Application of Benefit-Cost Analysis to the Proposed California High-Speed Rail System

Abstract

A high-speed rail system operating on a dedicated right-of-way that results in a significant volume of trips being diverted from the air and highway modes can be expected to generate significant benefits. The major benefits that will accrue to both users and nonusers from the construction and operation of such a system are described. Both intercity and urban travel benefits are included in the analysis. A methodology for how these diverse benefits can be quantified is presented, and, importantly, it is shown how these benefits can be monetized for input into a comprehensive benefit-cost analysis. Of the 11 types of benefits examined, 4 were found to produce the bulk of the benefits of the high-speed rail system. For the present purposes, benefit-cost analysis is a public-sector evaluation tool that compares all the benefits of a project to society with all the costs of a project. The objective is to ascertain whether all the benefits do in fact exceed all the costs. The major benefits include the revenues derived from high-speed rail users, the high-speed rail user benefits (consumer surplus) net of fares paid, the travel time savings to urban commuters, and the value of time savings to intercity air travelers. Actual data have been taken from the proposed California highspeed rail system to illustrate the benefits that can be expected from such a system and the discrete steps that have been undertaken in the benefit-cost analysis.