In what circumstances is investment in HR worthwhile?

INTRODUCTION By High Speed Rail (HSR) we normally mean rail technologies capable of speeds of the order of 300km ph on new dedicated track. Such systems offer journey times that are more competitive with other modes, and particularly air, than traditional train services, and very high capacity. But their capital cost is also high. The proposals of the European Commission for the Trans European Transport Network (TEN-T) envisage expenditure of 600b euros, of which 250b euros is for priority projects, and a large part of this expenditure is for high speed rail. Thus it is extremely important to have a robust appraisal methodology for these huge investments. It is not clear that this has happened in the case of the Trans European Networks. Individual projects are suggested by, and appraised by, member state governments, even though they are applying to the European Commission for assistance with funding. Research for the European Commission has appraised the TEN-T network as a whole, but has not appraised the individual elements of the programme to ensure that they are all worthwhile (TML, 2005). The aim of this paper is to consider the methodology for the appraisal of high speed rail proposals, and to produce some indication of the circumstances in which such proposals might be worthwhile. In the next section we present an overview of the principal costs and benefits which need to be taken into account in an HSR appraisal. Then we illustrate the process for two particular contrasting examples – the study of HSR proposals in Great Britain, and an ex post evaluation of the Madrid-Seville line in Spain. In section four of the paper we formulate a model to incorporate the principal parameters influencing the outcome of an appraisal and in section five we use this model to draw conclusions on the circumstances in which high speed rail may be justified

Numerical interactions between compactons and kovatons of the Rosenau-Pikovsky K(cos) equation

A numerical study of the nonlinear wave solutions of the Rosenau-Pikovsky K(cos) equation is presented. This equation supports at least two kind of solitary waves with compact support: compactons of varying amplitude and speed, both bounded, and kovatons which have the maximum compacton amplitude, but arbitrary width. A new Pad\'e numerical method is used to simulate the propagation and, with small artificial viscosity added, the interaction between these kind of solitary waves. Several numerically induced phenomena that appear while propagating these compact travelling waves are discussed quantitatively, including self-similar forward and backward wavepackets. The collisions of compactons and kovatons show new phenomena such as the inversion of compactons and the generation of pairwise ripples decomposing into small compacton-anticompacton pairs

In what circumstances is investment in HR worthwhile?

INTRODUCTION By High Speed Rail (HSR) we normally mean rail technologies capable of speeds of the order of 300km ph on new dedicated track. Such systems offer journey times that are more competitive with other modes, and particularly air, than traditional train services, and very high capacity. But their capital cost is also high. The proposals of the European Commission for the Trans European Transport Network (TEN-T) envisage expenditure of 600b euros, of which 250b euros is for priority projects, and a large part of this expenditure is for high speed rail. Thus it is extremely important to have a robust appraisal methodology for these huge investments. It is not clear that this has happened in the case of the Trans European Networks. Individual projects are suggested by, and appraised by, member state governments, even though they are applying to the European Commission for assistance with funding. Research for the European Commission has appraised the TEN-T network as a whole, but has not appraised the individual elements of the programme to ensure that they are all worthwhile (TML, 2005). The aim of this paper is to consider the methodology for the appraisal of high speed rail proposals, and to produce some indication of the circumstances in which such proposals might be worthwhile. In the next section we present an overview of the principal costs and benefits which need to be taken into account in an HSR appraisal. Then we illustrate the process for two particular contrasting examples – the study of HSR proposals in Great Britain, and an ex post evaluation of the Madrid-Seville line in Spain. In section four of the paper we formulate a model to incorporate the principal parameters influencing the outcome of an appraisal and in section five we use this model to draw conclusions on the circumstances in which high speed rail may be justified

In what circumstances is investment in HSR worthwhile?

The case for building new High Speed Rail (HSR) infrastructure depends its the capacity to generate social benefits which compensate for the construction, maintenance and operation costs. Decisions to invest in this technology have not always been based on sound economic analysis. A mix of arguments, besides time savings –strategic considerations, environmental effects, regional development and so forth– have often been used with inadequate evidence to support them. We have explored under what conditions net welfare gains can be expected from new HSR projects. In this paper we use some simplifying assumptions with the aim of obtaining a benchmark: the minimum level of demand from which a positive social net present value could be expected when new capacity does not provide additional benefits beyond time savings from diverted and generated demand.public investmest, infrastructure, cost-benefit analysis, transport, high speed rail

Least Present Value of Net Revenue: a new auction-mechanism for highway concessions

This paper presents a new mechanism for awarding tolled-highways, based on the variable-term concept proposed by Engel et al (1997). These authors claim that a mechanism based on bids for least-present-value of revenue (LPVR) eliminates the risk of demand and simplifies renegotiations. However, if maintenance and operation costs are non-negligible, it is proven that, under LPVR, bidders need to estimate future traffic to make their offers, so the risk of demand is still present. Moreover, LPVR does not guarantee the selection of the best concessionaire. An alternative mechanism (least-present-value of net revenue, LPVNR) is proposed. The idea is to use bids that do not force firms to estimate future traffic. Under LPVNR, firms must make offers on: (i) total amount of revenue, net of maintenance costs; (ii) annual operation and routine-maintenance costs; and (iii) cost of road re-pavement. The concession is awarded to the firm with the lowest total expected cost, and the selection rule is adapted to the information available. The new mechanism is simple, does not impose additional efforts from firms, and eliminates the risk of demand more effectively. Although initially conceived for the road sector, the idea of LPVNR could easily be extended to other infrastructure sectors.Highways, roads, concessions, auctions

Auctions for Infrastructure Concessions with Demand Uncertainty and Unknown Costs

Auction mechanisms commonly used in practice for awarding infrastructure concession contracts induce a bias towards the selection of concessionaires who are optimistic about demand, but are not necessarily cost-efficient. This helps to explain the frequent renegotiation of concessions observed in practice. This paper shows that the fixed-term nature of contracts is the key element for selection errors, and it proposes a better alternative mechanism based on flexible-term contracts. This new auction mechanism reduces the probability of selection errors and contract renegotiation, and it is simple enough to constitute a good option for concessions in sectors like transport and public utilities.concessions, auctions, renegotiation, infrastructure

La medición de la rentabilidad social de las infraestructuras de transporte

Las infraestructuras contribuyen al bienestar social cuando cumplen una condición muy simple: los beneficios sociales han de ser mayores que sus costes sociales. La sociedad suele contemplar las infraestructuras con un cierto sesgo consistente en la creencia de cuanta más, más grande y de nueva tecnología mejor. El concepto de coste de oportunidad del dinero público no parece pertenecer al lenguaje de muchos de los que deciden sobre la construcción de grandes obras públicas. En este trabajo se defiende la evaluación económica de los proyectos de inversión en infraestructuras de manera que se evite la construcción de obras de dudosa rentabilidad social destinándose los fondos públicos donde son los beneficios sociales compensan el coste de oportunidad de su utilización

Argentina's transport privatization and re-regulation : ups and downs of a daring decade-long experience

When Argentina initiated reform of its transport sector in 1989, it had few models to follow. It was the first Latin American country to privatize its intercity railroad, to explicitly organize intraport competition, and to grant a private concession to operate its subway. It was second (after Japan) to privatize its urban commuter railways and one of the first in the developing world to grant road concessions to private operators. Argentina's experience shows that transport privatization and deregulation provide efficiency gains that can be delivered to users. Despite unexpectedly high residual subsidy requirements, fiscal costs are lower, services have improved, and new investment is taking place. Argentina's decade-long experience shows that the reform process involves learning by doing. Inexperienced new regulators quickly face the challenges in controlling monopoly power and providing long-run incentives for private investment. Designing sustainable reform requires a commitment by government to minimize its role in the sector and to respect its original promises to both users and concessionaires. Argentina has learned the importance of building up the regulatory capacity needed to monitor contracts, especially when initial uncertainty about demand and cost conditions is strong and renegotiation is the probable outcome of daring reform. The government's main challenge in monitoring contracts is to get enough information to reach a balance in its decisions about distributing efficiency gains fairly between consumers and private investors. This is one area in which Argentina may not yet have met the challenge. As the last wave of contract extensions in rail and roads comes to an end, one issues is likely to be the need for better targeting of subsidies for the poor.Public Sector Economics&Finance,Roads&Highways,Environmental Economics&Policies,Banks&Banking Reform,Transport and Trade Logistics,Environmental Economics&Policies,Public Sector Economics&Finance,Airports and Air Services,Roads&Highways,Railways Transport

A comparison of rail liberalisation levels across four European countries

The paper presents the results of a research on railway regulation and liberalisation in Italy, France, Germany and Spain. The analysed fields of regulation are the relationship between the State and the rail companies, network access conditions by operators, slot allocating and pricing schemes and how public service obligations are defined, paid and regulated. The aim of the paper is to give a comparative overview of the rail regulation from a critical point of view, rather than descriptive. The regulatory frameworks are outlined and then assessed according to their implications on the liberalisation level and on the effective market opening. The conclusions are that the actual level of liberalisation is still scarce and only in some cases the opening level is increasing. Market penetration of newcomers is significant only in niche markets. An issue emerging from the work is the opposing attitude of incumbent railways against liberalisation and the role of decision makers in backing this behaviour. The strategies followed to limit the outcomes of the liberalisation process are different across the country sample. However, all the incumbents argue with the self-referential declaration of efficiency, public service obligations and they claim to be under an excessive and unfair foreign competition. These arguments are yet embedded in legislative, organisational and economic settings supporting these positions like the common ownership of network and services, the permanence of dominant positions and favourable financial conditions.railways; liberalisation; regulation; Europe; Italy; France, Germany; Spain

Investing in high speed rail: when waiting is socially profitable

Public investment in high speed infrastructure is a priority of the Spanish government. High speed is a technological breakthrough in transport but, from an economic point of view, the question is whether is socially worthy to allocate public funds to this transport option. The answer requires a comparison of benefits and costs for each corridor. In this paper the analysis of the profitability of the high speed rail investment is made using the information obtained from a survey to the users of the corridor Madrid-Zaragoza-Barcelona.infrastructure, public investment, transport, railways, cost-benefit analysis