THE IMPACTS OF AN INDUSTRY SWITCH TO LARGE RAIL GRAIN HOPPER CARS ON LOCAL INFRASTRUCTURE: A CASE STUDY OF NORTH DAKOTA

A recent shift to larger grain hopper railroad cars may threaten the viability of the light-density branch line network in grain producing areas. This paper highlights the types of lines that are likely to be abandoned as a result of this switch by presenting a case study of North Dakota light-density rail lines. The study models the decision process used by railroads in deciding whether to upgrade such lines or abandon them. The costs of upgrading North Dakota rail lines that are candidates for abandonment are estimated. Generalized highway impacts that could result from the abandonment of rail lines also are estimated. In modeling the railroad decision process on whether to upgrade lines, it is shown that railroads are likely to rank investment alternatives based on their internal rates of return. In estimating the internal return, railroads are likely to use a maximum of an eight-year time frame for evaluating the benefits. Short line railroads are unlikely to make the investment upgrade in most cases. Results also show that the highway impacts resulting from North Dakota rail line abandonment are substantial, but somewhat less than rail upgrading costs in most cases. However, the highway impacts and other unquantified public costs of abandonment may be large enough to justify a partial public subsidy of rail line upgrading.