Project NPV, positive externalities, social cost-benefit analysis - The Kansas City Light Rail Project


Suhakar Raju

Document Type

Journal Article

Publication Date


Subject Area

mode - rail, mode - tram/light rail


The Heartland Light Rail project represents Kansas City’s biggest infrastructural investment in decades. The ballot initiative for the light rail project was voted down three times until it was finally approved in November 2006. Using best estimates of construction costs, operating expenses and federal funding, I estimate the net present value (NPV) of the project to be negative $343 million. From a standard NPV perspective the Kansas City light rail transit (LRT) system is unlikely to break even. However, if the negative externalities of auto travel and the positive externalities associated with light rail are properly accounted for in a comprehensive social cost-benefit framework, investment in the Kansas City LRT system becomes an increasingly feasible option.


Permission to publish the abstract given by the Journal of Public Transportation.