System dynamics in railway project appraisal: Assessing student productivity and wider economic benefits in the knowledge economy

Abstract

Rail projects require substantial long-term investments, making comprehensive project appraisal essential. Traditional cost-benefit analysis (CBA) emphasizes direct benefits but often overlooks wider economic benefits (WEB) like productivity gains and human capital development within the knowledge economy. Even when WEB considered, most studies rarely capture the feedback loops between different benefits over time, limiting comprehensive evaluation. To address these gaps, this paper develops a system dynamics (SD)-based WEB evaluation framework, applying it to the Shatin to Central Link project in Hong Kong, which connects a major university to the local transit network. The model uses student salary as a proxy of productivity, reflecting indirect economic benefits tied to human capital enhancement. Based on survey data, the results show increased student productivity contributes a cumulative impact equivalent to 1.60% of total WEB value over 50 years. The analysis reveals significant long-term gains, with profitability increasing from HK$35.79 billion to HK$42.20 billion and the investment payback period shortening by 0.42 years to 13.86 years when feedback loops are considered versus traditional CBA. These findings highlight the cumulative effects from the interactions among benefits and the reinforcing relationship between infrastructure and productivity in driving economic growth. While this case focuses on one university, the framework can be extended to assess wider regional impacts. The model’s generalizability is discussed through feature customization, integrated impacts, and multi-stakeholder perspectives. This research demonstrates that the SD approach enhances WEB analysis, overcoming limitations of CBA and offering actionable insights for investment decisions that promote sustainable, knowledge-based urban development.