While several U.S. corridors exhibit characteristics that suggest  potential economic viability, decision makers have faced difficulties in  ascertaining whether any specific proposed line will be viable due to  uncertainties in how accurately project sponsors forecast riders and  estimate costs, and to the lack of agreement and standards regarding how  a project’s public benefits should be valued and assessed. High speed rail also has more potential to attract riders in corridors  experiencing heavy travel on existing modes of transportation (i.e.,  conventional rail, air, and highways—including automobile and bus) and  where there is, or is projected to be, congestion and constraints on the  capacity of existing transportation systems. Traffic safety: Benefits from increased traffic safety include reduction in  traffic accidents, to the extent that the rail service reduces congestion on  highways. In addition,  sustaining public and political support for project development will also  be a challenge. Federal funding that has historically been made available for high speed  rail has been derived from general revenues, rather than a dedicated  funding source. Consequently, high speed rail projects must compete with  other nontransportation demands on federal funds, such as national  defense, education, or health care, as opposed to being compared with  other alternative transportation investments or policies in a corridor. In the countries we visited, the central government generally funds the  majority of up-front costs of their country’s respective high speed rail  projects, and they do so without the expectation that their investment will  be recouped through ticket revenues. Sustaining public support over this length of time can  be difficult and can have significant impacts on a project. The recently enacted PRIIA, in addition to authorizing funding, provides  numerous other opportunities for a greater federal role in high speed rail  development, as follows:  the act requires the Secretary of Transportation to establish and carry out  a rail cooperative research program that will address, among other things,  new high speed wheel on rail systems; the FRA Administrator is tasked with the development of a long-range  national rail plan consistent with approved state rail plans and the rail  needs of the nation; the FRA Administrator is required to support high speed rail development,  including high speed rail planning; the act explicitly provides a framework for the establishment of a High  Speed Rail Corridor Development Program, which permits the Secretary  to make grants to states, groups of states, and others to finance capital  projects in high speed rail corridors; the act requires the Secretary to issue a request for proposals for the  financing, design, construction, operation, and maintenance of high speed  intercity passenger rail systems operating within high speed rail  corridors; and the Secretary is to study high speed rail routes and establish a process for  states or groups of states to redesignate or modify designated high speed  rail corridors. Incorporate performance and accountability for results into funding  decisions. To date, there has been little consideration at a national policy level of  how high speed rail could or should fit into the national transportation  system and what high speed rail development goals should be. Project selection criteria encourage a project sponsor  to evaluate public benefits. Appendix I: Scope and Methodology

To better understand the potential viability of high speed rail service in the  United States, we reviewed (1) the factors affecting the economic viability  of high speed rail projects—that is, whether a project’s total social benefits  offset or justify the total social costs—and difficulties in determining the  economic viability of proposed projects; (2) the challenges that U.S.  project sponsors experience in developing and financing high speed rail  projects; and (3) the federal role in the potential development of high  speed rail systems. Rather, this study  identifies characteristics of corridors and service and other factors that  contribute to a proposed project’s benefits and costs and the challenges in  developing and financing such projects. We requested and reviewed any  available data on ridership forecasts and evaluations, project cost  estimates and evaluations, as well as the costs to construct and maintain  high speed rail service in these countries. This included analyzing selected high speed  rail legislation from 1965 to 2008, including the Passenger Rail Investment  and Improvement Act of 2008.
Why GAO Did This Study

Federal and other decision makers have had a renewed interest in how high speed rail might fit into the national transportation system and address increasing mobility constraints on highways and at airports due to congestion. GAO was asked to review (1) the factors affecting the economic viability--meaning whether total social benefits offset or justify total social costs--of high speed rail projects, including difficulties in determining the economic viability of proposed projects; (2) the challenges in developing and financing high speed rail systems; and (3) the federal role in the potential development of U.S. high speed rail systems. GAO reviewed federal legislation; interviewed federal, state, local, and private sector officials, as well as U.S. project sponsors; and reviewed high speed rail development in France, Japan, and Spain.

What GAO Found

Factors affecting the economic viability of high speed rail lines include the level of expected riders, costs, and public benefits (i.e., benefits to non-riders and the nation as a whole from such things as reduced congestion), which are influenced by a line's corridor and service characteristics. High speed rail tends to attract riders in dense, highly populated corridors, especially where there is congestion on existing transportation modes. Costs largely hinge on the availability of rail right-of-way and on a corridor's terrain. To stay within financial or other constraints, project sponsors typically make trade-offs between cost and service characteristics. While some U.S. corridors have characteristics that suggest economic viability, uncertainty associated with rider and cost estimates and the valuation of public benefits makes it difficult to make such determinations on individual proposals. Research on rider and cost forecasts has shown they are often optimistic, and the extent that U.S. sponsors quantify and value public benefits varies. Once projects are deemed economically viable, project sponsors face the challenging tasks of securing the up-front investment for construction costs and sustaining public and political support and stakeholder consensus. In the three countries GAO visited, the central government generally funded the majority of the up-front costs of high speed rail lines. By contrast, federal funding for high speed rail has been derived from general revenues, not from trust funds or other dedicated funding sources. Consequently, high speed rail projects must compete with other nontransportation demands on federal funds (e.g., national defense or health care) as opposed to being compared with other alternative transportation investments in a corridor. Available federal loan programs can support only a fraction of potential high speed rail project costs. Without substantial public sector commitment, private sector participation is difficult to secure. The challenge of sustaining public support and stakeholder consensus is compounded by long project lead times, by numerous stakeholders, and by the absence of an established institutional framework. The recently enacted Passenger Rail Investment and Improvement Act of 2008 will likely increase the federal role in the development of high speed rail, as will the newly enacted American Recovery and Reinvestment Act of 2009. In the United States, federal involvement with high speed rail to date has been limited. The national rail plan required by the Passenger Rail Investment and Improvement Act of 2008 is an opportunity to identify the vision and goals for U.S. high speed rail and how it fits into the national transportation system, an exercise that has largely remained incomplete. Accountability can be enhanced by tying the specific, measurable goals required by the act to performance and accountability measures. In developing analytical tools to apply to the act's project selection criteria, it will be important to address optimistic rider and cost forecasts and varied public benefits analyses.