Intercity Passenger and Freight Rail:
Better Data and Communication of Uncertainties Can Help Decision Makers Understand Benefits and Trade-offs of Programs and Policies
GAO-11-290: Published: Feb 24, 2011. Publicly Released: Mar 28, 2011.
Concerns about the weak economy, congestion in the transportation system, and the potentially harmful effects of air emissions generated by the transportation sector have raised awareness of the potential benefits and costs of intercity passenger and freight rail relative to other transportation modes such as highways. GAO was asked to review (1) the extent to which transportation policy tools that provide incentives to shift passenger and freight traffic to rail may generate emissions, congestion, and economic development benefits and (2) how project benefits and costs are assessed for investment in intercity passenger and freight rail and how the strengths and limitations of these assessments impact federal decision making. GAO reviewed studies; interviewed federal, state, local, and other stakeholders regarding methods to assess benefit and cost information; assessed information on project benefits and costs included in rail grant applications; and conducted case studies of selected policies and programs in the United Kingdom and Germany to learn more about their policies designed to provide incentives to shift traffic to rail.
Although implementing policies designed to shift traffic to rail from other modes may generate benefits, and selected European countries' experiences suggest that some benefits can be achieved through these types of policies; many factors will affect whether traffic shifts. The extent to which rail can generate sufficient demand to draw traffic from other modes to achieve the desired level of net benefits will depend on numerous factors. Some passenger or freight traffic may not be substitutable or practical to move by a different mode. For example, certain freight shipments may be time-sensitive and thus cannot go by rail. Another key factor will be the extent to which sufficient capacity exists or is being planned to accommodate shifts in traffic from other modes. How transport markets respond to a given policy--such as one that changes the relative price of road transport--will also affect the level of benefits generated by that policy. Experiences in selected countries suggest that varying amounts of mode shift and some benefits were attained where decision makers implemented policies to move traffic from other modes to rail. For example, a road freight pricing policy in Germany resulted in environmental and efficiency improvements, and freight rail grants in the United Kingdom led to congestion relief at the country's largest port. Pursuing policies to encourage traffic to shift to rail is one potential way to generate benefits, and other policies may be implemented to generate specific benefits at a lower cost. Information on the benefits and costs of intercity passenger and freight rail is assessed to varying degrees by those seeking federal funding for investment in rail projects; however, data limitations and other factors reduce the usefulness of such assessments for federal decision makers. Applicants to two discretionary federal grant programs--the Transportation Investment Generating Economic Recovery program and the High-Speed Intercity Passenger Rail program--provided assessments of potential project benefits and costs that were generally not comprehensive. For instance, applications varied widely in the extent to which they quantified and monetized some categories of benefits. In addition, GAO's assessment of selected applications found that most applicants did not provide key information recommended in federal guidance for such assessments, including information related to uncertainty in projections, data limitations, or the assumptions underlying their models. Applicants, industry experts, and Department of Transportation (DOT) officials GAO spoke with reported that many challenges impacted their ability to produce useful assessments of project benefits and costs, including: short time frames in which to prepare the assessments, limited resources and expertise for performing assessments, poor data quality, lack of access to data, and lack of standard values for monetizing some benefits. As a result, while information on project benefits and costs was considered as one of many factors in the decision-making process, according to DOT officials, the varying quality and focus of assessments resulted in additional work, and the information provided was of limited usefulness to DOT decision makers. GAO recommends DOT conduct a data needs assessment to improve the effectiveness of modeling and analysis for rail and provide consistent requirements for assessing rail project benefits and costs. DOT, Amtrak and EPA provided technical comments, and DOT agreed to consider the recommendations.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: In February 2011, we found that information on the benefits and costs of intercity passenger and freight rail projects is assessed to varying degrees by those seeking federal funding for investment in rail projects; however, data limitations and other factors reduce the usefulness of such assessments for federal decision makers. Applicants to two discretionary federal grant programs -- the Transportation Investment Generating Economic Recovery program and the High-Speed Intercity Passenger Rail program -- provided assessments of potential project benefits and costs that were generally not comprehensive. For instance, applications varied widely in the extent to which they quantified and monetized some categories of benefits. In addition, our assessment of selected applications found that most applicants did not provide key information recommended in federal guidance for such assessments, including information related to uncertainty in projections, data limitations, or the assumptions underlying their models. While the shortened time frames of the programs and resource limitations among project sponsors were key causes of the varying quality of analyses, data limitations (including a lack of historical data, particularly with respect to high-speed rail), data inconsistencies, and data unavailability also accounted for some limitations in applicants' benefit-cost information and will continue to impact these analyses in future funding rounds. Until data quality, data gaps, and access issues are addressed for the data inputs needed for rail modeling and analysis, projections of rail benefits will continue to be of limited use. We therefore recommended that DOT conduct a data needs assessment and identify which data are needed to conduct cost-effective modeling and analysis for intercity rail projects. In response, in 2011, DOT's Federal Railroad Administration raised this issue with the Transportation Research Board's National Cooperative Rail Research Program (NCRRP). Since then, the NCRRP has funded five research efforts which address data needs and cost-effective modeling and analysis of intercity rail projects. One of these research efforts was completed in 2015 -- Alternative Financing Approaches for Passenger and Freight Rail Projects. Three other research efforts are near their final draft form -- Comparison of Passenger Rail Energy Consumption with Competing Modes, Intercity Passenger Rail Service and Development Guide, and Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs. The fifth effort -- Intercity Passenger Rail in the Context of Dynamic Travel Markets -- is still in the midst of the analytical work, but a final draft is expected the summer of 2015. Collectively, these research efforts go a long way to improve the state of the art with respect to identifying needed data and analyzing the costs and benefits of rail projects, and provide a rich resource for projects sponsors to draw from as they consider rail investments.
Recommendation: To improve the data available to the Department of Transportation and rail project sponsors, the Secretary of Transportation, should, in consultation with Congress and other stakeholders, conduct a data needs assessment and identify which data are needed to conduct cost-effective modeling and analysis for intercity rail, determine limitations to the data used for inputs, and develop a strategy to address these limitations. In doing so, DOT should identify barriers to accessing existing data, consider whether authorization for additional data collection for intercity rail travel is warranted, and determine which entities shall be responsible for generating or collecting needed data.
Agency Affected: Department of Transportation
Comments: In response to this recommendation, on June 5, 2014, a working group was convened to: (1) Share knowledge and best practices for Benefit Cost Analysis (BCA) across DOT modal administrations; (2) Review and validate FRA's overall strategy and approach to BCAs for intercity rail projects; (3) Incorporate best practices and harmonize with TIGER and other DOT BCA initiatives; and (4) Assist in review of FRA's future BCA guidance materials. FRA's final BCA guidance is expected to be completed in FY 2016. This recommendation will remain open until such guidance has been finalized.
Recommendation: To improve the data available to the Department of Transportation and rail project sponsors, the Secretary of Transportation, should, in consultation with Congress and other stakeholders, Encourage effective decision making and enhance the usefulness of assessments of benefits and costs, for both intercity passenger and freight rail projects by providing ongoing guidance and training on developing benefit and cost information for rail projects and by providing more direct and consistent requirements for assessing benefits and costs across transportation funding programs. In doing so, DOT should: (1) Direct applicants to follow federal guidance outlined in both the Presidential Executive Order 12893 and OMB Circulars Nos. A-94 and A-4 in developing benefit and cost information. (2) Require applicants to clearly communicate their methodology for calculating project benefits and costs including information on assumptions underlying calculations, strengths and limitations of data used, and the level of uncertainty in estimates of project benefits and costs. (3) Ensure that applicants receive clear and consistent guidance on values to apply for key assumptions used to estimate potential project benefits and costs.
Agency Affected: Department of Transportation