Ottawa City Council Kills Light-Rail Line

In what I regard as a victory for common sense, the Ottawa city council has killed a planned light-rail line. Unfortunately, this may be a costly decision as a previous city council had signed a contract to construct the line, and the contractors say they want compensation for the cancellation.

The 18-mile line, which had been approved by the city council last July, was expected to cost CN$778 million, or about CN$43 million per mile. The Province of Ontario had promised to cover about CN$400 million of this cost, leaving the city to find CN$378 million.

Light rail passing high-density housing in Moscow. Photo by Lowell Grattan.

But after having spent CN$65 million on the project, a new city council elected in November decided light rail was a waste of money. In December, they voted 13-11 to cancel just before a contract deadline.

Siemens, which had the contract to build the line, threatened a lawsuit. Earlier this month, the company sent a letter to the city asking for CN$175 mllion for “wrongful termination of the contract.” Of this, CN$25 million was for money already spent and the rest was for “lost opportunities and profits.” Alternatively, the company said it would build the light rail, but due to the delay, it would now cost CN$70 million more — provided the city agreed to it by the end of February.

soft viagra If you look like you just fell out of bed, plan on going back there, alone. Both of them are of recommended cialis canada online same genre. Although reasons find this link commander cialis behind this are not certain, it is believed to range from biological to psychological. Kamagra Tablet Like every other ED medication, Kamagra is available in a tablet form cialis fast delivery which you can ingest with water or juice. The city council, however, rejected this offer, a majority saying they did not want the light rail. Siemens may end up suing, but the city probably expects to pay something less than the CN$175 that Siemens requested.

This is a rare counter-example of the Concorde or Sunk-Cost Fallacy, which refers to the tendency of people and, especially, governments to throw good money after bad on ill-considered projects because they don’t want to admit that they wasted the money they already spent. This is named after the Concorde, the British-French supersonic plane, which was a financial failure and would have to be considered a social failure as well unless you think it is appropriate for average taxpayers to subsidize the trans-Atlantic travels of people who can afford $5,000 for a ticket.

The last flight of the Concorde. Photo by Adrian Pingstone.

As one paper on the Sunk-Cost Fallacy says, “decisions are often based on past investments rather than expected future returns. This leads to an unwillingness to abandon something if a great deal has been invested in it, even if future prospects are dim.” In a political context, the cost that is sunk is more than just money: it is the prestige of the politicians advocating for particular projects. This makes it especially hard to learn from mistakes.

Some consider the Concorde to be a technological success particularly in view of the rivalry between Europe and the United States, which decided not to subsdize a supersonic passenger liner. But a paper on the Sunk-Cost Fallacy that appeared in the Journal of Ecology and Society argues that it was just such fallacies that led to the downfall of some past civilizations. Continuing to invest in failed projects leads the societies to eventually collapse.

On one hand, it is pretty amazing that the United States can afford to burn up more than $100 billion (adjusted for inflation) on capital improvements in rail transit over the last fifteen years even though the returns from such investments are zilch. On the other hand, if we want to stay competitive with Europe and, especially, Asia, we are going to have to invest more wisely in the future.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

4 Responses to Ottawa City Council Kills Light-Rail Line

  1. JimKarlock says:

    But after having spent CN$65 million on the project, a new city council elected in November decided light rail was a waste of money. In December, they voted 13-11 to cancel just before a contract deadline.
    JK: So what caused a sudden attack of common sense?

    Thanks
    JK

  2. davek says:

    Having used The Google five minutes ago, I am now an expert on this matter. It appears the public was opposed principally to this specific plan, which runs a line north-south. Those in the south end were particularly annoyed at the property tax increase they were likely to face. My guess is that if they could have enjoyed the positive externalities of LRT without having to chip in, they would have free-ridden away. Although various media reports suggest citizens are still open to an east-west line, they also suggest that it will be a while before everyone’s settled down enough to discuss it.

    Hot damn, I love these Intertubes.

  3. JimKarlock says:

    My guess is that if they could have enjoyed the positive externalities of LRT
    JK: What “positive externalities?
    LRT kills at three times the rate of cars.
    LRT costs double what private cars cost per passenger-mile.
    LRT does not cause development.
    LRT does not reduce congestion
    LRT construction cost is extreme
    see http://www.DebunkingPortland.com
    But it is a nice toy because it: Costs too much and does too little

    The people who really wanted light rail in Portland are:
    Electric companies……………………. (sell electricity)
    Gas company ………………………..(electricity for natural gas – probably coal in other regions)
    International Brotherhood of Electrical Workers
    International Union of Operating Engineers
    Banks ………………………………….(sell the bonds)
    Siemens Duewag Corporation……..(Makes rail car components)
    Public Employees Unions…………..(Will operate trains)
    Parsons, Brinckerhoff, Quade & Douglas

    Thanks
    JK

  4. the highwayman says:

    The city of Ottawa is an urban mess. The federal government ripped out all the train track in the city center years ago.

    So bringing back rail transit is undoing the damage that the federal government did to the city.

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