Briefing Papers 9: Housing and transport: proximity matters

AUT’s Briefing Papers initiative has kindly allowed us to syndicate their recent series on housing. I wrote the ninth paper in the series:

The decisions that individuals and societies make about housing are deeply linked to decisions about transport. The ways in which people get around are affected by where they live and how their neighbourhoods are designed. And transport, in turn, has a host of broader effects. It affects our happiness and wellbeing, the efficiency of our economy, our expenditures on infrastructure, how clean our air is, and how much of our public health spending is consumed by diabetes and cardiovascular disease.

In recent years, the policy debate about housing has focused largely on prices and aggregate supply dynamics. Transport usually only enters the frame when asking when roads will be built to enable greenfield areas to be subdivided. In my view, this is too narrow a perspective.

A more holistic perspective on housing policy would ask further questions. First, how does the built environment, including housing, influence people’s travel choices? Second, does it matter how people get around? And third, are we offering people the housing and transport choices they desire?

The “Five Ds”

In her 1961 book The Death and Life of Great American Cities, Jane Jacobs observed that “dense, diversified city areas” were full of people travelling on foot, in contrast to the suburbs and “grey areas”. Half a century later, transportation researchers Reid Ewing and Robert Cervero (2010) reached the same conclusion, with added statistical rigour, after reviewing hundreds of academic papers.

Ewing and Cervero concluded that there are “five D’s” that influence people’s travel behaviour: density, diversity, design (of street networks), destination accessibility, and distance to public transport. The denser the neighbourhood, or the greater mix of uses within it, the more likely people are to walk, cycle, or take public transport. By contrast, single-use areas with disconnected street networks are amenable to cars and not much else.

Another way of putting this is that proximity matters. Being close to more destinations gives people more opportunities to make trips in a variety of ways. People respond to the availability of choices by, in many cases, choosing alternatives.

This isn’t simply a result of selection bias, in which car-loving people live in car-based neighbourhoods. The characteristics of the place you live can in fact change the way you travel. Consider the results of a recent study in Vancouver, which found that people who prefer an auto-oriented neighbourhood, but live in a walkable one walked twice as often, took public transit twice as frequently, and drove nearly two days less per week than those who prefer and live in an auto-oriented neighbourhood.

What happens to us when we travel?

But does it matter if people live in places that lack the “five D’s”? In other words, should we care how people get around (and how far they must travel)?

In a word: yes. When people live in places that offer them better transport choices – i.e. the option to walk, cycle, or take public transport as well as the option to drive – it’s better for them and better for society.

There are three key advantages to living in a place that offers proximity and transport choices.

The first is that proximity can save people time, money and stress. When I used Census data to analyse household expenditures on housing and transport in New Zealand’s three main cities, I was surprised to find that financial savings from lower rents further out of the city tended to be fully offset by added commuting costs. When you factor in the added time that people must spend on the roads, living further away starts to look like a false economy.

To make matters worse, longer commutes can be psychologically costly – a 2014 study by the UK’s Office of National Statistics found that, all else equal, longer commutes were associated with lower and lower levels of happiness. As Charles Montgomery observed in Happy City, people buy houses once but must commute every day.

The second reason to appreciate proximity is that it can be more economically efficient. Longer distances between people increase the “spatial transaction costs” that they must bear to socialise, trade ideas, and do business. By contrast, the “five D’s” give people greater opportunities for interaction. This is important, as economies ultimately rely upon people’s interactions and transactions – between workers and businesses, entrepreneurs and investors, shoppers and retailers, and students and educators.

We have a good idea of how these effects may play out in Auckland. Land-use and transport modelling undertaken for the Auckland Plan (and subsequently presented to hearings on Auckland’s Unitary Plan) shows that developing a more compact, mixed-use city will give workers much better access to jobs, and businesses much better access to workers and customers. Interestingly, it is also expected to result in lower congestion, suggesting that people who would prefer to drive also benefit from increased transport choices.

Finally, enabling people to live in areas with better transport choices can make us healthier. This wasn’t necessarily the case a century ago. When New Zealand’s cities were being established, urban planning aimed to mitigate diseases of proximity. In his history of city-building in Australia, New Zealand, and the Pacific coast of North America, Lionel Frost observes that suburbanisation began as a public health panacea: it made people “safe from the deadly miasmas of the inner city” by allowing them to “dig a simple cesspit at the back of a relatively deep lot”.

But things have changed since then. Instead of struggling with cholera and other diseases of proximity, we are now afflicted by diseases of inactivity, such as diabetes and cardiovascular disease. According to a study commissioned by Auckland, Wellington and Waikato councils, physical inactivity caused 246 premature deaths in 2009 – roughly equivalent to road deaths in more recent years. Nearly 50% of New Zealand’s population is physically inactive.

Public health agencies are acutely aware of the social costs associated with living in neighbourhoods that do not offer people transport choices. But although they are responsible for addressing the health issues arising from housing and transport issues, they don’t have a lot of influence over how we build neighbourhoods. Perhaps that should change.

Unmet demand for transport choices

But are we simply getting the housing and transport choices that we choose? After all, most Aucklanders drive most of the time. Data from New Zealand’s Household Travel Survey indicates that Aucklanders did 94% of their travel (measured in kilometres) in cars, either as drivers or passengers. Other transport modes barely featured.

However, surveys consistently suggest that people would like to have more choices than they do. Take, for example, Auckland Council’s recent “Housing We’d Choose” study, which surveyed Aucklanders to find out how they weigh up the price, quality, and location of housing. When considering how convenient a location is, 38% of respondents ranked easy access to public transport as important, well ahead of access to a motorway as important (29%).

However, only a minority of Aucklanders actually live within close distance of good public transport services. According to PhD research by my colleague Saeid Adli, less than one in ten Aucklanders lives in a neighbourhood where they can access more than 50,000 jobs in a thirty-minute public transport commute. This is significantly below the share that say they would like to live in such a place, which indicates significant unmet demand.

In a similar vein, the Vancouver research I cited earlier finds that 20% to 30% of people living in “auto-oriented” neighbourhoods would prefer the opportunity to live within walking distance of more destinations. Meanwhile, only 3-12% of people living in walkable neighbourhoods would have preferred to live somewhere auto-oriented.

How can we get the choices we want (and need)?

In other words, people want to live in places that give them transport choices, but can’t. How did this happen, and what can we do about it?

Historically, the disciplines of urban planning and transport planning have adopted a “one size fits all” approach to meeting people’s needs and desires. If the average commuter drove a car, policymakers responded by building lots of roads, and neglecting public transport, walking, and cycling. If the average business provided a parking lot for customers and employees, policymakers responded by regulating to require every business to provide a similarly-sized carpark. If the average household needed three rooms and a backyard, policymakers responded by subsidising the construction of many standalone houses – and regulating the alternatives out of existence.

This is an absurd approach and it must change. Housing and transport policies must recognise the diversity of needs and desires that different people have, and respond by providing or enabling choice. While not everyone wants to live in a neighbourhood that offers the “five D’s”, many people would quite like the opportunity. Why not give them that choice? It’s good for them – and it’s likely to be good for the rest of us too.

Transport CBA, housing supply, and the spatial equilibrium

In comments to a recent post I wrote reviewing recommendations from the Australian Productivity Commission’s review of public infrastructure investment, reader Brendon Harre raised an important question about transport cost-benefit analysis (CBA). He commented that:

“the benefits of providing a grid of urban transport options (without mode bias) in advance of development in order to keep land, commercial and residential property affordable is not measured”

This is an important issue that’s worth careful consideration. As a best guess, I think that Brendon’s point isn’t quite true. In a roundabout way, transport CBA does capture benefits associated with enabling development. However, the modelling tools available might over- or under-estimate the magnitude of those benefits in some cases.

Let’s start by reviewing how transport CBA works in New Zealand. Here are the key steps:

  1. A transport agency or council comes up with a land use forecast – i.e. a rough idea of where people are going to live and work in the future.
  2. The transport agency then identifies two (or more) futures scenarios for the transport network in the area. For example, they may consider one scenario in which no new roads were built, and one in which a new highway is built at the edge of town.
  3. The agency then models the transport network under the fixed land use forecast and multiple transport network scenarios.
  4. Based on the modelling, it then calculates how travel times (and vehicle operating costs, emissions, etc) differ between the scenario. It sums up the reductions in travel times (etc), multiplies them by the average value of time, and then uses the resulting dollar value as the numerator in a benefit-cost ratio (BCR).

This procedure obviously bears little relationship to what we observe in practice. In reality, there is significant endogeneity between the availability of infrastructure and land use outcomes. In other words, if you build it, they will come, and vice versa. You can’t assume that land use will remain fixed if transport options change!

Another way of saying this is that rather than “banking” travel time savings from wider or faster roads, people tend to “re-invest” them into other things, such as living in a larger or cheaper house in a different location. (Or re-scheduling trips from off-peak times, shifting modes from PT, walking or cycling, etc.) Public transport is different, as it doesn’t get congested, but the principle is somewhat the same – speeding up journeys allows people to travel more.

Economists call this phenomenon “induced traffic”. I’ve previously discussed this phenomenon from a slightly different angle, focusing on the implications of induced traffic for how we manage and invest in road networks. I’ve argued that we should stop telling ourselves the lie that increased road capacity will ever “fix” congestion and accept that all we can do is give people alternatives to participating in congestion and implement congestion pricing to free up the roads.

However, I think it’s also worth considering what induced traffic means from a housing supply perspective. It’s useful to start by thinking about how individuals might respond to the opportunities created by new transport infrastructure. Let’s use the City Rail Link as an example, as we’ve got a good idea of what it will do for travel times:


Suppose I’m currently living in Morningside (I’m not, but it’s a simpler example) and facing the following costs for transport and housing:

  • Rent of $250 a week, assuming I’m flatting
  • Public transport fares of $30 a week, as a single journey to Britomart costs $3 with a HOP card
  • Travel time costs of around $130 per week, assuming that I value my commute time at around $20 per hour. It currently takes around 40 minutes to travel from Morningside to midtown by train, including the walk at the end.

Now let’s consider what will happen when CRL is done. My travel time will be cut dramatically – after CRL, it will only take 15 minutes to commute from Morningside. This is a big saving in travel time. Under these assumptions, CRL will make me better off by around $80 a week (i.e. ~4 hours saved * $20/hour).

However, I’ve also got the option to live further west in search of cheaper housing. Let’s say I choose to move to Henderson, where I pay a bit more in train fares (around $4.80 per trip) and save a bit of travel time relative to my old location. This only makes sense to do if it enables me to save at least $80 in rents for a similar dwelling. Otherwise, moving further out has made me worse off than simply staying in place and “banking” the travel time savings.

What we learn from this example is that the perceived benefits from relocating following the construction of new transport infrastructure, including lower housing costs or better quality housing, should be roughly equal to the added travel time cost of doing so. Economists describe this concept as the “spatial equilibrium” – i.e. people trade off housing and transport costs. As I found when looking at housing and commute costs in NZ cities, we can observe this trend empirically.

(That being said, there are reasons to think that moving further out in pursuit of cheaper housing is not necessarily a great idea. In The Happy City, Charles Montgomery argues that people overestimate the benefits they get from a bigger house, and underestimate the misery of longer commutes. But let’s set aside the impact of cognitive biases for the moment…)

The upshot of this is that, the standard approach to transport CBA actually seems to capture many of the benefits of new housing supply following transport infrastructure development. This sounds perverse – didn’t I say that transport models didn’t reflect reality very well? – but it makes sense when you think about how individuals make decisions about where to live and how to get around.

However, there are two caveats to this point. The first is that individuals don’t internalise all the costs (or benefits) of their location choices – there are externalities. If one location is better at generating positive spillovers in production or consumption (“agglomeration”), cheaper to serve with publicly-funded infrastructure, or responsible for fewer greenhouse gas emissions, it might be better to build infrastructure that will encourage people to live there. This is captured imperfectly in transport CBA at present – but it doesn’t have much of an impact on housing supply.

A second, more subtle issue is that our capital budget may be too constrained to deliver enough transport capacity to enable a sufficient supply of housing. For example, we may be pursuing a costly and land-intensive approach to supplying peak transport capacity that results in diminishing returns from investments. If that’s the case, we need to ask whether we have cheaper opportunities to add capacity to the transport network. (Or, alternatively, start raising taxes, which is always a popular option.)

What do you think about the spatial equilibrium in our cities?

Sunday reading 27 September 2015

Tim Harford, “What cities tell us about the economy“, Undercover Economist:

Jacobs is not the only person to argue that economic development may be profitably studied through a magnifying glass. A new research paper from three development economists, William Easterly, Laura Freschi and Steven Pennings, offers “A Long History of a Short Block” — a Shinohata-style tale of the economic development of a single 486ft block of Greene Street, between Houston and Prince Street in downtown Manhattan.

Easterly, a former World Bank researcher, is well known in development circles for his scepticism about how much development can ever be planned, and how much credit political leaders and their expert advisers deserve when things go well.

“Here’s a block where there is no leader; there’s no president or prime minister of this block,” he explained to me. Greene Street, he suggests, offers us a perspective on the more spontaneous, decentralised features of economic development.


The lessons of Greene Street? Getting the basic infrastructure right — streets, water, sanitation, policing — is a good idea. Aggressive planning, knocking down entire blocks in response to temporary weakness, is probably not. Predicting the process of economic development at a local level is a game for suckers. Most importantly, even a tremendous development success — the United States and, within it, New York City — is going to show some deep wrinkles to those who get in close.

Also from New York, here’s urban economist Ed Glaeser’s perspective on how that city could address its housing cost issues: “Build big, Bill“:

Mayor de Blasio’s focus on creating or preserving 200,000 “affordable units” over 10 years, many of which would come at the expense of market-rate units, offers the prospect of two permanently separate cities:

In one New York, the market-rate city, housing will be freely accessible to anyone willing to pay — but many will be priced out as increased affordability requirements raise building costs.

In the “affordable” New York, housing will be dribbled out unenthusiastically by lottery to lower-income renters by developers who have no incentive to treat them with respect but see them only as a cost of selling market-rate units that will be even more expensive to carry the subsidized ones.

The possibility of scoring a prized, below-market unit like the type the city creates through special carveout programs creates intense competition for these units; a flock of my graduate students once left class early to enter into the lottery for subsidized units in Boston’s new Mandarin Oriental.

Giving people a small shot of winning an affordable unit lottery is no substitute for encouraging the creation of a far more abundant supply of ordinary rental apartments. Radically upping that supply would leave far more New Yorkers able to rent something for a reasonable price on the free market, instead of allowing rents to continue to rise for most while a select few win access, via waitlists and lotteries, to a separate class of apartments at below-market rates.

Once upon a time, New York City understood this. In the early 1920s, we were building 100,000 new housing units, accessible to people across the economic spectrum, every year. As a result, the booming city remained affordable to working- and middle-class people like my grandparents.

How was this possible? For one, the city’s regulations back then were relatively modest, focusing primarily on safety and light. Thanks in no small part to that limited red tape, the cost of producing new units was relatively low, and — surprise, surprise — they got built.

In a similar vein, the San Francisco Bay Area Renters Federation asks: “How does adding expensive housing help the little guy?” They’ve put together a quite neat mathematical model to illustrate the dynamics of the market:

A central question of our housing debate is whether building new (expensive) housing protects existing low-cost housing, or destroys it. I have had the great fortune over the last year and a half to discuss this question with hundreds of people. What we all have in common is whatever side we take, we believe the relationship is perfectly obvious.

In an effort to clarify my own thinking, and double check that my mental model didn’t have any hidden internal inconsistencies, Davi Caetano, Phil Nova, Matt Lichti, Avi Flamholz, Jean-Ezra Yeung and I wrote a simulation of a housing market. Our initial conditions were 15,000 people and 10,000 housing units. Our intervention was adding 2,000 more “luxury” units.  What we found was that after adding luxury units, displacement decreased at every income level.


But who benefits from the new units? Is it only the higher income displaced people?

Let’s compare just the blue sections before and after the addition of the 2000 high-scoring units.


Displacement decreases in every income category, and completely disappears in the higher income categories. This is part of the result is particularly relevant to the conversation in San Francisco over whether to subsidize middle income housing, and whether to build “luxury” housing with abandon.

Renters who have very low and intermittent, or zero income – the elderly, people on disability, the temporarily unemployed – will need subsidies in order to afford to live in SF, or anywhere. That is uncontroversial. What’s phenomenal about the past few years in San Francisco is how many middle and higher income people are finding themselves displaced. Famous example: Kelly Dwyer. Dwyer works for the City of SF, and her husband is a firefighter. Nonetheless, they find they cannot afford the type of housing they want in San Francisco. Ironically, throughout her political career Dwyer has been an opponent of the rapid and substantial increases in residential housing capacity that would have enabled her to stay in SF.

Since we’re now in San Francisco, it’s worth reading Scott Weiner’s argument that “San Francisco should always have a subway under construction” in Medium. Weiner is a member of the SF Board of Supervisors, so his view carries some weight. Incidentally, while San Francisco is at the centre of an urban region of over 5 million people, the city itself has less than a million people. And it’s growing less rapidly than Auckland.

San Francisco is experiencing unprecedented growth. The city has 200,000 more people than in the early 1980s and 100,000 more than in the early 2000s. We are growing by about 10,000 people a year and are projected to add another 150,000 residents by 2040. We see the results of this growth on our streets every day, with more and more auto congestion and a harder time for our extensive bus network navigating the streets and meeting schedules. Indeed, Muni buses travel at the slowest average speed of any urban bus system in the country, at just over eight miles per hour on average.

We are working hard to make our surface transit system run more efficiently — reducing the number of cars on the road, increasing the number of buses and light rail vehicles, creating transit-only lanes and bus rapid transit lines. Yet, as important as this work is for our city, it isn’t enough. We need to move more transit underground, meaning we need more subways.

Subway construction is a critical part of the future of dense urban centers all over our country. New York, which is already served by an extensive subway system, is building the Second Avenue Subway to serve the east side of Manhattan. Los Angeles is expanding the Purple Line Subway, which will extend the city’s growing metro system from Downtown all the way to Westwood. Internationally, we have seen aggressive investments in subway systems pay off in places like Santiago, Chile, which has the second largest network in Latin America, after Mexico City…

If you read on, Weiner’s got some good ideas about institutional and funding changes needed to keep transport investment going.

Over at Washington Post’s Wonkblog, Emily Badger and Christopher Ingraham take a look at the most popular housing typologies in big US cities. A few interesting things pop out to me. Philadelphia and Baltimore are rowhouse cities (or terraced houses as they’re called in the UK and NZ) – pretty anomalous in the US situation. Los Angeles and Seattle have got a surprisingly large amount of large apartment blocks, but few rowhouses or small apartment blocks. And even some cities we think of as pretty sprawled out and subdivided – Atlanta, Houston, Denver – have a decent mix of apartments:

wonkblog most popular housing typology by city chart

However, all households aren’t created equal. A reader pointed me towards this disturbing article on rental tenancies in Auckland. (I rent, but I’m lucky enough to have a good landlady and a dry apartment. You shouldn’t have to be lucky to have a decent place to live!) Jess McAllen, “Rental nightmare: Are our tenants second-class citizens?” Stuff:

Damp spongy floors, peeling wallpaper and the smell of “mud” and “pond water” are recognisable descriptors to anyone who has lived with mould – which, it turns out, seems to be most Auckland renters.

Andrew King from the Property Investors Federation, whose group represents about 6000 landlords owning 22,000 properties, says that some of the power to stop it is in their hands. He says tenants often do things that encourage mould, such as not heating homes and drying clothes on clothes racks.

“A lot of tenants actually keep their curtains closed during the day. Both parties need to take responsibility for mould.”

Similarly, Housing Minister Nick Smith is proposing a $1.5 million education programme as part of his Minimum Standards bill to educate tenants and landlords about mould.

“The Green Party says mould is solely the responsibility of landlords,” says Smith in response to their alternative draft amendment to the Residential Tenancies Act of 1986. “But professional advice I have received is that mould largely depends on the way tenants are ventilating their homes.”

But the renters Sunday Star-Times interviewed, at least, have gone above and beyond their duties in ventilation – often spending lots of money on dehumidifiers and heat pumps – and find Smith’s comment patronising.

The dire conditions are making them sick, they say. In the case of one 20-year-old, mould destroyed the possessions of her dead mother.

Over on the other end of town, housing is a challenge for different reasons. In his NZ Herald column, Bernard Hickey reminds us that location is an important, if costly, “status good” for families: “The lure of the ‘Double Grammar zone’“:

Is there any more powerful phrase in the minds and spreadsheets of Auckland’s real estate chatterati than “double Grammar zone”?

Just the thought of those three words plastered across a real estate billboard is enough to make any red-blooded agent salivate. It’s also enough to make any property developer in the zones see stars and dollar signs. That’s why as many as 1800 apartments are expected to be built in the Auckland Grammar zone over the next three years.

But those three words and the thought of all those apartments is also enough to make the principals of Epsom Girls Grammar School and Auckland Grammar School go green at the gills.

Hickey looks at a number of ways that the desirable schools could accommodate growth. His last option seems quite elegant – in fact, Act actually proposed something similar back in 2003. Perhaps it’s time for the local MP to stand up for his alleged libertarian principles:

The final option is to simply turn the schools private. There is certainly plenty of demand for such assets. Private equity group Pacific Equity Partners is reported to be in talks to buy Academic Colleges Group, which includes schools in Auckland, for $500 million.

Perhaps the free market Act party could get behind such a public asset sale? That would be a double-riot option with a sideshow lynching of the local MP.

All the options are ugly, but are the inevitable result of creating a resource with public money that is highly desirable and virtually free to all those able to buy into the zones.

On a completely different note, here’s a fantastic TED talk by Swedish transportation researcher Jonas Eliasson. He’s looking at the success of Stockholm’s congestion pricing scheme:

Eliasson draws a good analogy between road networks and other complex social systems:

Planning a complex social system is a very hard thing to do, and let me tell you a story. Back in 1989, when the Berlin Wall fell, an urban planner in London got a phone call from a colleague in Moscow saying, basically, “Hi, this is Vladimir. I’d like to know, who’s in charge of London’s bread supply?”

 And the urban planner in London goes, “What do you mean, who’s in charge of London’s — I mean, no one is in charge.” “Oh, but surely someone must be in charge. I mean, it’s a very complicated system. Someone must control all of this.”

 “No. No. No one is in charge. I mean, it basically — I haven’t really thought of it. It basically organizes itself.”

It organizes itself. That’s an example of a complex social system which has the ability of self-organizing, and this is a very deep insight. When you try to solve really complex social problems, the right thing to do is most of the time to create the incentives. You don’t plan the details, and people will figure out what to do, how to adapt to this new framework.

According to Eliasson, even rather small congestion charges can induce a big change in behaviour and hence congestion. Incidentally, the fact that a 1-2 euro charge got 20% of traffic off the road during rush hours means that those rush hour trips weren’t very valuable to the people taking them – an insight that transport agencies should take into account when planning to expand peak road capacity at a high cost:

Stockholm is a medium-sized city, roughly two million people, but Stockholm also has lots of water and lots of water means lots of bridges — narrow bridges, old bridges — which means lots of road congestion. And these red dots show the most congested parts, which are the bridges that lead into the inner city. And then someone came up with the idea that, apart from good public transport, apart from spending money on roads, let’s try to charge drivers one or two euros at these bottlenecks.

Now, one or two euros, that isn’t really a lot of money, I mean compared to parking charges and running costs, etc., so you would probably expect that car drivers wouldn’t really react to this fairly small charge. You would be wrong. One or two euros was enough to make 20 percent of cars disappear from rush hours. Now, 20 percent, well, that’s a fairly huge figure, you might think, but you’ve still got 80 percent left of the problem, right? Because you still have 80 percent of the traffic. Now, that’s also wrong, because traffic happens to be a nonlinear phenomenon, meaning that once you reach above a certain capacity threshold then congestion starts to increase really, really rapidly. But fortunately, it also works the other way around. If you can reduce traffic even somewhat, then congestion will go down much faster than you might think.

Sunday reading 20 September 2015

The shifting patterns of how Londoners live and work - See more at:

The shifting patterns of how Londoners live and work – Via Urban Demographics.

Eric Jaffe, “Milan Abruptly Suspended Congestion Pricing and Traffic Immediately Soared“, CityLab. A very popular congestion pricing scheme in Milan was suspended for an 8-week period during a court challenge. Researchers evaluated the impacts on driver behaviour during the suspension. Somewhat surprisingly drivers immediately took back to the roads the first day of the suspension. (It was assumed there would be at least a minor delay in the return to pre-congestion charging behaviour). The study also made the following conclusions about the overall effects of the program:

The pricing scheme results in 27,000 fewer cars entering Area C per day—a 14.5 percent decline in traffic… The researchers find that most drivers respond to the charge by traveling at different times or taking different routes, as expected.

Milan’s program reduced air pollution (as measured by carbon emissions and PM10 particulate matter) from 6 to 17 percent. That’s a huge figure when you consider that Area C is just 5 percent of metro Milan—and that the city already has a pretty clean vehicle fleet, owing to a previous congestion fee that exempted cleaner cars. The researchers estimate the value of that environmental benefit at $3 billion a year.

Commuter routes adjacent to public transportation saw smaller traffic changes than those without similar access. In other words, many of the people who took public transit to work continued to do so even once the cordon price was suspended. This finding suggests that people are more than happy shifting out of cars if they can find homes with good transit access to work.

11-Year-Old Kid Shames “Whiny Entitled” Adults Who Hate Safer Silver Lake Streets“, Curbed LA. In a lively debate about a recent road diet in Los Angeles, 11-year old Matlock Grossman addresses the hysteric crowd with a show-stopper….

Clearly there are motorists out there who are not mature enough to share the road without having the rules painted on the road to show who goes where. The road diet, by design, is meant to slow down cars because – motorists are the problem.

Even if there are zero bicyclists taking advantage of the bike lanes, it doesn’t matter. The road diet effectively reduces collisions and the statistics prove this.\Stop bullying and victim-blaming the pedestrians and bicyclists as being the problem.

If motorists acted towards women, or another group of people, the way you act towards cyclists, people would be horrified by your hateful words and violent actions.

I don’t understand why driving a car makes you think you’re more important than someone else. You’re not.

It’s whiny entitled behavior you wouldn’t tolerate from a kid, why should I tolerate it from adults?

In entirely unsurprising news the “upscale” San Francisco private bus service Leap has filed for bankruptcy. Recall the media portrayal of the start-up targeting an “intended clientele” with  amenities including wi-fi, juice bars, smart phone ticketing and of course the de rigueur recycled wood interiors…

Jarrett Walker, one of the more lucid skeptics of the boosterism associated with vehicle technology in urban transportation, nailed the business model logic six months ago in the tweet below: “pleasantly uncrowded bus = failing business“.



Retro-futuristic vision of self driving cars.

Owen Williams, “The Netherlands is getting self-driving shuttle buses, but they’re slow as hell“, TNW News. A small pod-like driverless shuttle will be tested for travel between Wageningen and the Ede-Wageningen train station. It’s not surprising that they are slow, but they will also not work under the, erm, challenging conditions of darkness or congestion.

The vehicles won’t have a driver, but will be monitored from a remote control room to ensure they’re functioning safety. There’s even a backup plan if the WePod’s self-driving abilities don’t work out: a joystick will be installed.

What’s unique is that the WePod will travel on public roads, without designated lanes or barriers. For now they won’t run in challenging conditions such as bad weather, at night or during rush hour.

Annie Gaus, “When will driverless cars hit the streets? Uber, policy experts have wildly different timelines“, San Francisco Business Times.

The participants … all agreed on the benefits of driverless cars to reduce emissions and congestion on Bay Area roadways. But they disagreed broadly on exactly when autonomous vehicles — defined as cars that can operate without human participation — will be traffic-ready and available to anyone.

“In the 2020s” predicted Ashwini Chhabra, who leads policy development at Uber.

“2075 maybe,” countered Dr. Steven Shladover, a program manager at California Partners for Advanced Transportation Technology, a UC Berkeley research institute.

Some of the disparity lies in the definition of driverless cars. According to guidelines defined by the DMV and the Society of Automotive Engineers, there are several different levels of automation — some of which already exist in driver assistance features like active lane control.

Coral Davenport, “VW Is Said to Cheat on Diesel Emissions; U.S. Orders Big Recall“, The New York Times. A widely reported news story where Volkswagen has been charged for violating Federal EPA (US) clear air regulations by circumventing air quality testing systems. Apparently the cars software system detects the emissions testing device and turns on full emission control only for the test. Hopefully future cars won’t be able to game their required “pedestrian detection functionality.”

The Environmental Protection Agency accused the German automaker of using software to detect when the car is undergoing its periodic state emissions testing. Only during such tests are the cars’ full emissions control systems turned on. During normal driving situations, the controls are turned off, allowing the cars to spew as much as 40 times as much pollution as allowed under the Clean Air Act, the E.P.A. said.

Driverless cars will need to update their operating system to consider a much more intimate use of city streets as per international Park(ing) Day. Auckland’s event was well documented by Non-Motorist (@bythemotorway)  below and part I, part II, and part III.


Park(ing) Day Auckland 2015, Non-Motorist (@bythemotorway)

Tom Fucoloro, “Seattle will let neighborhoods design their own crosswalks“, Seattle Transit Blog. Events like Park(ing) Day and actions like tactical urbanism are civic protests designed to challenge the current conception of city streets. Recall how Mike Lydon told the story about Seattle promoting street parties by providing a streamlined permitting system. Seattle has now created a community crosswalk program where residents can design their own crosswalks. Community action is leading the charge in democratising city streets, and eventually institutions respond.

DOT and Seattle Department of Neighborhoods are jointly working on this program to allow interested community members to showcase their neighborhood’s unique culture and history or just liven up an intersection crosswalk with a colorful design. This is a great way for the city to celebrate our neighborhood communities in a creative and visual manner.

Noah Smith, “The Threat Coming by Land“, The Economist.

In a city or suburb, land’s value comes from location. People want to be close to the companies where they work. Companies want to be close to the people they employ. Stores want to be close to the consumers they serve, and consumers want to be close to the stores. Companies in the same industry want to be close to one another, so they can keep an eye on rivals, absorb ideas and poach talent. And people want to be close to other people in general, so they and their children can have friends, enjoy culture and meet their romantic partners…

As our economies become more complex, there are more kinds of stores, more cultural activities and more industries to cluster together. Therefore, the value of location increases, which pushes up the value of land. It doesn’t matter how much empty land is out there — who wants to live on the Kansas prairie? What matters for the value of modern land is the incentive to locate close to other people..

What can we do? One approach, advocated by the 19thcentury economist Henry George, is to tax the value of locations. Essentially, a Land Value Tax is a property levy with exemptions for development.

How Tube strikes help Londoners“, The Economist. An interesting study on how transit strikes shift passenger commute travel patterns, sometimes for the better.

The results are surprising. Three-quarters of commuters were forced to change their route during the strike, either because stations were closed or because congestion was unbearable. But once the strike finished, not all of them went back to their old habits. Instead, about 5% of the group decided to stick with their new route.

Before the strike, it seems, many Londoners had unwittingly been taking a suboptimal route to work. The stylised Tube map, designed by Harry Beck in 1933, distorts London’s geography. Beck was pilloried for showing Wimbledon and South Wimbledon to be miles apart, when in fact it is an easy walk from one to the other. Add to that the different average speeds at which trains hurtle along—the Waterloo & City line goes at 47kph (29mph), compared with the Hammersmith & City line’s 15kph—and it is small wonder that many commuters choose the “wrong” route to work. The strike made them realise their mistake.

Park(ing) Day 2015

It has been a busy morning across the city centre with the opening of the Beach Road cycle lane extension and the annual celebration of Park(ing) Day. This year most of the park(ing) day activity has been focused on High Street/Lorne Street. Here are some photos. Please add a comment if there are other events happening across the city. More photos will be added later  in the day.

PARK(ing) Day is a annual open-source global event where citizens, artists and activists collaborate to temporarily transform metered parking spaces into “PARK(ing)” spaces: temporary public places. The project began in 2005 when Rebar, a San Francisco art and design studio, converted a single metered parking space into a temporary public park in downtown San Francisco.

Parking Day 2015 (photo: @AnjaVroegop)

Parking Day 2015 (photo: @AnjaVroegop)

Parking Day 2015 (photo:

Parking Day 2015 (photo: @EmmaMcInnes)


Parking Day 2015 (photo: @EmmaMcInnes)

Public transport and congestion in Wellington

Last week, I took a look at some new research from the Netherlands that estimated the benefits of public transport for car travel times based on data from 13 “natural experiments” – public transport strikes. The Dutch researchers found that PT provided significant congestion reduction benefits – around €95 million per annum, equal to 47% of PT fare subsidies.

While the data was specific to Rotterdam, I’d expect to find similar results in most other cities with half-decent public transport networks. The whole thing got me wondering: Is there any similar evidence from New Zealand?

Fortunately for PT users and drivers, but unfortunately for researchers, potential PT strikes have mostly been averted over the last few years. However, Wellington did experience a “natural experiment” of sorts back in June 2013, when a major storm washed out the Hutt Valley railway line:

Source: NZTA

Source: NZTA

The Hutt Valley rail line was out for six days, including four working days. During that period, things got pretty ugly on the roads, as the motorway into downtown Wellington didn’t have enough capacity to accommodate people who ordinarily commuted in by train.

The Ministry of Transport (among others) very cleverly observed that this was a great opportunity to learn something about the impact of PT networks on road congestion. During the rail outage, they surveyed around 1,000 Wellington commuters about their travel experiences. According to their report, they found that:

  • The closure of the Hutt Valley rail line put significant pressure on the road network. Delays for commuters were most severe on the Monday following the storm. Traffic on State Highway 2 was severely congested, with morning peak hour conditions lasting two hours longer than usual
    • 80 percent of Wellington commuters from the Hutt Valley and Wairarapa experienced a longer than usual trip
    • 32 percent of them experienced delays of over an hour
  • the severity of commuter delays lessened over the week, with the number of commuters from the Hutt Valley and Wairarapa experiencing delays of over an hour halving by Wednesday 26 June

Essentially, what happened was that a bunch of people who ordinarily caught the train from the Hutt Valley couldn’t do that due to the storm damage. A quick eyeballing of MoT’s graph of daily rail patronage suggests that around 4,000 people had to make other travel arrangements:

Wellington storm daily train patronage

Almost half of the rail commuters from the Hutt Valley opted to drive instead, while the remainder chose to take replacement buses or to stay at home instead. This had a serious impact on motorway traffic, as shown on this graph of hourly southbound traffic volumes. On a normal day (the green or blue lines), traffic volumes peak at around 7-8am, and fall off sharply after that.

By contrast, on Monday 24 June, when the rail line was out, people were still travelling in (slowly) until almost 11am. That’s some serious congestion:

Wellington storm hourly vehicle flows

Based on survey data, MoT estimated that the storm damage increased average travel times during the morning peak by 0.329 hours (20 minutes) on Friday 21 June, 0.309 hours (18.5 minutes) on Monday 24 June, and 0.230 hours (14 minutes) on Wednesday 26 June. It then used those estimates of average delay for people travelling at peak time to estimate the added cost of congestion that arose as a result of the Hutt Valley rail line outage:

Wellington storm cost of increased travel time

In short, a four-day breakdown in part of Wellington’s public transport network cost morning peak travellers around $2.66 million in lost time. If we assume that there was a similar level of delay during the afternoon peak, when people are commuting out of downtown Wellington, the total cost would be roughly double that – $5.32 million.

This can give us a rough estimate of the value of public transport for congestion relief in Wellington. Extrapolated out over a full year (i.e. 250 working days), these results suggest that the Hutt Valley rail line saves drivers the equivalent of around $330 million in travel time (i.e. $5.32m / 4 days * 250 working days).

That is a very large number. According to an Auckland Transport report comparing Auckland and Wellington rail performance, Wellington’s overall rail network only cost $81.2 million to operate in 2013. 56% of operating costs were covered by fares, meaning that the total public subsidy for the network is around $36 million per annum.

On the back of these figures, it looks like Wellington’s drivers are getting a fantastic return from using some fuel taxes to pay for PT rather than more roads. The travel time savings associated with the Hutt Valley line alone are nine times as large as the operating subsidy for the entire Wellington rail network.

There are two caveats worth applying to these figures, one practical and one methodological.

First, it’s likely that the value of rail for congestion relief is unusually high in Wellington due to the shape of the city. Here’s a map of Wellington’s population density and infrastructure in 2001 and 2013 (from my analysis of urban population density). Dormitory suburbs extend linearly up the Hutt Valley and towards Porirua and the Kapiti Coast. Everyone travelling from those places to downtown Wellington are funnelled through a single transport corridor running along the shoreline of the harbour:

Wellington density 01-13 v2

In Wellington, losing the rail line means pushing everyone onto a single road. (Unlike Rotterdam, cycling isn’t especially viable due to the lack of safe infrastructure on this route.) In other cities, there tend to be a greater range of alternative routes, which spreads around the traffic impacts.

Second, these results aren’t as robust as the Rotterdam study, due to their use of survey data rather than quantitative measures of traffic flow and speed. They’re not likely to be totally wrong, but it’s likely that people over- or under-estimated commute times, or that the survey wasn’t representative of all travellers (which could invalidate MoT’s extrapolation to all morning peak travellers).

However, the increasing availability of real-time data on traffic speeds from GPS devices means that the next time this happens, it will be possible to measure the impacts in much greater detail and with greater precision. The Rotterdam study offers some good methodological insight into how best to do that – it looks at transport outcomes at specific locations over a long period of time, and controls for seasonal and weekday effects that may influence transport outcomes.

Lastly, it would be really interesting to see some similar analysis done for Auckland. I’m sure that there have been a number of full or partial rail network outages, either due to bad weather or scheduled track upgrades. Perhaps it would be worth taking a look at congestion on those days.

Briefing Papers 5: “Rental standards”

AUT’s Briefing Papers initiative has kindly allowed us to syndicate their recent series on housing. The fifth paper is by Philippa Howden-Chapman, professor of public health at University of Otago:

Every year people die prematurely in winter in New Zealand, a phenomenon unheard of in the coldest parts of Europe and North America, where houses are built and heated to protect people from winter cold. People are more likely to die in winter in New Zealand if they live in rental housing, because it is likely to be older and in poorer condition than houses which are owner occupied, and which provide more protection from the cold.

In July this year a coroner’s report stated “Whether the cold living conditions of the house became a contributing factor to the circumstances of Emma-Lita’s death cannot be excluded”. The rental house the two-year old was living in was cold and mouldy and the family had been unable to afford any heating. The Minister for Building and Housing, Nick Smith, responded by announcing “a pragmatic package” of changes to tenancy law to “make homes warmer, drier and safer … without imposing excessive bureaucracy or cost.” Most significant are the new requirements for ceiling and underfloor insulation and smoke alarms to be phased in by 2019.

The package also includes a number of amendments to the Residential Tenancies Act (RTA) aiming to quickly establish when a rental property is abandoned, increase disclosure requirements for landlords and strengthen MBIE’s enforcement powers. Tenants are still expected to be the ones to initiate complaints about poor housing, but they have longer to do so and landlords who retaliate will be subject to an increased maximum penalty of $2,000. However, tenants may still fear to complain, particularly where there is a shortage of rental housing.

The proposed law changes also gives teeth to MBIE to investigate breaches of the Act, although a recent extensive review of rental laws, Paper Walls, suggested that MBIE could have better used its existing powers under Section 124, to take over the direct monitoring of remediation.  MBIE has used this power only twice in the last 20 years. The amendment’s new Section 109 explicitly grants MBIE the right to investigate and take action against landlords in severe cases. It will be important to monitor MBIE’s use of these powers to investigate severely substandard housing.

Are the changes enough? The Government made the decision to introduce selected minimum standards in preference to implementing a comprehensive evidence-based rental housing warrant of fitness (WOF), which would ensure all houses passed a range of health and safety tests. In 2013 five councils and the NZ Green Business Council announced that they and the University of Otago, Wellington were pre-testing a 31-item rental WOF, developed by He Kainga Oranga/Housing and Health Research Programme for over a decade. Regardless, MBIE commissioned a parallel study of state housing alone. The results of the Councils’ and Otago’s WOF pre-test were made public in early 2014 and showed that the WOF was considered fair and acceptable by 85 percent of the landlords. While most rental properties failed, relatively small amounts of money were required to bring most of the surveyed properties up to the pass standard. The recently released results of the MBIE study were comparable: while only four percent of the 400 properties were fully compliant it was judged that an additional 48 per cent could be remediated to meet the comprehensive standards within two days, at relatively low cost.

By contrast, the Government’s proposed minimum rental standards are not evidence-informed and the Regulatory Impact Analysis, as Treasury observed, does not meet the quality assurance criteria – it lacked analysis and there had been inadequate consultation. The Minister gave no plausible reason why the regulations reverted to 1978 insulation requirements, now almost 40 years old, which are just over half EECA’s current standard (70mm vs 120 mm of thickness).
A recent cost-benefit analysis of ‘Warm Up NZ’ included heating, and this analysis demonstrated the high benefit:cost ratio (about 4:1) of the whole package. This has been overlooked by the Minister, who stated that heating is already required in the RTA 1986. This Act does not in fact refer to heating, but incorporates the Housing Improvement Regulations 1947, which require a fireplace or an approved form of heating in the lounge. It has been widely interpreted that an approved form of heating could include an electric socket, although a 2011 District Court case found this to be inadequate and ordered compensation to a tenant where the landlord had failed to provide some form of inexpensive heater to meet the regulations.[1] Heating costs for tenants are likely to remain high without requirements for an efficient and cost-effective heating source as well as thermally efficient insulation levels that meet the current Building Code.
Requiring all landlords to insulate their properties is a step forward, but suggesting low standards is a retrograde step. It appears to be a continuation of the Government’s practice to act with extreme caution, when more cost-beneficial measures could have far-reaching positive consequences for energy efficiency, health and CO2 emissions. The comprehensive Rental WOF proposed by He Kainga Oranga and tested by the councils includes the key, critical items that have been shown to warrant social investment, with randomised control trials clearly demonstrating reductions in the burden of disease and injury. It is a serious public health concern that the government is introducing comparatively ineffective standards for rental housing, where a growing proportion of low-income children and their families live.

[1] Complete Property Management Limited V White DC Christchurch CIV-201 0-009-3562, 3 February 2011 [unpublished].

Briefing papers 4: “Where’s the plan?

AUT’s Briefing Papers initiative has kindly allowed us to syndicate their recent series on housing. The fourth paper is by Alison Cadmon, head of Dwell Housing Trust, a community housing provider in Wellington:

I remember the event but can’t quite remember where it took place. I remember the atmosphere – a sense of relief and excitement that at last there was a plan to address New Zealand’s increasing housing problems. And I remember that the then Minister of Housing was at the event, to launch Building the Future – New Zealand’s Housing Strategy. I’m not too worried about not remembering all the details of the event as it was ten years ago.

The strategy had been developed in consultation with more than 500 people who attended consultation meetings, hui and fono from Whangarei to Dunedin, and a further 200-odd individuals and organisations who made written submissions. The strategy created a sense of momentum and a shared direction.

Ten years later, and housing is, once again, a government priority. Housing affordability and the reform of social housing featured prominently in the Prime Minister’s 2015 State of the Nation speech. The current Cabinet has three Ministers responsible for housing – showing an unprecedented level of interest in this one area.

There’s a wide recognition that housing affordability is a significant and growing issue for NZ. The role of social housing in the equation has finally been recognised. Two key pieces of work initiated by the current government have formed the basis for their current policy work. In 2010 the government established the Housing Shareholders Advisory Group (HSAG). The group was set up by the Ministers of Finance and Housing to provide independent advice to the Government on the effective and efficient delivery of social housing to those most in need. The second was the inquiry into housing affordability by the Productivity Commission in 2012. While neither of the reports were strategies, they had recommendations for government.

Like the 2005 NZ Housing Strategy, the 2010 HSAG report and the 2012 Productivity Commission report both included a goal to grow the community housing sector and diversify the provision of social housing. The government has committed to growing the sector but there hasn’t been a clear long-term plan to support this.

The growth of the community housing sector is of great interest to me personally as I have worked for a community housing organisation since 2003. In 2013 I was granted a Winston Churchill Fellowship to travel to Australia and the UK to look at the growth of not-for-profit community housing organisations. In recent decades the growth in the provision of social and affordable housing by community organisations has significantly changed the landscape of social housing in most OECD countries. The scaling-up of these organisations – through government financial investment, the transfer of stock, and other initiatives – has proved to be a highly successful method of increasing the quality and supply of social and affordable housing. These countries have embraced the added value of the community housing and the benefits of growing it. Change has been happening in New Zealand for many years, but it has been much slower than in other comparable countries.

One of the conclusions of my study was that where growth had been most successful, it was as the result of a planned and cohesive approach from governments and/or local authorities. One of many examples is the New South Wales (NSW) state government’s Planning for the Future, New Directions for Community Housing in NSW. Developed in 2007, the strategy and government’s aim was ‘to grow community housing from 13,000 to 30,000 homes over the next 10 years.’ By 2013 they had almost reached that goal.

In New Zealand state housing is the Crown’s second largest social asset valued at around $15 billion. Despite the significance and size of this asset there is no requirement for a strategic plan at the national level or any planning processes for this asset.

How does this compare with the planning for other government assets or agencies? The Crown’s largest social asset is state highways. There is a variety of long-term planning requirements at the national, regional and local levels for transportation. New Zealand Transport Agency has a 15 year whole-of-government and integrated planning models. The contrast between the planning for roading and housing is significant. Yet both roading and housing should be regarded as vital infrastructure for New Zealand.

So why is it important to have a strategy or a long-term strategic direction? Strategies create the framework that guides how all the partners will tackle the challenges and issues within the local and national housing systems. Strategies are needed to outline and achieve objectives and to set targets. The complexity of housing is another reason why a strategic and well thought through approach is needed.

Those of us who have worked in community housing for many years have seen objectives for our sector drift and change from one report, to new policy announcements, to a new pilot, to another report, and so on…. Without a long-term consistent policy direction we are doomed to the stop-start lack of progress we have suffered for the last ten years; all the while our housing issues increase. Without a strategic plan, and by not implementing the strategies we have developed, time and opportunities and resources are wasted.

Importantly, too, strategy have visions – statements that outline what we want to achieve. In 2005 the NZ Housing Strategy vision was All New Zealanders have access to affordable, sustainable, good quality housing appropriate to their needs. What’s our current vision for housing in NZ?

Community Housing Aotearoa (CHA) is the umbrella organisation for the community housing sector. Recognising the need to outline a plan and a way forward it has taken matters into its own hands and proposed a draft plan, Our Place – All New Zealanders Well-Housed. CHA also knows that the solution to some of our most complex problems is not simply building houses: ‘it is about creating communities that prosper with affordable and quality homes. Housing is the centre of the jigsaw. If we can fix this, it may also fix a host of other social issues’. CHA outlines a bold vision of community housing organisations providing homes for 50,000 more people in five years and the community housing sector becoming the same size as Housing New Zealand in that time.

What happened to the 2005 Building the Future strategy? We had a strategy, everyone got excited – but it went nowhere. In the 10 years since, housing affordability has only worsened. While much current focus is on the skyrocketing cost of purchasing houses in Auckland, weekly rentals across New Zealand have also risen faster than incomes. Benefits have not risen at all in this time. The average weekly rent for a three bedroom private house increased from $280 in 2005 to $359 in 2013 – a 28% increase. The average weekly rent for a three bedroom private house in Auckland increased from $440 in 2005 to $570 in 2013 – a 29% increase.

Where would NZ’s housing issues be now, had the 2005 strategy been implemented? We can only wonder. New Zealand needs a long-term strategic approach to housing, with cross-party consensus to achieve its objectives. The benefits of long-term planning is evident in other sectors and overseas. In the absence of government leadership, the community housing sector is taking the initiative by developing a document that belongs to the sector rather than a specific government. I hope in ten years’ time Our Place isn’t forgotten – instead, it’s remembered as the foundation of a shared long-term vision and plan.

The case against publicly owned golf courses, part 2

Last week I started taking a look at publicly-owned golf courses. I argued that they are different from public parks in several important respects. While public parks are freely available to all Aucklanders, golf courses are only open to paying golfers. As a result, we need to treat golf courses differently – not as a tax-funded public good, but as a business that must pay its way.

This week, I will take a look at some of the “opportunity costs” associated with using land for golf courses rather than alternative uses, such as public parks or housing. My central question is this: Do the benefits of using land for golf outweigh the benefits of developing the land for housing? Or is it the other way around?

Let’s start with a look at some broad trends. First, here’s what’s happened to the price of housing over the last two decades: it’s gone up significantly. This is a strong indication that demand for housing (and more intensive urban land uses) is increasing. While predicting the future is difficult, most people expect housing demand (and prices) to continue rising in the future.

Auckland house prices, rents, and CPI

Second, here’s a short-term forecast of revenues for Auckland’s 39 golf clubs from a 2013 report on future prospects for golf facilities. According to the report, golf club membership has been declining by around 1.6% a year. Unless something major changes, this trend will continue and put many golf courses under financial pressure:

Auckland golf club revenue projections chart

Effectively, rising demand for housing and falling demand for golf mean that using large amounts of publicly-owned land for golf courses will become increasingly inefficient. Here’s one way of thinking about the benefits of the status quo (to golfers) versus the benefits of redevelopment (to people who otherwise wouldn’t be able to buy or rent homes in the area).

I’m going use Chamberlain Park as a case study, but the same approach could be generalised to other publicly-owned golf courses. Here’s a picture of the course, which occupies 32 hectares in Mount Albert:

Chamberlain Park Golf Course

According to the local board, Chamberlain Park currently hosts over 50,000 rounds of golf a year. Let’s be generous and call it 55,000 rounds. According to the club’s website, green fees are $30 on weekends. This means that the total annual value of golf rounds played at Chamberlain Park is $1.65 million. In present value terms (i.e. extending this forward 40 years into the future and applying a 6% discount rate), this equates to $26.2 million.

Now, let’s consider alternative uses for the land. Let’s assume that we would develop it for housing and commercial uses, with a substantial amount of land reserved for public parks. We don’t have to look too far to find a good example of this kind of development. It’s exactly what’s happening at Wynyard Quarter, which will have a mix of medium-density residential and commercial buildings, a substantial waterfront park, and a linear park running the length of Daldy St:

Wynyard Quarter 2012 master plan

The important thing is that if development is master-planned appropriately, it can lead to more housing and better public spaces. That’s certainly happening at Wynyard, but it could also happen in Chamberlain Park if redevelopment enabled better connections between new public parks, the Northwestern cycleway, Western Springs, and Mount Albert in general.

So let’s start by assuming that we would reserve one third of Chamberlain Park – 10 hectares – for new parks and playing fields. That’s the same size as Grey Lynn Park, which attracts 100,000 people to the Grey Lynn Festival on a single Sunday – i.e. twice as many people as Chamberlain Park sees in a year.

The remainder – around 22 hectares – could be developed as new neighbourhoods, possibly along the mid-rise, mixed-use lines of Wynyard Quarter. I’m going to assume, further, that around 25% of that space would be devoted to streets, which is pretty typical of new developments. That means that after providing some sizeable public parks and laying out all the streets, we’d have around 16 hectares that could be built on.

Now, current land values in the Mount Albert area are in the range of $1500 per square metre, or possibly higher. That’s a reasonable estimate of the value that people place on the opportunity to live in the area. That means that the total benefit of redeveloping Chamberlain Park for housing is around $240 million (i.e. $1500/m2*16 ha*10,000m2/ha). These benefits would accrue primarily to the people who end up living in the area, but it could also keep housing prices from rising as rapidly and thus have wider benefits.

In short, the benefits of redeveloping Chamberlain Park – even after leaving aside a substantial area for public parks – are nine times larger than the benefits of the status quo for golfers (i.e. $240m/$26.2m = 9.2). Because demand for housing is rising at the same time that demand for golfing is falling, this figure is likely to increase, not fall.

This doesn’t necessarily mean that we have to redevelop Auckland’s publicly-owned golf courses, but it does raise some questions. First, given the fact that redevelopment is likely to be vastly more beneficial than the status quo, why isn’t it being put forward as an option in the Chamberlain Park consultation?

Second, why isn’t the opportunity cost of using lots of land for golf being recognised the prices charged by golf courses? As we’ve seen, people would place a quite high value on being able to live or work on the land occupied by some golf courses. In principle, that should be factored in to green fees, but in practice it isn’t. In the next instalment, I’ll explore this question further – it turns out that publicly-owned golf courses enjoy a large subsidy from ratepayers.

What do you think about the benefits of alternative options for using golf course land?

Sunday reading 13 September 2015

Jonah Lehrer, “A physicist solves the city“, NY Times. This article is a few years old but still thought-provoking. It discusses a physicist’s analysis of the data on cities. The key finding is that resource consumption increases more slowly than city size, while economic activity and human interaction increases more rapidly. While I think the title overstates things – the work identifies a set of strong correlations but not a causal mechanism – it’s still important:

The correspondence was obvious to [Geoffrey] West: he saw the metropolis as a sprawling organism, similarly defined by its infrastructure. (The boulevard was like a blood vessel, the back alley a capillary.) This implied that the real purpose of cities, and the reason cities keep on growing, is their ability to create massive economies of scale, just as big animals do. After analyzing the first sets of city data — the physicists began with infrastructure and consumption statistics — they concluded that cities looked a lot like elephants. In city after city, the indicators of urban “metabolism,” like the number of gas stations or the total surface area of roads, showed that when a city doubles in size, it requires an increase in resources of only 85 percent

What Bettencourt and West failed to appreciate, at least at first, was that the value of modern cities has little to do with energy efficiency. As West puts it, “Nobody moves to New York to save money on their gas bill.” Why, then, do we put up with the indignities of the city? Why do we accept the failing schools and overpriced apartments, the bedbugs and the traffic?

In essence, they arrive at the sensible conclusion that cities are valuable because they facilitate human interactions, as people crammed into a few square miles exchange ideas and start collaborations. “If you ask people why they move to the city, they always give the same reasons,” West says. “They’ve come to get a job or follow their friends or to be at the center of a scene. That’s why we pay the high rent. Cities are all about the people, not the infrastructure.”

…The challenge for Bettencourt and West was finding a way to quantify urban interactions. As usual, they began with reams of statistics. The first data set they analyzed was on the economic productivity of American cities, and it quickly became clear that their working hypothesis — like elephants, cities become more efficient as they get bigger — was profoundly incomplete. According to the data, whenever a city doubles in size, every measure of economic activity, from construction spending to the amount of bank deposits, increases by approximately 15 percent per capita. It doesn’t matter how big the city is; the law remains the same. “This remarkable equation is why people move to the big city,” West says. “Because you can take the same person, and if you just move them to a city that’s twice as big, then all of a sudden they’ll do 15 percent more of everything that we can measure.”

Relatedly, here’s a map that Oxford University researcher Max Roser put together of land use changes in Europe over the last century. I noticed two key trends: first, there are a lot more cities (the red areas), and second, the forests have become denser. In other words, if you want to protect nature, stay out of it!

Over in the US, FiveThirtyEight’s Gary Rivlin takes a look at “Why the plan to shrink New Orleans failed“. It’s a good account of the difficulty of rebuilding or rethinking a city after a major disaster, especially when there are big demographic and racial divides:

“The government is going to spend, what, $100 billion or more to rebuild New Orleans — and for what?” Sharky asked a few months after Katrina. “If we don’t do things differently, it can happen again next year.”1

Money was very much on Canizaro’s mind in early 2006. He asked me to imagine the cost of providing police, fire protection, garbage pickup, and other city services to half-built neighborhoods in low-lying New Orleans. Every expert was telling him the same thing: The city couldn’t afford to let every last neighborhood come back. Fewer people meant less tax revenue and therefore less money to spend on everything from police and fire to street repairs.

Yet by that point, Canizaro was admitting that it was inevitable that he would duck the tough call and not prohibit low-lying neighborhoods from rebuilding. He was a white man leading the redevelopment of a city that was two-thirds black. Of the 353,000 people living in a part of the city that flooded, 265,000 were black.

“Unfortunately, a lot of poor African-Americans had everything they own destroyed here,” he said. “So we have to be careful about dictating what’s going to happen, especially me as a white man.”

One other thing that this brought home to me was that the US has a stupidly large amount of money to spend on infrastructure. New Orleans has a slightly smaller population than greater Christchurch, and yet various levels of government spent around US$100 billion (~NZ$160bn at today’s exchange rates) rebuilding it. By comparison, the Treasury’s latest estimate is that the NZ government will spend a total of NZ$7.6bn rebuilding infrastructure in Christchurch. The total cost of the rebuild, including insurance payouts to homeowners, is likely to be more like $40bn.

On a different note, Emily Washington at Market Urbanism takes a look at the scientific validity – or lack thereof – of common traffic engineering standards. She describes them as a case of “Engineering in the dark“:

In The High Cost of Free ParkingDonald Shoup explains the origin of municipal parking requirements. Municipal planning offices do not have the resources to study the amount of parking that businesses should provide. Even with more staff, it’s not clear that planners would be able to determine optimal parking requirements unless they allowed business owners themselves to experiment and choose the amount of parking on their own in a learning process of how to best serve their customers.

The Institute of Transportation Engineers is one of the only organizations that provides estimates of the number car trips that businesses generate. Given the lack of information planners have to determine parking requirements, they often rely on ITE’s information to set their parking requirements. However, ITE studies are often conducted at businesses that already provide ample free parking, ignoring the potential for businesses to manage demand for parking on their property through prices. Furthermore, ITE estimates of trip generation are typically based on a very small sample of locations, which are unlikely to be representative of businesses and cities in general.

In the example below, the ITE provides a recommendation for fast food parking requirements based on their floor area. Even though the chart includes a line of best fit for the plot of peak parking spot occupation and floor area, the ITE hasn’t demonstrated a correlation between these two variables. Shoup points out:

We cannot say much about how floor area affects either vehicle trips or parking demand at a fast food restaurant, because the 95-percent confidence interval around the floor-area coefficient includes zero . . . This is not to say that vehicle trips and parking demand are unrelated to a restaurant’s size, because common sense suggests some correlation. Nevertheless, factors other than the floor area explain most of the variation in vehicle trips and peak parking occupancy at these restaurants.

Parking R2

Even though this study fails to show much of anything about parking at fast food restaurants, the ITE parking requirement recommendations carry heavy weight with city planners. Shoup finds that “the median parking requirement for fast food restaurants in the US is 10 spaces per 1,000 square feet–almost identical to the ITE’s reported parking generation rate of 9.95 spaces per 1,000 square feet. After all, planners expect minimum parking requirements to meet the peak demand for free parking, and parking generation rates predict this demand precisely. When the ITE speaks, urban planners listen.”

A linear trendline through 18 non-randomly sampled data points with an R2 of 0.038 tells you precisely bugger all about how much parking a new restaurant is likely to need. Anybody who thinks this is a good basis for regulation ought to be sent to Statistics Re-Education Camp.

However, it turns out that regulators aren’t the only ones coming up with absurd requirements based on no data whatsoever. Reddit came up with many, many examples of crazy HOA (Home Owners’ Association) rules. HOA rules, which influence building design and maintenance in many American suburbs, are enforced through private covenants, but that doesn’t prevent them from being costly and unreasonable:

I worked in property management for a while and at one time I had a portfolio with 30 HOA’s. And guess what I go to do? …..Write rule violation notices for all of them, based on what the HOA board members told me to send notices for.

Sometimes I cringed while putting them in envelopes, feeling so bad for fining some sweet old lady $50 for planting purple flowers when purple is NOT on the approved color list, and demanding she dig up all her hard work.

Or fining someone $75 for their garbage can being “too visible from the street.”

Or demanding that someone plant a new tree in their park strip, then fining them and making them plant a NEW new tree because it wasn’t “between 60 and 72 inches.” It was 58. The board president measured it.

Fun fact: many states allow HOAs to foreclose on your house if you refuse to pay fines or membership fees!

I have a bunch, but the one that sticks out is when we got fined for having a 2×4 in our backyard. Our FENCED backyard. In a place you couldn’t see from public property.

I know someone where his HOA prevents you from taking the trash out the day before pick up. Like if taking your trash out on sunday night for trash day monday was worthy of a $50 or $100 fine. 12:01AM Monday is fine, but 11:59PM sunday wasn’t

I was once made to resod my front lawn. In the middle of summer with average daily temperatures over 100 degrees. During one of the worst droughts on record. While the whole city was under watering restrictions.

The new lawn (which I had spent several hundred dollars on) promptly died and they tried to make me replace it again, but apparently enough people had complained by that point that before I did they agreed not to make us replace our lawns until the water restrictions were lifted.

Confession bear time: I had to get up early for work (3am), so as I drove through the neighborhood I looked for people watering their lawns in the middle of the night on violation of restrictions. Most people were just trying to avoid being hassled by the HOA, I know, so I left them alone. But when I saw members of the HOA board doing it, I reported them to the city.

I suspect that, in the long run, HOA covenants may be worse for growth than traditional zoning rules. This is because zoning can be amended at the city-wide level to accommodate growth somewhere. Growing cities can undertake re-planning exercises where they identify where there are opportunities to develop more intensively. Under covenants, though, there is no mechanism for balancing out urban growth requirements. If any individual HOA doesn’t want apartment blocks, it can simply ban them, without having to consider the trade-offs of doing so.

On a completely different note, the Economist has taken a look at how UK’s regional governments are trying to “win back control of their bus networks”. The system put in place under Thatcher, which privatised both operations and service planning, has apparently been failing many regions quite badly. (New Zealand is a bit ahead of the curve in making similar much-needed changes – which I previously discussed here.)

Outside booming London, bus passenger journeys have fallen by 37% over the past three decades. Critics believe that deregulation has played a part in the decline: in 1986 Margaret Thatcher privatised the then publicly run bus networks outside the capital. Several commercial bus companies have come to dominate parts of England and Wales, and their fares have increased by at least 35% more than inflation between 1995 and 2013. “There can be few business sectors where profits continue to rise while customer numbers fall so significantly,” says Nick Forbes, leader of Newcastle city council.

So he, and others, are trying to re-regulate their regional networks. The aim is not renationalisation but taking control of the franchising of routes run by commercial operators. Recent commitments by the government to regional devolution have given the moves momentum. The bus companies are resisting strongly…

The aim, says Mr Forbes, is for Nexus to regulate the services and enable seamless switching between buses and other modes of transport, as with London’s electronic Oyster card. Under the proposed new regime, bus companies would bid for contracts to operate routes, rather than just operating the ones they like. Nexus would collect fares, pay the operators and invest some of the money (which the companies currently keep as profit) back into the system to boost subsidies. It says operators would still make a healthy margin.

Also on the topic of buses, it turns out that embracing low-cost policies enabling better bus systems and safe cycling can be an economic winner. Alex Davies, “The world could save trillions with buses and bikes“, Wired:

The argument that embracing a low-carbon future is a road map to economic ruin is bunk, say a band of economists who argue that investing in more efficient transportation, buildings and waste management could save cities worldwide at least $17 trillion. One way to unlock that savings is to promote bikes and buses.

The savings come from stimulating economic activity, decreasing health care costs, reducing poverty, and cutting the costs associated with urban sprawl, like time and productivity lost to traffic congestion. That’s according to a report, Accelerating Low‐Carbon Development in the World’s Cities, released today by New Climate Economy, a group of economists formed to examine the costs and benefits of addressing climate change.

“For too long, there’s been the same old argument used to prevent bold action on climate change, which is there’s some sort of tradeoff between economic prosperity and climate action,” says Nick Godfrey, an author of the report and the organization’s head of policy and urban development. “In cities, that is a false choice. Actually, there is a significant confluence between promoting economic growth and prosperity, and climate action.”

On a different note, some clever map-makers have come up with a great illustration of how Mercator projections can mislead us about the size of places in the extreme north or south. (More info here.) It turns out that Greenland is not the world-bestriding colossus that it is made out to be:

And to finish up, here are two good pieces discussing economic geography in the present day and the distant past.

In the New York Times, Adam Davidson takes a look at economic life as it was almost 4000 years ago: “The V.C.s of B.C.“:

In general, we know few details about economic life before roughly 1000 A.D. But during one 30-year period — between 1890 and 1860 B.C. — for one community in the town of Kanesh, we know a great deal. Through a series of incredibly unlikely events, archaeologists have uncovered the comprehensive written archive of a few hundred traders who left their hometown Assur, in what is now Iraq, to set up importing businesses in Kanesh, which sat roughly at the center of present-day Turkey and functioned as the hub of a massive global trading system that stretched from Central Asia to Europe. Kanesh’s traders sent letters back and forth with their business partners, carefully written on clay tablets and stored at home in special vaults. Tens of thousands of these records remain. One economist recently told me that he would love to have as much candid information about businesses today as we have about the dealings — and in particular, about the trading practices — of this 4,000-year-old community. […]

In 1962 A.D., as our modern era of globalization was just beginning, the economist Jan Tinbergen — who would later share the first Nobel in economic science — noted something curious: Trade within and between countries followed a mathematical formula. He called it the Gravity Model, sort of an E=mc2 for global business. It comes with an imposing formula: Fij = G(Mi x Mj)/Dij. Which, simplified, means that trade between two markets will equal the size of the two markets multiplied together and then divided by their distance. (The model gets its name from its mathematical similarity to the equation in physics that describes gravitational pull.) […]

Economists were drawn to the Kanesh archive because it offered an unprecedented chance to see how well the Gravity Model applied in an economy entirely unlike our own. This was trade conducted via donkey, through a land of independent city-states whose legal and cultural systems were totally dissimilar to any we know. But still, the model held up: Ali Hortacsu, a University of Chicago economist on the Kanesh team, says that the trade figures between Assur and Kanesh matched the formula almost perfectly. ‘‘It was a very nice surprise,’’ he told me.

Over at Medium, Matthew Romaine explains how proximity still matters for the success or failure of startups today: “Tokyo vs the Bay Area“:

Tokyo’s density allows for 2–3x the number of meetings per day.

In Tokyo, you can have a string of 1-hour meetings with 30min. between each. Start with a power-breakfast at 8AM, your next meeting at 9:30AM, then 11:00AM, 12:30PM, 2PM, 3:30PM, 5PM, 6:30PM, 8PM (dinner meeting). That’s 9 meetings. Yes it’s possible — I’ve done it before. I don’t recommend repeating this daily, but if you’re fundraising or hustling in sales, at least it’s possible. In the Bay Area there’s a lot of driving, even when many of the VCs are on Sandhill Road. When we were fundraising our seed round back in 2010, we maxed out at 4 meetings / day. You could probably do 5–6 meetings in San Francisco city proper, but you’ll likely be frazzled and sweating towards the end. More recently thanks to Uber you don’t have the stress of finding parking every time, but the traffic can still suck and be unpredictable. Tokyo’s impeccably reliable by-the-minute public transportation means you can pack-in a string of in-person meetings like no other. And nothing replaces f2f meetings when large sums of money are involved.