Mar 4

Railroad Reconstruction on Rail Baltica’s Route (Tallinn-Tapa-Tartu section) – Socioeconomic Cost-Benefit Analysis

The research task was to carry out a socio-economic cost-benefit analysis on the renovation of Rail Baltica’s Tallinn-Tapa-Tartu section, that would bring about the increase in the speed limit of trains up to 120 kmph for passenger trains and 80 for freight trains.

The analysis was based on the comparison of two scenarios according to the European Union cost-benefit analysis requirements. Costs and benefits were taken into account both from the perspective of the enterprise (the effect of the investment on the financial figures of the enterprise) and of society in general (including passenger time and cost savings, environmental effects etc.). A sensitivity analysis was also carried out in order to evaluate how the change in values of inputs affect the main results.

The net present value of the project was negative for the enterprise but at the same time the results of the analysis showed important socio-economical advantages of carrying out the project, mostly thanks to time savings for passengers and also freight transportation companies. Project also decreases infrastructure costs which allow better utilization of the infrastructure from society’s point of view.

The whole cost of the investment was 651 million kroons according to the transportation infrastructure investments plan. Results allowed the financing of the project from the Cohesion Fund.

The analysis was commissioned by ASI Consult OÜ, the end-user was AS Eesti Raudtee.