For  example, market-based policies that change the relative prices of the  modes are likely going to be the most cost-effective. Shifting Traffic to Rail from Other Modes May Generate Benefits, but Many Factors Will Affect Whether Traffic Shifts, and Policies Abroad Have Produced Mixed Results

		Determining the Extent of Benefits That Can Be Achieved through Rail Is Complicated by Numerous Factors

In order to generate benefits—such as a decrease in the harmful effects of  transportation-related pollution—through mode shift, a policy first has to  attract sufficient rail ridership or rail freight demand from other modes  that have higher harmful emissions. In practice, the extent to which rail  can generate sufficient demand to draw traffic from other modes and  generate net benefits will depend on numerous factors. For example, some long-haul trucking and rail shipments  may be substitutable. In both the United States and in other countries we visited—where freight  and passenger traffic generally share the same rail infrastructure— the  potential benefits of a policy designed to shift freight traffic to rail are also  affected by the amount of capacity available or planned on the rail  network to accommodate a shift in traffic, as well as the capacity available  or planned on competing transportation modes. Furthermore, how transport system users respond  to a given policy will also impact the extent to which the policy generates  any benefits. In Selected European Countries, Experiences Suggest That Policies Intended to Produce Mode Shift May Lead to Varying Amounts of Mode Shift and Some Benefits

Based on experience in the United Kingdom and Germany where decision  makers made a concerted effort to move traffic from other modes to rail  through pricing policies, targeted grants, and infrastructure investments,  these policies resulted in varying amounts of mode shift. While some benefits were  attained through implementation of policies designed to shift traffic to rail,  these benefits were not necessarily achieved in the manner originally  anticipated or at the level originally estimated. Other countries have had similar experiences implementing pricing  policies to provide incentives to shift traffic to rail. Grant Applicants’ Assessments of Project Benefits and Costs Are of Varying Quality and Usefulness to Decision Makers

		Grant Applicants’ Assessments of Project Benefits and Costs Were Not Comprehensive in Many Respects

According to DOT officials from both programs, as well as our assessment  of 40 randomly selected rail-related TIGER and HSIPR applications,  information on project benefits and costs submitted by applicants to the  TIGER and HSIPR programs varied in both quality and  comprehensiveness. However, in some cases, certain  categories of impacts may be more difficult to quantify than others and  qualitative information on potential benefits and costs can be useful to  decision makers. Notably, the majority of the applications to  the TIGER and HSIPR programs that we reviewed did not provide  information related to uncertainty in projections, data limitations, and the  assumptions underlying their models. Short Time Frames, a Lack of Clear Standard Values, and Data Limitations Contributed to the Inconsistent Quality and Limited Usefulness of Assessments of Project Benefits and Costs

Applicants, industry experts, and DOT officials we spoke with reported  that numerous challenges related to performing assessments of the  benefits and costs of intercity passenger or freight rail projects can  contribute to variation in the quality of assessments of project benefits and  costs in applications to federal programs such as the TIGER and HSIPR  programs. Encourage effective decision making and enhance the usefulness of  assessments of benefits and costs, for both intercity passenger and freight  rail projects by providing ongoing guidance and training on developing  benefit and cost information for rail projects and by providing more direct  and consistent requirements for assessing benefits and costs across  transportation funding programs. DOT provided technical comments and agreed to  consider the recommendations. Amtrak and EPA provided technical  comments, which we incorporated as appropriate. GAO staff who made major contributions to this  report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

To better understand the potential net benefits of intercity passenger and  freight rail, we examined (1) the extent to which transportation policy  tools that provide incentives to shift passenger and freight traffic to rail  may generate emissions, congestion, and economic development benefits  and (2) how project benefits and costs are assessed for investment in  intercity passenger and freight rail and how the strengths and limitations  of these assessments impact federal decision making. International Case Studies: The United Kingdom and Germany

We conducted case studies of selected policies and programs in the United  Kingdom and Germany to learn more about policies to address concerns  about emissions, congestion and economic development.
Why GAO Did This Study

Concerns about the weak economy, congestion in the transportation system, and the potentially harmful effects of air emissions generated by the transportation sector have raised awareness of the potential benefits and costs of intercity passenger and freight rail relative to other transportation modes such as highways. GAO was asked to review (1) the extent to which transportation policy tools that provide incentives to shift passenger and freight traffic to rail may generate emissions, congestion, and economic development benefits and (2) how project benefits and costs are assessed for investment in intercity passenger and freight rail and how the strengths and limitations of these assessments impact federal decision making. GAO reviewed studies; interviewed federal, state, local, and other stakeholders regarding methods to assess benefit and cost information; assessed information on project benefits and costs included in rail grant applications; and conducted case studies of selected policies and programs in the United Kingdom and Germany to learn more about their policies designed to provide incentives to shift traffic to rail.

What GAO Found

Although implementing policies designed to shift traffic to rail from other modes may generate benefits, and selected European countries' experiences suggest that some benefits can be achieved through these types of policies; many factors will affect whether traffic shifts. The extent to which rail can generate sufficient demand to draw traffic from other modes to achieve the desired level of net benefits will depend on numerous factors. Some passenger or freight traffic may not be substitutable or practical to move by a different mode. For example, certain freight shipments may be time-sensitive and thus cannot go by rail. Another key factor will be the extent to which sufficient capacity exists or is being planned to accommodate shifts in traffic from other modes. How transport markets respond to a given policy--such as one that changes the relative price of road transport--will also affect the level of benefits generated by that policy. Experiences in selected countries suggest that varying amounts of mode shift and some benefits were attained where decision makers implemented policies to move traffic from other modes to rail. For example, a road freight pricing policy in Germany resulted in environmental and efficiency improvements, and freight rail grants in the United Kingdom led to congestion relief at the country's largest port. Pursuing policies to encourage traffic to shift to rail is one potential way to generate benefits, and other policies may be implemented to generate specific benefits at a lower cost. Information on the benefits and costs of intercity passenger and freight rail is assessed to varying degrees by those seeking federal funding for investment in rail projects; however, data limitations and other factors reduce the usefulness of such assessments for federal decision makers. Applicants to two discretionary federal grant programs--the Transportation Investment Generating Economic Recovery program and the High-Speed Intercity Passenger Rail program--provided assessments of potential project benefits and costs that were generally not comprehensive. For instance, applications varied widely in the extent to which they quantified and monetized some categories of benefits. In addition, GAO's assessment of selected applications found that most applicants did not provide key information recommended in federal guidance for such assessments, including information related to uncertainty in projections, data limitations, or the assumptions underlying their models. Applicants, industry experts, and Department of Transportation (DOT) officials GAO spoke with reported that many challenges impacted their ability to produce useful assessments of project benefits and costs, including: short time frames in which to prepare the assessments, limited resources and expertise for performing assessments, poor data quality, lack of access to data, and lack of standard values for monetizing some benefits. As a result, while information on project benefits and costs was considered as one of many factors in the decision-making process, according to DOT officials, the varying quality and focus of assessments resulted in additional work, and the information provided was of limited usefulness to DOT decision makers.

What GAO Recommends

GAO recommends DOT conduct a data needs assessment to improve the effectiveness of modeling and analysis for rail and provide consistent requirements for assessing rail project benefits and costs. DOT, Amtrak and EPA provided technical comments, and DOT agreed to consider the recommendations.