How Economists Routinely Screw Up HSR Cost Benefit Analysis

Jan 26th, 2013 | Posted by

The main purpose of any transportation project is to help people get to where they want to go. Cost should be a subsidiary factor in the planning of any transportation project. Unfortunately, in the 30 years since right-wing ideology became politically ascendant, keeping costs down so that rich people didn’t have to pay higher taxes started taking precedence over building effective transportation projects. This may have been tenable as long as oil prices remained low. But once prices began rising again, it was clear that building electric passenger trains was a top priority for modern societies.

AVE Class 103 at Madrid Atocha

Problem is, when the economists got a hold of these projects, they regularly criticized them because in their very narrow analysis, the benefits didn’t match the costs. But as a new World Bank report argues, such analyses are deeply flawed due to their unwarranted limitations:

Traditional economic evaluations of major transport infrastructure investments focus on the direct costs and benefits arising from travel, including user time savings, operator cost savings, and reductions in externalities including air pollution, noise, and accidents. There is an emerging consensus that major transport investments may have significant impacts that are not well captured by this type of conventional cost-benefit analysis. In China, the World Bank transport team has supported both econometric studies and on-the-ground surveys that begin to identify and quantify these impacts in the context of China’s emerging High Speed Rail (HSR) program. Based on this and other research, the Bank team has begun to pilot a methodology to evaluate wider economic development benefits for several HSR projects, and has found them to be significant – of the same order as, but additional to the direct transport benefits that are traditionally measured. Crucially, these benefits of larger and better connected markets accrue to businesses and individuals even when they themselves do not travel.

This is similar to an argument Richard Florida has been making for some time now – that one of the emerging trends out of the Great Recession is that regions are going to be more deeply interconnected to each other, and that when this happens new economic value is created. Agglomerations of multiple metropolises have a significant competitive advantage over individual metropolises, just as the individual metropolis emerged with a competitive advantage over the individual industrial city over a century ago.

The World Bank study argues that there are demonstrable economic benefits to agglomeration and that HSR plays a role in this:

Quantifying these benefits relies on a concept known as ‘Economic Mass’. Economic mass is a measurement that combines the size of a city’s own economy with its accessibility to other regions. Economic mass in a given location can therefore increase through one of two means: the level of economic activity can increase, or the surrounding areas can become more easily accessible, as measured by a combination of the time and cost of travel. So if HSR (or other transport improvements) can reduce the friction of travel between regions, it can increase the ‘economic mass’ of the cities it serves.

The concept and measurement of economic mass is relatively straightforward; where research has progressed in recent years has been in identifying the relationship between the economic mass of a region and its overall level of productivity. This link is based on four propositions:

a) economic mass rises with transport improvements;
b) the average output of employees, and hence their wages, varies directly with economic mass, even after controlling for other variables;
c) there are positive externalities from transport improvements which increase output for some firms independently of their use of the transport network; and
d) this increase in output is not included in the standard evaluation of transport projects.

A major UK study that attempted to quantify this relationship estimated that, other things being equal, a doubling of economic mass would give rise to an increase in per worker productivity of 3.5%. Crucially, these productivity benefits accrue to businesses and individuals even where they do not themselves travel.

The study then argued that these benefits are already present in China thanks to agglomerations enabled by that country’s huge expansion in HSR in recent years:

Benefits were calculated for the 30-year period following project completion [of the Nanning-Guangdong HSR line]. Direct benefits including time savings for passengers and freight, reductions in operator cost, and generated traffic, yielded net present benefits of approximately 50 billion RMB in 2009 RMB. Using the elasticity of productivity with respect to economic mass adopted above, the agglomeration benefits were estimated at 49 billion RMB (both weighed against the 2009 present value of project costs of 47.9 billion RMB, all discounted at 12%). In our analysis, then, agglomeration benefits were found on the order of (and in this case only slightly lower than) traditional project benefits.

Agglomeration benefits and traditional benefits show that HSR is a powerful creator of new economic value well in excess of its costs. And that’s before you throw in the economic value generated by savings on oil – the “green dividend.” For the Los Angeles area alone the green dividend for HSR was estimated at $10 billion per year. Across the entire state it could be nearly $30 billion – again, per year. Add in the traditional benefits and the agglomeration benefits and it’s clear that HSR would more than pay for its construction costs.

But traditional neo-classical economics, with its narrow focus on an arbitrarily limited set of costs and benefits, ignores those larger and demonstrable benefits. So their reporting makes HSR look like a bigger risk than it really is.

A classic example of getting the HSR economic analysis massively wrong was in Spain’s El País newspaper last week:

Twenty years after the first high-speed train cut a swath through the Castilian uplands, the evidence suggests that they are simply not viable economically, or even necessary to provide rapid links between the country’s cities. But no politician seems able, or willing, to put a stop to the spread of the AVE….

Spain has spent 46 billion euros on high-speed railways over the last two decades, but the final bill will end up being much higher. Paying off the cost of Spain’s ambitious public works program is growing, in much the same way that mortgage payments increase over time. It is part of the country’s deficit problem, notes [Daniel] Albalate, who employs the following metaphor to describe the benefits of the AVE: “It is like building infrastructure in the desert.”

But the article doesn’t make any mention at all of agglomeration benefits. It doesn’t make any mention at all of the green dividend or oil costs. The article describes at length Spain’s current economic crisis without noting that Spain, like the other so-called “PIIGS” are the most oil-dependent nations in Europe. While mainstream media outlets like El País seem to believe that government spending on things like trains is part of the problem, they are totally blind to the actual causes of the problem – oil dependence – and ignorant of the emerging economic geography of the 21st century where agglomerations matter a lot to creating economic opportunity and value.

Spain is going to emerge from this crisis as one of the European nations best poised for success thanks to its AVE network, which agglomerates metropolises such as Madrid, Sevilla, and Barcelona (whether or not Catalunya votes for independence in 2014) by transportation methods that are independent of oil. The same is true of China, and it will be true for California as well, assuming the HSR project continues on its current path.

By any sensible cost benefit analysis, HSR is a sensible thing to do. Let’s hope the media abandons the failed neo-classical model and starts listening to folks like the World Bank who have a better understanding of how HSR actually works in practice.

  1. jimsf
    Jan 26th, 2013 at 19:53

    the Bank team has begun to pilot a methodology to evaluate wider economic development benefits for several HSR projects, and has found them to be significant – of the same order as, but additional to the direct transport benefits that are traditionally measured. Crucially, these benefits of larger and better connected markets accrue to businesses and individuals even when they themselves do not travel

    Well no freakin duh! Any schmo off the the street with an ounce of common sense could have told them that. and these are the kinds of people we trust to assist in running the world?
    Explains a lot doesn’t it.

    StevieB Reply:

    The average person on the street knows only what he hears in the media about HSR. The media is filled with stories with a hint of scandal. Media stories about HSR cite sources saying the costs are so high that there will never be enough benefits to justify the costs. A few lesser viewed sources such as this blog provide reliable information.

    Nathanael Reply:

    If it weren’t such a pain in the neck to travel in the US, my friends (who live on opposite coasts) might have managed to get some of their products (battery with 100x storage capacity of existing ones, etc.) commercialized already. They can do the scientific work via email, but when it comes to dealing with financiers and lawyers, that’s been substandard; the financiers and lawyers rarely meet *both* of them and therefore get false impressions.

    I would expect that China is getting the immediate benefits of better travel connectivity.

    DATA1717 Reply:

    If your friends had the ability to create a viable battery that has 100x storage capacity of existing ones, and the only thing holding them back from this reality was the physical separation of 3000 miles wouldn’t behoove them to move to the same city?

    Nathanael Reply:

    No. 80-year-old tenured professors have strong incentives not to move house.

  2. MarkB
    Jan 26th, 2013 at 20:09

    I thought the AVE trains were profitable above the rails, but the linked article indicates not, albeit in sometimes ambiguous language. Are all AVE lines operationally profitable? Some lines? No lines? And how does the network perform in aggregage?

    Joey Reply:

    The last I heard (which may not be accurate anymore) was that the actual high speed trains covered their operating expenses but the medium distance AVANT services did not.

    MarkB Reply:

    I don’t know how Renfe is organized, but if AVE = high speed and AVANT = medium distance, those are apples and oranges.

    Joey Reply:

    AVANT services are 250 km/h trains running on the high speed lines.

  3. Reedman
    Jan 26th, 2013 at 20:19

    Spain is mentioned in the article, and is an interesting case study: 25% unemployment, partially caused by a commitment to implementing alternative energy, no matter the cost (like HSR, the decision wasn’t based on cost/benefit financial budgeting analysis, only the argument (by civil servants) that the intangible benefits justify the extraordinary costs). According to the Universidad Rey Juan Carlos, it cost the Spanish taxpayer $600k for each alternative energy job, $1.2 million for each wind energy job. Each alternative energy job caused the loss of 2.2 jobs elsewhere in the economy due to higher energy prices and higher taxes.

    MarkB Reply:

    Spain’s biggest issues were a real estate bubble collapsing, causing bank insolvency, causing huge government debt and austerity, causing a confidence crisis. Green job may have been part of the government’s spending during the bubble, but the job were an effect, not a cause.

    Nathanael Reply:

    The unemployment in Spain was caused entirely by financial policies. “Free trade” with Germany + fixed currency rates + no capital controls + giving away the power to print money + corrupt private banks . Just like in the rest of Europe. As for energy prices, they’re driven by forces outside Spain for the same reason — free trade. Taxes? Don’t make me laugh.

    Renewable energy is one of the few things which has *helped* Spain’s economy.

    The “study” you quote, Reedman, is stupid and ignorant — or more likely, deliberate propaganda. It’s most likely that the study you quoted is one of those bogus bought-and-paid-for-by-rightwing-CEOs studies. There’s an awful lot of those out of so-called “economics” and “finance” departments.

    joe Reply:

    That data appears to be nonsense at first blush. 1.2 million per job. How do you explain the inefficiency?

    Alon Levy Reply:

    Funny how in 2007 nobody thought Spain was in trouble, and now in 2012 each of the European periphery countries has a different special explanation for why it’s horrible and must suffer for its bad choices.

    Jo Reply:

    One of the causes which exacerbated Spain’s economic troubles was ineptness on part of former Prime Minister’s Jose Luis Rodrigues Zapatero’s part; when things started getting bad, he was in complete denial. Overall you had general ineptitude from the political party in power at the time.

    Nathanael Reply:

    The biggest problem was the austerity push coming from the European Central Bank and the German private banks. Zapatero didn’t realize how bad things were. If he had, he would have unilaterally pulled the country off the Euro; I can forgive him for not realizing it was that bad.

    Andy M Reply:

    Though to be honest, the present Rajoy government is pretty much out of touch too. Admitedly they’ve got a tough nut to crack but I see no evidence of them doing anything meaningful to get out of the crisis. I don’t expect them to last long.

    Nathanael Reply:

    The Rajoy government, being right-wingers, actually believes the austerity nonsense, making it even worse than the Zapatero government.

    Obviously Spain needs a third option.

    Jonathan Reply:

    Alon: you need to learn to spell “Not Germany, and not Nordic”. ;) ;) ;).
    France is not doing wonderfully. And Itally was one of the Original Six. You can’t call Italy “periphery”, at least not without giving up any pretension of being informed.

    Alon Levy Reply:

    France is doing okay – not as well as Germany, but it has positive economic growth and an unemployment rate that’s not all that bad by its usual Eurosclerotic standards. Pre-recession, Spain and France had the same high-single-digit unemployment rate. Today, France is at 10% and Spain at 20%.

    And people talking about European core vs. periphery in the US classify Italy as either. It’s clearly not doing as well as Germany, or even as well as France. But unlike Ireland, Greece, etc., it was not doing well even before the recession (which I realize is also true of Portugal, but still), and it did not have a large inflow of foreign investment. In the years leading up to 2008, Ireland, Greece, and Spain had some of the highest GDP per capita growth rates in the first world; Italy had the single lowest. So Italy’s issues aren’t really the same hot money problems. It just had a terrible decade, so once the global economy crashed, it got destroyed.

    Nathanael Reply:

    Before the crash, Italy had Berlusconi. Who helped maintain Italy’s reputation as a corrupt place, but added to it with a reputation of a country where one monopolist was favored by the government. This is not really a recipe for encouraging investment from outside.

    Fake Irishman Reply:

    Right — Spain was running a budget surplus before the real estate bubble burst (which was largely driven by foreigners) and because it doesn’t have its own currency, it can’t deleverage by weakening its currency, but instead has to inflict deflation on its population (with all the unemployment, service cuts and widespread misery that entails) — because a few EU central bankers are afraid of inflation cresting 1.5 percent in Germany. Ditto in Ireland. You’ll notice how you don’t hear about any massive Spain-style economic dislocations in Denmark despite its huge push for green energy, or in France despite its massive TGV system. But of course, this is what I get for drinking the cool-aid from second-rate economists (sarcasm alert) like Brad Delong, Paul Krugman and Alan Blinder.

    joe Reply:

    Spain is also exporting this technology of which it is a pioneer for consumer use. Oil rich Arabia is buying and for use there Mid-east and in N Africa.
    The latest update came as Saudi Arabia’s ACWA Power International reportedly signed a $1bn deal to supply the Moroccan government with electricity from a 160MW solar thermal plant the company has built with Spain’s Aries Ingenieria & Sistemas SA and TSK Electronica & Electricidad SA.

    Saudi Arabia announced this year that it is to become the latest Gulf state to adopt a wide-ranging solar strategy, outlining plans to invest $109bn over the next 20 years in order to take advantage of its excellent solar resources and diversify its energy mix. Its stance echoes that of several countries in the region, including Qatar, Abu Dhabi, and Dubai, all of which have recently unveiled new plans for accelerating investment in renewable energy.

    Jo Reply:

    Spanish exports are one of the few positive things helping Spain now (or at least keeping it from completely drowning), of which green energy plays an important part.

    D. P. Lubic Reply:

    “You’ll notice how you don’t hear about any massive Spain-style economic dislocations in Denmark despite its huge push for green energy, or in France despite its massive TGV system.”–Fake Irishman

    This ties in with my voting decisions in the most recent election, and why I wouldn’t vote for Republicans at all at the current time despite being an extremely conservative person, perhaps the most old fashioned one who posts here. The tie-in is that the Republicans are–well–dumb.

    Case in point–we had a presidential candidate make an unfortunate remark about “47% of the population” not paying income taxes, and thus they were always going to be freeloaders. There were some problems with that, in that the 47% includes people who are on Social Security or some sort of disability payment, some whose paychecks are too low, some who are business owners and their profits are too low (and as an auditor, I see those!), and, let’s admit it, it also includes a portion of the really rich 1% who have really good accountants and tax lawyers.

    But then there is the corollary, which is that 53% of the people do pay taxes? Is that too low, as the candidate’s comment would suggest? What was it like in a better economic time, like the 1950s? Well, I found out that the “taxpayer participation rate” for 1960 was only 49%! Keep in mind that in 1960 most women were-stay-at-home moms, and the Baby Boomer generation was mostly still a bunch of babies, with some not even being born yet. So much for using taxpayer participation as a metric. . .

    Then there has been the bit about top tax rates–marginal rates at that–going from 35% to something like 36.5%. Oh, what wailing and crying we hear! Why, that’ll kill incentive, it’s confiscatory, it’s–still way, WAY under the maximum tax rate in 1960 of 94%!! Now, keep in mind, that rate was on an income of $300,000.00 or more (which is probably about $2 million or more today), and you had a lot of deductions you could take then that you can’t take now, like the interest payments on your car and your credit cards. Still. . .

    What all this tells me is that we’re asking the wrong questions. We have lower taxes than before, we have greater taxpayer participation than before, we even have lower interest rates than before, so all of these things do not seem to be the cause of our troubles.

    I think we need to look to other things to figure out what we need to do. That would include listening to environmentalists, (some) engineers, and yes, poets and writers and even movie stars, and to quit listening so much to overly righteous politicians and pundits with their too-simple answers that make them look like simpletons, and to oh-so-serious economists and bankers, whose models are little better than over-simplified caricatures of the real world.

    Jerry Reply:

    At D. P. Lubic. 
    Thank you for the post. I like your reference to the 1960s. I always smile when I hear about Robert Strange McNamara’s comment that he considered not becoming Sec. of Defense in 1960 because the pay was only $25,000 a year. 
    Certainly we all live in a very different world. 

    Jerry Reply:

    At D. P. Lubic. 
    “I think we need to look to other things to figure out what we need to do.” 
    Amen. So do I. And so do some Economic students who walked out of an Economic class at Harvard.     See:

    As usual, the article comments are interesting.  The conflict between Micro Economics and Macro Economics is never ending. 
    The future calls for a new economic/business model “bottom line” made up of the three P’s. – Planet, People, Profit 

    D. P. Lubic Reply:

    Thanks for both posts, Jerry, it’s always nice to see people who look beyond the obvious, or at least beyond what the pundits and the like tell us.

    That’s why I’m cautiously optimistic about the younger generation. I understand that a lot of people in “Generation Y” consider themselves the “fix it” generation. They will be the ones to whom will fall the responsibility of repairing the economic, environmental, and social damage we all see and decry. I just hope enough of the dinosaurs, including at least certain members of the 1%, will get out of their way. Otherwise, I’m afraid we will run out of time.

    Listen to me, and laugh–because I’m old fashioned, Catholic, pro-life, pro-modesty, wish entertainment was cleaner, all the stuff that should make me a Tea Party person, but I’m not, too much phoniness and stupidity there.

    Andy M Reply:

    I’m certainly with you on the latter, but right now I see little evidence of there being a “fix it” attitude in any generation presently living, more a “milk the system while we can” coming from both young and old. Yes, there are individuals out there with some amazingly astute views and understanding, but I wouldn’t say that there’s a movement large enough to be ready to take the reins and fix it.

    I think things have to get worse before they can get better.

    Nathanael Reply:

    I’ve been wondering about the astounding stupidity we’ve seen among politicians of a certain age, and the degree to which it is being reduced in younger generations. There’s a possible explanation: lead.

    Perhaps the smarter politicians are those who managed to avoid the comprehensive lead poisoning which happened to most children of the 50s, but particularly children in cities. Anyway.

    Jonathan Reply:

    @Fake Irishman?

    What? What what? Deflation and unemployment go hand-in-hand? QUck, wake up all the NeoClassical economists (and Econ 101 profs) and tell them the Philips Curve has been empirically refuted!

    Oh, what’s that you say? That’s as much economics as policy-makers understand? “Ooops”

    Alon Levy Reply:

    You mean “empirically proven,” right? What the Philips curve says can’t happen simultaneously (in the short run) is high inflation and high unemployment; it actually predicts that deflation and high unemployment will co-occur.

    Fake Irishman Reply:

    Thanks for the clean-up job, friend.

    Jonathan Reply:

    Not exactly If prices are stable, _some_ economists start saying “oh, well we’re at the natural level of employment; nothing to see here, move along”. Except US unemployment is still at 7.8%, which doesn’t count discouraged job-seekers or the under-employed. (And it’s a lot higher in some states.)

    I mumble about downard rigidity of wages (Krugman has written about it, and how the Philips curve breaks down at very low inflation rates), and recalibrate my rather dark sense of sarcasm.

  4. Mike Brennan
    Jan 27th, 2013 at 09:16

    “Agglomerations of multiple metropolises have a significant competitive advantage over individual metropolises..” This is the perfect argument for connecting LA – SD with greater urgency. They are geographically closer than LA-SF and would benefit tremendously from high-er speed rail between the two. Many people would opt for a train ride with good transit options at either end and reliable quick service. What is the timetable for upgrade to 110 mph on that corridor? Seems like nothing is happening..

    Nathanael Reply:

    They’re still trying to finish double-tracking SD-LA (and triple-tracking north of Fullerton). The Surf Line runs on unstable cliffs, on sand, across estuaries, and through extremely rich neighborhoods, so doing it without causing NIMBY explosions is hard and going slowly, but a few projects get done every year.

    Judge Moonbox Reply:

    Another problem the Surfliners experience is Camp Pendleton. I took that train once, and I saw Marines on maneuvers. If I had taken a later train, I might have seen Marines hitting the beach.

    I would also note the section through Rose Canyon made the train really slow down, and LA Union Station can’t be approached from the south–trains have to get up north of the stub terminal. As soon as the CaHSRA can complete a southern approach, it’ll benefit a lot of Surfliner and Metrolink passengers.

    EJ Reply:

    Were these marines crossing the tracks or something? The only reason the Surfliner slows down through Pendleton is because of some decrepit 100-year old bridges, which are gradually being replaced. Other than those speed restrictions it’s the fastest section on the whole route, being fairly straight and cleared for 90 mph.

    Nathanael Reply:

    There’s been a plan floating around for a while to tunnel under La Jolla to bypass Miramar and Rose Canyon, but that is *not* funded (and has not completed environmental studies).

    Jonathan Reply:

    LA-SD is ecnomically smaller than LA-SF. A good LA-SF route (which _could_ have a station within cycle-down-the-hill distance of Sand Hill venture-capital) has more of a growth effect: it makes a bigger difference to bigger individual metro areas.

    not to mention the public-policy aspects of connecting all the conurbations in the Central Valley — the ones Synon likes to crap on.

    Paul Druce Reply:

    LA-SD is 2/3rds of CA’s population and most of full system expected ridership.

    Paul Dyson Reply:

    Quite so. SF is but a village of less than a million.

    joe Reply:

    One wonders….

    “In 2010, San Francisco welcomed 15.92 million visitors, an increase of 3.1 percent from 2009. These visitors spent $8.34 billion in 2010, up 6.2 percent from the previous year.”

    …why you write such things.

    Paul Dyson Reply:

    That’s a good thing since they have priced themselves out of almost every other economic activity.

    Paul Dyson Reply:

    And only half the total for San Diego county.

    joe Reply:

    You just compared sprawling San Diego County to a Village and only doubled the tourism and apparently think the demand for SF as a locality makes it icky.

    Time to stop digging.

    Jonathan Reply:

    Village of 1m? You’re thinking of San Jose.
    By “SF”, in context, one clearly means the entire Bay Area. Keep going, you can reach Synon status if you try.

    Alon Levy Reply:

    Think *, not +.

    EJ Reply:

    Well, you’re thinking about this in terms of economic benefit. This is a prestige project, like they do in 3rd world countries, designed to glorify Jerry Brown’s legacy. I mean sure, the obvious place for investment in rail is upgrading LA-SD and SF/SJ-Sac, but where’s the glory in that?

    Eric Reply:

    Since when are HSR and SF-SJ/LA-SD mutually exclusive? Brown is doing both.

  5. Reedman
    Jan 27th, 2013 at 09:21

    Link to today’s LA Times article about land acquisition (or the lack thereof) for CAHSR:,0,6688039.story

    Peter Reply:

    Why do people think that they can hold up projects by forcing eminent domain? Of all the “problems” CHSRA has had to deal with, this is by far the most straight-forward?

    synonymouse Reply:

    Earth to Cheerleaders and PB Worshippers:

    Take a look at this emm-effing map of the CHSRA in this LA Times link. Is this map accurate or has it been exaggerated?

    If it is correct anyone with half a brain would ask the obvious question: what the f**k is this grotesque go-around doing north of LA?

    Those responsible for this chicanery should be scourged.

    With this monumental incompetence and corruption setting a standard, yes, the property owners have every right, maybe even a public duty, to hold up, sequester, shake down the Moondoggle for as long and as much as possible. The CHSRA reeks of larceny and folly.

    VBobier Reply:

    Only a far right loony would spew what You just did Syno, unless You have legal proof, which is what the courts are for, I’d shut up if I were You, cause otherwise you have no idea what You are talking about, You just don’t like it cause You can’t get Your way, well too bad, soo damned sad….

    synonymouse Reply:

    Couldn’t quite grasp exactly what I was supposed to legally prove.

    As a kid I was pretty much a marxist.

    That map shows Villa’s TehaVegaSkyRail taking off due east. Is that accurate? I thought it was northeast. Hell, if the notion is to deviate in the hope of picking up some more passengers why not just proceed east out of LA proper maybe 50 miles or so and then head leisurely back north towards the boondocks.

    Peter Reply:

    “Couldn’t quite grasp exactly what I was supposed to legally prove.”

    I was wondering that myself. VBobier seems to think that we’re dealing with burdens of proof and persuasion as you would have to in court. I’m not aware of any current court case dealing with Antelope Valley v. Tejon Pass. There was Palmdale’s suit, but that got dismissed.

    As to the map, I wouldn’t exactly take any map printed in a newspaper at that level of detail seriously. Look at the connection from Gilroy towards Merced. Unless I’m completely mistaken, that’s supposed to run due east-west, but it’s shown at an angle on the LA Times map. If you rotated the map to align that with east-west, the LA-Palmdale leg would run more northeast.

    Paul Dyson Reply:

    Syn: The LA Times map is not aligned north to south hence the distortion. There is no north point on the drawing so technically it is not a map, at least the way I was brought up. So it is still northeast, instead of northwest up the 5. Remember dear chap, the largest city east of Reno and west of the Mississippi?

    synonymouse Reply:

    Apparently Houston:

    But Mexico City has, what, 20 million? Where’s the NdeM?

    Peter Reply:

    Try again. Hint: go onto Google Earth, find Reno, then scroll due south until you hit water. Look just to the east of that spot.

    Nathanael Reply:

    Hee hee hee. LA.

    This is like the way people forget that Miami is west of Pittsburgh.

    StevieB Reply:

    It has been two weeks since the state’s Public Works Board cleared the way for the California High-Speed Rail Authority to begin negotiating for property in Fresno and Madera counties needed for high-speed train tracks and Vartabedian is critical of no purchases so far.

    Read more here:

    In a meeting that lasted less than 10 minutes, the board — which includes the directors of the state’s Finance, General Services and Transportation departments — voted 3-0 to approve the formal selection of 356 separate parcels by the rail authority.

    The Public Works Board is in charge of buying land for highway and other transportation projects in the state.

    Rail authority officials can now start making offers to owners whose property is targeted for the first stage of construction. Those parcels are either in the path of the tracks themselves or will be affected by related construction, including overpasses to carry city streets and county roads over the tracks or the relocation of Highway 99 between Ashlan and Clinton avenues.

  6. synonymouse
    Jan 27th, 2013 at 13:25

    I would not rag on this issue so boringly if it were not major. A reasonable divergence of opinion – say 5-10 miles of detour – still within the parameters of the north-south route, no problem, no argument.

    But this constitutes a serious decision – by far the outstanding controversy surrounding CHSRA planning. Pertaining to the mountain crossing regional politics and parochial interests have produced a very poor plan. Las Vegas will eventually be relocated to California. Dig it.

    I don’t like the idea of tearing hollow-core we paid good money for 20 years later. See I-280 in Dogpatch. Just make a better and more insightful decision in the first place. It is not that hard – just think about all the issues and ramifications over and over. The Tehachapi DeTour will require more subsidy than Tejon, the default centrally positioned entree into LA. Same applies to Pacheco vs. Altamont. Nothing succeeds like success.

    If you dump the subsidy onto Amtrak you are just worsening their budget, leading to calls for its privatization. The most efficient is the best longterm choice.

  7. synonymouse
    Jan 27th, 2013 at 13:28

    tearing down hollow-core

  8. Roger Christensen
    Jan 27th, 2013 at 14:12

    Hanford West option not a done deal according to some area opponents.
    According to a Hanford city manager memo, HSR’s Diane Gomez said that her staff was preparing to recomend the Hanford West option at the Feb 14 CASHR meeting.
    I spoke to some opponents today who attended both the Hanford City Council meeting and the January CASHR Board Meeting. They say they asked Dan Richard and he told them there was no staff position at this time.

    Nathanael Reply:

    Nothing wrong with Hanford East. Or Hanford Central, IMHO.

  9. John Nachtigall
    Jan 27th, 2013 at 15:13

    I agree with the premise of the article that in China there are benefits to the system beyond the obvious. But China, unlike the US, is connecting regions that are not currently well connected. They don’t have an interstate highway system or an extensive air system like in the US. So while it follows that China will experience peripheral benefits of building an HSR system, I don’t see how the US would experience these benefits.

    If a person wishes to travel between LA and SF currently they have many choices and none are so onerous that they would refuse to make the trip but would for HSR. More importantly businesses have many options including cars, airplanes, and even web meetings to make connections between “regions”.

    It should also be noted that the base cost of these connections in China is an order or magnitude or more less than in the US. So while the premise of the article is accurate and fair, extending its logic to the US is tenious.

    Alon Levy Reply:

    You’re right that China doesn’t call its national expressway network “interstate highways” and in that sense it doesn’t have the US Interstate network.

    John Nachtigall Reply:

    China has 1/3 the road density

    And 1/10th the car ownership

    So I will rephrase. China does not have the extensive and mature motorway system that the US has.

    Alon Levy Reply:

    The expressway density is partially geographic. The US has expressways in the middle of nowhere connecting the coasts. China has fewer of these, because its middle-of-nowhere western regions aren’t on the way to California.

    John Nachtigall Reply:

    1. Thanks for your contempt of the middle of the country as the middle of nowhere. The people of the Midwest and west thank you for your concern

    2. The Chineese who live inland, who most likely outnumber the entire population of the US would also like to thank you for your contempt that they are not worth connecting to the coast.

    3. Why is it so hard for you to admit the obvious, China does not have the road system that the US does?

    D. P. Lubic Reply:

    China doesn’t have the mature road system–but they seem to be hell-bent on repeating what I consider a serious mistake we made.

    Big highways in the middle of nowhere aren’t restricted to the midwest and west. We have them in Appalachia, too. Funny thing is, no one talks about whether these roads are “profitable.” I can personally tell you that you can drive for miles on some of them without seeing another vehicle. I’m not sure those roads really were a good investment–and in fact, the road system as a whole has a much lower “farebox recovery” ratio than intercity rail. Why, it’s now close to half the ratio that Amtrak has (road system at 47% or less, Amtrak close to 88% or so). “Cost per mile” doesn’t matter here; if you talk to a banker about a business, he’s going to want to know how well you cover your costs. If you have a unit cost of 5 cents on 100,000 units but you only recover 2 1/2 cents per unit, the banker is going to call the bankruptcy judge. If you have a unit cost of 10 cents but you’re getting almost 9 cents back, well, there’s hope for you.

    I think we’ll see some very interesting things if Amtrak can get that last 12%.

    D. P. Lubic Reply:

    Item of interest–current edition of “Destination Freedom” (National Corridors Initiative newsletter), which includes an editorial by a former Richmond, Fredericksburg, & Potomac Railroad officer, Richard Beadles, on true high speed service for the midwest, specifically Chicago-St. Louis:

    Also of interest is the expansion of the New Orleans trolley system (it now connects with Union Station), a proposed streetcar system for Detroit (!), and a proposed return of rail service to Roanoke, Va.

    A glimpse of how rail service to Roanoke used to look.

    Alon Levy Reply:

    You don’t need to have contempt for people who live in South Dakota to think that it wouldn’t justify an expressway if it weren’t between Chicago and Seattle. In contrast, Xinjiang, Tibet, and Qinghai aren’t on the way between two different parts of China, which means fewer highways serving them. For the same reason the US also has a much longer rail network than China – more transcontinentals because of the prevalence of coast-to-coast traffic.

    John Nachtigall Reply:

    I suggest you look at roads like I-25.

    It does not run between your coasts…only in those “low density areas. Yet the expressway was built.

    And Tibet is on the way between Tibet and the coast which would be enough reason to build in the US because the US road system was built to bring everyone together…not just the coasts.

    Also,that is the opposite argument the CAHSR are using for the proposed alignment. The train is running a longer route and out of the direct way just to pick up a lower population area (instead of the highway alignment).

    Alon Levy Reply:

    The US road system was built as it was to have pretty lines on a map, regardless of cost-effectiveness. (Hence I-90 and I-94, which are redundant with each other.)

    John Nachtigall Reply:

    Wow Alon…you are stubborn. Even when it costs your argument nothing you refuse to admit the obvious.

    First you argued the US system was more dense because of geography, now it is because the planners wanted lines in every state of the map???

    I realise you have contempt for the road system, but you can’t seriously belive that the only reason the roads in a state like South Dakota was built was so it looked pretty in that state.

    I grew up in a town on the I-25 corridor. It is vital for the health of all the states it runs through (you know it as flyover country). Roads like the “Million Dollar Highway” may seen like small fry to you but these towns would die without them.

    I am surprised by your attitude, it was my understanding that you viewed transportation policy more like a human right and therefore it did not need to pay for itself, it was a government service. Or is it only a government service if it is a railroad, not a road?

    My original point remains, the Chineese don’t have the roadway system that the US has and therefore the effects of HSR are going to be outsized in relation to whatever benefits the US would see.

    Alon Levy Reply:

    Thomas Macdonald, who’s from Iowa, thought there was no reason to build freeways in South Dakota. Because of pressure to make his tollways-will-never-pay-for-themselves report more positive, he was compelled to propose toll-free freeways instead, and this ballooned to a national network replacing the major US highways, in addition to the primary transcontinental highways.

    I have no idea where you got the idea that I view transportation as a human right. I view access as a right and mobility as a natural monopoly that should be run as a regulated utility. That’s why I harangue people about cost-effectiveness while Robert claims it’s just a ploy to keep taxes low. Independently of that, I also view cars as a crime against large parts of humanity, parts that Americans are just unused to seeing as fully human.

    Eric Reply:

    Alon, if it makes you feel better, those part of humanity don’t see Americans as fully human.

    (Or maybe it’s more accurate to say that everyone cares more about their family and compatriots than about a randomly chosen person, and doing so does not necessarily make you a bigot.)

    Alon Levy Reply:

    You’ll be surprised how much they care.

    I care about my family and my circle of friends. Randomly chosen resident of whatever country I have a passport of or live in? Whatever, I care to exactly the same extent as for a randomly chosen human.

    synonymouse Reply:

    @ John Nachtigall

    China differs from the US in that we had a militant pro-hghway public opinion from the outset. The Chinese will inevitably “grow” auto clubs just like the US. Middlle class and wealthy auto owners will become a political force that cannot be dismissed and China will build a freeway more massive than anything in the US. It is a certainty.

    And that will impact passenger train business negatively, just as in the US in the past.

    synonymouse Reply:

    freeway network

    Nathanael Reply:

    John: Those expressways really were unnecessary.

    I know people who live in North Dakota. The population density is such that the US Road System is plenty. The expressways are simply overkill.

    Expressways are also very bad for local towns, because it makes it easy for travel to bypass them entirely. A recent expressway project destroyed Horseheads, NY.

    To summarize: US 550 is valuable to the cities it goes through; I-25 kills the cities it bypasses.

    Peter Reply:

    China also has an extensive air travel network, which, after a rapid rise through the 1990s and the first half of the last decade, is now struggling to attract passengers after the HSR network began expanding.

    John Nachtigall Reply:

    The UShas 5 flights per 1000 people per year, China has .3 or a easily explained a magnitude less

    Airports per capita (a measure of infastructure) looks even worse

    Air travel has the same problem as HSR use in China….the general population can’t afford it, which is why they are state sponsored and lose money, as opposed to the reason air travel loses money in the US which is overcapacity and too many options. Neither is good.

  10. trentbridge
    Jan 27th, 2013 at 17:00

    Why stop at HSR? I blame EVERYTHING on cost accountants. Once upon a time a meal on an airline was enjoyable (and free) and then the cost accountants decided that the cost of providing real food was too expensive so they started cutting the quality and then stopped serving meals altogether. They saved millions (they could count the cost of each meal not served.) However they couldn’t measure the trips (business and pleasure) not taken because the the experience had deteriorated so much. Let’s be honest if Delta, United or American were going to treat you like crap and charge more for being a late-booking business traveler then you might as well fly Southwest or Frontier or Allegiant. Look how much cost accountants saved when they cheapened the interiors of Detroit cars with fake wood fascias and cheap textile seats and cheap carpets. You could get better interiors if you paid for the option but then Honda and Toyota built it in because it was cheaper to put in the good stuff at the factory than at the dealership.
    The quality of life is part of the economic mass. Riding a brand-new shiny new train is going to be vastly better than flying a twenty-year old 737 with a thirty inch seat pitch. Living in a place like LA or SFO with better transportation connections to more places is preferable to Kansas City or Oklahoma city regardless of the local taxes or cheaper housing.

    D. P. Lubic Reply:

    While we’re at it, let’s also blame the economists who insisted on “market competition” to set prices and deregulated the airline and other industries. Essentially we wound up going back to the days before railroads were rate-regulated, and a big part of support for that came from the railroads themselves, who realized they were cutting each others’ throats and nobody was making money, and in the process greatly annoyed captive shippers and passengers with higher rates to make up for the losses on the competitive business.

    Funny thing was, back when rates were regulated and the railroads had a viable passenger service, you still had competition–it just wasn’t based on price. Sure, the Erie and the New York Central and the Pennsylvania and the Baltimore and Ohio all charged the same basic rates between, say, New York and Chicago–but look at how they advertised the dining car service, the scenery, a pleasant ride, or in the case of the B&O, that you could also stop to see Washington, DC, on all trains. That was funny because the B&O was making the best of its “grand detour,” much longer and hillier than the Pennsy or the NYC. . . :-)

    Richard Mlynarik Reply:

    Why stop at HSR? I blame EVERYTHING on cost accountants.

    Damn straight!

    We as a society should weigh differing social goals agains each other in terms of the “unicorn farts” required to produce them, not “dollars”; and have “unicologists” not “accountants” do the measuring.

    Then you can have a stewardess (value 0.017 unicorn farts) serve you martinis and a steak (0.003 unicorn farts) on your flight (fare 0.000 unicorn farts, because unicorns can fly.)

    Eric Reply:

    You can still have luxurious comfortable air travel if you want. It’s called first class, and it costs about what “normal” travel cost in the era before deregulation. The only difference now is that there is also another cheaper option. Most passengers choose cheapness over comfort, but that is their decision.

    Nathanael Reply:

    Well, actually, thanks to the airport security theater, you can’t have luxurious comfortable air travel even in first class; but that’s another issue…

    Nathanael Reply:

    Cookie cycle. Gah, can’t find the comic which describes this… I think was K Chronicles…

  11. nick uk
    Jan 27th, 2013 at 17:24

    today in the uk the government will formally announce the route of hs2 north from birmingham to leeds and manchester and where the connections will be to the existing lines. much of this has been leaked by the press already probably through the government itself to soften the blow.

    the antis are already blogging their displeasure as usual facts are at a premium ! the uk govt may be getting some things well many things wrong (ie cutting too quickly and in a recession – america learn from this) but they recognize the importance to the economy of fast lower polluting transport hence hs2 and also widespread nuclear sourced electrification of all major lines.

    also the north south rail artery through london (thameslink) is being upgraded to allow 24 trains per hour and the brand new east west crossrail line is being built. the line to my town will be connected to thameslink which will interchange with crossrail at faringdon which is expected to become londons busiest station in 2018. heathrow trains will run through crossrail and will interchange at old oak common in west london which at present is mostly unused railway land near wormwood scrubs, londons famous or infamous prison !so i will be able to get to heathrow and hs2 also with 1 change. st pancras for eurostar is 25 minutes from where i live by train (100 mph great northern electrics).

    quick connectivity and modern lower carbon infrastructure is the way forward. perhaps if spain as a country had invested more in this sector and less in the housing bubble as a country they would not be in the mess they are in. as robert says it is hard to accurately measure good infrastructure but i think it is worth its weight in gold – especially LONDON 2012 !!! as an aside the javelin moniker applied to the hs1 high speed trainsets (140 mph service speed 125 mph) looks to be sticking

    Jonathan Reply:

    Don’t keep us on tenterhooks. What’s happening in the Chilterns?

    (the suit about not considering impact on London Underground,,and from the golf course .. phooey)

    Old Oak Common mostly unused?!? Why not name the interchange “Brunel HSR station”? ;)

    Richard Mlynarik Reply:

    Old Oak Common = LSWR.

    Jonathan Reply:

    I don’t know what planet _you_ live on; but on this plant, Crossrail is building its interchange station on the site of the former GWR Old Oak Common Motive Power Depot, now known as Old Oak Common TMD, a depot for diesels and MUs running into Paddington.

    The original Old Oak Common depot was designed by Churchward.

    nick uk Reply:

    yes i believe most of the suits (guess you dont mean the feds !) were about as frivolous as something you might have seen on ally mcbeal ! the idea that a golf course is more important than nationally important infrastructure says it all really. We can call them NOMGC ies ! maybe they can’t see the WOOD for the trees and dont understand how the IRON road of hs2 can be a DRIVER of regeneration. guess they’re just stuck in a sandpit without a wedge !

    many existing lines cross through or near old oak common and developers and the local council (think it is hammersmith and fulham) have drawn up plans to regenerate the area. as you say a more imaginative name would be worthwhile. OOC doesnt sound like somewhere you might want to go !

    as you can imagine the anti bloggerss over here are going wild filling the ethernet with myths and factually incorrect statements (we used to call them lies !). from most comments it appears that people are only reading the headlines then flying into a rage without checking the facts at all. those who will be directly affected have my sympathy and i guess i can understand that you would say anything to prevent losing your house garden or business or dare i say it golf course !

    perhaps the biggest misconception is that hs2 is all about speed when in fact the main driving force is the increasing congestion on existing rail lines. maybe the line should be hc2 not hs2. another important point people miss is that when the direct city to city non stop trains are rerouted to hs2 this will free up seats as well as paths for more freight and passenger trains. critics also choose to ignore that even cities not on hs2 will benefit as through trains will run. for example at crewe (an important junction) hs2 compatibles will leave the birmingham manchester hs2 route and join the existing west coast line (that is mostly nowhere near any coast !) to liverpool or lake district / scotland.

    I dont know whether critics are deliberately mis-stating their comments or whether it is just that they have decided they are against it so they dont bother reading the widely available facts about the project. on the other hand british people like to complain about everything especially the weather – this is why aussies call brits whinging poms !

    Nathanael Reply:

    Well, the UK is known for retaining old names. “Haymarket”? “Poultry”? Might as well go with “Old Oak Common”.

    Jonathan Reply:

    Nick; nope. Whinging Poms were called that because they kept talking about how much better everything was back in the “mother country”. ;)

  12. DATA1717
    Jan 27th, 2013 at 20:23

    Got a question and not sure were to post it and it is relevant to economic projections that go several decades into the future.

    Since all of this is based on current projections, what happens if something drastic changes in the next 15 years that would dramatically change the projections.

    What happens if in 12 years technology improves so we can safely run the trains at 300 mph? Does that change things, and would it be possible ti include new technology late into the building process?

    For example, in 12 years we have so much energy coming from solar and other renewables that there is an even greater savings to had from using electric transportation.

    Richard Mlynarik Reply:

    What if every resident of the US were equipped with personal jetpacks by 2015? How would that change things?

    D. P. Lubic Reply:

    Sorry, Data, but you got an answer from one of a couple of perpetual grouches here. Don’t be too angry with them, they’ve tried to improve the project but didn’t get listened to for a variety of reasons, and they’re still sore about that, to a certain extent with good reason, but let’s admit it, they’ve also gone too far.

    Anyway, an important question becomes “What could happen to change the predictions?” Speaking personally, I’m not sure we will be going much faster than this. Part of that is due to energy consumption, but it’s also due to the increasing demand (and cost) for precision track maintenance as speeds go up. Slight irregularities in “line and surface” that are unnoticeable at 79 mph become horrendous at 100 or more, and dangerous as speeds approach 150. Amtrak’s former president, the late Graham Claytor, said an interlocking or junction on the Northeast Corridor that had just been resurfaced would feel perfect under his office car at 125 mph–but that one coal train, with 100-ton cars in it, would hammer the switches enough that he could tell the difference on the next trip. (Keep in mind that this was a railroad president who had a strong background in operations and maintenance, and he very likely would be more observant of things like this than the average person.) This is even more pronounced in the true high speed ranges; it’s universal for HSR tracks to get a nightly shutdown for several hours to keep the tracks in line.

    Another question becomes “How much speed can you use?” A lot of the answer to that question revolves around “How fast is the competition, and how comfortable and convenient is it?” You may not always need a lot of speed to win out commercially. An example is Amtrak’s service from Lynchburg, Va. to Washington, DC. This is a relatively new service, perhaps two years old, but it is earning an operational profit with an average speed in the 60 mph range. Part of the reason for this is a pent-up demand for rail service, and part is the lack of airline service and the lack of an Interstate highway paralleling this particular railroad. This is essentially the situation that prevailed before the government built more and more airports and the Interstate system. If these factors are in your proposed corridor, then you have to be faster (and hopefully have better amenities) than your competition.

    A big question, at least for me, is what’s going to happen with oil prices. Our transportation network is something like 99% oil dependent, and it’s only a matter of time before oil becomes too precious to use the way we use it now; some would argue we’ve been there for years. I don’t see that changing to where we get $2.00 gasoline in the future again.

    Finally, despite Richard’s earlier comment about unicorn air service above, the amenity question is not entirely irrelevant. I think a big part of the decline in interest by younger people in cars is because the driving experience stinks anymore–too much traffic, too many idiot, drunk, or senile drivers, and other things, too. Nobody enjoys a Sunday drive anymore, even if they can afford the gas.

    DATA1717 Reply:

    Thanks for the detailed response.

    Part of the idea I was trying to articulate is that it would seem that looking into the future there can only really be improvements as far as rail/related technology goes. So if HSR is a good idea now, then it should only get better in the future and I’m not sure if economist can look ahead like this.

    Joey Reply:

    What happens if in 12 years technology improves so we can safely run the trains at 300 mph? Does that change things, and would it be possible ti include new technology late into the building process?

    It is currently safe to run at 300 mph. Just not economical from a maintenance or energy usage perspective. I could be wrong, but I don’t think either of those factors are going to change massively in the coming years, at least with conventional steel-wheel-on-steel-rail HSR. Maglev is a different matter, but that’s uneconomical for other reasons…

    … on the other hand, comparing Japan’s maglev costs with the USA’s conventional HSR costs makes maglev look quite economical.

    William Reply:

    Yeah, I think that’s the primary reason Japan spent more effort to raise the average speed instead of higher top speed for their Shinkansen lines, comparing to European HSR lines.

    DATA1717 Reply:

    So basically we are planning on running the rail as fast as possible considering the constraints maintenance and alignments of steel tracks.

    Things like the energy used for the train will likely only improve. Instead of relying on electricity from power plants on coal, in 15 years much of that may come from much improved solar power that would make the cost of running the HSR even cheaper.

    swing hanger Reply:

    Yes, the idea is to run as fast as required safely, not as fast as possible- the mantra of competent rail operators. And as William commented, what is important is average (rather than top speed), which is improved by the little, less glamorous aspects of railway operation, such as lower dwell times, efficient station layout/throat trackage, curves, braking, and traffic control systems.

  13. Useless
    Jan 28th, 2013 at 10:45

    Here is how the HSR is working out for four countries that have it.

    William Reply:

    Can’t read it, require registration…

  14. swing hanger
    Jan 28th, 2013 at 16:51

    Google the headline: “Fast track: France, Japan, S Korea, Spain” in the news section, you should be able to access it then.

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