Alaska-Yukon rail line would cost $10.5B, study says

Building a railway line linking the Yukon, Alaska and ports in northern British Columbia would not only carry a $10.5-billion price tag but the line may actually lose money, says a study.

A railway linking the Yukon, Alaska and ports in northern British Columbia would cost $10.5 billion to build, and then might actually lose money, according to a feasibility study.

But the study also found that economic spinoff benefits from the railway could make up for any losses.

Released Tuesday by Yukon Premier Dennis Fentie and AlaskaGov. Sarah Palin, the $4.7-million study, titled Rails to Resources to Ports, looked into the feasibility of building a line of more than 2,000 kilometres, which would also connect Alaska and the Yukon to the North American railway system.

The study found that building the rail line would cost an estimated $10.5 billion. Furthermore, such a line would recover only 75 per cent of construction costs over 50 years of running at capacity, leaving the Yukon and Alaska governments on the hook for nearly $3 billion to pay the difference.

"There's a 26 per cent funding gap, and we would have to look for where that other money would come from," said Kells Boland, a Calgary-based consultant who led the study's research.

However, Boland added that such losses would be compensated by many economic spinoffs. For example, having rail as a fuel-efficient and cheaper form of transportation would encourage mines to use it. The rail project would create construction, maintenance and other related jobs, and the Yukon economy would boom.

"It's $170 billion in additional economic activity," Boland said. "That's gross domestic product [and] 1.3 million job years."

Boland added his team of 120 consultants will now look at the impact that passenger train tourism on the line could have on the economy — a potential spinoff that the study released Tuesday did not address.

So far, no rail companies have offered to lay track on the proposed rail line. And while both the Yukon and Alaska governments shared the costs of the feasibility study, neither government has made the idea a top priority. Palin said earlier this year that it was not a priority for her administration, while Fentie said Tuesday he would want Ottawa to help pay for such a project.

"This, if it should ever happen, would be very similar to the Alaska Highway. It's a national infrastructure and requires national government involvement," Fentie told reporters. He said he will e-mail or mail a copy of the report to the federal transportation minister.

Palin said Tuesday that she will now consult Alaskans about the idea.