Economic Impact of Railroad Abandonment: Carrington-to-Turtle Lake Rail Line

Abstract

The Carrington-to-Turtle Lake rail line serves five agricultural shippers in a four county area in central North Dakota. Service on the line has been affected by recent embargoes, floods, and poor, deteriorating track conditions. The line is a strong candidate for abandonment as efforts to rehabilitate the line have lacked financial support. Prior to this study, a benefit/cost study, which compares benefits and costs of a rail line reconstruction, was performed for the rail line in an attempt to secure financial assistance for rehabilitation. Railroad abandonment impacts rural communities and local economies in a variety of ways. Businesses that use rail for transportation usually experience a change in their shipping options. Instead of sending and/or receiving materials and supplies by rail, those items must be moved by truck. The severity of the change is often a function of the amount of material shipped and distance hauled. Rail abandonment affects property values. In the absence of tax rate changes, reduced property values translate directly into lower property tax revenues for local governments. Rural areas, especially in North Dakota, often do not have adequate road and highway infrastructure to absorb movements of grain and agricultural inputs exclusively by truck. The transference of rail movements to truck traffic accelerates the deterioration of local roads and highways. Abandonment of the Carrington-to-Turtle Lake rail line was estimated to increase transportation costs for shippers on the line by $329,000 annually. A majority of the increase in transportation costs would be incurred by farmers in the form of reduced commodity prices. The North Dakota Input-Output Model estimated that the $329,000 in direct impacts would generate an additional $682,000 in secondary impacts. Total economic losses for the regional economy were estimated to be $1 million annually. Additional impacts included an annual loss of $17,900 in state-collected tax revenue. Annual net costs (i.e., damages less additional user revenues) to repair and maintain state roads impacted from increased truck traffic were estimated at $297,000 for resurfacing and $868,000 for reconstruction.