Recommended Read: Randal O’Toole Gets High-Speed Rail Wrong

Now that there’s decent chance of US investment in rail, Randal O’Toole is resurrecting his takes from the early Obama era, warning that high-speed rail is a multi-trillion dollar money sink. It’s not a good analysis, and in particular it gets the reality of European and Asian high-speed rail systems wrong. It displays lack of familiarity with rail practice and rail politics, to the point that most nontrivial assertions about rail in Europe and Asia are incorrect.

More broadly, the way O’Toole gets rail investment here wrong comes from making unexamined American assumptions and substituting them for a European or Japanese reality regarding rail as well as rail politics. If the US can’t do it, he thinks other countries can’t. Unfortunately, he’s even unfamiliar with recent work done on American costs, when he compares the Interstate system positively with recent high-speed rail lines.

High-Speed Rail Profitability: France

I’m currently working on building a database similar to our urban rail costs for high-speed rail. Between this and previous iterations of analyzing the TGV, I’ve been reading a lot of internal French reports about its system. Thankfully, France makes available very good public information about the costs and technical specifications of its system. It helps that I read French, but the gap between what’s available for France and Belgium (see for example line schemas) is vast. This provides crucial background that O’Toole is missing.

The most important thing to understand is that the TGV network is profitable. The Spinetta report on the fiscal losses of SNCF makes it clear, starting on p. 60, that the TGV network is profitable, and recommends favoring its development over the money-losing legacy networks, especially the branch lines. The report even calls for closing weak branch lines with only a few trains a day, which I called the Spinetta Axe at the time, in analogy with the Beeching Axe. Due to public outcry the state rejected the cuts and only implemented the organizational changes promoted by the report.

Moreover, all lines are very profitable excluding the cost of fixed capital. The Spinetta report’s TGV section says that operating costs average €0.06/seat-km, which is around 0.085€/p-km, despite overstaffing of conductors (8 per conventional 400-car TGV) and extensive travel on legacy track at low speed and higher per-km labor costs. Average TGV fare revenue per an ARAFER report from 2016 is 0.10€/p-km – compare p-km on p. 15 and revenue on p. 26. This is typical for Europe – RENFE and DB charge similar fares, and the nominal fares seem to have been flat over the last decade.

What’s dicier is cost of capital. In all other European countries for which I’m aware of the process, all of which are Northern rather than Southern, this is done with benefit-cost analysis with a fixed behind-the-scenes discount rate. France, in my view wisely, rates lines by their financial and social rates of return instead. A 2014 report about the Bordeaux-Toulouse LGV, recently given the go-ahead for 7.5 billion €, warns that the profitability of LGVs decreases as the system is built out: the LGV Sud-Est returned 15% to SNCF’s finances and 30% to French society (including rider consumer surplus), but subsequent lines only returned 4-7% to SNCF’s finances, and Bordeaux-Toulouse is likely to return less, 6% including social benefits per the study and at this point slightly less since the study assumed it would cost slightly less than the current budget.

The general theme in the French discourse on trains is that the TGV network is an obvious success. There absolutely is criticism, which focuses on the following issues:

  • Regional rail, that is not intercity rail, is underdeveloped in France outside Paris. The ridership of TER networks is pitiful in comparison with German-speaking and Nordic metropolitan areas of comparable size. For example, sourced to a dead link, Wikipedia claims 64,300 TER PACA trips per day, comprising the metropolitan areas of Marseille (1.8 million), Nice (1), Toulon (0.6), and Avignon (0.5); in Helsinki (1.5) alone, there are 200,000 daily commuter rail trips. But this isn’t really about high-speed rail, since TER planning and subsidies are devolved to regional governments, and not to SNCF.
  • SNCF has contentious labor relations. In the early 2010s, the unions went on a wave of strikes and got wage concessions that led to the evaporation of SNCF’s 600 million €/year primary surplus. The railway unions in France (“cheminots”) are unpopular, and Macron has been able to pass reforms to SNCF’s governance over their strikes and objections.
  • Future LGVs are not as strong as past ones. Real costs in France are rising, and the network already links Paris with all major secondary cities in airplane-competitive time save Nice. Interprovincial links on the network are weak, despite the construction of the LGV Rhin-Rhône, and nothing like the Deutschlandtakt is on the horizon enabling everywhere-to-everywhere travel.
  • SNCF thinks like an airline and not like a railroad. It separates passengers into different buckets as airlines do, has many executives with airline background (and Spinetta is ex-Air France), thinks passengers do not ride trains for longer than 3 hours even though at 4 hours the modal split with air is still better than 50-50, and has poor integration between the TGV and legacy rail.
  • SNCF still has a lot of accumulated debt from past operating losses, some predating the TGV and the start of regional subsidies for regional rail. It was hoped that TGV profits could cover them, but they can’t. This mirrors the controversy in Japan in the 1980s, where, in the breakup of JNR into the JRs and their privatization, debt from past operating losses was wiped but not debt from Shinkansen construction (see Privatization Best Practices, PDF-p. 106).

However, saying that the existing network is a failure is the domain of cranks and populists. It is unrecognizable from the discussion of transportation investments in France.

What O’Toole says about high-speed rail

O’Toole’s understanding of internal French (or Spanish, or Japanese) issues is weak. This isn’t surprising – Americans to a good approximation never have good insights on the internal issues of any other country, even when it speaks English. The American political sphere, which includes political thinktanks like Cato, is remarkably ignorant globally, and rather incurious. As a result, what he says about the TGV is based on an Americanized understanding. To wit:

Bus-rail competition

The Northeastern United States has a weak rail network: Amtrak averages vintage 1960s speeds and charges 2-4 times the per-km fare of the TGV. As a result, an ecosystem of private intercity buses has developed, starting with unregulated ones like Fung Wah and, as they were shut down, corporate systems like Megabus and Bolt. O’Toole is fond of these buses, with their lower fares and road-like lack of integration between infrastructure and operations.

And thus, he claims, falsely, that European high-speed rail cannibalized profitable buses. This is unrecognizable from within Europe, where intercity buses were underdeveloped until recently. In France, US-style intercity buses are called Macron buses, because the deregulation that brought them into existence passed in the mid-2010s, when Macron was the economy minister. They complement high-speed rail but do not replace it, because trains get me from Paris to the German border in 1:45 and buses don’t.

To be fair, TGV ridership has been stagnant in the last few years. But this stagnation goes back to the financial crisis, and if anything ridership picked up starting 2017 with the opening of the LGV Sud-Europe-Atlantique. So the buses are not even outcompeting the trains – they thrive in the gaps between them, just as historically they did on international routes, where rail fares are considerably higher and ridership lower.

High-speed rail construction costs

O’Toole looks at the most expensive few lines possible:

Britain’s 345‐​mile London–Scotland HS2 high‐​speed rail line was originally projected to cost £32.7 billion (about $123 million per mile) and is currently expected to cost £106 billion ($400 million per mile).

International comparisons of high-speed rail costs exist, and Britain’s costs are by far the worst. For example, a 2013 Australian comparison looking at the prospects for such a system in Australia finds that High-Speed 1/CTRL, the line linking the Channel Tunnel with London, cost A$134 million/km, and the second costliest line in the dataset was thee 94% tunneled Bologna-Florence line, at A$95 million/km.

French costs up until the LGV Bordeaux-Toulouse stood around $25-30 million per km in 2021 dollars, net of tunnels. German costs are similar, but German lines have far heavier tunneling than France, a range of 26-51% in tunnel compared with 0-6% in France. One reason is topography. But another is that Germany prefers mixed-use passenger-freight lines, which forces higher construction costs as freight requires gentler grades and, since superelevation must be lower, wider curves; France, like Japan and China, builds dedicated passenger lines, and, unlike Japan or China, keeps them largely at-grade to reduce costs.

O’Toole says, without more references, that it would cost $3-4 trillion to build a US-wide high-speed rail network. But the official Obama-era crayon, at 20,000 km, would be $500 billion at tunnel-free European costs, or maybe $600 billion with 5% tunneling, mostly in difficult places like California and across the Appalachians.

Freeway costs

O’Toole proposes more freeways, and says that to build the Interstate system today would cost $530 billion so it’s better than high-speed rail. Here is where his lack of knowledge of the most recent literature on infrastructure costs is a serious drag on his analysis: Brooks-Liscow establish that there was a large real increase in Interstate cost throughout the life of the program, so a budget that’s really a mixture of cheaper early-1960s construction and more expensive construction in the 1970s is not applicable today.

The same issue affects rail costs: the LGV Sud-Est cost, in today’s money, around $8 million/km, which cost would never recur. Brooks-Liscow explain this by greater surplus extraction from citizen voice groups, which demanded detours and route compromises raising costs. This appears true not just diachronically within the US but also synchronically across countries: so far, the low-cost subways we have investigated are all in states with bureaucratic rather than adversarial legalism, while medium-cost Germany is more mixed. Politicized demands leading to more tunneling are well-documented within Germany – the Berlin-Munich line was built through a topographically harder alignment in order to serve Erfurt, at Thuringia’s behest.

So no, today costs from the 1960s are not relevant. Today, urban motorway extensions cost double-digit millions of dollars per lane-km, sometimes more. The I-5 improvement project in Los Angeles is $1.9 billion for I-5 South, a distance of 11 km, adding two lanes (one HOV, one mixed traffic) in each direction. It’s possible to go lower than this – in Madrid this budget would buy a longer 6-lane tunnel – but then in Madrid the construction costs of rail are even lower, for both metros and high-speed lines.

The discourse on profits

In contrast with the basic picture I outlined for the TGV, French media and researchers often point out threats to rail profitability. This can easily be taken to mean that the TGV is unprofitable, and if one has an American mindset, then it’s especially easy to think this. If SNCF officials say that 20% of TGVs lose money, then surely they must be hiding something and the figure is much higher, right? Likewise, if Spinetta says that the TGV network is profitable but not all trains are, then surely the situation is even worse, right?

But no. This is an Americanized interpretation of the debate. In the US, Amtrak is under constant pressure to show book profits, and its very existence is threatened, often by people who cite O’Toole and other libertarians. Thus, as a survival strategy, Amtrak pretends it is more profitable than it really is.

This has no bearing on the behavior of railroads elsewhere, though. SNCF is not so threatened. The biggest threat from the perspective of SNCF management is union demands for higher wages, and therefore, its incentive is to cry poverty. Nobody in France takes out yardsticks of farebox recovery ratios, and therefore, nobody needs to orient their communications around what would satisfy American libertarians.

Energy

Within the European high-speed rail research community, the energy efficiency of high-speed rail is well-understood, and many studies look at real-world examples, for example the metastudy of Hasegawa-Nicholson-Roberts-Schmid. In fact, it’s understood that high-speed rail has lower energy consumption than conventional rail. For example, here is García Álvarez’s paper on the subject. This is counterintuitive, because higher speeds should surely lead to higher energy consumption, as Hasegawa et al demonstrate – but high-speed lines run at a uniform speed of 200 or 250 or 300 or 350 km/h, whereas legacy rail has many cycles of acceleration and deceleration. At speeds of up to about 200 km/h, nearly all electricity consumption is in acceleration and not maintaining constant speed, and even at 300 km/h, a late-model high-speed train consumes only above one third of its maximum power maintaining speed.

Instead of this literature, O’Toole picks out the fact that all else being equal energy consumption rises in speed, which it is not equal. Garcia in fact points out that higher speeds are better for the environment due to better competition with air, in line with environmental consensus that trains are far superior on well-to-wheels emissions to cars and planes. Worse, O’Toole is citing Chester-Horvath’s lifecycle analysis, which is not favorable to California High-Speed Rail’s energy efficiency. The only problem is that this paper’s analysis relies on a unit conversion error between BTUs and kWh, pointed out by Clem Tillier. The paper was eventually corrected, and with the correct figures, high-speed rail looks healthy.

Competition with cars and planes

Where high-speed rail exists, and the distance is within a well-understood range of around 300-800 km, it dominates travel. A 2004 report by Steer Davies Gleave has some profiles of what were then the world’s main networks. For Japan, it includes a graphic from 1998 on PDF-p. 120 of modal splits by distance. In the 500-700 km bucket, a slight majority of trips all over Japan are made by rail; this is because Tokyo-Osaka is within that range, and due to those cities’ size this city pair dominates pairs where rail is weaker, especially inter-island ones. In the 300-500 km bucket more people drive, but the Shinkansen is stronger than this on the Tokyo-Nagoya pair, it’s just that 300-500 includes many more peripheral links with no high-speed rail service. It goes without saying that high-speed rail does not get any ridership where it does not exist.

In France, this was also studied for the LGV PACA. On p. 14, the presentation lists modal splits as of 2009. Paris-Toulon, a city pair where the TGV takes around 4 hours, has an outright majority for the TGV, with 54% of the market, compared with 12% for air and 34% for driving. Paris-Cannes is 34% and Paris-Nice is 30%, both figures on the high side for their 5:00-5:30 train trips. Lyon-Nice, a 3:30 trip with awful frequency thanks to SNCF’s poor interprovincial service, still has a 25% market share for the TGV.

In general, competition with cars is understudied. Competition with planes is much more prominent in the literature, with plenty of reports on air-rail modal splits by train trip length. JR East, Central (PDF-p. 4), and West all report such market shares, omitting road transport. Many European analyses appeared in the 2000s, for example by Steer Davies Gleave again in 2006, but the links have rotted and Eurostat’s link is corrupt.

O’Toole misunderstands this literature. He lumps all air and road links, even on markets where rail is weak, sometimes for geographical factors such as mountains or islands, sometimes for fixable institutional ones like European borders. In fact, at least measured in greenhouse gas emission and not ridership, all air travel growth in Europe since 1990 has been international. International high-speed rail exists in Europe but charges higher fares and the infrastructure for it is often not built, with slowdowns in border zones. This is a good argument for completing the international network in Europe and a terrible one against building any network at all.

Topography

Even at the level of basic topography, O’Toole makes elementary errors. He discusses the Tokaido Shinkansen, pointing out its factor-of-2 cost overrun. But its absolute costs were not high, which he characterizes as,

The Tokyo–Osaka high‐​speed rail line supposedly made money, but it was built across fairly flat territory

So, first of all, the “supposedly” bit is painful given how much JR Central prints money. But “fairly flat territory” is equally bad. Japan’s mountainous topography is not an obscure fact. It’s visible from satellite image. Per Japanese Wikipedia, 13% of the route is in tunnel, more than California High-Speed Rail.

The United States can and should do better

The report is on stronger grounds when criticizing specifics of Amtrak and California High-Speed Rail. American rail construction is just bad. However, this is not because rail is bad; it’s because the United States is bad.

And there’s the rub. Americans in politics can’t tell themselves that another country does something better than the US does. If it’s in other countries and the US can’t do it, it must be, as O’Toole calls rail, obsolete. This is especially endemic to libertarians, who are intellectually detached from their European right-liberal counterparts (Dutch VVD, German FDP, etc.) even more than the American center-left is from social democrats here and the right is from the mainline and extreme right here.

So here, faced with not too hard to find evidence that high-speed rail is profitable in Europe and Asia, and in fact intercity rail is profitable here in general (direct subsidies are forbidden by EU law unless the line is classified as regional), unlike in the United States, O’Toole makes up reasons why trains here are unprofitable or unsuccessful. He says things that are not so much wrong as unrecognizable, regarding topography, buses, construction costs, debt, the state of the TGV debate, or greenhouse gas emissions.

O’Toole is aware of our transit costs comparison. I imagine he’s also aware of high-speed rail cost comparisons, which exist in the literature – if he’s not, it’s because he doesn’t want to be so aware. And yet, no matter how loudly the evidence screams “the United States needs to become more like France, Germany, Japan, Spain, etc.,” American libertarians always find excuses why this is bad or unnecessary. And then, when it comes to expanding freeways, suddenly the cost concerns go out the door and they use unrealistically low cost figures.

But figuring out why the US is bad requires way deeper dives. It requires delving into the field and understanding how procurement is done differently, what is wrong with Amtrak, what is wrong with the California High-Speed Rail Authority, how engineering is done in low- and medium-cost countries, various tradeoffs for planning lead time, and so on. It requires turning into the kind of expert that libertarians have spent the last 60 years theorizing why they need not listen to (“public choice”). And it requires a lot of knowledge of internal affairs of successful examples, none of which is in an English-speaking country. So it’s easier to call this obsolete just because incurious Americans can’t do it.

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Recommended Read: How has President Biden done on transportation in his first 100 days?

President Biden has gotten a lot of attention for his (good) infrastructure plan and overall approach to transportation. But after 100 days in office, the administration has ignored a lot of low-hanging fruit when it comes to executive and administrative actions they can take to support public transportation, emissions reduction, and other critical goals. 


Then Vice President Biden. Photo by the U.S. Embassy Jerusalem

In November 2020, along with Smart Growth America, we sent the incoming Biden administration a memo outlining executive actions and long-term legislation we urged the new president to initiate, which included a list of executive and administrative actions on transportation:

Issue area Department Status Action
Access to federal funds USDOT Simplify applications for discretionary grant programs (like the Better Utilizing Investments to Leverage Development (BUILD) program) by creating an online application and benefit-cost analysis (BCA) process so that small, rural and limited-capacity agencies can more easily access federal funds.
Climate change USDOT We only measure what we treasure. Re-establish the greenhouse gas (GHG) performance measure for transportation abandoned by the last administration, follow this up with annual state GHG rankings, and provide guidance for projecting GHG emissions at the project level.
Climate change USDOT Done Repeal the June 29, 2018, Federal Transit Administration (FTA) Dear Colleague to public transit agencies regarding the Capital Investment Grant program, specifically the treatment of federal loans as not part of the local match, inclusion of a geographic diversity factor in grant awards, and encouraging a low federal cost share.
Climate change USDOT Allow rural transit systems to receive funding from the Low and No Emission bus program.
Equity USDOT Identify infrastructure that creates barriers to mobility (such as highways or rail beds that divide a community). Then prioritize resources to address those barriers and the disparities they create (e.g., by removing infrastructure barriers or creating new connectivity).
Passenger rail White House, USDOT Review the Amtrak Board of Directors and assess the balance of the board with respect to support for and experience with vital long distance, state-supported, and Northeast Corridor routes, as well as civic and elected leaders from local communities actually served by the existing network.
Safety USDOT Revise the New Car Assessment Program to consider and prioritize the risk that increasingly larger automobile designs pose to pedestrians and cyclists and the driver’s ability to see pedestrians (particularly children and people using wheelchairs and other assistive devices.)
Safety USDOT Comment period extended Reopen the comment period on the handbook of street engineering standards (the Manual on Uniform Traffic Control Devices or MUTCD) used by transportation agencies to design streets, and reframe and rewrite it to remove standards and guidance that lead to streets that are hostile to or dangerous for those outside of a vehicle.
Technical guidance White House, HUD, USDOT, GSA Re-activate the Location Affordability Portal created by DOT and HUD and establish a location efficiency and equitable development scoring criteria to be applied to decisions involving location of new federal facilities, particularly those that serve the public.
Update modeling to achieve desired outcomes USDOT Improve traffic projections used to justify projects by issuing guidance requiring the measurement of induced demand and a review of the accuracy of current travel demand models by comparing past projections with actual outcomes, reporting their findings, and updating the models when there are discrepancies.
Update modeling to achieve desired outcomes USDOT Push states and metro areas to stop assuming that time savings automatically accrue due to faster vehicle speeds by updating the guidance on the value of time and instead start considering actual projected time savings for a whole trip.

Unfortunately, while the Biden administration has been saying many of the right things, the administration hasn’t made much progress on transportation in real terms, only addressing two of the actions in this list. 

The good: A rule change

Repealed Trump changes to transit construction grants: Under President Trump, the Federal Transit Administration (FTA) made an unprecedented change to the program for building transit to count federal loans that get repaid in full by local governments as part of the federal share of a project’s cost, rather than the local share. This unfairly penalized local communities that use low-cost federal loans, essentially requiring more local funds for projects where the feds are only covering 50 percent or less of the cost. As per our recommendation, the Biden administration rescinded this rule in February. 

The incomplete: More comments for street design manual

Comment period extended for the broken street design manual: The Manual on Uniform Traffic Control Devices (MUTCD) is a street design document used by planners across the country. To date, this manual’s overemphasis on designing for motor vehicle speed and failure to fully consider all modes of travel in the places where people live and work has contributed to the rising tide of people struck and killed while walking on streets that are dangerous by design—by creating and governing the design of streets that contribute to this crisis in the first place. 

The Trump administration proposed tepid changes to the MUTCD that failed to reform the vehicle-centric standards that prioritize the cars racing through neighborhoods and rules which limit, for example, how communities can install crosswalks, bike and bus lanes, or traffic calming.

Transportation Secretary Pete Buttigieg brought up reforming the MUTCD in March as a technical fix the new administration could focus on, and the Biden administration took the important step of extending the period for submitting comments on the MUTCD. 

The comment period ends on Friday, May 14th. USDOT and the Federal Highway Administration (FHWA) have not yet committed to a rewrite or a fundamentally new approach that would prioritize safety and people. This is the moment for us to push for it. You can submit a comment directly on our website—it only takes one minute. 

The bad: No other executive actions taken

There is so much more that the Biden administration can do immediately to make a major positive difference in transportation policy, from requiring the measurement of induced demand in traffic projections used to justify highway expansions, to reinstating the greenhouse gas (GHG) performance measure repealed by the Trump administration. The latter measure was supported by 47 members of Congress in a letter led by Senator Ben Cardin (MD) and Rep. Earl Blumenauer (OR-3), and over 75 organizations and local elected officials in a letter we wrote and organized. 

The Biden administration is making some major promises on transportation and infrastructure—most notably with the American Jobs Plan, the largest investment in infrastructure ever proposed by a president. But only the broad strokes of this plan were released. As we wrote last month, getting the policy right is critical to making sure that this investment delivers the sustainable, equitable, safe and efficient transportation system we need. 

We’ve learned the hard way through years of big spending with no policy changes: Policy matters. Rulemaking matters. If the Biden administration truly wants to transform U.S. transportation, they need to do more than talk about it. They need to seize the opportunities to make changes that don’t require Congress to weigh in.

The post How has President Biden done on transportation in his first 100 days? appeared first on Transportation For America.

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