NOT so very long ago, a walk along much of what was left of the canal network linking Edinburgh and Glasgow was a pitiful experience.

Supermarket trolleys and old mattresses lay dumped in the murky water, overgrown tow paths were a haunt for vandals and wildlife was disappearing.

Now, thanks to a remarkable transformation that has taken place in less than a decade, the entire 68-mile stretch is undergoing a renaissance.

There is a buzz about the place: the previously rundown canal area of Edinburgh's Fountainbridge now has trendy restaurant barges and is referred to as "Little Venice"; couples are getting married on the Falkirk Wheel and holiday cruisers are sailing the canals, mooring at custom-built marinas along the way.

The latest figures on the £84.5 million Millennium Link – which reconnected the Union Canal in the east and the Forth and Clyde Canal in the west – back up the "feel-good" factor.

New research reveals that the largest canal restoration project in Europe has helped attract more than £178 million of investment across the Central Belt and brought 4,000 much-needed jobs to the area in the past five years.

More than 1,000 homes have been built along the canals and 93,000 square metres of commercial floorspace have been created since the ambitious "Peoples' Project" began in 1999.

The figures – in a report compiled by the independent economic consultant Roger Tym & Partners – are ahead of the original forecasts, which predicted £100 million of investment and the creation of 3,420 jobs by this stage.

Projections also show the restoration of the canals has the potential to generate £1.5 billion of investment and more than 12,500 jobs by 2015.

Kay Baxter, a grandmother-of-six from Dumbryden in the deprived Wester Hailes district of Edinburgh, says the reopening of the canal - which was in-filled in the mid-1960s - has given something back to the local community.

"Before the canal was brought back, it was just concrete and there was nowhere to go for a walk, even if you had wanted to. Now we've got the canal path, which is brilliant for children.

"The most obvious thing is the sense of peace and a feeling that the environment belongs to us now. You just need to look around and there are swans, ducks and the odd barge. You can even walk along it at night because it's all lit up. Another thing which has changed is that you see teenagers sitting fishing and being quiet."

That these signs of everyday life are seen as something unusual shows just how far the canals have declined since their heyday. By 1790, the Forth and Clyde Canal linked Glasgow and Bowling in the west and Glasgow and Grangemouth in the east.

The Union Canal, built between 1817 and 1822, linked the centre of Edinburgh with the Forth and Clyde Canal at Falkirk. It was also instrumental in carting the building material for the construction of the capital's New Town.

The canals and their tow paths were vibrant areas with passengers waiting to board the horse-drawn "Swift Boats" travelling at nine to ten miles per hour. "Sleeper services" offered overnight voyages taking a little longer, at just over 14 hours.

During the day, the canals were so congested with barges carrying cargo - much like articulated lorries on 21st century motorways - that boatmen often jumped off the barges to go for a "walk through" pint.

Gable-wall doors in hostelries along the route allowed thirsty workers to walk in one door and grab a drink before rushing out a door at the other end and jumping back on their barges.

But what was once a vital link for transporting goods such as coal and building materials, as well as passengers and animals, was overtaken by the advent of the steam engine and then cars before being swiftly abandoned.

Speaking at the British Waterways annual general meeting in Edinburgh yesterday, Stewart Stevenson, the Holyrood transport minister, said the canals and waterways were a key resource for Scotland. "Underused for many years, there is a fantastic opportunity to build on recent investment. Our aim is to produce a thriving network, which brings benefits to people across Scotland.

"We have already seen communities benefit from the increased leisure, tourism, regeneration and environmental opportunities. I want to see this go from strength to strength in years to come."

Steve Dunlop, director for Scotland at British Waterways, described the consultants' report as "very good news".

He added: "This shows that the huge effort that was undertaken to get the canals open again is now paying off. More and more communities are now benefiting from the waterways, with the network delivering on a number of different levels."

Colin Galloway, 65, a member of the Linlithgow Union Canal Society, has witnessed the decline and revival of both canals. "When I was a boy, we could still go rowing in the canals. But there was a feeling at that time that the car was supreme and all the talk began of filling in the canals.

"They became dangerous places because there was no traffic going along them. Now they are vibrant places attracting people back."