At the outset we should be reminded that the term "high-speed rail" is a misnomer. The use of this term tends to suggest that we are considering the economic and other benefits of American investments comparable to projects like the inter-city and inter-regional bullet trains of France or Spain or Japan. In fact, with very few exceptions, we will not be able to develop such systems in the United States at acceptable financial, social, and environmental costs. Instead, we should consider the potential costs and benefits of more frequent, more reliable, and somewhat faster (say, an average of 90 to 125 miles per hour) passenger rail service in city pairs of 250 to 400 miles apart.

In that more realistic context, there are clearly circumstances where such expanded service can offer substantial benefits, in terms of greater labor mobility, and job and business access, but even in these circumstances, the benefits of improved intercity passenger service will be achieved only if such systems are seamlessly connected to other modes of public urban or intra-metropolitan transportation and if these investments are appropriately related to supporting land use and development plans.

The value of these investments can only be evaluated in the context of broad and strategic investment plans or programs. Within that context, such projects must, as Tony Shorris has pointed out, be measured against the costs and benefits of alternative investments in transportation infrastructure that might achieve the same ends.

In its June 2009 report the Bipartisan Policy Center's National Transportation Policy Project (NTPP) called for holding all federally-supported investments in the nation's transportation system accountable for demonstrating performance toward a suite of national goals, including (but not limited to) economic growth, prosperity, and competitiveness. In some places, and as part of comprehensive strategic corridor or metropolitan programs, investments to improve intercity passenger rail services can meet these tests and will be highly competitive against other possible investments or actions. But that will not be true in all cases, nor true at all times.

As NTPP has noted, particularly in a time of fiscal crisis and constrained public resources, all transportation investments must be rigorously evaluated and shown to be those investments that will bring the greatest benefits and returns, in terms of clearly articulated national economic, energy, environmental, and safety goals. In that context, there can be no single answer to the question of the eonomic benefits of investment in one particular mode or type of project. NTPP has provided a basis for assessing competing programs for new infrastucture or capacity expansion across all modes, including, but not limited to, improved intercity passenger rail services.

High-speed rail investment is the most significant step towards transforming our nation’s transportation network since the interstate highway system was begun more than 50 years ago. A network of high-speed rail corridors will support and create millions of jobs, revitalize our economy, reduce our dependence on oil and expand transportation choices for millions of Americans.

For all this to occur it needs to be built right. To make sure that high-speed rail achieves its economic potential, it must be done in tandem with developing our existing and emerging regional high-speed corridors and upgrading reliability and service on conventional intercity and commuter rail services. In addition, stations need to be located in higher-density, transit-oriented developments to enhance livable communities and ensure interconnectivity with regional rail and bus networks, airports and other modes.

Funding for high-speed rail needs to be part of an overall transportation vision that included an integrated and interconnected set of travel choices both for movement of people and goods. The time is right for creating a high-speed rail network. Just as the interstate highway system was not built overnight, this too will take time, but we must begin now.

The report’s headlines tout the ability of high-speed rail to increase wages, create jobs and generate business sales—all good things. However, deeper in the report we find an equally important paragraph warning us that these benefits will only be realized if investments are made in connecting the lines with the surrounding communities.

Stations have to be located in areas that are convenient to businesses. Riders living in outlying areas of the cities have to be able to get to there easily. The conclusion: All of those great HSR benefits hinge on increased investment in transit and freight mobility.

Beyond just getting people to the rail line, we also need appropriate zoning near the station. Successful transit oriented neighborhoods have to be attractive places to live and work. Building that kind of sustainable community requires investment in the rehabilitation of water and wastewater systems, flood control and waste systems.

HSR has the ability to transform the way we live and work, but it cannot make those changes alone. All levels of government have to make a strong commitment to building and improving sustainable communities that augment investments in HSR.

We have the opportunity to create the cities and economy of the future, let’s not waste it on short-sighted thinking.

High Speed Rail will have a major, positive economic impact. Not only are the short- term design, engineering and construction benefits important, especially in these pressing economic times, but also, there is the long-term advantage to a region that is served by High Speed Rail. While the numbers vary and are, indeed, debatable, most experts agree there will be a positive benefit.

Instead of debating the details---$19B, $34B, $7B---let’s focus on the other side of the equation, which is, what happens if we do not build a new system? Most of our regional centers of economic activity are increasingly paralyzed in ever increasing traffic congestion. Our airports are increasingly over-crowded, making it more and more difficult to meet the public and especially the business community’s need for intra-regional travel. When these congestion delays become too great, the business community and the resultant jobs will look elsewhere.

We have a choice to make: we can pay billions for roads or airport expansions and pay for the consequences, or we can choose to be economically competitive and invest in High Speed Rail.

I vote for the rail alternative for three key reasons.

First, look to our competitors in Europe, Japan and China (where I will be speaking next month). Over the next three years, China is investing over $300 billion into its railways, expanding its network by 20,000 kilometers, including 13,000 of which are high-speed.

Second, one of the biggest challenges for our airports is trying to meet the short distance intercity/intra-regional travel. I use the Thurgood Marshall Baltimore Washington Airport on a regular basis. Many flights leaving that airport are going to Philadelphia, Newark or New York City. I almost always take Amtrak, but would do so even more enthusiastically---as would thousands of other travelers, I am sure---if ½ an hour or an hour could be knocked off those trips. I see the day when High Speed Rail serves most of our intra-regional travel needs and our airports’ capacity is opened for longer domestic and international flights.

Third and most important, is the broad issue of the environment, sustainability and climate change. By every measure intra-regional travel by rail, including High Speed Rail, will have less impact on the environment, be a more efficient use of energy and produce less green house gas emissions than more cars on gridlocked highways and more flights in over crowed and increasingly delayed airports.

Produce $19B in economic benefits? We cannot be certain of that. Find a better way for inter- and intra- regional travel. High Speed Rail will do that.

The central economic question around high speed rail is whether the value it creates can be achieved through other means at lower costs. Answering such a question requires being clear about the value HSR projects can create, its relative cost, and the costs of alternatives that accomplish the same ends.

In presentations made at a recent conference on high speech rail hosted by the Rudin Center for Transportation Policy and Management at New York University (http://wagner.nyu.edu/rudincenter/conferences/symposia.php), the debate around these issues was substantial. One organizing principle that emerged from an examination of the European HSR programs was to disaggregate the benefits of such projects into three levels: national, regional, and local. From a local perspective, HSR can certainly help the central cities of the burgeoning American mega-regions access larger labor pools, increasing their relative value within the US marketplace, and perhaps even enhance their global competitiveness. In some cases, localized economic development around HSR stations can be leveraged when investments are combined with sound land use policies and well-targeted infrastructure investments. Depending on the mega-region involved, HSR can provide central cities with access to labor pools that less costly alternatives – such as bus rapid transit or even light-rail – cannot.

From a regional perspective, HSR can sew together mega-regions into much larger and more efficient labor markets, benefitting employers and workers alike. Further, smart HSR designs that are closely integrated into existing regional transit and highway networks, and coordinated with regional land use plans, can create opportunities for increased density of development that would reduce sprawl and the related carbon consumption.

Finally, from a national perspective, HSR creates significant potential relief for America’s air traffic system that is already groaning with excess demand and limited capacity. Increasing the capacity of our national air travel system is a slow and highly uncertain process and, as the UK has recently demonstrated with its cancellation of the planned third runway at Heathrow after a generation of debate there, the climate implications of such expansion need to be explored and debated. Yet the need to increase the nation’s connection to the rest of the world will only grow in the years to come, so shifting the use of limited air space away from short-haul flights to international service at our crowded airports is essential. Substitution of HSR for short-haul flights makes clear sense from an environmental perspective, and may well be one of the few options we have to achieve these national goals (as well as the regional and local benefits cited above). And lastly, the better connected US mega-regions are to each other, the more efficient the entire US economy will become – just as the interstate highway system increased overall US productivity, intelligent HSR investments can get more out of the entire national market.

In short, there are clearly potential benefits to HSR that are not easily achieved through other, less costly transportation investments, and in most cases, they are classic public goods that will not be addressed by the market without some public sector intervention. However, such investments need to be both bold enough to change the workings of the underlying labor markets (incremental changes in rail service will not do it) and strategic enough to be affordable and deliverable in the context of the highly balkanized US system of local land use, funding, and infrastructure planning (our relatively weak central government remains our greatest handicap in implementing sound national infrastructure investments). The case for America’s ability to meet these tests is far from being met.

In our June 30 NewsBrief, "The Rail Debate Intensifies," (available at http://www.infrastructureusa.org/the-rail-debate-intensifies/) we speculated whether the Administration's $8 billion high-speed rail initiative is indeed a first "down payment" on a multi-generational commitment to create a network of high-speed lines or whether it is simply a one-shot initiative that will only marginally increase passenger rail speeds in a few rail corridors. Our conversations with colleagues in the transportation community and the railroad industry suggested that the weight of expert opinion is favoring the latter scenario.

Many of the experts we had consulted noted that the future of true high-speed rail in America depends on finding a dedicated source of funds that could sustain the program over a period of several decades. Because building new high-speed lines would require massive sums of money and long-term financial commitments, the program could not be placed on a pay-as-you-go basis and left to the vagaries of the annual congressional appropriations process. However, securing a dedicated funding source would require broad-based public support. Are there enough potential intercity rail users in America to engender popular grassroots support for a tax-financed rail fund like the Highway Trust Fund? Would there be enough users and beneficiaries of high-speed rail service to generate the billions upon billions in tax revenue necessary to fund a network of dedicated high-speed rail lines? And will future presidents and Congresses share this Administration's enthusiasm for high-speed rail or will they be obliged to focus attention and scarce resources on other more urgent infrastructure priorities? Despite the rosy expectations of the U.S. Conference of Mayors as expressed in its June 14 report ("The Economic Impacts of High-Speed Rail on Cities and their Metropolitan Areas") and despite the confident rhetoric of some industry and government HSR boosters, there are huge uncertainties concerning all three questions.

That is why most informed observers we have talked to expressed skepticisms about the prospects of President Obama's high-speed rail initiative sparking a renaissance in intercity passenger rail transportation. A more likely legacy of the HSR program will be a series of improvements in Class I rail infrastructure---assuming a successful resolution of the current impasse concerning the terms on which Class I railroads are willing to participate in this program. The planned improvements as detailed in the Administration's HSR announcements ---upgrading track and signal systems, eliminating grade crossings, refurbishing existing stations, deploying positive train control technology---will not only benefit the private railroad companies but also enhance the overall capacity of the nation's freight carrying infrastructure, since freight railroads move 40 percent of the nation's intecity freight (as measured in ton-miles.)

In the end, therefore, the HSR initiative could turn out to be of considerable economic benefit to the nation---but not quite in the way the program has been sold to the public and not exactly in the manner it is still being envisioned by the Conference of Mayors and other passenger rail boosters. Improvements in Class I freight railroad performance rather than substantial improvements in the quality of intercity passenger service is likely to be the main consequence of the $8 billion "high-speed" rail initiative.

It is not easy to forecast business results, so I would have more faith in the Conference of Mayors’ benefit estimates if the mayors themselves, or businesses or taxpayers in their cities, were to invest some of their own money in passenger rail services. Why should rural taxpayers be forced to pay for these allegedly beneficial urban projects?

Also relevant is the 1850 essay written by the French economist Frederic Bastiat "That Which Is Seen, and That Which Is Not Seen." He pointed out that what are seen are the jobs directly created by the government, but that unseen are the workers displaced by the taxes raised to create these jobs.

Furthermore, is there anything in the mayors’ report to suggest that high-speed passenger rail services are the most effective investments to achieve the forecast benefits? Are there, indeed, more cost-efficient ways to link cities? The federal Department of Transportation has published no relevant analyses. Can other contributors to this blog fill this gap?

The report from the U.S. conference of mayors is mostly wishful thinking. Many of the economic benefits it claims are not net additions to economic growth, but relocation of economic activity from one part of a state or region to another part (chiefly cities). Other alleged benefits fail to consider the costs to taxpayers, and thus represent gross, not net, benefits. And still other benefits depend on very large (but non-quantified) supporting public-sector investments. Let’s examine these three points briefly.

Economic development consultants have done extensive business in recent decades producing studies purporting to show the large net benefits of taxpayer-subsidized sports stadiums and convention centers. When independent economists review these studies, they find that most of the reported benefits represent the relocation of economic activity from one vicinity to another. For example, a new sports stadium generally will attract paying customers who will also pay to park their cars, stay overnight (at least some of them) in nearby hotels, and buy meals in local restaurants. However, this spending on sports entertainment almost certainly represents the substitution of one type of entertainment spending for another that would have occurred in other ways and other locations. There is little or no net gain to the regional, state, or national economy.

The same is true of the report’s estimated benefits from higher-density development near HSR stations, visitor spending due to enhanced tourism to the HSR city, and potential expansion of technology clusters. It’s easy to see why big-city mayors would be happy to have more economic activity shifted inside their borders, but this is a zero-sum game for the state and federal taxpayers who are being asked to pump (initially) tens of billions and ultimately hundreds of billions of dollars into HSR projects.

And this brings us to the second problem with these benefit estimates. For example, the report claims significant savings in time and travel cost to HSR users. This is like similar studies of urban rail transit that tout the low fares (compared with the user-cost of owning and operating a car) but ignore the fact that 100% of the capital costs and (in most cities) 70% of the operating costs are paid for by taxpayers, not rail transit users. Any realistic benefits estimate must use the fully allocated cost per HSR user trip, not the hugely subsidized fare.

Third, and perhaps least appreciated, is what’s in the fine print of the study. “In all four cities, the ultimate impact on regional economic growth depends on the effectiveness of connections between HSR stations and the surrounding area.” That’s a grudging admission that the large majority of hoped-for HSR trips will not be from station to station, but from one suburban location to another suburban location. That’s because of the past 50 years’ suburbanization not only of housing locations but also of job locations. So station-to-station HSR trip times are only part of the story; whether there will be net trip-time savings compared with driving depends on comparing door-to-door travel times. That’s certainly the case for the report’s claimed benefits of facilitating very long commutes such as Palmdale to Los Angeles or Lakeland to Orlando. A footnote to one table makes it even more clear that the potential economic benefits depend on “. . . supportive public policies and infrastructure investments to allow the benefits of HSR to be realized, and the projected additional business development to occur.” What it’s trying to say is that unless metro areas spend additional tens or hundreds of billions on a region-wide rail transit network, connecting everywhere to everywhere, much of the economic benefit will not materialize.

Again, that underscores that this report is nothing like a benefit/cost analysis. The costs are more or less taken as a given, able to be ignored, so that hypothetical gross benefits can absorb all the attention. Alas, the real world is not like that. The resources that building and operating HSR will consume have alternative uses, with potentially greater economic value added. A benefits-only study is useless as a guide to sound public policy.

One exciting ripple effect of President Barack Obama's commitment to high-speed rail is the promise of economic development in the areas surrounding transit hubs.

The promise is real and has been demonstrated around the world in countries where high-speed rail is established. In addition to the significant and important improvements to mobility choices, reduction of harmful carbon emissions and dependency on fossil fuels and the creation of thousand of construction and permanent jobs, high-speed rail also offers the opportunity of significant economic development associated with land use changes. New rail stations draw a mix of commercial and residential developments. These mixed-use land developments, or "transit villages," are enhanced by user-friendly features, such as bike trails and walking paths, that encourage a live-where-you-work environment and minimizes the need for auto dependency.

With high-speed rail stations as their anchors, these transit village developments create a sense of community and vitality with a scope and character unique to a city and its environs. For instance, large terminal stations will likely be developed in already busy and dense urban centers and will focus on maximizing interconnectivity to other modes of travel and existing developments.

Intermediate stations, located between the large terminal stations, may focus more on local re-development to encourage growth and stimulate the economy in areas that may be underserved by attracting growth back to the urban cores.

As an added bonus, the building of rail station—including high speed rail stations—have proven to increase property values. Research by Reconnecting America shows that family residences located near commuter rail stations in Boston have a 6.7% premium over homes located elsewhere. And after an announcement of new transit stations in Los Angeles, commercial property values in expected station areas grew 78%, compared to 38% for other properties.

The best news is that the economic development benefits of high-speed rail could begin immediately. Investment and station area planning could begin now in anticipation of high-speed rail coming to a community. City master plans and land-use plans may need to be updated and modified to encourage development incentives and re-zoning to encourage activity around these stations.

With some level of commitment that high-speed rail will come, investors will want to be the first to locate and develop near these stations--after high-speed rail arrives, this land becomes prime real estate available only at a premium.

In the future, the modern city and all of her citizens will benefit and thrive from a balanced transportation system that includes high-speed rail.

The U.S. Conference of Mayors report is telling in that it quantifies the benefits we would forgo if we fail to aggressively build a high-speed rail network.

The benefits of HSR are evident in the experience of other countries, yet we in the United States, alone among our peers, have been reluctant to pursue them. One source of reluctance is skepticism about whether HSR makes sense outside of the Northeast corridor. The USCoM report clarifies that many regions can benefit from HSR investment.

While the regional focus of the report makes sense, it might make it easy to overlook the benefits that would accrue to adjacent states, as well as to the nation as a whole. Broader regional labor markets and more seamless connections make the overall economy more efficient and resilient. Swift travel between businesses and research centers lower the cost of generating knowledge. Short-haul HSR traffic relieves stressed road and air systems. The payoffs are truly far-reaching.

Skeptics argue that any investment in connectivity would have similar effects, but experience tells us that is simply not the case. Japanese cities that received HSR investment rather than highways outperform those that built only highways. The reason? HSR drives growth in unique ways, as the USCoM report emphasizes. No other travel mode can deliver airport volumes of people and connections without an airport-sized footprint.

To truly maximize these benefits, we must ensure that HSR links people to the right destinations. Perhaps the most valuable component of the USCoM report is its strong recommendation to work beyond the tracks and ensure that HSR connects to station-area development and other transportation. The U.S. experience with rail transit offers two good lessons. First, we ought to have built more of it sooner, and second, we should have built better station areas with greater connectivity. We are catching up in both areas now and cannot afford to repeat the same errors with HSR. The USCoM report outlines how we can reap enormous benefits from HSR if we get the details right.

The recent USCM study points up a key benefit of developing high speed rail in America, particularly in that part of America that represents the bulk of our current and future population and economic activity—the so-call Megaregions. These areas, such as the Boston-Richmond corridor or the Chicago heartland are where the action is. Notwithstanding all the benefits of modern technology, the face to face meeting is still an essential part of human activity. The more individuals who are within an interconnected area, the more opportunities there are for interaction and generation of economic activities. Years ago, the financial community of the United States consisted of those businesses and individuals within walking distance of Wall Street in Manhattan. Today, and even more so in the future, that community consists in institutions all up and down the East Coast. Good rail service already knits this industry together—high speed rail service will do an even better job.

The same argument can be made for the key industries, including tourism, that drive the economy of other Megaregions. The UK government analyzed this phenomenon in the ground-breaking Eddington Report and concluded that what they called “agglomeration” was key to the growth of the UK economy because of the value adding effect of shortening travel times and offering frequent service. We can do the same with the Corridor investments contemplated under the Obama Administration initiative.

Although the United States lags behind many other industrialized nations in making a serious, long-term commitment to high-speed rail, there is now broad support on the federal, state, and local level for investing in a national high-speed intercity passenger rail system.

According to a recent report by the United States Conference of Mayors on “The Economic Impacts of High-Speed Rail on Cities and their Metropolitan Areas,” we have an historic opportunity to create jobs, develop a domestic manufacturing base, and provide an environmentally-friendly and competitive transportation alternative for the traveling public.

This study evaluated the impacts of the development of high-speed rail in four different metropolitan regions, and in each case the study showed that high-speed rail service will “significantly increase jobs, wages, business sales, and value-added Gross Regional Product.” According to the study, high-speed intercity passenger rail will yield economic benefits for all types of cities across the nation, regardless of size, geographic location and economic structure. The report also projected that the potential long-term economic impacts will continue to increase as high-speed rail service is fully implemented, congestion is eliminated, and passengers experience first-hand the time and economic savings that high-speed rail can provide. In the four cities that were studied -- Los Angeles, Chicago, Orlando and Albany -- investment in high-speed rail would produce approximately 145,500 jobs, which is critical in these challenging economic times.

A safe and efficient transportation system is critical to the United States. However, our nation’s transportation system is near capacity, with gridlock on our highways and in our airspace. Competitive and convenient alternatives, such as high-speed and intercity passenger rail, must be explored.

With strong support from the Obama administration, Congress, state governments, and private partners, we have an historic opportunity to begin developing a nation-wide high-speed and intercity passenger rail system. In order to succeed, however, this investment in high-speed rail will require consistent financing. Although it is a large investment up front, a new intercity, high-speed rail system will pay dividends by providing a reliable and environmentally-friendly way to travel, creating new job opportunities, and developing a domestic manufacturing base.