Toward a Positive Argument for High-Speed Rail

In recent weeks, I've been busily making what you might call a negative argument for high-speed rail -- pointing out the many ways in which arguments against HSR are deficient. That's all well and good, but positive cases for HSR need to be made, as well.

Now, others have already begun to do this. California has released a lot of documentation and research related to its decision to construct a high-speed rail network. At a more casual level, Chris Bradford and Yonah Freemark have shown that simply by making a few reasonable assumptions, the stripped down models used by Ed Glaeser produce results that are far more favorable to rail investment.

But I think it's worth stepping back and considering the decision to build HSR in context. The biggest problem I have seen with critical arguments is that they ask the wrong question, namely, given current conditions could a single HSR line be profitable.

That's not the way to make these decisions, and indeed, if we had been making decisions like that all along, much of the country's existing infrastructure would never have been built. So let's see if we can't arrive at a better understanding of the question to which some of us believe HSR is the answer.

In this country, we do not build transportation infrastructure for profit. Perhaps this is upsetting to the libertarians among us, but that's how it is and how it should be.

Rather, we build transportation infrastructure because we recognize that mobility is vital for the economic, social, and political life of the country. The question then becomes, what criteria does government use to build new infrastructure? What is government trying to accomplish?

To a significant extent, these decisions are not wisely made. Local governments often plan new roads based on what developers want and what federal funding is available to them.

Planners often make plans that attempt to figure out where growth will be or should be, and their advice is occasionally heeded. Limited cost-benefit analyses and environmental impact statements figure in decisions but are rarely binding.

The point is this -- the decision to build a new highway or a new airport is rarely the result of a rigorous analysis of the totality of costs and benefits, to individuals, taxpayers, and society.

That doesn't mean that we should feel good about building rail whether or not it makes economic sense. It does mean that the existence of highways and non-existence of HSR should not be taken as evidence of any kind of intrinsic economic goodness on the part of highways.

So, having said all of that, let's set out a few key facts for consideration. First, current infrastructure appears to be inadequate. Roadway congestion in America is quite costly. The Texas Transportation Institute has estimated annual congestion costs around $80 billion.

That works out to annual costs of approximately $10 billion for Los Angeles, $8 billion in New York, $3 billion in Atlanta and Dallas, $2 billion in Philadelphia and Boston, and so on down the line.

These numbers are open to dispute; congestion costs are difficult to estimate. But it is clear that significant amounts of valuable time and fuel are wasted everyday due to crowded conditions on highways and city streets.

Congestion is worsening in large metropolitan areas, and serious congestion costs can be found in progressively smaller metropolitan areas. Airline delays have also gotten progressively worse in recent years, particularly in our largest metropolitan areas.

Now, congestion at airports and on roads can be reduced by increasing the cost of using those modes. Congestion declined with increases in the price of oil in 2007 and 2008. Unfortunately, the economy's dependence on oil meant that high oil prices contributed to the onset of a serious recession.

It's also worth noting that increases in the price of oil and decreases in driving and flying took place alongside increases in usage of transit and rail. This reflects that rail is a substitute for highway and air travel, and that increases in the cost of the latter will boost demand for the former.

A third piece of information: the American population is forecast to grow by over 100 million people over the next four decades.

Currently, the Census Bureau projects that the United States will be home to approximately 440 million people in 2050, about 133 million more people than currently reside in the country. Based on recent trends, it seems likely that most of those people will live in the country's metropolitan areas.

Based on these pieces of information, it seems clear that if nothing is done, congestion will continue to increase. Ultimately, this will lead to a steady reduction in mobility within and between the nation's metropolitan areas, with negative consequences for economic activity and social welfare.

The question, then, is this: what should be done about this state of affairs?

One potential answer is what you might call the no-build solution -- no new capacity of any sort will be built. Governments might choose several options within the no build solution; they could truly do nothing, or they could choose to ration demand by pricing roads and airport slots.

In either case, however, the cost of traveling by road or air would rise. This could be reflected as an increase in time cost or monetary cost or both.

However the increase occurs, recent experience suggests that the rising cost of travel by car or plane will lead to an increase in demand for substitutes. In the absence of action, then, demand for transit and rail will be enhanced (and cost-benefit analyses should reflect this).

Note: I'm not mentioning oil prices at all here. It's not easy to predict where prices will go tomorrow to say nothing of four decades down the road.

It does seem likely, however, that oil price volatility may increase in coming years (and has already increased since the placid days of the 1990s). In that case it's worth considering the value of an acceptable substitute to driving and flying. The better consumers can adjust to swings in oil prices, the less economic damage such swings will do.

Now, what if we choose to build new capacity? This, it seems obvious to me, is the most likely policy course. Governments will react to complaints about growing congestion as they always have -- by building more capacity.

The question then becomes what kind of new capacity should be built. Glaeser and others have attempted to show that high-speed rail does not pass a simple cost-benefit test. I'm inclined to disagree with their assessment, but to a certain extent, that question is beside the point.

Government is going to build more capacity. Given that, what is likely to be the best investment, all things considered?

Available alternatives, as it turns out, are not all that attractive. Roads do not appear to pay for themselves any more than railways do. Receipts from the federal gas tax come close to covering federal highway expenditures, but gas is used on highways and non-highways alike, indicating that at the federal level, highways are subsidized.

A more detailed analysis by the Texas Department of Transportation led to the development of the Asset Value Index, which was used to gauge the life-cycle cost of Texas roads, highway and non-highway.

According to the Texas research, none of the state's roads paid for themselves, taking into account all relevant taxes and fees. In some cases, gas tax rates would have to be $2 per gallon or more before a piece of infrastructure would break even. Obviously, a gas tax at that level would correspond to increased usage of substitutes, like rail and transit.

Environmentally speaking, rail infrastructure is a much better option than new road or air infrastructure. Ed Glaeser concluded that there are positive environmental gains from building rail, and he was comparing rail to the no-build alternative.

If one assumes that some kind of new infrastructure will be built, then the case for rail becomes more compelling still. Life-cycle emissions for rail are considerably lower than those for driving options.

They're lower than flying options as well, and rail compares most favorably to life-cycle emissions for small planes, which are most common on the short routes that would be in direct competition with intercity trains.

Glaeser did cite research out of Britain as a reason to be wary of the life-cycle emission benefits of high-speed rail, but even there rail comes out fairly well.

The research, a Booz Allen Hamilton study commissioned by the UK Department for Transportation, shows that on routes where rail currently has a low market share (which describes most of the routes being considered for HSR service in America) rail can produce significant emission savings, even taking construction of HSR systems into account.

What's particularly notable about this is that it compares HSR construction to a no-build option, rather than a world in which air services are expanded to alleviate airport congestion.

Very little of this will satisfy those who want to see how rail can earn a profit before moving forward. That's fine, and as the title indicates, this is just the beginning of the argument for high-speed rail.

But it's important to understand the context in which the rail decision is being made. America will be building new intercity transportation infrastructure in the coming decades, of that we can be sure. In many cases, the most attractive of available investment options will be high-speed rail.