Protesters create Pedestrian Paradise

Unless you’ve avoided either the city or the news for the last day you’ll know that yesterday thousands of people descended on the CBD to protest the signing of the TPP. This post isn’t about the TPP – there are plenty of other places for you to discuss it – but rather about the impact the protests had on the city which I think highlighted a number of key issues we frequently advocate for. I wasn’t there so these are based on observations from others and images on social media.

Protesters walking down Queen St are nothing new but what was very interesting this time is that a number of groups went and blocked major intersections all around the city. This included blocking roads such as Albert St, Fanshawe St, Hobson St, Nelson St and Wellesley St. Given that Hobson and Nelson in particular are one way, it leaves them completely empty downstream of where they were blocked off. This had the effect in instantly turning many roads within the city over to people.

From these and many other comments I saw it made many parts of the city that are often quite hostile to those on foot actually very pleasant, pedestrian paradises if you will. There is obviously a lot going on in the city right now with the CRL getting under way and a number of large commercial building projects on the go but at the same time plans like the City Centre Master Plan call for making the city centre more people friendly – among other things. For example, it lists this as one of its outcomes and targets

OUTCOME 7

A walkable and pedestrian-friendly city centre – well connected to its urban villages.

Target 1: More kilometres of pedestrian footpaths/walkways
Target 2: More kilometres of cycleways
Target 3: Reduction in pedestrian waiting times at intersections
Target 4: Reduction in use of left-turn slip lanes
Target 5: New mid-block pedestrian crossings

Over the last few years we’ve had numerous international guest speakers visit Auckland talking about how we can do many of these things, do them quickly and do them cheaply. This includes people such as Janette Sadik-Kahn and Mike Lydon and many others.

It all begs the question of whether we’re moving fast enough to reach the city’s goals. Now obviously there’s a need for cars to be in some parts of the city but we do need to get the balance right. What the protests showed us yesterday is that almost completely shutting many roads in the city didn’t cause the sky to suddenly fall in. Perhaps the lesson we can take from it all is for the council and Auckland Transport to be bolder about making changes, throw some cones or planter boxes out on the street and block off a lane or two. It would allow quick changes to be made in response to the impacts generated and would probably end up with a faster, cheaper and superior result to the current process of modelling every change to the nth degree first.

To me the protest also helped highlight just how valuable the CRL is going to be once complete. Protests might not be that regular an event but disruption caused by traffic certainly is. Trains using the CRL are able to completely bypass any issues on the surface. Of course this doesn’t guarantee that in a protest situation that those protesting don’t try to shut the rail network too. Further, as it stands right now, for many of projects to make the CBD more people friendly the CRL happens to be a key lynch pin. For example, key parts of the proposed Victoria St Linear Park can’t happen till the CRL is built as two of the entrances sit within that future linear park.

Aotea Station Design North

 

I also thought of this in the terms of the impact to light rail should we have protests in the future. Obviously a line down Queen St would have been blocked by the protesters so in a situation like yesterday. One advantage it has is that it’s relatively easy to turn them around needing only a crossover track rather than circling a block. Designing light rail to ensure this is a possibility will be important for Auckland.

Lastly a little bouquet to Auckland Transport. Not only were the TPP protests going on but NZ Bus drivers were having a union meeting disrupting or cancelling services. Given they only had one day’s notice about the bus drivers I thought they did well to get some services on some key routes covered by buses and drivers from other bus companies. In hindsight having both the TPP and bus drivers meeting on the same day might have been a good situation as the buses would have been equally held up by the protesters. At least it meant only one day of disruption.

Transport technologies!?! Part 2

This previous post considered wider socio-economic factors which might shape the development/deployment of transport technologies, namely 1) denser cities, 2) policy settings, and 3) demographics. In this post I now discuss some more specific issues that are relevant to transport technologies, specifically:

  1. Economies of density
  2. Costs: Fixed versus variable
  3. Complements versus substitutes
  4. Conclusions: The Spruce Moose?

The takeaway message from this post is that the future is complex and uncertain. D’uh … read on for enlightenment!

1. Economies of density

The Prime Minister’s recent speech, in which he announced funding for the City Rail Link and the East-West Link, is an example of how policy settings can respond to wider socio-economic factors, such as population growth. Auckland’s rapid growth means that public investment in underground passenger rail stacks up more now than it perhaps has done in the past. As a result changed, Auckland’s transport network is set to change in a rather profound way.

Why has Auckland’s growth helped make the case for the CRL? Well, passenger rail has relatively high fixed costs. This in turn means that passenger rail experiences so-called economies of scale (or more accurately density). The phrase “economies of density” is used to describe situations where marginal costs are below average costs. This means that average costs fall as demand increases. Fixed costs like rolling stock and train stations all contribute economies of density in passenger rail.

 

Last week saw another example of “economies of density” in the context of New Zealand’s transport system, although this time the investment originates with the private sector. Emirates announced that – from this March – they will begin direct flights between Auckland and Dubai (NB: Apparently Qatar Airways is considering similar moves). Direct flights to Dubai will shave approximately 3 hours off travel-times between New Zealand and a number of destinations in the Middle East and Africa.

 

Economies of density lead to virtuous/vicious cycles: Higher demand begets lower costs, which begets higher demand etc (and vice versa). That’s why they are sometimes called “positive feedback loops”. Domestic air travel in New Zealand provides a nice example of virtuous cycles at work. Here, a combination of falling fuel costs, higher visitor numberslarger and more efficient planes, and competition has seen airfares fall (NB: I’m waiting on updated inflation data before making a more definitive statement). Many transport technologies, especially those where passengers share vehicles and/or facilities, tend to experience economies of density.

Private vehicles also experience economies of density to some degree. High levels of car ownership, for example, makes it easier to find a petrol station when you need one. The key difference between private vehicles and other transport technologies, however, is the degree to which road networks experience congestion. Beyond critical levels of demand, traffic congestion increases rapidly, i.e. congestion is a convex (upwards sloping) function. Congestion externalities are an example of dis-economies of density, and it’s one that is apparent in most cities of Auckland’s size and larger.

Congestion externalities are also an issue that things like driverless and/or electric vehicles do not resolve. Road pricing does solve congestion, although this is achieved by suppressing demand. So when people argue that electric and/or driverless cars will reduce demand for PT I’m somewhat sceptical, because these technologies don’t seem to change the fundamental dis-economies of scale that afflict urban road networks.

And when one thinks of the growth that Auckland will experience over the next 20 years, then economies of density are actually rather important. Perhaps more important than new technologies themselves …

2. Costs: Fixed versus variable costs

Our previous discussion noted that economies of density/scale arise in the presence of fixed costs. In this section I want to distinguish more carefully between fixed and variable costs. One useful way to think about transport costs is using a matrix which has “fixed/variable” versus “private/public” dimensions (NB: The latter is not relevant to this discussion, but can be for discussions of transport pricing more generally).

Cost table

 

Of course, such distinctions involve some arbitrary judgements. Parking for example, is both a private and a public cost. I’ve categorised it as “public” simply because a proportion of parking costs are subsidised by society. Despite the need for such judgements, I think this type of cost matrix is quite useful for classifying costs and subsequently analysing how changes in transport technologies (or policy settings for that matter) might impact on demand.

Using this framework (and a bunch of heroic assumptions) I have constructed the following graph to illustrate how the costs of cars compares to taxis and public transport, and how costs vary with distance measured in kilometres travelled per annum. PT fares are capped at the price of 12 monthly passes at $220 per month).

C1 Total private costs (c)

 

Here we see that cars become cheaper than taxis for people who are travelling more than 2,500 kilometres per year. Of course, the orange line is just one possible instance of the cost curve for cars. Depending on their preferences and circumstances, some people may opt to buy a cheaper car with higher operating costs, which would reduce the intercept but bump up the slope of the orange line. Nevertheless, the general point remains: For people who travel a lot, owning your own car makes more sense than using taxis.

Now consider a future scenario where electric driverless vehicles (“robot cars” for short) are available. How might they impact on these cost curves? Well, let’s assume robot cars cost 50% more than conventional cars; are 50% cheaper to park; and cost 25% less per kilometre to operate/maintain than conventional cars. When robot cars are used for taxis, they remove the need for a driver and increase higher utilisation. For the sake of the argument, let’s assume that the cost of using taxis drops by 50% with the advent of robot cars.

Under these assumptions, the cost curves presented above can be re-calculated as follows.

C2 Total private costs (future)

 

In this scenario taxis suddenly become cheaper than private cars for people who travel less than 10,000 kilometres per annum. By way of comparison, that’s slightly more than the average New Zealander travels per year. By pushing up fixed costs but reducing variable costs, robot cars seem to dramatically increase the scope for cheap taxi services to meet the demand for car travel for a wider range of households.

So consider this “what if” scenario: What if the primary impact of robot cars was to reduce the cost of taxis? In such a scenario would we need more or less PT? This leads me nicely onto the next topic …

3. Complements versus substitutes: A or B versus A & B?

When a new transport technology hits the market, one of the key questions we should seek to answer is whether it will complement or substitute existing technologies. The answer is not always obvious, but it is always important.

To provide an example, consider whether taxis increase or decrease demand for public transport. Many people think taxi’s compete with public transport, i.e. the two are substitutes. Rodney Hide, for example, had this to say on the matter (source; emphasis added):

[Uber is] … a whole new way of doing business. It disempowers bureaucrats and puts customers and drivers in charge. I love it. The public transport of the future won’t be clapped-out trains but driverless cars and Uber. It may happen much quicker than we now can possibly imagine. We won’t own a car. A driverless car is always just a minute away, ready to whisk us to our destination.

According to U.S. researchers, however, taxis are complements for public transport. This article provides a nice synopsis of relevant issues, while more detailed analysis is available here. The last report identifies “primary factors” for taxi demands, including 1) the number of workers commuting by subway and 2) the number of households that don’t own vehicles. Of course, places like New York have some attributes which are – for better or worse – not relevant to the New Zealand context …

 

Given that Auckland doesn’t have the density or subway system which exists in NYC, could Rodney be correct with his crystal ball-gazing? The answer, I think, is both “yes and no”. More specifically, taxis will compete with public transport in some places, while complementing it in others.

I think this article puts the distinction rather nicely when it says:

It is likely that these [taxi] services will just exacerbate the differences that already exist in the quality of public transit in different areas.  The localities that invested and ran their systems well won’t be as impacted.  In the areas where frustration is higher, the problems will surely become worse when revenues and ridership decline.  And the biases and history that impact why certain systems are the way they are will become more apparent.

The complements versus substitutes issue is relevant to many debates about new transport technologies. Some people seem convinced not only that driverless cars are imminent, but that they will drag people away from PT. I’m personally not so sure.

Conclusions:  “The Spruce Moose”?

One of my favourite Simpsons episodes starts with Mr Burns opening a casino. At the end of the episode, when the whole sordid venture is crashing down, an increasingly erratic Mr Burns pulls a gun on his ol’ mate Smithers and orders him to get into the model bi-plane affectionately known as the “Spruce Moose”.

maxresdefault

 

While hilarious, the behaviour of Mr Burns is not something we should emulate when it comes to transport policy. History is littered with unfortunate examples of politicians picking winners well in advance of demand. Indeed, such attitudes gave us 50 years of motorway building in Auckland, replete with well-documented examples of optimism bias and strategic misrepresentation. My point? Let’s not hold a proverbial gun to our own heads and over-commit to any particular kind of transport technology. Instead, let’s embrace the transport technologies we have, and be passionate about using them more efficiently, while keeping tabs on new transport technologies as they evolve.

There is no doubt that we live in exciting times: New Zealand is growing and seems to be experiencing economies of density, at least in the transport sector. Costs of air travel are falling, while other technologies, such as passenger rail, are more viable than they have perhaps been in the past. Robot cars and trucks seem likely to emerge onto the scene at some point, helping our car fleet to become smaller, quieter, cleaner, and generally more efficient than it is currently.

Meanwhile, rapid developments in telecommunications (which I intend to discuss in a later post) are changing the way that goods and services are delivered. This change is occurring at astounding speeds and in amazing ways. In a few years Uber has grown to become one of the world’s most valuable transport companies. In Europe, a start-up called “Blah blah car” has raised hundreds of millions in venture capital to expand its business, one which is already moving millions of people around the continent at very affordable prices. I can book any one of 5 trips from Amsterdam to Brussels tomorrow for about 10 Euro.

In such a dynamic and rapidly changing environment it’s hard to know what to do. And that’s kind of the point: There’s a risk that we over-adjust to new technologies, just like the motorway builders did in Auckland 50 years ago. What I would do, however, is ask some hard questions “around the edges” of what we are currently doing. And perhaps consider delaying some projects slightly in light of the uncertainty.

Indeed, when it comes to the CRL, my main criticism of the National Government’s requirements for accelerating funding was that similar conditions were not also attached to other large transport projects. Appropriately specified triggers would seem to be useful adjunct to existing benefit-cost analysis and provide a more precise understanding of when work on a particular project should go ahead (NB: Of course there are other factors to consider, such as interest rates).

In an upcoming post I will talk more about emerging technologies for non-car transport modes; that stuff is so exciting it deserves its own post.

Bicycles in China

Our Chinese correspondent* has sent us some thoughts about the transport environment in Shanghai:

The biggest surprise of my trip has been the huge number of electric bikes and electric scooters – many powered by lead acid batteries.  They are almost completely quiet and hum along the pedestrian-cycle paths on the sides of all the roads.  There are no gasoline motorcycles at all.

China bicycle parking

The e-bikes are mainly completely powered (no e-assist) and go quite fast.  At night no one uses the lights – probably to save batteries – so you have to quite careful on the footpaths.  Because it is winter the scooters have permanently attached large gloves on the handles – sort of like over-sized oven mitts as well as poncho like shields attached to the front.  Also not uncommon to see people tootling along holding an umbrella…

China scooter with hand warmers

[* My father, who is currently on a business trip over there.]

China is currently the largest market for electric bikes and scooters. Although car sales have taken off in China over the last decade, e-bike sales have taken off faster:

Worldwide e-bike sales in 2010 estimated to be 24 million. About 300,000 in USA, about 700,000 in Europe, 1.2 million in India, Japan and Taiwan, and 21.6 million in China!

e_bike_global_distribuation

Electric bike sales have grown far faster than the sales of any other mode of transportation in China, from a modest 150,000 units sold in the late 90s to more then 20 million today. That’s three times as many as the most optimistic projections for cars sales in China for the near future.

e_bike_china_demand

Given population density and poor air quality in China’s large cities, it’s easy to see the attraction of e-bikes for both individuals and policymakers. They don’t contribute directly to smog and they don’t take up much space.

There’s been some speculation about whether China will import US-style auto-centric transport habits as it develops. However, it might make more sense for China to export its e-bike-heavy transport mix to other cities in Asia and Africa that are facing similar issues of bad air and overcommitted road space.

Moving to a Suburban Office Park

Just before Christmas it was announced that Vodafone would move out of its offices in the city and now they’ve said they will move 1,800 staff to Smales Farm on the North Shore.

Vodafone is leaving its office in Auckland’s Viaduct Harbour.

The telco has announced its plan to combine all its Auckland operations in one place, in one of the biggest corporate relocations in New Zealand.

Its 1800 Auckland staff are currently spread across four locations, including Smales Farm on Auckland’s North Shore and the high-profile Viaduct location.

From mid-2017, they will all be based in a refurbished building in Smales Farm.

Vodafone and Smales Farm are investing a combined $200 million into the redevelopment of the Vodafone building and the creation of a Vodafone-branded precinct.

The building will have one of the largest digital billboards in the country on its facade.

….

Alongside the Vodafone building, Smales Farm is also developing a new hospitality zone with working greenhouses and a laneway of boutique eateries where people can meet and eat.

I immediately had a few thoughts about this that are relevant to what we discuss on the blog.

  • Unless they live on the shore I imagine that for many staff this move will be very frustrating. If they prefer to drive then they’ll still have to battle traffic – either to the city before it frees up after the bridge or if they come via Upper Harbour then they’ll have rush hour traffic on the North Shore to contend with. The move could however be good for the Northern Express given one of the big advantages Smales Farm has is a busway station at its doorstep so perhaps this will lead to an increase in NEX patronage.Vodafone Smales Farm - Aerial 2
  • Perhaps Auckland Transport and/or the Council should try to work with Vodafone to collect data on the travel patterns and mode choices that staff currently use. It could make a fascinating case study to compare how mode use and travel choice changes based on workplace location. My suspicion is it will lead to more staff driving
  • In Vodafone’s press release they talk about making an “innovative, sustainable and interactive precinct designed to foster business and community growth”. It will be interesting to see how far they take the idea of sustainable and whether it’s a bit of greenery. For example at present the Vodafone building in Smales Farm doesn’t even a bike rackVodafone Smales Farm - concept entrance
  • Having worked in them before, one thing I loathe about suburban office parks is the isolation such as the often limited choice in food, retail and other activities. I guess the hospitality zone that will be developed might partially address the food aspect but I guess time will tell.
  • The intersection of Taharoto Rd and Northcote Rd is already a pretty horrid location, I guess the addition of a giant digital billboard will only serve to reinforce that. Related there is currently a water feature and grassy area leading out from the building to the intersection. I wonder how many people have ever actually used it to relax or walk thought like they suggest will happen in the future.Vodafone Smales Farm - concept
  • I wonder what impact this will have on Auckland Transport. They currently have offices and a number of staff based in the Vodafone building at Smales Farm.

Why Houston is a city to watch for PT

Houston is often known as a large sprawly city built on the back of some truly massive motorways such as the Katy Freeway which is the world’s widest road and is now up to 26 lanes wide in places – yet more congested than ever after a NZ$4.3 billion upgrade.

Houston Katy Freeway

Despite that this year it will be a city to watch when it comes to public transport. Here’s why.

In 2014 Houston went out for consultation on a re-imagined bus network to completely overhaul their PT network. Helping lead the design was Jarrett Walker who has been doing the same thing in Auckland. He talks in more detail about the network and process in this post. Like Auckland, Houston were running a lot of buses but due to the poor network design many duplicated other services, meandered all over the place or were focused on serving a small population and as such the network was not effective. The map below shows the frequent routes under the old system

 

Houston Network Before

And here’s what the frequent network looked like after the reimaging. Like the proposals in Auckland there are other services running at lower frequencies too.

Houston Network After

One area Houston have definitely got over us is that after going out for consultation in May 2014 they implemented the entire network in August last year. By comparison Auckland Transport consulted on the idea of the new network in the 2012 Regional Public Transport Plan (RPTP), launched consultation on the South Auckland part of the new network in 2013 and aren’t expected to implement it till near the end of this year with the whole network not likely to be rolled out till the end of 2017. I’m suspect one of the reasons Houston was able to make the change so quickly is that the buses were run by transit authority and they already had the interchanges they needed in place.

At the same the city has also been rolling out improvements to its light rail network. In late 2013 it opened an 8.5km extension to their original Red Line and in May 2015 it opened two new lines – Green and Purple with a further extension to the Green Line still under construction.

Houston MetroRail map

 

What makes Houston interesting to follow is to see particularly what impact the new bus network has on ridership. The image below was being shared around social media last week and Kent included it in the most recent Sunday reading.

houston

When a complete bus network is changed a decline in ridership is is expected early on but it’s expected that over time it will then rise and do so at a faster rate so that after a few years the system is performing better than it was had the change not happened. The results above are surprising in just how fast the change appears to be happening. Bus ridership in Auckland is been growing however if the same sort of improvement in trend was seen it would be very positive.

Looking into the details a bit further one of the reasons for the good result in November was actually due to an extra working day which accounts for about 46% of the increase however even taking that into account the result is positive. Obviously it’s only early days but I’ll be keeping track of what happens in Houston as it might be an indicator as to what will happen hear following the roll out of the New Network in South Auckland. I’m sure many other cities will equally be watching what happens to see the value in moving to a connected frequent network.

In looking into the details I was also able to get ridership results for the city for the last 5 or so years allowing us to the trends that have been happening. One thing that surprised me was how comparing it to Auckland’s. At the start of the period Auckland had around 62 million trips to 69 million in Houston. As of November Auckland had 81 million trips to 74 million in Houston. Things obviously aren’t so comparable on a per capita basis as their urban area has around 5 million people so per capita they are much lower than Auckland

A breakdown of their results as a 12 month rolling average is below and as you can see a lot of their growth is being driving by growth on light rail since the network was expanded – much like how in Auckland the rail network is driving the growth. The big difference is our bus ridership has also continued to grow. Interestingly their Red Line on the light rail network is carrying about 54,000 people a day which is about the same as Auckland’s entire rail network.

Houston Transit Ridership

 

Given the implications for the new network I’ll continue to keep an eye on what happens as it may be an indicator of what we can expect.

Just cruising

Cruise ships are often a feature of the Auckland waterfront these days, and we’re well into the 2015-2016 season (summer is the busiest time, although these days the season seems to stretch out to June). The ships we see in Auckland are mainly in the range of 1,000 to 1,500 guest cabins. By comparison, Auckland’s largest hotel (the Rendezvous) has 450 rooms, and there are about 9,000 hotel rooms across the whole city.

As such, cruise ships give a pretty big boost to the number of people in town, even if it’s only for a day or two. The ships also have a large number of crew – usually one crew member per guest cabin or a little less – although many of them have to stay on board during stops at port. As reported in the Herald, the biggest cruise ship visiting this season carries almost 5,200 passengers and crew, and there will be even larger ones in the next season.

IMG_20151129_174620

Pic caption: The Golden Princess, taken 29/11/2015. 1,318 guest cabins, and from the front vaguely reminiscent of the helmet Princess Leia wears when she’s disguised as a bounty hunter.

Despite their size, cruise ships are actually a pretty small part of New Zealand tourism. In the last year, 3 million tourists flew into NZ, compared to around 200,000 cruise ship passengers sailing in. However, cruises have been one of the fastest growing tourism segments over the last decade, although numbers have been quite flat for the last three years.

Of course, Will Smith has a song for this too.

Transport technologies!?! Part 1

As the new year kicks off, it seems like an appropriate time to reflect on some wider trends – as Patrick recently did in this excellent wrap-up of the year just gone. Looking forward, one of the most exciting trends relates to how technology will impact on how we travel. This post marks the first in what I hope to be a long-running series on transport technologies. In this initial post I want to focus on wider factors that might shape changes in transport technologies.

Some people may find this strange. After all isn’t technological change a random gift from the gods, i.e. something which emerges from the ether without any particular rhyme or reason? Au contraire. Technological change doesn’t occur in a vacuum; it arises from entrepreneurial people and businesses anticipating people’s wants and needs. And just because a particular technology is developed doesn’t mean it will find a market and become widely adopted.

For this reason, before we try and portend too much about future transport technologies themselves, I think it is useful to step back and think about the process through which technological change occurs, and in particular the factors that capture the attention of entrepreneurs and/or shape the market for new technologies in other ways. The following sub-sections identify three factors, namely 1) Land use; 2) Public policies; and 3) Demographics, which I expect to direct the arrow of technology change in coming decades.

You may be able to think of others, and I’d be interested to hear what they are.

1. Land use: Denser cities favour space-efficient transport modes

Why begin a conversation about transport technologies by talking about land use? Put simply, the demand for transport (especially when measured in terms of passenger-kilometres travelled) is strongly dependent on the choices people make about where to live in relation to where they want to be. Land use also impacts on the relative effectiveness of different transport modes. For example, when average trip distances are short, then walking and cycling become more viable and vice versa. Hence, trends in land use are likely to have a bearing on the scale and composition of future travel demands.

What is happening to land use in New Zealand? Two over-arching trends emerge from the data: 1) urbanisation, i.e. more people are living in cities and towns and 2) densification, i.e. the dense areas of our cities are growing the most rapidly. The first trend is well-established and has persisted for the best part of a century, so I won’t cover it here. The second trend, however, is not well-understood in some quarters. David Seymour, for example, was recently quoted by The Herald as follows (source):

I don’t believe in 50 years time when we’re a society with vastly more sophisticated transport that people will be as attracted to living so intensely,” he said. “As transport technology improves, as it has for the last 200 years, people will say that’s great and travel farther and faster and we’re going to consume more space,” he said.

Seymour’s forecast runs contrary to observed land use trends over the last two decades or so. The table below is extracted from a paper written by my colleague Peter Nunns, which summarises densities for New Zealand cities in the period 2001 – 2013. We find that most cities that are growing have also experienced increases in density in this period, with Auckland leading the pack with a 33% increase in density.

Densities

I should point out that this table uses “population-weighted densities”, which measures the density at which the average resident lives. Population-weighted densities are a more  accurate indicator of urban density than the more-commonly cited “average density”, for reasons Peter discusses here.

The following two graphs provide strong evidence of how density is changing in Auckland. The first figure shows population growth in Waitemata compared to other parts of Auckland. The second figure then shows population growth in Auckland’s city centre from 1996 to 2015, in which time the population of the city centre grew at an average rate of ~12% p.a.. This is approximately six times higher than the Auckland average, which in turn is higher than the New Zealand average.

Auckland LB Population Change - 2015 2

City Centre Population - 1996-2015 2

It’s reasonable to suggest that where density increases, then we can also expect the value of land to increase – holding other factors constant. Research by Arthur Grimes into land values in Auckland suggests that the “pull” of Auckland’s city centre has indeed increased in the last two years (source).

And where space becomes more valuable, then one might reasonably expect space efficient transport modes to become relatively more attractive. A paper aptly titled “The Future of Motorized Transport” had this to say about the relative space efficiency of different transport modes (source).

Land use per mode

This analysis suggests that, on average, cars require ten times more space than the next least space-efficient transport mode (buses). In my opinion, this seems to indicate that where density increases, and space becomes more valuable, then cars will be placed at an significant disadvantage compared to other transport modes.

Is my hypothesis borne out by data on people’s transport choices? While we can never be sure, I would cautiously answer “yes”. The following figure, for example, shows how the total number people accessing the city centre using cars or public transport has changed in the period from 2001 and 2014.

Basically, all of the growth in travel demands to Auckland’s city centre over the last 15 years (plus some) has been met by public transport. Moreover, the following figure shows total public transport patronage in Auckland since 1920. While much hooplah has been made of recent patronage growth, this figure shows how PT patronage in Auckland has actually been growing at a decent pace since the early 1990s, which is around the same time that the population of central areas started to grow. Coincidence? I suspect not.

1920-2015 Auckland Patronage 1

Is Auckland unique in terms of its land use trends? After all, what matters most to technological development is not what’s happening in Auckland but the general trends that are happening globally. It’s hard to say conclusively, and I don’t have time to do a detailed survey in this blog post (please let me know if you know of one). However data does suggest that Auckland is not *alone* in terms of the land use trends that it’s seen over the last two decades or so. For example, here’s what a recent publication had to say about trends in the value of land in Amsterdam (source): “The price of land in the Amsterdam city centre is 200 times as high as that in the countryside … this price difference more than doubled between 1985 and 2007.

Now at this point you might not be convinced by my dot-joining between density, land values, and transport outcomes, and for quite understandable reasons: Not all of the transport outcomes illustrated in the preceding figures will be caused by trends in land use. You might argue that changes in travel demands are likely to reflect a myriad of other factors, such as policy changes and demographic trends. And I think you’d be correct, which brings me to my next two points …

2. Public policy: Slowly recognizing the need for change?

The preceding section argued that trends in land use in Auckland have increasingly favoured space-efficient transport technologies. This raises the question of whether policy-makers have been responding to these trends? The answer, I think, is “yes, albeit rather slowly”. The key point I want to make in this section is that future trends in travel demands will be impacted by shifts in public policies which are already underway. Hence, it is useful to understand these shifts because they are relevant to the question of which technological developments are adopted by people with the most vigour.

Parking is perhaps the most notable example of policy change in the Auckland context. So-called minimum parking requirements, or “MPRs”, were removed from Auckland city centre in the 1990s. For those of you who haven’t heard of MPRs, they are regulations imposed by Councils which require new developments to provide a certain “minimum” amount of parking. The amount is based on predictions about the peak demand for parking at each individual development.

Of course, if you provide a lot of free parking then you are providing a large subsidy to people who drive, and at the same time reducing the density of development. In this recent post, Peter discussed the removal of MPRs in terms of the proposed Commercial Bay development at the foot of Queen Street. He comments as follows:

… if those MPRs still applied to the city centre, Commercial Bay would have required over 2,000 carparks. That’s seven times as much parking as the developers actually want to build … According to Precinct, Commercial Bay will cost $681 million to build. If MPRs required the development to include another 1,750 carparks, at a cost of $30-50,000 apiece, it would add $50-90 million to the cost of the project. That suggests that MPRs would impose a “regulatory tax” of  7-13% on downtown development.

In a nutshell, removing MPRs can be expected to both 1) increase the costs of owning and operating cars and 2) enable more intensive development. For this reason, the Unitary Plan proposes to remove MPRs from areas where they are considered likely to do the most damage, as illustrated by the red areas in the figure below (source).

MPRs

* This map is slightly out of date due to recent changes.

I note that Auckland is not alone in rolling back MPRs: Many cities in New Zealand and overseas are moving in a similar direction. Basically, it seems likely that the size of the red blobs in the figure above will grow over time. In this context, it seems reasonable to suggest that parking policies will increasingly shift in a direction that is, by historical measures, not as favourable to individual car ownership and use.

What other policy shifts might change the way we travel in the future?

The recent “Paris Outcome” on climate change and carbon emissions is an obvious one. Given its multi-lateral nature, the Paris Outcome seems like a policy that might impact on global trends in transport technologies. Personally I think the transport technology game-changed in Paris; our transition to a low carbon economy needs to start immediately and be complete by the middle of the century if we are to avoid catastrophic climate change.

Congestion charging is another potential policy shift. It involves charging differential prices by time and location so as to keep vehicle demands within the available road capacity. Over time, congestion pricing is becoming more attractive as the benefits of adopting such a scheme increases (due to Auckland’s growing population), while the costs of doing so decreases (due to improvements in technology). Congestion charging is supported by the likes of this Blog, the Auckland Council, NZCID, and the Productivity Commission.

The general point I want to make, however, is that public policies are changing in response to wider transport and energy issues. Unfortunately I think it’s all-too-common to focus on how policy should respond to technology, without thinking also about how technology might respond to major policy settings. Widespread adoption of policies associated with parking reform, the Paris Outcome, and congestion charging will change the way we use existing transport technologies in the near future, while also changing the incentives associated with new technologies. There is a mutual dependence between policy and technology that operates in both directions.

The final factor I want to discuss is the question of demographics, i.e. what the hell is New Zealand’s population going to look like in 30 years?

3. Demographic trends: Which horoscope do you prefer?

Demographic trends are increasingly difficult to predict, hence I prefer to talk in terms of “scenarios”, rather than defined outcomes. The two key demographic attributes are size and age.

To highlight how uncertain these projections are, just consider that barely 5 years ago New Zealand was effectively staring down the barrel of a major demographic problem: We’d done so well at exporting young people to more exciting cities overseas that our population growth was slowing and our demographic profile was becoming increasingly imbalanced. This was all occurring at the same time as the first of the baby-boomer generation were entering into their retirement, with all of the associated fiscal costs this implied. Back in 2011, Natalie Jackson from the University of Waikato’s (excellent) NIDEA research group had this to say on the issue of demographics (source):

As elsewhere, New Zealand’s population is ageing. As elsewhere, this ageing has two main drivers: increasing longevity, and declining birth rates, both outcomes of the Demographic Transition. In New Zealand’s case, however, the population is also ageing ‘prematurely’ from another cause, the legacy of net migration loss at young adult ages (typically 20-24 years) which New Zealand experiences in most years, and at 15-19 and 25-29 years in many other years as well. The loss, compounded by the falling birth rates at the time each cohort was born, has created a deep bite in today’s age structure across ages 25-39 years. This bite is not only driving up the median age faster than would otherwise be the case, given that New Zealand has the highest birth rate in the developed world, but has enormous implications for the country as it faces the retirement of its baby boomer generation.

Around the same time, economists working at the NZIER published a separate working paper titled “The Flight of the Kiwi”. This made the following comments on net migration between New Zealand and Australia, which was accompanied by the figure below (source):

If economic growth for the 2010-2025 period in New Zealand and Australia were to be at the rates currently projected by the OECD, then we should expect a net 412,000 people to emigrate between now and 2025. This is the equivalent of the whole population of Wellington, including the Hutt Valley and the Kapiti Coast, moving to Australia.

Actual versus predicted migration

Fortunately, subsequent events have ensured these demographic predictions have not materialised. I can’t shake the feeling, however, that this owes more to Australia’s relative misfortune (due to the collapse in global commodity prices) than it does to New Zealand’s good management. And despite New Zealand’s economic performance relative to Australia’s being about as good as it gets, we still only achieve a net migration gain between the two countries of a couple of hundred people p.a. This suggests that if/when Australia gets on top of its economic/fiscal challenges, then the net outflor might return to the sorts of levels predicted by the NZIER.

Personally, I think volatility in population and demographic statistics is something we need to get used to. In gneeral, New Zealanders seem to be a relatively mobile, skilled group of people who are benefiting from the opportunities afforded by an increasingly globalised world. As such, movements of people appear to be increasingly sensitive to relative socio-economic performance. When New Zealand is not performing well, then tends of thousands of us are likely to take our leave and head offshore (mostly to Australia), and vice versa. This is good for them and generally good for the receiving country. I doubt that it’s good for New Zealand, given the aforementioned demographic issues we face.

This has led me to consider two rather divergent population/demographic scenarios for New Zealand:

  1. The home-coming queen” – New Zealand’s socio-economic performance exceeds that of the countries with which we compete for people, such that fewer people depart while more New Zealanders currently living overseas decide to return home. As a result, New Zealand experiences strong population growth of 2-3% p.a., which helps to grow the workforce and mitigate the demographic imbalance introduced by the baby-boomers; or
  2. The gerontocalypse” – New Zealand’s socio-economic performance lags behind that of the countries with which we compete for people, most notably Australia. Young and/or mobile New Zealanders depart en masse, and population growth to fall to approximately 1% – almost all of which occurs in Auckland. The growth in the workforce is unable to offset increasing costs of health and super, but necessary policy reforms are opposed by baby-boomers. As a result, tax rates rise, further exacerbating the exodus.

The transport implications of these two scenarios are obviously rather different. The “home-coming queen” scenario might require increased transport investment, especially in the upper North Island where most of the population growth is likely to occur. It might also require different types of transport technologies, such as driverless metro systems and/or and inter-city passenger rail between Auckland and surrounding urban centres, namely Hamilton, Tauranga, and possibly even Whangarei. It might a new tunnel under the Kaimai ranges, or Auckland and Tauranga ports to merge into one “super-port” located midway between the two cities. I don’t know.

In contrast, the “gerontocalypse” scenario would be associated with lower economic growth, and lower socio-economic well-being generally. In terms of transport, we’d expect transport budgets to come under pressure. Some roads may need to be closed or sold off, and/or road user charges might need to rise simply to fund maintenance of the existing network let alone new investments.

I don’t know which scenario is more likely, but I know it’s important to discussions of transport technology. There’s a big difference between what technologies might work for a country of 5 million versus a country of 10 million, where most of the growth is located in and around Auckland, Hamilton, and Tauranga.

Without having answers to such question, it’s hard to frame discussions of which transport technologies might need to be adopted in the future. Dare I say it, perhaps this raises the need for some strategic thinking at the national level about demographic/population changes? It seems like National is betting on our ability to attract young people as a means for mitigating the rising costs of health and super associated with an ageing population. If so then that’s fine – but it would be useful to know this such that it can inform discussions of transport technologies, and the appropriate policy responses.

4. Conclusion

Discussions of future transport technologies often occur within a “transport silo”, where the interaction with wider socio-economic factors is downplayed. In reality, the development and adoption of transport technologies does not happen in a vacuum but is instead shaped by prevailing socio-economic factors. Current trends in land use and public policy, for example, indicate that transport technologies which are space and energy efficient are likely to have a comparative advantage in the future. Demographic outcomes are something of a wild-card. Whether New Zealand is able to address its demographic imbalances, and more specifically maintain socio-economic performance at levels comparable to the countries with which we compete for skilled migrants, may have a large bearing on the transport technologies needed over the coming decades.

A Brilliant Invention

By Australian cartoonist Michael Leunig

Leunig - wheel

Tourism is booming

It hasn’t had the media coverage it deserves, but New Zealand is going through a tourism boom. The Tourism Satellite Account, the comprehensive record of tourist spending, found that international tourists spent 17% more in the year to March 2015 than they had the year before that, for a total of $11.8 billion. That’s an absolutely massive rise, the biggest in more than a decade. There was some similar growth back around 2000-2002, but since then double-digit growth has just been a happy memory.

Essentially, the tourism sector has gone from barely keeping pace with inflation in the post-GFC period, to now be growing massively. Tourism has kept growing in the last six months as well, so we’re in for another big rise for the year to March 2016 (I’m guessing it will be 10-12%).

Visitor arrivals are way up, but given that tourists take shorter trips than they used to, my favourite stat is the average number of visitors in NZ on a given day – that’s a better indicator of how much they’re contributing to the economy, and the ‘buzz’ they add to tourist hotspots.

Tourism is booming

This graph shows strong growth over 2000-2002, much slower growth in the years that followed, and faster growth from 2013 until the present.

Auckland will certainly have been getting its share of the tourism pie. Most international visitors fly in and out via Auckland Airport, and the city is also a tourism destination in its own right. We usually get about 37% of the nationwide expenditure by international tourists (excluding airfares, and the percentage would be even higher for those).

So, conservatively, international tourists probably spent at least $4.3 billion in Auckland in the year to March 2015, and the amount for next year looks even bigger. That’s a big injection into the Auckland economy, and of course the wider New Zealand economy too.

Now let’s all celebrate, while listening to the fresh sounds of Will Smith and Jazzy Jeff.

Are cities really getting less dense?

I have been pondering a comment in William Fischel’s generally excellent new book on zoning to the effect that:

…suburbanization and reduced urban density are worldwide phenomena. All but 16 of the 120 urban areas on every continent grew outward and reduced their overall population densities in the last decade of the previous millennium, even as almost all of them grew in total population.

This is an interesting claim, but one that I find very difficult to reconcile with the evidence on other “big picture” changes observed in cities over the last three decades.

In recent decades, agglomeration economies have gotten stronger and the structure of advanced urban economies has changed. This has in turn increased the premium that people place on proximity and centrality – a phenomenon well illustrated by Grimes and Liang (2007), who show how close proximity to the city centre shifted from being a “disamenity” to an “amenity” during the 1990s:

Grimes and Liang (2007) value of proximity chart

Relatedly, regulations limiting density are increasingly binding (and, in places like Auckland, San Francisco and New York, more costly than regulations limiting sprawl). This was nicely illustrated by three recent pieces of research that showed that (a) Auckland’s legacy planning regulations imposed twice as many costs on apartments as standalone houses, and that (b) the cost of legacy councils’ building height limits were higher than the cost of the city’s former urban growth boundary:

Type of regulation Estimated cost of regulations Source
Rules affecting standalone houses $32,500-$60,000 per dwelling Grimes and Mitchell (2015)
Rules affecting apartments $65,000-$110,000 per dwelling Grimes and Mitchell (2015)
Metropolitan urban limit $860 per Auckland household NZIER (2014)
Height limits $933 per Auckland household NZIER (2015)

So colour me perplexed. On the one hand, I have a very respected and knowledgeable economist telling me that cities are getting less dense. On the other hand, I have a mass of evidence, often compiled by other respected and knowledgeable economists, that suggests that densities should be increasing, not decreasing.

As it turns out, Fischel’s claim is what my mathematician friends describe as “true but trivial”. It’s not inaccurate, but it doesn’t tell you anything interesting about the world either. The idea that urban densities are getting lower is in fact a statistical artefact – i.e. it’s a “fact” that arises from the way that Fischel has calculated population densities.

Calculating population densities is a slightly arcane subject. Last year, I wrote a short paper that explored alternative measures and explained why we should prefer a population-weighted density measure to a simple average density:

The most common approach to measuring population density is simply to divide the total population of a city by the total land area of the city. As shown above, this approach will tend to underestimate the density of cities with large expanses of lightly populated exurban land. However, this approach is commonly used for international comparisons due to the fact that it relatively straightforward to calculate…

The population-weighted density measure was introduced by Barnes (2001) to correct for the weaknesses of the simple average density measure. This measure was recently used by the US Census Bureau to produce consistent and meaningful data on American cities (Wilson et al, 2012). As the example above suggests, it more accurately reflects the density at which the average city resident is living (Eidlin, 2010).

Population-weighted density is estimated by calculating the density of all individual neighbourhoods within a city, assigning each neighbourhood a weight equal to its share of the city’s total population, and summing up the weighted density of all neighbourhoods. In other words, if a dense inner-city neighbourhood has ten times as many people as an outlying suburban neighbourhood, the inner-city area would be weighted ten times as heavily as the suburban area.

In other words, average density measures the density of the average hectare of land in the city, even if hardly anyone lives there, while population-weighted density measures the density of the neighbourhood that the average citizen lives in. Average density is not, therefore, a very meaningful number if you want insight about how people are living in a city.

Moreover, it turns out that a city’s average density can be declining even though every part of the city is getting more dense! This sounds counterintuitive, so I’ve put together a simple model showing how it can happen.

You can download the model here in case you’re interested in playing with it. For simplicity, I’ve assumed a linear city that extends in one direction from a centre. (This readily generalises to a city that extends in multiple directions.) Population densities are highest near the centre and decline exponentially with distance. (The distance decay parameter I’ve used loosely approximates observed outcomes in big NZ/Aus cities.)

I’ve tested the impact of a 20% increase in the urban population. In the model, intensification accounts for around 60% of growth, meaning that all existing developed areas get ~12% denser. The remaining 40% of growth occurs in low-density greenfield areas, which expand the city’s footprint by 33%.

Mathematically-minded readers will see where this is going. But for the visual learners out there, here’s what it looks like on a graph:

Changing population density example chart

Because the urban footprint has expanded by 33% while the population has only grown by 20%, the city’s average density has dropped by 10%. But if you look at the graph, you can see that it would be ridiculous to say that the city is spreading out and de-densifying. In fact, every part of the city is getting more dense, and most growth is occurring within built up areas.

In other words, Fischel is wrong to say that cities are getting less dense. Horizontal growth is certainly happening – but so is vertical growth.

I would argue that the latter trend – towards proximity, density, and efficient use of land – is the more significant of the two. We are currently seeing big changes in the function, structure, and use of cities. Recognising and responding to those changes is important, and policies that unwittingly stifle them will have large economic and social costs.

That’s why it’s important to measure density (and other urban phenomena) accurately – bad measures often contribute to bad policy decisions.

How do you think cities are growing?