This working paper reviews the key costs and benefits of high speed rail (HSR) investments. It also discusses, as case studies, several proposals of HSR lines in Britain and the existing Madrid-Seville corridor. It finally develops a model to investigate the demand conditions under which high speed rail is socially profitable.

It concludes that only under exceptional circumstances (a combination of low construction costs plus high time savings, perhaps because the existing rail infrastructure and services on competing modes are very poor) could a new HSR line be justified with a level of patronage below six million passengers per annum on opening; with more typical construction costs and time savings a figure more like nine million passengers per annum is needed.