» A new route from London to Birmingham to be opened by 2026, with further extensions planned into 2030s. Project continues to face healthy skepticism.

Whatever the recession’s effects on government budgets, infrastructure development in Europe continues to advance at a steady pace. The United Kingdom government affirmed last week that it would move forward with the construction of a £18.8 billion ($29 billion) high-speed link between London and Birmingham, due for opening in 2026. This in spite of draconian cuts across all sorts of public services, both in Britain and across the continent.

The U.K.’s high-speed effort — it will effectively produce the nation’s first domestic truly high-speed line — follows almost two decades of travel to and from Paris and Brussels via Eurostar trains that operate under the English Chanel. Though those services have only recently met opening-year ridership expectations, Eurostar holds the large majority of the air-rail market share to these continental capitals, especially since following improvements completed in 2007 London finds itself within about two hours of its mainland peers. The popularity of that service surely had something to do with the government’s decision to move forward on a second line.

HS2 will bring measurable benefits: London to Birmingham in just 45 minutes, compared to 1h20 today, and eventually an hour off of trips to Manchester or Leeds, once extensions north to those cities are opened in 2032 at a cumulative cost of £36 billion. Direct trips between northern cities and Heathrow Airport and even the continent via the Channel Tunnel Rail Link will be put into place. London’s aging Euston terminal will be significantly spruced up. The biggest improvement, perhaps, will be the practical doubling of capacity between the capital and the Midlands by providing a release valve for the West Coast Main Line, which recently went through its own upgrading project but which is predicted to reach capacity with a dozen years. (It already handles more than 40% of the country’s freight and 75 million annual passenger journeys.)

Yet the enormous cost of the link up to Birmingham has been put in question repeatedly not only by those who worry about increasing public debt but also those who question the need for the new rail link — especially along the chosen alignment.

The questions vary, depending on the critique: Is it worth spending this much money, primarily to reduce travel times by half an hour on trips between London and northern cities? Is the West Coast Main Line actually at capacity, or can it easily be expanded? Will UK travel patterns change to a significant enough extent to justify more transportation connections?

Much of the criticism of the project has focused on the line’s segment through the Cotswolds northwest of London, a pristine section of Britain that also happens to hold the residences of some of the nation’s most wealthy. But project planners seem to be unable to find an alternative to that alignment; it has remained the same even after the political transition between Labour and the Conservatives after the 2010 elections. That opposition, however, comes across as nimbyism, especially since its prime backers call from the affected area.

But the complaint that there is not enough of an economic rationale for the project is more compelling. The government’s own study of the project suggests that the first section would have a shaky benefits-cost ratio of just 1.6. This means that each pound of investment in the project would lead to £1.6 in economic benefits (in today’s discounted currency). Public works projects should be considered in comparison with one another to prioritize investments, and this rating is low.* The government’s own study of the 51M alternative, produced by project opponents as a suggestion to expand capacity on the West Coast Main Line, suggested a benefits-cost ratio of five or six for that less costly scheme.

Up in the air is the issue of whether the system will ever be extended north of Birmingham, to Manchester and Leeds as suggested by current planning, and then further north to Scotland. Of course, the financing to make those expansions possible is lacking, despite the fact that they would improve the benefits-cost ratio of the program to between 1.8 and 2.5, a far better result.

Meanwhile, the delayed completion of the line (it will not enter the construction stage until 2018) forces us to ask whether governmental action today is “final.” The justification of the wait has been that the government wants to first complete the equally huge Crossrail urban rail project for London. But who knows what priorities the government of 2018 will have. Will the high-speed rail project by then have lost political support?

A low cost-benefit ratio, however, does not necessarily mean the project shouldn’t be built.** The 51M scheme would be fine, but according to the government, it would fail to provide the capacity expansions to the rail network the country necessitates. It would force increasing freight shipments onto congested roadways. As the U.K. plans for its future, it has a choice: Allow its existing infrastructure to become paralyzed by disinvestment and a lack of capacity, or invest to expand it. The latter choice will allow for expanded travel and trade, the former will not.

These issues plague the development of many similar infrastructure investment projects. The California High-Speed Rail project, which continues to attract significant criticism from across the country and which lacks the national commitment devoted to Britain’s program, nonetheless represents a fundamental choice about the future of that state. Will it invest in its mobility systems to guarantee that its future inhabitants have access to travel options? Or will it overwhelm its existing infrastructure with the pains of growth? It’s an expensive choice.

* The government’s insistence that the project will create a large number of jobs (and therefore that it is good) improves the benefits-cost ratio only to the extent that external (non-construction) employment growth occurs because of the rail project and wouldn’t otherwise. After all, construction jobs, if that were the priority, could come cheaper: We could pay people to dig holes.

** As long as the ratio is over 1. Otherwise, the project would then produce more costs than benefits…

Image above: Rendering of British High-Speed Rail, from HS2

» Over the long run, California’s fast train project remains within an acceptable range of costs, despite recent increases.

The release of the California High-Speed Rail Authority’s revised business plan on Tuesday underlined concerns about the future viability of the nation’s biggest proposed transportation project: Not only would its completion have to be delayed significantly — to 2033 or later — but projected costs have risen dramatically, to $98 billion in year-of-expenditure dollars. In a political environment where making a large long-term commitment to anything other than the military is almost impossible, the increasing costs required to pay for the program put in doubt its future. This fast train project designed to connect Los Angeles and San Francisco in 2h40 is not dead, but its completion is less likely now than it was last week.

The steadily rising nature of the public expenditures that would be required to build the project as now designed have been roundly criticized in some quarters, and it is true that the project’s increasing reliance on very heavy and expensive infrastructures like viaducts and tunnels may be unnecessary by international standards. But the project’s per-mile costs — even with the cost increase — are not hugely different from those in other developed countries for rail systems offering speeds of up to 220 mph.

Yet the broader issue is how the project’s price compares to that of existing public sector transportation investments and the economy as a whole, and as the chart above demonstrates, its ostensibly enormous price is, well, relatively small.

Between now and 2033, the rail project would cost between $65 and $75 billion (in 2010 dollars). Over the same period, Caltrans, California’s Department of Transportation, can be expected to spend at least $286 billion (also in 2010 dollars), mostly on roads projects, assuming that its current annual budget of about $13 billion (including federal and state outlays) stays intact. In truth, considering that there is considerable support for increasing infrastructure spending in general, that figure is likely to go up considerably.

Compare those figures to the state’s GDP, which is estimated at about $1.9 trillion a year. Over the course of twenty-two years, the state will produce $42 trillion in output (again, in 2010 dollars) — assuming no growth in the economy, despite the fact that California’s population is expected to grow by seven to seventeen million people by 2040.

This very conservative* estimate, then, suggests that a high-cost rail project would not only represent only 0.18% of a heavily depressed state economy over 22 years, but also that it would only account for 21% of the broader state transportation budget, which would remain mostly focused on highway construction and maintenance, as in the status quo. On average, the U.S. invested between 2.5 and 3% of its GDP on publicly sponsored infrastructure between the 1950s and 1990s. The full cost of the California project thus comes to appear far less dramatic.

The project becomes even less problematic considering it is, like almost every high-speed rail project, expected to be operationally profitable, and that its benefits to the society will be larger than its costs. The analysis done by the authority, based on decreased travel times, lower use of fuel, reduction in pollution, increases in productivity and reliability, and a decline in traffic accidents, suggests a decent benefits-cost ratio of 1.5 to 1.8. This does not include other benefits, such as the ability to avoid building hundreds of lane-miles of new highways and expanded airports to accommodate the mobility needs of millions of new California residents.

Nor is such a significant investment in one project out of the international norm. The Grand Paris Express, designed to connect the suburbs of the French capital with a circumferential rail network, will cost about $40 billion to build (including ancillary improvements in the existing system). This alone will represent about 0.4% of the Paris region’s GDP between now and 2025. Both the Paris and California projects will contribute massively to the economic growth of the regions in which they are being built.

The question, then, is two-fold: First, what level of investment should the country make in its transportation system? Second, are other transportation projects more valuable than the California rail project?

The first issue is political: Is there sufficient support among electoral constituencies in California to allow for the continued sponsorship of what will be a drawn-out process with plenty of controversy? California Governor Jerry Brown appears to remain on board, as does, surprisingly, at least one member of the state GOP delegation. The rail authority’s attempt to stage the project — beginning with a segment between the Central Valley and either the Los Angeles Basin or Bay Area, and then moving for a full-length line — is one way to make the project more palatable in the short term.

More broadly, the state must make a decision about how it wants to invest in its transportation future. As already noted, the state department of transportation is likely to invest about $300 billion in mostly highway infrastructure over the next two decades. With so much spending directed towards the roads network, it cannot be easy to dismiss a large spending commitment to rail. But the difference between the two is obvious: Because the rail line is a single project (despite its statewide implications), it is viewed in terms of its huge costs and long-term lifecycle; the roads improvements likely to occur during the same period are four times as expensive — but broken into much smaller, shorter-term projects, so they are far less politically vulnerable.

And the system will surely need further support from the federal government, which the authority hopes to convince (over the next few decades) to chip in $20 billion or more in grants. Because of the insecure fiscal situation, private funding for the project will have to wait. Nevertheless, a future Congress that considers high-speed rail an acceptable mode of transport will likely fund projects nationwide; remember that earlier in 2011, President Obama proposed entirely seriously investing $53 billion in fast trains. Though that effort was not successful, the idea is clearly on the minds of policymakers.

None of this suggests that it would be a bad idea to reduce the costs of the project. The cost of the line cannot continue to increase infinitely (though the authority’s math in this business plan is based on the considerable preliminary engineering completed since the last plan in 2009, so that doesn’t seem likely). The whole line cannot be put into tunnels or onto viaducts in order to avoid community opposition, or it will become impossible to fund.

At a certain point, the question is therefore whether there are other programs that would provide better societal benefit than the high-speed rail system, and this is a valid conversation worth exploring. From my perspective, moving the money into roads infrastructure would be simpleminded considering the need to expand mobility options and decrease levels of pollution. It could also be possible to use the funds for local transit expansion, which has plenty of unmet capital needs, especially in California’s largest cities. But who in the state is proposing a comprehensive effort to upgrade rail and bus networks? And how would that spending address the needs of intercity travel?

* And admittedly back-of-the-envelope, but the point is to highlight proportions here, not specific values.

» Despite an excellent proposal and significant state support, the project cannot hope to attract private investors without a larger commitment of aid from Washington. Meanwhile, Europe continues to invest.

The long hoped-for private financing necessary to construct the California High-Speed Rail project will not come as easily as originally planned.

That, at least, is the conclusion of the authority empowered to build the project, the nation’s single-largest infrastructure program. According to the Los Angeles Times, in a letter to legislators this week the agency warned that the private money that it had counted on to cover a third of the project’s more than $45 billion costs would likely not be available until after parts of the line were up and running. The problem is that investors are concerned about the fact that of the expected major contribution from the federal government, only $3 billion has been authorized so far — and opposition in Congress to President Obama’s high-speed rail program means more money will be difficult to get, at least until after the 2012 elections.

The letter was essentially a preview of the authority’s new business plan, which is due to be submitted November 1. The plan must be approved by the state legislators in order for state funding to be spent on the 220 mph line, which is designed to connect Los Angeles and San Francisco, with future links to San Diego and Sacramento.

The news is embarrassing for the authority, which has been arguing for years that it could attract billions in private funds before the project was ready to be built, but it is not altogether surprising given the situation in which it has been placed. As I argued in mid-2009, California may well “never receive a guarantee that the feds will fully fund their prescribed share of the entire corridor’s construction costs. This is a huge problem, because a public agency shouldn’t be expending massive amounts of money on sections of a train system it doesn’t know it can finish completely. The private partners California hopes to interest in its program will not be excited about helping out on a train line they aren’t sure will ever open.”

And indeed, this has been a legitimate concern about the Obama Administration’s high-speed rail program since it was first formulated. Though it is designed to sponsor major projects like California’s, its small appropriation ability means that the commitments it should be making — California wanted upwards of $10 billion from Washington, equal to the full amount thus far appropriated by Congress to the national program — cannot be distributed. The fact that the House and Senate have yet to agree on a long-term transportation bill, and the fact that Republicans have shown no interest so far in funding more intercity rail programs using the public purse, suggests that the situation is unlikely to get better for now.

This is likely to put a dent in plans to open the new rail line by 2020.

The California authority has developed a series of potential solutions to the problem, which must be solved if the agency wants to use the federal grants it has received thus far, since they must be spent by 2017. One option is to use federal loan guarantees and tax credits to provide an incentive for private investors to put their funds into the project or to leverage the $9 billion in state funds (authorized by the public in a 2008 vote) through the bond market, which could allow a tripling of available money. This would all have to be paid off eventually through public sector tax funds or user fees. While the California network is to be operationally profitable like virtually every high-speed rail system, it is unclear whether receipts will be large enough to cover capital costs.

The other possibility is to shorten the planned route, replacing what was originally supposed to be a full new line from San Francisco to Los Angeles with a feeder line that would speed up existing Amtrak trains. Because the federal government has committed to a Central Valley segment between Merced and Bakersfield as the first section fo the route to be constructed, it seems likely that the authority would have to concentrate its resources on this project.

In some ways, this could be a reasonable approach. Trains between Oakland and Bakersfield currently take six hours to complete their journey, but the high-speed line would allow 52-minute trips between Merced and Bakersfield, compared to three hours today. Thus constructing just this segment would reduce Oakland-Bakersfield trips to less than four hours — a massive reduction in journey times — if the appropriate rolling stock were available.

Of course, this would do little to address the greater concern, which was supposed to be linking San Francisco and Los Angeles in 2h40. Currently, there are no direct trains into San Francisco, and the coastal route along which Amtrak trains run from Oakland to L.A. requires 11 to 12 hours of journey times. There is no train link between L.A. and Bakersfield. Because of the federal government’s previous decision to concentrate its resources in the Central Valley, resolving this issue will have to wait for another time if more funding is not found in the short term. But one wonders whether a link between Oakland and Bakersfield will be enough in itself to generate profitable ridership that convinces private investors to commit to the project, as the authority seems to be implying.

This news comes just as the European Union announced its most recent Ten-T program, which is investing €31.7 billion in ten E.U.-scale corridors, most of which are designated for high-speed rail. Member countries have committed to hundreds of billions of euros more to build the projects, and indeed, there are active plans for new lines in most European countries. This is a prime example of governments thinking seriously about how to invest their limited resources in transportation projects that will pay off in the long-term.

Some might argue that the United States and Europe are simply different, that private investors here recognize that Americans will not ride trains and thus will not commit to funding irrational projects. But the ability of European countries to attract private partners to cover up to half of the costs of their new rail lines has a lot more to do with the fact that there has been a solid commitment from governments there to invest in those programs, whereas American policy on the issue has been erratic at best.

The problem is that California has been shunted into an impossible position: forced to make due with very limited federal funds despite a large commitment from state voters, the authority cannot attract private dollars. This is not, I would argue strongly, the fault of the authority or the Department of Transportation, which has funded it so far; blame rests entirely on a Congress that has been incapable of having a serious discussion (and making a final decision) about the merits of major investments in the nation’s transportation infrastructure. Instead, it continues to hand out small amounts, enough to keep projects like California’s alive but not enough to actually implement them.

But California is still in a bind. It must either must cancel work — a dead-end proposition that will inevitably require unearthing the proposal in a decade — or build a much-shortened segment with far fewer benefits to the state. While it would be nice to get from Oakland to Bakersfield more quickly, the advantages of such a project pale in comparison to those of a full San Francisco-to-Los Angeles line.

None of this news should be cause for celebration for opponents of spending on government infrastructure. The millions of people who are expected to ride the high-speed rail system every year will have to get between their destinations by some mode, and California’s air and roads infrastructure is at capacity. No high-speed system means spending just as much — or more — public dollars on upgrades to the existing system. Meanwhile, even if the financial costs of upgrades to highways and airports were similar to those of building the new rail network, the society’s economic costs of doing so are completely different: The high-speed rail system would offer an ecologically friendly alternative that reinforces the city centers of the state instead of furthering sprawl.

Without a real sign of commitment from the federal government, however, projects like California’s simply will not be able to be constructed in the United States. This speaks volumes of the ability of the American public sector to invest in projects that are beneficial to the society as a whole from a long-term perspective.

Image above: California High-Speed Rail, from California High-Speed Rail Authority

» Congress isn’t able to do much in terms of passing new legislation — but the Department of Transportation hasn’t hesitated to move forward to fund intercity rail projects.

Americans are frustrated with the Congress: Over 80% of the population disapproves of the job the national legislature is doing. And no wonder. With the unemployment situation out of control and the economy still on the skids, this is the time for government action.

All we seem to be getting, however, are repeated demands from Republicans to reduce spending drastically — and meek replies from Democrats worried about upsetting the electorate. President Obama’s Jobs Bill, introduced twenty days ago, would provide a real, albeit too small, stimulus to the economy, specifically through the construction and refurbishment of infrastructure.* But the legislation has yet to be introduced in either house of Congress. Meanwhile, getting any transportation spending approved other than short-term extensions of the previous multi-year bill (which expired 729 days ago) has been impossible thanks to disagreement between the parties and a general reluctance to identify funding sources.

When Republicans took control of the House of Representatives early this year, they promised to fight to eliminate previously approved grants for states across the nation to invest in intercity rail projects. Facing a Democratic Senate, that would not be an easy proposition, but the intense effort to reduce government spending over the past year could have meant the loss of funds already promised to states — but for projects not quite ready for prime time.

In the meantime, the Department of Transportation has been pushing grants out of the federal government’s hands as quickly as possible so that they can not be rescinded.

In September alone, the Federal Railroad Administration has approved hundreds of millions of dollars for intercity rail upgrades nationwide: $149 million for New York State, $116 million for New England, $49 million for Texas, $48 million for North Carolina and Virginia, $35 million for the Northeast Corridor, $31 million for Washington State, and $13 million for Oregon, among others. Earlier this summer, hundreds of millions of dollars were appropriated to California and the Northeast. Unless states turn back the money, unlikely considering that the projects have gotten so far and their pro-rail sponsors, these funds cannot be taken back by Congress.

It’s worth questioning how ready most of these states are to use these funds now that they have them, or how quickly they’ll be able to get construction started. The first high-speed rail grants were announced in January 2010; other than the project to upgrade tracks between Chicago and St. Louis, has any major construction begun?

The DOT, perhaps, wouldn’t be rushing these grants out to the states if it were completely confident that the high-speed and intercity rail funding program were alive and well. Under an Obama Administration and a fully Democratic Congress, that would be likely.

But the Senate came very close a week and a half ago to approving a fiscal year 2012 budget that had no money at all for high-speed rail — and Mr. Obama seemed ready to go along, in the spirit of budget-cutting bipartisanship. The compromise that was eventually reached last week saved $100 million for the mode (a pittance compared to years passed), though even that could face considerable obstacles in the House.

Though Republicans now seem willing to spend a bit more money on transportation than they did a few months back because of an outcry that set in once it became clear that initial plans would reduce funding (and therefore transportation-related jobs) by 30%, their investment strategies would do little to increase the annual federal appropriations now spent on mobility. We are at a standstill, unable to make a big move.

What has been made manifest over the past few months is that President Obama’s efforts to alter American transport policy have been far from universally accepted, that their long-term effect on U.S. mobility is unclear, and that the DOT has been forced to descend into a defensive mode in which it has no choice but to push grants out as quickly as it can for fears that legislators will change their minds mid-stream.

Mr. Obama’s affection for high-speed rail is well-known, and he has included it as an integral element of his transportation plans from the beginning, unlike former President Bill Clinton, who said he cared about intercity rail during the 1992 campaign but then proceeded to forget about it. Yet, possibly because of low approval ratings stemming from other issues, the current Administration has been unable to convince other politicians — especially many Republicans — that such projects are worthy of investment. Mr. Obama’s message, rebooted several times (first as a way to “win the future,” then as part of the Jobs Bill), simply has not come across loud and clear.

These difficulties, along with the GOP-Governor-forced destruction of three marquee projects in Wisconsin, Ohio, and Florida, has once again reinforced the idea that Americans simply cannot handle the idea of spending government funds on intercity rail — despite the quite positive effects it has produced abroad. The fact that the Congress continues to debate transportation investments in terms of mode, with a certain pot of money reserved for roads, another pot for transit, etc., suggests that few in power have taken seriously the concept that transportation decision-making should be mode-neutral and oriented towards providing the best-possible mobility, economic, and environmental benefits. The fact that future rail investments are predicated on getting specific outlays for that mode is a sad reflection of the way we currently invest in our travel corridors and in our cities;  we seem to be considering mostly vehicles, not the passengers in them.

So the DOT moves forward, articulating a strategy to distribute the funds it does have as quickly as possible. This is not a long-term approach and it is not a sustainable one.

* The U.S. Department of Transportation recently announced how Mr. Obama’s Jobs Bill dollars would be distributed: $27 billion for rebuilding roads and bridges; $9 billion for rebuilding transit systems; $5 billion for TIGER-like competitive grants; $4 billion for high-speed rail projects, $3 billion for aviation improvements; and $10 billion for an infrastructure bank.

Image above: Albany-Rensselaer Station, set to receive aid from the Federal Railroad Administration for improvements, from Flickr user mava (cc).

» France’s high-speed rail network is more extensive than ever and attracts huge ridership — but the financial viability of new lines raises concerns.

Thursday, France celebrated the 30th anniversary of the opening of the high-speed link between Paris and Lyon by then-President François Mitterand, an occasion that redefined travel in Europe and encouraged countries around the world in invest in faster train service by offering train service at speeds above 150 mph for the first time. SNCF, the public national rail company, celebrated this evening at Paris’ Gare de Lyon, where services first originated.

The distinct orange and blue TGV trains that have rocketed through the French countryside at speeds of up to 320 km/h (200 mph) since 1981 have been extraordinarily successful in attracting travelers away from airlines and even the highways because of the quick journey times they offer between center-cities. And they’re supremely safe: More than 1.7 billion rides have been taken on TGVs, fatality-free. Because of France’s reliance on nuclear plants, the electric-powered service has provided the country a low-carbon travel alternative; when considering alternative routes people would have taken without high-speed service, new routes — including construction and operations — are carbon positive* in the long-term.

Because of a series of investments in new dedicated passenger lines, Paris is now three hours from the Mediterranean, two hours and twenty minutes from London and the German border, and one hour and twenty minutes from Brussels. 2,300 km of new lines already under construction or planned for opening within the next decade (see map at the end of the article) promise significant improvements that will bring Toulouse and the Spanish border within three hours of Paris.

The high cost of new rail lines, however, puts in question how much further expansion the French can afford.

Combined with relatively affordable fares, lower travel times have increased ridership on TGV trains in France to about 100 million passengers a year (141,000 a day), more than one and a half times the population of the country as a whole. Though SNCF’s one billion total annual riders is dwarfed by ridership on DB German rail (1.9 billion), France’s encouragement of the construction of new high-speed lines and SNCF policies that push all riders to fast trains, rather than segregating train speeds by the means of individual travelers, have allowed the company to control 50% of the European high-speed market, compared to 22% for DB, 11% for Spain’s Renfe (which has a longer high-speed rail network), and 10% for Italy’s FS.

83% of French people have ridden TGV trains, similar to the percentage of Americans who have flown and far higher than the percentage of Americans who have ridden Amtrak, high-speed or not (less than a third of them).

From its TGV services, SNCF has made significant profits, which have reached €900 million annually in recent years, much of which has been used to cross-subsidize losses on slower Intercités trains serving smaller cities and TER operations offering regional rail.

But the demands by President Nicolas Sarkozy — who recently said “The TGV, it’s France” — on the national public rail infrastructure owner RFF to build more high-speed lines has changed the equation. Though new routes are usually partially funded by local, regional, and national governments, TGV offerings have been expected to pay back a portion of construction costs (and the much smaller cost of line maintenance) through fees on track usage. RFF covered 28% of the construction costs of the LGV Rhin-Rhône Branche Est, which will open for service later this year, for instance; those costs will be paid back through track fees eventually passed down to passengers on TGVs.

But debt accumulated to build the lines has reached €29 billion for RFF and €9 billion for SNCF; new lines, at a cost of €16-27 million per kilometer, will increase those sums substantially.

RFF has responded to this increase in debt by significantly increasing track fees, and it plans to do so by 40% between 2008 and 2012 — enough to wipe out SNCF’s margin of profitability on the TGV entirely (though the French government has said it would work to stabilize those charges after 2013). RFF will increase fees on the most popular TGV routes the most.

SNCF has responded by threatening to cancel routes with lower ridership (even though they are profitable if excluding the track fees devoted to construction) and it has said the loss of profitability will make it impossible for it to replace the original 1981 fleet of TGVs before 2020. Fares are increasing at 3.4% annually, twice the rate of inflation, and SNCF plans to charge users more on select routes even as it reduces customer service for others to a low-cost model over the next few years. Competition on international routes running through France, expected to begin later this year, will put another cog in the TGV’s future.

Other solutions, such as public-private partnerships for new routes, may reduce the burden on RFF, but they won’t help much for SNCF or riders because someone will have to pay for construction costs at some point. The new LGV Sud Europe Atlantique, to run from Tours to Bordeaux, will cover 55% of its construction costs through track fees, but the project’s PPP partner’s investment in the project will have to be paid back through higher track fees on trains through the corridor (the private investor will also get to keep all profits from the line). RFF’s 14% share of the costs of this project will have to be covered by riders on other lines paying track fees, since all track fees from this route will go to the investor, not RFF.

The irony of charging more track fees to pay for the construction of new lines is a lower degree of service on existing lines and less train travel, since SNCF must cover capital costs with operations profits and higher fares reduce demand.

Standing in the way is the inherent conflict between SNCF’s interests, which revolve around maximizing passenger revenue, and those of RFF, which are about minimizing debt from infrastructure construction and maintenance. These must be harmonized. SNCF’s President Guillaume Pépy has suggested that the current separation of operations from track ownership is a clunky, inefficient model that does not respond adequately to the needs of the railway. Other solutions, such as Germany’s or Spain’s, in which infrastructure is owned by a division of the national rail company, may be less amenable to future competition in services but may make for a less administratively complex system.

The fundamental question is whether France should continue to build new lines (and increase the debt of agencies like RFF), even if that means putting existing services out of the price range of some riders. The government has chosen to pursue that path, but it may not be a solution that is viable in the long term.

Nonetheless, the TGV remains a model for the rest of the world. SNCF has successfully demonstrated how to extend fast, safe, and environmentally friendly rail services to most of the country at prices that most of the population can afford.

Note: In the map above, which is just of high-speed lines, not all French rail lines, LGV refers to “ligne à grande vitesse,” or high-speed rail line.

* Carbon positive in this case means that the line will produce less carbon than would have status quo alternatives.

Image at top: Two TGV Duplex units linked at Marseille-St. Charles, from Flickr user Dmitri Sumin (cc)

California Governor Jerry Brown, a longtime supporter of the development of high-speed rail, has not given up on his state’s plans for an extensive network stretching initially from San Francisco to Los Angeles, and then on to Sacramento and San Diego. Despite cost estimate increases, opposition to the line among residents of some affected areas, and a total loss of new federal funding thanks to anti-investment Congressional Republicans, Mr. Brown has made evident in recent weeks his support for the line.

Construction on a segment in the Central Valley between Merced, Fresno, and Bakersfield is still planned to get under way next year. Funding for that initial link is mostly lined up, thanks to state commitments and federal grants resulting from the stimulus of early 2009.

But because of more detailed projections, the 178-mile first phase of the project is now expected to cost far more than initially envisioned — $10 to $13.9 billion instead of $7.1 billion — and it will need an injection of funds from another source to be constructed. With a promise to the state’s citizens that another demand for California-wide funds will be avoided, few local dollars to contribute, and an utter inability to rely on Washington for practically anything, that means the system will have to find private investors to join in. Whatever the relative merits of allowing private companies to invest in what is fundamentally public infrastructure, California has no other place to turn for the successful completion of its system.

California is not alone; with a depressed economy and few public sector funds available, there is increasing recognition of the importance of engaging private-sector funds in the creation of infrastructure. Illinois Governor Pat Quinn signed a bill this week authorizing public-private partnerships (PPPs) to be used for the creation of infrastructure in his state.

Critics of the California High-Speed Rail Authority have repeatedly argued that the agency would be unable to locate businesses that might be willing to contribute to the system, but international examples suggest that there is significant private sector interest in infrastructure construction. The Authority will release a request for qualifications soon and select a winning bidder in early 2012. But it has yet to clarify the manner in which it would structure its relationship with private companies in terms of financing, construction, and operations.

For precedents, the state should to look at France, which has recently signed two very large deals with private financing and construction conglomerates for the completion of two new extensions of its already large high-speed rail network. They provide two different models for engaging PPPs.

The first is the Bretagne-Pays de la Loire (BPL) high-speed link, which will connect Western France to the existing northern branch of the Atlantique line with 182 km of new tracks between Le Mans and Rennes for a cost of €3.4 billion. The connection will reduce running times from Rennes to Paris by 37 min, making it possible to travel on 320 km/h TGV trains between the cities in less than 1h30 by the time construction is complete in 2016.

The PPP contract here is being mostly funded with public sector sources; RFF, the public infrastructure owner, will contribute €1.4 billion, with state and local governments paying about a billion Euros more. 30% of the costs will be financed by the private sector group Eiffage. These loans will be paid back over twenty years with pre-determined fees from RFF and the government.

Like the Rhônexpress project in Lyon that connects the city center to the airport, this PPP arrangement essentially keeps the operations risks in the hands of the public sector; if ridership comes in under estimates, it will have to scrounge up funds from elsewhere to pay Eiffage its standard due. If ridership is higher than estimates, RFF will make a profit on its investment.

The other much larger project soon to begin construction in France is the Sud-Europe Atlantique line, which will extend the southern branch of the existing Atlantique line 302 km from Tours to Bordeaux. This €7.8 billion program will by 2017 bring Bordeaux within 2h05 of Paris, about an hour faster than today. Ridership to and from that city and Toulouse, planned to be about four hours away from Paris, is expected to rise substantially.

Because of the expected profitability of the line, RFF signed a concession contract earlier this year with a private consortium called LISEA made up of Vinci construction company (33.3%), the Caisse des Dépôts (25.4%), SOJAS investment company (22%), and AXA bank (19.2%). The 50-year contract, which includes construction, operations, and maintenance, is the largest-ever PPP for a high-speed rail construction project in Europe.

LISEA will contribute €3.8 billion to the project, with the remainder of costs being financed by the public sector, from local, region, national, and European sources. Much of the private funding will come from low-interest, long-term loans that will be repaid through charges on TGVs and other trains using the line, which will eventually be passed on to the ticket-paying passenger. The public sector funds are grants, so about half the line’s construction cost is expected to be paid back through ridership over the course of fifty years.

Unlike the BPL line, which limited risks of operational profitability and line ridership to the public sector, in this case the private investors will be responsible if initial estimates fall short.

If it wasn’t clear, the business case for Sud-Europe Atlantique line, like that for the California High-Speed Rail Authority, assumes operational profitability. Considering that the international record shows that high-speed rail systems have little difficulty achieving self-support, these are not unsound predictions. In both cases, the advantage of acquiring private-sector support for the project is delaying public investment and using future revenues to pay back construction costs. Each approach has its advantages, especially in terms of where risk is directed.

It would be a mistake to conclude from these examples that private-sector involvement will save any significant money over the long-term. Fundamentally, the creation of PPPs to fund projects such as California High-Speed Rail does not mean that the public at large will end up being responsible for a smaller percentage of overall costs. Indeed, the U.S. Department of Transportation’s Office of Inspector General released an under-recognized report last month that expounded on this fact significantly.

By considering a series of PPP highway projects in the U.S. and abroad, the study noted that they “have a higher cost of capital than traditional public financing… [and] involve equity investors who own stakes in the projects, share in the profits, and expect to earn higher rates of return for the risk they undertake,” in addition to having to pay taxes public projects do not have to pay. Even if PPPs have lower design and construction costs, may be able to more effectively increase tolls, decrease percentage of evading users, and take more advantage of concessions*, they are usually not able to offset the higher costs resulting from the formerly noted issues.

Some states like Illinois and Indiana have “made” billions by leasing off highways to private investors for billions for fifty years or more, but the report argues that “the funds paid upfront to the public sector under a PPP are paid in exchange for future revenues, often in the form of tolls.”

In other words, while the taxpayer may appear to be getting a discount now by having a business group pay for infrastructure, users of that same infrastructure will inevitably have to face the costs of future tolls. In the case of high-speed rail, replacing public sector investment during the construction phase with privately financiers using loans means higher ticket prices in the future to pay back a portion of the costs of construction. There is no free lunch.

The question is whether benefits of a transportation investment advantage the entire public or whether they are reserved to the specific people who take direct use of it. Transportation economists are convinced of the value of user fees, which assume that it is inefficient to carry out redistribution through indirect means, and for them, it makes perfect sense to charge users the full cost of not only the operation but also the construction of the infrastructure they are using. (Many economists would also argue that high-speed rail projects have significant positive externalities like pollution reduction and land use prioritization attached to them that demand direct grants from the government to cover some costs.) This user-fee approach is the method being used in the financing systems of the PPPs discussed here.

Others, however, would argue that the benefits of infrastructure like high-speed rail are economy-wide and that they should be paid for not only by users but by all members of the population through taxes. If we take this side of the argument, it becomes less clear that the best value for the society is to divert most costs to users. A grant-based system assumes that benefits of a transportation investment are felt by people throughout a country (such as through economic growth) and therefore just charging the riders for the costs of capital investments would be inappropriate.

Encouraging private investment in the California high-speed system now may make it more feasible to envision its construction in the short-to-medium-term. Delaying using future public sector revenues to pay for a project today is the basis of much long-term investment, so there is nothing particularly out of the norm about this idea. But the use of such investment will realistically mean a future of higher ticket prices resulting from the need to pay off the bonds taken out for the project’s completion.

Nor is the involvement of private-sector groups in a public-sector project risk-free. In fact, the devastating example of the United Kingdom’s High-Speed 1 line, connecting London to the Channel Tunnel, suggests that any decision to incorporate private investors in public infrastructure should be approached with skepticism — even trepidation.

A report from the Public Interest Research Group, also released this summer**, established a number of valuable principles for PPPs that are useful to consider in evaluating whether or not to include private groups in the funding process for a high-speed rail line. These suggestions include aligning “private sector incentives with public sector goals,” only pursuing PPPs “where ample competition exists,” ensuring “clear public accountability,” retaining public control over system decisions, limiting lengths of contracts, and guaranteeing transparency in the contracting process.

In addition to considering the French examples for PPP contract models, these are helpful suggestions that should be taken to heart by the California High-Speed Rail Authority as it develops its plan to bring fast train service to the state.

* Many of these fiscal advantages may (or may not) stem from the ability of private sector groups to avoid paying workers living wages, comply with minority workforce inclusion programs, fulfill expectations expressed by the public in the democratic system, and so on.

** For the sake of full disclosure, I served as a reviewer for the PIRG report.

» With political figures failing to account for the long-term interests of their constituents, the U.S. continues down its confused path.

The opening of the new $32.5 billion Beijing-Shanghai high-speed rail link this week marked a significant milestone in the world effort to improve intercity rail systems. Though the development of fast train networks in China has not been without its failings, the connection of the nation’s two largest metropolitan regions — the tenth and nineteenth-largest in the world — is a human achievement of almost unparalleled proportions, especially since it was completed a year earlier than originally planned and just three years after construction began. It comes as the Chinese government celebrates its 90th anniversary.

With ninety daily trains traveling the 819-mile link at average speeds of up to 165 mph, the corridor will likely soon become the most-used high-speed intercity rail connection in the world. Because of safety concerns, the quickest journey between travel endpoints will take 4h48, more than the four hours originally proposed. But that will still be more than twice as fast as the existing trip by train and about as quick as the air trip when including check-in times and the journey to and from the airport. So from the perspective of intercity mobility, the rail link will be a huge improvement. The fact that trains stop in the major cities of Tianjin, Jinan, Xuzhou, Bengu, and Nanjing (among many others) — and that they free up capacity on the older line for freight use — only improves matters.

China is in a stage of its economic progress that makes great works such as this high-speed system more feasible than similar works in more developed countries like the United States. While the comparison between the Beijing-Shanghai link and the New York-Chicago connection is hard not to make — each would serve resident populations of about sixty million along corridors of roughly 1,000 miles — their respective political contexts differentiate them to such a degree that makes them almost impossible to compare.

Some Americans may dismiss the Chinese achievement, suggesting that the system’s construction by a single-party government with authoritarian tendencies makes it in itself suspect. One of the great things about the American political system is that it attempts to respond to the demands of the citizenry. The defeat of several Democratic governors in last fall’s elections reflected on some degree of disenchantment with the Democratic Party in general, but in three cases — Florida, Ohio, and Wisconsin — the GOP’s open opposition to intercity rail projects there clearly played a role in convincing voters, who evidently agreed with the anti-rail sentiment, to throw out Democrats. In some ways, it is a reflection on a successful democracy that the rail projects in those places were cancelled, whatever their technical merit.

Yet the completion of China’s longest high-speed line should raise questions in the minds of Americans about whether our particular political and economic system is most fit to compete in a rapidly changing global economy.

The United States, celebrating its own 235th anniversary, has in many ways yet to escape the doldrums of the recession. But unlike China, whose government moved forward quickly to invest in its economy in response to investor insecurity, the U.S. has been characterized by a pile-up of political figures grounding their schizophrenic decision-making in paranoia over the role of government and a general distaste for definitive action on anything.

This week’s endorsement of the Central Florida SunRail commuter train project by Governor Rick Scott (R) was a reflection of American democracy at its worse. Having complained of budget deficits and scorned off federal intercity rail funds for a fast train to link Tampa and Orlando that would have likely cost the state no money, Mr. Scott has given his go-ahead to a project whose primary beneficiary will be CSX, the freight rail operator, and whose costs to the state will run up the tab into the hundreds of millions of dollars — with few public benefits. The SunRail service will operate every 30 minutes at peak hours and every two hours during the middle of the day, at least at the beginning of operations. Future operations improvements lack funding.

The commuter line’s first phase was approved by the Federal Transit Administration in 2009 for New Starts funding because of years of influential lobbying by similarly debt-obsessed Congressman John Mica (R) despite considerable objections from the U.S. government over its cost effectiveness; it was arguably the most expensive per rider of any project approved that year. The project will serve an estimated 4,300 riders a day at a final cost of $1.2 billion, $432 million of which will be handed directly over to CSX for the purchase of its line.* This amounts to a state subsidy for a private corporation, in direct contrast to the high-speed rail line, which was attracting offers of hundreds of millions of dollars from private groups that saw operating profits on the horizon.

This in a country where even the head of the supposedly progressive party claims, just like the Republican opposition, that the best way to soothe the country’s economic woes is to reduce government spending. And meanwhile, expensive projects with only a minor impact on mobility or accessibility somehow make their way forward. Ideological consistency appears not to be an American strongpoint.

Americans cannot raise their hands in dispair, brushing off the successes of Chinese dictatorship as simply the consequence of a lack of democracy. The U.S. political system’s failures to adapt to contemporary needs are no fault of democratic practice.

Indeed, China was not alone in moving forward with fast train systems last week. The French railroads authority approved the first phase of the Sud Europe Atlantique high-speed line, which will run 190 miles from Tours to Bordeaux and decrease travel times from Paris to Bordeaux from three hours to 2h05 in 2017. The program is the largest public-private partnership ever signed in Europe and will cost a total of $11.3 billion, half of which will be covered by a group of private firms expected to pay off their initial capital expenses with fifty years of operating profits. In case the point was not clear, France is a perfectly democratic place; the project underwent ten years of studies before being approved for funding, including a significant round of public forums on the scheme. The program was approved by a succession of political leaders who were elected to their posts.

Thus it is not democracy in itself that makes it difficult to envision projects similar to the Beijing-Shanghai line being completed in the U.S., but rather our particular brand of democracy. Its short political term lengths, reliance on two center to center-right political parties, overwhelming involvement of lobbying groups in the legislative process, strong state governance, and weak local and state revenue production capabilities too often result in indecision, half-hearted solutions, and reckless governing logic that focuses on short-term wins more than long-term considerations. In many ways, it’s the opposite of the Chinese governance system, where most decisions are factored into a multi-decade conception for the country’s future by state master planners who seem to know what they’re doing. Do we?

What is the appropriate response to this problem? We can speculate away, but what is obvious is that American political support for specific investments in projects such as commuter trains or high-speed rail lines is haphazard at best and dangerously wasteful at worst. This is no way to run a country.

* The funds will allow SunRail to use the corridor during the day, but CSX will still be able to run freight trains on the corridor at night, potentially making maintenance of the line more difficult. This includes a completely out of proportion $200 million insurance policy that the state is paying to CSX to use the tracks. In addition, the funds provide tens millions of dollars to CSX to upgrade an adjacent line.

Image above: Shanghai Hongqiao station, from Flickr user triplefivechina (cc)

» The American freight rail system is often cited as a world model that must be protected from the intrusion of passenger rail networks. But comparisons with passenger-heavy Europe are not as meaningful as have been suggested.

Among those who argue against the public funding of improved intercity passenger rail in the United States, the notion that such improvements would reduce the viability of the freight rail system is frequently cited. The argument goes like this: Passenger and freight rail are in competition for the same infrastructure, so encouraging people to ride the trains would make it more difficult to transport their goods. The end result could be a minor improvement in passenger mode share towards the railways and a significant mode shift of freight away from the railways, to the highways.

The American freight rail network, it is argued, is one of the best in the world, able to move more goods over a longer distance than trucking can, partially because in most of the country, rail passenger services are basically nonexistent. The decreasing use of intercity passenger rail in the second half of the 20th Century appeared to correspond with an increase in freight by train.

Similarly, the comparison with Europe, where passenger rail has a far higher mode share, seems particularly informing: There, rail accounts for less than ten percent of freight ton-miles, compared to 38 percent in the U.S., according to a 2005 Harvard study by Jose Manuel Vassallo and Mark Fagan. Since 1995, the rail share for freight in Europe has declined from 20 to 17% while it has increased from 33 to 38% in the U.S. The European emphasis on passenger rail suggests a negative influence on freight rail, which implies that if the U.S. wants to maintain its freight system, further investments in passenger networks could be counterproductive.

Yet a closer read of the available data suggests that this story is specious. Though trucking accounts for a larger percentage of freight shipments in Europe, the U.S. actually moves a larger amount of goods (by ton-mile) by road than its European peers (1.7 million ton-miles versus 1.3 million), despite having a smaller population (310 million vs 380 million). How can this be? In order to consume what we consume, Americans rely on goods that are moved longer distances. And U.S. inhabitants are also larger consumers of material goods that require shipping; indeed, the country’s 6.5 million annual ton-miles of freight dwarf the 3.1 million in Europe.

Most significant perhaps is the American reliance on coal as an energy source; it accounts for almost half of overall power production in this country, compared to about 16% in Europe overall (and even less in some countries like France and Spain). Related is the fact that Europeans simply consume less energy — less than half as much on a per-capita basis and almost as little even in the wealthiest countries like Germany. For historical and logistical reasons, coal can be moved more efficiently by train, which explains a large share of the difference between American and European freight transport patterns. The coal moved by American railroads alone — about 1.5 million ton-miles, representing 23% of American goods movement — is equivalent to about half of all European freight shipments, according to the Harvard study, based on 2000 information.

More recent data suggests that the emphasis of American freight railroads on coal shipments has only become more pronounced, accounting for 47% of tons moved on the railways in 2007. Wyoming, of all states, is the leading state for outbound shipments of freight… because of the coal that originates there.

So the U.S. reliance on an incredibly polluting, inefficient power source has upped the use of trains for freight. But that is no success story in itself, since renewable forms of power production require no forms of material movement to and from production facilities. Less transportation — if not needed — is more efficacy from an economic and environmental perspective.

The Harvard report also indicates that the fact that European rail networks are sometimes not interoperable — Spain and France, for instance, have differing track gauges — structurally reduces the appeal of shipping freight by train, even though trucking is quite expensive (because of relatively high fuel taxes and frequent tolls). The ease of moving goods on the European coast means far more goods there move on the sea than in the U.S.

Thus this data does not demonstrate that Europe’s low freight rail mode share was “caused” by the continent’s excellent passenger services, the argument so frequently cited by campaigners against passenger rail investment. Rather, the evidence suggests that the reasons for Europe’s differences are multifarious in origin, with the effects of access by passenger trains only playing a minor role. In other words, the lack of a really strong freight rail system cannot be easily attributed to the existence of well-performing passenger trains.

On the other hand, the evidence for Europe’s differences do not “prove” anything about the feasibility of an improved passenger rail network in the U.S. nor does it discount the considerable investments the American freight railroads have devoted to improving their infrastructure, much of which occurred with little public aid. Implementing improved passenger rail networks on existing corridors cannot be done easily, nor should it interfere with the ability of existing freight companies to operate (even if they are transporting coal…). And European countries need to do more to guarantee the movement of freight on railways, which are more efficient than their truck-based counterparts.

Nonetheless, when it comes to freight rail, the comparison between the U.S. and Europe is inappropriate.

Image above: Intermodal freight in Indiana, from Flickr user vxla (cc)

» California’s fast train network should be built, but can its backers maneuver around the difficult federal grant system that is supposed to fund it?

Here’s a little-known fact about California’s geography: The Central Valley, believe it or not, is situated between Los Angeles and San Francisco.

All kidding aside, the California High-Speed Rail Authority’s choice of the Fresno-Bakersfield route for the system’s first construction phase has produced a flurry of criticism, most recently from the California Legislative Analyst’s Office (LAO, a sort of CBO for California). The LAO released a report this week that suggests that the project be reevaluated, perhaps by being absorbed into Caltrans (the state department of transportation) or possibly by being refocused on other initial corridors, such as Los Angeles to Anaheim or San Francisco to San Jose, which could act as improved commuter rail corridors if the whole system were never completed.

The report has its inaccuracies and parts of it deserve the skewering Robert Cruickshank provided it. Most significantly, the notion repeated by the report that faced with limited funds it is “more realistic” to focus on shorter corridors within metropolitan areas rather than between them completely misunderstands the value of high-speed rail.

The stretch through the Central Valley — along which trains will travel at 220 mph — is the crucial investment for a fast train system in the state. By allowing trains to accelerate to extremely fast speeds not possible within metropolitan areas, the system can produce true time savings over automobile and air alternatives.* Without the Central Valley link, the network would simply be a series of improved commuter lines.

Unfortunately, incremental improvements, rather than major new investments, are what the financing system that has been developed so far by the U.S. Congress and Department of Transportation is better at producing.

The problem California is now encountering has been a difficulty with the federal intercity rail process since its formulation with the 2009 Stimulus. Ironically the grant-making process — supposedly designed with high-speed rail in mind — has been more effective in funding smaller upgrades to existing Amtrak corridors than it has in financing large construction programs like California High-Speed Rail. This was a foreseeable dilemma.

In August 2009, before states had even submitted their grant requests, I wrote that the allocation system as initially designed would do few favors for the advancement of major projects:

“The problem is that the FRA [Federal Railroad Administration] has no standardized system by which to hand out those funds; as of now, it looks like the Department of Transportation will simply distribute money every few months to the projects it deems most valuable. As a result, California could get a billion here for the Transbay Terminal or a billion there for a line between Bakersfield and Merced, but never receive a guarantee that the feds will fully fund their prescribed share of the entire corridor’s construction costs. This is a huge problem, because a public agency shouldn’t be expending massive amounts of money on sections of a train system it doesn’t know it can finish completely. The private partners California hopes to interest in its program will not be excited about helping out on a train line they aren’t sure will ever open.”

And indeed, my predictions were right on point: The DOT has distributed relatively small grants every few months to its preferred projects (the two I anticipated were in fact funded) but it has never said it would fully commit to the completion of the entire California line. This has produced the second thoughts and hesitation on the project we are now seeing on the part of California politicians afraid that they will never get the federal dollars for which they have been hoping.

What is needed — and what has been needed for more than two years — is a Full-Funding Grant Agreement for intercity rail projects. Like the system used by the Federal Transit Administration for New Starts major capital projects, this agreement would commit all relevant entities to the financing and construction of a specified “Minimum Operating Segment” (MOS) designed specifically to offer mobility improvements without necessitating other segments to be completed to be viable. For public transportation projects, this contract ensures that Washington, the local transit agency, and other funding entities will keep to their word and finish the project by contributing a pre-determined share of total costs. This has been an efficient and effective system,** so bringing it into the intercity rail arena is a no-brainer.

What is currently funded in California — the Central Valley section — would likely not qualify as an MOS because it has not been designed and studied as an independent project; alone, it would probably not attract enough riders to justify its cost. A high-speed project like California’s, which requires entirely new tracks, would preferably be analyzed as a whole (as it has been) and funded as such. The same is true for other proposed true high-speed rail routes, like Amtrak’s $117 billion Northeast Corridor plan or a new route between Dallas and Houston, which this week received a $15 million planning grant from the DOT. In order to be built effectively and efficiently, each would need a signature from the federal government that ensures that a certain percentage of costs would be covered.

Lacking the significant budgetary authority to commit to such a process in any place proposing a high-speed rail line costing more than $5 billion, however, the DOT has had to hand out grants to smaller aspects of the $43 billion California project with the hope that one day the funding will come through for the entire system. This puts California officials in a bind: Are they supposed to be able to to attract private investment with such few assurances from Washington? Are they supposed to proceed with construction, even if they cannot be sure that the whole project will be completed? The federal government’s grants imply that Washington will put up its share of the project’s cost, but they certainly do not guarantee it.

The LAO report effectively suggests that the project be put on hold pending the answers to these questions. If California cannot be sure that it can fund the entire system, the logic goes, perhaps it should not be building the central stretch. But abandoning the work the state has done so far, or just delaying the program in hope of more definite policies in the years ahead, is a recipe for giving up on the project altogether. Today, California has momentum on its project — a supportive governor and billions of dollars in the bank amassed just over the past two years — so in the face of confusion in Washington, it at least has a chance to move forward. If the state relaxed its grip now, would it be able to keep going?

* Frequently overlooked is the fact that some of the world’s most successful high-speed routes, whether between Paris and Lyon or between Barcelona and Madrid, are more accurately high-speed lines in the countryside between the cities. At the ends of the routes, within the metropolitan areas themselves, trains generally run on slower-speed older lines.

** With the exception of a certain project in New Jersey.

Image above: High-Speed Rail in California’s Central Valley, from California High-Speed Rail Authority

» For the first time, the Department of Transportation makes a major effort to use high-speed rail grants to invest in the Northeast Corridor.

After months of complaints that the U.S. DOT was not focused enough on the needs of its densest and most productive metropolitan area, the agency has agreed to appropriate almost $800 million to the Northeast Corridor — enough to begin work on upgrades to the main line between New York and Philadelphia.

Also winning major new grants for rail upgrades are Michigan, Illinois, and New York State. California will receive another $300 million to pursue construction on the Central Valley segment of its planned new San Francisco-to-Los Angeles main line.

This is the third major release of rail funds from the federal government after similar announcements in January, October, and December 2010.

The $2 billion in projects funded today are taking advantage of the decision in February by Florida Governor Rick Scott (R) to abandon his state’s efforts to construct a new rail line between Tampa and Orlando, despite the fact that the line’s construction would have been almost fully paid for by the federal government. Numerous studies projected it to be operationally profitable. The governors of the states that received awards today are unanimously supportive of intercity rail projects in their respective states, so they are unlikely to turn back the funds.

These grants are the last of their kind: The election of a Republican majority to the U.S. House of Representatives has put a block in the Obama Administration’s efforts to continue funding for rail projects. Indeed, the April budget agreement eliminated such grants entirely for Fiscal Year 2011. Unless there is a significant change of heart among conservative members of the national legislature, there is unlikely to be much more money at least until after the 2012 elections.

Nonetheless, the commitment of hundreds of millions of dollars to the Northeast is likely to be well-received politically. After all, at the root of much of the criticism of the Administration’s rail grants has been its focus on places like California and Florida, which have been (inappropriately) construed as the “wrong places” for initial investments. At least so far, few have objected to the notion that the Boston-Washington corridor deserves — and needs — better rail service.

Specified for funding are $450 million in improvements on a 24-mile section of track from New York and Philadelphia (between New Brunswick and Morrisville) that will allow 160 mph service there and $295 million for a bypass around the Harold Interlocking in Queens, now a major impediment to the smooth-running of trains into and out of Manhattan. Three projects worth a total of $50 million in Maryland and Rhode Island will also attempt to increase capacity marginally on the corridor.

What remains far off is Amtrak’s $117 billion vision for a brand-new high-speed rail line connecting the Northeast’s biggest cities. Though the national rail agency asked for funds to begin studying a new trans-Hudson tunnel between New York and New Jersey called the Gateway project, it came away empty-handed this time around as the government has made the right-headed decision that with limited funds only much-needed upgrades to the existing line should be pursued.

The complete renewal of the Northeast Corridor will probably have to wait until something akin to President Obama’s $53 billion intercity rail plan is agreed to by the Congress, unlikely in these deficit-obsessed times.

Fortunately for the rest of the country, the new focus on the Northeast has not prevented the government from awarding grants to other states including California, which now has enough money to complete a 133-mile segment of the first phase of its statewide system. Tracks are now funded for the entire corridor from Bakersfield north of Fresno to the wye where trains will eventually head off either north to Sacramento or northwest to San Francisco. With $10 billion in state funds and $4 billion in federal funds now committed to this program, this project is well on its way to getting off the ground.

Also moving forward are upgrade projects in Illinois, Michigan, and New York State, where Amtrak services will be significantly improved to allow for faster travel times. On top of the previously awarded funds, Michigan will be able to offer 110 mph service on the 135-mile track segment between Kalamazoo and Dearborn by 2013, saving passengers up to 50 minutes between Detroit and Chicago. The funds for Illinois will continue to improve service on the route between Chicago and St. Louis. And New York will be able to relieve the bottleneck that occurs at the Albany-Rensselaer Station with $58 million in grants.

California and the Midwest will receive $68 million and $268.2 million, respectively, for the purchase of new trainsets to be used on existing Amtrak routes. A similar $100 million grant was provided to the Golden State two weeks ago for new train cars and locomotives.

Double tracking of existing lines and minor improvements in capacity will be funded in Connecticut, Massachusetts, and Pennsylvania. Texas has been awarded $15 million to pursue studies on a future true high-speed rail corridor between Dallas and Houston.