RAIL TRANSIT: An Increasing Drain on Social Welfare and Society

COST Commentary: Below are two articles addressing the wide differences we are exposed to on a daily basis regarding the role of public transit, particularly train transit, in our Nation’s mobility and transportation priorities and train transit’s actual social benefits and impact versus those perceived and advertised by some.

First is a summary by Reason Foundation’s Robert Poole of a Brookings Institution report by transportation scholar Cliff Winston describing the true and minor role which public rail transit plays in overall US mobility and transportation. The report concludes that, in fact, rail transit is an increasing drain on social welfare.” There are many and growing examples of the fact that train transit degrades transit and mobility for the small number of people for which transit is critical to support their daily mobility needs and provide higher quality of life.

Second is an article by Wendell Cox about an editorial published in the Baltimore Sun regarding the need for greater investment in train transit in the Baltimore area. The Sun suggests more trains will address traffic congestion, pollution and rising fuel prices, but, the Sun presents no supporting evidence in the face of large and growing bodies of experience and facts which are absolutely contrary to the Sun’s proposed train solution.

Both articles are from 2006 but are essentially current in their messages. The wide gap between facts and perceptions in the opposite positions reflected in these two articles are costing US society billions of dollars in wasteful spending of taxpayer transportation funds which could be redirected to transportation solutions which would improve mobility and quality of life for all citizens. While all citizens suffer from this wasteful spending of taxpayer dollars, it disproportionately degrades the quality of life for low income citizens by reducing their mobility and access to opportunity while increasing their costs.

As in the two articles below, the citizens of the Austin area face the daily conflict regarding train transit here is Austin. After light rail transit was rejected for many years by Austin voters, Capital Metro deceived many voters with false promises of a low cost, effective commuter rail in 2004. This “Red Line” commuter took 50% longer than planned and costs were more than 65% greater than Cap Metro presented to voters. Since Cap Metro was not truthful or was incompetent in making a commitment to voters that the federal government would pay $30 million of the costs, the costs to local citizens was more than double that promised. More egregious is the fact that the annual operating costs are about 6 times the $2 million promised.

The Red Line’s ridership is so low that is has worsened congestion and pollution while taxpayers subsidize each daily, two-way rider about $25,000 per year or enough to buy and provide gas for a new car for them each year.

So far, Cap Metro’s ill-advised solution is to spend even more tax money and provide more train service in spite of overwhelming evidence that this is the exact opposite of the actions they should be taking to provide an effective transit system for the community. Thankfully, they are technically bankrupt and cannot do much greater harm in the near future.

However, the City of Austin is ignoring all the poor results of Cap Metro’s failed Red Line commuter train and actual train experience throughout the US as reflected in the articles below. With wildly exaggerated claims of ridership and significantly underestimated costs, Austin is spending millions of taxpayer’s dollars to study and proceed toward the implementation of a Central Austin light rail (urban rail) system which would cost more than $2 billion and more than $25 million per year to operate while providing no measurable improvement in mobility for Central Austin. In fact, it will likely increase downtown congestion and create major safety hazards. More importantly, this central rail would have a devastating negative impact on congestion outside downtown Austin by redirecting a huge portion of available transportation dollars to the train serving very few and not improving many area roadways which serve more than 99% of the trips.

Since the City of Austin has no viable plan for funding the proposed downtown light rail train, it could only be implemented with major tax increases for all citizens to highly subsidize the few riders, just as Cap Metro is experiencing with the Red Line.

Also, the City’s proposed train could result in dramatically reducing investment in bus transit effectiveness by increasing costs and reducing service which would reduce mobility, opportunity and quality-of-life for low income citizens who depend on transit and have no alternatives.

Brookings Scholar on Rail Transit in America

By Robert Poole, Brookings Institution, September 1, 2006

Rail transit projects in most U.S. urban areas arouse controversy. Many taxpayer advocates argue against them, contending that they produce very small benefits in exchange for very large taxpayer costs. But transit advocates justify the projects as essential to reduce congestion and improve air quality, by “getting people out of their cars.”

Brookings Institution’s transportation scholar Cliff Winston has taken a quantitative look at this issue. His new paper is titled “On the Social Desirability of Urban Rail Systems,” co-authored with Vikram Maheshri, an economist at the University of California at Berkeley. It appears in the Journal of Urban Economics.

The purpose of the paper is to estimate the contribution of U.S. urban rail systems to social welfare. The authors define the net benefit of a rail transit system as the difference between its benefits, broadly measured, and its net cost to taxpayers. If this difference is positive, it means that the dollar value of the rail system’s benefits is greater than its net cost to taxpayers (i.e., the difference between what the rail system’s customers pay as fares and the total cost to build, operate, and maintain the rail system).

On average, rail transit systems cover about 40% of their operating costs from farebox revenues and none of their capital costs, according to figures in the National Transit Database. That means their net taxpayer subsidy is large, given the high capital costs of rail.

Winston and Maheshri construct an elaborate econometric model to estimate the “consumer surplus” of 25 rail transit systems. This is economists’ term for the benefits to users, over and above the fares they pay. The large systems (New York, Washington, DC, San Francisco’s BART, etc.) all produce significant consumer surpluses. But most of the smaller ones do not; those with “negligible” consumer surpluses are Miami, St. Louis, Sacramento, San Jose, Pittsburgh, Denver, Buffalo, and Newark. Most of these are relatively new light rail systems.

Next, the authors compare the consumer surplus of each system with its net taxpayer cost. On this measure, every single one of the 25 systems has negative net benefits—i.e., the annual value of the benefits to users is less (usually much less) than the annual cost to taxpayers. Surprisingly, this is true even for the massive New York City rail transit system, which by itself accounts for two-thirds of the nation’s rail transit passenger miles.

But what about larger benefits to the metro area? Rail systems are advocated not just to benefit their riders, but because they are expected to reduce traffic congestion, reduce air pollution, save energy, etc. So the final step in Winston and Maheshri’s analysis was to estimate the value of these “externality” benefits. They first conclude that the only one of these purported benefits large enough to make any difference is congestion relief. Given rail transit’s low load factor (less than 20% during all the hours of the day these systems operate, generating costs), neither the energy savings nor the emission reductions are significant.

They do quantify the congestion reductions, which are significant because the rail systems attract riders during rush hours, when marginal reductions in cars on the road can make a meaningful difference in the level of congestion. Adding the congestion savings to road users to the consumer surplus gives the total benefits of rail transit. When this total is compared with the net taxpayer costs, only San Francisco’s BART produces net social benefits (though the Chicago Transit Authority system comes close).

All 23 other U.S. rail transit systems are net losers. The net social cost of some of these systems is as follows:

• Miami-Dade Transit: ______$141 million/year
• St. Louis light rail: _______$171 million/year
• Dallas DART light rail: _____$457 million/year
• Sacramento light rail: _____$106 million/year
• San Jose light rail: _______$210 million/year
• Pittsburgh light rail: ______$135 million/year
• Denver light rail: _________$279 million/year

This means each of those urban areas is poorer by that amount each year.

Winston and Maheshri anticipate that some rail advocates will protest that these systems offer other benefits that are not accounted for in their calculations. For example, rail stimulates some development around rail stations. “But case studies have yet to show that after their construction transit systems have had a significant effect on employment or land use close to stations and that such benefits greatly exceed the benefits from commercial development that would have occurred elsewhere in the absence of rail construction.”

And there is also the claim that rail systems increase the mobility of low-income residents. But the authors point out that the median annual income of rail users in 2001 exceeded $50,000, which was greater than the median income of the general population in that year. So rail’s primary market is not the poor (unlike bus transit).

Overall, then, the authors conclude that rail transit is erroneously believed by the public to be socially desirable, because “supporters have sold [rail systems] as an antidote to the social costs associated with automobile travel, in spite of strong evidence to the contrary.” [emphasis added] They conclude that, in fact, rail transit is “an increasing drain on social welfare.”

Transit Envy at the Baltimore Sun

By Wendell Cox, Demographia Observations, Demographia, November 30, 2006

A Baltimore Sun editorial maws on about transit, transit elections and reducing traffic congestion. What the Sun misses is that transit and traffic congestion are completely different subjects. No level of transit investment, anywhere in the world, has materially reduced traffic congestion.

A November 29, 2006 editorial in the Baltimore Sun illustrates the typical populist, and wrong, romanticism about mass transit. Noting that a voters in a number of jurisdictions around the country approved transit tax increases, the Sun said: “Growing traffic congestion, rising fuel prices, and concern over pollution have made the case for transit too difficult to ignore.”

Regrettably, there is a huge difference between the “case’ and the reality. The reality is that transit cannot reduce traffic congestion. The reality is that, at whatever level of investment, transit has not attracted sufficient numbers of drivers to materially reduce the share of urban travel by automobile.
A look less than 40 miles south of Baltimore proves the point. In the Washington, DC area, more than 100 miles of high-quality Metro has been built — more than in any world urban area except for Seoul. Altogether, the miles of Metro built in Washington equal the total built in all of the other US urban areas. Yet what about traffic? Washington’s ranks fourth in the nation, and is close enough to challenge number two and three (transit rich Chicago and San Francisco) at any point. Over the past 20 years, traffic congestion has nearly tripled, despite the miles and millions of Metro.

The Sun goes on to cluelessly claim, “What works in Seattle, Denver and soon Salt Lake City and Kansas City, too, can work here – if it’s given a chance.” This is the old “story from across the mountains,” which achieved its highest form when a well-known columnist suggested Cleveland as a model for St. Louis.

However, things are much different than the Sun perceives across the mountains. Here is how things “work”” Like in Baltimore, Seattle’s’ transit market share is less than 2.5 percent. Denver’s is less than 1.5 percent. It would take a miracle of massive proportions to get transit up to a 0.5 percent share in Salt Lake City and Kansas City. Further, no virtually urban area — not in the United States and not in Western Europe — even has plans that would materially reduce automobile use or traffic congestion. That, however, does not keep transit officials from promising the impossible in their pursuit of more money in elections. In the private sector, such behavior is subject to truth in advertising laws. In transit, it gains accolades.

Why is it that transit cannot reduce traffic congestion? It is simply that transit best serves the historical 19th century core of urban areas. For example, nearly 40 percent of downtown Washington commuters use transit for the work trip. However, downtown Washington accounts for less than 20 percent of the area’s employment. More than 80 percent of the destinations are outside downtown and outside the ability of transit to compete. This is why the large majority of travel in all American and Western European urban areas is by car and why there is no hope for this to be reversed. It is, as noted above, so hopeless that not even the planners can concoct a vision in which car travel would be reduced.

At the same time, the mindless preoccupation with transit and its futility outside the urban core is accompanied by a misunderstanding of the role that the automobile has and will continue to play. Research indicates that the superior mobility of the automobile is one of the reasons that affluence has spread so widely in American and Western European urban areas. Around the country, programs to get cars to low-income households are increasing their incomes by significantly increasing the geography of their jobs options — despite decades of talk about transit and “reverse commuting,” it simply has not happened to a material degree. There is a simple reason. It cannot.

Any genuinely interested in solving the transportation problems of the modern urban area will do well to discard the rhetoric and look at the reality. Transit can play an important role in a few markets, like the nation’s strongest downtowns and door-to-door transportation service for the physically disabled. However, no volume of political “throw away” lines or editorial rhetoric will change the fact that transit has little or no role to play outside these niche markets.

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