Justifying a high-speed rail project: social value vs. regional growth

This article establishes a relationship between the net present value (NPV) of a High-Speed Rail (HSR) project and its social value, its transportation consumers‘ surplus (TCS) and its regional economic impact in terms of growth. First, it is shown that if the NPV is positive, it may generate growth even if no bottleneck exists. Second, when shadow-pricing and externalities are included in the calculations, and the HSR demand has been forecasted by a multinomial logit model, the NPV differs from its net economic impact. For instance, one variant of the project, though acceptable, reduces growth elsewhere in the economy. Decision-making is then in a quandary.