Economic, social and environmental changes with HST technology introduction

Naturally, greater speed implied lower generalized costs of travel and lower costs implied

a reduced impedance of distance that would raise accessibility and the economic potential

of the major centres served. In an imperfectly competitive market for transport-using

activities, there will not be an unambiguous predictable response to changes in transport

costs. This is equally true for the movement of goods and people, particularly in the latter

case where the movement is for business or commuting purposes. Thus, changes in user

benefits will not be a complete measure of the change in total economic benefits, as they

will not include these wider economic benefits. One of the empirical challenges in

identifying the impact of HSR results from the fact that rail lines are usually endogenous

to economic geography. So it is very difficult to establish the counterfactual of what

would have happened in the absence of an HSR line and to disentangle its effects from the

natural growth path.

We can view wider economic benefits in two ways. On the one hand, they involve an

increase in total welfare, which is greater than the measured increase in consumers’

surplus to users through time-savings, reductions in accident rates etc. On the other hand,

we can see these benefits as the increase in GDP (Gross Domestic Product) which occurs

4 .

because of the changes in economic activity, which derive from the transport change

These represent different ways of measuring benefits and typically give different

numerical results. For example, time-savings accruing in the course of commuting or

leisure travel are welfare gains to the user, but do not have a direct effect on GDP unlike

time-savings in the course of work. However, where such time-savings lead to an overall

gain in productivity because people can access more productive jobs more easily, this will

be recorded as a change in GDP. We speak now of the labor market, that often those who

talk about economic benefits ignore. Labour market effects in imperfectly competitive

R. Vickerman, “Indirect

4 and wider economic impacts of High-Speed Rail”. 6

Chapter 1 – Analysis of economic change

labour markets arise in three possible ways: changing participation rates, increased

working hours and moves to jobs that are more productive. Improved transport can enable

access to jobs that would not otherwise have been possible. If this enables workers from

regions that have employment-deficient to access, jobs in labour-deficient regions there

will be gains to the workers, to employers and to the public sector, which gains tax

revenue and faces lower social security payments. Possibly of greatest importance,

however, is the impact on productivity, which arises thorough workers being able to move

more easily from less productive to jobs that are more productive. HSR has the important

effect of creating a potential step-change in the size of labour markets, not just for daily

commuting, but also for reinforcing the possibility of long-distance weekly commuting

where the constraints of housing or personal circumstances prevent job- related migration.

About benefits for workers, Barack Obama affirm: “A major new high-speed rail line will

generate many thousands of construction jobs over several years, as well as permanent

jobs for rail employees and increased economic activity in the destinations these trains

serve.”

Perhaps the broadest policy implications for consideration in the labor

market/transportation impact framework is the issue of “Place prosperity” versus “People

prosperity”. In fact also the economic potential of a region changes with the advent of

i

such innovation. This potential, according to a simplified model, can be express as:

ି௔௖௖

ൌ ݈݇ ෍ ݈ ݁

ܲ ೔ೕ

௜ ௜ ௝

௝ ), relative to

So, where the potential, P, at is a function of the attractiveness of location (l

i i

5

) weighted by the accessibility term acc .

all other locations (l j ij

We now see some empirical data on the worldwide economic benefits. In Japan, thanks to

Shinkansen, employment growth in retail, industrial, construction and wholesaling was

16–34% higher in station than non-station locations (Hirota 1984). Amano and

Nakagawa’s (1990) independently corroborated this finding of a 26% higher employment

growth level for station versus non- station locations (1.8% to 1.3% respectively). In

France with two lines in operation (the 1981 TGV Southeast Paris-Lyon and the 1989

TGV Atlantic Paris-Le Mans/Tours) business travel increased 56% while services travel

R. Vickerman, “Indirect

5 and wider economic impacts of High-Speed Rail”. 7

Chapter 1 – Analysis of economic change

was up 112% (Pieda 1991). They create only three new stations for the system and only

one Lyon Part-Dieu had significant local economic development effects.

Figure 4 – Switching phenomenon of Madrid‐Siviglia mode of transport

Source: image.slidesharecdn.com

In that immediate area, land values have risen markedly and office space due to access-

related demand rose by over 43% from 1983 to 1990. We can see in the chart alongside as

the advent of high-speed trains has had a negative impact on other transport systems, in

particular we see the comparison between trains and planes on Madrid-Siviglia journey:

there is a proper “switching phenomenon”.

1.3 Focus on urban regions 6

Now let us focus on economic impact of HST on Urban Regions . Many European

countries made investments in infrastructure

for high-speed trains. As we said in the first

paragraph, the objective is to make rail

transport once more competitive with respect

to road and air transport. To this end, they

built up gradually a European network for

HSTs. We can see the development of that

network as a renaissance of rail transport. In

urban regions, the advent of the HST can be a

stimulus to invest in the rehabilitation of

station areas that have been neglected for

Figure 5 – Journey times between stations 1989‐2009 decades. That neglect can be explained partly

Source: High Speed Europe‐ A sustainable link between by the diminishing share of rail transport in the

citizens, European Commission‐ Directorate General for

Mobility and Transport, 2009

6 P. M. J. Pol, 2003, “The economic impact of the High‐Speed Train on Urban Regions”, European Regional

Science Association (conference paper). 8

Chapter 1 – Analysis of economic change

modal split, and partly by the diverging interests of stakeholders. Many European cities

drew up ambitious plans for the redevelopment of station areas. The expectation is that the

redevelopment of the major station areas will greatly enhance the accessibility and

economic appeal of inner cities, and at the same time create space for new urban activities

and residents. For instance, the high-speed trains have reduced travel times by 43%

between Brussels and Frankfurt and more than 60% (from 4 hours and 52 minutes to 1

hour and 51 minutes) between Brussels and London. The costs of travelling between two

locations comprise monetary transport expenses, transport time (travel and waiting times),

and the effort made for the trip (discomfort, risk of theft of property, risk of delays). The

‘generalised transportation costs’ (GTC) include the total of monetary transport costs,

time and effort. Individuals can differ in their valuation of travel time and the effort

journeys require. A business traveller, for instance, will be inclined to attach more value

to relatively fast and comfortable transport than a tourist does. With the increase in the

economic value of time, an individual will be prepared to pay more for relatively fast

transport to keep the total GTC constant or reduce it. As prosperity increases and incomes

rise, people want to travel further and faster. They prefer to live in a pleasant environment,

for which they are prepared to live farther from their workplace; companies want

economic interaction with actors from a larger relevant region, and individuals want to go

on holiday to ever more remote areas. The construction of the HST-network affects the

development of the European urban system, and thus the competition between cities. The

influence manifests itself in the two trends distinguished above: on the one hand, the HST

reinforces the existing hierarchical position of cities, while on the other, it promotes the

formation of a network of cities. The development of the European HST-network can

7 . Actors in these

have a particular effect on relatively small cities that are to be connected

cities can try to turn their improved accessibility and changing status to good account.

Through substantial investments in their station areas and their cities, they may attract

new inhabitants and economic activities and thereby achieve a higher position in the urban

hierarchy. The connection of a city to the HST-network gives an external impulse to an

urban region. The decision to realise that connection is mostly made by the national

government. As we said before, connection to the HST-network implies a reduction of the

GTC. That effect is due to the phenomena described in the theory as time-space

7 P. M. J. Pol, 2003, “The economic impact of the High‐Speed Train on Urban Regions”, European Regional

Science Association (conference paper). 9

Chapter 1 – Analysis of economic change

convergence and cost-space convergence. The high-speed railway brings cities closer

together in terms of travel time and (direct) transport costs. In particular, the direct access

to the centres of major cities will be improved, because many HST- stations are in city

centres. The GTC will also be reduced by competition between transport modes serving

the same intercity connections in Europe, notably air and rail. Such competition also

spells greater choice and flexibility, as well as lower prices for the travellers. With the

same GTC level, more remote locations can be reached. This impact is empirically not

measurable. This is because it is not normally possible to link directly accessibility

changes with economic development; many other variables have influence on this

relationship and economic changes can occur over a relatively long period, during which

many other urban elements change. The advent of the HST can generate opportunities for

economic renewal and/or growth, and urban actors can proactively respond to this. The

advent of the HST can be beneficial for those cities that already have a strong competitive

position (a strong economic potential). However, for weaker urban regions, also backwash

effects can occur because of the improved external accessibility. Of course, even the most

peripheral regions can obtain many advantages by the advent HSR, always in terms of

accessibility. Of course, even the most peripheral regions can obtain many advantages by

the advent HSR, always in terms of accessibility. Cities far from those "central" can be

integrated shortenin