I’ve seen people who I think highly of argue that high construction costs in the United States are an artifact of precarity. The argument goes that the political support for public transportation there is so flimsy that agencies are forced to buy political support by spending more money than they need. This may include giving in to NIMBY pressure to use costlier but less impactful (or apparently less impactful) techniques, to spread money around with other government agencies and avoid fighting back, to build extravagant and fancier-looking but less standardized stations, and so on. The solution, per this theory, is to politically support public transportation construction more so that transit agencies will have more backing.
This argument also happens to be completely false, and the solution suggested is counterproductive. In fact, the worst cost blowouts are for the politically most certain projects; Second Avenue Subway enjoyed unanimous support in New York politics.
Cost-effectiveness under precarity
Three projects relevant to our work at the Transit Costs Project have been done exceptionally cost-effectively in an environment of political uncertainty: the T-bana, the LGV Sud-Est, and Bahn 2000.
T-bana
The original construction of the T-bana was done at exceptionally low cost. We go over this in the Sweden report to some extent, but, in short, between the 1950s and 70s, the total cost of the system’s construction was 5 billion kronor in 1975 prices, which built around 100 km, of which 57% are underground. In PPP 2022 dollars, this is $3.6 billion, or $35 million/km, not entirely but mostly underground. This was low for the time: for example, in London, the Victoria line was $122 million/km and the Jubilee line was $172 million/km (source, p. 78), and Italian costs in the 1960s and 70s were similar, averaging $129 million/km before 1970.
The era of Social Democrat dominance in Swedish politics on hindsight looks like one of consensus in favor of big public projects. But the T-bana itself was controversial. When the decision was made to build it in the 1940s, Stockholm County had about 1 million people; at the time, metros were present in much larger cities, like New York, London, Paris, Berlin, and Tokyo, and it was uncertain that a city the size of Stockholm would need such a system. Its closest analog, Copenhagen, did not build such a system until the 1990s, when it was a metro region of 2 million. It was uncertain that Stockholm should need rapid transit, and there were arguments for and against it in the city. Nor was there any transit-first policy in postwar Sweden: urban planning was the same modernist combination of urban renewal, automobile scale, and tower-in-a-park housing, and outside Stockholm County, the Million Program projects were thoroughly car-oriented.
Construction costs in Sweden are a lot higher now than they were in the 1950s, 60s, and 70s. Nya Tunnelbanan is $230 million/km, compared with a post-1990s Italian average of $220 million; British costs have exploded in tandem, so that now the Underground extensions clock at $600 million/km. Our best explanation is that the UK adopted what we call the globalized system of procurement, privatizing planning functions to consultants and privatizing risk to contractors, which creates more conflict; the UK also has an unusually high soft cost factor. From American data (and not just New York) and some British data, I believe that the roughly 2.5 cost premium of the UK over Italy is entirely reducible to such soft costs, procurement conflict, risk compensation, and excessive contingency. And yet, Sweden itself, with some elements of the same globalized system, maintains a roughly Italian cost level, albeit trending the wrong way.
And today, too, the politics of rail expansion in Sweden are uncertain. There was controversy over both Citybanan and Nya Tunnelbanan, neither of which passed a cost-benefit analysis (for reasons that I believe impugn the cost-benefit analysis more than those projects); it was uncertain that either would be funded. Controversy remained over plans to build high-speed rail connecting Stockholm with Gothenburg and Malmö, and the newly-elected right-wing government just canceled them in order to prioritize investment in roads. Swedish rail projects today remain precarious, and have to justify themselves on cost and efficiency grounds.
LGV Sud-Est
Like nearly all other rich countries, France was hit hard by the 1973 oil crisis; economic growth there and in the US, Japan, and most of the rest of Western Europe would never be as high as it was between the end of WW2 and the 1970s (“Trente Glorieuses“). On hindsight, France’s response to the crisis models can-go governance, with an energy saving ad declaring “in France we don’t have oil, but we have ideas.” The French state built nuclear power plants with gusto, peaking around 90% of national electricity use – and even today’s reduced share, around 70%, is by a large margin the highest in the world. At the same time, it built a high-speed rail network, connecting Paris with most other provincial cities at some of the highest average speeds outside China between major cities, reaching about 230 km/h between Paris and Marseille and 245 km/h between Paris and Bordeaux; usage per capita is one of the highest in Europe and, measured in passenger-km, not too bad by East Asian standards.
But in fact, the first LGV, the LGV Sud-Est, was deeply controversial. At the time, the only high-speed rail network in operation was the Shinkansen, and while France learned more from Japan than any other European country (for example, the RER was influenced by Tokyo rail operations), the circumstances for intercity were completely different. SNCF had benefited from having done many of its own experiments with high-speed technology, but the business case was murky. SNCF had to innovate in running an open system, with extensive through-running to cities off the line, which Japan would only introduce in the 1990s with the Mini-Shinkansen.
Within the French state, the project was controversial. Anthony Perl’s New Departures details how there were people within the government who wanted to cancel it entirely as it was unaffordable. At the end, the French state didn’t finance the line, and required SNCF to find private loans on the international market, though it did guarantee those loans. It also delayed the line’s opening: instead of opening the entire line from Paris to Lyon in one go, it opened two-thirds of it on the Lyon side in 1981 and the last third into Paris in 1983, requiring trains to run on the classical line at low speed between Paris and Saint-Florentin for two years; in that era, phased opening was uncommon, and lines generally opened to the end at once, such as between Tokyo and Shin-Osaka.
Construction was extraordinarily inexpensive. In PPP 2022 dollars, it cost $8.4 million/km. This is, by a margin, the lowest-cost high-speed rail line ever built that I know about. The Tokaido Shinkansen cost 380 billion yen, or in PPP 2022 dollars $40 million/km, representing a factor of two cost overrun that forced JNR’s head to resign. Spain has unusually low construction costs, and even there, Madrid-Seville was $15.7 million/km. SNCF innovated in every way possible to save money. Realizing that high-speed trains could climb steeper grades, it built the LGV Sud-Est with a ruling grade of 3.5%, which has since become a norm in and around Europe, compared with the Shinkansen’s 1.5-2%; the line has no tunnels, unlike the classical Paris-Lyon line. It built the line on the ground rather than on viaducts, and balanced cut and fill locally so that material cut to grade the line could be used for nearby fill. Thanks to the line’s low costs and high ridership, the financial return on investment for SNCF has been 15%, and social return on investment has been 30% (source, pp. 11-12).
This cost-effectiveness would never recur. The line’s success ensured that LGV construction would enjoy total political backing. The core features of LGV construction are still there – earthworks rather than viaducts, 3.5% grades, limited tunneling, overcompensation of landowners by about 30% with land swap deals to defuse the possibility of farmer riots. But the next few lines cost about $20 million/km or slightly less, and this cost has since crept up to about $30 million/km or even more. This remains low by international standards (but not by Spanish ones), but the trend is negative.
SNCF is coasting on its success from a generation ago, secure that funding for LGVs and state support in political contention is forthcoming, and the routing decisions have grown worse. In response to NIMBYism in Provence, the French state assented to a tunnel-heavy route, including a conversion of Marseille from an at-grade terminal to an underground through-station, akin to Stuttgart 21, which has not been done before in France, and the resulting high costs have led to delays on the project. Operations have grown ever more airline-style, experimenting with low-cost airline imitation to the point of reducing fare receipts without any increase in ridership. One of the French consultants we’ve spoken with said that their company’s third-party design costs are 7-8% of the hard costs, which figure is similar to what we’ve seen in Italy and to the in-house rate in Spain – but the same consultant told us that there is so much bloat at SNCF that when it designs its own projects, the costs are not 7% but 25%, a figure in line with American rates.
Bahn 2000
Switzerland has Europe’s strongest passenger rail network by all measures: highest traffic measured by passenger-km per capita, highest modal split for passenger-km, highest traffic density. Its success is well-known in surrounding countries, which are gradually either imitate its methods or, in the case of Germany, pretending to do so. It has achieved its success through continuous improvement over the generations, but the most notable element of this system was implemented in the 1990s as part of the Bahn 2000 project.
The current system is based on a national-scale clockface system (“Takt”) with trains repeating hourly, with the strongest links, like the Zurich-Bern-Basel triangle, running every half hour. Connections are timed in those three cities and several others, called knots, so that trains enter each station a few minutes before the connection time (usually the hour) and depart a few minutes after, permitting passengers to get between most pairs of Swiss cities with short transfers. Reliability is high, thanks to targeted investments designed to ensure that trains could make those connections in practice and not just in theory. Further planning centers adding more knots and expanding this system to the periphery of Switzerland.
Switzerland is famous for its consensus governance system – its plural executive is drawn from the four largest parties in proportion to their votes, with no coalition vs. opposition politics. But the process that led to the decision to adopt Bahn 2000 was not at all one of unanimity. There had been plans to build high-speed rail, as there were nearly everywhere else in Western Europe. But they were criticized for their high costs, and there was extensive center-right pressure to cut the budget. Bahn 2000 was thus conceived in an environment of austerity. Many of its features were explicitly about saving money:
- The knot system is connected with running trains as fast as necessary, not as fast as possible. Investments in speed are pursued only insofar as they permit trains to make their connections; higher speeds are considered gratuitous.
- Bilevel trains are an alternative to lengthening the platforms.
- Timed overtakes and meets are an alternative to more extensive multi-tracking of lines.
- Investment in better timetabling and systems (the electronics side of the electronics-before-concrete slogan) is cheaper than adding tunnels and viaducts.
Swiss megaprojects have to go to referendum, and sometimes the referendums return a no; this happened with the Zurich U-Bahn twice, leading to the construction of the S-Bahn instead. All Swiss planners know in a country this small and this fiscally conservative, any extravagance will lead to rejection. The result is that they’ve instead optimized construction at all levels, and even their unit costs of tunneling are low; thanks to such optimization, Switzerland has been able to build a fairly extensive medium-speed rail system, with more tunneling per capita than Germany (let alone France), and with two S-Bahn trunk tunnels in Zurich, where no German city today has more than one.
The American situation
The worst offenders in the United States are not at all politically precarious. There is practically unanimous consensus in New York about the necessity of Second Avenue Subway. At no point was the project under any threat. There is an ideological right in the city, rooted less in party politics and more in the New York Post and the Manhattan Institute, with a law-and-order agenda and hostility to unions and to large government programs, but at no point did they call for cancellation; the Manhattan Institute’s Nicole Gelinas has proposed pension cuts for workers and rule changes reducing certain benefits, but not canceling Second Avenue Subway.