Impact of Rail Abandonment upon Grain Elevator and Rural Community Performance Measures

Historically, businessmen located on rural branch rail lines have strongly opposed rail abandonment. They have argued that the loss of their branch rail lines would substantially increase their costs and make it more difficult-and perhaps impossible-for elevators and farmers to market their grain and to obtain production inputs. Community leaders maintain that the very existence of their towns will be threatened if their rail lines are abandoned. Congress also has been concerned with the impact of rail abandonment on rural communities. The Railroad Revitalization and Regulatory Reform Act of 1976 provides up to $360 million of financial assistance to states for "transitional continuation of service on light density rail lines that are necessary to continued employment and community well-being throughout the United States." The available research on the impact of rail abandonment on rural businesses and towns is inconclusive. The studies addressing this question generally are of three types. One type attempts to project the potential impact of abandonment on communities and elevators that have rail service. Studies by Poth (1975a,b) and by Fink and Goode forecast large losses of income and/or employment from potential rail abandonment. A second set of studies measures changes in communities and counties before and after abandonment. Due measures employment and population in two Oregon counties before and after abandonment of a branch line. Allen measures population growth, transportation costs, and firm adjustments within ten communities before and after abandonment. Due and Allen conclude that the shortand long-run effects of abandonment were relatively small. A third set of studies compares the growth of firms and counties affected by abandonment with the growth of nearby firms and counties that continued to have rail service. Bunker and Hill measure the impact of rail abandonment on agricultural production and on associated grain-marketing and fertilizer-supply firms located on two abandoned rail lines by comparing the growth of the firms located on the abandoned lines with the growth of nearby firms. The chief impact was on fertilizer dealers. There was no clear indication that abandonment had any significant impact on employment. Sloss, Humphrey, and Krutter attempted to measure the overall effects of rail abandonment on the development of nine test counties that had lost a major portion of their rail mileage. These nine counties were compared with nine control counties that had either no abandonment or relatively little abandonment. They find no significant impacts attributable to abandonment using economic indicators such as changes in total bank deposits, changes in total value added by farm products, changes in number of employees in manufacturing, etc. Measures of total economic activity on a county basis, however, may be too aggregative to measure accurately the impact of rail abandonment on individual businesses and communities. Many communities already have lost their rail lines. Thus, it should be possible to measure statistically the effect of rail abandonment on performance measures of businesses and communities by comparing the change in performance measures over time of the businesses and communities that have lost their rail service with the change in these performance measures of similar businesses and communities located on branch rail lines. It should then be possible to determine if significant statistical differences occur in the change in performance measures of the two groups of businesses or communities. This note compares certain performance measures of cooperative elevators and incorporated towns in Iowa that lost their rail lines before 1974 with the performance measures of cooperative elevators located on all rail lines in Iowa and of incorporated towns served exclusively by seventy-one Iowa branch rail lines recently studied for possible upgrading or abandonment (Baumel, Miller, and Drinka 1976, 1977). These seventy-one branch lines, which generally serve rural areas in Iowa, are considered as potential candidates for abandonment.