HIGH-SPEED RAIL PLAN A POTENTIAL MONEY PIT
California and European experiences offer cautionary tales: Wendell Cox
The proposal to build a highspeed rail line linking Vancouver, Seattle and Portland deserves intense scrutiny given the burden that such systems have placed on taxpayers around the world.
The preliminary report forecasts that it will take $30 billion to $55 billion to complete. Experience suggests costs would likely be much higher.
There are two principal problems. The first is that high-speed rail routinely costs much more than planned. The second is that high-speed rail routinely falls short of ridership projections, which means that taxpayers, who would pay for construction and planning (or later financial bailouts), must provide operating subsidies.
In some of the most extensive infrastructure research ever completed, a team led by Prof. Bengt Flyvbjerg of Oxford University, with experts from the University of Stockholm and the University of Karlsruhe (Germany), found that the costs of building large passenger rail projects typically rose at least 45 per cent from project approval to completion. Cost overruns of more than 80 per cent were not uncommon.
Further, ridership averaged approximately 40 per cent less than projected levels, leaving taxpayers to, in effect, pay the fares for the many people planners thought would ride, but do not. The researchers found that cost overruns and revenue shortfall in rail were worse than in other types of infrastructure. And the European research was performed well before the unprecedented and continuing disaster of the California high-speed rail system had developed. In 1999, the state of California unveiled plans for a 1,300-kilometre highspeed rail system to link San Diego, Los Angeles, the San Francisco Bay Area (including Silicon Valley) and Sacramento. The first segment, from Los Angeles to San Francisco, was projected to cost the equivalent of
$32 billion in today’s dollars.
Immediately the planned costs began rising. After state voters approved a bond issue in 2008, costs doubled in less than four years. Even the predictions for cost overruns made by Joseph Vranich and I in a policy report commissioned by the Reason Foundation proved far too conservative. This is despite the fact that our analysis was based on the findings of Flyvbjerg et al and further analysis of other projects around the world.
Costs rose so much that planners abandoned plans for high-speed infrastructure over sections of the route in the San Francisco and Los Angeles metropolitan areas to reduce costs.
Even so, after another round of cost increases, and another withdrawal of more than 50 kilometres of highspeed infrastructure (from San Jose to Gilroy), projected costs have now risen to more than $85 billion, and potentially to $125 billion.
For that, taxpayers could get (it’s not at all certain at this point) a scaled-down, tastefully labelled “blended” system in which high-speed trains operated in mixed traffic on the same conventional tracks. This is not unlike mixing high-speed trains with much slower West Coast Express commuter trains in the Lower Mainland. The new trains will look sleek, but they won’t travel any faster than the trains already there.
Voters were promised in the 2008 referendum that trains would be able to travel from San Francisco to Los Angeles in two hours and 40 minutes. In a 2012 report, we estimated (in another Reason Foundation report) that the fastest operating time would be about 50 per cent longer, but that was before the latest addition of another slow-operating section.
The “bottom line” is that Californians can hope to receive, at best, a substantially downgraded initial line that operates much more slowly than promised.
All of this would be provided at a cost perhaps three to four times (or more) than originally planned. Even as construction has started, there is still not enough money to finish the job, and the highly touted private investors have never appeared.
Another case shows how inaccurate planning can be. The 1996 ridership projection for the London to Paris and Brussels Eurostar, which operates through the Channel Tunnel, was forecast to carry nearly 25 million passengers in 2006. Yet, more than a decade later, in 2017, ridership barely exceeded 10 million, about 60 per cent short.
Current plans confirm that the Vancouver-Portland high-speed rail line would rely substantially on public subsidies. But why should taxpayers pay at all? There are more than enough competing needs for tax funding in British Columbia, not to mention Washington and Oregon.
Each dollar spent to provide attractive and comfortable high-speed rail rides to people who have at least three alternatives for the trip (air, car and bus) is a dollar not available to provide for other more pressing needs.
Why should B.C.’s struggling households, already burdened with some of the world’s highest house prices and rents, be asked for more taxes to build and operate such an extravagance?
Plans confirm that the Vancouver-Portland high-speed rail line would rely substantially on public subsidies.
Wendell Cox, a senior fellow with the Frontier Centre for Public Policy in Winnipeg, has written high-speed rail policy reports on four projects in the U.S. He was appointed to three terms on the Los Angeles County Transportation Commission and one term on the congressional Amtrak Reform Commission in the U.S.
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