High-Speed Finance for High-Speed Rail?
Hammond, J. D., Nation's Cities Weekly
Amtrak recently announced the adoption of a comprehensive plan to upgrade and replace its Northeast Corridor in order to achieve the sort of high-speed rail standards seen in Western Europe and East Asia. The fairly cursory plan borrows largely from this summer's Penn Design study--one that would connect Philadelphia to New York in 30 to 45 minutes and Washington to Boston in 3.5 hours at speeds in excess of 150 mph. Both studies predict a tripling of ridership and profits in excess of $1 billion per year if the plan is carried out.
The cost, however, is staggering: $117 billion--at least $4 billion a year--over 30 years. Considering that federal capital outlays for passenger rail are as little as $10 billion, for which state and regional governments compete fiercely, the amount of time and money it would require to complete this vision greatly frustrates and complicates the project.
Meanwhile, Europe and Asia forge ahead on high-speed rail with visions that already supersede this: a Chinese bullet train just reached 415 km/h (258 mph) on a standard run from Shanghai, breaking a previous record China Railways had itself set only months ago. Under the Amtrak plan, U.S. trains will take an entire generation to reach speeds three-fifths of what its international competition is already exceeding.
Fortunately, a number of alternatives exist to such a piecemeal financing plan. Chief among them are proposals for a national infrastructure bank, which could reduce the complexity of projects like this by a significant margin: for example, the $117 billion cost of the Northeast corridor upgrade would be reduced to $40 billion, realizing the project decades sooner, employing workers immediately and realizing a cost reduction of nearly two-thirds on savings from inflation, finance costs and economies of scale, according to Amtrak and Yonah Freemark, editor of the Transport Politic.
Funding for an infrastructure bank could be provided by numerous sources, from the federal government to associations of state and local governments to even foreign lenders. …