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Why High-Speed Rail Isn’t Less Cost-Effective Than Other Transit Investments (Part One)

Posted by Shane Phillips on Wednesday, March 26th, 2014

UCLA’s Institute of Transportation Studies released a working paper report* two days ago, which makes the claim that local transit and active transportation upgrades are a more cost-effective way to reduce greenhouse gas emissions (GHGs) than California’s planned high-speed rail (HSR) line from Los Angeles to San Francisco. And if their numbers are to be trusted, those local projects are way more cost-effective: when all is said and done, they calculate that HSR will cost approximately $361 per metric tonne of GHG reduction — 30 times more than a tonne sells for in California’s cap-and-trade market — while Los Angeles’ Orange Line Bicycle Path will actually save the state over $3,600 for every metric tonne of GHG reduction that they achieve. The Orange Line Busway and Gold Line light rail services both fall somewhere in between, but look much better than high-speed rail by this metric.

I’m going to take a look at why this is completely wrong in two parts. Today will be the (relatively) short post, regarding their misleading calculation of “Net User Costs” for high-speed rail and other transportation infrastructure.

Here’s an adaptation of the table from their paper, which shows the costs of reducing greenhouse gas emissions. Notice that in the first column the full public cost is actually lowest for high-rail; only after they account for “Net User Costs” are factored in does HSR end up looking so bad.

Cost per metric tonne of GHG reduction:

 

Full Public
Cost

Full
Public Cost Less Net User Costs

California High­-Speed Rail 

$461

$361

Orange Line Busway

$1,074

-$676

Gold Line Light Rail Transit

$3,458

-$1,233

Orange Line Bicycle Path

$1,061

-$3,670

So what are “Net User Costs”? They’re the amount you save when you switch from one mode of travel to a cheaper mode. When I switch from driving to work to taking the Gold Line, I go from paying whatever it costs to operate my car to paying $1.50 for a one-way fare on LA’s Metro system. When I switch from flying to taking high speed rail, my ticket cost drops from $97 to $81. It’s in this conversion that UCLA’s working paper so significantly misrepresents the private savings of local transit and bicycling relative to high-speed rail.

There are a few problems here. The first is a bit abstract — it’s actually the use of this metric in the first place. It completely ignores those that switch from driving to high-speed rail, because this is switching from a less expensive mode to a more expensive one. From the perspective of this paper, those diversions don’t exist, or at best they’re implicitly judged as mistakes. But people generally act pretty rationally, and someone that decides to trade in a car trip for a train trip is probably doing so for completely valid reasons. Maybe they don’t want to deal with traffic, or they put a premium on their time, or they want to work during their trip. If the benefits of taking the train outweighed the costs, they’d either find another way to get there or they wouldn’t make the trip at all. Reducing all decisions to the immediate monetary cost isn’t very instructive, and the reality of millions of people choosing to use the Acela high-speed rail service in the Northeast, rather than driving, highlights that.

The second point is easier to understand, and probably more significant. Net user costs are an easy calculation for air to rail: the ticket cost of one minus the ticket cost of the other. Things get tricky when measuring the cost of switching from car to bike or bus, however. To calculate the savings, the report’s authors need to know the cost of the new trip — easy: bikes are free and buses are $1.50 — and the cost of the car trip it replaced. The driving cost is found by multiplying the trip distance by the standard IRS mile rate, which is mostly used for deducting business-related transportation expenses. As of 2012, that rate was 55.5 cents per mile.

The reason this number is so inappropriate is that the mileage rate is “based on an annual study of the fixed and variable costs of operating an automobile,” and the vast majority of people switching from their car to the train aren’t getting rid of their cars (sadly), they’re just using them less. Most of those “fixed and variable costs” — insurance and car payments in particular, as well as depreciation — are accruing no matter how much or how little you drive; most car owners that switch to transit or bicycling are only saving on gas, and perhaps parking in very dense areas. I wrote about this car ownership sunk cost bias last year. Though it’s dependent on the driver, gas probably account for less than a quarter of most people’s car expenses, so this study probably overstated the Net User Cost savings by a factor of 4, at least.

As a side note, since it’s (falsely) assumed that no one is switching from driving to using HSR for their long-distance travel, the rail line doesn’t benefit from this nifty accounting trick. That’s convenient, since if driving actually did cost 55.5 cents per mile, it would cost $211 to drive from LA to SF — more than double a high-speed rail fare.

As someone who’s been car-free for going on six years, I’m the last person to criticize someone trying to raise the profile of local transit and active transportation investments — I rely on them every day and frequently write about the need for more. Even though most people don’t get rid of their cars when new transit services arrive, some do, and that’s amazing. We should celebrate and encourage that. But at the same time, pitting different forms of clean, efficient transit against one another isn’t productive, especially when those transit types serve entirely different purposes. I feel that this recent UCLA report understated the benefits of HSR while overselling the benefits of rail, bus, and bike infrastructure. In truth, they’re both outstanding investments and perfect complements, and we should be striving to find ways to build more of each.

The second part to this critique is available here, with a focus on the differences between high-speed rail and local transit infrastructure, and why they shouldn’t be considered competitive with one another. 

About Shane Phillips
www.betterinstitutions.com
“I grew up in the suburbs of Seattle, got my driver’s license the day I turned 16, and rarely visited the city because driving in it was so unpleasant. Seven years later I moved to Seattle and realized the problem wasn’t the city, but how I chose to get around in it. I’m currently pursuing my Masters in Public Administration and Urban Planning at the University of Southern California in Los Angeles, and working on behalf of more sustainable, safe, healthy, economically productive cities.”

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