Chapter 4: The Benefits of High Speed Rail

HSR will have a transformative impact on Ontario's economy and deliver benefits by motivating a significant mode shift away from the automobile, reducing travel times and providing better connectivity along the Toronto-Windsor corridor; all of these will support the Province's goals for addressing climate change. HSR will also generate benefits by connecting economic clusters, increasing employment catchment areas, and encouraging competition and knowledge-sharing.

This chapter details some of the benefits that will be realized both quantitatively and qualitatively as a result of HSR in the Toronto-Windsor corridor. It is structured to reflect the three key themes (foundational principles) highlighted in the vision for HSR as described in Chapter 3: Transform Mobility; Catalyze Economic Development; and Support Regional Integration and Development. Figure 4.1 illustrates the benefits described in this chapter within the context of the three themes.

The BCRs shown in Table 3.4 of Chapter 3 include a range of benefits that fit under the first two key themes and include, for example, GHG reductions as a result of HSR, benefits of reduced road congestion and passenger travel time savings, and cost savings through a reduction in personal automobile ownership, all over a 60-year time frame.

The third key theme is covered in the second half of the chapter, which describes what are commonly referred to as wider economic benefits, or WEBs. There is a growing practice worldwide of including WEBs in BCR calculations for transportation projects. WEBs are the additional benefits that transportation projects such as HSR can deliver to regions as a result of increased connectivity and mobility options, which generate what is referred to as "expanded benefits." With the inclusion of WEBs in the BCR calculation for HSR between Toronto and London, the expanded BCR increases from 1.02 to 1.09.

It is estimated that HSR would generate over $20 billion in economic value over a 60-year period. Approximately $17 billion of these benefits will be realized in the Toronto-London segment of the corridor, with the remaining $3 billion realized in the London-Windsor segment.

Figure 4.1: The Benefits of HSR

Source: Steer Davies Gleave

Transform Mobility

Based on projections consistent with the Province's Growth Plan for the Greater Golden Horseshoe (2006), over 10 million travellers annually are forecast to use HSR in the Toronto-Windsor corridor by 2041. As a comparison, in 2015, VIA Rail carried approximately 920,000 passengers in the Toronto-Windsor corridor and 3.6 million passengers in the entire Quebec City-Windsor corridor.1 .

As the business case demonstrates, HSR will alter transportation patterns in the Toronto-Windsor corridor and encourage a shift away from automobile use. A comparison between forecast mode shares in 2041 under a business-as-usual (BAU) scenario and with HSR implemented demonstrates that if the BAU scenario prevails, automobile use in the corridor would reach 95%. With the implementation of HSR, automobile use is forecast to be 86%. In 2041, HSR could therefore take an estimated 5.7 million cars off of the highway network between Toronto and Windsor.

Travel Time Savings

A key benefit of HSR would be reliability and travel time savings. HSR is anticipated to offer savings of between 40% and 60% over current travel times, as highlighted in Table 4.1.

Table 4.1: Comparison of Travel Times: HSR and Other Modes

Source: Steer Davies Gleave

These travel-time reductions represent an unprecedented level of efficiency for passenger travel in this corridor, especially when viewed in combination with the productivity and environmental benefits. The business case has estimated that travel time savings from HSR would yield over $7 billion in economic benefits over a 60-year period.

Savings from Automobile Use

HSR will provide an alternative to the automobile and consequently could reduce the need or desire for automobile ownership or use. This would yield significant economic benefits including reductions in costs related to automobile ownership (purchase costs, insurance) and operations (fuel, maintenance etc.).

The reduction in automobile use would also result in a reduction in expenditures related to highway maintenance and expansion along the corridor (i.e., if personal automobile use decreases, this would result in less wear on highway infrastructure). In combination, these reductions are estimated to yield approximately $9 billion in benefits over a 60-year period.

Congestion Reduction and Safety Benefits

According to the business case, automobile use in the Toronto-Windsor corridor is primarily single occupancy with an average of 1.2 occupants per car.

HSR's travel time savings would encourage automobile users to switch to HSR, which would increase the overall efficiency of passenger travel on the Toronto-Windsor corridor and free up road capacity for other productive uses including the movement of goods. The business case estimates that the Province would realize approximately $3.7 billion in economic benefits over a 60-year period through a reduction in congestion and associated improvements to transportation safety (i.e., due to a reduced number of vehicles on the road) directly attributable to HSR.

Environmental Benefits

HSR would unlock significant environmental and economic benefits. Over a 60-year period, HSR would lead to reduced emissions and save over 7 million tonnes of CO2 from entering the atmosphere.

Although this represents a relatively small percentage of overall Ontario emissions, a 250 km/h electrified HSR service has a carbon reduction factor of over 20. This suggests that for every tonne of CO2 that the HSR system would create due to electricity supply requirements, it would remove over 20 tonnes of CO2 emissions from the road network due the changes in travel demand driven by the HSR service.

Travel by HSR produces one-third of the carbon emissions of car travel and one-fourth of the emissions of an equivalent trip by air.2 . In the long term, this would contribute to the Province's goals to transition to a low-carbon economy and reduce GHG emissions, particularly in the transportation sector.

In addition to the reduction of GHG emissions, HSR generally also presents other environmental benefits. Studies indicate that HSR systems demonstrate high levels of land-use efficiency in comparison with the land required for highway operations; for example, a two-track HSR railway can carry 13% more passengers per hour than a six-lane highway and requires 40% less land .

Catalyze Economic Development

Talent Mobility and Attraction

HSR could shape travel in the Toronto-Windsor corridor by expanding the commute shed and reducing commute times between Toronto and Kitchener-Waterloo to an average of 48 minutes. This will enable greater mobility for all categories of travellers from business to leisure and allow more Ontarians to live and work in different communities.

Compared to driving, which can take up to two hours between Toronto and Kitchener-Waterloo during peak times, this is a significant time-saving benefit. It is also worth considering that the time spent commuting by rail can be considered productive time, since high speed internet and mobile connectivity options would enable HSR commuters to do work or other tasks they would otherwise be unable to accomplish if they were driving.

Similarly, Kitchener-Waterloo and London would be brought well within the 45-minute commute shed range at 25 minutes. This means that the total two-way daily commute time between the two cities would be less than one hour, representing a significant opportunity for talent mobility between two growing communities that have strong industrial foundations and world-class universities.

In addition to reducing travel times and enabling the expansion of commute sheds, HSR would connect knowledge centres throughout the corridor. The benefits of this are difficult to quantify, but connecting key centres of learning has been undertaken elsewhere in the world. For example, in the U.K., the London-Cambridge high-tech corridor rail service connects world-class educational institutions with the country's largest city and financial centre.

In the Toronto-Windsor corridor, many knowledge and corporate centres, including those highlighted in Table 4.2, would be linked by HSR connections.

By connecting these knowledge centres, HSR could support innovation and collaboration between industries and academic institutions, or create more opportunities for university/college partnership programs or the expansion of satellite campuses.

For the purposes of this report, "commute shed" is defined as a geographic area within which people can travel in a specified time.

Table 4.2: Selection of Knowledge Centres in the Toronto-Windsor Corridor

Urban Centre Knowledge Centre
Downtown Toronto
  • University of Toronto
  • Ryerson University
  • Ontario College of Art and Design (OCAD University)
  • MaRS Discovery District/Healthcare District
  • Financial District
  • Humber College
  • George Brown College
  • Seneca College
  • Various universities with downtown campuses
Pearson Airport
  • Adjacent airport corporate centre
Guelph
  • University of Guelph
Region of Waterloo
  • Wilfrid Laurier University
  • University of Waterloo
  • Conestoga College
  • Start-up and high-tech hub
London
  • University of Western Ontario
  • Fanshawe College
Windsor
  • University of Windsor
  • St. Clair College

Source: Steer Davies Gleave. Note that this list of knowledge centres and institutions in the corridor is representative and not necessarily exhaustive.

In a recent speech, the Premier's Business Advisor, Ed Clark, gave sound advice: "Create the right environment and companies will come to where the supply of talent and ideas are located." Modern, fast, efficient transportation links, including HSR, are an essential part of creating such an environment, one that will foster innovation, investment and productivity.

Global connectivity is so important to commerce today that access is crucial not just to Toronto as the region's major business centre but to other cities in North America and around the world as well. Efficient and reliable transportation links from Pearson, Canada's largest airport, to businesses within the Greater Toronto Area are essential.

Throughout the Special Advisor's engagement with Indigenous communities and with stakeholders, particularly those representing the business sector in the corridor, a key theme was repeated: talent mobility among Southwestern Ontario municipalities is the single-largest challenge for growing companies. For example, representatives of the technology business community in Kitchener-Waterloo believe that when a company grows beyond 300 employees it often "hits a wall" where talent attraction and retention becomes challenging. Many young professionals tend to prefer to live in larger urban centres such as downtown Toronto. Without access to the talent pool of high-tech professionals in the Toronto area, companies find it more difficult to expand their operations.

Beyond Kitchener-Waterloo, similar challenges are faced by companies in the London area. At a roundtable held in London by the Mowat Centre in 2015 with information communications technology executives, the main concern expressed was over the barriers posed by a skills shortage—executives worry that they only have partial success in attracting top talent to London although the city has access to top university and college graduates and attractive features such as more affordable housing. But they compete with, and often lose out to, what they perceive to be more desirable city centres. The connection of economic hubs through a fast, reliable HSR service will expand the overall commute shed and enable greater mobility.

Wider Economic Benefits (WEBs)

As described earlier in the chapter, the expanded BCR for HSR includes the measurement of WEBs. According to the business case, the literature on WEBs typically divides benefits into three categories:

  • Agglomeration benefits.
  • Imperfect competition.
  • Labour supply improvements.

The primary benefits related to HSR are associated with agglomeration.

Agglomeration benefits, or "cluster benefits," are generated when firms and people locate near one another in cities and industrial clusters and encourage knowledge-sharing, competition, and innovation4 . HSR can be considered to bring firms and people closer together through reduced travel times.

These benefits would positively impact the following industries in the Toronto-Windsor corridor:

  • Manufacturing (light and heavy manufacturing).
  • Construction (residential, commercial, and industrial construction).
  • Consumer services (sales, retail, tourism, transportation).
  • Producer services (insurance, finance, research and development, and knowledge-based industries).

As shown in Table 4.3, WEBs would generate an additional $1.3 billion in economic benefits for the corridor over a 60-year period, which in addition to the base benefits brings the total value generated in the corridor to $21.55 billion. The business case demonstrates that producer services are expected to generate the majority of benefits due to the density of knowledge in this sector between Kitchener-Waterloo, Guelph, and Toronto in particular.

Additionally, WEBs that have been calculated for Kitchener-Waterloo to London are anticipated to see the most growth over the 60-year period, largely due to the population and employment growth forecast for the region.

Table 4.3: Value Generated Through WEBs

Sector Value
NPV 60-year (million $2021) $1,300
Manufacturing (million $2021) $260
Construction (million $2021) $80
Consumer services (million $2021) $100
Producer services (million $2021) $860

Source: Steer Davies Gleave

Overall, although the WEBs generate fewer benefits compared to the base benefits, it is important to understand that HSR systems generate more than just travel-related benefits. Measuring agglomeration benefits in particular quantifies some of these WEBs, while other benefits are qualitative.

Support Regional Integration and Development

As demonstrated throughout the business case, HSR will provide a fast, efficient connection between urban centres and knowledge centres in the corridor. In addition to transforming mobility and catalyzing economic development, HSR will also contribute to regional integration and development.

According to the business case, the population catchment for HSR by 2041 will be 13.5 million people, providing a significant number of Ontarians access to a service that connects them to jobs, universities, and cultural centres when and if they need it. This shift in regional integration benefits can be expanded by investing in first-mile/last-mile connections to HSR and expanding the feeder system for buses and rail, and by encouraging mixed-use development and intensification in and around HSR stations.

From a land-use perspective, HSR will support provincial policies such as the Growth Plan for the Greater Golden Horseshoe (2006), by helping the Province to grow where it has designated for intensification without adding pressure to the Greenbelt. It will be necessary to encourage this by intensifying development around HSR stations and encouraging municipalities to pursue transit-oriented development.

Furthermore, regional integration is closely linked to economic growth, which is more likely to occur in places that have better transportation connections. This includes local transit and first-mile/last-mile linkages, but it also includes HSR and its ability to increase market access and connect communities within a larger region.

Some argue that HSR has a tendency to exacerbate sprawl by allowing more people to commute to the hub city, which just increases challenges faced by regional centres that were supposed to benefit from quicker connectivity. For example, there has been some doubt in the U.K. that the planned HS2 between London and Birmingham will turn Birmingham, the U.K.'s second-largest city, into a bedroom community rather than an independent commercial hub. However, an assessment of the German ICE model has shown that an HSR connection in smaller communities can actually directly contribute to strong economic growth.

Limburg and Montabaur, two small German towns with populations of approximately 34,000 and 13,000, are 20 kilometres apart along the German ICE track that runs from Cologne to Frankfurt, two major hub cities with populations of around 1 million and 700,000 respectively.

In partnership with other levels of government, local planning authorities in both Limburg and Montabaur were able to negotiate an HSR stop when the ICE line was being planned and to provide land for development. The HSR station at Montabaur was built outside the city centre, a short distance from a highway connecting Cologne and Frankfurt. Commuters were attracted by low residential land values and proactive zoning of private land. Development in the area surrounding the station started occurring as the station and HSR line were being developed and accelerated after operations began.

The station also spurred the development of business and retail centres. Since the station opened, approximately 50 enterprises with 1,000 jobs have located in Montabaur. A study of the spatial impacts of HSR found that the Montabaur's GDP and employment grew by 2.7% more than other comparable communities, and concluded that HSR had a tangible and permanent impact on the town's growth5 .

The key lesson from this example is that the implementation of any HSR system should be coupled with an alignment of regional transportation and of economic and urban planning policies. In cases where HSR has generated economic benefits, it has been coupled with efforts to connect stations to transit linkages and other first-mile/last-mile connections.

Recommendation 24: Encouraging Density

It is recommended the Province develop and/or encourage, as appropriate, regional development initiatives, tax incentives and/or grants to mitigate any urban sprawl HSR might create, and encourage transit-oriented development in station areas.

  • Since growth and development policies are implemented at the municipal level, the Province should work closely with municipalities to achieve this objective.

References

1 VIA Rail Canada. Annual Report 2015, 9.

3 Greengauge 21 (2009). Fast forward: A high-speed rail strategy for Britain.; and American Public Transportation Association (January 2012). An Inventory of the Criticisms of High-Speed Rail With Suggested Responses and Counterpoints., 66‒67.

4 Glaeser, E. L. (February 2010). Agglomeration Economics. The University of Chicago Press., 1‒14.

5 Ahlfeldt, Gabriel M. and Arne Feddersen (2010). From periphery to core: economic adjustments to high speed rail. London School of Economics & University of Hamburg.

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