Why high-speed rail would fail

A Shinkansen train pulls into Tokyo Station.

SHOULD Australia build a high-speed rail network?

Despite its wealth and bounty of one of the key commodities (i.e. high-grade iron ore) needed to build high-speed rail networks, Australia is a relatively poor candidate for high-speed rail for some of the same reasons as the United States.

As I have written previously in another article discussing the key reasons why high-speed rail does not really exist in the United States:

• Population density or lack thereof

• Our unique model of urban and suburban development

• The strength of our property rights

• Car culture, or America’s lingering obsession with the car

• The lasting power of network effects

• An existing rail network is geared towards long-haul commercial freight traffic

Australia shares some of these characteristics with the United States. For example, while America’s population density is relatively low at 33 persons per square kilometre, Australia’s is even more extreme at just 3.1 persons per square kilometre.

I went to Australia for the first time ever last year (Perth) and remember how it reminded me a lot of driving around in California (and very different from most places in Asia and Europe). Population density is probably the single biggest factor in determining the economics of high-speed rail and for this answer I am going to focus on it.

For long-haul passenger travel, you must compare high-speed rail to its main alternative — air travel — and start by recognising the unique characteristics of each:

• First, there are the upfront infrastructure costs involved in building a high-speed rail network — costs are largely proportionate to the length of the line; a 2000km line will generally cost around double the cost of a 1000km line. Meanwhile, building two airports costs the same no matter the distance between the two. And building a third airport (that can of course connect directly to the first two) is even cheaper compared to having to build two more connecting rail lines to connect the first two cities to the third city.

• Second, there is the difference in the nature of the operating costs for high-speed passenger rail versus aeroplanes. Planes typically cost much more to operate (higher fuel requirements, depreciation) while train track is more expensive to maintain, especially as it gets longer.

• Third, there is a difference in the passenger experience. High-speed trains are slower, but it also usually takes less upfront commuting time to get to and from the train station which can be located closer to downtown and have less stringent security/check-in requirements. Trains are also typically more comfortable at the same price point than aeroplanes.

The relative advantages and disadvantages of high-speed rail versus air travel change with the distance travelled between stations. For short trips, the lower upfront time it takes to get to the train station can overcome slower train speed. Shorter distances between stations make the infrastructure cost of building out high-speed rail track less expensive relative to building airports. Higher utilisation generally favours high-speed rail because the fixed infrastructure cost is usually higher than air travel — amortising it over more trips would help mitigate this disadvantage.

I put together a very high-level spreadsheet that you can play with to see how modifying assumptions like distance and utilisation affects the ultimate cost of each: Illustrative Economic Comparison between HSR and Planes.

An economic comparison between high-speed rail and air travel.

An economic comparison between high-speed rail and air travel.Source:Supplied

This illustrative case above is built on a hypothetical country with three cities that are each 400km apart — imagine if you will a formation that looks like an equilateral triangle. Based on the default assumptions, the cost of high-speed rail and air travel are about the same and it actually takes less door-to-door time with high-speed rail.

But as you increase the “distance between stations” variable, the economics tip in favour of air travel. While infrastructure costs tend to rise rapidly as the distance between stations increases, the time advantage shrinks (and flips in favour of flying) after a certain inflection point. Every country will have a different inflection point based on its unique characteristics.

Due to Australia’s very low population density, the average long-haul trip is typically a much longer distance. For example, the distance from Sydney to Melbourne (combined population 9.5 million) is around 713km — and this pair is considered relatively close.

Meanwhile, the distance between Beijing and Tianjin (combined 30 million population) is 107km. Beijing to Shanghai is around 1084km but along the HSR route there are many large cities and an accessible population numbered in the hundreds of millions.

There are many other variables that go into the economic analysis of course. Every country is different — for example, it costs a lot more to build high-speed rail in mountainous terrain versus flat ground, interest rates and costs of capital vary, labour costs are higher in some countries — but population density explains a large portion of the reason why high-speed rail is more attractive in some countries versus others.

This article originally appeared on Quora and was reproduced with permission.

CLARA’s plan is to build new regional, compact, sustainable, smart-cities and connect them by most advanced high speed rail

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