Molly Castelazo and Thomas Garrett of the Federal Reserve Bank of St. Louis think not: "Light Rail: Boon or Boondoggle?" (Boondoggle, they say).
"...The economic value that society places on light-rail transit is reflected, in part, by people�s willingness to pay for it. This is true for most products and services in the economy. To make a profit and stay in business, private companies must offer a product or service whose production costs are below what consumers are willing to pay for it. The public provision of light-rail services, in contrast, costs more than consumers are willing to pay. For example, fare revenue covers only 28.2 percent of operating costs in St. Louis, 19.4 percent of costs in Baltimore and 21.4 percent of costs in Buffalo.2 Nationwide, annual light-rail operating costs ($778.3 million) far exceed fare revenue ($226.1 million); the balance ($552.2 million) is paid for with tax dollars. Note that these numbers refer only to operating expenses. With such large annual losses, no light-rail system could possibly recoup its construction costs, which can amount to several hundred million dollars. No privately owned system would ever be operated (or even be built) with such a dismal balance sheet.
One justification for the subsidies paid to build and operate light-rail systems is that light rail will reduce pollution and congestion from automobile traffic. However, building light rail is only a short-run solution to the problems of traffic congestion and pollution. To permanently alleviate the problems of traffic congestion and pollution, policy-makers must address the root cause of both: the inefficient pricing of roadway usage. Traffic congestion and pollution exist because the costs of driving an automobile are artificially low..."
There are also cheaper ways to provide transportation for poor people. For example, for what's being spent on the St. Louis MetroLink:
"...the annual light-rail subsidies could instead be used to buy an environmentally friendly hybrid Toyota Prius every five years for each poor rider and even to pay annual maintenance costs of $6,000. Increases in pollution would be minimal with the hybrid vehicle, and 7,700 new vehicles on the roadway would result in only a 0.5 percent increase in traffic congestion. And there would still be funds left over�about $49 million per year. These funds could be given to all other MetroLink riders (amounting to roughly $1,045 per person per year) and be used for cab fare, bus fare, etc."
Or maybe just provide traditional bus service - it would still be cheaper than light rail.
Given the draw backs, why do we still keep building light rail systems? Large, concentrated benefits to a few special interests, while the total costs, which may be large, fall lightly on individuals in the overall tax paying population.
I learned about this from Peter Gordon: "Airy Plans".