Project Summary
The movement of California goods is one of the largest employment generators within the state and is critical to both the structural health of the economy and the physical health of its citizens. However, the goods movement sector is subject to market failures that may result in suboptimal modal shares, in particular an excess of truck traffic some of which would ideally be diverted to rail. While opportunities for modal shift are limited within the state, there are significant possibilities for California exports. Examining the agricultural sector, California is one of the largest producers of perishable produce in the world and a majority of this produce leaves the state on a truck, despite the fact that rail dominated the market through the mid-1970’s. Significant inertia exists today among the grower-shipper- buyer network that has frozen in place the domination of the trucking industry among perishable produce, even though rail movement would reduce social cost in many cases. While the private sector is unlikely to invest in a modal shift given the historically low fuel prices, it is possible that there is an opening for a public-private partnership (PPP) that could provide a gentle push for change. This project will build on the initial work from the “Rail and the California Economy” project and explore the possibility of using public initiatives—including capital investment, risk sharing, subsidy, and other interventions—to support new rail infrastructure for the perishable produce industry. Specifically, the report will review the current state of affairs in two major growing regions, the Salinas Valley and the southern Central Valley, and analyze how goods move and the benefits of a modal shift to rail. The report will then identify public-private partnerships that might promote a shift to realize these benefits. Additionally, if time permits the project may review an existing PPP involving rail, the reconstruction of the Colton Crossing in southern California and the public benefits associated with its completion.
