduction of high speed rail services in Kent. The report showed that commuters from Kent to
London have higher incomes than non-commuters and non-rail users and linked high speed rail
services to higher incomes from commuters. The report considered the extent that HS services
might attract new residents to Kent, specifically commuters to London and concluded that there
is potential for new people to be attracted to Kent to take advantage of the combination of lower
house prices and shorter journey times into Central London. The report did not consider the
implications of such demographic changes for the economy of Kent.

6. Measurement of Non-Transport Benefits from Rail Investment

The previous discussion has shown that it is difficult to be certain about the economic impacts
of HST developments. Banister (2007) has considered the broader issue of measuring
economic impacts from transport investments. He notes that traditional methods of evaluation
have not been very successful at accounting for non-transport benefits from transport
investments, but non-transport factors are becoming more important as the costs of new rail
links cannot be justified in terms of transport alone.
As already mentioned, Preston et al (2008) considered non-transport effects and concluded
that there are theoretical reasons to expect HST to have socio-economic benefits over and
above those measured in conventional cost-benefit analyses, largely due to the promotion of

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Impact of High Speed Trains…

more competitive land and labour markets and of agglomeration economies. However, at the
practical level these net benefits are difficult to measure, as they may be swamped by external
factors, although gross effects are easier to discern.
Banister summarises the effects as follows: at the macroeconomic level, regional network
effects can be identified, as can the impacts on the economy as measured through changes in
output and productivity. At the meso level, the impacts relate more to agglomeration economies
and labour market effects, with some additional network and environmental consequences. At
the micro level, the impacts are determined by the land and property market effects.
At the macro level, he noted that in the UK, the current practice is to assume that the net effect
on the economy is zero after allowing for displacement and other effects. Transport affects the
location of economic activity, but not its scale or efficiency, so that transport investment on its
own is not a sufficient condition for economic development and there are other more cost
effective ways of promoting economic development than investing in transport.
The Public Accounts Committee (2006) concluded that the economic case for the CTRL still
remained marginal, even when the second section from South London to St Pancras was
opened in November 2007. A cautious DfT analysis gave a Benefit/Cost Ratio of 0.5:1.
Banister considered meso-level impacts (agglomeration economies - resulting from
geographical proximity of firms to each other - labour market effects, network economies and
environmental externalities) and micro-economic effects (impacts of land and property values).
Banister notes that it is difficult to quantify such benefits, but that progress is being made.

7. Environmental Concerns
In his report on the economics of climate change Stern (2006) suggests that action is needed
to reduce global emissions including in the transport sector. The main issues are curbing car
use and increasing public transport, with an emphasis on railways. In a study of future aviation
services for London, it was considered that HST might replace some air travel (York Aviation,
2008).

8. Further Research
A relevant issue for further research would be the effect of high-speed rail on property prices.
Limitations in the available space around railway stations are an issue that requires further
attention (Willigers, 2006).
MVA (2008) concluded that there is potential for new people to be attracted to Kent to take
advantage of the combination of lower house prices and shorter journey times into Central
London. It would be appropriate to carry out research to determine the impact on the Kent
economy of increased numbers of commuters who live in Kent but work in London.

9. Conclusions
When considering the benefits of HST, a distinction must be made between transport benefits
and non-transport benefits.
While some studies have provided evidence of the non-transport benefits and impacts of high
speed rail infrastructure developments on local and regional economies, it is difficult to find well
defined empirical and quantified evidence. Much discussion about benefits is speculative. The
evidence suggests that those areas without HST are at a disadvantage and therefore will have
fewer benefits to investors, be less attractive and their local economies will grow at a slower
rate, but such evidence is often speculative.
The design of future studies should take this into account. Studies are needed that measure
changes resulting from HST over-time, by measuring economic indicators at the beginning of
the period and then again after HST has operated. Where other factors also may influence
economic indicators, these effects need to be separated from the effects originating in HST.

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Appendix 1: Other literature not cited

1. Atkins (2006) High Speed Line Study. Report commissioned by the Strategic Rail Authority.
2. Martín, J. C. and Nombela, G (2007) Microeconomic impacts of investments in high speed
trains in Spain. Annals of Regional Science, 41 (3): 715-733
Abstract
In this paper, we analyze the effects of new high-speed trains (HST) on passengers’ mobility in
Spain. The construction of several new HST lines is planned in the Transport Infrastructure
Masterplan of the Spanish Ministry of Transport and Public Works (MOTPW) for the period
2000–2010, and they are expected to cause a major change in the transport sector. Our
objectives are twofold: firstly, we estimate the modal split (market shares of air, rail, bus and
private car) in the equilibria induced by the new high speed lines; and secondly we calculate
the number of passengers for these new HST services, in order to evaluate the revitalization of
railways in the horizon 2010. Data stem from a mobility survey carried out by the MOTPW. A
gravity model is estimated to forecast passenger flows between Spanish provinces in 2010,
and we also estimate a multinomial logit model to calibrate passengers’ choice of transport
mode. Results indicate that the impacts of new HST services will vary across routes, and they
depend on the spatial location of the new routes.
3. De Rus, G. and G. Nombela (2007) “Is Investment in High Speed Rail Socially Profitable?”
Journal of Transport Economics and Policy. 41 (1): 3-23.
Abstract:
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.
4. Haynes, K.E., Karlsson, C. and Blum, U. (1997). The regional and urban effects of high
speed trains. Annals of Regional Science. 131 (1): 1-20
Abstract
High-speed trains could be used to solve two different accessibility problems. In the first case,
where a point to point link is dominant, they are a potential substitute for air travelling. In the
second case it links together many cities and, hence, creates a new type of region or corridor
with a high interregional accessibility. One important hypothesis for the discussion in this paper
is the degree to which cities that are linked together into a band of cities by means of a high-
speed train connection are transformed to an extended functional region or in other words an
integrated corridor economy. This paper particularly examines economic integration in a
corridor economy in the short, medium and long term. In considering the short-term perspective
we discuss not only the integration of goods and service markets but also the integration of
labour markets and markets for shopping, private services and leisure activities. The discussion
of the medium term perspective is concentrated on the relocation of households and firms
within a high-speed train corridor. To study the long-term integration effects of a high-speed
train corridor we maintain that the analysis must be conducted using a genuinely dynamic
model for the specialisation of production and, hence, for trade with and transport of goods and
services and consequently transport of people.
5. John Kay, Alan Manning, Stefan Szymanski and Francois Bourguignon (1989) The
Economic Benefits of the Channel Tunnel Economic Policy 4 (8): 212-234 (article consists of
24 pages) Published by: Blackwell Publishing on behalf of the Centre for Economic Policy
Research, Center for Economic Studies, and the Maison des Sciences de l'Homme

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