Authors: Hovanes Gasparian and Kelley Groves
Abstract: Transportation is a critical issue facing California. As its population expands, the State will need to develop a new form of travel that will provide its residents with increased mobility and support its growing economy. Two solutions to this problem have risen to the forefront, the High-Speed Rail and the Hypeloop.
This report details a cost-benefit analysis of both of these forms of transportation in order to determine which one would benefit the state the most. We conducted an extensive meta-analysis in order to determine the appropriate cost and benefit variables for these projects. Examples include operations and maintenance costs, time-savings, reliability, safety, sustainability, and passenger productivity. These costs and benefits were discounted at a 7% rate to reflect the U.S. Department of Transportation’s TIGER guidelines for large-scale transportation projects. In the baseline scenario, the net present value for the High-Speed Rail was approximately $10.6 billion and $51.6 billion for the Hyperloop. We also conducted two sensitivity analyses on the discount rate and ridership projections to account for uncertainties in our model.
After a thorough analysis of both of these transportation systems, we recommend that the High-Speed Rail Authority reconsider moving forward with the HSR project in favor of the Hyperloop. Its net present value surpassed the HSR’s in our base case and our sensitivity analyses and would therefore be a more beneficial mode of transportation for society.