Climate change and New Zealand cities

Environmentalists sometimes have an uneasy relationship with cities. Because they concentrate a lot of people and economic activity in relatively small places, they also concentrate a lot of negative environmental effects. All that concrete, all that energy being consumed, the kilometres of malls and highways and subdivisions! It can’t possibly be good, can it?

As it turns out, cities can be quite environmentally friendly. The same factors that make cities economically efficient – the ease of interacting with others in a dense environment and the economies of scale that arise in large, well-connected places – can also make them environmentally efficient.

However, there are large variations in environmental efficiency within and between cities. Cities which offer better housing and transport choices tend to have much lower per-capita carbon emissions – a fact highlighted by a 2011 study of carbon emissions in 100 cities:

  • In the United States, the emissions per person in Denver are double those of people in New York, which has a greater population density and much lower reliance on private vehicles for commuting.
  • In Toronto, residential emissions per person in a dense, inner city neighbourhood with a high quality public transport system are just 1.3 tonnes of carbon dioxide equivalent, compared to 13 tonnes in a sprawling distant suburb.

Auckland’s Low Carbon Action Plan presents some of this data in a fascinating infographic:

Per-capita emissions in cities

Interestingly, Auckland doesn’t come out too bad on this comparison. We’re nowhere near as efficient as Vancouver, Stockholm, or Copenhagen, but we are in the same ballpark as moderately efficient North American cities like New York and Seattle. This is probably down to our high share of renewably generated electricity, as well as our relatively short commutes.

But can Auckland become more environmentally efficient, or will it grow in a way that causes it to lose its edge? In order to get a sense of this, I took a look at variations in carbon emissions from commutes within New Zealand’s three largest cities.

The maps below presents some preliminary estimates of carbon emissions. They’ve been calculated using the Census journey to work data presented in my recent Location Affordability Index paper, which allowed me to identify how far people were travelling to work and what mode of travel they were using, as well as some supplementary assumptions and estimates from several sources (e.g. EECA, NZTA). [I will put together a working paper on the analysis when my work at MRCagney permits!] Lighter yellows reflect lower average annual carbon emissions from commute trips, while darker blues represent higher emissions.

Annual CO2 emissions per commuter DRAFT v1

A few first thoughts about these findings:

  • These maps really show the power of proximity. People near the centre of the city tend to travel shorter distances to work, on average, because they’re closer to more jobs. This is obviously good for commuters – which is why house prices are so high in Ponsonby and Mount Eden – but it’s also great for the environment.
  • They also demonstrate the importance of transport choices. Commute emissions in Wellington suburbs tend to be much lower than in similarly-situated Auckland suburbs, because many Wellingtonians can choose between driving, an efficient electric train system, a frequent bus network, and relatively good walking and cycling.
  • Lastly, these maps highlight the perils of urban growth. Suburbs at the fringe of the city are much less environmental efficient than suburbs closer in. For example, moving from Mount Eden to Flat Bush could be expected to raise your commute emissions by one ton a year. (And leave you sitting in traffic for that much longer!) This is a particular challenge right now in Christchurch, where satellite towns with long commutes have absorbed households displaced by the earthquakes.

Of course, as a coastal city Auckland has some strong incentives to reduce its carbon emissions:

Paddleboarding on Tamaki Drive

Paddleboarding on Tamaki Drive may be fun for a day… (Source)

Auckland Transport’s 30 Year Project List

As part of the discussion on Alternative Transport Funding, which was launched yesterday, the Council also released a copy of Auckland Transport’s entire 30 year transport programme which includes the cost of projects and seemingly ranked according to some combination of criteria. The programme unfortunately does not include state highway projects, which makes it difficult to fully assess the merits of the overall transport packages outlined in yesterday’s announcements. However, it’s certainly clear what Auckland Transport projects can and cannot be afforded over the next 30 years under the two scenarios.

The document doesn’t explain the list in any detail, but it seems as though there are a number of projects on the first page which have some form of existing commitment or are ongoing requirements and therefore are not really considered “discretionary”. These are shown below:

committed-projectsThe ‘committed’ projects include those that appear to have contracts in place (electric trains, Albany Highway, a few things around Westgate), renewing existing assets and the City Rail Link. I actually wonder if it would be helpful for CRL to be ranked against all the other projects – rather than be included in this “other” list – as almost certainly it would rank either right at the top or very near it.

Anyway, moving on to the top of the list the projects listed below are those that are in both the Basic Network and the Auckland Plan Network – as well as some fairly broad brush allocation of funding to support sprawl in some of the areas identified by the Unitary Plan:

basic-network-projects

It’s a pretty short list for the 30 year transport programme, as well as being strangely focused on the first decade. The other key thing to notice here is the yellow boxes, which appear to be wrapped up programmes of projects (e.g. walking and cycling) where the amount of funding allocated to the programme varies quite significantly, depending on whether it’s the Auckland Plan Transport Network or the Basic Transport Network.

Even taking a fairly harsh look at the list above, there doesn’t seem to be too many projects that don’t make sense doing at all over the next 30 years. For me the three most glaring ones that need to be questioned are:

  • The Reeves Rd flyover at $141 million
  • The widening of the almost $200 million and soon to be opened Te Horeta Rd for another $74 million
  • Mill Road at $472 million which is something that we’ve highlighted could be looked at for a cheaper option, especially seeing as the government are now widening the southern motorway.

The rest of the projects are those which form part of the Auckland Plan Transport Network only. Essentially, these are the additional projects from Auckland Transport which the additional funding is being asked to pay for:

auckland-plan-network-projects

While there are a few really dumb projects on the list above (Mt Albert Park & Ride, what the heck?) there’s also a lot of pretty good stuff that is missing out under the Basic Transport Network. Furthermore, while there is some, it seems at first glance that there isn’t a huge amount of really expensive dumb stuff in the programme list of Auckland Transport’s projects. That contrasts with the package of state highway projects highlighted yesterday which doesn’t appear to have been questioned at all.

Over the next few days I’ll be starting to look into the detail at the overall balance of the packages, as well as assessing the extent to which they are similar to what we proposed in the Congestion Free Network.

Alternative Transport Funding Report Released

The latest report on alternative transport funding for Auckland, prepared by the Independent Advisory Board (formerly the Consensus Building Group), has just been released. The report will form a critical part of the Council’s public consultation on the next Long Term Plan (the 10 year budget), essentially asking Aucklanders two key questions:

  • Are you willing to pay more for a better transport network?
  • If so, then should that extra money be from existing sources (rates, fuel taxes etc.) or from a “motorway user charge”?

We have been highly skeptical of past proposals that request more money to be spent on transport – in particular the first version of the Integrated Transport Programme as well as the initial report on alternative funding prepared last year by the Consensus Building Group. In fact, the Congestion Free Network came into being as a result of our frustration with the transport programme being a “build everything” and we felt a large part, if not all of the $12 billion funding gap could be resolved through removing poor value projects, rather than by requiring additional funding.

Overall, the new report is a clear step in the right direction and combined with the work being done as part of the next LTP and the next ITP it seems as though quite a lot of effort has gone into removing the more idiotic projects included in the original ITP, although there isn’t a huge amount of detail in the information that has been provided. There are, however, still many unanswered questions that the report doesn’t seem to address – plus its key recommendation of suggesting a “motorway user charge” is fraught with problems. But I’ll get onto that in a moment – first to summarise some key points from the report.

A comparison between what is in the two programmes – known as the “Basic Transport Network” (that which can be afforded under the 2.5-3.5% rates increase proposed in the LTP) and the “Auckland Plan Transport Network” (the preferred network, which requires additional funding) is shown in the series of tables below.

Firstly, for bus and ferry investment:

bus-ferry

The main difference between the two networks seems to be in the scale of the bus lane programmes and the provision of additional busways in the second and third decades, supported by service frequency improvements. The proposed Botany to Manukau busway appears to be extended to the airport like we suggested as part of the CFN however more interesting is to see a new proposal for a “cross isthmus” bus RTN between New Lynn, Onehunga and Otahuhu. I wonder what route and form that would take.

Next for rail:

railThe difference between the two networks is fairly stark in the second and third decades, with no investment at all in rail over this period in the Basic Transport Network. I must say the complete lack of rail investment in the Basic Transport Network after 2025 is a bit surprising and raises some questions about the prioritisation process that determines what’s in and what’s out of the Basic Transport Network after 2025. Importantly, CRL is in the Basic Transport Network and therefore does not require alternative funding.

Next, for roads:

roadsLooking at arterial roading projects first, it’s clear that even the Auckland Plan Transport Network is much smaller than what was proposed originally in the first version of the Integrated Transport Programme. In fact it seems like billions upon billions have been shaved off the previous ITP’s numbers, which included crazy things like nearly a billion dollars on upgrading Great South Road. We’ll take a more detailed look at this in a future post, but credit where it’s due to Auckland Transport who have responded to criticisms of the first ITP by ensuring the Auckland Plan Network has been significantly refined to deliver much better value for money.

Unfortunately the same cannot be said about the state highway programme, which doesn’t vary much between the two networks – aside from some rather optimistic “widening to reduce congestion” in the final decade (haven’t they heard of induced demand?) A whole bunch of very dodgy projects (Additional Harbour Crossing, SH16 Port Access, SH1 Warkworth to Wellsford etc.) have been included in the Basic Transport Network for some unknown reason, as well as of course being in the Auckland Plan Transport Network. This is important to keep in mind when considering the resulting “funding gap” – which of course could be a whole heap smaller if we stripped out the $5.5 billion Harbour Crossing and multiple billions on these other unnecessary projects.

Components of the walking, cycling and safety programmes for the two networks are shown in the table below:walking-cyclingIt’s not clear what the cost difference for walking and cycling is between the two networks, but it’s clear that only the Auckland Plan Transport Network goes anywhere close to delivering on the Auckland Plan vision for active transport.

Now for miscellaneous other stuff, like maintenance, renewals and supporting sprawl:

maintenance-renewalsThe shortfall in funding maintenance and renewals under the Basic Transport Network is a real concern, as the last thing we want to do is end up like the USA where infrastructure is falling to bits because politicians want to “cut ribbons” rather than look after what we already have. The lack of funding for developing the greenfield sprawl areas may not be such an issue as this could force the developers themselves to come to the party a bit more.

Overall, as I noted above it’s clear the Auckland Plan Transport Network is vastly improved from what was in the first ITP. A lot of the really poor investment in the arterial network appears to have disappeared, although there are still a few remaining remnants like Penlink and Mill Road, although even with these projects it seems like the bulk of spend has been pushed out into the future. However, the big remaining issue is that a similar exercise doesn’t seem to have occurred with the State Highway network and there are still billions upon billions of dollars in poor value for money projects – most particularly the Additional Harbour Crossing but also other duplicative projects like SH20B, Warkworth-Wellsford and others. NZTA have really dropped the ball on this one and unfortunately I suspect part of this comes about because the under the current situation motorway projects get full government funding while every other transport project has to beg for a slice of the funding pie. More than once I’ve heard council people say we should build certain projects simply because the government are paying for them.

Cut out what I estimate to be around $8 billion in very poor value for money state highway projects and we’re left with a $4 billion funding gap. If we push $8 billion of state highway projects out of both the Basic Transport Network and the Auckland Plan Network, it means we can afford $8 billion more of good projects before we have to turn to Alternative Funding and it means that we only need to find ways of raising an additional $4 billion. Over 30 years, that’s not a particularly huge issue to overcome.

So if we think back to the two questions at the top of the post, it seems as though the answer to the first one is there may well be value from paying a bit more to get a better transport network, but the actual requirement for additional funding might be around a third of what the report highlights. Now let’s turn to the second question of which would be the best way of raising this additional funding.

Essentially the two options proposed are:

  1. Increasing existing funding mechanisms like rates, fuel taxes, development contributions, central government grants etc.
  2. Introducing a charge for entering the motorway network

Some more detail on the “Rates and Fuel Tax” option are shown below:

rates-fuel-taxI must say I was pretty surprised to see how low the additional rates and fuel tax increases would need to be in order to close the funding gap. A rates increase of between 3.4 and 4.4% is actually lower than what was assumed in the 2012 Long Term Plan (that had 4.9%) while a 1.2 cent per litre annual fuel tax hike would probably get lost as a rounding error in typical price fluctuations. It’s a credit to Auckland Transport’s project prioritisation that they’ve managed to develop a network that could be fully funded under the funding assumptions of the 2012 Long Term Plan, and it’s only the political decision to have a much lower rates increase that’s essentially “re-created” the funding gap.

Combine this with the above observation that the “funding gap” could be further reduced to around $4 billion instead of $12 billion and we could see the gap closed by rates increases only 0.3% higher than otherwise or fuel tax increases of a mere 0.4 centre per litre compared to what would otherwise occur. That’s starting to look like a pretty compelling option.

The other funding option is called a “Motorway User Charge” and is summarised below:

motorway-user-chargeThere’s a lot of discussion in the document around the relative costs and benefits of the two approaches – with the report seeming to express something of a preference for the motorway user charge scheme, based on its travel demand management effects of discouraging some trips and encouraging higher levels of public transport use. We’ll look at the details of this analysis in further posts, but note that this option does come with some fairly significant set up and operational costs (~$110 million set up with opex costs of 24c per trip) as well as potentially diverting quite a lot of traffic off the motorway network and onto local roads – which seems quite counter-productive.

To summarise, there’s quite a lot to like in the Independent Advisory Board’s report. It seems like some hard work has gone on by Auckland Transport (although sadly not NZTA) to optimise their desired transport network so it’s far more realistic than what was proposed in the first ITP. Take out a few of the dumber motorway projects and we’re left with a pretty damn good 30 year transport network that can almost be funded from existing sources (just requiring 0.3% higher rates increases and 0.4 cents per litre higher fuel tax increases) or from a very low motorway user charge. Or from other ways we might think up of to find $4 billion over 30 years.

 

Update: unsurprisingly the government has once again poured cold water on the idea of tolling or fuel taxes.

http://www.beehive.govt.nz/release/govt-responds-auckland-transport-report

Why Demographia’s data is irrelevant and misleading

Demographia is a pro-sprawl think tank in the USA that publishes density and house price data for cities across the world. They’re often seen using their statistics to argue that the only way to deliver affordable housing is with suburban fringe expansion into greenfields land.

Demographia’s data on housing affordability has come under fire in the past for slipperiness with definitions and misleading choice of measures. But their analysis of population density has gotten less attention – although it’s even more riddled with errors.

Demographia’s approach to calculating density is simple but misleading. They have simply calculated the total number of people in each city and divided it by the total land area covered by that city – including unpopulated areas like parks and reserves. This measure of average density is actually quite irrelevant. For example, Demographia uses it to claim that Los Angeles is more dense than New York.

As Peter outlined in this recent post, what is much more relevant is the density of the neighbourhood that the average person lives in, rather than the density of the average acre of land in the city.

For argument’s sake, consider a village of one hundred acres with one hundred residents. By the measure of area weighted density the density is simple, one person per acre. Does this represent the reality of how people live? Well it could, if everyone lived alone in a separate house on an acre of land. But what if they didn’t? What if everyone lived in a single apartment block in the middle of town that sat on one acre of land? Well then the density the people actually live at would be 100 people per acre. That’s a hundred times more dense… but the same density by Demographia’s measure!

And what if it were something more complex? What if a quarter of the town lived in the one apartment building, half lived in eighth-acre sections around it, and the remaining quarter were spread out over the rest of the land? Doesn’t that sound a bit closer to the reality of most cities? One person per acre means nothing for this theoretical town, half the people live at eight times that density and a quarter at fifty times the density.

Just in case you’re still unsure, in the image below the dots represent dwellings and each box has the same number of dots in it. Overall they have the same average density however in reality they would feel like two very different places.

patterns-of-density

In short population-weighted density is a much better indicator of the density of the neighbourhoods people chose to live in, and a much better way to describe cities and housing.

With that in mind, it was a simple task to take Peter’s data and throw it on a chart. In simple terms these show how many people live in neighbourhoods (Census meshblocks to be precise) grouped by density in Auckland, Wellington and Christchurch.  I’ve also picked out the density level that Demographia says each city is.

Auckland Wellington Christchurch charts_Page_1

Auckland Wellington Christchurch charts_Page_2 Auckland Wellington Christchurch charts_Page_3

It’s easy to see a few things here. First of all we can see that neighbourhood density can vary quite a lot within cities. One number just can’t describe how people live. Second, we can see there is something of a bell curve. Most people live within the middle range of densities, those living very low or very high are small in number, but that middle is actually quite broad. Third, we can see how far off Demographia is. Their supposed summary statistic isn’t anywhere near the middle of the curve, it’s actually near the bottom in each case.

For example it seems the Demographia figure describes the density at which roughly five percent of Aucklanders live. Nine percent live at lower densities, and 86% live at higher densities. Many people live in neighbourhoods that are two or three times more dense than Demographia’s misleading average. In short, Demographia’s figures are irrelevant for the vast majority of Aucklanders (and Wellingtonians, and Christchurchers). They don’t reflect how the majority of people choose to live.

Sorry Demographia, your data is plain useless.

Can new roads pay for themselves?

It’s common to hear people say that because roads are paid for by their users (fn 1), we should build more roads. After all, the new roads will fund themselves!

At first glance, this seems convincing. But a closer look reveals that the “new roads pay for themselves” argument is based on a logical fallacy. Basically, the fact that the average road pays for itself does not mean that the next road will also pay for itself. In fact, there’s a large amount of recent evidence from the transport market that the next, or “marginal”, road will cost taxpayers more than it brings in revenue.

Economists understand the importance of marginal analysis when making decisions about what to build and how to charge for it. Businesses typically make pricing and production decisions “on the margin”. In other words, they look around for the next potential customer and ask: “Can I produce one additional unit and sell it to that person for a profit?” If the answer is yes, they produce it; if it’s no, they don’t as it would reduce their overall profits.

So what is the market telling us about demand for new roads? As always, it’s best to go and look at the empirical evidence. Over the last decade or two, there have been a number of efforts to get users to pay for new roads. Australia, the US, New Zealand, and a variety of other places have built toll roads – sometimes privately financed, sometimes publicly financed. In most cases, revenues from users were expected to pay the cost of the roads.

These costly investments have almost all failed. Toll roads have suffered from low traffic and low toll revenue. They have often required expensive taxpayer-funded bailouts. It looks as though people are not willing to pay for the marginal road.

In Australia none of the toll roads built after 2000 have been profitable:

Australia has some of the finest highway tunnels in the world, but for the private investors who trusted traffic usage projections from leading and respected consultancy firms the story has been a tale of insolvency and disappointment. Most of the privately owned toll highway projects constructed in the last 15 years in Australia have fallen into receivership or administration within a short time of opening to traffic when it became clear that toll revenue from actual traffic usage would be well short of covering its contribution to the construction costs.

The failures include the A$1bn Sydney Cross City Tunnel, which has seen traffic volumes less than half of forecasts, and the Brisbane Clem 7 and Airport Link tunnels, where traffic volumes have fallen short of forecasts by over 75%.

traffic avoids clem 7 tunnel

People would prefer to queue in traffic than pay the Clem 7 toll

In the US, an academic paper reviewing toll roads financed by Australia’s Macquarie Bank found that:

The record for these projects is abysmal.

Two of the projects declared bankruptcy. The assets of one, Pocahontas, were written down to zero by its new owner, and two were bought by the government jurisdictions where they were located. Another is in negotiations to be bought by the state of Virginia. None of these projects fulfilled their initial plans to operate successfully as profitable, private companies. Macquarie’s most substantial U.S. project, the Indiana Toll Road project, is near insolvency and attempting to restructure its loans.

In New Zealand, private finance has been slower off the mark, but there have been a couple of experiments with toll roads. In Tauranga, the Route K toll-road has been a financial millstone for the council since its opening in 2003. This year, NZTA agreed to pay off its remaining debt at public expense:

The New Zealand Transport Agency will take $62.5m of the remaining Route K debt from Tauranga City Council, it has today announced.

The council signed off the agreement with NZTA over the ownership of the debt on Route K in a meeting today.

The agency had already agreed to take ownership of the road from July 2015, but at a council meeting this afternoon, councillors discussed the agency also taking on the debt, less $1 million which the council would still owe.

The removal of the debt would see the council’s credit rating upgraded from A+ to AA-.

This is a clear market signal about the financial viability of new roads. It should not be surprising. After a half-century of road-building, Australia, the US, and New Zealand have extensive and mature road networks. There are seldom opportunities to dramatically improve the network by building another road. (Which is not to say that there are no opportunities to do so – it’s just that they’re bloody hard to find!)

In this context, it makes more sense to invest the marginal transport dollar in providing better transport choices. After half a century of underinvestment in public transport and walking and cycling facilities, there’s a lot of latent demand. As a result, every time Auckland has built a new piece of public transport infrastructure this century, demand has outstripped projections. Here, for example, is a graph from a few years ago that shows that Britomart met its 2021 patronage targets more than a decade early.

In other words, people aren’t willing to pay for new roads, but they are queuing up to get on the bus or train. Transport policy should recognise these market signals and invest in choice.

Britomart Projection Numbers Graph

The market has spoken. It wants some more trains.

Footnote 1: This is factually incorrect. Since 2004, the National Land Transport Fund, which consists of fuel taxes, road user charges, and vehicle license fees, has paid 100% of the cost state highways. However, it only pays 50% of the cost of local roads, which account for the majority of vehicle kilometres travelled. The remaining 50% are paid for by local council rates.

The case for free-market urbanism

In the National Review, a conservative American magazine, Reihan Salam takes a look at the confused state of the American debate over intensification. His article, entitled “The Great Suburbia Debate” criticises the position taken by Joel Kotkin, a long-time campaigner for low-density suburban development. He writes:

Though I’m an admirer of Kotkin, and though I can’t speak for every conservative who has made the case for denser development, he gets a number of important things wrong…

For example, Kotkin claims that “some conservatives” (again, no names) have been “lured by their own class prejudice” into turning against market forces. “In reality,” Kotkin writes, “imposing Draconian planning is not even necessary for the growth of density.” Of course, this is exactly the argument that Edward Glaeser makes in The Triumph of the City, a manifesto for the pro-market, pro-density right. “In places that have both liberal planning regimes and economic growth, such as Houston and Dallas,” he observes, “there has been a more rapid increase in multifamily housing than in cities such as Boston, Los Angeles, San Francisco or New York.” Indeed, this is why many conservatives, myself included, have explicitly argued that cities like New York, San Francisco, and Los Angeles should look to the liberal planning regimes of Houston and Dallas as a model. (To be clear, by “liberal” planning regimes, Kotkin means less-restrictive, more market-oriented planning regimes, and so do I.)

The global cities that manage to be both highly productive and affordable, like Tokyo and Toronto, tend to have liberal planning regimes, which allow for rapid growth of housing stock, and in particular of the multifamily housing stock. These regions are characterized by rapid housing development in the suburbs and in the urban core, and their “suburbs” tend to be more urban than low-density suburbs in the U.S. governed by stringent planning regimes that tightly restrict multifamily development. When Glaeser makes the case for density, he does so not by calling for “imposing draconian planning” on cities and towns. Rather, he explicitly calls for the relaxation of land-use regulation.

[...]

Kotkin relies heavily on the work of Wendell Cox, a transportation consultant who seems to believe that denser development is necessarily a product of central planning. In desirable regions, however, less restrictive planning regimes will naturally lead to higher densities, as property owners will naturally seek to maximize the value of their investments. Restrictive land-use regulations tend to limit density, not impose it on unwilling landowners.

Salam’s article is excellent and I recommend reading it in full. I pulled out these excerpts as they highlight a few essential facts that often go missing from the debate over urban policy:

  • Denser development cannot be imposed by fiat – it will happen if and only if there is market demand for it (as there often is in places that are accessible to jobs and amenities). If nobody wants to buy apartments, then no apartments will get built!
  • Urban planners can’t simply require people to build at higher densities – but they can limit density to below what the market wants.
  • The rising demand for higher density development isn’t a market distortion, but evidence that the market is working.
MERCHANT Q

The market’s been at work in New Lynn (see also: Transportblog’s development tracker)

In short, we must interpret rising population densities as the result of many individual decisions rather than the whim of an urban planner. My research shows that population densities are rising rapidly in Auckland and several other large NZ cities, which suggests that we’re voting heavily for density with our feet and our wallets. This is, as Salam suggests, a natural outcome of market forces and should be accepted with equanimity. We should recognise this demand where it exists and make complementary public investments in walking and cycling facilities and public transport.

Lastly, I’d note that people from all across the political spectrum should be able to appreciate cities. As Jane Jacobs observed in The Death and Life of Great American Cities, a good urban neighbourhood demonstrates many of the virtues that conservatives celebrate, such as small business ownership, a close-knit community that watches out for itself, and independent-minded civil society (often battling against big government bureaucracy in the form of overreaching traffic engineers).

Jane Jacobs campaigned against this Pharaonic act of bureaucratic hubris (Source)

Jane Jacobs campaigned against this Pharaonic act of bureaucratic hubris (Source)

As a result, we often see centre-right mayors implementing good urban policies. Big-city mayors such as New York’s Michael Bloomberg, London’s Boris Johnson, and Buenos Aires’ Mauricio Macri have been right at the forefront of the movement for better cities. They’ve realised that better cities are more prosperous, and that it’s possible to improve a city by improving the choices available to people.

Stuart’s 100 #45: What if Renters….

#45: What if Renters had the choice to have Rights and Responsibilities like Commercial Tenants?

Day_45

Home ownership is of course a daily debate in this city of Auckland. In the absence of anything else, the New Zealand Herald will always run a  story to ensure that it is front of mind. Declining rates of home ownership are certainly a significant issue and one worthy of debate. But what isn’t often talked about is the reality of renting. More and more people are doing it, and doing it for longer, maybe for life. And some even by choice. This will be extremely foreign to older generations of New Zealanders. But it is happening.

So isn’t it about time we had a discussion around renting and how that tends to work in this country? Are there ways it could work better?

Commercial tenants for example, have far greater certainty, in terms of longer term fixed leases, with clauses such as rent reviews and rights of renewal built in to the contract from the start. They also tend to have greater flexibility, negotiating the ability to alter and shape the space to how you want it.

For residential tenants, these two things hand-in-hand would go a long way to changing some of the downsides of renting. Greater certainty around living in a space for a period of years, together with the ability to paint the walls or make some changes to the place to have it the way you want it; would lead to a greater sense of security and ‘ownership’ or responsibility for the space that is your rented home.

It is certainly true that there is nothing stopping anyone negotiating these types of terms with their landlord. That is one thing where a tenant is in the position of direct contact with the owner, but quite another matter when the property is managed through a property management company or agent. These businesses tend to have stock standard contracts and conditions and show little desire for negotiation. Where is the public discussion around these things? Blanket rules like no pets for example are quite common. Is that reasonable?

These things should be looked at, as regardless of your views on home ownership or housing affordability, renting is a reality right now for many New Zealanders. In Auckland this isn’t likely to swing around in the opposite direction anytime soon, so lets’ start looking at these things at least.

Stuart Houghton 2014

Why it’s not possible to build our way out of congestion

Wired magazine recently published a good, succinct explanation of induced traffic. It’s worth reading in full as it hits upon an incredibly important, often overlooked fact: it’s not possible to eliminate congestion by building more roads. Here are a few of the more interesting excerpts:

The concept is called induced demand, which is economist-speak for when increasing the supply of something (like roads) makes people want that thing even more. Though some traffic engineers made note of this phenomenon at least as early as the 1960s, it is only in recent years that social scientists have collected enough data to show how this happens pretty much every time we build new roads. These findings imply that the ways we traditionally go about trying to mitigate jams are essentially fruitless, and that we’d all be spending a lot less time in traffic if we could just be a little more rational.

But before we get to the solutions, we have to take a closer look at the problem. In 2009, two economists—Matthew Turner of the University of Toronto and Gilles Duranton of the University of Pennsylvania—decided to compare the amount of new roads and highways built in different U.S. cities between 1980 and 2000, and the total number of miles driven in those cities over the same period.

“We found that there’s this perfect one-to-one relationship,” said Turner.

If a city had increased its road capacity by 10 percent between 1980 and 1990, then the amount of driving in that city went up by 10 percent. If the amount of roads in the same city then went up by 11 percent between 1990 and 2000, the total number of miles driven also went up by 11 percent. It’s like the two figures were moving in perfect lockstep, changing at the same exact rate.

Los Angeles: Sitting in traffic after ignoring supply and demand for over 50 years.

In their excellent paper on the topic, Duranton and Turner describe this as “the fundamental law of road congestion: New roads will create new drivers, resulting in the intensity of traffic staying the same.” Their research also digs into a couple of other related and equally interesting phenomena:

  • Better public transport provision doesn’t actually reduce road congestion – but it does enable more people to move without being affected by congestion
  • Reducing road capacity has no measurable impact on congestion – if less road space is available, people take public transport or active modes instead, or avoid making low-value trips.

Urbanist.co also has some further discussion of Duranton and Turner’s work. The economists go on to suggest economists’ favourite answer to congestion: road pricing. (If you’re interested in reading more about that topic, Stu Donovan and I have written several posts about the economics of road pricing.)

So what can be done about all this? How could we actually reduce traffic congestion? Turner explained that the way we use roads right now is a bit like the Soviet Union’s method of distributing bread. Under the communist government, goods were given equally to all, with a central authority setting the price for each commodity. Because that price was often far less than what people were willing to pay for that good, comrades would rush to purchase it, forming lines around the block.

The U.S. government is also in the business of providing people with a good they really want: roads. And just like the old Soviets, Uncle Sam is giving this commodity away for next to nothing. Is the solution then to privatize all roads? Not unless you’re living in some libertarian fantasyland. What Turner and Duranton (and many others who’d like to see more rational transportation policy) actually advocate is known as congestion pricing.

Incidentally, I like Turner’s “Soviet Union” metaphor a lot – I’ve said on occasion that we’re running our transport system like a Polish shipyard.

Lastly, it’s incredibly important to consider induced traffic when making policy recommendations. As I wrote in my review of Alain Bertaud’s talks in Auckland, keeping commute times down is an important part of maintaining an efficient urban labour market. Some people seem to have taken Bertaud’s recommendation that policymakers focus on keeping average car commutes under 30 minutes (and PT commutes under 45 minutes) as a call for more roads. This is a superficially appealing but deeply wrongheaded idea.

Induced traffic means that building roads to keep commute times down will not work. And it will be expensive. While there is often a good case for specific road improvements to remove key bottlenecks or improve safety – the Victoria Park Tunnel comes to mind – Duranton and Turner’s work shows that a strategy of building lots of roads will not succeed in minimising commute times. An alternative approach is needed.

Is the City Centre Deprived?

*16/10/2014: updated with interactive map*

Radio New Zealand recently ran an article titled “Slum warning over Auckland CBD”, which began:

Auckland’s central city is home to some of the region’s poorest people, living in tiny overcrowded apartments which are threatening to turn some areas into slums.

Census data shows part of the inner city has a deprivation level of 10, which is the same as some of the poorest parts of south Auckland – such as Mangere, Papakura and Otara.

Once you get past the somewhat sensationalist headline and opening, this is actually a relatively informative article, but I think a bit more context is required. My response is possibly a bit too much context, so feel free to skip to the last few paragraphs.

 

What is Deprivation?

According to the University of Otago, who publishes the New Zealand Index of Deprivation, “deprivation has been defined as a state of observable and demonstrable disadvantage relative to the local community or the wider society or nation to which an individual, family or group belongs”. It’s a multi-dimensional and evolving concept, and can be assessed in a number of different ways.

The New Zealand Index of Deprivation uses census data to gauge deprivation at the local (but not individual/ household) level. In the latest index, based on the 2013 census, the following variables are used, in order of decreasing weight in the index:

Dep Index variables

The index uses aggregated data to provide useful information about whether people living in a given area are more or less likely to be deprived. The data is based on what’s available from the census, and is more limited (and less direct) than the range of questions we’d focus on if we were interviewing individuals or households, for example. In fact, the University of Otago has also created a New Zealand Index of Socioeconomic Deprivation for Individuals, which is an interview-based system.

Similarly, Statistics New Zealand ask a wide range of questions in their Household Economic Survey – whether household members have shoes in good condition, or do things like go without good meals, doctor’s visits and so on to save on costs. The survey used to ask “how often in the last twelve months [the interviewee] had stayed in bed longer to save on heating costs – never, occasionally or often”, and I used this variable in my dissertation to look at energy poverty – one of the many dimensions of poverty, which is a related concept to deprivation.

As you can see from these questions, there are a range of things that people can end up going without, which many of us may not really come across in our everyday lives (although we may have been through phases of this, e.g. while studying). These are social issues and not generally the domain of this blog, but I mention them for context and to give an idea of what deprivation indices are really trying to get at.

 

Is the Index of Deprivation well suited to looking at the city centre?

The New Zealand Index of Deprivation is an excellent resource and useful for comparing different areas, assessing the need for health and social services and so on. However, I think the Radio New Zealand article above, and the New Zealand Index of Deprivation itself, probably overstates the degree of deprivation in the city centre, although there are certainly deprived people (and arguably even deprived areas) in the city centre.

To give more detail, the index assigns each of the 2,000-odd geographical “area units” across New Zealand a ranking of 1 to 10, with the same number of area units in each decile, and 10 being the most deprived. One of the “area units” in the city centre, Auckland Central East (east of Queen St), was ranked 10 in the 2013 index, whereas Auckland Central West (west of Queen St) was ranked 9 and Auckland Harbourside (north of Customs St, the Viaduct, the Scene apartments etc) was ranked 6.

I’ve listed the variables that go into the index above. and as you can imagine, there are some indicators that are less relevant to a high-density context, and there are others that are less relevant to areas with a younger population. The University is aware of this, and mention in their FAQ here:

What happens if people choose not to own one or more of a house, a car or a phone?

We are restricted to information available from the census forms, which do not include information about choice for these items. However, the NZDep index includes information from six deprivation variables which are unlikely to be relevant to people who make such choices, such as some people living in inner-city apartments, so the index-value for a small area is unlikely to be substantively affected by the lack of choice information for the other three index variables.

An important aspect of deprivation is the lack of choice in going without certain things – it’s really about people who feel forced to go without “a house, a car or a phone”, or from further up in this post, “wearing shoes with holes because you could not afford replacement” and so on, rather than choosing to do without for lifestyle or other reasons. So the first point I’d note is that people often choose to live in the city centre and not own their apartment, a car etc, while I also acknowledge the university’s comments on the other variables in the index.

Secondly, areas with a high proportion of students also tend to come out badly in the index. Students obviously tend to perform poorly on income measures, and also on unemployment ones – based on customised census data, 10.3% of full time students in NZ are unemployed, vs. 4.5% for the general population (and the unemployment rate, which is different, is 22.0%).

In Dunedin, for example, students are heavily concentrated in the “Otago University” and “North Dunedin” area units, both of which have a deprivation index of 9. I lived in this area for 18 months, and while there are certainly students living in substandard conditions, again there’s an element of choice; going without now to earn higher incomes down the track.

That brings me to another important point, which is that deprivation for individual students is likely to be short-lived, rather than entrenched. Student-oriented areas may be “deprived” and remain so over time, but that’s arguably less of a social issue than areas where you have the same people living there for years and remaining deprived.

As you’d expect, the University of Otago is clued up about this. They make some effort to adjust for the student factor, e.g. through leaving the Student Allowance Benefit out of the benefit variable in the index (“it was considered that the majority of people on this benefit were probably not disadvantaged or socioeconomically deprived in the same way as those on the other means tested benefits”), but generally the index is still a bit less meaningful for areas with a large proportion of students.

Thirdly, the city centre, being dominated by apartments, will come out very well on some measures which aren’t recorded in the index – apartments aren’t usually damp and cold, as so many NZ houses are. On the other hand, many of them could still be seen as substandard, in terms of minimal living space, poor facilities, not much natural light or ventilation and so on.

 

So, is the City Centre Deprived?

Here’s a map of the Index of Deprivation scores for meshblocks across the CBD:

I’ve done some analysis on the city centre using the variables which go into the Index of Deprivation, and my conclusions would be that the city centre is still relatively deprived in many ways – but it’s probably not as bad as it looks in the index, and the deprivation for individuals is less likely to be long-term.

Unemployment rates for city centre residents are high however you slice it, for both students and non-students. I expect that a lot of that has to do with the age structure (youth unemployment is much higher) and ethnic mix (unemployment for Asian ethnic groups is somewhat higher).

The city centre also comes out badly on the “living space” variable, as you might expect given high land costs and generally smaller dwelling sizes. Using a simple measure of overcrowding – more than two people per bedroom – 3.5% of CBD dwellings are overcrowded, vs. 1.2% across New Zealand. The index measure is a bit more in depth, and looks at the number of “spare bedrooms” compared to an occupancy standard; if anything, the CBD probably comes out worse on that measure.

On the “support” variable, there are also quite a lot of single parent families in the city centre. So, there are some warning signs here – I’d hope there is a good support structure in place for these families.

So, there is deprivation in the city centre, and it needs to be acknowledged. I don’t think it calls for a hysterical response, but there are social issues which should be recognised and addressed. It’s important that the CBD has good social services in place – and I think it generally does – and that these continue to improve as the CBD’s population continues to grow.

Factors influencing PT use

A comprehensive US study looks at different factors determining modal choice – in particular looking at what makes particular people more likely to use public transport than others. The key findings are shown below:

transit-choicesNone of the findings are particularly surprising at this level, although it is interesting to note that the basics of getting PT right – fast, reliable and affordable service – are seen as more important than flashy add-ons.

Digging into the report’s executive summary highlights a few more interesting results. Firstly, in relation to whether travel trends are changing for cultural/generational reasons or simple economic circumstances:

A central topic of this report is the behavior and attitudes of the Millennial generation as compared to older Americans. Whether the apparent change in travel preferences among Millennials is the result of a true generational change in attitudes— rather than a product of economic or social circumstances—is a topic of fierce debate. We see behavioral evidence to suggest that such a shift is indeed taking place: Parents of school-age children, who are under 30 are, it appears, more likely than parents of school-age children over 30 to use public transit, even when controlling for income.

There are also some potentially counter-intuitive outcomes when looking at the role of upbringing:

We also look at the role of upbringing in mode choice. Investigating the childhood circumstances and travel patterns of Millennials (defined in the report as people under 30) and Baby Boomers (over 60) leads us to a paradox: The Millennial generation seems to be defying its sheltered, suburban upbringing by delaying the acquisition of a driver’s license and choosing transit. Meanwhile, Baby
Boomers, who grew up using transit and were encouraged to do so, are defying their upbringing by avoiding transit now.

Maybe everyone’s just being rebellious?

An area where it seems that the US might differ from New Zealand, Auckland in particular, is the relationship between transit use and income. In the US, it seems like the richer you get, the more likely you are to drive:

transit-use-by-income

Transit Use by Income legendI haven’t seen a similar graph for Auckland, but when you look at areas with higher PT use they don’t exactly stand out as being the poor parts of the city – quite the opposite in fact:

pt-use-by-origin

Many American cities are only just starting to embark on the process of ‘recentralisation’ that Auckland has gone through over the past decade or two (Ponsonby was one of the poorest parts of the city once, Freemans Bay was once a slum). I wonder whether over time they might also see more complex and surprising relationships between PT use and income over time. I also wonder what the causes and implications for Auckland’s poor are from not being higher users of public transport. I suspect the basics of travel time, reliability and cost are significant, especially for those working multiple jobs or that involves travel outside of the peak.

It would be great to see a similar study done in New Zealand, so we can compare with the US patterns and reasons for different transport choices but more than anything this report highlights that if we want more people using PT we need to focus on improving the quality of services.