6 KiwiRail Benefits to NZ Economy ($2 billion in value)

2-minute read

Rail in New Zealand has been estimated to provide a total value of $1.7 billion to $2.14 billion to the country’s economy each year.

Such are the findings of the newly published, 30-page “The Value of Rail in New Zealand” report prepared for the Ministry of Transport by Ernst & Young (EY).

Based on 2019 data of rail freight across New Zealand and passenger rail in Auckland and Wellington, the desktop modelling exercise found rail’s economic contribution had risen about 27% based on midpoint comparisons to calculations previously run on 2016 figures.

The benefit of rail in comparison to accommodating the same railfreight and passenger volumes on the roading network revealed the following midpoint estimates:

  • Time (congestion) savings – $997 million.
  • Reduced air pollution – $322 million.
  • Reduced fuel use – $216 million.
  • Reduced GHG emissions – $180 million.
  • Maintenance benefits – $105 million.
  • Safety gains – $96 million.

Following its analysis of the report, KiwiRail has highlighted the following six additional economic contributions:

  1. Commuter rail in Auckland and Wellington avoids 26 million annual car trips.
  2. New Zealand would need another 24,000 trucks on the road without railfreight.
  3. Air quality benefits from rail are equivalent to saving 70 lives each year.
  4. Railfreight avoids the use of over 150 million litres of diesel each year (about one million barrels).
  5. Rail comparatively reduces CO2 emissions by 2.5 million tonnes annually.
  6. Rail avoids 288 fewer injuries and fatalities each year.

In its May Express newsletter, the national rail operator emphasised that “there is an economic value of rail that is not captured in traditional profit and loss calculations”.

“These often-hidden benefits are delivered to all New Zealanders through social, environmental and economic values which were first quantified in 2016 by professional services firm EY,” it stated.

Describing the report’s about $2 billion value measure of rail as a “conservative” estimate, KiwiRail noted that the overall economic savings “far exceed what the Government puts into rail each year”.

“Rail makes a huge contribution to New Zealand – pre-COVID, more than 35 million passenger journeys were taken on rail each year and 25% of our export goods travel by rail.

“Rail is also an inherently environmentally-friendly mode of transport, with 70% fewer carbon emissions than heavy road freight.”

SOURCE: NZ Shipping Gazette

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