Appraising the benefits of bottleneck removal in rail transport: a simplified CBA approach

The removal of infrastructure bottlenecks is widely considered among the most profitable interventions, in socio-economic terms, and rail transport is not an exception. However, as outlined for example by RailPAG (2005), the measurement of the related benefits is difficult and no specific manuals indications seem to exist. From a general point of view, by removing a rail bottleneck we expect at least two kinds of benefits: direct benefits to transport users and external benefits to the rest of society (environmental externalities, accidents and congestion) due to the avoidance of possible shift to more impactful transport modes. The first effect is particularly hard to correctly evaluate, especially without a complete transport model, and thus CBAs currently performed might often result biased. The aim of this paper is to propose a simplified approach to estimate the effects of a capacity constraints for a simple rail network, and assess its removal through a CBA. In the first part, we briefly analyse the transport economics literature on the issue. In the following we introduce the proposed methodology, based on the use of a standard logit model, to measure the rail users’ generalised costs with and without the capacity constraint, and the consequent users and social surplus variation. The model is specified initially for a single link and then extended to a more complex network. Then, we outline the other elements to be included into a CBA in addition to surplus variation: rail service performance improvements, external costs associated to road shift and possible wider economic effects. We also discuss the effect of regulation in the distribution of calculated surplus variations.