The economic case for a high-speed train in Alberta is extremely weak.
Transportation Minister Ric McIver announced earlier this fall that several people “from substantial business interests” had come by his office saying that if the land were available, they would build a high-speed train between Calgary and Edmonton. Reportedly, the minister said that “research into high-speed rail is happening within government.”
While it may sound appealing, hard evidence from around the world shows that the idea of cost-effective high-speed rail in Alberta amounts to fantasy.
High-speed rail must connect highly densely populated areas and transport huge numbers of people each day to be profitable. Alberta could not meet these criteria.
Only two high-speed rail lines in the world are profitable: the Tokyo-Osaka corridor (Tokaido) in Japan and the Paris-Lyon line in France. A quick look at their context helps us inject some reality into the debate here.
The 465-kilometre Paris-Lyon trip had a ridership of 114 million in 2008. The 515-kilometre Tokaido line transported 151.32 million people in 2007, which would amount to moving one-third of Calgary to Edmonton and one-third of Edmonton to Calgary each working day of the year. The Tokaido corridor has 64.2 million people — over 17 times Alberta’s population.
Europe’s extensive experience with high-speed trains further demonstrates that such infrastructure can’t be economically viable here. A 2010 study co-sponsored by the Organization for Economic Co-operation and Development and the International Transport Forum titled “When to Invest in High-Speed Rail Links and Networks?” offers a sobering picture. The author writes that in densely populated Europe, “the break-even volume of passengers to justify a new high-speed line is very variable, ranging from three to 17 million in the first year of operation under possible assumptions examined, but typically even under favourable conditions, at least nine million passengers per annum will be needed.”
In addition to suggesting that a very large ridership is needed to make high-speed rail economically sensible, the OECD/ITF report shows that road congestion relief is negligible, and environmental gains are insignificant. For those concerned about energy use, high-speed trains spend more megajoules per passenger and per kilometre than conventional trains, planes or motor vehicles.
The study also asserts what many know intuitively: High-speed rail cannot compete with today’s cars — not to mention cars expected to be 28 per cent more efficient by 2030.
The contrasting costs between car and high-speed rail for Alberta drive home the point. The distance between the city centres of Calgary and Edmonton (according to Google) is 299 kilometres. For a typical North American car with average fuel efficiency — say a 2010 Honda Accord (eight litres per 100 kilometres) — it would take 48 litres of gasoline for a round trip (ignoring the consumption of travel within both cities).
Assuming a price of 99 cents for a litre of regular gasoline in Alberta, gas would cost $47.52 for the round trip. Let’s add the Canadian Automobile Association’s average cost of $13.05 per 100 kilometres to operate a vehicle in Canada ($78.30), and estimate external costs of traffic congestion and pollution at $14.90. The total of $140.72 would comfortably transport up to four people, making the round-trip cost $35.18 per person.
A Van Horne Institute estimate for a high-speed train between Calgary and Edmonton forecasted one cost of $3.413 billion. (We use Van Horne’s unadulterated 2003 numbers. The tendency of high-speed rail projects to run over budget by 50 to 100 per cent found in Europe and Japan is not calculated). Their cost was projected to be amortized at a 7.5 per cent rate, which would yield $255.98 million in the first year, which when divided by the report’s (highly inflated) projected ridership of 1.7 million one-way trips per year, would give us an average cost of $150.58 per individual ride (we ignore the cost of getting to and from the station).
Calgary MLAs can undoubtedly afford $301.16 for a round trip to the legislature. But for a family of four visiting relatives at Christmas, the $1,204.64 (2003 dollars) high-speed rail cost, 8.5 times more, is simply not effective.
The contrast should give us pause for reflection. The economic conditions for private enterprise to make profits from high-speed rail are absent and Albertans would have to rescue it: they would end up paying for it in spades for a generation, from Milk River to Peace River, whether they ride it or not.
Albertans cannot afford a high-speed train, no matter who builds it.