ANALYSIS OF THE BENEFITS OF 

HIGH-SPEED RAIL ON THE NORTHEAST 

CORRIDOR 

Federal Railroad Administration 

Number: CC-2008-091 

Date Issued: June 26, 2008 
U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: INFORMATION: Analysis of the Benefits of 

High-Speed Rail on the Northeast Corridor 

Date: June 26, 2008 

From: David Tornquist 

Assistant Inspector General 

 for Rail and Maritime Program Audits and 

 Economic Analysis 

Reply to 

Attn. of: JA-50 

To: Federal Railroad Administrator 

This report presents the results of our review of the benefits of high-speed 

rail (HSR) on the Northeast Corridor (NEC). HSR has been proposed as a key 

option for managing congestion on the NEC, a region that has experienced a 

significant increase over the past 20 years in the number of vehicles on its 

congested highways and aircraft in its congested airspace. For example, H.R. 

6003, the Passenger Rail Investment and Improvement Act of 2008, which was 

reported out of the House Committee on Transportation and Infrastructure on May 

22, 2008, directs the Secretary of Transportation to solicit proposals for the design, 

construction, and operation of a HSR system between Washington, DC and 

New York City. In addition, this bill, and its Senate counterpart S. 294, include 

other provisions that more broadly promote HSR on the NEC and elsewhere. 

The objectives of our review were to: (1) estimate the revenue and congestion 

relief benefits associated with different levels of HSR on the NEC and 

(2) determine whether HSR would pay for itself through increased revenues, 

congestion relief, or a combination of the two. Additionally, we sought to estimate 

the consumer surplus provided by different levels of HSR on the NEC.1

 

To address our objectives, we worked with Charles River Associates, International 

(CRA) to model the benefits from two different levels of HSR on the NEC, taking 

into account the availability of the alternatives of traveling by air and automobile. 

We compared the results from this analysis to existing estimates of the costs of 

 

1

 Commonly included in transportation cost-benefit analyses, consumer surplus captures the difference between what 

consumers are willing to pay for a service and what they actually pay for that service. 
2

implementing HSR on the NEC to determine if the benefits from implementing 

HSR would exceed its costs. Exhibit A provides detailed information on our 

scope and methodology. 

BACKGROUND 

HSR has long been discussed as a means to alleviate NEC congestion. In 1976, 

legislation was passed envisioning 3-hour service between Boston and New York 

(the north end) and 2 1/2-hour service between New York and Washington (the 

south end).2

 However, both the condition of the NEC infrastructure and its 

capacity constraints, in tandem with competing demands from other users such as 

commuter traffic and freight, have prevented Amtrak’s Acela, the most rapid rail 

service on the NEC, from ever meeting the planned travel times. Currently the 

scheduled trip times of Acela, exceed the legislative targets by almost 1/2-hour on 

both ends. 

In this review, we focused our analysis on two scenarios for HSR estimated by 

CRA. In scenario 1, CRA estimated the benefits associated with achieving the 

travel times initially envisioned in the 1976 legislation, that is 3-hour service 

between Boston and New York and 2 1/2-hour service between New York and 

Washington. In scenario 2, CRA estimated the benefits of achieving travel times 

that are 1/2-hour shorter on both ends, that is, 2 1/2-hours between Boston and 

New York, and 2-hours between New York and Washington. 

RESULTS IN BRIEF 

The benefits from HSR in scenario 1 would exceed the expenditures required to 

implement it. While the benefits of HSR in scenario 2 would be considerable, the 

absence of reliable cost estimates for achieving these travel times made it 

impossible to determine if the benefits in this case would exceed the costs. A 

sizeable share of air travelers along the NEC would switch to HSR if it were 

available at scenario 1 speeds, thereby providing some relief to the area’s 

congested airspace. 

The benefits from HSR under scenario 1 would exceed the expenditures 

required to implement it. We found that achieving passenger rail travel times of 

3-hours between Boston and New York and 2 1/2-hours between New York and 

Washington (scenario 1) would produce a net present value benefit of 

 

2

 The Railroad Revitalization and Regulatory Reform Act of 1976. 
3

$16.3 billion in 2006 dollars.3 This amount exceeds the estimated $14.0 billion in 

2006 dollars of infrastructure investments4

 needed to achieve these travel times. 

These benefits are composed of $11.9 billion in increased rail revenues, 

$4.1 billion in gains in consumer surplus, and $0.3 billion in congestion relief. 

HSR on the NEC would cause a notable share of current air travelers to 

choose to travel by rail rather than by plane. We found that roughly 11 percent 

of air travelers would divert to HSR at scenario 1 travel times. This would provide 

congestion relief at NEC airports and in NEC airspace. However, less than 

1 percent of automobile travelers along the NEC would divert to HSR in 

scenario 1. This result reflects the greater similarities between air and rail travel 

than rail and automobile travel, particularly with regards to convenience. 

Benefits from HSR would grow at an increasing rate with each further 

reduction in travel time. Scenario 2, with its travel time reduced by an additional 

1/2-hour from scenario 1 on both the north and south ends of the NEC, would 

produce net present value benefits of $36.0 billion. This is more than double those 

in scenario 1. Our evaluation showed that each further 1/2-hour reduction in travel 

time would generate benefits at a greater rate as travel time decreased. 

Substantial additional benefits beyond those estimated in our evaluation 

would result from implementing HSR on the NEC. Freight and commuter 

services also would benefit from the investments needed to enable HSR in 

scenario 1, producing benefits beyond our estimates. In addition, investments 

supporting any level of HSR would reduce aircraft and automobile emissions. 

OBSERVATIONS AND CONCLUSIONS 

Benefits from HSR, under Scenario 1, Exceed the Costs Required to 

Implement It 

The $14.0 billion investment needed to achieve passenger rail travel times of 

3-hours between Boston and New York and 2 1/2-hours between New York and 

Washington would produce a net present value benefit of $16.3 billion in 

2006 dollars. Travel times on the NEC have been slowed by the condition of the 

infrastructure, its capacity constraints, and competing demands for the use of the 

infrastructure by freight and commuter trains. As a result, Acela’s scheduled trip 

 

3

 Unless otherwise indicated, all the benefit estimates quoted in this report are calculated for the 33 years following 

completion of the necessary infrastructure investments and expressed in 2006 net present value terms; that is, they 

are discounted back to 2006 and expressed in 2006 dollars. We assumed the necessary investments would be 

completed in 2012 for scenario 1 and in 2017 for scenario 2. 4

 The investment cost estimates quoted in this report effectively assume all investments occurred in a single year, 

2006, and are expressed in 2006 dollars. The net present value of the investments would be reduced if they were 

spread out over time. 
4

time on both the north and south ends exceeds the goals set in 1976 by almost 

1/2-hour each. It would require an estimated $14.0 billion in infrastructure 

investments to achieve these travel times. Three categories of benefits were 

considered: revenues, consumer surplus, and congestion relief. 

Revenues 

The majority of the estimated benefits, $11.9 billion, are composed of increased 

revenues (see figure 1 on the next page), which would grow from a combination of 

factors, as indicated by our models of HSR demand. First, existing riders would be 

willing to pay more for the faster service. Second, ridership (and therefore 

revenues) would increase as travelers from other transportation modes diverted to 

rail service. Finally, riders who would otherwise not have traveled at all would 

decide to do so because of the new service. Revenues represent benefits from 

HSR because they provide an indication of the value of the service to HSR 

passengers. 

Consumer Surplus 

Gains in consumer surplus would total $4.1 billion, which means travelers would 

be willing to pay $4.1 billion more for HSR than the amount they would actually 

pay.5

 This difference between the value of the service to consumers and what they 

would actually pay represents an improvement in consumer welfare or well-being. 

The calculation of consumer surplus is a commonly used method of determining 

the improvement in welfare associated with a transportation project. For example, 

it is used in the evaluation of the Southern HSR project proposed by the North 

Carolina Department of Transportation. 

Congestion Relief 

The estimated benefits from congestion relief on the NEC, resulting from 

reductions in delays on roads and in airports and airways, add another $0.3 billion. 

Faster rail service diverts travelers from the air and roads to rail. The estimated 

value of congestion relief is the sum of the value of time saved by NEC air and 

road travelers and the decrease in operating costs of air carriers along the NEC. 

 

5

 An HSR provider cannot capitalize on this willingness to pay more, in part because it varies from passenger to 

passenger on the same train. It is not feasible for an HSR provider to identify those passengers who would be willing 

to pay more, or how much more each would be willing to pay. 
5

Figure 1. Benefits of HSR on the NEC ($ Billions) 

 

0

10

20

30

40

Scenario 1 Scenario 2

Revenues Consumer Surplus Congestion Relief

$0.3 

$4.1 

 $11.9 

$0.6 

$8.6 

 $26.8 

 Total $36.0

Total $16.3 

$ Billions

Source: OIG analysis. 

Required Investment 

The estimate of $14.0 billion in needed infrastructure investments is based on the 

most recent studies available6

: a 1994 study of the NEC North End (the section 

between Boston and New York), produced by the Federal Railroad Administration 

(FRA), and Amtrak’s 2000 study of the South End (the section between New York 

and Washington).7

 The bulk of the costs identified in these studies are required to 

bring the NEC up to a state of good repair and to expand capacity to accommodate 

all users, both of which are preconditions for achieving scenario 1 travel times. To 

the extent that it was possible to identify which investments in these studies have 

already been made, the costs of completed investments were excluded from the 

total. 

Comparatively minor additional costs beyond those needed to achieve a state of 

good repair and to expand capacity are required solely for implementing HSR. 

Only 8 percent or $1.0 billion of the $14.0 billion in investment expenditures are 

required solely for HSR (see table 1 on the next page). By comparison, the 

 

6

 These studies do not include the costs of upgrading the 18 mile section of the NEC owned by MetroNorth. We 

requested this information from MetroNorth representatives, but they did not provide it to us. We do not expect that 

inclusion of these costs would change our conclusions because the portion of the NEC involved is relatively small. 7

 We also reviewed the 2006 “Engineering State of Good Repair Study”. However, that study drew heavily from and 

provided less detailed information than the 2000 South End Plan. 
6

investments required to achieve a state of good repair total $6.2 billion,8 and those 

providing the necessary capacity expansions would cost $6.5 billion. “Life Safety” 

investments account for the remainder, $0.3 billion, of the $14.0 billion total. 

Table 1. Infrastructure Investments Needed for Scenario 1 ($ Millions) 

 HSR-Specific: 

 North End 

 South End 

Subtotal 

 $182 

 $867 

$1,049 

 State of Good Repair: 

 North End 

 South End 

Subtotal 

 $577 

$5,616 

$6,193 

 Capacity Improvements: 

 North End 

 South End 

Subtotal

 $543 

$5,955 

$6,498 

 Life Safety Investments $268 

 Grand Total $14,008 

 Source: OIG analysis of FRA 1994 North End Plan and Amtrak 2000 South End Plan.

A Notable Share of Air Travelers Would Switch to HSR 

We estimated that 11 percent of current air travelers along the NEC would choose 

to travel by HSR instead of by air, if it were available at scenario 1 travel times.

Figure 2 on the next page illustrates this for FY 2006.9

 On the other hand, we 

found that HSR achieving scenario 1 or scenario 2 travel times would have little 

impact on automobile ridership along the NEC. The difference in the 

responsiveness of air and automobile travelers is consistent with the findings in 

other studies, which show that air and rail travel are closer substitutes for each 

other than they are for automobile travel.10 Automobile travel differs from air or 

rail travel in that it generally involves door-to-door service, offers greater 

flexibility in time of departure, and does not require travelers to share space with 

 

8

 Amtrak recently estimated that it needs $4.8 billion to bring its NEC infrastructure to a state of good repair, with 

additional funds needed for the portion of the NEC owned by MetroNorth. We could not reconcile that estimate, 

which was not provided in the context of a study, with our information. 9

 The estimates of the net present value of congestion benefits effectively assumed a constant diversion rate for all the 

years for which benefits were calculated. 10 See, for example, “Bay Area/California High-Speed Rail Ridership and Revenue Forecasting Study”, Cambridge 

Systematics, Inc., August, 2006 and “A Heteroskedastic Extreme Value Model of Intercity Travel Mode Choice”, 

Chandra Bhat, Transportation Research Part B: Methodological, Volume 29, Issue 6, December 1995, pp 471-483. 
7

strangers. Consequently, rail travel must be extremely competitive in other 

dimensions, such as speed or cost, to attract automobile travelers. 

Figure 2. Effects of HSR on Air and Auto Ridership in FY 2006 11

0.0

3.0

6.0

9.0

 Base Scenario 1 Scenario 2

125.0

128.0

131.0

134.0

 Base Scenario 1 Scenario 2

0.3% 0.6% 

 10.6% 

 

 20.3% 

MillionsMillions

Air Ridership Auto Ridership 

 Source: OIG analysis. 

Total Benefits from HSR Would Grow at an Increasing Rate with 

Further Reductions in Travel Time 

In scenario 2, we estimated benefits for travel times that were 1/2-hour shorter 

than in scenario 1 for travel between Boston and New York and between New 

York and Washington. We found that the net present value of the resulting 

benefits would be $36.0 billion. This is more than double the benefits that would 

be realized in scenario 1 (as shown in figure 1 on page 5). Both revenues and 

consumer surplus would more than double between scenarios 1 and 2. Congestion 

benefits would just double, as would the percentages of air and auto travelers that 

would switch to HSR (see figure 2). 

In order to see how benefits would vary with travel times, we estimated the 

ridership and revenues for a wider range of travel times. In this effort, we only 

estimated results for a single year, 2006, and assumed fares would remain at 

current levels, because that was sufficient to allow us to see the pattern in the 

responsiveness of benefits to travel times. We found that the total benefits from 

 

11 The base ridership numbers depicted in figure 2 differ from actual FY 2006 ridership for two reasons. First, the base 

figures only track ridership for those counties assumed to receive HSR service (which are the same as those currently 

receiving Acela service). This reasonably approximates the number of actual NEC air travelers, but is significantly 

less than the actual NEC automobile ridership. Second, the base figures, like the figures for scenario 1 and 2, assume 

Amtrak is using a revenue maximization process to determine fares that would have diverted more riders from 

automobiles and airlines to rail than Amtrak’s present revenue management process does. Exhibit A provides further 

discussion of the revenue maximization issue. 
8

HSR would grow at an increasing rate with each successive reduction in travel 

time, as shown in figure 3. In other words, the benefits from each additional 

1/2-hour reduction in time would increase as travel time decreased. This result 

implies that scenarios 1 and 2 were not unusual in terms of the scale of benefits 

produced. 

Figure 3. Benefits from Various Travel Time Reductions for 2006 ($ Millions)

 Travel Time [North End Time (H:M) / South End Time (H:M)] 

 Total Annual Benefits Change in Annual Benefits 

$0

$500

$1,000

$1,500

$2,000

$2,500

3:00 / 2:30 2:30 / 2:00 2:00 / 1:30 1:30 / 1:00

$335

$413

$526

 Source: OIG analysis. 

The results from this analysis also imply that investigation of the costs of 

achieving travel times shorter than those in scenario 1 is warranted to allow for 

determination of benefits net of costs in those situations. However, at present, 

there are no comprehensive estimates of the costs of the NEC infrastructure 

investments necessary to support travel times shorter than those considered in 

scenario 1. Amtrak and FRA representatives indicated that they anticipate the 

costs of achieving the second half hour of travel time reduction reflected in 

scenario 2 would be greater than the costs associated with the first half hour of 

travel time reduction reflected in scenario 1. The costs of infrastructure 

investments to further reduce travel times are expected to grow at an increasing 

rate with each successive decrease in travel time because the most cost-effective 

options for reducing travel time would be implemented first. 
9

Substantial Additional Benefits Beyond Those Estimated in Our 

Review Would Flow from the Investments Enabling HSR 

Our estimate of the benefits of HSR on the NEC is conservative in that it excludes 

benefits related to improved nationwide airspace traffic flows and improved 

commuter and freight services. We did not calculate these effects because each of 

them would have required extensive additional modeling. For example, producing 

reliable estimates of the benefits from improved commuter services would require 

modeling ridership for each of the seven NEC commuter agencies, a task of 

considerable scope. 

Regarding air travel, we only calculated the monetary value of congestion benefits 

for travel on the NEC. We would expect, for example, that reducing congestion in 

the New York City area would improve air traffic flows throughout the national 

airspace system. That is, the delays in other parts of the country caused by delays 

in flights into or out of New York would be reduced. We did not include the 

benefits of the broader congestion reduction in our analysis. 

Substantial investments in the condition and capacity of the NEC could 

significantly improve commuter and freight services. Currently, there are many 

locations at which the condition of the infrastructure or physical constraints limits 

capacity, speed or both. Even minor delays on one service can quickly cascade 

into significant delays for all services. With respect to freight, current clearance 

restrictions on part of the infrastructure mean that essentially only size-restricted 

local traffic can use the corridor at present. 

The benefits to the public of improvements in commuter and freight services could 

be considerable. By some measures commuter rail services are much larger in 

scale than Amtrak services. For example, Amtrak accounts for only about 

14 percent of weekday NEC train movements and roughly 5 percent of annual 

NEC riders. Commuter rail traffic comprises virtually all of the rest. Freight 

operations could change in both scale and nature if clearance constraints were 

removed. 

CONCLUSION 

The benefits from HSR, as initially envisioned (scenario 1), exceed the 

expenditures necessary to implement it. We estimated that HSR at this level of 

service would produce a net present value benefit of $16.3 billion in 2006 dollars, 

which exceeds the estimated $14.0 billion in 2006 dollars of infrastructure 

investments needed to achieve it. While our estimate of the financial impact from 

congestion relief was small, $0.3 billion, we also estimated that a sizeable share of 
10

air travelers along the NEC would divert to HSR, thereby providing some relief to 

the congested airspace in the area. Our analysis also showed that as travel times 

decrease further, the resulting benefits from HSR would grow at an increasing 

rate. The investments initially envisioned for HSR would produce benefits well 

beyond those quantified here. They would also significantly benefit NEC 

commuter and freight rail services and provide benefits such as reduced aircraft 

and automobile emissions. 

We have discussed our observations and conclusions with FRA and Amtrak 

officials. Since we are making no recommendations, no formal response to this 

product is required. FRA did not offer comments, but Amtrak objected to our 

characterizing achievement of a state of good repair and capacity improvements as 

preconditions to realizing scenario 1 travel times. However, we consider these 

investments essential to the implementation of reliable HSR service and have not 

changed our report to reflect Amtrak’s comment. 

We appreciate the courtesies and cooperation of Amtrak and Federal Railroad 

Administration representatives during this review. If you have any questions 

concerning this report, please call me at (202) 366-1981 or Mitchell Behm, the 

Program Director, at (202) 366-1995. 

# 

cc: Audit Liaison, OST, M-1 

 Audit Liaison, FRA, RAD-43 

Amtrak Liaison 
11

EXHIBIT A. SCOPE AND METHODOLOGY 

SCOPE 

We conducted an analysis of the costs and benefits of HSR along the NEC. Our 

objectives were to: (1) estimate the revenue and congestion relief benefits 

associated with different levels of HSR on the NEC and (2) determine whether 

HSR would pay for itself through increased revenues, congestion relief, or a 

combination of the two. Additionally, we sought to estimate the consumer surplus 

provided by different levels of HSR on the NEC. 

We worked with CRA to estimate the benefits from reducing the trip times for 

Acela on the NEC. CRA used econometric models to estimate demand for HSR, 

taking into account the availability of opportunities to travel by air, automobile, 

and conventional rail. They also estimated revenue maximizing fares and used a 

model of the NEC highway network to estimate reductions in roadway congestion. 

We developed estimates of the costs of implementing HSR using available studies. 

METHODOLOGY 

Revenues 

Overview 

CRA carried out the estimation of the benefits from HSR for scenarios 1 and 2 in 

four steps. First, CRA generated demand curves12 for HSR for every station-pair 

for each of the two scenarios as well as for travel at the current or base travel 

times. Second, CRA utilized these demand curves to calculate the HSR fares that 

would maximize Amtrak’s revenues in each of the scenarios and the base case. 

Third, CRA estimated the change in revenues, consumer surplus, and congestion 

benefits. Fourth, CRA used forecast values of air and automobile travel demand 

and socioeconomic variables to project the benefits over the lifespan of the 

infrastructure investments, and the net present values of the projected benefit 

streams were calculated. In addition to estimating benefits for scenarios 1 and 2, 

 

12 In this instance, a demand curve is the relationship between a range of HSR fares and the number of travelers who 

wish to take HSR at each fare in the range. 

Exhibit A. Scope and Methodology 
12

CRA conducted analyses of the sensitivity of results to further reductions in travel 

times. Each of these steps is addressed in greater detail below. 

Estimating Demand Curves for HSR 

To generate HSR station-pair demand curves for each of the scenarios and the 

base case, CRA used econometric models (specifically, binary mode choice 

models) to calculate the HSR ridership corresponding to a wide range of HSR 

fares for each travel time scenario. The fares for conventional rail were assumed to 

be held constant at their 2006 levels. 

Obtaining Revenue Maximizing Fares 

In the second stage of the study, the demand curves generated in the previous 

stage were used to obtain the HSR fares that maximize Amtrak’s revenue for the 

two scenarios and the base case. This was done by using a method of capacityunconstrained optimization.13 This process incorporated certain fare constraints in 

order to produce more realistic results. For example, fares for a given origindestination pair were constrained to not exceed the sum of the fares between the 

origin and an intermediate station and between an intermediate station and the 

destination. Also, one constraint ensured that there would be a premium on HSR 

fares as compared with conventional rail fares. 

This step was performed because we assumed Amtrak would set fares for the new 

service using a revenue management process as it does now, rather than simply 

maintaining current fares. However, we found that the revenue maximization 

process we modeled would have diverted considerably more revenues and riders 

from other modes than Amtrak’s revenue management process. To isolate the 

benefits from upgrading travel times alone, we first used our revenue 

maximization process to estimate the revenues that could have been generated 

without upgrading travel times. We then also applied it to determine the revenues 

that could have been generated at the upgraded travel times. 

Calculating Benefits for a Single Year 

In the third stage of the study, CRA estimated the increase in benefits resulting 

from shorter HSR trip times for a single year under both scenarios. The increase in 

benefits was the sum of the increases in Amtrak’s revenues, consumer surplus, and 

congestion relief. The revenue increases were calculated as the difference between 

the baseline revenue and the revenue in each of the two scenarios, all evaluated at 

the revenue-maximizing fares. 

 

13. Optimization is a mathematical tool used to determine the values that maximize (or minimize) an objective. In this 

case, the objective was revenues from HSR, and the optimal values were the HSR fares that maximized HSR 

revenues. 

Exhibit A. Scope and Methodology 
13

The increase in consumer surplus was calculated separately for those who were 

already riding Acela, those who diverted to HSR from air carriers, those who 

diverted to HSR from automobiles, those who diverted to HSR from conventional 

rail, and those who had not been traveling previously but were induced to travel by 

the advent of the new HSR. For the first three groups, the gains in consumer 

surplus were proportional to the sum of the monetary value of the travel time 

reduction, net of the fare increase, plus the monetary value of the modal constant 

change (both of these monetary values were generated by the models). Modal 

constants in binary choice models measure the preference of travelers for one 

transportation mode over another. CRA adjusted the modal constants to capture 

the higher levels of comfort and reliability expected to follow from bringing the 

NEC infrastructure up to a state of good repair. 

For travelers who were expected to divert to HSR from conventional rail, the 

mode choice models allowed for direct calculation of the gain in consumer surplus 

as the increase in utility or consumer welfare as measured by a standard economic 

utility or consumer welfare function. For those travelers who had not been 

traveling previously, but were induced to travel by the advent of the new HSR, 

consumer surplus was calculated as a proportion of a function of the change in a 

generalized measure of costs that included the cost of time. 

To calculate congestion benefits, monetary values of time were multiplied by the 

travel time reductions experienced by those travelers who continued to travel by 

air carrier or automobile. In addition, the savings in operational costs per unit of 

time for different categories of aircraft were multiplied by the reductions in airport 

delays. Delays for each of thirteen airports14 were derived using a Volpe 

Transportation Systems Center model of airport congestion, along with data from 

the Federal Aviation Administration’s Terminal Area Forecasts and information 

provided by operations personnel from the different airports. Congestion on the 

NEC highway network was calculated using a highway model constructed in 

TransCAD from National Highway Planning Network data and traffic count data. 

Calculating the Net Present Value of Benefits Occurring Over the Lifetime 

of the Investments 

It was assumed that infrastructure improvements allowing for scenario 1 travel 

times would be completed by the year 2012, and those supporting scenario 2 travel 

times would be completed by 2017. In both scenarios, the investments were 

assumed to last 33 years. Calculating the NPV of the resulting benefits required 

 

14 The thirteen airports were chosen due to their high air volumes. They were Baltimore-Washington International 

(BWI), Ronald Reagan Washington National (DCA), Washington Dulles international (IAD), Philadelphia 

International (PHL), Newark Liberty International (EWR), John F. Kennedy International (JFK), LaGuardia (LGA), 

Long Island MacArthur (ISP), Westchester County (HPN), Bradley International (BDL), Theodore Francis Green 

State (PVD), Boston Logan International (BOS), and Manchester Boston Regional (MHT). 

Exhibit A. Scope and Methodology 
14

determination of the rates at which the benefits would grow during the 33 years 

following completion of the infrastructure improvements in either 2012 or 2017 

and then discounting the benefit streams back to 2006. 

Since the diversion rates were assumed to be constant, the benefits associated with 

each mode would grow at the same rate as demand for travel by that mode. For the 

most part, the benefits associated with air travel were grown using FAA’s 

Aerospace Forecasts for national air travel reduced by the ratio of anticipated 

population growth for the NEC relative to the expected national average. Benefits 

related to travel involving the slot-controlled airports were grown using forecasted 

enplanements from FAA’s Terminal Area Forecasts. Benefits associated with 

each of the other travel modes were determined using mode-specific econometric 

models (specifically, direct demand models) in conjunction with socio-economic 

data forecasts from Woods and Poole.15 All benefit streams were discounted to the 

year 2006 using a 3 percent real discount rate. 

Conducting Sensitivity Analyses 

To assess the sensitivity of the level of benefits to the choice of travel time, CRA 

estimated the benefits that would have resulted in a single year, 2006, from 

achieving each of a series of increasingly shorter travel times. Econometric 

models (specifically, binary mode choice models) were used to estimate the 

diversions from other transportation modes to HSR that would occur as a 

consequence of the travel time reductions. To simplify this process it was 

assumed that fares would remain at existing levels, so these analyses did not 

involve revenue maximization. The benefits associated with each reduction in 

travel time were determined as described in the preceding section on calculation of 

benefits for a single year. 

Costs 

We interviewed representatives from FRA and Amtrak to ascertain which studies 

would be relevant to estimating the costs of upgrading the NEC for HSR. Two 

documents were identified as providing the best available information on the 

subject: “The Northeast Corridor Transportation Plan: New York City to Boston” 

by FRA (1994) and “The Northeast Corridor South End Transportation Plan: 

Washington, DC to New York City” by Amtrak (2000). We also reviewed the 

report entitled “Engineering State of Good Repair” by Amtrak (2006), which 

primarily addressed investment needs on the NEC South End and drew heavily 

from the 2000 South End Transportation Plan. 

 

15 Woods and Poole Economics, Inc. is an independent firm that specializes in long-term county economic and 

demographic projections. Woods and Poole's database provides projections of socio-economic variables through 

2030 for every county in the United States. 

Exhibit A. Scope and Methodology 
15

We further consulted with FRA to determine which of the projects listed in the 

two documents have already been completed. This determination was fairly 

straightforward with respect to the plan for the North End of the NEC. However, 

the lack of detail provided in the South End Transportation Plan substantially 

limited our ability to do this with respect to that portion of the NEC. 

Consequently, our estimate of the investment needs on the South End may be 

overstated. Finally, we inflated all costs to 2006 dollars using a gross domestic 

product deflator. 

Exhibit A. Scope and Methodology 
16

 EXHIBIT B. MAJOR CONTRIBUTORS TO THIS REVIEW 

THE FOLLOWING INDIVIDUALS CONTRIBUTED TO THIS REPORT.

Name Title 

Mitchell Behm Program Director 

Betty Krier Supervisory Economist/Project 

Manager 

Chia-Mei Liu Economist 

 

Exhibit B. Major Contributors to This Review 
17

508 Compliant Figures for “Analysis of Benefits of High-Speed Rail on the 

Northeast Corridor” 

Figure 1: Net Present Value of Benefits ($ Millions)

Category of Benefits Scenario 1 Scenario 2 

Revenues 11,895 26,749 

Consumer Surplus 4,075 8,643 

Congestion Relief 322 558 

Total 16,292 35,950 

Figure 2: Effects of HSR on Air and Auto Ridership 

Type of Ridership Numbers of 

Riders in FY 

2006 

Change from 

Base 

Percent 

Change from 

Base 

Air: Base Case 8,219,053 na na 

Air: Scenario1 7,346,657 (872,396) (10.6%) 

Air: Scenario 2 6,552,618 (1,666,435) (20.3%) 

Auto: Base Case 133,420,489 na na

Auto: Scenario1 132,964,580 (455,909) (0.3%) 

Auto: Scenario 2 132,653,645 (766,844) (0.6%) 

 
18

Figure 3. Sensitivity Analysis of Travel Time Reductions 

Travel Time 

North End 

Travel Time 

South End 

Total Annual 

Benefits 

($ millions) 

Change in Annual 

Benefits 

($ millions) 

3:00 2:30 1,022 -- 

2:30 2:00 1,357 335 

2:00 1:30 1,770 413 

1:30 1:00 2,296 526