Costs, benefits, and impacts

As of March 2018update, 212 cities have built rapid transit systems. The capital cost is high, as is the risk of cost overrun and benefit shortfall; public financing is normally required. Rapid transit is sometimes seen as an alternative to an extensive road transport system with many motorways; the rapid transit system allows higher capacity with less land use, less environmental impact, and a lower cost.

Elevated or underground systems in city centers allow the transport of people without occupying expensive land, and permit the city to develop compactly without physical barriers. Motorways often depress nearby residential land values, but proximity to a rapid transit station often triggers commercial and residential growth, with large transit oriented development office and housing blocks being constructed. Also, an efficient transit system can decrease the economic welfare loss caused by the increase of population density in a metropolis.

Rapid transit systems have high fixed costs. Most systems are publicly owned, by either local governments, transit authorities or national governments. Capital investments are often partially or completely financed by taxation, rather than by passenger fares, but must often compete with funding for roads. The transit systems may be operated by the owner or by a private company through a public service obligation. The owners of the systems often also own the connecting bus or rail systems, or are members of the local transport association, allowing for free transfers between modes. Almost all transit systems operate at a deficit, requiring fare revenue, advertising and subsidies to cover costs.

The farebox recovery ratio, a ratio of ticket income to operating costs, is often used to assess operational profitability, with some systems including Hong Kong's MTR Corporation, and Taipei achieving recovery ratios of well over 100%. This ignores both heavy capital costs incurred in building the system, which are often subsidized with soft loans and whose servicing is excluded from calculations of profitability, as well as ancillary revenue such as income from real estate portfolios. Some systems, particularly Hong Kong's, extensions are partly financed by the sale of land whose value has appreciated by the new access the extension has brought to the area, a process known as value capture.