HSR and regional development strategies in France - Vincent Benezech International Transport Forum at OECD

International Symposium on
       ‘‘HSR Impacts and Regional Development Strategy’’
                 Seoul, Monday 23 March 2015

HSR and regional development
strategies in France
Vincent Benezech
International Transport Forum at OECD

2

Introduction

• French HSR has had many positive impacts on mobility and
  economic development
• But impacts are not evenly distributed and planning is
  often done with unrealistic expectations
• Presentation outline:
   – Overview of the French HSR system
   – Expected and observed effects of HSR
   – Planning and financing HSR in France
• Focusing on some specificities of the French case

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Overview of the French HSR
system

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   The French HSR network

• First line open in 1981
• World speed record
• Currently:
   – 2000 kms of HSR
   – 750 kms opening in 2017
   – 54 billion pkms in 2012
       • Out of 89.1 rail pkms

• Organised around Paris

                                     Source: Julie Perrin

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Organisation of the HSR system

        RFF                            SNCF
   (SNCF Réseau)                   (SNCF Mobilité)

       Planner                   Main (sole) operator

  1 600 employees                155 000 employees

                    Local        Rail
  French State                                   …
                 government   regulator

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Services extend beyond HSR network

        Source: Julie Perrin

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Services extend beyond HSR network

        Source: Julie Perrin

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Services extend beyond HSR network
 • Strong penetration of HSR in France with limited
   expansion of HSR network
    – HSR even in ‘remote’ areas where HSR would not otherwise be
      justified

 • Commercial success in many cases
 • National audit agency: HSR extensions not relevant
   anymore
    – HSR trains spend 40% of their time outside of the HSR network
    – A strain on the finances of the HSR operator
    – At the expense of regional rail

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But a lot of new HSR stations are built
outside of cities

                                     • Compromise between
                                       operational speed and
                                       regional traffic
                                     • HSR on conventional
                                       network only to expand
                                       HSR services further
                                     • Limited connectivity
                                       with other public modes
                                       of transport
                                     • Strategy now evolving

 Source: Soulié et Tricoire (2002)

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HSR services are a commercial product
 • The rail operator is state-owned…
    – No competition on national lines
    – Large subsidies for regional and conventional long-distance rail

 • … but HSR services are designed as a commercial
   product
    – HSR services need to be profitable for SNCF
    – But getting less and less so…
               Million euros per billion pkm

                                                         Revenues/traffic ratio

                                               Source: Cours des comptes

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HSR services are a commercial product

 • SNCF operates complex yield-management and discount
   card system
    – Close to monopolistic pricing
    – « Mobility for everyone »
    – Development of low-cost services

 • Load factors are high
    – Around 70% for HSR services in France
    – Compared to about 50% in Germany for instance

 • But operational margin is not higher than in Germany

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Expected and observed
impacts of HSR

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Socio-economic indicators
 • HSR lines are not financially viable
 • They make sense from a socio-economic point of view
   but their traffic/impact is always over-estimated

                             HSR line            Ex-ante   Ex-post

                             South-East           28.0        -
  Source:Cours des Comptes

                             Atlantic             23.6      14.0

                             North-Europe         20.3       5.0

                             Paris connections    18.5      15.0

                             Mediterrannean       12.2       8.1

 Socio-economic internal rate of return for selected HSR projects

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Impacts on mobility

 • The French experience reinforces the evidence on the
   zone of relevance of HSR
    – Between 1 and 3 hours of travel time
    – Between large, dynamic urban centres

 • Strong competitor with air
 • But this does not translate into reductions in CO2
   emissions
    – Construction costs too CO2 intensive
    – HSR services outside of HSR network not full enough

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HSR stations in city centers …
 • Reinforcement of strong regional metropolises

                              - Ambitious and often successful
                                urban renewal plans
                              - HSR reinforces the image of
                                the city as a dynamic center of
                                activity
                              - But no evidence of
                                direct/wider economic benefits

  Source: Wikipedia

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… and HSR stations outside of city centers
 • Compromise between operational speed and local
   stakeholders’ wishes
 • Can be a success in terms of traffic
    – If accessible, connected to the conventional rail network
    – When customer base is present (dynamic economic region,
      tourism…)

 • But to the detriment of historical rail stations which see
   less train services
    – Some neighbourhoods of historical stations witness closure of
      shops

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… and HSR stations outside of city centers
 • Against local government’s desire, no systematic
   development around stations
    – The worst case: the project does not materialise
    – The best case: local companies relocate close to HSR
    – Survey of companies in rural areas: HSR not the main driver
      behind location choice

                Source: Agence Duthilleul

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Planning and financing HSR in
France

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Overview
 • First HSR line
    – French State in coordination with SNCF
    – Link large cities with few intermediate stops

 • The rail infrastructure manager cannot take up bad
   debts
    – Only finance up to the amount of expected rail toll returns over
      the duration of the project (50 years)
    – Limited power over planning decisions

 • With « regionalisation »
    – Multiple local, national and supra-national stakeholders
    – Very diverse objectives

 • Recently, return of centralised planning (Mobilité 21
   committee)
    – But some projects still go ahead even if deemed not relevant

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Consequences

 • Financing is made against guarantees for services
    – For accessibility and attractivity for local authorities
    – To maintain revenue levels in case of RFF/PPPs

 • Result in unrealistic objectives
    – Service guarantees are very long-term and expand beyond the
      scope of projects
    – Competition between efficient long-distance journeys and local
      development

 • Competition between local stakeholders
    – For levels of services
    – For location of stations

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     Example: East line

                                 Stakeholder            M€
                                 French state     680

                                 Local            640
                                 government
                                 RFF              532

                                 Europe           118

                                 Luxembourg       40

                                 Source: Réseau Ferré de France

Source: Réseau Ferré de France

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Example: East line
                        Metz

                           Lorraine TGV station

  Source: Google Maps
                        Nancy

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Conclusion - impacts

• HSR can have a deep impact on
   – Mobility, accessibility to regions
   – Economic development of already developed areas

• But no observed structural effects of HSR
   – Depends on the supply of enough services, connection with
     conventional rail
   – Need of cooperation between local authorities involved

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Conclusion - planning

• HSR is extremely popular among local authorities (« Effet
  TGV ») and French people
• Inventive financing transforms HSR planning into a
  bargaining exercise
• Groing awareness about the need for inter-modality and
  collaboration between stakeholders

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Further reading
• In English
   – The Economics of Investment in High-Speed Rail. ITF Roundtables,
     155, 2014.
   – Bazin et al (2011) High-speed rail service and socio-economic
     transformation in local areas, a review. Presented at the 90th Annual
     meeting of the TRB.

• In French
   – La grande vitesse ferroviaire, un modèle porté au-delà de sa
     pertinence. Rapport de la Cour des Comptes, 2014.
   – Troin (2010) Désirs de gares TGV : du projet des édiles locaux au
     ‘désaménagement’ du territoire. Belgeo, 1-2.