Overstating the Benefits of Passenger Rail
Tuesday, September 15th, 2009 By Marc KilmerGongwer News Service($) reported on a press conference by passenger rail advocates yesterday that had this astonishing claim:
Creation of a rail line from Boston to Portland, Maine produced a 220% return on the $100 million in public spending, according to real estate developer Robert Martin.
The project has generated more than $7 billion in construction investment, 17,800 new jobs in the region, $76 million in tax revenue, and $2.4 billion in consumer purchases, he said during a news conference.
That seemed quite shocking to me as the evidence I’ve heard about passenger rail indicates that its economic development benefits are pretty paltry (if they exist at all). So I did some searching to see if I need to revise my opinion. A quick Google search shows that I don’t.
The numbers quoted by Gongwer aren’t the economic benefits of the Maine railroad. They are, in fact, merely an estimate from a pro-rail group that are estimated to occur by 2030. Either the Gongwer reporter got it wrong or the pro-rail advocate who said these things was misinformed. Regardless, even this estimate of the thirty-year benefits from the Maine railroad are inflated and unrealistic.
The moral of the story — don’t believe everything you hear about how great passenger rail is.
Tags: passenger rail
September 15th, 2009 at 4:38 pm
Marc:
As you know from some of my prior comments, I share your skepticism regarding the value of spending billions for trains. However, I have been wondering lately what the proper question is for state officials at this point.
The feds have already ponied up $8 billion, and I suspect there will be more to come over the next few years. So if I were an Ohio official, it’s too late for me to worry about the general concept. In effect, that train has left the station
.
The question for Ohio is, if the feds are going to spend billions on this, what is the effect on Ohio if we sit it out? If a bunch of nearby states participate, and a new rail network is built that largely excludes Ohio, have we hurt Ohio more than if we saved our money now?
The analogous situation is states that compete with other states by luring businesses with tax incentives. Sure, all the states would be better off if none of them did it, but once it starts, they all pretty much have to participate.
I’m not entirely sure of the answer, but it seems like a harder question.
September 15th, 2009 at 5:22 pm
As you say, the presence of federal incentives for passenger rail (or the related high-speed rail) complicates the picture. However, I still feel that these rail projects will be such a boondoggle that Ohio would be better off just refusing to participate. Even with the federal subsidies, rail will still require state subsidies. It’s likely these subsidies will be larger than state policymakers are currently projecting. Accepting the federal money will obligate the state to spend a lot of money down the road. Since the benefits of passenger rail are fairly minimal, even if the feds subsidize most of the cost, I don’t see it being a good trade-off for the state.