The right idea in the wrong place

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    The Road to Renewal
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High-speed passenger rail is a commendable public policy goal that can provide valuable benefits to the public, but should only be pursued where it makes economic sense. A project should move forward if the revenue from all sources is sufficient to cover operating costs while making a contribution to its capital costs, including paying off debt and providing its investors with an adequate return on their investment. That's true regardless of whether the investors in question are private individuals or taxpayers.

If America wants true high-speed rail, we should first improve the Northeast Corridor between Washington and Boston.

The proposed high-speed rail line between Los Angeles and San Francisco is unlikely to meet that test. The estimates of costs recently doubled, to almost $100 billion, and it may ultimately cost much more. Research by the Oxford professor Bent Flyvbjerg shows that costs are underestimated for rail projects by about 45 percent on average, the most of all types of transport projects. High-speed rail could become California's Big Dig. Moreover, ridership — and thus revenue — is often overstated.

Given uncertainty in cost and ridership, along with the fact that even the most optimistic estimates peg the costs at a minimum $50 million per mile, Californians would be wiser to first complete a line from San Diego to Los Angeles. Demand for high-speed rail between its sprawling cities could then be observed before building a much more expensive Los Angeles-San Francisco line, almost three times the distance.

But if America wants true high-speed rail, we should first improve the Northeast Corridor between Washington and Boston. Much more modest expenditures there could increase speeds on a line where there is proven demand for high-speed rail service in some of the most congested areas of the country. These cities — as opposed to many in California — have relatively dense downtown areas featuring several public transportation options at train destinations.

There are solid ways to move forward with high-speed rail in the United States, but a new line between San Francisco and Los Angeles is not among them.

R. Richard Geddes is a visiting scholar at AEI

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About the Author

 

R. Richard
Geddes
  • Rick Geddes is associate professor in the Department of Policy Analysis and Management at Cornell University. His research fields include private infrastructure investment through public-private partnerships, postal service policy, corporate governance, women's property rights, and antitrust policy. He is a Research Associate at the Mineta Transportation Institute, and a visiting scholar at the American Enterprise Institute. He was a Fulbright Senior Scholar at Australian National University in Canberra in the fall of 2009, and a Visiting Researcher at the Australian Government's Productivity Commission in the spring of 2010. His research focused on Australian public-private partnerships in both positions. Geddes teaches courses at Cornell on corporate governance and the regulation of industry.

    In addition to his teaching and research at Cornell, Geddes served as a commissioner on the National Surface Transportation Policy and Revenue Study Commission, which submitted its report to Congress in January 2008. He has held positions as a senior staff economist on the President's Council of Economic Advisers, Visiting Faculty Fellow at Yale Law School, and National Fellow at the Hoover Institution at Stanford University.

    In 2008, Geddes received the Kappa Omicron Nu/Human Ecology Alumni Association Student Advising Award. His published work has appeared in the American Economic Review, the Journal of Regulatory Economics, the Encyclopedia of Law and Economics, the Journal of Legal Studies, the Journal of Law, Economics, and Organization, the Journal of Law and Economics, the Journal of Law, Economics, and Policy, and Managerial and Decision Economics, among others.

  • Email: [email protected]

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