High Speed Rail: Getting Our Money’s Worth

Advocates for passenger rail in America are excited. The stimulus bill provided $8 billion for high speed rail construction, California has passed a bond for nearly $10 billion to build a system in that state, and other projects from Florida to Chicago are moving forward. The Federal government is planning to issue the grants to “jump-start” development of a national system this fall. In this climate, Harvard Economist Edward Glaeser posted today the second in a series where he says he will attempt to conduct an economic analysis of high speed rail.

“Personally, I almost always prefer trains to driving,” Glaeser wrote in his introductory post to the series last week, but quickly added, “the public must be wary every time our leaders decide to spend billions of our tax dollars,” citing economists who have long argued passenger rail is rarely worth its cost.

The result of the first analysis is unsurprising: an unfavorable finding to a conventional cost-benefit analysis evaluation. Some will quibble with the assumptions or methodology, and they are very rough. (Ryan Avent posted this scathing critique on Streetsblog earlier today, the Transport Politic also evaluated the assumptions)

However, I’m not going to attack the math. I’m not overly worried about the outcome of a cost-benefit analysis calculation, because we almost never make big transportation infrastructure decisions through this kind of analysis. We built the interstate highway system because it was deemed a suitable national goal. Cities are building light rail transit because they want it for a variety of reasons. Certainly, economic analysis informs many specific aspects of the system design, such as weighing possible routes, deciding on service levels, and sometimes selecting the mode. However, experienced transportation planners know because of the future’s uncertainty, even the most rigorous analysis can be wrong. And on many of the big questions, such as what mode of transportation to invest in and where it should go, are decided through the political process regardless of whether they make economic or practical sense. Finally, even the most brilliant and accurate cost-benefit analysis is only meaningful if the actual cost is somewhere close to the estimate cost. It turns out creating accurate estimates — and ensuring the project is built for a similar price — is very difficult.

For large infrastructure projects like high speed rail, accurate cost estimates almost never happens. According to Bent Flyvbjerg’s Megaprojects and Risk, the cost overruns can truly be spectacular:

That means the total actual cost of Boston’s Big Dig was nearly three times the original estimate. A 100 percent cost overrun means it was double. On average, out of the study of 258 total projects in the book, the actual costs were 45 percent higher than estimated.

The causes of what they call this “calamitous history” are many and diverse. For the list above, I selected a variety of projects, from different times and cultures, to show it’s not uniquely an American problem. They’re not even all government-led projects, most notably the Channel tunnel was a private initiative. Private ownership does help, but cost overruns for a selection of private transport projects in the book run from 80% for the Channel tunnel to 15% for France’s Pont de Normandie bridge.

Much of the rest of the book is a detailed discussion of the causes for error in the creation of estimates, and possible reforms to improve the efficiency of megaproject construction. On the cost estimate side, the authors argue project studies rarely incorporate sufficient accounting of the inevitable risk, and are often skewed to meet political needs.

On the construction efficiency side, the authors propose four basic “instruments of accountability”:

• The involvement of risk capital: At least one-third of the project’s budget should come from private investors with no sovereign guarantee – i.e., they would lose money if the project goes over budget or has lower revenue than anticipated.
• Explicit formulation of regulatory regime: identifying all associated costs, even non-obvious ones like access ramps and stations, creating independent environmental review and other necessary oversight committees, and define the project financial and decision-making structures. They suggest a state-owned enterprise approach or build-operate-transfer approach, which place the government at arms length and minimizes conflicts of interest where the government is working both as an active booster and trying to meet public-interest objectives.
• Performance specifications: Define performance targets instead of specifying the specific approach for technical and environmental goals.
• Transparency: Enhanced transparency and public involvement to scrutinized plans and minimize opposition.

Our conventional project planning system could stand to gain from some of these reforms, and the time is now to incorporate them into the selected high speed rail projects. I still believe it’s important to try to create accurate estimates of total costs and benefits, and bring them into the decision-making process. However, since cost-benefit models are limited by uncertainty and often disregarded by the political system, we must also focus our attention on how to complete projects in the most cost-effective way possible.

> Edward Glaeser series: Part 1, Part 2
> Flyvbjerg, Bruzelius, and Rothengatter: Megaprojects and Risk

Planetizen Post: Making the Car Free Choice

See my latest Planetizen post: “Making the Car Free Choice”

On related topics here see Are you ‘Carfree’, Does Beijing Have Too Many Cars?, Climate Change: The Moral Imperative for Smart Growth (on urban form and driving), and (a question hopefully we’ll ask soon) Will Electric Cars Fuel Urban Sprawl?

National Journal Asks: Gas Tax $ For Bike Trails?

Here’s my answer to the question “Should the next surface transportation bill allow states and municipalities to use a greater share of scarce Trust Fund dollars on non-highway projects such as bike lanes and pedestrian walkways?” on the National Journal’s Transportation “Expert” Blog.

For more background, see my post “Fixing America’s Federal Transportation Policy.”

Will Electric Cars Fuel Urban Sprawl?

Shai Agassi has an idea so revolutionary it’s convinced venture capitalists to commit hundreds of millions of dollars, major corporations to sign on, and the leaders of countries around the world scrambling to sign up to be the guinea pigs for his new technology. It’s also an idea that, as soon as it is heard by many Americans, causes them to sneer. Perhaps this response should be no surprise, since Agassi’s idea aims to completely revolutionize the quintessential American mode of transport, the automobile.

Automobiles are ripe for re-invention, but progress is halting. Between pure electric, fuel cells, ethanol, plug-in hybrids, and natural gas vehicles, the technology of the sustainable auto of the future is anything but clear. Other, less practical concepts abound. Some urbanists are keen to make the city totally car-free, based around bicycles, walking, and transit.

The Concept

Agassi, formerly an executive with the global software company SAP, struck upon what he thinks will become a paradigm shift for the auto. In his plan, owners of electric vehicles subscribe with his company. In exchange for the fees they pay (carefully calibrated to be below the cost of operating a gasoline vehicle) they get the right to swap their batteries at a large network of re-fueling stations, or charge up at special plug-in spots located at work or even their home. The car’s computer shows the way when the charge is low. The company charges the batteries using wind farms, solar generation, and other sustainable sources. The difference between the subscriber fees and the amortized cost of the infrastructure and battery service is pure profit. Countries eager to shift their transportation systems away from petroleum can further encourage a shift to electric technology through tax differentials on the autos themselves. Israel has planned a differential based on environmental impact: electric cars will be taxed at a 10 percent rate, compared with 79 percent on gas-powered cars and 30 percent on hybrids.

What about the notorious range problem for all-electric vehicles? Better Place claims their vehicle, developed by the Renault-Nissan Alliance, will have a range of 100 miles. Roughly 95% of all daily auto trips in the U.S. are less than 30 miles, and over 99% are less than 100 miles. Given a liberal smattering of battery changing stations, the range problem is vastly reduced.

The logic is compelling. After all, we already use one privately owned network infrastructure on a daily basis, for cellular phones. The subscriber model means most can get phones for very low cost, and a vibrant market exists for new and used handsets. The dashing CEO has been convincing quite a few political leaders, with deals inked to build networks in Denmark, Israel, and Australia, and plans underway for Hawaii and the San Francisco region. The governor of economically beleaguered state of Michigan even took a test drive in the company’s prototype in November. (above)

Urban Effects

In general I’m not as skeptical as some critics. The concept seems sound, particularly for geographically compact regions like Israel and Hawaii. But what will the impact of the Better Place system be on our cities? Some would obviously be positive. Since private vehicles are major sources of air pollution, mass adoption of electric vehicles will result in immediately improved public health and cleaner air. Taxicabs and Zipcars (already leased from designated parking spots) could be converted to clean, all-electric fleets.

When it comes to urban form, the result is less clear. In the words of two Israeli environmentalists:

Car-based transportation requires the building of more highways and roads, new bridges and intersections that would take up land; it also creates the conditions for urban sprawl, which would take up even more land. This is a non-sustainable solution for Israel.

But would it? Conventional urban economic theory holds that that transportation systems increase the spatial extent (and decrease density) of the city if they reduce the cost of transportation. If we assume the network covers the entire metropolitan area, and the Better Place system was less expensive than gasoline cars, it could encourage sprawl and cause new, electric-car fueled traffic congestion on our roads. The networked system might result in a altogether new urban form, both less centralized than the rail-dominated cities of the early 20th century, or the formless sprawl facilitated by the long range of gasoline vehicles. Slightly shorter ranges than gasoline combined with the modern economy could encourage the development of polycentric urban areas, perhaps unintentionally anticipated in this Wired illustration of the Better Place network, where freeways loop strangely around nodes of skyscrapers and no sidewalks are in sight.

In fact, Agassi’s plan could have another unintended effect: boosting the number of cars in the city. In a worst-case scenario, where the network (or tax policies) subsidize the cost of the vehicle and make driving even cheaper than gasoline transport, Better Place could boost rates of auto ownership and distance traveled, exacerbating parking shortages and traffic.

How can we avoid these outcomes? Property pricing parking and abolishing parking requirements in urban areas would help auto owners bear the true cost of their intensive use of urban space and ensure all vehicles can park. Congestion pricing policies could reduce congestion in dense urban areas, shifting travel to more space-efficient transit. Our cities will need continued transit investment.

With the first charging station open in Israel and Renault-Nissan’s vehicles set to hit Israeli streets in 2011, these questions may be answered in just a few years.

> Wired: “Driven: Shai Agassi’s Audacious Plan to Put Electric Cars on the Road”
> Economist: “Renault-Nissan’s ambitious plans for all-electric cars”
> Better Place

Better Place photos: Renault-Nissan electric car in Denmark, Better Place Israel CEO at the first charging station, Better Place CEO Shai Agassi and Michigan Governor Jennifer Granholm; Wired Magazine illustration

Shared Vans Already Here … and Illegal

Over a year ago I described Cape Town’s minibus shared van transit system, where licensed drivers provide shared rides along designated routs. At the time, I suggested such a system, common in many countries around the world, should be considered in the U.S. I was wrong — there are examples of similar service in the U.S., although here they’re generally antagonized by the very agencies dedicated to providing public transportation. Miami, Atlantic City, and San Diego have shared taxi, or jitney, services. However, like in so many other areas, New York city is the most notable case.

Since the late 1970s, thousands of unlicensed “dollar” vans (they now charge $1.50 or $2) have provided rides in several New York City neighborhoods. The industry got started in earnest during the 1980-81 transit strike, and have proliferated despite occasional crackdowns by authorities. In the 1990s, the MTA estimated some 5,000 feeder vans operated in the city, shuttling passengers to subway stations in boroughs where conventional taxis are hard to find. The vans often run in direct competition with busy bus lines, providing faster, more convenient service. Robert Cervero’s 1997 book Paratransit in America features a rare scholarly examination of these vans, illustrated with this map describing the parts of Broolyn, Queens, and The Bronx where the vans are active.

A Brooklyn friend confirms the Flatbush corridor is alive and well, New Yorkers are welcome to chime in about the others. Generally operated by Caribbean immigrants, criticism often focuses on ethnicity and safety since the unregulated vans do not have to be inspected or carry insurance. The MTA and city officials accuse the vans of “poaching” bus riders and unsafe operations, and have sought to curtail the vans through occasional crackdowns over the years. Nonetheless even critics concede the operators are providing transportation services with no public subsidy.

The latest crackdown effort came after a hit-and-run accident in Brooklyn involving a dollar van driver who fled the scene fearing arrest. In response, the city began a ticketing blitz and began the process of designing a sticker to clearly identify which of the vans are among the 279 officially licensed carriers, who are prohibited from picking up passengers on-demand by city rules. For now, at least, an uneasy truce exists. “Some van operators argue that one-size-fit-all standards are wrongheaded,” observes Cervero, who asks “Should everyone be forced to ride in vehicles that are fairly new, meet high liability insurance requirements, and have comfortable, padded seats, paying a premium fare for these provisions?” For the time being in most U.S. cities, the answer is yes.

New York Subway Vs. D.C. Metro

A recent visitor to this website asked this question on a previous post:

hello, i am a New Yorker who relocated moved to DC last year. in my decades of riding the NYC subway, at $70/month unlimited rides, I have probably experienced a handful of delays and/or major issues with the tracks. in my one year of having lived in DC, there has been an average of one major delay per week due to track or other issues —- and I pay over $4.00 per one-way trip.

can you offer some thought or explanation as to why this is, in the context of the two train systems?

Although I know far more about the history and operations of Metrorail than the New York City Subway, here’s my general reaction on the reasons this rider has experienced more delays on Metro:

1. System redundancy: When I have traveled to New York, I often noticed construction work or service disruptions on the subway. However, unlike the Metro, the system has multiple tracks on most routes and many tunnels to route trains during disruptions. Metro, on the other hand, has much more limited flexibility – when a train breaks down, there’s no alternate track or tunnel for those behind it to travel on. Here’s some thoughts about why that is.
2. Funding differences: WMATA is generally under-funded and has no dedicated funding source – they go begging each year for tax dollars from Maryland, Virginia, and D.C. In the words of a fellow planner: “Over the years, WMATA has had to make a choice: make needed track repairs for mid-life preventative repairs or pay for additional rollingstock to meet massive demand. WMATA chose for years to purchase additional rollingstock.” I don’t know the history of New York Subway funding, but today the system is run by a huge state agency.
3. System age: The New York City subway is very old. This means that they have lots of maintenance to do, but it also means they have been at it for a while. The Metro is just hitting middle age, meaning lots of things are breaking for the first time now, at the same time they are facing the strain of record ridership.

What About the Price?
The issue of cost raises several issues, First, I should remind the commenter that the New York City subway, like New York City itself, is unique by American standards. The city has a unique history, namely it grew explosively before the auto age, setting a template for high density, transit-oriented development. As a result, the city’s density is off the charts, low auto ownership off the chart, transit use off the chart, and the activity level on its streets generally higher than anywhere else in America. I’m always surprised by former New Yorkers who somehow think their city is a reasonable standard to compare any other city in America. (You can’t get a good slice of pizza, everything closes early, your subway is worse, etc.) In fact, you should expect other American cities to be very different than New York.

That said, there are several reasons Metro’s fare is higher. First, they charge high fares because they need the money and they can. Second, their ridership peaks heavily, meaning most riders travel during peak times. The New York Subway’s riders are spread out more throughout the day, and the system is open 24 hours. Operating a system with high peaks is much more expensive than a system with more even ridership in terms of trains, personnel, and infrastructure. Third, given the Metro’s size and relationship to the region, for many riders it functions more like a commuter rail system. In fact, despite the graduated fares my analysis showed the longest distance riders are getting the best deal — under $0.50 a mile, lower than the IRS mileage rate.

These are just some quick thoughts regarding the differences, and I’d be interested in other perspectives.

In casual conversations, the convenience of the New York Subway is the gold standard for American public transit, and for good reason. Although it has flaws, it is enormous and a relative bargain for travelers. We also haven’t built anything like it for over 100 years. That’s why I’ve been spending my time writing about what we need to change to increase investment in alternatives to the road and freeway network.

Does Beijing Have Too Many Cars?

The skies of Beijing have cleared somewhat after draconian measures have taken effect to curb pollution, which include closing factories and taking roughly half the vehicles off the road. I thought this observation from the Post’s coverage today was interesting:

But a few motorists said they hoped the changes would not be temporary.

“Ten years ago, the government promoted the dream of owning a car in order to develop the car industry,” said Zhang Dalin, 40, a sales manager who usually drives to work but now takes a bus and the subway. “Now, traffic and pollution are so bad, they have to do something. But ordinary people shouldn’t pay the price for the government’s wrong decisions.”

The options for government to “do something” presumably include transit improvements (which are happening) and measures to curb auto use: higher taxes and fees, congestion pricing, or inflexible rules like the even-odd license plate number restrictions used today.

With Beijing’s 2007 population of 17,430,000, assuming an average household size of 3, and taking the Post’s figure of 3.3 million cars, that translates into roughly 0.57 cars per household, or 43% with no vehicles. For comparison, that means Beijing has more cars per household than New York City and Newark but less than any other big U.S. city.