New Perspectives on Investment in Infrastructures by G. Arts, W. Dicke and L. Hancher

1 stuck on the tracks? empirical study 
for investments in the dutch railway
 infrastructure
 Rudi Bekkers
 1.1 introduction
 In recent years, concerns have been expressed in the Netherlands about invest
ments in ‘public’ infrastructures such as energy, public transport, the water
 supply and telecommunications. In order to satisfy the public’s ever-changing
 concerns about demand, environmental goals, etc. some of these infrastructures
 may require large-scale investment. Over the past decades, many of these infra
structure sectors have been confronted with new regulatory models, liberalisa
tion and privatisation. Although these developments possibly helped to improve
 cost-effectiveness, they could now be hindering the ability of infrastructure
 managers to meet the demand for investments. The (shareholder’s) demand for
 profitability might not match the public desire to invest in capacity, quality, new
 services, or more environmentally friendly systems. In addition to the issue of
 investment, similar questions have been raised about performance, innovation,
 and other features related to governance structure.
 This paper focuses on the Dutch railway infrastructure, and aims to answer the
 questions of whether investments in infrastructure involving large adaptations or
 upgrades are desirable (seen from the public perspective) and if the railway sector
 in its current state is able to make such investments. As the Dutch railway sector
 has not had to face privatisation and only limited liberalisation, it is interesting 
to compare it with sectors where such developments have had a larger impact. 
The performance of the railways is always a highly topical subject in the media 
and in the political arena. At first glance, the Dutch railway sector would seem to 
be challenged by the desire of politicians and the public to become involved in 
large investment projects, such as a new European safety system and improved
 power supply for trains. On the other hand, earlier large investments such as the
 ‘Betuwelijn’ freight connection from Rotterdam harbour to Germany, later faced
 criticism that it was too expensive and unnecessary. The high-speed train line 
between Amsterdam and Belgium has also been criticised for delays and mounting
 costs.
  1.1.1 research focus and methodology
 The overall aim of this paper is to understand the governance model of the Dutch
 railways and to explore what lessons can be learned from experiences in this
 sector. More specifically, we will focus on the following four research questions:
 1. Is the level of investment in the railway sector, seen from the various perspec
tives, considered adequate? Is the allocation of investments also adequate?

2. How does the railway sector perform, and how is that related to the use of Key
 Performance Indicator regulations?
 3. How innovative is the railway sector and to what extent is it able to adapt to its
 changing environment?
 4. What other lessons can we learn from experiences in this sector?
 For this paper, we specifically address railway infrastructure, although occasion
ally this cannot be done without taking the providers of passenger and freight
 services (the rail operators) into account. We also focus predominantly on
 passenger services as well as occasionally referring to freight transport by rail.
 This article is based on interviews with representatives of the various stakehold
ers (infrastructure managers, rail operators, regulatory agencies) as well as
 academics and sector specialists. A total of eight interviews were conducted
 among six key stakeholders. These interviews were held in the spring of 2007 and
 views are supplemented by secondary sources (literature, internet data sources).
 Unless otherwise noted, the (anonimised) views and claims in this paper are
 based on these interviews. Given the scope of this paper, we do not claim to be
 representative or exhaustive. We do believe, however, that this short study
 provides valuable insight into the functioning and governance of the railway
 sector.
 Furthermore, we would like to point out that this study is explorative. Our aim is
 not to give decisive answers based on a large empirical study, but rather to under
stand to what extent governance problems, in particular investment problems,
 are present in this sector.
 1.1.2
 structure of this paper
 This article is structured as follows. Ever since the early days, railways have been
 considered as fulfilling a public service. Section 1.2 introduces the public interests
 that are at stake in this sector. Section 1.3 continues by describing the regime
 changes Dutch railways have undergone in the past two decades, and 
summarises the current governance model. Section 1.4 aims to answer the first
 three research questions (investment, performance, and innovation), and 
the subsequent section focuses on the fourth research question by discussing 
possible improvements to the governance model as suggested by the stake
holders. Section 1.6 draws conclusions and discusses what can be learned from
 this specific case study.
 1.2 The public interest in railways
 Not long after the introduction of the very first railways, governments realised
 that these networks provided services that were highly beneficial for society and
 contributed to economic growth and welfare. Like in many other countries, the
 first railway services in the Netherlands were introduced by private firms but

New Perspectives on Investment in Infrastructures by G. Arts, W. Dicke and L. Hancher