America’s Infrastructure Cost Disaster

The growing cost estimates for California High-Speed Rail seem designed to embarrass those of us who were enthusiastic about the project. Something to note, based on Alon Levy’s breakdown, is that this isn’t really a case of the initial estimates being wrong. Instead, the two biggest drivers of higher costs are changes to the plan. One set of changes is that because it’s taking the state time to get the money together, the duration of the project is being extended which is pushing costs up. In essence, the project is so expensive that California wants to do it more slowly which is making it even more expensive. Another set of changes is that a lot of post-hoc modifications are being made at the request of local communities who want more segments to be tunnelized or viaducted.

Both of these, I hope people will understand, represent systematic pathologies in the American infrastructure planning process and not something unique about passenger rail. The former, in particular, is maddening. We spend too little on infrastructure in a way that winds up driving up the per-project cost, which winds up driving down the per-dollar utility of infrastructure spending which winds up eating away at public support for infrastructure spending. And the set of cost drivers forced by community opposition would imperil any large scale transportation project. In either case simply shifting the California HSR pot of money into some other project wouldn’t resolve the problem (see Brad Plumer for a full discussion). If you cast your eyes east to the replacement of the Tappan Zee Bridge, you’ll see that large-scale automobile infrastructure projects on the east coast are every bit as subject to these overruns as large-scale train infrastructure projects on the west coast.

At some point if America wants to improve its lagging infrastructure, we need to do something about the fact that our building costs are systematically higher than what you find abroad. I think very few people appreciate the extent to which that’s the case, but some of the numbers are mind-boggling. And we’re not just talking about China being able to get things done cheaper — all over Europe and Japan you can find examples of much better-managed infrastructure construction.