Thursday, May 5, 2011

Capital cost projections for Twin Cities to Chicago corridors

I made an earlier post listing the projected ridership, operating cost, and operating surplus for each of the various routes between the Twin Cities and Chicago that have been studied over the years. Here is a companion table, attempting to list the projected capital costs, total cost, total benefit, and other benefit cost measures over a 25- or 30-year window.

Some important notes about the column data:
  • Net present value (NPV) is generally the most important number to look at. It is basically (or may simply be) the total benefit minus the total cost over the studied time window. In theory, the calculations that lead to that value should compensate for the fact that the money could have alternatively been put into other investments which would have a decent rate of return. Most of these studies seem to use a "discount rate" of 5%, which I interpret to mean that the NPV numbers listed would be above and beyond what you would get from an investment that returns 5% each year.

  • The first Tri-State study also said that NPV is present value (PV) plus first-year capital costs (NPV = C0 + PV) (presumably the cost is a negative value there).

  • A few studies listed "Capital Constrained Consumer Surplus" and defined it as NPV/C0. Where it wasn't available, I used NPV divided by the sum of capital cost and one year of operating cost (not shown here), which seemed to be what the other studies were doing.

  • In a few cases where total benefit wasn't listed on its own, I used gross consumer surplus plus revenue present value for that column. Where NPV was not explicitly listed, I used total benefit minus total cost.
Other notes:
  • Something is goofy about the Tri-State II study, since it listed total costs that were less than the capital costs. Presumably they were listing the total costs minus system revenues. I gave up on trying to fiddle with the numbers to get them to make sense by adding that in, so the study's values are just listed verbatim here.

  • The Eau Claire alternatives from the Wisconsin State Rail Plan from 2002 are in addition to the MWRRI river route. They promote greater ridership, but in that analysis, the additional route coverage drags down overall performance somewhat.

  • The Rochester Rail Link study appears to look at the costs of running a line from the Twin Cities to La Crosse via Rochester, which seems to add about 50% to costs, but roughly doubles the population that has access to the southern end of the line.

  • In general, these studies include ridership, costs, and benefits for an additional route from Chicago/Milwaukee up to Green Bay, which would run somewhere between 120 and 140 miles, and would likely serve the Fox Cities along Lake Winnebago.

  • The SNCF study only looked at the entire Midwest as a system, so I couldn't get any useful info out of it for this table.

  • The Minnesota State Rail Plan only included costs for Minnesota, and didn't list any benefit values explicitly. There was supposed to be a companion benefit cost study, but they wanted to use a standardized methodology, which hasn't been provided by the Federal Railroad Administration (apparently).
Anyway, here's the table. You want total benefit divided by total cost to be (significantly) greater than 1, but NPV/C0 only needs to be (significantly) greater than zero.

StudyProjection yearRouteSpeedRidershipCostBenefit
Tri-State I (1991)2024 (25-year)
via Rochester
125 mph8.1$940
185 mph10.6
300 mph (maglev)12.2
via Green Bay185 mph10.1
300 mph (maglev)11.7
Tri-State II (2000)2020 (30-year)
MWRRI River110 mph2.9$940

via Rochester (DM&E)110 mph2.8
150 mph4.2
via Rochester (new alignment)150 mph4.9
via Rochester (elevated)185 mph5.9
Wisconsin State Rail Plan (2002)2020MWRRI River110 mph3.4
w/ Eau Claire (alt. 1)79 mph3.7
110 mph3.7
w/ Eau Claire (alt. 2)79 mph3.4
110 mph3.4
via Eau Claire (alt. 3)
79 mph3.5
110 mph3.7
w/Janesville79 mph3.6
Rochester Rail Link (2003)2020 (30-year)
MSP to Rochester (and La Crosse?)
150+ mph1.7
185+ mph1.9
250+ mph (maglev)2.9
MWRRI (2004)2025MWRRI River110 mph$1,860
SNCF Midwest (2009)2023+via Eau Claire220 mph
SEMNRail/ Tri-State III (2009)2020MWRRI River110 mph4.3
via Rochester110 mph4.7
220 mph
Minnesota State Rail Plan (2010)20??MWRRI River (base case)110 mph1.7

MWRRI River (best case)2.5

via Rochester (base case)1.9

via Rochester (best case)2.9

MWHSR/ Siemens (2011)
2025MWRRI River110 mph4.4

2030via Rochester150 mph12.5

220 mph15.9

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