Is transport too expensive? The Transportationist gets us thinking

David Levinson, the Transportationist, as usual, is thinking critically about the discussion about budget cuts in transport, and he’s got a provocative argument: transport projects cost too much to build. I’m fond of pointing out how failures to raise the gas tax erodes the purchasing power of the funds, but it’s also the case that costs have risen.

I don’t really disagree with his list of potential reasons. I only have a few additions, which may be riffs and variants on what he already has.

Some (additional) reasons why I hypothesize transport (and infrastructure) costs just keep going up and up:

1) The highest demand areas for maintenance and new stock occur in places that are expensive. I wonder how much of the costs of, say, intersections have to do with land costs. When Levinson asked why is it is so expensive–$175K–I began trying to think of private sector comparables, and I don’t have any except the house renovations: right now, looking at $15K to $20K for a new climate system, which makes no sense without new windows (another $10K). But that doesn’t include the land costs which are already sunk. So yes, the Northeast Corridor and California links of the proposed high speed make the most sense in terms of service and users, but they are also the most expensive to build. Ditto with LA’s subway down Wilshire. It’s a great corridor. It’s also west LA, where land just doesn’t get more expensive.

As urban land gets more intensively used, these costs get higher and higher.

2) Project creep. Standards have risen, as Levinson notes, but it’s not as though there aren’t a lot of what we might call side-payments in project development: noise walls hither and thither, etc. It’s hard for me to say that these costs aren’t necessary because the politics of getting something built pretty much requires the outlay.

And these are directly related to the first question, where the more densely settled the surrounding area, the higher the side payments.

3) Envy is a much bigger problem in public works than in personal life, I think. Jurisdiction X got a light rail link. I pay taxes for those things, why does Jurisdiction X get it when my neighborhood/district doesn’t? It’s a recipe for political hostages at budget time, as few political leaders have any reason to say “You know, the benefit cost on a project in my district just shows the project makes no sense.” It’s leads to two problems: projects that make no sense to serve some notion of geo-political equity, and project creep because if Jurisdiction X’s light rail stations had public art and golden knobs and a fountain, then my district’s light rail should have those and more. Combined with the Other People’s Money problem, this type of envy is a recipe for project creep.

There’s part of me that thinks that this problem might be addressed by forcing localities to pony up the cost of amenities out of property tax coffers.

4) One quibble with Levinson’s list: people do do benefit cost analysis all the time, but benefit cost is only as good as the integrity of the data and the analysts, and the whole process is too easy to roll. For development in California, I think CEQA forces agencies to get pretty financially committed to projects before they hit the “go” button in analysis. So by the time you’re there, you’re doing analysis to rationalize what you’ve committed to. With nonuser benefits and nonmarket benefits thrown in, the b/c ratio is politically constructed number. Perhaps it’s not CEQA–perhaps the commitment problem occurs everywhere, in that any line on the map causes a political firestorm, so that you have your rationales lined up before you draw anything.

Again, I’m not sure how to avoid this other than to have multiple groups paid to analyze potential projects–the proposing district and districts competing for the same funds. I’m sure we would find a way to make unsavory deals there, too.

I have no actual numbers or proof on these ideas. Maybe they are all small potatoes. Anybody got research they can have me read?

Comments Off

Filed under finance and pricing

Comments are closed.