Thursday, June 23, 2005

In Which A Heritage Foundation Report Convinces Me That I Am Wrong...

by Tom Bozzo worry too much about the benefit/cost details of the rail transit components of the City of Madison's forthcoming master plan.

In the comment exchange following the previous outing on the city's plan, Bryan Smith mentioned a P.J. O'Rourke NYT op-ed that in turn cited a Heritage report by Wendell Cox on how transit systems can't pay for themselves — supposedly to the extent that it would be possible to lease every new rider of the new Minneapolis light rail line a new BMW X5 for the price of light rail and have money left over — and therefore, by Cox's logic, should all be abandoned in favor of "private" alternatives.

The thing is, noting Alan Schussman's post on Heritage-quality research from last week, not to mention previous posts here on Heritage's efforts to advance the administration's Social Security bamboozlement agenda, if a Heritage-sponsored analysis says something that looks like it might be in the public interest is terrible, then I should probably be looking for whatever is wrong with the Heritage analysis. (*)

In the case of rail transit systems, there are some things wrong.

I greatly mistrust Cox's emphasis on one particular cost-effectiveness measure used to assess transit programs, the "incremental cost per incremental trip." For the Minneapolis light rail line, that was estimated to be $19 before the project was undertaken. The methodology for the measure is briefly described at this DOT page. Note that the $19 figure is not the result of Heritage number mangling, but rather is a figure taken from a Metro Transit filing with DOT.

What could be wrong? Incremental cost per incremental trip appears to divide an annualized cost of rail, including capital and operating costs, by a forecast of the number of rides added to the entire transit system. If I have it right (**), it basically loads the entire cost of rail on the rail ridership drawn out of cars. Which is to say that riders diverted from buses are effectively carried for free in this method — better than free, even, to the extent that some costs of the bus network can be avoided. Since incremental riders are about 40% of the Minneapolis light rail's total ridership according to a survey reported in the Strib, if the incremental cost per incremental trip were still $19, the incremental cost per trip is a far less scary $7.60.

Meanwhile, also via the Strib, Metro transit reports a 2004 cost per LRT ride of $3.88, with a $3 subsidy. The subsidy reportedly was high in '04 because of startup costs of the line, and is expected to fall to $2.34 this year. I assume that doesn't repay construction grants, but a $1,610 annual expenditure on a 5-day/week, 50-week commute won't lease anyone an X5.

It's also fair to consider what the incremental cost of a trip by car is. If you have an expensive car and don't use it for many trips, it can be substantial. If you lease a stripper X5 and only drive it to work and back (not likely, granted), the incremental cost of the trip is $14.40 PLUS the average incremental cost of insurance, fuel, roads, and so on. The cost per trip for such a vehicle will remain several dollars even at more realistic trip counts. That doesn't include the potentially astronomical congestion prices for trips where they might be charged.

Last, if subsidy of the transit systems is so offensive, we might consider the extent to which the road network or portions thereof require subsidies from general revenues, or cross-subsidies from heavily trafficked roads. Given a method of allocating revenues to roads and construction cost figures, it's not to hard to get a back-of-the-envelope approximation to a road's break-even traffic.

For the revenue allocation, let's use the taxes on the gas burned on the roads (there are registration fees, too, though since they aren't traffic-related, allocations would be more arbitrary). Combined federal and state taxes on gas in Wisconsin are just under 50 cents per gallon, or 2.5 cents per trip mile at 20 MPG. This Virginia DOT page gives a cost of $800,000 per lane-mile for an urban street, with a 30-year depreciation life. Assume a 5% annual cost of funds, and the annual cost of the urban lane-mile is $66,666.67. If the road gets 2.5 cents revenue per trip-mile, then the break-even daily traffic for the lane is just over 7,300 daily trips. A secondary road at $250,000 per lane-mile still requires nearly 2,300 trips to break even.

You might ask how many arterial streets in Madison carry 7,300 cars per lane per day. Not many is the answer. From the city's 1999 traffic counts (scroll down at the link for PDF maps), only sections of University Avenue, Campus Drive, Park St., Mineral Point Rd., John Nolen Drive, Gammon Road (betw. Woodman's and the Beltline) and Whitney Way (between Odana Rd. and the Beltline) crossed the threshold. Wisconsin has relatively high gas taxes, so it's easier to cross the threshold here than in many other jurisdictions. Of course, traffic has probably gotten worse on all of the above. But much of the road network looks like one big welfare case.

I barely have time to mention that if the peak oil Charlie Foxtrot is only half as Charlie Foxtrotted as pessimists like James Howard Kunstler suggest, assumptions that petroleum-fueled private vehicles will be viable will in the not-too-distant future prove to be inoperative.

For the above reasons, I say, bring on the trains.


(*) Lest I have another Howard Dean moment, this should not be taken to imply that I'd disagree with everything a conservative partisans might say.

(**) I'm not an expert in this calculation, so if anyone knows for real, I'd appreciate an education.
The PJ O'Rourke comparison was clearly a joke. Leasing a car is clearly an expensive way to drive a car. How about for purchasing a car (and not a Beemer)? I imagine that even an environmentally friendly Toyota Prius would be a viable option. And since, what, 80% of the money for the train is a federal grant, does all this analysis include that money, or is it just free money?

And I will point out the obvious. Trains take you from a specific station to other stations. They don't necessarily take you where you want to go. No doubt, lots of people can use them, but while it is still *legal* to drive a car, most people won't take a train (especially on a -20˚C day in winter) and some people can't take them.

And, you said it yourself - gas is a small part of the cost of a trip in a car. If gas goes to $5 a gallon, which it won't, gas will still be a small part of the cost of a trip in a car (~20% even for cheap cars?). The gas price won't become restrictive to most people (especially for a drive to the office) for some time.

I've said it before, CO2 is plant food - hell, I used to work on Rubisco and saw it in molecular detail - what do you have against plants?

Finally, (I like rambling) lest people think I drive some gas-guzzling SUV, I ride my bike to work or take the #3 bus (on which I once saw a vampire, among other crazies, BTW). Madison - which is home to people I would think would be more supportive of your viewpoint than mine, in case you already didn't know that - is full of SUV drivers, in case you already didn't know that. Big liberals that I personally know complain about global warming and Bush's energy policy, yet still drive SUVs.

Trains are a losing battle. They may get built, but they won't solve the problem. When even the most conscious people in America don't think the problem is big enough to warrant a change, will an actual solution occur?
Actually, I don't see the comparison of transit costs with private vehicle leases as problematic. A lease payment is just the sum of a depreciation charge and a cost-of-funds charge, and is conceptually apples-to-apples with the capital cost part of the transit system cost calculations.

The $7.60 average incremental cost per ride would include the entire cost, including that funded through federal grants. The feds were to pick up about half of the Minneapolis LRT capital cost.

As you may have noticed, I don't particularly have anything against cars (though I personally loathe SUVs). The flexibility and freedom of private transportation is a great feature. But I don't think it transcends the laws of supply and demand, either. I have my naive economist faith that as private transportation becomes more expensive, people will weigh the relative marginal benefits and costs. Heck, I may even bike into work more myself.
In regards to Mayor Dave's master plan, I bet you are pretty hyped that the Supreme Court ruled that people's homes and businesses can be taken against their will for private development that is determined to benefit the public. Now Mayor Dave cannot be stopped. If he comes to the Smith house to put some walkable infill development in, I guess I will have no recourse.

Geesh. I'm sorry to stray off topic, but the Supreme Court too conservative? Methinks not. I should get a blog to make posts of my own!
You would be wrong about my reaction to the majority decision in Kelo v. New London.
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