The impact of high-speed rail investment on economic and environmental change in China: A dynamic CGE analysis

Abstract

This study investigates the impact of high-speed rail investment on the economy and environment in China using a computable general equilibrium (CGE) model. The analysis is implemented in a dynamic recursive framework capturing long-run capital accumulation and labor market equilibrium. A national level impact was simulated through direct impact drivers including land use conversion, output expansion, cost reduction, productivity increase, transport demand substitution and induced demand. The results suggest that rail investment in China over the past decade has been a positive stimulus to the economy, while the effect on CO2 emissions generation has been large. Overall, the economic impacts of rail investment are achieved primarily through induced demand and output expansion, whereas the contribution from a reduction of rail transportation costs and rail productivity increases were modest. In addition, negligible negative impacts were found from land use for rail development and the substitution effect among other modes. Emissions reduction from substitution of rail for other modes was small and offset by output expansion due to lowered rail transport costs and induced demand.