Friday, August 19, 2011

Don't Argue Choo-choos With Reason: PolitiFact Gets High-Speed Rail Facts in Florida Wrong

This is as devastating a critique of a critique as I've ever seen.
If I was to take these guys on I would make sure I knew as much as they did and back it up with a tactical nuclear device.
From Reason's Hit and Run blog:
High-speed rail supporters are still trying to turn back the clock on Gov. Rick Scott’s decision to reject federal funding for the proposed Tampa-to-Orlando rail line. PolitiFact Florida writes:
Though Gov. Rick Scott killed the Tampa-to-Orlando high-speed rail line months ago, he continues to get asked about the decision when he crisscrosses the state.
He says it wasn't quite the deal everyone thought it was.
"The federal government, (they said) I'm going to give you $2.4 billion — that sounds nice, right?" Scott told Tampa's local CBS affiliate WTSP this month.
But, "You've got to put up a billion dollars to finish the project."
To evaluate the “truthfulness” of Gov. Scott’s statement, PolitiFact focuses almost exclusively on Reason Foundation’s January study on the costs of the proposed Florida high-speed rail line, writing:
On Jan. 6, 2011, the Reason Foundation released an analysis about Florida's rail project, which concluded that capital costs to build the line would be higher than anticipated and that ridership would fall short or projections.
Scott relied on the Reason analysis in killing the high-speed rail project a month later.
While the federal government had committed $2.4 billion and the state $280 million, "This report assumes that any cost above $2.7 billion will be borne by Florida taxpayers."
The Reason analysis goes on to cite research by European academics who looked at 258 projects in various countries over 70 years and found that cost overruns occurred in 90 percent of the projects.
"If the Tampa to Orlando high-speed rail line experiences cost escalation typical of international high-speed rail projects, it will cost between $.54 billion and $2.7 billion more than projected," the Reason report states. "Based on averages, most likely the overrun would be about $1.2 billion, all of which would be the responsibility of Florida taxpayers."
The analysis is right to point out that many other rail projects experienced cost overruns. But there are reasons to question its methodology and objectiveness are suspect.
Here are PolitiFact’s criticisms of the Reason study:
PolitiFact says: The author of the study, Wendell Cox, is a known rail skeptic, and Robert Poole, a Reason Foundation director whose name was on the report, served on Scott's transition team for transportation issues.
It is interesting that PolitiFact is basically suggesting that you can't be right about high-speed rail's costs if you are in anyway skeptical of the government's rosy predictions. Does advising the governor or preferring cost-effective transportation investments over boondoggles prevent one from being correct in PolitiFact's world? Apparently.
PolitiFact: Much of the expectation [in the Reason study] of cost overruns is based on a list of 258 projects studied by European academics. But those projects are not just rail projects. The study includes bridges, tunnels and highways. In fact, of the 258 projects, only 58 (or 22 percent) are actually rail projects.
PolitiFact’s “European academics” point refers to research led by Bent Flyvbjerg, professor of major program management at the University of Oxford’s Said Business School. Here is what Flyvbjerg’s report (.pdf) found about rail:
"Rail projects incur the highest difference between actual and estimated costs with an average of no less than 44.7%, followed by fixed links averaging 33.8% and roads with 20.4%.... if we subdivide rail projects into high-speed rail, urban rail and conventional rail, we find that high-speed rail tops the list of cost escalation with an average of 52% , followed by urban rail with 45%  and conventional rail with 30%...We conclude that the question of whether there are significant differences in cost escalation for rail, fixed links and roads, respectively, must be answered in the affirmative. Average cost escalation for rail projects is substantially and signicantly higher than that of roads, with fixed links in a statistically non-significant middle position between rail and road. Cost escalation for rail is more than twice that of roads. For all three project types, the evidence shows that it is sound advice for policy and decision-makers as well as investors, bankers, media and the public to take any estimate of construction costs with a grain of salt, and especially for rail projects and fixed links."
If PolitiFact is just going to ignore the Flyvbjerg study’s findings and suggest that Florida’s fantasy cost estimates are correct, shouldn’t they point us to a high-speed rail project that came in at, or under, budget, recouped its capital costs, and is currently financially supporting itself? They can’t do that because no such high-speed rail project exists.
When Amtrak decided to study how those European trains make money, they instead found out European trains don’t make money. Amtrak’s Inspector General concluded: “European Passenger Train Operations operate at a financial loss and consequently require significant Public Subsidies.”
But again that doesn’t fit the PolitiFact narrative.
PolitiFact says: The $1.2 billion overrun estimate [in the Reason study] is created simply by assuming the Florida rail project will cost 45 percent more than anticipated. How is that assumption made? By calculating the average overrun in 258 transportation projects considered. There is no analysis to suggest Florida will experience an "average" cost overrun compared with the other projects.
Actually, there is quite a bit of evidence that Florida could expect at least average overruns. The Reason Foundation projections were based in part on a detailed 11-point comparison between the Tampa-to-Orlando line's claimed construction costs and a segment of the proposed California rail line on similar flat and level terrain. And Florida appeared to be underestimating its costs significantly. Just last week, the California High-Speed Rail Authority revised its own cost projections for the first segment upwards by between approximately 40 and 100 percent. The AP reports...MORE
On second thought I might want to make that a strategic nuke.