Economic study touts Alaska-Canada rail link

VANCOUVER, British Columbia Thu Jun 21, 2007 6:38pm EDT

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VANCOUVER, British Columbia (Reuters) - A railway to link Alaska to the rest of North America would create wider benefits even if freight revenue did not cover the projected $10.5 billion construction cost, according to a new study.

Building a more than 1,600-mile (3,300-kilometre) line between existing railroads in Alaska and Canada would spur mining development and open a new trade route to Asia, according to the report released this week by governments of the state of Alaska and the neighboring Canadian territory of the Yukon.

"The implications of this are much broader than just building a railroad," said Eugene Lysy, Yukon's deputy minister of economic development, who chaired the C$4.7 million ($4.4 million) study's management working group.

"In terms of the North, Yukon and Alaska, we have an opportunity to position ourselves to benefit from the supply and demand requirements of a growing global economy," Lysy said.

The study suggests the rail link would likely have to be funded as a joint public-private project, because projected freight shipping revenues over 50 years would cover only about 75 percent of the full $10.5 billion investment.

Building the rail line through the largely wilderness region would create $11.4 billion in net public benefits such as increased employment over the next five decades, according to the researchers.

There have been calls to build a railway between Alaska and the rest of the continent since at least the early 1900s, and in 2000 the U.S. Congress authorized $6 million to study the feasibility of the idea.

The study examined building a line from the Canadian National Railway in northern British Columbia, running through Yukon to the state-owned Alaska Railway, as well as a branch line to the White Pass & Yukon Route Railway.

Rail cars to and from Alaska now travel by barge, so building the line would improve the state's economic security by adding transportation options, the researchers said.

Exports of British Columbia coal and iron ore from Yukon would likely make up much the line's freight traffic, because access to rail service would make building mines in the region more economically feasible.

Asian trade via containers could also become a revenue source.

Lysy said the economic research used to prepare the 84-page report was much more extensive than any earlier study on an Alaska rail link.

The researchers acknowledged the line would also have an environmental and social impact on the wilderness area, and said both issues needed more study.

"In terms of environmental protection, there are issues with wildlife, endangered species and extensive bodies of water through the region," the study said.

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