The Danish light rail system is a bad investment – even considering side effects and changed conditions

On numerous occasions, doubts have been raised regarding the economic consequences of the planned light rail system along Ring 3 of the Capital Region, since the economic analysis from 2013 did not examine, among other things, the so-called “side effects” of the light rail system, and because several of the conditions for the light rail system have changed.

We have assessed the light rail system’s side effects (also referred to as broader economic benefits) to be negative, on the order of –0.1 billion DKK. The reason the side effects are negative is that, in the 2013 analysis, it was determined that the light rail system would result in major inconvenience to businesses, reducing competitiveness.

However, the conditions for the light rail system have changed since 2013, such that, among other things, motor vehicle traffic is inconvenienced less. To assess whether such changes eliminate the negative effects of the project, we have done calculations based on a scenario with unrealistically optimistic conditions. Even in this unrealistic scenario — where, in comparison to the original analysis, we halved operating costs, increased the benefits for collective travellers by 50%, and eliminated the inconvenience to motor vehicle traffic — the light rail system would result in a large economic deficit.

Primarily, those conditions that positively affect the economy were highlighted in public debate by Hovedstadens Letbane (“Capital City Light Rail”) and others. However, there are also several opposing conditions, worsening the socio-economic impact of the light rail system. There is thus nothing signifying that the light rail system would be a good investment from an economic perspective, even considering the changed conditions.

It is recommended that the light rail project be terminated as soon as possible. Instead, options for improving traffic conditions by other means should be investigated. A bus rapid transit (BRT) system, among other options, should be considered. In 2010, a BRT solution was compared with a light rail solution, and it — unlike the light rail system — was assessed as producing an economic surplus.