It is a special kind of boondoggle that even a politician can resist. People who spend other people’s money for a living aren’t in the habit of asking too many questions at the best of times, still less when even the most colossal waste of funds can be justified as “stimulus.” But when a project promises not only the usual thousands of jobs and billions in spinoff benefits, but to save the earth in the bargain, you’d think they’d be falling over themselves to sign on. But some ideas, it seems, are just too insane.
Hence the latest act in the ongoing, 30-year farce known as high-speed rail. The setting this time is Alberta, but the action is always the same. A consulting firm reports, after many months and millions of dollars, that the latest scheme to link city A to city B by high-speed rail—in this case, Calgary and Edmonton—will cost billions of dollars, in fact billions more than was previously estimated. The politicians take a look at the numbers, blanch, and thank the consultants for their work. The project does not proceed. It never does.
On the other hand, it never seems to die, either. Each study merely becomes fodder for the next. This latest report on the merits of a Calgary-Edmonton train à grand richesse is the third in Alberta in the last three decades. There have been 16, at last count, on the Quebec City-to-Windsor corridor, with stops in 1989 (estimated cost of construction: $2.4 billion), 1990 ($5.3 billion), 1991 ($7.1 billion) and 1995 ($18.3 billion, including interest and inflation). Did that eye-popping 1995 report finally bury the idea? Nope. It’s currently being reviewed by a federal-provincial working group.
The dream never dies, because the people pushing high-speed rail are impervious to reality—either because they are dreamers to begin with, or because they have a vested interest in illusions. The Alberta report, for example, put the cost of linking Calgary and Edmonton—at 300 km, barely a quarter the journey from Quebec City to Windsor—at anywhere from $3 billion, for a humble 125-miles-per-hour diesel upgrade, to $20 billion, for the 300 mph, magnetic levitation special. By 2021, its baseline forecast suggests the train could be carrying between 1.5 million and 5.8 million passengers annually, depending on the technology chosen.
That sounds like a lot, until you consider that the same study estimates total passenger trips between the two cities will have grown to 84 million that year. For an investment of $3 billion, the train would have seized a 1.8 per cent market share. But pony up $20 billion, nearly seven times as much, and it rises to 6.9 per cent—and stays there: the proportions for 2051 are broadly similar. Understand: this was widely seen as an endorsement of the idea.
What’s clear from even the optimistic numbers in the report is that a Calgary-Edmonton line would be hopelessly uneconomic. Whatever technology was used, the estimated net present value of passenger revenues from 2011 to 2051 would not even cover the costs of construction, let alone the operating costs. And that’s before the first shovel in the ground, the first strike, and the first cost overrun. What Albertans would be buying, if the history of these sorts of mega-projects is any guide, would be decades of rising subsidies. Under the circumstances, the response of Alberta’s transportation minister was understandable: “No, no, no, no, no. No.”
It’s at this point that high-speed rail enthusiasts start tapping their foot impatiently. Yes, yes, yes, they say: perhaps it wouldn’t be “profitable.” But what about the environmental benefits? You can’t just measure everything in terms of profit and loss, you know.
No, you can’t. But in fact, there are no environmental benefits to high-speed trains, as such. The tracks are unsightly, they consume large amounts of fossil fuels, and they encourage people to live large distances from each other—sprawl, in other words. And the more you subsidize them, the more you encourage all of these things.
What people mean when they talk about the environmental benefits of high-speed rail are the reductions in environmental harm associated with other modes of transport, notably cars. But these only materialize if large numbers of people do, in fact, leave their cars at home and take the train. There is scant evidence of this. Of those making the journey from Edmonton to Calgary today, fully 91 per cent do so by car. If all goes well, the Alberta study forecast that, decades from now, that number could be reduced all the way to 90 per cent in the $3-billion scenario—88 per cent, if you splashed out for the full $20 billion.
Subsidizing train travel is a peculiarly expensive and ineffective way of getting people out of their cars. Most people won’t find it enough of an incentive to switch. Others would have taken the train anyway, without a subsidy. And even though you are subsidizing a less wasteful mode of transit, the fact remains you are still subsidizing waste.
If you want to make rail travel more attractive, it’s not subsidy you need: it’s entrepreneurs who have risked their own money, lying awake at night thinking of ways to lure people onto their trains. And if you want to encourage people to drive less, there’s a far simpler, more direct route, one that does not expose the taxpayer to huge and unknowable risks. It is to charge the full price of using the highways they drive on—road tolls, in other words.
Rather than subsidize train travel, why not take the subsidy out of driving? Make it more expensive to drive, and I promise you the train will look a lot more appealing in a hurry.