A Social Cost-Benefit Analysis of the Calgary-Edmonton High Speed Rail Project

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2014-09
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Abstract
In this capstone project I address a transportation issue of importance to the future of economic development in Alberta. A high-speed rail transit system linking the Calgary-Edmonton corridor has been proposed in Alberta as an effective method to foster and accommodate economic development. However, because of the very large initial cost, public investment is almost seen as being required in order for it to be financially viable. In order to justify billions of taxpayer dollars, a high-speed rail project must be found to produce a net social benefit. High-speed rail has the potential to greatly improve the efficiency of transportation in Alberta. The link between Calgary and Edmonton is a crucial one to the success of Alberta's economy. With a high speed rail system, the goal is for Albertans to be able to increase the speed of transportation and at a reduced cost. If this outcome was realized, it would inevitably enhance future development and augment economic growth. There exists detailed information on high-speed rail in Alberta. It provides reasonably reliable estimates of costs of the project, and how much revenue it can generate. It is also well-known from literature that external benefits, both on the demand side and supply side of high-speed rail, come in many forms and are not just marginal. The components of the project have undergone extensive analyses, but there has only been one cost-benefit analysis to evaluate the net benefit of high-speed rail to Alberta. Recently, the Government of Alberta summoned a committee to investigate high-speed rail further. However, they decided against the results of the analyses to go through with the project immediately. Their recommendations were primarily based on public submissions and oral reports as opposed to more heavily relying on evidence. Because of the major economic impact that it can have on Alberta, and because most of the analyses have portrayed a likely positive result, it was beneficial to conduct another cost-benefit analysis. This one provided an even more updated and thorough estimate of the viability of highspeed rail in Alberta, because it included updated cost, revenue, and external benefit figures as of 2013. The results of this cost-benefit analysis are in accordance with other analyses, especially with respect to the typically used 5% nominal discount rate and it is estimated that high-speed rail will almost certainly provide a positive net benefit to Albertans, and thereby will assist with the province's economic development. What has been determined from the research conducted in this capstone is that the Government of Alberta should begin preparation for a high-speed rail system in Alberta in the future by determining which high-speed train will benefit Alberta the most, by gathering the necessary land titles for the project, by launching public consultations with any affected First Nation's land, and by launching a campaign in Alberta to inform the public of the benefits of high-speed rail and garner support for the project. It would also be wise to conduct further sensitivity analysis as it plays a pivotal role in the feasibility of the project, as well as a comparative analysis designed to determine if any other avenues under the umbrella of government accountability need the funds instead.
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Citation
Tilleman, Brandeis. (2014). A Social Cost-Benefit Analysis of the Calgary-Edmonton High Speed Rail Project ( Master's thesis, University of Calgary, Calgary, Canada). Retrieved from https://prism.ucalgary.ca.