A 42-kilometre rail trail connecting Bungendore to Captains Flat through Hoskinstown would bring about $2 million to the towns' local economies each year, a feasibility study has found.
The trail would cost between $6 million and $8 million to build, and up to $90,000 annually to maintain.
"As evidenced by the experience in other states where rail trails have been successful, new businesses will start up, existing businesses will have increased patronage and local employment will be boosted," the study, prepared for Molonglo Rail Trail Incorporated, found.
The study found more than 45,000 people would use the trail annually, based on a series of "conservative estimates".
The president of Molonglo Rail Trail Incorporated, Bill Taylor, said cyclists were known as "wallets on wheels" who would spend into the communities along the trail.
Mr Taylor said the next step for the trail was preparing a detailed development plan, which he would like the Queanbeyan-Palerang Council to fund.
The plan would make the project "shovel-ready" and more attractive in government funding initiatives, Mr Taylor said.
"Our expectation is that state and the federal government will come to the party on this as has been the case with many of these sort of regional development tourism projects," he said.
Mr Taylor said rail trails attracted a wide range of cyclists, including families with children.
"The draw for interstate people, people from Sydney, people from Canberra, would be fantastic," he said.
Businesses along the route were also primed to service the trail, including offering lunch hampers and accommodation to those making the trip.
"There are playing fields in Captains Flat where if somebody was ambitious, they could set up a camping enterprise or glamping. There's all sorts of possibilities," he said.
He said there has been little support from the NSW government in the project, although NSW Labor made an election promise to fund the trail last year.
The feasibility study included letters of support from businesses and interest groups, alongside individuals.
Destination Southern NSW chair Richard Beere wrote to support the trail.
"Tourism across NSW is vital to the economy and is a source of employment for people of all ages. Investment in the development of assets such as this are an important factor in meeting visitor expectation in a competitive market," he said.
The rail line, which branches off the still active Canberra to Sydney line, was built in 1939 to service the mines at Captains Flat. The line closed in 1968, six years after the mines shut.
Mr Taylor said the Queanbeyan-Palerang Council was split on the issue of the trail and council elections later this year could reignite interest in the project.
Mr Taylor said there was no demand for the Bungendore to Captains Flat line to be reopened, despite a small community of rail enthusiasts eager to see steam trains run between the two towns.
"The tracks are in no shape to take a steam train. I think they weigh something like 60 tonnes, so the tracks and the sleepers have to be in really good shape," he said.