The California High Speed Rail Project: A Due Diligence Report

By Wendell Cox & Joseph Vranich

The report is sumarized below and the full report can be found at:

This report is the first independent review of the California High Speed Rail project. Based upon California high speed rail reports and international and national comparisons, it is concluded that the project would have only minimal impact in reducing greenhouse gas emissions and that these modest gains would be exceedingly expensive. Costs are projected to escalate to as much as $80 billion, the ridership projections are absurdly high and it seems likely that there will be defaults on any commercial bonds and heavy financial losses.

Because of the losses and cost increases, it is likely that it will be difficult to complete Phase 1 (San Francisco-Los Angeles-Anaheim) and nearly impossible to complete the extensions to Sacramento, Stockton, Modesto, the San Gabriel Vally, the Inland Empire (Riverside-San Bernardino), San Diego, the East Bay and Oakland.

In addition, it is highly unlikely that the claimed travel times can be achieved.

Key findings follow:

Private Investment Impacts
• Investment losses are likely.
• Commercial bond default is likely.

Traveler Impacts
• Promised travel times are unlikely to be achieved.
• Trains will fail to meet the statutorily required maximum travel times.
• Airlines will continue to dominate the market between northern and southern California.
• Few travelers are likely to be attracted from cars in the shorter distance markets.
• San Diego and Sacramento extensions may not be built for decades, if ever, due to high costs.

Capital Costs
• Construction cost overruns are likely.
• Proposed state bonds will likely be insufficient to complete Phase I, Phase II or complete plan.
• Federal funding is likely to be far less than projected.
• Private funding is likely to be insufficient to finance the complete plan.
• Political “meddling” could increase capital costs.
• Additional state capital subsidies are likely to be required.
• Political “meddling” will require additional stations, more stops and slower train schedules.
• CHSRA’s capital cost projections for highway and aviation alternatives are implausibly high.
Operating Costs
• Operating costs are likely to be substantially higher than planned.
• Taxpayer subsidies to cover operating costs are likely.

Greenhouse Gas Impacts
• Impact on greenhouse gas emissions reduction to be small.
• GHG reduction to be far more costly than the international ceiling of $50 per ton.

Public Response
• Opposition may spread as site-specific urban, suburban and rural impacts become better known.
• Opposition by communities is likely to require reduced operating speeds and slower schedules.
• Mitigating unpopular neighborhood impacts could increase capital costs.
• Elevated tracks could create objectionable sound walls and other “Berlin Wall” structures.

• No train in the world meeting the operating specifications can be used legally in the U.S.
• It is unclear that any train redesigned to meet U.S. safety requirements can also meet the CHSRA speed and performance requirements.
• The train’s capacity is not set, which calls into question the accuracy of ridership, revenue and cost forecasts.
• Train weight is not set, which could affect speed, schedule, ridership, energy use and cost forecasts.

Road and Aviation Impacts
•HSR will fail to divert significant traffic from highways and airports.
•The Authority will fail to implement the bargain rail fares it currently proposes.

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