Independent Analysis of RTA Plan in 1996 Concluded that Costs Exceed Benefits by $2,500,000,000

In extreme contrast to a cost-benefit study commissioned by the RTA, the consulting firm ECONorthwest released a study (pdf) in 1996 concluding that the RTA system plan is not a cost-effective investment based upon likely changes in transportation performance.

The new analysis indicates that the costs of the RTA plan exceed its transportation benefits by $2.5 billion. The annualized cost per new transit rider is $13,028 and the return on the public's investment is minus 4.2% per year.

In a related development, Porter and Associates, a firm that conducted earlier studies for the RTA, released a report (pdf summary) just prior to the EcoNorthwest study that concluded that the RTA plan would generate a positive return on investment of 7.4% and generate net benefits of $4 billion. The conclusion of the independent study differs from the conclusion of the RTA study by $6.5 billion (negative $2.5 billion contrasted with positive $4 billion), an astounding difference.

The ECONorthwest report also considers other potential effects of the plan such as improvements in land-use and air quality. Analysts found that the RTA is not likely to generate measurable benefits in these areas.

The summary of the report states that "there are some non-transportation benefits which may lead voters to support the measure anyway. Investments in rail are popular in other cities even when they provide limited transportation benefits."

ECONorthwest is an economic consulting firm that has done numerous projects for the state and federal government on the application of benefit-cost analysis to transportation investments and policies. This study was reviewed by a panel of outside transportation experts:

Paul Courant, Chair, Economics Department, University of Michigan

Jose Gomez-Ibanez, Derek Bok Professor of Urban Policy and Planning, Graduate School of Design and John F. Kennedy School of Government, Harvard University

John Kain, Visiting Professor, University of Texas at Dallas and Henry Lee Professor of Economics and Professor of Afro-American Studies, Harvard University

Steve Fitzroy, Consultant and Former Director of Research and Forecasting for the Puget Sound Regional Council

Anthony Rufolo, Professor of Urban Studies and Planning, Portland State University

These reviewers agreed that "the methods and assumptions used in this analysis are consistent with those that professional transportation economists would use in analyzing projects of this type. The estimates of the range of net transportation benefits of the plan are reasonable and provide useful information for voters to consider when deciding whether to support the measure."

In the case of the Porter and Associates study -- paid for by the RTA seeking consultant review of its own plan -- there was no independent, non-local review panel like the one above.

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Last updated February 07, 2011