Many countries offer subsidies to their railways because of the social and economic benefits that it brings. The economic benefits can greatly assist in funding the rail network. Those countries usually also fund or subsidize road construction, and therefore effectively also subsidize road transport. Rail subsidies vary in both size and how they are distributed, with some countries funding the infrastructure and others funding trains and their operators, while others have a mixture of both. Subsidies can be used for either investment in upgrades and new lines, or to keep lines running that create economic growth.
Rail subsidies are largest in China ($130 billion), Europe (€73 billion) and India ($35.8 billion), while the United States has relatively small subsidies for passenger rail with freight not subsidized.
Social and economic benefits of rail
Railways channel growth toward dense city agglomerations and along their arteries. These arrangements help to regenerate cities, increase revenue from local taxes, increase housing values, and encourage mixed use development. By contrast, a policy of highway expansion, which is more typical in the U.S., promotes the development of suburbs at the periphery, contributing to increased vehicle miles traveled, carbon emissions, development of greenfield spaces, and depletion of natural reserves.
Modern rail as economic development indicator
European development economists have argued that the existence of modern rail infrastructure is a significant indicator of a country's economic advancement: this perspective is illustrated notably through the Basic Rail Transportation Infrastructure Index (known as BRTI Index).
Subsidies by country
Total EU rail subsidies amounted to €73 billion in 2005.
|Country||Subsidy in billions of Euros||Year||Billion passenger-km travelled in 2014|
Note that several operators that do not receive subsidies also exist, including virtually all long haul and high speed services in France and Germany.
In 2015, total domestic rail spending by China was $128 billion and is likely to remain at a similar rate for the rest of the country's next Five Year Period (2016-2020). A planned 8,000 kilometres (about 5,000 miles) of track will be added domestically, with a goal of better connecting existing domestic track with other foreign railway systems.
Current subsidies for Amtrak (passenger rail) are around $1.4 billion. The rail freight industry does not receive direct subsidies.
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