The European Court of Auditors issued a report in late June critical of Europe’s development of high-speed rail. The European Court of Auditors is described on its website as: “the EU's independent external auditor, the European Court of Auditors looks after the interests of EU taxpayers. It does not have legal powers, but works to improve the European Commission's management of the EU budget and reports on EU finances.”
This article summarizes some of the most important findings of the European Court of Auditors report for the taxpayers, who have provided virtually every Euro of financial support to plan and construct high-speed rail in Europe. Only the Paris to Lyon route has been profitable including its construction costs.
The European Court of Auditors examined the experience with 10 high-speed rail lines reviewing European Union support. Three particularly relevant conclusions are highlighted in this article, especially for policy-makers in the United States where multiple high-speed rail projects have been proposed, with one already under construction (California).
Costs are Much Higher than Projected
The European Court of Auditors found that all of the seven high-speed rail projects for which there is data experienced cost overruns in planning and construction. The smallest cost overrun was on the Rhine-Rhone line (from Dijon to Mulhouse in France), at 26.1 percent. The second largest cost overrun was for the Berlin to Munich line, at 76.1 percent. The largest cost blowout was for the Stuttgart to Munich line, an astounding 622.1 percent. The line, however, is not yet open and could escalate more in cost before opening. The Court also notes that high-speed rail is becoming more expensive to build.
Projects Take a Long Time to be Completed
High-speed rail has taken very long to build. According to the European Court of Auditors, the construction time for the audited projects averaged 16 years. Including planning time, the average was 26 years from proposal to operation (See Note).
Projects are Over-Built
The European Court of Auditors found that high-speed rail has been built to considerably higher standards than required by their actual operation. They concluded that average speed are so far below the design speed that it “raises questions as to sound financial management” The Court further found that: “The costs involved could in fact have been far lower, with little or no impact on operations.”
Given these criticisms, the European Court of Auditors “found that the EU’s current long-term plan is not supported by credible analysis, is unlikely to be achieved, and lacks a solid EU-wide strategic approach.” Moreover, the added value to EU taxpayers of funding high-speed rail is characterized as low.
The Political Cost: Stuttgart 21
Meanwhile, this kind of public incompetence can have a political price. Stuttgart has become the first German state capital to elect a Green Mayor, after decades of rule by the Christian Democrats. New Mayor Fritz Kuhn has been a leader in the battle against Stuttgart 21, a high-speed rail related renovation of Stuttgart’s main railway station. According to the European Court of Auditors, Stuttgart 21 has had a cost overrun of 83 percent. At one point it was expected that the project would be complete in 2008, but now the opening date is scheduled for 2025.
Opposition by the Greens is based on concerns such as the extent of cost overruns, reduced access to park areas near the station, potential negative impact on suburban rail service and the small travel time benefit that is forecast. (See: here and here). This opposition by the Greens is somewhat surprising, since similar political interests have generally favored high speed rail projects around the world. In the meantime, the Greens have won the Baden-Württemberg state elections, also pushing aside the Christian Democrats. Stuttgart 21 had some influence on the results in both the city and the state.
The European Experience
High-speed rail has far from revolutionized travel in Europe (EU-15), where car travel has risen at more than 1.5 times the rate of rail travel since 1980 (just before the first high-speed rail line was opened in France), according to European Commission. In the last 20 years, rail’s share of travel in European Union nations has risen just 2 percent, despite building many high-speed rail lines. Airlines, on the other hand, have seen their market share of travel rise by 50 percent. Finally, high-speed rail is no bargain for taxpayers. In France, the government has just assumed more than $40 billion in railroad debt.
Lessons for the United States, Canada and Australia
This is a cautionary tale for the United States, Canada and Australia, where the high-speed rail lobby is seeking taxpayer subsidies to build lines. The European experience says that high-speed rail routinely costs more than projected, takes longer than anticipated to build and tends to be over-designed. Further, the minimal European impact on train market shares suggests an even more modest impact in the United States, Canada and Australia, where the skeletal rail systems have far too few riders to be attracted to the newer trains.
California’s Train Wreck: Generally Worse than Europe
In the United States, there is the greater concern of its woefully poorer performance in the delivery of urban rail infrastructure. City Lab found that US rail transit projects tend to cost considerably more than in Europe. Taxpayer subsidized high-speed rail projects in the United States are procured and managed similarly to transit rail projects, suggesting that the inferior project delivery likely could apply in the inter-city market as well.
The one major project, in California, is already well on the way to equaling or even exceeding the failures of Europe. By 2011, the Los Angeles to San Francisco segment had ballooned by at least 200 percent in inflation adjusted costs from its original 1999 estimate. This is nearly three times the cost overrun on the Berlin to Munich line, the second highest reported by the European Court of Auditors, though only one-third of the Stuttgart to Munich cost overrun.
In response the California High-speed Rail Authority replaced its full-high-speed rail plan, with a blended system that would have high-speed rail trains operate in mixed traffic with conventional trains in the San Francisco/San Jose and Los Angeles/Orange County areas. Even so, earlier this year the Authority announced a further increase in costs of nearly 20 percent. There is also considerable concern, because much of the route in the south will require long tunnels that could easily drive costs up even more.
California is also on schedule to be among the slowest to finish its project, with current operation over the entire route not expected until 2033. And, of course, what may open in 2033, is not a full high-speed rail system, as originally envisioned, but a significantly compromised system, with slower conventional trains and high-speed rail trains sharing the busiest sections of the route.
The Need for Rational Prioritization
The European Court of Auditors concluded that the use of European Union taxpayer funding was of “low added value.” The same seems even more true in the United States, where the California project has performed even worse. The experience is likely to be similar in the rest of the United States, as well as in Canada and Australia, and suggests the money could be used instead for more important funding priorities, of which there is no shortage.
Note: There are substantial differences between Europe and China. Yet, the contrast in high-speed rail delivery is profound, both in mileage constructed and time of construction. In just 13 years, since China opted for high-speed rail and rejected Mag-Lev (See: “Rail track beats Maglev in Beijing-Shanghai High-speed Railway.”), the nation has opened 15,500 miles (25,000 kilometers) of high-speed railway. China now operates more than two-thirds of the world’s high-speed rail.
Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.
Photograph: Anti-Stuttgart 21 poster by http://www.kopfbahnhof-21.de (Aufkleber der Stuttgart 21-Gegner) [Public domain], via Wikimedia Commons
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