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Findings of the updated Cost-Benefit Analysis suggest that Rail Baltica is economically viable and expected to generate an economic net present value of 6.6 billion Eur in direct net benefits.

Additional indirect impact, outlined in the wider economic impact analysis, is expected between 15.5-23.5 billion Eur. The related broader economic benefits include military mobility, environmental sustainability, social equality, corridor synergies, and supply chain impacts.

Explaining the rise in prices

The project has undergone significant evolution since its previous cost-benefit analysis in 2017. In Lithuania alone, regional stations, connections to airports and necessary infrastructure elements that were not foreseen in the original scope were included.

In addition, since the 2017 assessment, the world has been undergoing political and socio-economic changes, such as the pandemic, the war in Ukraine, all of which have had an impact on price rises, with inflation rising by 40%. It is estimated that the implementation cost of the project, aiming to build an operational Rail Baltica line across the three Baltic states connecting to Poland by 2030, will reach 15.3 billion Eur.

According to the independent evaluators, the increase in Rail Baltica's costs is due to the following factors: 31% of the increase stemmed from increased cost predictions due to design development between 2017 and 2023; 51% arose from more holistic calculations and lack of contingencies in the original estimation; 18% arose from additional external requirements and factors such as third-party requirements, various institutional technical regulations, interoperability technical specifications and other changes, arising in the last 6 years.

According to the cost-benefit analysis study, Rail Baltica's cost is estimated at 26 million Eur per kilometer. Studies have shown that for similar high-speed rail projects in Europe, the average cost per kilometer is 24 million Eur.

Benefits outweigh costs

The key findings of the study estimate that passenger transport is expected to generate 80% of Rail Baltica's benefits, with environmental improvements accounting for 14% and freight transport contributing 5%. The project will integrate the Baltic region into the European railway network, boosting GDP growth by 0.5-0.7 percentage point annually. Key growth contributors include land value appreciation, tourism, new business development, labor productivity, competitiveness, and urban development.

Rail Baltica supports trade flows affected by geopolitical events, such as Russia's war on Ukraine, and aids Ukraine's reconstruction. It enhances energy security by shifting from fossil fuels to renewable energy, reducing consumption by 1.5-3.3%, and supporting net-zero emissions by 2050. The project also improves environmental and traffic safety, reducing pollution and accident risks.

Rail Baltica enhances regional defense and security by providing EU standard-gauge 1435 mm infrastructure for passengers, freight, and military mobility. In peacetime, it can replace a 7 km convoy of military equipment with a single 40-wagon train, generating 2-4 million Eur annually from military transport. In armed conflicts, it could evacuate from 95,000 up to 143,000 people from the Baltic capitals to Poland within one day.

Continuation is essential

Achieving the full Rail Baltica project scope is essential for delivering wider socio-economic benefits at the EU, Baltic, and national levels. RB Rail AS has applied for over 2 billion EUR in the CEF 10 call at the beginning of 2024. EU financing beyond these sources will largely depend on negotiations for the next EU budget, alternatives are also being explored. 

In 2024, the Rail Baltica project has entered its next phase of implementation, with 15% of the Rail Baltica mainline scheduled to be under construction by the end of year. In Estonia, construction of 21 km of the mainline has been initiated. In Latvia, agreements have been made for the construction of more than 200 km of mainline, with preparatory works underway in the southern section and the commencement of construction on the first 13 km anticipated in the coming months. In Lithuania, construction of 29 km of mainline is in progress, with plans to extend construction to about 70 km section by year-end. Additionally, public procurement procedures for upper construction on the Kaunas-Lithuania/Latvia border section (168 km) are set to commence.

The two largest procurements, for electrification and for the control-command and signaling system design and construction, are following the overall project's timeline. Today, over 300 local and international companies from across Europe are contributing to the project development.