Economic, social and environmental changes with HST technology introduction

Economic and

Academic Year 2015/16 social changes with

High-Speed Train

technology

introduction

Università degli studi di Palermo

Corso di Gestione

dell’Innovazione Tecnologica

Prof. Umberto La Commare

E. Liga, A. Mattaliano, C. Scimeca, R. Scimeca

Index Index

INDEX .................................................................................................................................................................... 1

TABLES OF FIGURES ......................................................................................................................................... 1

CHAPTER 1 – ANALYSIS OF ECONOMIC CHANGES ..................................................................................... 3

1.1 A ........................................................................................................................... 3

NALYSIS OF INVESTMENT COSTS

1.2 E ............................................................................................................................................... 5

CONOMIC BENEFITS

1.3 F ...................................................................................................................................... 8

OCUS ON URBAN REGIONS

1.4 T HST W M .................................................................................................................................. 11

HE ORLD ARKET

1.5 T I ( ) ...................................................................................... 15

HE COSTS OF CORRUPTION IN TALY AND NOT ONLY

CHAPTER 2 – SOCIAL IMPACT AND WIDESPREAD .................................................................................... 18

2.1 W ? ................................................................................................................................. 18

HO ARE OUR CUSTOMERS

2.2 S HS ................................................................................. 20

OCIAL BENEFITS WITH TECHNOLOGY INTRODUCTION

2.3 F I ............................................................................................................. 22

OCUS ON THE SOCIAL IMPACT IN TALY

2.4 W E I .................................................................................................................... 24

IDESPREAD IN UROPE AND TALY

CHAPTER 3 – ENVIRONMENTAL IMPACT ................................................................................................... 28

3.1 I ...................................................................................................................................................... 28

NTRODUCTION

3.2 A , ............................................................................ 29

IR AND NOISE POLLUTION AND IMPACT ON THE TERRITORY

3.3 T S V ................................................................................................................... 34

HE CONFLICT IN THE USA ALLEY

Tables of figures

F 1 – G I .............................................................................................................. 3

IGURE ROWING DEMAND OF THE TALIAN RAILWAYS

F 2 ‐ A 500 HSR E ................................................................................................................ 4

IGURA VERAGE COST OF A KM IN UROPE

F 3 – E ‐ HSR ........................................................................................................................ 6

IGURE UROPE SPACE REDUCTION WITH

F 4 – S M ‐S ............................................................................. 8

IGURE WITCHING PHENOMENON OF ADRID IVIGLIA MODE OF TRANSPORT

F 5 – J 1989‐2009 .......................................................................................................... 8

IGURE OURNEY TIMES BETWEEN STATIONS

F 6 – W HST .......................................................................................................................................... 12

IGURE ORLD RAILWAYS

F 7 – H S R T E ........................................................................................................................ 13

IGURE IGH PEED AIL RAFFIC IN UROPE

F 8 – M ..................................................................................................................................................... 14

IGURE ARKET SHARE

F 9 – M : NTV‐T .......................................................................................................................... 15

IGURE ARKET SHARES RENITALIA

F 10 – C C H ‐S R ............................................................................... 16

IGURE APITAL OSTS OF IGH PEED AIL OF THE MOST POPULAR LINES

F 11 ‐ S ............................................................................................................ 19

IGURE EVERAL PASSENGERS GETTING ON THE TRAIN

F 12 – C ............................................................................................................................................... 20

IGURE USTOMER NEEDS

F 13 – S ‐ ................................................................................. 20

IGURE PACE TIME SHRINKING WITH FAST CONNECTIONS INTRODUCTION

F 14 – E HST ....................................................................................... 23

IGURE VALUATION OF TIME REDUCTION WITH INTRODUCTION

F 15 – R E ............................................................................................................ 25

IGURE AILWAYS EXTENSION PER UROPE COUNTRY

F 16 – K HS ............................................................................................................................................ 25

IGURE M OF RAILWAYS

F 17 – P HST ( – ) ......................................... 26

IGURE ASSENGER TRANSPORTATION BY TRADITIONAL TRAINS AND BY BILLION PASSENGER KM

F 18 – T I ( – ) .......................................................... 26

IGURE RAIN PASSENGER TRANSPORTATION DEMAND IN TALY BILLION PASSENGER KM

F 19 – E .................................................................................... 27

IGURE UROPE PASSENGER TRANSPORTATION MODAL SHARE BY ROAD

F 20 – CO EU‐27 ............................................................................................. 28

IGURE EMISSIONS BY MODE OF TRANSPORT IN THE

2

F 21 ‐ D ETR 500 ‐ .................. 30

IGURE RAG REDUCTION EFFECT OF RETROFITTABLE BOGIE FAIRINGS FOR AN TRAIN WITH EIGHT MID COACHES

F 22 ‐ S .............................................................................................................................. 31

IGURE OUND EMISSION LIMIT VALUES

F 23 ‐ A ....................................................................................................................... 31

IGURE COUSTIC BARRIERS IN URBAN AREAS

F 24 – E .................................................................................................................................. 32

IGURE QUIDISTANT BAFFLE PLATES

F 25 – F R ................................................................................................................................................... 33

IGURE RECCIA OSSA

F 26 ‐ H V T : I , , ..................... 35

IGURE IGH SPEED TRAIN LINE FROM ENAUS TO URIN THE TALIAN SIDE IN RED BLUE IN THE INTERNATIONAL PART 1

Index

F 27 ‐ E A 2030 ........................................................................... 35

IGURE STIMATES OF THE TRANSIT OF GOODS THROUGH THE LPS FOR

F 28 ‐ T N ‐W ......................................................................................... 36

IGURE HE OFFER OF TRANSPORT PLANNED FOR THE ORTH EST

F 29 – F.A.R.E. T – L ..................................................................................................... 39

IGURE PROJECT PHASES FOR LINE URIN YON 2

Chapter 1 – Analysis of economic change

CHAPTER 1 – Analysis of economic changes

1.1 Analysis of investment costs

We see now the economic aspects of HST innovation, looking at the investment costs

needed for this technology, the benefits (economic nature) and to HST world market. Just

follow that list, starting with the investment costs to understand immediately what extent

is this innovation: in this way, we can better evaluate the economic benefits. We conclude,

then, with the current market situation, to have a clear idea on the economic spread of

high-speed trains.

The development of High Speed Rail (HSR) in Europe has been encouraged, and

1 . Several lines are in operation, and

financially supported, by the European Commission

many others are under construction

or waiting for approval. HSR

technology represents as a solution to

congested roads and airports and as

an efficient response for the

incremental demand in the coming

years. The economic rationale for the

construction of new HSR depends

heavily on the expected volume of

demand, which is also very sensitive

to the line length and population

Figure 1 – Growing demand of the Italian railways density. The economic justification

Source: Primo rapporto annuale al parlamento, Camera dei Deputati

16 Luglio 2014 for new investment in HSR is

strongest where a potential market exist for travel in 300-600 km interval. Nevertheless,

high-density urban areas mean higher construction costs. The construction cost per km of

2014,

1 “Primo rapporto annuale al parlamento, Camera dei Deputati 16 Luglio 2014”. 3

Chapter 1 – Analysis of economic change

a high speed railway line changes dramatically depending on geographic conditions

(crossing of urban areas, mountains, etc.). Values go from €12 million in Spain to €45

million in the Netherlands. To have a HSR line in operation requires incurring some fixed

and partially sunk costs: the investment costs in infrastructure and superstructure, which

consists of the tracks and sidings along the line; the buildings and technical equipment for

terminals and stations, the line signaling, traffic management and control system. These

components need maintenance and operation (energy, materials and labor) and a

reservation system; and though these costs are in some way dependent of the volume of

traffic, they cannot be completely avoided when demand is lower than expected.

Maintenance and operating costs of rolling stock are energy and labor expenses needed

for having trains in operation. These costs are demand-related, but, in the short term, we

2 .

can partially considerer them as fixed

Figura 2 ‐ Average cost of a 500km HSR in Europe

Source: Is investment in High‐Speed Rail Socially Profitable, Nombela 2006

It is not easy to obtain values for costs of HSR projects, because the range of variation is

wide, and costs change according to local conditions (as we said before): density of urban

areas crossed, number of tunnels, bridges, and so forth. We remind that data on

infrastructure costs show how the cost per km in construction costs varies from €12

million per kilometer in Spain to 32 in Germany and over 45 in the Netherlands. The case

for High Speed Rail (HSR) infrastructure depends on the capacity of generating social

benefits, which compensate the construction, maintenance and operations. Not always, the

economic analysis have been the basis of the decisions to invest in this technology. A mix

G. Nombela, 2006, “Is

2 investment in High-Speed Rail Socially Profitable?”. 4

Chapter 1 – Analysis of economic change

of arguments, besides time-savings, strategic considerations, environmental effects,

regional development and so forth– usually makes the discussion on the economic

rationality of investing in HSR vague and imprecise. So, let us see a simplified model

usable to make an economic assessment about an HSR investment. According to this

model, the condition to be satisfied for a positive NPV (Net Present Value) can be express

by as follows: ் ்

ିሺ௥ିఏሻ௧ ି௥௧

ൣܤሺܳ ሻ න

න ሺܳሻ൧݁ ݀ݐ െ ܥ ݁ ݀ݐ ൐ ܫ

െ ܥ

௤ ௜

଴ ଴

In which:

-Q represents the demand

-B(Q) is the function of annual social benefits of the project

(Q) and C are respectively annual maintenance and operating cost variable with Q and

-C q i

annual fixed maintenance and operating cost

-I represents infrastructure construction costs

-T is the life of the project

and θ are respectively the social discount rate and the annual growth of benefits and

-r 3 .

costs, which depends on Q

1.2 Economic benefits

Often, many evaluators consider indirect impacts (especially on regional economic

performance) as a justification for additional benefits from high-speed rail (HSR) projects.

The usual assumption is that the improvements in accessibility, which the creation of an

HSR link makes, will enlarge market areas and increase the implicit competitiveness and

productivity of firms in a newly connected region. In addition, the time-savings made by

all travellers are equivalent to an increase in productivity.

G. Nombela, 2006, “Is

3 investment in High-Speed Rail Socially Profitable?”. 5

Chapter 1 – Analysis of economic change

Figure 3 – Europe space‐reduction with HSR

Source: www.epf.eu

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 d