April 25, 2004

Railways need density

Patrick Crozier | Rail Economics

By which I mean that railways are at their most profitable (or least unprofitable) when they operate in densely-populated areas with large populations. This matters to me because I believe that profit is a very good indicator of whether something should be done or not.

Empirically, this seems to hold out. Profitable railways can be found in Japan’s cities and suburbs. In Britain, in London, there are some commuter TOCs which don’t need any subsidy at all and most of them need (or, at least, until recently needed) very little. Most of the subsidy (insofar as it can be apportioned) ends up supporting services outside London. In the past, private companies have found it (just about) profitable to build underground railways in both London and New York.

Although states do not operate on a strict profit and loss basis, ultimately, how much an infrastructure project stands to lose will play a factor in whether it gets built or not. States seem to have found that it is only worth building (or running) subways in densely-populated parts of the world. Thus they’ve built them in Tokyo, Paris and Moscow, but not Birmingham or Edinburgh.

Why, this should be, I am not quite sure. I guess it has something to do with marginal costs in that the marginal cost of one extra rail passenger is, in fact, very low (no need for extra drivers, station staff or signallers), while the marginal cost of an extra road passenger is much higher. And, at some point, the average cost of a rail passenger becomes less than that of a road passenger.

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most services benefit from population density though.

A hat shop in a city centre will have more customers who can access it than a hat shop in a village.

but if you're looking at a comparison between road and rail transport it's all a bit murkier. It's also about who picks up the tab

rail schemes don't have as many external costs as the car. someone buys the land, builds the railway and infrastructure and operates the trains. they pick up the whole of the cost

with the car the Highways Agency builds the road, drivers buy their own car and pay for its operation, a police force will regulate driving speeds and driver behaviour, health authorities pick up the costs of the much higher accident rates on roads, pollution damage may take years to become evident and again is picked up by health authorities

Now we all pay for this through tax/insurance but if we could identify all these costs and present them as a bill to the car driver we could then make more informed choices on the mode of transport we wanted to use.

Posted by dgately on April 26, 2004

Yeah. Most of my arguments allready mentioned, dgately.

Patrick, there is one argument more, even if I have to go back to a posting of yours some month ago. You mentioned being in Cologne and going by subway, if I remember that right.

When I lived in Cologne (where my sister still lives, so I've been there frequently), large parts of what now is subway was tram (therefore, they still use trams instead of proper subway trains). The transition was made because of congestion (cars!) in the city centre.

For tram/subway passengers, journeys now last longer. Tram in the Cologne city centre had its own strip of street (sorry, I simply don't know how to translate "Gleisbett") for decades and was rather fast.
But for car drivers, there is a little more street to congest now.

If I've got my numbers right, subway construction costs about fifteen times more than tramrail construction (please correct me, I'm really not sure).

So, that's subway costs - isn't it?

Posted by Rike on April 27, 2004

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