In recent years, railways have begun to regain a central role in Mexico’s national infrastructure agenda. Ambitious projects have been launched in both freight and passenger sectors to reverse the historical relegation of this transport mode in favor of road transport and aviation. In freight, the focus has been on consolidating logistics corridors that connect ports, borders, and key industries. In passenger transport, the government has announced the development of approximately 3,000 kilometers of new railway lines. Key projects include the Tren Maya, the Interoceanic Train, the Isthmus Train, the Mexico-Toluca train, the Mexico-Querétaro train, and the AIFA-Pachuca passenger train.
These developments represent one of the most significant expansions of Mexico’s railway network in the 21st century. The Tren Maya, spanning nearly 1,500 km, connects five southeastern states (Chiapas, Tabasco, Campeche, Yucatán, and Quintana Roo). The Interoceanic Train links the ports of Salina Cruz (Oaxaca) and Coatzacoalcos (Veracruz), with branches to Ixtepec and Dos Bocas. The Mexico-Toluca train, currently in an advanced construction phase, aims to connect the State of Mexico’s capital with the western part of Mexico City. Altogether, the planned corridors will serve key cities such as Cancún, Mérida, Campeche, Villahermosa, Oaxaca, Coatzacoalcos, Toluca, Pachuca, San Juan del Río, and Querétaro—integrating regions previously marginalized from the national rail system.
This resurgence is not mere technological nostalgia but rather a revaluation of rail’s structural advantages, especially when framed within a broader vision of territorial development, social equity, and environmental sustainability. This essay explores those advantages, the financial challenges of building and operating railways, and a key conceptual proposal to ensure long-term viability: the planned leveraging of urban value generated by rail corridors.
Advantages of railways: sustainability, efficiency, and territorial cohesion
Railways are among the most energy-efficient and high-capacity forms of transport. A freight train can replace up to 280 trucks, significantly reducing road traffic, infrastructure wear, and logistics costs. Furthermore, per ton transported, trains produce 75–80% fewer CO2 emissions than road transport, aligning with national and international decarbonization goals. In Europe, countries like Germany and France have massively incentivized train use for intercity transport to curb emissions from the transportation sector, which accounts for nearly 25% of total CO2 emissions according to the European Environment Agency (EEA).
For passenger transport, rail provides fast and reliable connections for communities that are traditionally isolated or poorly connected. A modern regional train (120–160 km/h) enables functional relationships between cities up to 200 km apart—equivalent to a 1.5-hour trip. High-speed trains—like Spain’s AVE or Japan’s Shinkansen—reach 250–300 km/h, expanding the influence radius to 300–400 km from a major metropolis. This could significantly impact corridors such as the Bajío, Central Mexico, and the Gulf region.
Unlike planes or buses, trains typically enter directly into city centers, reducing transfer times and improving user experience. Rail also helps alleviate overcrowded metropolitan areas by allowing people to live further away without sacrificing commuting competitiveness. This supports territorial rebalancing and demographic redistribution, fostering a more efficient and sustainable urban network.
Construction and operation costs: a structural financial imbalance
Despite these advantages, railway development faces a major hurdle: the high cost of construction and operation. In Mexico, the average cost of building one kilometer of railway varies by route type, topography, and technology, but for the proposed average speeds, it ranges from $8 million to $15 million USD per linear kilometer for modern passenger trains. In Europe, with generally higher operating speeds, high-speed rail averages €20–30 million per kilometer, depending on terrain complexity and associated structures like bridges and tunnels (OECD, 2023).
These costs cannot be covered solely through ticket sales, especially when rail is designed as a social integration tool providing access to low-income populations. Public subsidies may partially help, but large-scale projects become unviable without complementary models that capture and reinvest part of the value created by the infrastructure.
Operational costs also remain high. Continuous maintenance, skilled personnel, safety, and energy needs (electric or diesel) mean that even well-patronized trains require ongoing financial support. Thus, it is critical to innovate financing mechanisms that do not rely exclusively on fares or permanent subsidies.
Rail as a catalyst for urban development
The core idea of this essay is that railways do not just move people or goods—they move opportunity. Their speed and reliability integrate formerly isolated communities into everyday access to jobs, education, and markets. A 200-km radius becomes realistic for functional connectivity between peripheral towns and regional economic centers. With high-speed trains, this radius can stretch to 400 km, multiplying prospects for economic expansion and territorial integration.
In Mexico, railway design now categorizes stops into stations, halts, or technical points, depending on relative importance. Still, it is crucial to incorporate, from the planning stage, the possibility of strategic stops also in areas without consolidated settlements but with potential to become new residential, industrial, or commercial hubs.
This requires thinking not just in terms of a transport project, but as a territorial intervention. Where trains pass and stop, value is generated. This value translates into land appreciation. Currently, these gains mostly benefit private actors without the railway project recouping any of that value. If the government instead participates from the beginning in acquiring land near the rail corridor, it could harness that appreciation to help fund the infrastructure.
A new institutional model: the Land Bank and intergovernmental coordination
To achieve this, it is vital to redesign the institutional architecture. A specialized public entity is needed—a Land Bank—that identifies, acquires, manages, and disposes of strategic land linked to railway projects. This entity could be a government agency under the Finance Ministry, operated in coordination with the Transportation Ministry and in close collaboration with local governments.
Its operation would involve identifying future settlement or industrial zones before finalizing the rail route, acquiring land (or drawing from its reserves) both for direct works and for influence zones, managing urban rezoning, and equipping plots with basic infrastructure like water, electricity, roads, and sanitation. Later, these plots could be transferred to private developers through auctions, concessions, or other mechanisms, generating revenues to help cover construction and even operation costs.
This model creates an unprecedented alignment of incentives: the same actors that generate value (the state through infrastructure) capture and reinvest that value—creating a virtuous cycle. It also curbs private speculation, channels orderly urban growth, and provides territorial development certainty.
Moreover, the Land Bank would enable better urban planning by promoting compact and sustainable growth hubs instead of sprawling developments. It would also serve to coordinate public service investments, avoid social conflicts over land ownership, and support long-term visioning.
International examples: inspiration for Mexico
Similar models have succeeded in other countries. In Japan, companies like JR East not only operate trains but also develop entire urban areas around their stations, capturing land value through commercial and residential projects. In France, SNCF has collaborated with local governments to plan stations and integrated urban development districts, as in Lyon Part-Dieu. In Leipzig, Germany, rail development has gone hand-in-hand with urban repositioning through coordinated transport and housing strategies. These cases show that trains are not just transportation—they are structuring agents of the territory, capable of regenerating declining areas and guiding sustainable urban growth.
Conclusion: infrastructure with a long-term vision
The construction of new railways in Mexico represents a historic opportunity to modernize infrastructure, close territorial gaps, and improve the sustainability of the transportation system. However, for these projects to be financially viable and sustainable in the long run, an integrated vision is essential.
Incorporating a value capture mechanism from the design phase—via the creation of a Land Bank—not only makes the impossible possible but also transforms governance and urban planning models. This demands unprecedented coordination between transportation, finance, and urban authorities, but the benefits are clear: more profitable infrastructure, better-organized cities, and fairer and more equitable economic development. Mexico needs not only more trains, but it also needs new paradigms to make them possible.
Additionally, this strategy opens the door to new forms of financing. Captured land value can be used to back green bonds, public-private investment instruments, or trusts ensuring long-term financial sustainability of the rail system. Thus, the train ceases to be a one-off developer and becomes a modern vector of national transformation.
Just as airports—depending on their size—can justify the creation of airport cities, railways should be viewed similarly. At ALG, as a consultancy specializing not only in railways but also in industrial and urban platforms and in complex public-private investment and operation schemes, we see in this new development need a great opportunity to help our clients implement increasingly sustainable and integrated development models—where transport infrastructure plays a fundamental role.
