Many countries offer

subsidies A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...

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 An urban area, built-up area or urban agglomeration is a human settlement with a high population density and infrastructure of built environment. Urban areas are created through urbanization and are categorized by urban morphology as cities, ...

and along their arteries. These arrangements help to regenerate cities, increase revenue from local

taxes A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, o ...

, increase

housing Housing, or more generally, living spaces, refers to the construction and assigned usage of houses or buildings individually or collectively, for the purpose of shelter. Housing ensures that members of society have a place to live, whether i ...

values, and encourage

mixed use development Mixed-use is a kind of urban development, urban design, urban planning and/or a zoning type that blends multiple uses, such as residential, commercial, cultural, institutional, or entertainment, into one space, where those functions are to some ...

. By contrast, a policy of

highway A highway is any public or private road or other public way on land. It is used for major roads, but also includes other public roads and public tracks. In some areas of the United States, it is used as an equivalent term to controlled-acces ...

expansion, which is more typical in the U.S., promotes the development of suburbs at the periphery, contributing to increased

vehicle miles traveled The units of measurement in transportation describes the unit of measurement used to express various transportation quantities, as used in statistics, planning, and their related applications. Transportation quantity The currently popular units ...

, carbon emissions, development of greenfield spaces, and depletion of

natural reserve A nature reserve (also known as a wildlife refuge, wildlife sanctuary, biosphere reserve or bioreserve, natural or nature preserve, or nature conservation area) is a protected area of importance for flora, fauna, or features of geological or o ...

Modern rail as economic development indicator

European

development economist Development economics is a branch of economics which deals with economic aspects of the development process in low- and middle- income countries. Its focus is not only on methods of promoting economic development, economic growth and structural ...

s 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 The Basic Rail Transportation Infrastructure Index (BRTI Index) is a synthetic measure combining rail transportation metrics (existence of modern rail networks and average speed of main inter-urban itineraries) and cost efficiency observations, used ...

(known as BRTI Index).

Subsidies by country

Europe

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

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). 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

The

India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...

n railways are subsidised by around Rs 2.4trillion ($35.8 billion), of which around 60% goes to commuter rail and short-haul trips.

United States

Current subsidies for

Amtrak The National Railroad Passenger Corporation, doing business as Amtrak () , is the national passenger railroad company of the United States. It operates inter-city rail service in 46 of the 48 contiguous U.S. States and nine cities in Canada ...

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

Russia

In total,

Russian Railways Russian Railways (russian: link=no, ОАО «Российские железные дороги» (ОАО «РЖД»), OAO Rossiyskie zheleznye dorogi (OAO RZhD)) is a Russian fully state-owned vertically integrated railway company, both manag ...

receives 112 billion rubles (around US$1.5 billion) annually from the government.

Japan

The privatized rail network in Japan requires few subsidies. The three biggest companies, JR East, JR Central and

JR-West , also referred to as , is one of the Japan Railways Group (JR Group) companies and operates in western Honshu. It has its headquarters in Kita-ku, Osaka. It is listed in the Tokyo Stock Exchange, is a constituent of the TOPIX Large70 index, and i ...

(which account for 60% of the passenger market) receive no state subsidy.

References

External links

UK Rail Finance 2014-15
{{DEFAULTSORT:Rail subsidies Rail transport Subsidies