Costs Matter: Some Examples

A bunch of Americans who should know better tell me that nobody really cares about construction costs – what matters is getting projects built. This post is dedicated to them; if you already believe that efficiency and social return on investment matter then you may find these examples interesting but you probably are not looking for the main argument.

Exhibit 1: North America

Vancouver

I wrote a post focusing on some North American West Coast examples 5 years ago, but costs have since run over and this matters from the point of view of building more in the future. In the 2000s and 10s, Vancouver had the lowest construction costs in North America. The cost estimate for the Broadway subway in the 2010s was C$250 million per kilometer, which is below world median; subsequently, after I wrote the original post, an overrun by a factor of about two was announced, in line with real increases in costs throughout Canada in the same period.

Metro Vancouver has always had to contend with small, finite amounts of money, especially with obligatory political waste. The Broadway subway serves the two largest non-CBD job centers in the region, the City Hall/Central Broadway area and the UBC, but in regional politics it is viewed as a Vancouver project that must be balanced with a suburban project, namely the lower-performing Surrey light rail. Thus, the amount of money that was ever made available was about in line with the original budget, which is currently only enough to build half the line. Owing to the geography of the West Side, half a line is a lot less than half as good as the full line, so Vancouver’s inability to control costs has led to worse public transportation investment.

Toronto

Like Vancouver, Toronto has gone from having pretty good cost control 20 years ago to having terrible cost control today. Toronto’s situation is in fact worse – its urban rail program today is a contender for the second most expensive per kilometer in the world, next to New York. The question of whether it beats Singapore, Hong Kong, London, Melbourne, Manila, Qatar, and Los Angeles depends on project details, essentially on scoring which of these is geologically and geographically the hardest to build in assuming competent leadership, which is in short supply in all of these cities. I am even tempted to specifically blame the most recent political interference for the rising costs, just as the adoption of design-build in the 2000s as an in-vogue reform must be blamed for the beginning of the cost blowouts.

The result is that Toronto is building less stuff. It’s been planning a U-shaped Downtown Relief Line for decades, since only the Yonge-University-Spadina (“YUS”) line serves downtown proper and is therefore overcrowded. However, it’s not really able to afford the full line, and hence it keeps downgrading it with various iterations, right now to an inverted L for the Ontario Line project.

Los Angeles

Los Angeles’s costs, uniquely in the United States, seemed reasonable 15 years ago, and no longer are. This, as in Canada, can be seen in building less stuff. High-ranking officials at Los Angeles Metro explained to me and Eric that the money for capital expansion is bound by formulas decided by referendum; there is a schedule for how to spend the money as far as 2060, which means that anything that is not in the current plan is not planned to be built in the next 40 years. Shifting priorities is not really possible, not with how Metro has to buy off every regional interest group to ensure the tax increases win referendums by the required 2/3 supermajority. And even then, the taxes imposed are rising to become a noticeable fraction of consumer spending – even if California went to majority vote, its tax capacity would remain very finite.

New York

The history of Second Avenue Subway screams “we would have built more had costs been lower.” People with deeper historic grounding than I do have written at length about the problems of the Independent Subway System (“IND”) built in the 1920s and 30s; in short, construction costs were in today’s terms around $140 million per km, which at the time was a lot (London and Paris were building subways for $30-35 million/km), and this doomed the Second System. But the same impact of high costs, scaled to the modern economy, is seen for the current SAS project.

The history of SAS is that it was planned as a single system from 125th Street to Hanover Square. The politician most responsible for funding it, Sheldon Silver, represented the Lower East Side. But spending capacity was limited, and in particular Silver had to trade that horse for East Side Access serving Long Island, which was Governor George Pataki’s base. The package was such that SAS could only get a few billion dollars, whereas at the time the cost estimate for the entire 13-km line was $17 billion. That’s why SAS was chopped into four phases, starting on the Upper East Side. Silver himself signed off on this in the early 2000s even though his district would only be served in phase four: he and the MTA assumed that there would be further statewide infrastructure packages and the entire line would be complete by 2020.

Exhibit 2: Israel

Israel is discussing extending the Tel Aviv Metro. It sounds weird to speak of extensions when the first line is yet to open, but that line, the Red Line, is under construction and close enough to the end that people are believing it will happen; Israelis’ faith that there would ever be a subway in Tel Aviv was until recently comparable to New Yorkers’ faith until the early 2010s that Second Avenue Subway would ever open. The Red Line is a subway-surface Stadtbahn, as is the under-construction Green Line and the planned Purple Line. But metropolitan Tel Aviv keeps growing and is at this point an economic conurbation of about 3-4 million people, with a contiguous urban core of 1.5 million. It needs more. Hence, people keep discussing additions. The Ministry of Finance, having soured on the Stadtbahn idea, bypassed the Ministry of Transport and introduced a complementary three-line underground driverless metro system.

The cost of the system is estimated at 130-150 billion shekels, which is around $39 billion. This is not a sum Israelis are used to seeing for a government project. It’s about two years’ worth of IDF spending, and Israeli is a militarized society. It’s about 10% of annual GDP, which in American or EU-wide terms would be $2 trillion. The state has many competing budget priorities, and there are so many other valid claims on the state coffers. It is therefore likely that the metro project’s construction will stretch over many years, not out of planning latency but out of real resource limits. People in Israel understand that Gush Dan has severe traffic congestion and needs better transportation – this is not a point of political controversy in a society that has many. But this means the public is willing to spend this amount of money over 15-20 years at the shortest. Were costs to double, in line with the costs in most of th Anglosphere, it would take twice as long; were they to fall in half, in line with Mediterranean Europe, it would take half as long.

Exhibit 3: Spain

As the country with the world’s lowest construction costs for infrastructure, Spain builds a lot of it, everywhere. This includes places where nobody else would think to build a metro tunnel or an airport or a high-speed rail line; Spain has the world’s second longest high-speed rail network, behind China. Many of these lines probably don’t even make sense within a Spanish context – RENFE at best operationally breaks even, and the airports were often white elephants built at the peak of the Spanish bubble before the 2008 financial crisis.

One can see this in urban rail length just as in high-speed rail. Madrid Metro is 293 km long, the third longest in Europe behind London and Moscow. This is the result of aggressive expansion in the 1990s and 2000s; new readers are invited to read Manuel Melis Maynar’s writeup of how when he was Madrid Metro’s CEO he built tunnels so cheaply. Expansion slowed down dramatically after the financial crisis, but is starting up again; the Spanish economy is not good, but when one can build subways for €100 million per kilometer, one can build subways that other cities would not. In addition to regular metros, Madrid also has regional rail tunnels – two of them in operation, going north-south, with a third under construction going east-west and a separate mainline rail tunnel for cross-city high-speed rail.

Exhibit 4: Japan

Japan practices economic austerity. It wants to privatize Tokyo Metro, and to get the best price, it needs to keep debt service low. When the Fukutoshin Line opened in 2008, Tokyo Metro said it would be the system’s last line, to limit depreciation and interest costs. The line amounted to around $280 million/km in today’s money, but Tokyo Metro warned that the next line would have to cost $500 million/km, which was too high. The rule in Japan has recently been that the state will fund a subway if it is profitable enough to pay back construction costs within 30 years.

Now, as a matter of politics, on can and should point out that a 30-year payback, or 3.3% annual interest, is ridiculously high. For one, Japan’s natural interest rate is far lower, and corporations borrow at a fraction of that interest; JR Central is expecting to be paying down Chuo Shinkansen debt until the 2090s, for a project that is slated to open in full in the 2040s. However, if the state changes its rule to something else, say 1% interest, all that will change is the frontier of what it will fund; lines will continue to be built up to a budgetary limit, so that the lower the construction costs, the more stuff can be built.

Conclusion: the frontier of construction

In a functioning state, infrastructure is built as it becomes cost-effective based on economic growth, demographic projections, public need, and advances in technology. There can be political or cultural influences on the decisionmaking process, but they don’t lead to huge swings. What this means is that as time goes by, more infrastructure becomes viable – and infrastructure is generally built shortly after it becomes economically beneficial, so that it looks right on the edge of viability.

This is why megaprojects are so controversial. Taiwan High-Speed Rail and Korea Train Express are both very strong systems nowadays. Total KTX ridership stood at 89 million in 2019 and was rising on the eve of corona, thanks to Korea’s ability to build more and more lines, for example the $69 million/km, 82% underground SRT reverse-branch. THSR, which has financial data on Wikipedia, has 67 million annual riders and is financially profitable, returning about 4% on capital after depreciation, before interest. But when KTX and THSR opened, they both came far below ridership projections, which were made in the 1990s when they had much faster economic convergence before the 1997 crisis. They were viewed as white elephants, and THSR could not pay interest and had to refinance at a lower rate. Taiwan and South Korea could have waited 15 years and only opened HSR now that they have almost fully converged to first-world Western incomes. But why would they? In the 2000s, HSR in both countries was a positive value proposition; why skip on 15 years of good infrastructure just because it was controversially good then and only uncontroversially good now?

In a functioning state, there is always a frontier of technology. The more cost-effective construction is, the further away the frontier is and the more infrastructure can be built. It’s likely that a Japan that can build subways for Korean costs is a Japan that keeps expanding the Tokyo rail network, because Japan is not incompetent, just austerian and somewhat high-cost. The way one gets more stuff built is by ensuring costs look like those of Spain and Korea and not like those of Japan and Israel, let alone those of the United States and Canada.

52 comments

  1. Benjamin Turon

    I have read more and more in the US Media and even chatted with people online about the how the very high costs of American infrastructure — sometimes also mixed in with military projects, like US Navy ship building, comparing ship building with a rolling program of railway electrification. There was a recent opinion piece from Bloomberg on how nominated Sec of DOT Pete Buttigieg needs to address the cost of infrastructure in the United States.

    Buttigieg May Finally Give the U.S. Its Infrastructure Day. As transportation secretary, the former McKinsey consultant’s cost-cutting and networking skills are just what the job needs.
    https://www.bloomberg.com/opinion/articles/2020-12-16/buttigieg-s-mckinsey-skills-may-get-the-u-s-its-infrastructure-day

    • Herbert

      McKinsey does not have the necessary skills to deliver cheaper or better infrastructure projects. That needs domain knowledge those types usually scoff at.

      • michaelrjames

        Herbert, I agree but at the same time hope for the best. Buttigieg is clearly not stupid and his (minor) public actions in South Bend and stated policy during his presidential run suggests he wants to do something real. Not least because assuredly he still has that high office in his lifeplan.

        Can he really go against his training and experience to come to the conclusion that consultancies of the ‘smartest people in the room’ are a big part of the problem? Maybe.

  2. Herbert

    Back in the nineteenth century, rail infrastructure was seen as so desirable, it was often not built “at the edge of the financially viable” (though many private companies did that) but “at (or beyond) the edge of the technologically possible”. When von Ghega started with the Semmering railway project, there wasn’t a locomotive in the world that could do what he proposed. And there wasn’t even dynamite yet. They proved it could be fine only in doing it. Similar things a half century later can be said about the first base tunnel (where they didn’t build another one through the same mountain before, making the “base” qualifier redundant), the Simplon tunnel where it became only clear once it was done that steam locomotives could not be used in it…

  3. Herbert

    In Germany the benefit cost quotient is often what makes or breaks projects. For example, all proposed expansions of Nuremberg U-Bahn (beyond the under construction U3 extension to Gebersdorf) fail to reach one above 1.0 – even projects like an infill station on U2 between airport and Ziegelstein. I don’t know how the “cost” for those quotients is calculated, but “creating more benefit” for the purpose of those calculations is usually out of the question…

    • Eric2

      What ratio do they use if not 1.0? Something like 0.7?

      And I assume there are positive externalities not accounted for, otherwise it would be morally wrong to build any sort of project with a benefit/cost ratio under 1.0?

      • Alon Levy

        Usually the way it works is, all the positive externalities are rolled into the BCR – hence one speaks of a social or economic BCR and not just a financial one. The minimum BCR is around 1.2-1.3, to take into account cost escalation risk. HS2 for example is surplus-extracted down to 1.something, since at normal Continental cost the BCR would be unbelievably high.

        • Herbert

          The standard assumptions of ridership underlying those BCRs are usually way lower than what happens as soon as the line opens

          • Herbert

            There is also, if I understand correctly, the issue of whether the effect of the new line is only considered on the new stretch or on the entire line. The Nuremberg U2 extension southwards to Stein is said to be hampered by this. Apparently applying for more line than you plan to build at first makes building the newer stages easier somehow

    • Alon Levy

      Yes, and this is also true in Britain and Canada. France does not do this – it has retrospective ROIs, including social ROIs and not just financial ones, but that’s only for LGVs. So you see reports saying something like “the LGV Sud-Est had a financial ROI of 15% but the LGV SEA would only have about 3% and future lines even less.”

      • rational plan

        Britain does have ROI rules, but does include potential to create growth and raise future tax growth etc The existing system tended to reward project near London, because high level of growth, high land values etc etc. Consequently no where felt they got the big projects. Recently this has changed and it all about increasing agglomeration benefits (i.e making sure those small left behind towns have a decent rail service to the nearest metropolitan centre and that, that centre has enough capacity to take the extra services. But the virus has put all this up in the air, as no one is really sure what is going to happen to traffic levels in the next 5 years.

      • michaelrjames

        @Alon: ” France does not do this – it has retrospective ROIs, including social ROIs and not just financial ones, ”

        Who’d have thunk it:-) Even though I never knew that, but it doesn’t surprise me. Of course it doesn’t mean everyone else doesn’t do it, just that they allow too many other factors, including absurd political and short-termist things, confound decisions.
        As I have said many times on this blog, the beancounters and econocrats price all the easy stuff in BCAs but never the most important stuff because it is so much more difficult to calculate properly. Makes the measure either useless or subject to whims of vested interests (often the very consultants doing the calculation).
        ………………
        However I don’t understand why the LGV SEA would be so poor. It is now up to 10m pax pa. and that is without the cross-border fast link. But then there’s all the uncosted benefits of the future Spanish connections. The strengthening of international connections to all of France’s neighbours is more than just a train line. Even if Eurostar wasn’t enough to stop Brexit, it would have had an effect (and of course not just social or tourism; just look at those tens of thousands of trucks stranded both sides of the tunnel. It is almost parodic that Flyvjberg concludes (from his ROIs etc) that it should never have been built.

        Alon: “A bunch of Americans who should know better tell me that nobody really cares about construction costs – what matters is getting projects built.”

        I wonder if you include Yonah Freemark who clearly supports CaHSR despite the absurd costs, arguing “California HSR’s projected cost’s upper end was just 0.18% of the projected GDP of California over a 20-year construction period. The implication: the cost of high-speed rail (and public transit in general) is small relative to the ability of the economy to pay. This must be paired with the sobering observation that the benefits of public transit are similarly small, or at most of the same order of magnitude.” By “benefits” I believe it is implied that those are the direct ‘simple’ financial ROIs etc. (Though this was a decade ago now. Not sure of his position today.) It also looks like that French offer to build it as a “cost plus” project would have been a bargain … just like their offer to build Australia’s East Coast HSR almost 40 years ago, but which was cancelled by politicians on the basis of short-termist ROIs!

        • Alon Levy

          I think the ROI approach is better than the BCR just because it leaves to civilian politics the choice of whether a (say) 3% ROI is worth it; the British BCR system imposes an opaque social discount rate. But it’s not quite an econocratic approach because France, too, cares greatly that intercity rail should be profitable (“rentable”), it just has a different way of computing profits from us or the Brits.

          The LGV SEA is not bad, but it is kind of meh. It has 10 million passengers and this is nice, but the LGV Sud-Est had 30 million on the eve of the opening of the LGV Atlantique 30 years ago. Bordeaux is a smaller city than Lyon, and the cities nearby that can be served on branches, like Poitiers and Angoulême, are smaller than Dijon, Grenoble, and other LGV Sud-Est branch cities. The construction cost of the LGV SEA is also a lot higher. The LGV Sud-Est was atypically cheap, SNCF exercising far more internal cost control than it would later, for example balancing cut and fill to be of the same volume so that the cut earth could then be used nearby for fill, since the success of the train was not certain and nobody knew there would be any surplus to extract. Subsequently construction has been more politicized, with farmers demanding and getting more compensation and more alterations; the LGV SEA has also been done as a PPP, at ~50% higher cost than the contemporary non-PPP LGV Est phase 2 adjusting for tunnel proportion, because France too got that PPP bug.

          Eurostar is another story. It so severely underperforms any ridership projection based on city size, and I’ve spent almost the entire lifetime of this blog trying to figure out why. At this point I think it’s a combination of very high fares and an airline-style boarding process that adds half an hour to the door-to-door travel time in less busy times and hours during the summer travel peak.

          I am subtweeting certain Americans with my criticism of people who think costs don’t matter, but Yonah is not among them. I have not heard him say costs do not matter; on the contrary, he’s done very good work collecting costs and ridership figures for French tramways, which are very positive, even if I am worried for the future due to the most recent GPX cost overruns (design-build, sigh).

          • Matthew Hutton

            London also has airports carefully ringing the city and has low density housing stretching pretty close to the city centre.

          • michaelrjames

            @Alon: “The LGV SEA is not bad, but it is kind of meh. It has 10 million passengers and this is nice, but the LGV Sud-Est had 30 million on the eve of the opening of the LGV Atlantique 30 years ago. ”

            Well, there’s simply a lot more people in the south-east compared to the south-west. The #2 and #3 French cities are on the route and #6 Nice is too; Bordeaux MSA is #5 but only a bit ahead (≈100k) of Nice. And the SE gets far more tourism and related activity (conferences, Cannes Film Festival, Monaco, Avignon summer festival etc). Most people travelling by train to Languedoc-Roussillon will travel via the same route. Plus Geneva via Lyon. And now Barcelona.
            However when those SW links are completed there will be increased pax to French Basque region (Pau, Biarritz & Bayonne surfing capital of Europe) and on to Spanish Basque cities of San Sebastian and Bilbao. Not to mention Toulouse which is the #4 city by MSA

          • michaelrjames

            On Eurostar, I agree. I think the biggest factor is the way it is structured. It was a megaproject that blew its budget and so went bust early (and again later) and Thatcher insisted there wasn’t a penny of state subsidy or help in its restructuring. The owner of the infrastructure, Groupe Eurotunnel (though I recall it has had a name change) was lumbered with a debt that forces them to charge Eurostar too much for using the tracks & tunnel so that Eurostar has hardly ever made a profit. It’s first profit was 2012 and it surpassed 10m pax in 2013, and IIRC it is up to about 12m.
            I don’t agree about the boarding process which I always found to be very unBritish in efficiency; from turning up at then Waterloo station to boarding could be as little as ten minutes (even economy; for business class 10m is guaranteed IIRC). But the Brit obsession with passport checks combined with paranoia about refugees who can claim asylum if they make it to Blighty so they want to ensure no one without proper papers boards the train in the first place. This doesn’t affect London-Paris or London-Brussels but it certainly complicates service to/from Amsterdam and Germany where pax are forced to change trains en route (sometimes reboarding the same train but the point is they must go thru C&I controlled by Brits, only available i Brussels, Paris or Lille I think). The Brits refuse to do this on the train itself because Eurostar, not unreasonably, won’t agree to unscheduled stops at Calais to disembark any irregular travellers.
            Brexshit is not going to help. Or … with contrarian thinking, they may try a bit harder to get inbound tourism and business traffic when the Brexshit hits the fan next year, for which they would need to open C&I in Amsterdam and Köln and wherever could work. I forget if HM passes the cost on to Eurostar.

            Re Yonah Freemark. I agree that he is not saying cost doesn’t matter but neither are most of the others. Perhaps it is too fatalistic but it is important to get projects underway, despite the cost because time is a bigger enemy. And there is a lot of blather about costs no matter what they are, like the French cost-plus offer for CaHSR (of course that wasn’t the real reason for declining the offer). The French also made a similar offer to build HSR on Australia’s east coast for about A$4bn in 1984. After initial enthusiasm, from the new Labor Hawke-Keating government, the usual econocrats griped and a report said it had a lousy ROI! It’s a question of vision and of recognising value versus cost.

  4. Herbert

    https://www.nordbayern.de/region/nuernberg/gerangel-um-u-bahnausbau-geht-es-auch-nach-2025-weiter-1.10145700

    https://www.nordbayern.de/region/nuernberg/endstation-2025-nurnberger-u-bahn-ausbau-droht-ein-ende-1.10130049

    Two articles in German on the questionable future of U-Bahn extensions in Nuremberg after 2025. With a CSU Lord Mayor in office until 2026 (and then eligible for re-election) the U-Bahn boosters are in power, but while there seem to be no obvious U-Bahn extensions with a benefit cost quotient above 1.0 eminently sensible tram projects like a connection through the northern old town (along bus line 36) are not even discussed by the CSU…

    • Alon Levy

      It was planning more – the measures committing sales tax money to transportation started in 2008. There was that 30/10 program that never went anywhere.

      • Gok (@Gok)

        Can you elaborate what planning more means? LA is building four rail projects today, which is more than in 2005. What does the sales tax have to with construction costs?

        • michaelrjames

          (Alon is sleeping it off under his Xmas tree …. :-).
          Most transit projects in CA are funded by ballot-approved additions to sales tax (ie. a new tax that is hypothecated to specific projects).

        • バニートルーパー (@archie4oz)

          Pretty much all of those projects were in some form of planning/study back in 2005. Nothing was really being built though until Measure R and Measure M passed. To be fair though, I think LA has been building fairly consistently (at least from what I could observe first-hand over a 15-year’ish stint) when money has been made available. I don’t think the ballot initiative process though is the best way to get things funded, and Alon underplays how difficult it is getting *anything* (even just a privately funded commercial building) built in LA is.

  5. yuuka

    I’m reminded of your commentary regarding Hong Kong (https://pedestrianobservations.com/2020/09/16/hong-kong-construction-costs/).

    As a private company having a vested interest in keeping costs low – local sources even indicate one of the MTR’s architects literally got an award for proposing that Po Lam terminus be only a single track instead of two and saving construction cost – why are recent HK costs so high? It can’t be that MTRC no longer has to scrimp and save because someone else (namely the government) is paying for the SCL, right?

    • michaelrjames

      @Yuuka: “As a private company having a vested interest in keeping costs low ”

      It is not a private company but is a corporatised public entity. It may have listed some shares but >70% is still retained by the HK govt. Plus, I am quite 100% certain MTRC doesn’t do a single thing without it being approved by government (which is bad news long term seeing as how govt is now under the thumb of Beijing and they have zero interest or care about the interests of HK unless it impacts the PRC directly). Plus, the govt still provides 50% of the capital cost of major works like line extensions, stations etc.

      However, I agree with your reasoning. It’s a mystery. My own take is that what began in 1997 (the handover) has accelerated, ie. as speculators and the financial class perceive “their” HK of unfettered profit has a shorter time horizon, they must absolutely maximise their profits now rather than spread it out over longer timeframes. They brutally suppress social housing so as to keep up intense demand pressure on what is built, none of which is “affordable” housing. This was a major factor behind the umbrella movement and its sequelae, which was/is run by the young who can see where it is all heading into their future.

      • yuuka

        As long as the government doesn’t own *all* the shares in a company, said company has a fiduciary duty to its non-government shareholders to make profit.

        Funding wise, I hear different things from different places, but if there’s government cost-sharing, logic would dictate that they would still need to reduce the amount of money they themselves fork out, no?

  6. Mikel

    Small correction: the east-west Cercanías trunk in Madrid is definitely not under construction. I was going to add “nor will be for the foreseeable future”, but just today the ministry announced a tender for a new feasibility study, so it’s not entirely buried. I don’t know about its financial viability (even at low per-km costs, it’s a big project), but from a mobility standpoint it’s incredibly useful and in my opinion should be given very high priority. Then again, non-HS mainline rail here has been neglected for so long that there’s lots of stuff that should have high priority…

    I think you make a good and important point about what could be called the “low cost disease”: low costs due to high technical expertise can produce lots of wasteful spending when combined with very politicized (is that a word?) decisionmaking — not beacuse of overruns on specific projects, but because there’s no incentive for rational priority-setting or big-picture thought. Hence all the stupid airports, Madrid’s exurban highway building spree, and stuff like the egregious missed connection between C-4 and MetroNorte.

    Many of these lines probably don’t even make sense within a Spanish context – RENFE at best operationally breaks even

    Although to be fair, you could also make the opposite argument: many of them make sense because Renfe almost breaks even while being almost comically bad at running trains on them.

    • Alon Levy

      Yeah, RENFE’s operations aren’t good. It might be a rare case like that of Italy, where apparently private competition led to better service just because it forced the state operator to shape up. Sigh.

      But it’s worth pointing out, Madrid keeps building these metro extensions up to a frontier. IIRC the per-rider cost of MetroSur was on the order of €20,000, which isn’t great, but isn’t bad either; Paris is spending more per rider on M17 and M18, especially now with the latest cost overrun.

      • Mikel

        Yeah, even if the Madrid region is impervious to concepts like TOD, fare integration and bus lanes, the low cost allows them to get away with politically-motivated lines that would be questionable elsewhere — see the ML3 fiasco (a glorified tramway that is slower than buses), or the recent talk about extending M11 from Atocha to Valdebebas instead of Chamartín.

        Still, Ile-de-France is ~40% richer than Madrid in PPP terms, so the definition of acceptable cost can vary. And Madrid is the richest Spanish region, so the smaller cities (Valencia, Bilbao, Sevilla, San Sebastian…) are now more careful about priorities, because they just don’t have Madrid’s financial capacity to turn crayon into concrete, even at Spanish costs. For example, after Zaragoza built a succesful tramway line (around €5000 per daily rider), they had to scrap Line 2 indefinitely because they found no way to pay for it.

        • Matthew A da Silva

          I still don’t understand the point behind MetroSur. It’s a loop that isn’t particularly useful for getting TO anywhere, and the Cercanias lines in the region are much faster and more direct.

          • Mikel

            Haha, that strenghtens the point that Alon makes in the post — if you have low costs, you can build things that would be marginal elsewhere, or build them much earlier. Should it have been built? At that cost, yeah. Should they have built other stuff first? Probably.

            If you forgive the certainly circuitous alignment, MetroSur does make sense for two reasons:
            – For people who want to travel to Madrid, it feeds C-3 and C-4 (direct access to Sol and Nuevos Ministerios) and to C-5. The latter has show-up-and-go frequency but it requires a transfer at Atocha, which would be fixed by the Eje Transversal.
            – For those who want to travel between the served cities (the five of them are already close to 1M combined population, and growing), it serves most neighborhoods, as well as all of the hospitals and university campuses scattered around the area.

            The less charitable (but still true) interpretation is that it’s development-oriented transit. That’s why it serves some lower-density areas (car-oriented suburbs along M-50 used to be an important PP constituency), and why some segments run underground in the middle of nowhere.

          • michaelrjames

            @Mikel

            The less charitable (but still true) interpretation is that it’s development-oriented transit. That’s why it serves some lower-density areas (car-oriented suburbs along M-50 used to be an important PP constituency), and why some segments run underground in the middle of nowhere.

            Isn’t that what we call planning? NYC and London used to do it once, in a time and place far, far away …

          • Mikel

            Well… yeah, you could call it that. But in those years planning was done mostly on a “how much can we extract in bribes and land taxes” basis, and generally 100% automobile-centric. If you’re interested, Nación Rotonda have done an excellent job of documenting the atrocities from those years. Here’s an excellent and depressing video they made with some of the best (i.e. worst) land use hits.

          • Eric2

            Looks like small towns (<120,000 people) which decided they couldn't pay the operating subsidy with so few riders and taxpayers? And the systems only got funded in the first places because Spain was splurging so much in the leadup to 2008?

          • Mikel

            In Vélez-Málaga, it seems the ridership was disappointing and the operational losses too large. It seems to me that the choice of alignment was suboptimal, largely avoiding the urban core of Vélez-Málaga. If someone ever shells out the money for the Tren de la Costa from downtown Málaga to Motril, it could make sense to reopen the tram as a feeder line for riders going to Vélez-Málaga and Torre del Mar.
            In Jaén the alignment is fine but the region and the city couldn’t agree on how to pay for the operational deficit. So it has sit unopened for years, although they seem to be inching closer to a deal.
            In Castelló de la Plana, they built the ROW for a tram but then it got downgraded to a trolleybus. It gets a modest 2.3M pax/year.

            All of this fits into a common pattern in much of Spain, which we’ve seen with hospitals and corona as well, of building a lot of infrasructure because it’s cheap, but not allocating the funds to keep it running at maximum capacity.

          • Eric2

            @Mikel when I visited Madrid in ~2012, I was surprised to see that the subways were packed, even outside rush hour. It seemed to be a result of the trains/stations being short plus the headways being bad. My theory was that after the financial crash they could no longer afford to pay for good headways. But maybe the issue was more systemic like you say.

  7. Daniel

    I agree with your thesis but the point about Toronto is wrong. The switch from the Downtown Relief Line to the Ontario Line is not due to costs but due to the particularities of Doug Ford.

  8. Pingback: Penn Station y la gran chapuza americana » Politikon
  9. seangillis78

    Curious about thoughts on the REM network built/ proposed for Montreal and its relation to North American costs. It seems to be an outlier for North America, both in terms of cost/ kilometer and ambition. Almost 100 km of light metro for $17 billion CDN, with a mix of elevated lines and tunneling.Granted some of the track/ tunnel is upgrading commuter rail to light rail, similar to the Sky Train, but still dozens of kilometres of new infrastructure. At $170/ km this seems quite reasonable compared to some of the costs coming out of Toronto.

    • Alon Levy

      This is largely not underground, of course it’s cheaper than a subway. They even gave REM an existing city center tunnel, severing a key mainline rail link.

    • yuuka

      Each REM project needs to be considered separately – line A operates 4-car trains and takes over the old Mont-Royal tunnel, and the only underground tunnelling is at the airport and two infill stations in downtown Montreal along said Mont-Royal tunnel.

      Line B, on the other hand, has a subway (about 5-6 stops IIRC) under Lacordaire, but only uses 2-car trains.

      • seangillis78

        Line A: New elevated light metro: 24 km (14 km on the West Island, 6 km on the South Shore, 4 km south of Downtown). Refit of commuter rail: 25 km (Deux Montagne). New tunnels: 3 km to airport. Mont-Royal Tunnel refit: 4 km. Champlain Bridge: 4 km. (I’m missing some sections I think). $7 billion dollars total for 67 km.

        Line B: About 7 km underground, 26 km elevated. The 40 m platforms / two-car trains seems like a mistake. Hopefully they change that plan and go with more capacity. Still very early in the planning phases. $10 billion total for 33 km.

        As I look at these numbers this doesn’t look great cost-wise, since much of the system is retrofit and/ or elevated and the costs are still well above $100/ km for the network.

  10. Jarek

    Some thoughts about Toronto. Yeah our construction is too expensive and we’re not building as much as we should. But the U-shaped Relief Line is a bad example of that. The west side of the Relief Line was never serious, or should never have been a priority. The relief is needed for the Yonge line and particularly for the transfer at Bloor-Yonge: the Relief line is supposed to take passengers from the east end of Danforth line and some of bus passengers from east of Yonge to downtown.

    Places in Toronto that are already built in a form that would require subway service but don’t have it are essentially: Scarborough Town Centre; Thorncliffe Park; and Flemingdon Park. All are subject of current fairly advanced (and fairly expensive) subway plans. Though I guess it would have been nice to have built them earlier if they cost less.

    Otherwise there is Mississauga City Centre and whatever redevelopment areas come up. Mississauga is currently 10 km from the end of nearest subway line, there is not a lot along the way, and it would be a long subway ride to anywhere – if anything, a partly tunneled spur of the Milton train line would be better – if they can ever get to run trains on it all day. Weston could be another destination, but they’ve just gotten a train station, albeit with expensive tickets because the service is designated as the airport train – easier solved with organization than with concrete. Park Lawn/Marine Parade, arguably – but there’s a plan for a train station there which should happen and might happen in a few decades, maybe. Lower Don Lands are close enough to the core for an LRT connection to suffice (though Hamburg did build U4 through their HafenCity).

    If we had Madrid methodology and prices it would probably be worth it to put subways under a few of the grid roads to provide more reliable and faster service than York Mills/Finch/Don Mills/Dufferin/Jane buses currently do. But vast majority of Toronto doesn’t look like Madrid, even in the Old Toronto borders. It’s not quite that there’s no there there, but what there exists has been built for cars. The Danforth line is now 50 years old and there’s single family houses a 2 minute walk from the stations. Zoning politics won’t be solved with cheap subways.

    Other than the current (hyper-expensive) subway plans, more value for money in Toronto would come from better use of current rail corridors – if GO could be bothered to become S-Bahn or even Regio rather than commuter rail for office-going suburbanites. The busier station locations among the route of the west half of a hypothetical Relief subway line are all near the rail lines (because they’ve been built on former industrial lands): Queen/Dufferin/Abell, top half of Liberty Village, South Parkdale… it’s not glamorous but it would be well less than half the price, no matter what costs.

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