Monday, September 8, 2008

The Green Dividend

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

In contrast to the usual arguments that high speed rail will cost this state billions and provide nothing in return, this blog has consistently argued that high speed rail is a smart investment that will save Californians money over the more costly alternatives, and will provide us with new economic opportunities and savings.

Thanks to a link at The Overhead Wire we now have some evidence to suggest the economic benefits of sustainable transportation. It's being called the Green Dividend and is based on the successful example of Portland, Oregon, where sustainable and green transportation policies have saved residents $2.6 billion. The ripple effect throughout the local economy has made Portland one of America's leading cities, and provides a model that California would do well to emulate.

From the short paper by Joe Cortright:

Portland, OR, has acquired a reputation as the nation’s greenest city. For many, this green streak is viewed as a sort of environmental hair-shirt. Portlanders deprive themselves of prosperity in the name of saving the environment. Skeptics view biking, transit, density and urban growth boundaries as a kind of virtuous self-denial, well meaning, but silly and uneconomic. Critics see the seeds of economic ruin. They claim planning, policies and regulations that restrict use or access to resources impede growth and lower household income.

Similar claims are frequently made about high speed rail - that we'll be pouring some $40 billion down a hole and get nothing in return for it, a "train to nowhere" in the minds of some. But that thinking is as flawed for CA HSR as it is for Portland.

Cortright's argument is that since Portlanders have a shorter commute than the US average - 4 miles less - that translates into actual money saved, money that isn't spent on commuting and that can be respent throughout the economy:

Four miles per day may not seem like much, but do the math. The Portland metro area has roughly 2 million residents. If Portlanders traveled as much as the typical U.S. metro resident, that would produce 8 million more vehicle miles per day or about 2.9 billion more miles per year. A conservative estimate of the cost ofAll told, the out-of-pocket savings work out to $1.1 billion dollars per year. This works out to about 1.5 percent of all personal income earned in the region in 2005.

This is a good minimum estimate of the aggregate economic benefits—the green dividend—that Portland area residents enjoy as a result of land use planning and related environmental policies. But the benefits don’t stop there. Since Portlanders don’t spend that money on transportation, they have more money to spend on other things. Because so much of what is spent on transportation immediately leaves the state — Oregon makes neither cars nor gasoline — money not spent on transportation gets spent on sectors of the economy that have a much larger local multiplier effect. (Think locally-brewed beer.) According to IRS data, about 73 percent of the retail price of gas (back when it was under $2 a gallon, by the way) and 86 percent of the retail price of cars is the “cost of goods sold,” which immediately leaves the local economy. The $1.1 billion Portlanders don’t spend on car travel translates into $800 million that is not leaving the local region. Because this money gets re-spent in other sectors of the economy, it stimulates local businesses rather than rewarding Exxon or Toyota.

The economic value of the time saved is $1.5 billion, which is where Cortright gets his $2.6 billion figure. Portland is not a physically large place - about 2 million people live in the metro area - so one would figure that the economic benefit to Californians of similar miles driven savings would be much larger.

This is one of the core arguments for high speed rail - it will save Californians money. As fuel prices increase the cost of airfare and driving increases a well. Without a high speed rail alternative all that money gets taken out of the California economy - we only have one auto manufacturing plant, in Fremont, and even though Chevron is headquartered in San Ramon their massive profits are spread around global investors. If high oil prices were a boon to the California economy we'd certainly be seeing the effects right now. That we're instead sliding into recession should suggest the true costs of oil dependence.

"Green Dividend" could be put another way - "economic stimulus." Unlike a one-off check from the US Treasury, or offshore drilling that will produce no savings and no income (and even no gas) for Californians, high speed rail will help stimulate our economy by freeing up billions of dollars that are currently being wasted on commuting for other things - to sustain small businesses, afford housing or health care, start a new business, innovate something new.

Those who oppose Prop 1A have NO answer to this argument. They're going to leave billions of dollars in annual savings and economic stimulus on the table. And for what? To continue the failed and economically ruinous policies of the 20th century? Some argue that we're better off relying on alternatively fueled cars. But to sustain that demand we'd need at least $80 billion in freeway and roads improvements, the R&D costs and price to the consumer of those vehicles will not be cheap, and who knows how long it will take to develop these promising technologies.

Whereas HSR is off-the-shelf technology - it is ready to go right now. We don't need a long and unpredictable R&D schedule. We don't need to spend $80 billion on new freeway lanes - we can spend (as a state) an eighth of that on Prop 1A.

High speed rail's green dividend is substantial, and represents an opportunity to secure California's economic future that cannot be missed.


Rafael said...

Portland's example is instructive in that it shows the dollar - never mind the enviropnmental - value of transit-oriented development for the local economy. It also shows that such policies can be pursued independently of HSR. Finally, it highlights the long time scale involved.

Conversely, the example of many provincial towns in e.g. France shows the value of having an HSR station even if local transit is rather poorly developed at the time it opens. In that country, being part of the TGV network has become almost a prerequisite for attracting inward investment such as long-distance commuters and back office operations. This absolutely kick-starts a local economy in decline. Without that, dreams of local transit services tend to remain just that.

Of course, the greatest benefits accrue when planners ensure convenient, comfortable HSR connections both at airports and at local and regional transit hubs. That implies short walking distances, protection against sun and rain, clean platforms, good lighting/security, easy ticket purchases and, short wait times. If these literally pedestrian requirements are neglected, ridership suffers badly - undermining the massive investments in track, rolling stock and personnel. In transit planning, intermodal stations and integrated fare structures really are half the battle because typical trips involve at least one connection.

Critics argue that HSR projects are expensive showcases for vain - or worse - politicians/bureacrats that make no sense in the absence of local transit services. They want the money spent on building the transit infrastructure from the local scale up, rather than from the intercity scale down.

In a perfect world, they would have a point. Unfortunately, the world is not perfect and with the notable exception of BART, California has essentially failed to invest significant funds in public transportation for half a century. Overcoming this inertia does require a mega-project, in spite of the cost escalation risks involved.

To its credit, CAHSR is in part about promoting the development of transit-oriented districts in the cities and counties the bullet trains will serve. Nearly 10% of the prop 1A bond volume is reserved for this, though there is as yet no statewide policy framework for making sure it is actually spent on improving access to HSR. However, this is to some extent quibbling over details.

Shifting from oil-powered cars and short-hop flights to a combination of transit services, short-range electric cars and (electric) bicycles will probably turn out to be a much slower process than Californians would like. Think 30+ years, not five or ten. Getting HSR built will be just one step on that journey, albeit the largest one.

crzwdjk said...

BART isn't the only transit system in California, you know. In fact, LA's Metro Rail has 320k daily riders on a 73 mile system, which is only slightly less ridership than BART has, on a smaller system, much of which is light rail.

Oh, and if you want to talk about France, being "on the TGV" network really just means having direct service to Paris on the TGV, not necessarily having an actual high speed line running through town. Unfortunately, that won't be the case in California, and Sacramento and San Diego likely won't benefit from it at all until later phases are built.

Rob Dawg said...

No, LAMTA reports 272,476 and those are boardings not riders. That's Metro Rail.

Perhaps you meant Metro Link.

Mark Sharp said...

As much as I would love to see HSR in California I can not support a route that ignores the state's 3rd and 4th largest populated areas -including our capitol city while benefiting anti-public transportation, GOP strong holds like OC and the San Joaquin Valley. This is LA-SFBA project only and you want the rest of us to support your schemes without any benefits? I think not.

Anonymous said...

The East Bay has all the Intercity rail..Most of the Bart system and the ACE trains. I cant count the number of times I have taken the Ambus over to the East Bay to get the train. I have always voted yes on Rail bonds and Bart. The bus connection is no big deal.many people use it.The connection to HSR will be just as fast and easy to use. Voting no out of spite will not solve anthing

Robert Cruickshank said...

Mark, this route does not ignore San Diego and Sacramento and you are either uninformed or deliberately lying when you suggest otherwise. Sacramento and San Diego ARE included, just as the second phase.

Every project has to start somewhere. No nation to date has built out their entire HSR network at once. Every single one began with a starter line that was added onto as funding became available.

Your claims are even less defensible when you look at people like myself, who live in a city that is NEVER going to get an HSR station in any phase of the project - Monterey. But HSR helps improve passenger rail for all Californians even if you don't have a station - San Diegans can get to SF much faster by connecting at LA Union Station, for example.

Further, Prop 1A has specifically earmarked funding for existing intercity rail corridors - $45 million for the Surfliner, which can produce new equipment and tracks that will speed your journey from SD to LA.

The only way SD will be left out is if you vote no on 1A. A Yes vote will provide the additional service you deserve and bring HSR to SD a huge leap closer to actuality.

Anonymous said...

Voting no out of spite will not solve anything

I guess that is the dilemma for those of us in the capital. Vote no out of spite and solve nothing, or vote yes for a $40 bil train that gives us almost nothing.

Anonymous said...

Waste of money for eventual benefit of a better economy and perhaps a new travel corridor? What I find wasting money is on airport gates, freeways, and runways where you hear loud jet engines using up so much fuel and emit that back into the air.

Prop 1A bonds will ALSO BENEFIT EXISITING RAIL FOR CALTRAIN! This will eliminate some at grade crossings and improve train reliability for other trains.

We seem to make any new ideas a hurdle instead of seeing the vision behind an idea that has proven itself in Europe, Japan, China, and other countries around the world. Tell me where HSR does not work currently and is a money losing operation or has not taken a dent out of airlines.

Spokker said...

"while benefiting anti-public transportation, GOP strong holds like OC and the San Joaquin Valley."

Maybe they're not so anti-transit anymore? Keep in mind that Orange County has supported and renewed Measure M and OCTA is probably the most enthusiastic participant in Metrolink. OCTA is starting 30 minute Metrolink service on Orange County from Fullerton to Laguna Niguel in 2009.

OCTA is also starting their rapid bus program called "Bravo!" in 2009.

Anti-transit? Not so much anymore.

Anonymous said...

Golly Pantograph Trolleypole, why are you surprised when an organization really gets informed, they decide not to back this boondoggle.

Anonymous said...

"Golly Pantograph Trolleypole, why are you surprised when an organization really gets informed, they decide not to back this boondoggle."

okay Morris

Anonymous said...

Buuutt its a boooodoggiee!!! Really Morris...warming up for your dog and pony show Wed night?

Anonymous said...

Anyone remember this?

Excerpt from Wikipedia:

ALWEG proposed to the city of Los Angeles a monorail system that would be designed, built, operated and maintained by ALWEG. Alweg promised to take all financial risk from the construction, and the system would be repaid through fares collected. The City Council rejected the proposal in favor of no transit at all.

And look at what happened to LA, and only now are they making a public-transit system. This could also be the same fate for California if 1A is voted down.

Anonymous said...

annony, did you forget that monorail is a technology that does not work and HSR has worked?

Spokker said...

"annony, did you forget that monorail is a technology that does not work and HSR has worked?"

Yeah but it would have been essentially free (not counting any implicit costs) and there wasn't much going for Los Angeles public transit at the time.

Today it would be foolish to build a monorail system in LA. It would be incompatible with the current light rail and subway lines. The better use of resources would be to expand upon the system we already have.

Monorail technology was thrown out as an alternative for the Wilshire Corridor project. Good riddance to that idea.

Anonymous said...

Efficient cars and HSR are not competitors. HSR is competitor of airplains.
Airplains require hydrocarbons. Reaction propulsion require a kind of hydrocarbon that could not be obtained from biofuels without a complex chemical transformation that required additional energy.
HSR are a lot more efficient.
So, higher oil prices make HSR better alternative to flying.

無名 - wu ming said...

even before the line gets to sacramento, it cuts a daylong train ordeal on the coast starlight down to a short hop from sac to fresno on the san joaquins, and then another hour to LA.

as someone who rides the train from davis to LA pretty often, to see my grandparents for christmas, that would be a HUGE improvement, and allows you to catch the connecting southwest chief amtrak train on the same day, instead of spending an overnight layover in LA.

even when this is in its initial stages, and doesn't connect sac and SD directly, it still improves rail access tremendously for those cities, via the fedder networks of the capitol corridor, san joaquins, or surfliners.

as it would for people in monterey, given the relatively lose proximity to gilroy. not perfect, but it's something better than what we have.

Spokker said...

I think this will cause Amtrak to provide more service on the San Joaquins to and from Sacramento for those who want to connect to the high speed rail network until the HSR extension to Sac is ultimately built.

Spokker said...

In other news, Amtrak California continues to do well.

"Ridership on the San Diego-Los Angeles-San Luis Obispo Pacific Surfliner totaled 313,570, a 9.5 percent increase compared with August 2007's total. For the fourth-consecutive month, the Pacific Surfliner carried more passengers than Amtrak's Acela Express."

No demand for rail in California my ass.

Anonymous said...

Until the SAC leg is done people will not need travel all the way to
Fresno they will be able to board in Merced..light years faster than the San Joaquins and bus

無名 - wu ming said...

spokker - agreed. once this thing is built, it will fundamentally shift the way that rail works in CA. feeder lines like the capitols, san joaquins and surfliners are the future of slow rail in this state.