The rationale for HSR investment is not different to any other public investment decision.
Public funds should be allocated to this mode of transport if its net expected social benefit is higher than in the next best alternative.
The exam of data on costs and demand shows 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.
This paper discusses, within a cost-benefit analysis framework, under which conditions the expected benefits from deviated traffic (plus generated traffic), and other alleged external effects and indirect benefits justify the investment in HSR projects.
It pays special attention to intermodal effects and pricing.
The rationale for HSR investment is not different to any other public investment decision. Public funds should be allocated to this mode of transport if its net expected social benefit is higher than in the next best alternative. The exam of data on costs and demand shows 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. This paper discusses, within a cost-benefit analysis framework, under which conditions the expected benefits from deviated traffic (plus generated traffic), and other alleged external effects and indirect benefits justify the investment in HSR projects. It pays special attention to intermodal effects and pricing.
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