Rail subsidies

Many countries offer subsidies to their railways because of the social and economic benefits that it brings. The economic benefits can greatly assist in funding the rail network. Those countries usually also fund or subsidize road construction, and therefore effectively also subsidize road transport. Rail subsidies vary in both size and how they are distributed, with some countries funding the infrastructure and others funding trains and their operators, while others have a mixture of both. Subsidies can be used for either investment in upgrades and new lines, or to keep lines running that create economic growth.

Rail subsidies are largest in China ($130 billion), Europe (€73 billion) and India ($35.8 billion), while the United States has relatively small subsidies for passenger rail with freight not subsidized.

Social and economic benefits of rail

Railways channel growth toward dense city agglomerations and along their arteries. These arrangements help to regenerate cities, increase revenue from local taxes,[1] increase housing values, and encourage mixed use development. By contrast, a policy of highway expansion, which is more typical in the U.S., promotes the development of suburbs at the periphery, contributing to increased vehicle miles traveled, carbon emissions, development of greenfield spaces, and depletion of natural reserves.[2][3]

Modern rail as economic development indicator

European development economists have argued that the existence of modern rail infrastructure is a significant indicator of a country's economic advancement: this perspective is illustrated notably through the Basic Rail Transportation Infrastructure Index (known as BRTI Index).[4]

Subsidies by country

Europe
European rail subsidies in euros per passenger-km for 2008[5]
Main article: European rail subsidies

Total EU rail subsidies amounted to €73 billion in 2005.[6]

Country Subsidy in billions of Euros Year Billion passenger-km travelled in 2014[7]
 Germany 17.0 2014[8] 79.3
 France 13.2 2013[9] 83.9
 Italy 7.6 2012[10] 39.7
  Switzerland 5.8 2012[11] 18.4
 Spain 5.1 2015[12] 24.5
 United Kingdom 9.2 2016[13] 65.1
 Belgium 2.8 2012[14] 10.8
 Netherlands 2.5 2014[15] 17
 Austria 3.7 2021 11.4
 Denmark 1.7 2008[5] 5.8
 Sweden 1.6 2009[16] 6.1
 Poland 1.4 2008[5] 11.9
 Ireland 0.91 2008[5] 1.7

Note that several operators that do not receive subsidies also exist, including virtually all long haul and high speed services in France and Germany.

China
Main article: Rail transport in China

In 2015, total domestic rail spending by China was $128 billion and is likely to remain at a similar rate for the rest of the country's next Five Year Period (2016-2020).[17] A planned 8,000 kilometres (about 5,000 miles) of track will be added domestically, with a goal of better connecting existing domestic track with other foreign railway systems.

India
Main article: Rail transport in India

The Indian railways are subsidised by around Rs 2.4trillion ($35.8 billion), of which around 60% goes to commuter rail and short-haul trips.[18][19][20]

United States
For rail subsidies in the USA, see Amtrak public funding and Modern US rail history

Current subsidies for Amtrak (passenger rail) are around $1.4 billion. The rail freight industry does not receive direct subsidies.

Russia
Main article: Rail transport in Russia

In total, Russian Railways receives 112 billion rubles (around US$1.5 billion) annually from the government.[21]

Japan

The privatized rail network in Japan requires few subsidies. The three biggest companies, JR East, JR Central and JR-West (which account for 60% of the passenger market) receive no state subsidy.[22]

See also

References
  1. Lewandowski, Krzysztof (2015). "New coefficients of rail transport usage" (PDF). International Journal of Engineering and Innovative Technology (IJEIT). 5 (6): 89–91. ISSN 2277-3754.
  2. Squires, G. Ed. (2002) Urban Sprawl: Causes, Consequences, & Policy Responses. The Urban Institute Press.
  3. Puentes, R. (2008). A Bridge to Somewhere: Rethinking American Transportation for the 21st Century. Brookings Institution Metropolitan Policy Report: Blueprint for American Prosperity series report.
  4. Firzli, M. Nicolas J. (1 July 2013). "Transportation Infrastructure and Country Attractiveness". Revue Analyse Financière. Paris. Retrieved 26 April 2014.
  5. "ANNEX to Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 1370/2007 concerning the opening of the market for domestic passenger transport services by rail" (PDF) (COMMISSION STAFF WORKING DOCUMENT: IMPACT ASSESSMENT). Brussels: European Commission. 2013. pp. 6, 44, 45. Archived from the original (PDF) on 2013-05-03. Includes both "Railway subsidies" and "Public Service Obligations".
  6. "EU Technical Report 2007".
  7. "Railway Statistics – 2014 Synopsis" (PDF). Paris, France: UIC (International Union of Railways). 2014. Retrieved 8 November 2015.
  8. "German Railway Financing" (PDF). p. 2. Archived from the original (PDF) on 2016-03-10.
  9. "Efficiency indicators of Railways in France" (PDF).
  10. "Public Expenditure on Railways in Europe: a cross-country comparison" (PDF). p. 10.
  11. "Facts and arguments in favour of Swiss public transport". p. 24. Archived from the original (PDF) on 26 October 2014. Retrieved 3 July 2016. 6.3 billion Swiss francs
  12. "Spanish railways battle profit loss with more investment". 17 September 2015. Retrieved 10 March 2016.
  13. "GB rail industry financial information 2015-16" (PDF). Retrieved 22 February 2017. £6.7 billion, consisting of £4.3billion to network rail, and £2.4billion to train operating companies (TOC) using average of £1=1.366 euros for 2015-16
  14. "Implementation of EU legislation on rail liberalisation in Belgium, France, Germany and The Netherlands" (PDF).
  15. "ProRail report 2015" (PDF). p. 30. Archived from the original (PDF) on 2016-03-03. Retrieved 2016-03-09.
  16. "The evolution of public funding to the rail sector in 5 European countries - a comparison" (PDF). p. 6. Archived from the original (PDF) on 2016-03-04. Retrieved 2016-03-09.
  17. "China to Invest $128 Billion in Rail, Push for Global Share". Bloomberg News. 5 March 2015.
  18. Kumar, Saurabh (22 May 2019). "Indian Railways stays afloat in FY19, helped by advance freight charges". The Financial Express. Retrieved 2020-04-21.
  19. "Govt defends fare hike, says rail subsidy burden was too heavy". The Times of India. 22 June 2014.
  20. "Demand for Grants 2022-23 Analysis : Railways".
  21. "Government support for Russian Railways".
  22. "Level playing field: EU efforts to break into Japan's rail industry". 3 November 2014.
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