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Economic Impact and Financial Viability of the Proposed Baltimore Washington Maglev

posted in: Greenbelt News, Opinion

Guest post by Owen Kelley

It is clear from emails flying around, Facebook posts, and items in the News Review that many Greenbelters are concerned about the impact on Greenbelt of the magnetically levitated (maglev) train that has been proposed between Baltimore and Washington. To explore the question of whether the maglev would bring economic benefits that would outweigh harm to Greenbelt, this blog post examines some of the financial and economic numbers published by Baltimore Washington Rapid Rail (BWRR), the company seeking to build and operate this maglev.

Background

As of this summer, one of the two possible track alignments for the Baltimore Washington maglev would come out of a tunnel near the community gardens by the GHI office and then, heading north aboveground, devastate the Greenbelt Forest Preserve along Goddard Branch. The other proposed alignment would be aboveground and parallel to the Baltimore Washington Parkway, just east of the parkway.  Maglev trains passing along that second route could generate enough noise to reduce our ability to enjoy the extensive forest between the parkway and Ridge Road. (In planning documents, these two options are called alignments J1 and J.)

This forest is close to many of our homes, it is an important part of many people’s lives, and it helps to bind our community together–think about annual Pumpkin Walk. This forest was part of the plan since Greenbelt was founded as a New Deal experiment in town planning.  Central to this experiment was placing large tracts of green space next to neighborhoods of modest homes to promote quality of life. In other words, this forest is a living remnant of Greenbelt’s New Deal era “belt of green.” It is what’s called a “contributing element” to the Greenbelt National Historical Landmark on the National Registry of Historic Places.

It can be difficult to figure out what the maglev is all about.  It’s not you.  When it comes to the maglev, it actually is hard to ferret out the relevant facts and see how they fit together.

Just the Facts Ma’am

One reason that it is difficult to evaluate th­­e merits of the maglev is because Baltimore Washington Rapid Rail (BWRR) has not published in one place all of the relevant financial figures or the details of how these figures were calculated. A compilation of this information would make it easier to evaluate economic benefit and financial viability.

To partially address the information deficit, this blog post collects some of the financial and economic figures that can be found scattered, here and there, in some of BWRR’s presentations and affiliated websites. Performing some simple arithmetic on these published values, one finds inconsistencies (item #4, below).

Further doubts about economic benefit and financial viability come from comparing BWRR’s figures with information on corporate or government websites (item #2) or in peer-reviewed journals. In one case, BWRR fails to provide an essential high-level data value, but independent sources make it possible to estimate a range for this value (item #1).

It is tempting to rely on whatever cost-benefit analyses will be published within the maglev’s upcoming Environmental Impact Statement (EIS). The cost estimates in EISs, however, are unreliable (item #5), so it is vital that elected officials and the public engage in their own fact-finding and analysis.

1. For most people, the maglev would be slower than driving

BWRR advertises that the maglev would take 15 minutes station-to-station to go from Baltimore to Washington, but BWRR never mentions a vastly more important number, the average travel time door-to-door for real destinations in the maglev’s target market. Using various sources that are independent of BWRR, one finds that despite the speed of the maglev train itself, most people would find it faster to drive rather than ride the maglev.

As we know from our train or planes trips, it takes time to travel from home to either train station or airport and then more time to travel from the final station or airport to our real destination.

The table below suggests that the total duration of a trip via maglev would be about 80 minutes starting from various locations 2 to 4 miles from the Baltimore maglev station and ending at one of several locations within the DC beltway. In contrast, driving between these locations would take only 50 or 65 minutes during midday or rush hour, respectively, according to Google Maps. [1]

Anyone could repeat or expand this simple analysis using the online resources provided in the footnote. There is no evidence that the maglev’s upcoming Environmental Impact Statement will analyze average trip duration and describe the analysis method in sufficient detail that the public can check the math. The average trip duration for likely riders of the Baltimore Washington maglev would, ideally, be analyzed in a peer-reviewed journal.

2. The maglev ticket price would limit ridership

After years of promoting the idea of a malgev between Baltimore and Washington, BWRR has not yet identified in public documents who exactly would be willing to pay $80-$160 round trip to travel between these two city centers, which are separated by only 40 miles. Common sense suggests that the ticket price is too high to be attractive to many commuters, for family outings, or for the typical tourist. [2]

Were the average round-trip ticket to cost $100, a commuter would pay $24,000 a year to ride the maglev. This would be $12,900 more than the annual cost of commuting by car between Baltimore and Washington based on the IRS’s estimate of the per-mile cost of driving. Most American families have trouble saving for the future, so would they really choose to spend an extra $12,900 a year to upgrade from car commuting to maglev commuting? [3]

For most families, the maglev would be an unattractive option on a family outing. A DC-area family of four going to a downtown Baltimore attraction would expect to pay $60-$140 for the entire family to get in. They would probably not want to pay an extra $100 per person or $400 for the whole family to make the trip via maglev. [4]

Washington DC attracts tourists, but for most of these families, a side trip to Baltimore would not seem more attractive were the maglev built. Some studies estimate that the average American family spends $2,000 on its annual vacation. If an out-of-state family visited DC for their vacation, would the family be willing to spend an extra $400 on transportation if they decided to make a side trip to Baltimore? In contrast, the existing bus and commuter-rail service costs under $10 one-way, and renting a car for a whole week can cost under $500. [5]

3. The maglev is unlikely to create thousands of jobs, post-construction

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Everyone is sympathetic with Baltimore’s desire to attract people to its downtown, to revive its economy, and to create jobs, but the chances are slim that operating a maglev line from DC will do the trick.

As discussed in items #1 and #2 above, the maglev would be slower and more expensive than driving, leading to the conclusion that the maglev is unlikely to greatly increase travel between Baltimore and Washington. If travel does not increase, then operating the maglev would fail to create thousands of jobs the way that BWRR advertises it would.

In 2015, in a filing before the Maryland Public Services Commission, BWRR claimed that the maglev would generate “economic activity previously not conceivable.” They claimed that maglev operation would create 6,800 to 8,300 jobs in the Baltimore Washington region contingent on the maglev line being extended to New York City. [6]

More optimistically in 2020, the BWRR website claims that, post-construction, the maglev would create 14,600 jobs per year. The BWRR website provides no market analysis to back up this job-creation claim. [7]

4. Maglev ticket sales could not pay back the construction cost

Despite the high ticket price, BWRR could not recoup the construction cost for a Baltimore-to-Washington maglev line with ticket sales, even over a 30-year period. The following paragraph does the math.  BWRR has not announced private financing for the construction, so it looks like tax dollars would have to fund most of the maglev construction cost, which means that this money could not be spent on more effective solutions.

BWRR’s inability to pay for maglev construction with ticket revenue is clear from its own estimates of construction cost, ridership, and ticket price. BWRR estimates a $15 billion construction cost, and that may be an underestimate as discussed in item #5 below [8]. Assuming a fairly low interest rate of 3.25%, then the principal and interest on a $15-billion 30-year loan would total $23.5 billion [9]. Ticket sales would gross only $15 to $22.5 billion in 30 years based on BWRR’s expectation of 10-15 million one-way trips per year and an average ticket price of $50 one-way [10].

In recent years, WMATA, the organization that runs the DC subway, has had a multi-billion dollar backlog of “state of good repair” projects, and completing these projects promptly would be a better use for tax dollars than building a maglev that we don’t really need. Instead of investing in the maglev, there may be less expensive ways to reducing car emissions and rush-hour traffic, such as to find ways to make teleworking sustainable and convenient.

German maglev photo credit.

5. The cost-benefit analysis in an Environmental Impact Statement is unreliable

If the cost of constructing a maglev between Baltimore and Washington exceeds BWRR’s current $15-billion estimate, it would decrease the chance that maglev would avoid bankruptcy, let alone create an economic boom.

A number of studies find that construction costs for rail projects end up, on average, about 50% higher than estimated prior to construction beginning. Various theories have been advanced to explain why cost estimates continue to have a low bias in Environmental Impact Statements even after researchers have published evidence that the bias exists. [11]

Projects similar to the proposed Baltimore Washington maglev tend to have higher-than-average cost overruns, more than double the initial estimate in one case.

Before construction began, the California high-speed rail from Anaheim to San Francisco was expected to cost $33.6 billion in 2008, but today, with the track partially built, the estimate has more than doubled to $80 billion. The maglev planned in Munich was initially expected to cost 1.85 billion euros but it was canceled in 2008 as construction was about to begin because the cost estimate had risen to 3 billion euros. The Tokyo-Osaka maglev was expected to cost 5.1 trillion yen in 2007, but as construction proceeded, estimates rose to 9.1 trillion yen. [12]

Conclusion

Baltimore Washington Rapid Rail (BWRR) predicts that job growth and other economic benefits will flow from operating a maglev between Baltimore and Washington. Based on these predictions, BWRR asserts that the benefits outweigh any harm that the maglev might cause to the environment, to historical resources, or to the quality of life of residents along the track. It is in the public’s interest to determine if BWRR’s financial numbers are plausible and to avoid the trap of focusing exclusively on potential hazards and nuisances from building or operating the maglev. Each of us can make a contribution, but none of us have the time to do all of the necessary detective work ourselves.  We will have to work together.

Notes

[1] In 2020, O. Kelley estimated trip duration by considering Bal­­­­timore locations 2-4 miles from the maglev station: John Hopkins Homewood campus, Canton, Riverside, and Locust Point. The inside-the-DC-Beltway locations considered were College Park, Bethesda, and Crystal City. Downtown Baltimore driving times from https://maps.google.com. Estimated wait for the maglev assumes rush-hour and midday service every 8 or 30 minutes in each direction. Average wait time is half of the time between trains. DC subway-ride duration and wait time from Union Station, https://www.wmata.com/ schedules/trip-planner/. The 8-minutes post-DC-Metro represents either a half-mile walk or driving conditions and distances similar to those of the midday downtown Baltimore trip segment.

[2] one-way $40-80 ticket price stated by Wayne Rogers on 9 July 2015 before the MD Public Service Commission, as cited on pg. 5 of Judge T. Romine’s Proposed Order for case #9363 on 14 Oct 2015.

[3] In 2020, the cost of commuting by car is 58 cents per mile according to the IRS, and one might assume an 80-mile round trip, DC to Baltimore. A 48-week work-year is 240 days. By car, $0.58/mile x 80 mile/day x 240 day/year.  By maglev, $100/day x 240 day/year.

[4] At Fort McHenry National Monument, Port Discovery Children’s Museum, Maryland Science Center, and National Aquarium admission for 2 adults and 2 children is approximately $30-$60, $72, $96, and $140, respectively.

[5] $2,000 annual vacation: Business Insider 9 August 2019, https://www. businessinsider.in/miscellaneous/people-spend-an-average-of-1979-annually-on-summer-vacations-here-are-4-ways-to-save-money-on-your-next-trip/slidelist/70609380.cms.

[6]  “previously not conceivable” quote and jobs created: Rogers, W., 2015, testimony, MD Public Service Commission, case #9363, pg. 17-18, 13.

[7] 14.6k jobs/year: https://bwrapidrail.com/project/benefits/.

[8] “Rough construction estimates developed by BWRR at this early stage are $10 billion to $15 billion depending on the construction methodology, e.g. the proportion of higher-cost tunneling versus elevated structure.”: FAQ on https://bwmaglev.info, 1 Sept 2020.

[9] The interest and principal on a $15-billion 3.25%-interest 30-year loan from npr / (1-(1+r)-n) where n = 30 x 12, p = $15e6, and r = 0.0325/12, or use an online mortgage calculator.

[10] 10.2 to 15.4 million one-way trips annually (Rogers, W., 2015: testimony, Public Service Commission of MD, pg. 17, line 9). bwrapidrail.com and northeastmaglev.com say that the ticket price will be competitive with existing express-rail service. One might take this to mean a price similar to a 1-way Amtrak Acela ticket in 2020: $35-$80, DC to Baltimore. See footnote #2 of the present document for a $40-$80 ticket price.

[11] 50%  cost overrun for rail projects: http://americandream coalition.org/?page_id=3813. 45% average cost overrun in rail projects: Prieumus et al. (Eds), 2008: Decision-Making on Mega-Projects, pg. 7. Persistence of low bias in EIS cost estimates: Sturm, J., et al., 2011, Analysis of cost estimation disclosure in EIS for surface transportation projects, Transportation, 38, 525-544.

[12] California high-speed rail estimate of $33 then $80 billion: Editorial, Los Angeles Times, 17 June 2020. Munich Link Transrapid maglev cost overrun: https://en. wikipedia.org/wiki /Transrapid. The Tokyo-Osaka line is a superconducting maglev and is called the Chuo Shinkansen. Wikipedia.org states the 5.1 to 9.1 trillion yen cost estimate.

2 Responses

  1. Mary Ann Canter
    | Reply

    Thanks! Well done

    • Owen Kelley
      | Reply

      Mary Ann… Thank you for your feedback on the article, and thank you for working on creating the new firefly garden in Greenbelt. –Owen

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