High-Speed Rail: When Is It Worth It?

What makes high-speed rail succeed or struggle, from Japan's Shinkansen to newer projects, and how economists judge the costs and benefits.

High-speed trains running at 250 to 350 kilometres per hour can link cities faster than driving and, over some distances, faster than flying once airport time is included. But they are extremely expensive to build. Whether they are worth it depends heavily on where they are built.

The pioneer: Shinkansen

Japan opened its first high-speed line, the Tokaido Shinkansen between Tokyo and Osaka, in 1964, just before the Tokyo Olympics. It linked two of the world’s largest urban regions, carries enormous numbers of passengers and has an outstanding safety record. France, Spain, Germany and China followed. China has built by far the world’s largest high-speed network since 2008, with tens of thousands of kilometres of track.

What makes a line succeed

Economists and planners point to several conditions:

Large cities at the right distance: high-speed rail competes best on trips of roughly 200 to 800 kilometres. Shorter trips favour cars; longer trips favour planes.
High population density: many potential passengers along the route.
Central stations: stations in city centres save time compared with airports on the outskirts.
Connections: good local transport at each end.

The costs

High-speed lines require new, straight, carefully engineered tracks, often with many tunnels and bridges. Costs can run into tens of millions of dollars per kilometre and often exceed initial estimates. Britain’s HS2 project saw costs rise so much that its northern sections were cancelled in 2023. California’s high-speed rail project has faced large cost increases and delays.

India's first bullet train

India is building a high-speed line between Mumbai and Ahmedabad, about 500 kilometres apart, with financing and technology from Japan. The distance and the large populations at each end fit the conditions for success. Its economic value will depend on ridership, fares and whether costs stay under control.

Judging the value

Governments use cost-benefit analysis to compare costs with benefits such as time saved, fewer road accidents, lower emissions, freed-up capacity on existing railways, and wider effects on business and housing. Estimating ridership accurately is crucial, and studies have found that forecasts for large rail projects have often been too optimistic.

Thinking high-speed rail makes sense everywhere

High-speed rail shines between large, dense cities at the right distance. In sparsely populated areas, or where distances are very long, the same money might do more good spent on upgrading existing lines, buses or other transport.

Key takeaways

Japan's Shinkansen, opened in 1964, pioneered high-speed rail; China now has the largest network.
High-speed rail works best between large, dense cities about 200 to 800 kilometres apart.
Construction costs are very high and often exceed estimates, as with Britain's HS2.
Cost-benefit analysis weighs time savings and other benefits against these costs.