The Public Purpose
Number 16 December 1997

New Urban Rail In America:
Exorbitant Costs, Negligible Benefits

Engineering News Record Invited Rail Commentary by Wendell Cox

Analysis by The Public Purpose usually determines that construction of new urban rail systems in the United States is inappropriate. This is because the performance of new US urban rail projects is inconsistent with the our mission, which is:
To facilitate the ideal of government as the servant of the people by identifying and implementing strategies to achieve public purposes at a cost that is no higher than necessary.
New urban rail in America removes scant traffic congestion and air pollution while imposing costs that are exhorbitantly higher than necessary. Any serious strategy to reduce traffic congestion and air pollution through public transport in America must be based upon more cost efficient strategies, which are readily available.

Many US cities have developed or are planning rail transit systems in an effort to attract people from automobiles to reduce air pollution and traffic congestion. Most proposals are for light rail systems (street cars or trams), though some cities are building metro (fully grade separated) systems.

The new rail systems have been very costly. On average, rail transit systems have construction cost overruns of nearly 50 percent.(1) Operating costs for rail transit systems are, on average, 80 percent greater than expected.(2)

Generally, new US rail systems have attracted fewer than 40 percent of their riders from cars. Ridership has been below projections. Combining poor ridership levels with excessive operating costs, operating costs per passenger mile have exceeded 250 percent of projections (this excludes capital overruns).(3)

  • Attracting a single automobile user to Atlanta's metro system costs $15,000 per year.

  • Attracting a single automobile user to Portland's light rail line costs $5,000 per year.

  • Light rail systems are planned that will cost $30,000 annually per new rider. This is enough to lease a luxury automobile in perpetuity and pay the average house mortgage with a considerable sum left over --- more than $1 million over a working career.. During the 1980s, rail systems were expanded or opened in 13 cities. Market share declined in all 13 rail cities. For example:
    • In Portland, the number of automobiles diverted by light rail was less than 60 days of metropolitan traffic growth. Despite its $250 million light rail line, Portland's work trip market share declined by 33 percent during the 1980s.

    • Despite a $2 billion expenditure, Atlanta's work trip market share declined by 36 percent during the 1980s.

    • None of the proposed rail systems will have a significant impact on air pollution.(4)

    • In both Portland and St. Louis, adjacent motorways have continued to experience rapid automobile traffic growth, despite light rail openings.
    Los Angeles has opened three rail lines. Yet public transport use has declined at least 35 percent since 1985 when service was limited to buses. Cost overruns have now resulted in a proposal by public transport agency management to suspend future rail construction. Los Angeles ridership had increased by 40 percent from 1982 to 1985 in response to a reduced fare program discontinued in 1985. The cost per new passenger of this program was approximately $1,250 annually --- a fraction of urban rail system costs per new rider (see above).

    On average, the new rail systems require operating subsidies that range from 50 percent to 90 percent and capital subsidies of 100 percent. Even the established rail systems in older eastern and midwest cities require substantial subsidies. Worldwide, urban rail systems lose money except in the most densely populated Asian cities, where urban densities are far higher than in the US and automobile ownership is much lower.

    Busways and high-occupancy vehicle (HOV) lanes can be built for one-fifth the cost of rail systems.(5) Operating subsidies are far lower. Car pools require no subsidy. Competitively operated bus services require little or no subsidy (such as in New Jersey and the Chicago area). Competitive express bus services are much more cost efficient than rail systems.(6)

    Transit plans have systematically underestimated the capacity of busways by a factor of up to four.(7) Planners have also assumed that rail service is more attractive to passengers than bus service. Research, however, demonstrates no preference for rail.(8)

    Busways and HOV lanes can provide transit to more of an urban area. Rail transit is able to effectively serve only downtown work destinations. Downtown represents less than 10 percent of employment in virtually all US urban areas. Moreover, car pools are more fuel efficient than rail transit.(9)

    1. Don Pickrell, Urban Rail Transit Projects: Forecast Versus Actual Ridership and Costs (Washington, DC: US Department of Transportation, Urban Mass Transportation Administration, 1989).

    2. Don Pickrell, Urban Rail Transit Projects: Forecast Versus Actual Ridership and Costs (Washington, DC: US Department of Transportation, Urban Mass Transportation Administration, 1989).

    3. Wendell Cox, Jean Love, and Stephen Moore, Analysis of the Chicago Central Area Circulator (Belleville, IL: Wendell Cox Consultancy, August 1994).

    4. Secretary of Transportation, Report on Funding Levels and Allocations of Funds: Report of the Secretary of Transportation to the United States Congress Pursuant to Section 3(j) of the Federal Transit Act, As Amended, US Department of Transportation (Washington, DC: April 1994).

    5. John Kain, Ross Gittell, Amrita Daniere, Sanjay Daniel, Tsur Summerville, and Liu Zhi, Increasing the Productivity of the Nation's Urban Transportation Infrastructure (Washington, DC: US Department of Transportation, Federal Transit Administration, Technology Sharing Program, January 1992).

    6. Wendell Cox and Jean Love, "The Competitive Future of Passenger Transport," presentation to the Third International Conference on Competition and Ownership in Surface Passenger Transport (Toronto, ON: September 1993).

    7. Calculated based upon Kain.

    8. Moshe Ben-Akiva and Takayuki Morikawa, Ridership Attraction of Rail Compared with Bus (Washington, DC: US Department of Transportation, Urban Mass Transportation Administration, December 1991).

    9. Wendell Cox, Jean Love, and Samuel A. Brunelli, "The Livable American "City:" Toward an Environmentally Friendly American Dream," The State Factor, Vol. 19, No.3 (Washington, DC: American Legislative Exchange Council, August 1993).

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