The New Zealand Initiative last night released a think piece on the trade-offs of urban form – entitled “Up or Out“. Given the extensive recent debates in Auckland over the Auckland Plan and the Unitary Plan, plus the ongoing issue of housing affordability, it’s helpful to have further analysis and research in this area. Unfortunately, it seems as though some ideological assumptions behind what the NZ Initiative has come up with mask many of their conclusions – somewhat ironic given that one of the key thrusts of the piece is (valid argument) that we need to step back from assumptions and look at the data.
The general approach of the paper is reasonably logical – it analyses some of the benefits of a compact city approach, questions whether they hold true and then compares those benefits to some of the costs. Firstly, looking at agglomeration:
Part of this debate has centred on the agglomeration benefits that come from urban proximity. This is an important discussion point because agglomeration is often cited by planners as the clincher in their argument for compact cities. We do not reject the economic advantages to situating businesses and consumers closer to one other. After all, people and firms in urban areas tend to be more productive than their counterparts in less well-populated areas.
However, these advantages are only detectable as agglomeration benefits when the positives of proximity outweigh the costs of density. This is a balance that any city, regardless of urban form, has to strike if it is to survive. And yet this report shows that the restrictive planning regulations required to deliver the utopian vision of a compact city often tips the balance towards the cost side of the urban ledger.
You can tell from the use of the phrase “utopian vision of a compact city” that they have started out from an ideological position that density is bad.
It does make some sense that agglomeration benefits would have a limit. Yet if we look internationally there are much much larger cities and much much larger urban cores than Auckland – and we find that often it’s the larger cities and larger urban cores which are growing the fastest. The paper even references the significant agglomeration benefits from the CRL’s business case before going on to counter-intuitively suggest that agglomeration benefits in central Auckland appear to be on the wane.
However, the main argument is that the two main negatives of congestion and higher land prices need to be balanced against agglomeration to work work out whether building “up” or “out” is the right approach. Let’s work through the arguments made by the paper on each individually:
Congestion is one of these costs. Traffic congestion data from the United States shows that the most congested metropolitan areas are often the ones that have chosen to pursue compact development. Additionally, quantitative research into transit investments over a 26- year period using data from 74 US metros shows public transport had no long-term impact on road congestion. This stands at odds with the perception that high transit penetration is the solution, not an aggravator of gridlock.
Digging a bit deeper into how they arrived at this conclusion, it seems as though the same methodological mistakes around the measurement of congestion are being made as occurs with the Tom Tom surveys – focusing solely on congestion severity and ignoring issues like congestion exposure. The key point here is that low density car dependent cities may have less intensity/severity of congestion (because they’re so spread out) but whatever congestion there is has to be experienced by everyone because there are no alternatives. In a place like New York, the roads may be congested but to the vast bulk of people this doesn’t matter because they’re walking, cycling or using the subway.
The other gigantic flaw in the paper placing so much emphasis on the issue of congestion is the inconvenient analysis undertaken a couple of years ago which shows the most congested US cities are actually the most economically productive. While it’s more likely economic success causes congestion than the opposite, the congestion doesn’t seem to be holding these places back.
The key takeaway from this is that while congestion is annoying and perhaps theoretically should hold back economic performance, if we look at different cities across the USA it doesn’t seem to be doing this. It’s also interesting to compare how we view congestion on the transport network to other areas of society. For example people will choose to go to a restaurant that is busy, even if it involves waiting rather than go to an empty one next door. The crowded and congested restaurant is successful while the empty one is not. If we expand that to a city scale, many people would prefer being in a busy and interesting place with lots of other people than an empty city.
Moving on to land prices, this is seen as the other main negative resulting from a compact city approach that should be balanced against the agglomeration benefits:
Another cost is land. From the perspective of local government in New Zealand, compact cities are desirable because they limit the amount of roading, water and social infrastructure that will need to be provided. Yet by limiting the supply of land, city officials are inadvertently putting a scarcity value on housing in this country, which ranks among some of the least affordable in the world. Equally, the onerous regulations and zoning restrictions required to steer development along the compact model add to the scarcity value of housing. This scarcity value is not limited to housing, and businesses facing higher property costs will pass these on to customers in the form of higher prices, and where they cannot, firms will look to relocate to cheaper areas – a process that is already happening in Hamilton, a beneficiary of fleeing Auckland firms.
We’ve covered off this debate many times before in the past few years as the Auckland Plan and then the Unitary Plan were hashed through in great detail. While limiting the supply of land will theoretically drive up its price, when it comes to housing affordability the issue is the cost of housing more than the cost of land. Furthermore, it’s the cost of housing in particular areas that’s the issue – there’s plenty of affordable housing in Papakura, Clendon, Pukekohe, Waiuku and other far flung parts of Auckland. The huge price escalation is happening in the inner areas – and I can’t quite see how it’s possible to create more land in Grey Lynn or Mt Eden (although of course it’s possible to get more housing out of that land through intensification).
Going back to the paragraph quoted above, what’s particularly odd is the sentence “…the onerous regulations and zoning restrictions required to steer development along the compact model”. Given that enabling intensification is about the removal of zoning restrictions so people have more flexibility to do as they choose with their land, I wonder whether the NZ Initiative has completely misunderstood what planning does and does not do. One is not forced to build terraced houses in the Mixed Housing Urban zone – contrary to popular belief!
The other crazy thing that the paper completely ignores is the gigantic amount of sprawl that has been enabled in Auckland through the Auckland Plan and the Unitary Plan. In one big bang the restrictions on land supply in Auckland have been pushed outwards – even though the result of this is likely to be extremely expensive and not actually what people want anymore. Have the authors been completely ignorant of the Unitary Plan by accident or deliberately?
The paper then briefly touches on health issues – it seems to be cherry picking data and making assumptions based on how cities were in the 19th century to come up with conclusions that seem strangely at odds with what books like “Happy City” suggest. I’ll leave those details to a future post though.
Overall, the paper thinks that it’s come to some grand conclusions:
We have shown through academic research and the historic record that compact cities are not a panacea for the social, financial and infrastructural problems gripping modern cities today. There is no ‘one size fits all’ solution to urban costs, and the sooner we abandon ideology, the sooner we can start developing nuanced solutions to issues like congestion and skyrocketing property prices.
The aim of this report was not to generate specific policy recommendations but to unpack the highly technical argument surrounding urban form changes for the average citizen to participate in the discussion. Still, it is evident at a high level that overly centralised planning and decision making structures are one of the major contributing factors driving urban costs in New Zealand and further afield.
The conclusions are not completely wrong – in highlighting that cities are complex and any ‘one size fits all’ approach is likely to fail. However, in both key areas of critique (congestion and land prices) the paper has made some fundamental oversights – like ignoring the complexities of congestion and its seemingly minimal impact on economic performance, like ignoring the huge amount of additional land supply provided by the Unitary Plan and like ignoring that a key part of the compact city approach is liberalising planning rules within existing urban areas.
Perhaps unsurprisingly, but certainly disappointingly, the paper promises much but inevitably fails to deliver beyond repeating a simplistic ideological perspective on forms of urban growth – falling into the very trap it so merrily accuses others of doing.