Rethinking Rail: The Feasibility of Modern High-Speed Rail Projects in the U.S.

Abstract

Rail travel in the U.S. is extremely outdated and operates on legacy infrastructure systems, both caused by and contributing to an overreliance on alternative modes of transportation: most notably automobiles and planes. Driven in part by a rise in international initiatives, public demand for HSR expansion within the U.S. has surged. This paper seeks to identify and optimize the implementation of hypothetical HSR routes, as well as analyze why the U.S. lags behind other developed nations when it comes to advanced rail infrastructure. We use a two-level mixed integer optimization problem to identify the optimal set of lines to implement. The lower-level problem maximizes revenue across each possible rail segment. This is done by pairing a logit function, which models mode split between HSR and flying, with the total trip demand for each segment. Demand is derived from a Markov chain constructed from the DOT’s sample of 7 million annual airline tickets. The higher-level problem leverages the results from the lower-level problem to select the subset of segments that maximizes the profit from HSR upgrades under the constraint of a given budget. The results indicate that the optimal budget to realize benefits from HSR upgrades is $216 billion, yielding an annual profit of $10 billion and an ROI of 4.6%. This budget encompasses upgrades of the Portland–Seattle–Vancouver, Chicago–Detroit, Los Angeles–Las Vegas, Miami–Tampa, and Boston–New York City–Washington, D.C. (Northeast Corridor) lines. A sensitivity analysis identified construction costs, interest rates, and construction time as the dominant risks to HSR projects. A cost/benefit analysis of incremental upgrades of existing tracks to higher speeds versus new HSR lines indicated that the Northeast Corridor and a line from San Francisco–Los Angeles–Las Vegas would benefit the most from dedicated HSR. The other identified lines from the optimization problem, including additional lines in Texas and the Midwest, would yield the greatest benefit from incremental upgrades to higher speeds. This suggests that, in many cases, the additional cost of constructing new HSR lines outweighs the marginal benefits when compared to incremental upgrades to higher speeds. Even under conservative U.S. cost and demand assumptions, the results of this study show that upgrades to rail and dedicated HSR may be commercially viable transportation options. These improvements could displace millions of short-haul flights and vehicle miles traveled.