16 Logistics & Transport NZ
New research reveals true value of rail BY GREG MILLER THE LATEST “Value of Rail” report has been released, providing useful and interesting analysis of the benefits of rail, aside from the obvious ones of getting people and freight to their destinations. Rail is a critical enabler for the New Zealand economy, providing broad ranging benefits economically, socially, and environmentally. Rail networks have long been part of the infrastructure of New Zealand and are a significant investment for the nation. While we know the costs, there is an economic value of rail in New Zealand which is often overlooked. This value accrues to the community and in the latest report “The Value of Rail in New Zealand” by independent consultants Ernst & Young, some of these social, environmental, and economic values of rail transport are identified and quantified. The value of rail to New Zealand was first modelled by EY in 2016 when the Ministry of Transport, in partnership with KiwiRail and Waka Kotahi NZ Transport Agency, asked what the effect on the roading network would be if rail was removed. This model1 has now been updated and shows the benefits of rail to New Zealand range in value between
$1.7 billion to $2.14 billion per annum. This value is made up of costs which are often hidden: • Reduced congestion ($997m) • Reduced air pollution ($332m) • Reduced fuel use ($216m) • Reduced greenhouse gas emissions ($180m) • Reduced road maintenance ($105m) • Improved safety outcomes ($96m) Viewed through this lens, the importance of rail is even more significant than is already recognised and reaches beyond the economic benefit to the customers KiwiRail services directly. The general approach taken in assessing this value has been to model the potential economic cost to New Zealand from not having a rail network. The value is indicative because, for example, it doesn’t consider any second-order or behavioural effects that might result if there were more vehicles on the road. Without rail freight, it is estimated that there would need to be an additional 24,000 trucks
on New Zealand’s roads. Heavy commercial vehicles cause 90 per cent of damage to our roads2, so moving freight by rail greatly assists in reducing road damage. Each year commuter rail in Auckland and Wellington avoids more than 26 million car trips. Rail also contributes a wider range of benefits to the economy, and these can be measured when we consider what might occur if we didn’t have rail. When we do this, we see that rail generates fewer costs in terms of accidents, congestion, and emissions than road. The benefits include: • Air quality benefits from rail are equivalent to saving 70 lives each year; • Rail freight avoids the need for over 150 million litres of diesel each year, or approximately 1m barrels. As a result, rail helps the environment by reducing CO2 emissions by 2.5m tonnes per year; and • Rail helps to make our roads safer through 288 fewer injuries and fatalities per year. The value of rail calculated by EY excludes further qualitative benefits from rail, such as connectivity, land use and resilience benefits. Nor does it consider the direct contribution
