UCLA Study of Japan's Bullet Train Raises Questions about California Project

July 25, 2012

The state government of California is currently underway to fund one of the largest infrastructure projects in the history of the United States. The state's proposed bullet train, which will cost an estimated $68 billion, would connect Los Angeles and San Francisco, purportedly bringing vast economic growth to both cities and the Central Valley between, says the Los Angeles Times.

However, a new study by Jerry Nickelsburg, senior economist with the UCLA Anderson Forecast, suggests that this economic outcome is likely fanciful. In coming to this conclusion, he analyzed historical data regarding the economic impact of the construction of a similar bullet train in Japan.

  • Nickelsburg examined the growth rates of cities and regions served by Japan's system, compared to the nation's overall rate of growth, over a 30 year period.
  • He found that the introduction of high-speed passenger service had no discernible effect on local growth rates over and above national rates.
  • The analysis looked at nearly a dozen urban and rural prefectures and found no evidence that the introduction of bullet train service improved tax revenues, which was used as a proxy for local gross domestic product.
  • In one case, one region without high-speed rail service grew just as quickly as a similar region with it.

The California High-Speed Rail Authority responded to the study by referring questions to University of California, Merced, lecturer Dipu Gupta, who said he disagrees with the central conclusion that the project would not spur growth. Gupta argued that the effects of such an infrastructure project are not isolated to localities, and therefore the study disguised the true economic benefits of the train.

Nickelsburg responds, however, that Gupta's statements are really only applicable to freight improvements and that his study certainly would have captured the benefits of a passenger train if they existed.

Nickelsburg further contends that rather than creating new jobs in Los Angeles or San Francisco, the bullet train will simply contribute to urban sprawl by encouraging workers to live in the Central Valley and commute to work in the cities. This, he argues, will not have a substantial net positive impact on job growth.

Source: Ralph Vartabedian, "UCLA Study of Japan's Bullet Train Raises Questions about California Project," Los Angeles Times, July 13, 2012. Jerry Nickelsburg and Saurabh Ahluwalia, "California High-Speed Rail and Economic Development: Lessons From Japan," UCLA Anderson Forecast, June 2012.

For text:

http://www.latimes.com/news/local/la-me-high-speed-study-20120713,0,2827295.story

For study:

http://www.anderson.ucla.edu/documents/areas/ctr/forecast/UCLAForecast_June2012_HSR.pdf

 

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