Cost-Benefit Analysis of High-Speed Rail Link between Hong Kong and Mainland China

Abstract

The Legislative Council in Hong Kong has approved a funding of USD$8.60 billion to build the high-speed rail (HSR) line linking mainland China. HSR is a breakthrough technology that allows trains running at a speed over 250 km per hour. The most controversial part of the HSR investment is whether its cost could be compensated by the social benefits. In this study, a cost-benefit analysis of the Hong Kong to mainland HSR (HKM-HSR) line is carried out. First, all the direct and indirect costs, and social benefits are defined; then, monetary equivalents are assigned to these elements; third, all the future values are discounted into present values and aggregated. The results show that the project has a positive net present value (NPV) up to USD$2,068.49 million, which proves that the investment is worth. In addition, other transport alternatives, i.e. the existing roadway and conventional railway, are examined and compared with HKM-HSR, which unveils that HSR has the largest positive NPV among these three passenger transportation modes because of its excellent performance in ticket revenue, travel time savings and safety improvement.