Tuesday, July 28, 2009

Will the New York Times Provide A Fair HSR Assessment?

NOTE: We've moved! Visit us at the California High Speed Rail Blog.

The Economix Blog at the New York Times is launching a multi-part series on high speed rail, beginning with this post by Harvard economist Edward Glaeser. As a general rule I tend to dismiss any analysis of passenger rail that thinks a Simpsons episode has any role to play in the assessment (but then I did live through the endless and ultimately self-defeating debate over the Seattle monorail project, so perhaps I'm biased). But Glaeser has a high-profile soapbox to make his assessment, and as he is promising a fair analysis, it's worth taking this seriously.

Glaseser's basic approach can be gleaned from the following quotes:

I would be delighted to share the president’s optimism about high-speed rail, but if benefits do not exceed the costs, then America will just be living through a real-life version of “Marge vs. the Monorail,” where the residents of the Simpsons’ Springfield were foolishly infatuated with a snazzy rail project oversold in song by Phil Hartman’s character.

Economics doesn’t have any inherent opinion on trains, but it does strongly suggest the value of cost-benefit analysis, which may be the best tool ever created for evaluating public investments.

Already Glaeser is off to a bad start. By framing HSR as presidential optimism bordering on hucksterism and demanding a "cost-benefit analysis" he is assuming HSR is guilty until proven otherwise. HSR is cast as an unproven, almost mythical concept. Nowhere in this introductory post does Glaeser mention other HSR systems around the world, all of which generate operating surpluses and have successfully met their ridership goals (although it usually takes several years to reach that point).

In fact, as Glaeser lays out his methodology for the series, it seems that the numerous other HSR projects aren't going to put in an appearance at all:

I will spend the next three blog posts on the major costs and benefits of high-speed rail. The costs include up-front construction and operating costs. The benefits include direct benefits to riders, indirect benefits include reductions in carbon emissions and traffic congestion, and any indirect aid that rail gives to local economies and to national economic recovery.

I'm not quite sure how a credible analysis can be given without looking at the experience of other HSR projects around the world. But even if we were to limit our study to the US - flawed methodology, but let's play along - Glaeser's metrics leave quite a lot out.

Glaeser is likely going to assume that the cost of doing nothing is zero, as he gives no indication that the construction and operating costs will be compared to the construction and operating costs of new freeway lanes and new airport terminals and runways that will be needed to handle future traffic. We spent virtually all of 2008 on this blog reminding people that the cost of doing nothing is NOT zero - that any assessment of HSR's costs must be done in the context of the costs of alternatives.

This is almost never done for passenger rail, let alone HSR. The default assumption, even among academics (and especially among economists) is that the cost of not building passenger rail is always zero. Rail projects are usually framed as a new, novel, and probably unnecessary cost. It gets held to standards and metrics no other form of transportation is ever held to, especially automobile transportation, whose costs are not only far from zero, but are far higher than the cost of HSR.

The list of benefits of HSR also seems unusually limited. Glaeser doesn't include the savings on oil consumption, or the financial benefits of reduced pollution. He does plan to mention "indirect" benefits, hopefully to be measured along the lines of the green dividend, but he apparently isn't going to examine the benefits of greater urban density that HSR will encourage.

Granted, this first post is like the introduction of a dissertation - doesn't really offer much in the way of hard analysis. But what analysis is advanced here isn't exactly encouraging:

The up-front costs of rail are primarily the cash outlays, and these are perhaps easiest to quantify. The Government Accountability Office’s summary of building costs in Europe range from $37 million to $53 million a mile. The Japanese lines cost from $82 million to $143 million a mile. (Higher costs in Japan reflect difficult earthquake-prone terrain and expensive land.) Cost estimates in the United States range from $22 million a mile, for a Victorville, Calif., to Las Vegas route, to $132 million a mile for connecting Baltimore and Washington.

These figures are all debatable, but anyone who thinks that the G.A.O. got it wrong needs to come up with alternative figures that are equally plausible. As such, the cost of a 240-mile line, like the one that could connect Dallas and Houston, would probably run about $12 billion, but it could be as cheap as $6 billion or as expensive as $24 billion, and these are the numbers that we have most confidence about.

Actually, what is most in need is a clear definition of what makes a cost estimate "plausible." We need to see the logic and methodology behind an estimate. Land, labor, materials, etc - these costs can be estimated, and even though the estimates sometimes vary, there should always be a measurable reason for the variation - different assumptions about how land values will change in coming years, etc.

One reason I am so persistently critical of the "omg California HSR will cost $80 billion" claims are that those estimates are never explained. They're numbers pulled out of thin air. If someone sat down and looked at every single expenditure, questioned the assumptions, gave their own estimates for those expenditures, explained the reason for giving a different estimate on each piece, and then totaled it up and said "hmm this is higher than predicted" then that analysis would be quite welcome.

Unfortunately there's just something about passenger rail that seems to make some people think that it's perfectly fine to just pull numbers out of thin air and pass them off as if they are reasonable and credible. I don't know if that's Glaeser's plan, but what he's offered here isn't exactly encouraging.

So we will watch the next posts in the series (to be published once a week) with interest, but with skepticism. It's hard to shake the feeling that we're playing with a stacked deck on this one.

53 comments:

Fred Martin said...

Well, CHSRA's current estimate for the SF-LA first phase is $33 billion, yet in 1999, the official estimate was $12-14 billion. Hmmm.... I would like an explanation for this. How did CHSRA explode their budget estimates??? $80 billion is an easy extrapolation from this sort of poor oversight and management.

I think the Simpsons' 'Monorail' episode offers inspiring satire about this blog:

"Monorail! Monorail! Monorail!...."

"HSR! HSR! HSR!... By any means necessary..."

Anonymous said...

The CHSRA's mistakes have emboldened its critics. Promising a futuristic super-high speed line, competitive with air lines, between the Bay Area and LA and then detouring way to the east over a 150 year old railroad ROW and adding a bunch of podunk stops is pathetic. And then proceeding to pick an unnecessary fight with a string of affluent suburbs is downright stupid. The Reason Foundation should have it so easy.

The CHSRA should concentrate on building a proof of concept express high speed line along I-5 and over the Grapevine between San Jose and LA. If you insist it can't be done, which I dispute, then forget about hsr. Approach the Union Pacific and ask them how many billions they would need to build and operate a 110mph frequent passenge service along existing corridors.

If you are afraid of the Grapevine and its 3.5% gradient you are not ready for hsr.

jim said...

@anon Fresno and bakersfield are not podunk towns" and neither are riverside, san diego, anaheim and sacramento. This system is designed to provide high speed trips between the states largest cities and its fastest growing regions and that is exaclty what it will do. It is not about getting a hand ful of people from sf to la. We have planes for that. its about a new, flexible, expandable, transportation backbone that will carry the state's population through the next century. It not about right now. Its about tomorrow. A nonstop train from sf to la down the 1 5 would not serve any purpose what soever. It would not provide any service to areas that need service and it wouldn't offer any flexibility in destinations and city pairs. Is every anit hsr person around here only ever able to think in linear fashion? These are the same kind of people for whom every issue is black and white. Use your brains.

jim said...

and if you're gonna spend billions on 110 service, then you may as well make it worthwhile and make it 220. All of the state's regional trains will be 110 eventually in addition to HSR. and then we may - god forbid, have a real transportation network in this state that is capable of moving millions of people very quickly to very very many places, everyday.

Robert Cruickshank said...

Fred, there has been significant inflation between 1999 and 2008, particularly in building materials and land values. Further, the 2008 estimates are after 9 years of planning and research, whereas the 1999 estimate was when the project was in the extremely early stages of development, with few details definitively known.

In short, the 2008 estimate is far more accurate a measure of the true costs than the early and conceptual 1999 estimate.

TomW said...

Anonymous said: "... then detouring way to the east over a 150 year old railroad ROW"
ROW means right-of-way, the land which the railroad has the right to operate trains. Yes, that right has been around for 150 years.
However, ROW does not mean track... the HSR line will be entirely new tracks, and the age of the freight tracks that share the land is totally irrelevant.

Morris Brown said...

The $132 million per mile equates to $105.6 billion to build the 800 mile High speed rail project here. CHSRA estimates $45 billion at this point

California is earthquake country. California has very high land prices. California has very high labor costs. The $105 billion will be much closer to the cost of construction than CHSRA's $45 low balled number. All this, of course, without taking into account any interest costs for the bonds.

Bianca said...

Morris Brown wrote:

California is earthquake country. California has very high land prices. California has very high labor costs.

In every one of those statements you can substitute the word "Japan" for "California" and it's still a true statement. And yet they not only have HSR, they've had it for decades and continue to develop it. Italy has those same issues and they are going forward with HSR as well.

Infrastructure is expensive. It's not very sexy. But it's very necessary. Without it, the California we leave our children and grandchildren will not be a place where we want them to live.

Morris Brown said...

@Biana

I'll take the quality of life and life style we have here today in California anytime as compared to Japan, thank you; and without High Speed rail.

Bianca said...

Morris, the quality of life and life style that we have today is indeed wonderful.

I am thinking about what California will be like in 2030 if we don't build HSR. The US Census Bureau projects that California will likely have another 15 million people living here by then.

If we don't build HSR, we will have no alternative but continue to expand our freeways and airports to accommodate millions more Californians. Do you disagree with that? Do you think we can absorb another 15 million people without adding new infrastructure? You think California would be a nice place like that?

It is precisely because California is a wonderful place to live, and because I would like to keep it that way for my children, that I believe HSR is critically important to build.

Winston said...

@Morris Brown

Land prices are low and earthquakes through the Central Valley which is how HSR is routed. Yes the urban sections and mountain passes will be horrendously expensive but the flat, cheap central valley farmland the most of the route will run through won't be.

YESonHSR said...

Mews media today is all most nothing but the writers opinion and "drama items" if you read newspapers of 35-40 years ago you would see none of this made up stuff. When it came to large construction projects that was something to be PROUD of not and not an article of OMG its going to ruin us ,its a boondoggie! complainers were barley mentioned or tolorated. If we had the type of media and mindsetof today 60 years ago I doubt we would have BART or the Muni subway today.
A sample of how the media over reports every story is the one now starting with the Caltrain horns...They are now to LOUD..this is a saftey issue yet in 2 papers down the Penisual it a news item..reporting such horror as "it woke my son up" never mind its a for protection an issue due to all the grade incedents..or the facts the trains have been running thru for decades like this

Joe Roberts said...

On the news this morning the Gov announced further cuts in child nutrition programs, school funding, job training, and a host of other things to close the budget gap. We have a bankrupt state cutting essential services.

Now we have HSR at $100B--or some very large number--and the eventual subsidies that will be required. For what? A luxury train ride down the coast? Argue about routes, cost estimates, and green energy, it boils down to affordability. We can't afford this kind of luxury amid the other needs of the state. It's time the HSR people realized this and realized that things have changed since the November election. We're broke folks, with a long way to go to get back to where we were. Concentrate on something practical that will truly address the issues we face. A $100b project with never ending subsidies to cover operating and debt service costs is not what we need.

jim said...

@joe please turn on your brain and use some critical thinking skills. This years budget has nothing whatsoever to do with high speed rail. The cuts the gov is making are cuts that his republican constituents have wanted for long time. Californian's are tired of spending money on welfare. The money for high speed rail is an investment into something that will halp the state conintue to compete into through the century. It will generate revenue, not in the sense that the operator of the train will get revenue from operations, although its likely they will, but in the sense that mobility is of utmost importance and the real estate investments and the business investments that go along with a such a project will generate tax revenue. That's why it's called an investment. This years budget and the cries of "broke" are purely political events.

jim said...

news: New U.S. High Speed Rail Association Presents Network Plan

jim said...

the newly created high speed rail association website

dave said...

@ Joe Roberts

Your post is ridiculous and very funny. Thanks for that, now let's be serious.

We're not going to be broke forever and these BIG projects don't get built overnight. We must stay focused on the long-term and not just, "what about today". Ignoring this problem now will make us PAY Big time in the future.

Not very smart, if you ask me.

jim said...

I do want to point out to those critical of the tbt design with the platforms being in the basement and such - the the new Florence station has a design just like the sf tbt. scroll down

dave said...

@ Jim

That website has been up for like a month, I don't know why it hasn't been covered here at least once.

www.ushsr.com

dave said...

Here's a little suggestion for those of you who absolutely don't want to spend your tax dollars on HSR. Just MOVE, to a state that isn't proposing one, maybe Alaska or Next door in Nevada.

We don't mind, there isn't a significant amount of you same thinkers. We won't have a problem attracting new, innovative, fresh thinkers who agree we need HSR. California is popular no matter how bad things get here budget wise. They might move out, but they will be back.

So think about it and quit getting in the way of progress.

Joe Roberts said...

That's fine, Dave, then why not wait until we are in great shape and can take on the luxury project?

Given the state of the state and the clever tricks our wonderful legislature and governor are pulling to 'balance' the budget, we have a long term structural deficit that will take years to fix.

it's not ridiculous, it's reality.

jim said...

@dave I agree with that. Of course most people arguing against hsr on the costs, have nothing to say when you compare the amount of money that we'll need to spend on airport expansion and freeway expansion.

r. motorist said...

why not wait until we are in great shape and can take on the luxury project?

How long has this project been in the works? Since the mid-90's or so? As I recall, the state was in good shape in the later part of the 90's an early part of this decade. Was that a bad time to start this project? Or should any decades long project be canceled whenever a bad fiscal year shows up?

jim said...

@joe you don't wait because the cost will go up. We already know that the stte will be in better financial shape by the time the bonds need to be paid. These projects take a long time to build. Starting now creates jobs in a time when we need jobs and completes a project in time for the next economic peak when we will need it most.

joe roberts said...

@Jim Please turn on your brain for a second. The point is that HSR will create operating liabilities for the state for years to come. With the kind of problems we have, which won't go away any time soon, HSR continues to looks like a nice thing but hardly a high priority.

jim said...

Look at BART, it was being planned in the 1950's when rail was on its way out and cars were on their way in and at a time when the bay area had millions fewer residents. It was planned in the 50's, started construction in the late 60's and didn't open till the mid 70's, then it took another 10 years to work out the flaws and build rider ship. Had they listened to the naysayers at any point during the original 30 year period, we wouldn't have it today and 300,000 plus, people a day would be trying to cross the bridge at rush hour. not only that, it would have left the bay area without the transit oriented development options that we have today and without the tax revenues that are generated by all the businesses that are easily accessable by bart. The same is true for every large project. When the I-5 was being built, no one thought we needed it. When the -280 was being built from san jose, it was called a boondoggle. Can you imagine today if we had waited and didn't have the 280- but only the 101 as the only freeway on the peninsula. And, ironically, it was the very same peninsual nimby's who argued against the 280 freeway.

jim said...

joe - the problems we have today will be going away soon. I am old enough now to have lived through nearly 5 decades of economic ups and downs. Long term investment is what we need more of, living for today worrying about the next economic quarter's profits at the expense of foresight and planning are what got us into the current mess. In Fact its ALWAYS what gets into the mess. EVery single time, and ithas become the MO for american businesses and consumers making the ups and downs worse and more frequent. The benefits of infrastructure investment can be seen all over the world. Such projects last 100+ years and create a foundation for building and sustaining future economies. Califronian would be nowhere with outht UC system, the central valley project, the cal aqueduct, t, the freeway systems, the ports, and the railroads. In fact it was investment in railroads that built america in the first place. Had the government not invested in rail expansion we would all be living in pennsilvania.

BruceMcF said...

jim said...
"and if you're gonna spend billions on 110 service, then you may as well make it worthwhile and make it 220."

Quite ... there are lots of states where the capital cost of Emerging HSR corridors are so much lower, and multiple 1m+ metro areas close enough together, that it makes quite a lot of sense to start aggressively building out a 110mph network, and then add Express HSR corridor segments to extend the reach of the Emerging HSR network.

But its just basic physical and population geography that California is not one of those states.

And given the massive risk exposure of the California economy to oil price shocks, and the long lead time to building an Express HSR corridor, there is no excuse that can be given for delay that measures up to the risks of delay.

Peter said...

Now this is classic. PA Post article that Caltrain draws over 120 complaints after making horns louder (to meet FRA regulations). They include this sentence, but don't draw the obvious connection with HSR:

Caltrain officials pointed out yesterday that if there were overpasses or
underpasses at those crossings, horns wouldn't be necessary.

DaLanc said...
This comment has been removed by the author.
DaLanc said...

Knowing that HSR works in other places not too different than us, I don't believe it applies to conventional high speed rail... but maglev? Makes you think. The Simpsons do a great job of parodying certain workings of modern society, especially fancy infrastructure projects. What makes hsr different is that it has been done right the world over, and it will be done right here in CA.

Anonymous said...

America is not Japan and never will be. If you want to see a preview of California's future just take a look at the wannabe Iraq on our southern border.

Once mafias become entrenched they cannot be rooted out. Ruthless dictators have tried. California will legalize everything in a vain attempt to control crime and corruption. Good luck. Repealing Prohibition did not undo the Cosa Nostra, they just moved into other rackets. Hoboken provides another peek into the future, where the political machine morphs into organized crime.

Typically third world countries have some air service but crappy roads and hardly any railroads. That's California of the future - with all you growth-mongers' huddled and teeming masses.

Morris Brown said...

@Peter

Actually, Peter, CalTrain did draw HSR into the mix with what the final paragraph in their news release.

http://www.almanacnews.com/square/index.php?i=3&d=&t=2819

"Grade-separated crossings, as proposed by high-speed rail, would eliminate the need for engineers to sound the horn. Caltrain has entered into an agreement with the California High-Speed Rail Authority to bring the service along the Caltrain corridor."

NONIMBYS said...

YES of course the crybabies in Paloalto are now "upset" that the horns are to loud..waaaa ..MOVE since you moved next to railroad tracks you can move again if little Abe cant sleep...what a bunch of babies we have alive at this time.

Richard Mlynarik said...

Cost effectiveness has nothing to do with CHSRA's plans.

The authority shouted this in 72 point boldface screaming headlines when it explicitly put contractor profits first and public benefit last through its northern California nothing-must-threaten-BART-to-San-Jose-contractors route choice.

We're wasting -- literally flushing down the toilet -- $15+ billion in northern California alone because of deliberate and explicit political choices to maximize the utility of the HSR system, maximize the amount of unnecessary and duplicate construction (BART to SJ $10 billion; unneeded urban Caltrain projects Santa Clara-Redwood City $2 billion; Dumbarton Bridge steam train era rebuild $1 billion; Altamont "overlay" $1 billion; Capitol Corridor for Amtrak dinosaurs $2+ billion; extra Fresno-Sacramento cost $0.5 billion; crazy unprecedented insane globally unique lunatic duelling SF Transbay/Mission Bay terminals $1 billion; etc) .

So don't even talk about cost-effectiveness of CHSRA. That's entirely beside the point, as everybody with any sort of in on the project is very well aware, indeed.

There was a good, economically justifiable, environmentally beneficial state-wide rail project possible in an alternate universe, but it's not what's happening in this one.

Go ahead, do your little cheer lead routine for CHSRA pork all you want, but don't pretend you can make any sort of economic argument. Nobody cares about that, and keeping costs low or even remotely under control is something we simply never do here and something in which we have less than no interest.

jim said...

@richard. obviously nothing is good enough for you and you should move someplace where things are more perfect. No one around here has any desire to live up to your expectations.

dave said...

@ DaLanc

Exactly, proven HSR tech. has very low risk as their are many examples in different countries. We can expect the same here. I'd give the "deniers" more credit if we were trying to build a statewide Maglev. Then I'd be worried.

@ Anonymous 11:55

If your saying Mexico has "crappy air service" & "crappy roads" then you haven't been their lately or at all.

Most of Mexico's major highways are being renovated/rebuilt along with toll booths every so distance at an affordable rate. Most of the roads are being completely rebuilt thanks to the tolls.

Air service is good, never had problems. I don't know what your talking about.

Railroads could use some work but they are growing with TFM being partly owned by a U.S. railroad, KCS (Kansas City Southern) and Ferromex being partly owned by Union Pacific. So again I don't know what the H' your talking about.

Not to mention that Mexico is proposing building HSR. How embarassing! They will probably have HSR around the time we do or faster. We will be the third world country.

gabe said...

For everyone complaining about cost-

You have to show that HSR is cheaper than the alternative of more roads and airports.

If you want 20 lane highways, grinding traffic jams, or 4 hour flight delays, by all means, support the status quo...

Remember, the interstate roadways were a "boomdoggle" way over budget (several times) and took far longer than expected. Would you have opposed the Interstate System?

Rail>Auto said...

What does everyone think of this...

http://www.inhabitat.com/2008/02/13/interstate-traveler-hydrogen-super-highway-world%e2%80%99s-first-multi-utility-high-speed-rail-system/

Personally I support it as long as High Speed Rail is built with it, not one or the other...

BruceMcF said...

Anonymous said...
"America is not Japan and never will be."

Hello, the 60's are calling, they want the LP's that you borrowed back.

In this part of this century, HSR certainly remains in place in Japan, but they've also gotten around to putting it in place in other countries as well ... and not just Asian countries like Taiwan and China, but also some "non-Asian" countries you might have heard about, such as France, Spain, Germany, the Netherlands, England, etc.

Anonymous said...

Mexico electrified as far as Queretaro and then ripped it out. Those toll booths could prove an effective place for the gangs to dump bodies.

Count on a military dictatorship Burma-style in Mexico shortly.

Anonymous said...

The Germans - Herr Herrenknecht probably - would mine the Grapevine and fuggedabout Palmdale.

lyqwyd said...

@Anonymous:

you should really take your meds

lyqwyd said...

@Morris Brown

Peter was referring to the PA Post's lack of reference to HSR bringing grade separation, not Caltrain's release.

lyqwyd said...

@Richard

Pork is part of almost any infrastructure project. The bay bridge started out around $500 million, and is now over $6 billion. It's sad but that's the way it goes, and is nothing unique to HSR, therefore not a valid argument.

jd said...

anon 6:12pm,

if you know absolutly nothing more about Mexico than what you read in the paper then please do us the pleasure of shutting the fuck up.

Military dictatorship!? Read a fucking book or better yet ask Porfirio Diaz or Emperor maximilian or Huerta, or Madero how that worked out for them.

You wanna see first world vs third world? Go spend an hour in the Oakland Greyhound station and then go spend an hour in the Central de Camiones in Guadalajara and we can talk third world, or spend a day on Muni and then go ride the Metro in DF and we can talk about who is third world.

Racism has NO place on a transportation blog or anywhere.

Anonymous said...

A better analogy than Porfirio Diaz would Augusto Pinochet or Jorge Videla. Or Francisco Franco.

I forgot the name of the presidente who offed 200 college students in 1968.

jim said...

tell me again what mexican history has to do with HSR?

Anonymous said...

The senate committee, just cut back HRS from from 4 billion to 1.4 billion. That's a good step --- let's hope they cut it all out.

http://dc.streetsblog.org/2009/07/29/senate-panel-backs-1-2b-for-high-speed-rail-1-4b-extra-for-highways/

Anonymous said...

What a joke. Anything less than a ringing endorsement from Glaseser will elicit whining from Robert and his fellow HSR-fetishists.

Alon Levy said...

It's not that Glaeser isn't offering an endorsement. It's that he uses bad numbers to argue that any investment in anything outside the Northeast is a waste of money. For example, take his cost estimates. He says European HSR costs $37 million to $53 million a mile; in reality, new French HSR projects cost €10 million per km, which is equivalent to $22 million a mile (the high numbers are from a GAO report that says a lot of wrong things about HSR - for example, it predicts that future lines will not make operating profits, without a shred of evidence). He negatively compares density in the Midwest and Sunbelt with density in Boston; in fact LA and SF's urban areas rank third and second in the country in weighted residential density, after New York, and SF ranks fourth in job density after New York, Washington, and Chicago.

Anonymous said...

Its amazing that Alon Levy is condemning the GAO; claiming they aren't giving valid numbers.

I guess we can't trust anyone except the Authority.

Alon Levy said...

I don't care about the Authority. I care about the fact that SNCF says the LGV Est cost €10 million to build per km, which is barely half what the GAO claims to be the lowest per km cost in Europe. And I care about the fact that that GAO report in particular claimed not that HSR won't make operating profits in California, but that further lines anywhere in the world won't make operating profits.