Rail subsidies

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Many countries offer subsidies to their railways because of the social and economic benefits that it brings. Subsidies vary in both size and how they are distributed, with some countries funding the infrastructure manager and some funding the train 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 would otherwise be unprofitable.

Rail subsidies are largest in Europe (€73 billion) and China ($130 billion), while the USA has relatively small subsidies as it concentrates on highways and airports for subsidized passenger transport and mainly uses railroads for freight (which in the US does not require subsidies) .

Social and economic benefits of rail

Railways channel growth toward dense city agglomerations and along their arteries, as opposed to highway expansion, indicative of the U.S. transportation policy, which incents development of suburbs at the periphery, contributing to increased vehicle miles traveled, carbon emissions, development of greenfield spaces, and depletion of natural reserves. These arrangements revalue city spaces, local taxes,[1] housing values, and promotion of mixed use development.[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

USA

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

Europe

European rail subsidies in euros per passenger-km for 2008[5]

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

Country Subsidy in billions of Euros Year Passenger-km travelled in 2014[7]
 Germany 17.0 2014[8] 79.3
 France 13.2 2013[9] 83.9
 Italy 7.2 2010[10] 39.7
 Spain 5.1 2015[11] 24.5
 United Kingdom 4.5 2015[12] 65.1
  Switzerland 4.3 2012[13] 18.4
 Belgium 2.8 2012[14] 10.8
 Netherlands 2.5 2014[15] 17
 Austria 2.3 2009[5] 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

China

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In 2014, total rail spending by China was $130 billion and is likely to remain at a similar rate for the rest of the country's next Five Year Period (2016-2020).[17] Much of this is going on investment in new lines, especially high-speed railways, as China's rail network is undergoing rapid growth.[18]

India

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The Indian railways are subsidised by around Rs 400 billion ($5.8 billion), of which around 60% of which goes to commuter rail and short-haul trips.[19][20]

Russia

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

Japan

The privatised 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

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  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.
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External links