If the Big Move program is to deliver what it promises, then project evaluation must be based on rigorous analysis, with investment targeted "where it matters most," an approach that represents international best practice and that was endorsed by Metrolinx in 2008 in its own "guiding principles."
In an attempt to inform the debate on the Scarborough RT replacement, Metrolinx provided the Transit Investment Strategy Advisory Panel with a graph showing the comparative whole-life costs of different transit modes. This graph is shown in Figure 30. Unfortunately, the graph is potentially misleading, and could lead to ill-informed decisions.
First, the graph includes all costs, including financing costs, but as spent at the time rather than discounted to Net Present Values. This approach downplays the value of capital-intensive schemes, even where they can bring offsetting savings and benefits.
Second, the graph shows costs, but not benefits, not even financial benefits such as savings in costs of operating bus routes that may be replaced by the transit investment, and the incremental revenues that may be generated by the improved transit service.
Third, the graph omits Regional Express Rail, a mode that the Big Move identified as the backbone of the regional transit plan. Regional Express Rail can be built mostly over existing GO Rail corridors, and in many cases even over existing track, so capital costs are low. With relatively large trains, Regional Express Rail can be very efficient, and with higher operating speeds and higher yields, it has the potential to pay its way, recovering all operating costs and even paying back a large portion of capital costs from fares.
Fourth, each transit corridor is unique, with unique capital costs, and operating costs (and revenues) depending on traffic. Looking at the operating costs for each mode in the Metrolinx graph, it seems to compare a heavy bus route, which could be replaced with:
- BRT, with modest capital costs but apparently no reduction in operating costs, even though the productivity of drivers and buses on a BRT are normally higher
- At-grade LRT, with higher capital costs, but lower operating costs, presumably because the service is operated with larger, but less frequent, vehicles
- Elevated LRT and subway, with much higher capital costs but similar operating costs
Figure 30: Graph prepared by Metrolinx to inform the debate on choice of modes
We think projects costing billions of dollars deserve a more sophisticated analysis. We also think the public and policymakers can appreciate the complex trade-offs that have to be made when selecting the appropriate transit mode for each corridor.
Clearly, subways make sense on very heavily used corridors, while elevated LRT (or more precisely grade-separated LRT, with an exclusive right of way) offers an attractive mix of cost and speed for many suburban corridors. At-grade LRT works in the older parts of Toronto, for short routes, while BRT is often a cost-effective way of improving transit in low-density suburbs. This graph does not help policymakers understand these distinctions.
Figure 31 shows our comparison of different traffic modes, correcting for key deficiencies in the Metrolinx graphic, and based on data for specific Metrolinx schemes. Subway remains the most expensive mode, but at least on the Vaughan and Richmond Hill extensions, the savings to bus operating costs and the incremental revenues from new rider offset a significant part of the costs. The net cost (or "Funding Gap") is only about $300 million per route kilometre, one-third of the $1 billion figure suggested by Metrolinx.
Indeed, the funding gap on the Eglinton Crosstown LRT is similar, because although capital costs are slightly lower per kilometre, bus costs savings and incremental revenues are also lower. Surface LRT and BRT schemes cost less, but again, relatively little of the cost is offset by incremental revenues, at least for the schemes that are shown.
Regional Express Rail has very low costs, because it uses mostly existing surface corridors, trains are relatively large and fast, and revenues per passenger are high. Indeed, the net cost barely shows on the graph, per kilometre, while incremental revenues are as high as for the subway extensions.
Figure 31 shows the incremental costs and revenues of each Metrolinx scheme, and the "Funding Gap" per route kilometre, and for some suggested modified schemes. Note that most of the GO Rail schemes have revenues far in excess of incremental costs. By comparison, the LRT schemes generate very little incremental revenue in proportion to their costs. Further details, including the underlying analysis, are discussed in the following sections.
Note that elevated (and automated) LRT, as used successfully in Vancouver, Dubai, London, and other cities, is not shown, because no Metrolinx projects use this technology.