We talk quite a bit on this blog about the importance and value of agglomeration, which is the additional level of productivity which comes from locating activities close to each other. Agglomeration is why Auckland growing will be good for all New Zealanders, and at a smaller scale why central parts of Auckland growing will be good for all of Auckland. While agglomeration economies are well studied in terms of observing that they most definitely do actually exist, it has been a little less certain exactly why they exist.
A recent article in The Atlantic Cities reports on research done by MIT (Boston version, not Manukau version) on this question – with some perhaps unsurprising but at the same time interesting results:
There have been plenty of theories. Adam Smith famously figured that people become more productive when we’re able to specialize, each of us honing a separate area of expertise. And when lots of us elbow into cities, we’re able to specialize in ways that we can’t when a rural farmer must also double as his own butcher, accountant and milkmaid. Other economists have suggested that cities become great agglomerators of industry when factories cluster together around economies of scale and communal access to transportation.
“We think there’s an underlying completely different way of thinking here, which is very different from the economist’s way of thinking,” says Pan, a doctoral candidate in computational social science in the MIT Media Laboratory’s Human Dynamics Lab. Previous work by researchers at the Santa Fe Institute has proven the math behind the power of cities: As they grow in population, all kinds of positive outcomes like patents and GDP and innovation (and negative ones like STDs and crime) grow at an exponential factor of 1.1 to 1.3.
This means that all the benefits (and downsides) that come from cities don’t just grow linearly; they grow super-linearly, and at roughly the exact same scale, with a growth rate that looks on a graph something like this blue line (a linear relationship is shown in red):
As for why this happens, though, Pan pushes aside theories about the location of manufacturing or the specialty of trade. “It’s more fundamental than that,” he says. “Cities are about people. It’s just that simple.”
We have discussed the work of the Santa Fe Institute in before in this post with a video presentation by theoretical physicist Dr Geoffrey West.
The full paper in which the study is published highlights that fundamentally it’s the density that we’re able to form social ties which generates the super-linear increase in outcomes. As noted, “the larger your city, in other words, the more people (using this same super-linear scale) you’re likely to come into contact with.”
However, unlocking the potential of cities is dependent upon ensuring that sufficient transport infrastructure is available for the city to effectively function as a large connected entity, rather than just a series of smaller disconnected placed which just happen to be next to each other. This is detailed further below:
“What really happens when you move to a big city is you get to know a lot of different people, although they are not necessarily your ‘friends,’” Pan says. “These are the people who bring different ideas, bring different opportunities, and meetings with other great people that may help you.”
Maybe this doesn’t sound like a novel discovery – that the inherent power of cities lies in our individual connections to each other. Other researchers have nipped at a similar idea, calculating, for example, the “social interaction potential” of place. But until recently, most economic thinking sidestepped the sheer value of human interaction in favor of explanations about the proximity of manufacturing, or the processes of production.
This explanation for the power of cities also raises some curious questions about those places that remain an exception to the model. In some African cities and Eastern mega-cities, innovation and productivity don’t grow super-linearly. Populations grow, but the benefits don’t accrue with them as we would expect. This is likely because transportation infrastructure in those places is so poor that people aren’t able to connect across town to each other. “To live on the west side of Beijing,” Pan says, you never go to the east side.”
What I find fascinating is to analyse whether the internet has the ability to change this fundamental relationship – because it’s now so easy to be in instant contact with a huge number of people no matter where you are. Yet none of the recent research seems to suggest that technological advances make agglomeration less important – in fact it seems like as employment specialises more and more, agglomeration actually becomes more critical than ever.
Auckland feels like it’s at the cusp of something of a transition between being an ‘overgrown town’ and a ‘real city’ – with the distinction between the two manifesting itself in the difference between the Council’s vision for Auckland and central government’s vision. In the transport arena, central government thinks that the biggest problem is congestion on Auckland’s roads – which needs to be solved through building more roads. This makes sense if you think of Auckland as just an overgrown town – where widening a road normally seems to fix the transport problem faced. However, it doesn’t work in a large city and alternative approaches – like building a high quality public transport system – are increasingly necessary.
An article in yesterday’s Herald articulated the growing recognition – once again seemingly mainly led by the Council – that Auckland’s scale provides economic opportunities and the potential to be the “growth giant” of the country which simply don’t exist elsewhere in New Zealand:
Auckland Council chief economist Geoff Cooper says the city’s growth is far outstripping the rest of New Zealand.
“Auckland will add a person to its population every 19 minutes. This compares to one person every two hours for Christchurch and one person every 2.5 hours for Wellington,” he says.
With that rate of growth will come big challenges, especially on infrastructure, particularly tunnels, tarmac and bridges.
As the only chief economist employed by a territorial authority in New Zealand, Cooper says he is in a unique position, able to provide a level of data beyond many other councils’ resources.
Auckland is a powerhouse for the national economy, Cooper says, and average labour productivity for firms in the CBD is 139 per cent higher than outside the Auckland region, according to a Motu study.
“This shows just how important the central city is, not just for Auckland, but for New Zealand as a whole.
“Auckland firms are prepared to pay a high rental premium because of these returns. Creating an accessible and high-amenity city centre will be critical in allowing more firms to take advantage of these returns and generate a high performing business district,” he says.
There’s an interesting conundrum around Auckland’s rate of growth compared to the rest of the country – in that as Auckland gets bigger it creates a wider variety of economic opportunities and a sheer scale which improves productivity. Yet at the same time, to enable economic growth Auckland needs investment in infrastructure, spending that probably wouldn’t be necessary if that same growth happened elsewhere in the country. For example, Invercargill could probably cope with quite a lot more growth before needing any major transport investment.
That sort of “distributing growth” approach seems like it was perhaps more suited to economies of two or three decades (and beyond) ago, that modern 21st century economies. When lots of employment is in low-skilled manufacturing then it doesn’t really matter where the factory sets up – and looking around New Zealand there are still quite a lot of large factories in fairly small towns (resulting in those towns generally becoming incredibly dependent on that industry). However, in more service and knowledge focused economies with a greater and greater focus on skills, agglomeration benefits, specialisation and so forth. In this type of economy, large cities with large and diverse labour pools tend to do well.
Perhaps this is reflected in Auckland’s economy doing reasonably well in recent times:
“As Harvard professor and urban economist Edward Glaeser notes, ‘despite the technological breakthroughs that have caused the death of distance, it turns out the world isn’t flat, it’s paved. The city has triumphed’,” Cooper wrote.
The Auckland economy grew by 2.1 per cent in the past 12 months.
“While this is not particularly glamorous in its own right – Auckland’s 10-year average is 2.5 per cent – against the backdrop of a European sovereign debt crisis, a double-dip recession for Britain, stuttering growth for Germany and a reduced growth outlook for China, it looks rather more attractive,” Cooper said.
I think I fall on the side of taking advantage of Auckland’s potential size and the economic opportunities it provides, even if that comes at the cost of additional infrastructure. Distributing growth may have worked OK in the mid-2oth century economy but it just doesn’t seem to be the way of the future. This decision has some massive implications, perhaps the most relevant one to this blog is the key importance of projects like the City Rail Link in enabling Auckland to achieve its potential.
The 2012 Mercer Quality of Living Ranking survey has Auckland as the world’s third most liveable city – retaining the same ranking as 2011. The survey is designed to assist employers in the placement of expatriate staff and how much they should receive in living allowances, so the results tend to indicate quality of living if you’re really well off, however they give a useful guide. Here are the top 20:The explanation for how the results are collated is helpful in making sense out of them:
Mercer evaluates local living conditions in more than 460 cities it surveys worldwide. We analyze living conditions according to 39 factors, grouped in 10 categories:
Political and social environment (political stability, crime, law enforcement)
Economic environment (currency exchange regulations, banking services)
Socio-cultural environment (censorship, limitations on personal freedom)
Medical and health considerations (medical supplies and services, infectious diseases, sewage, waste disposal, air pollution, etc.)
Schools and education (standard and availability of international schools)
Public services and transportation (electricity, water, public transportation, traffic congestion, etc.)
Recreation (restaurants, theatres, movie theatres, sports and leisure, etc.)
Consumer goods (availability of food/daily consumption items, cars, etc.)
Housing (rental housing, household appliances, furniture, maintenance services)
Natural environment (climate, record of natural disasters)
The scores attributed to each factor allow for city-to-city comparisons. The result is a quality-of-living index that compares relative differences between any two locations that we evaluate. For the indices to be used effectively, Mercer has created a grid that allows users to link the resulting index to a quality-of-living allowance amount by recommending a percentage value in relation to the index.
For 2012, Mercer also prepared an Infrastructure Index, based on Electricity, Water Availability, Telephone, Mail, Public Transportation, Traffic Congestion & Airport Effectiveness. The results for this index are in many places quite different, with Auckland dropping from 3rd for liveability to 43rd for infrastructure provision. This most likely highlights that transport, particularly public transport I suspect, is the main barrier to becoming number one. The table below runs a comparison between the lists for those cities which appeared in both lists – those which scored better in the infrastructure are shown in green and those that scored better in the liveability are shown in red:It’s interesting that Auckland and Wellington are the two cities which outperform their infrastructure score in the final liveability ranking so much. What’s also interesting is that the cities with the top two infrastructure scores which haven’t corresponded to ending up in the top 50 liveable cities are Dallas and Atlanta: notoriously car dependent cities.
What is very interesting is that Auckland’s poor infrastructure score, relative to liveability, is perhaps reflected in Auckland generally scoring quite lowly in terms of economic performance compared to a number of these other cities. This is outlined in the Economy chapter of the Auckland Plan quite starkly:
Measured internationally, Auckland’s performance is relatively poor: it is ranked 69th out of 85 metro regions in the Organisation for Economic Co-operation and Development (OECD) in terms of GDP per capita. New Zealand’s economic performance has declined relative to other OECD countries in terms of GDP per capita to its position at 21st, but has stabilised at around 80% of the OECD median.
Pulling a few strands together, I think there’s likely to be an argument that Auckland’s historic under-investment in infrastructure – particularly the kind of transport infrastructure that encourages productivity through boosting employment densities - has held back our economic growth. This is reflected not only in our relatively poor economic performance, but also in our relatively low infrastructure scores in the Mercer survey. Because our transport investment in the past has been so focused on encouraging employment dispersal we have missed out on the agglomeration benefits that would have otherwise been enjoyed and therefore missed the economic growth that we should have had.
Fortunately there seems to be a growing recognition of this faulty thinking and a growing realisation that smart transport investment is about encouraging and facilitating land-use patterns which support economic growth – particularly through agglomeration. Let’s hope the government finally starts to understand this point and sees how critical a project such as the City Rail Link is in boosting Auckland’s economic productivity by allowing much greater employment densities in the city centre and in major centres on the rail network across Auckland. I can’t say I have too much hope though, sadly.
An interesting Australian article highlights something that has perhaps slipped under the radar of many – that a huge implication of economies in countries like New Zealand shifting away from manufacturing and more towards knowledge industries is a likely changing of the geography of employment. The Australian Federal Minister of Infrastructure and Transport, Anthony Albanese, notes that Australian cities are facing increasing competition from growing cities in Asia, while at the same time facing the aforementioned shift in employment types. Let’s pick up a few key paragraphs:
Albanese noted that Australian cities will continue to face competition from a growing number of larger cities in the region.
“That puts a major incentive in dealing with how we position ourselves in our increasingly urbanised and increasingly affluent region,” he said. “Our cities have to be more productive. Productivity isn’t everything, but in the long run it’s nearly everything.”
Albanese added that the changing nature of cities will mean more need for inner-urban medium density housing as work increasingly shifts away from outer urban areas toward city centres.
“In terms of economic functions, our cities are shrinking in on themselves,” he said. “The forces which drove the spread of our cities in the post-war period, predominately manufacturing, are being replaced by knowledge industries – the banking, legal, insurance and myriad of other business services.”
Albanese pointed out that the changes will continue to influence the shape of cities in Australia.
“Whereas manufacturing plants which are traditionally located on the city fringe or in industrial zones, the job-rich knowledge industries tend to concentrate in the heart of our cities,” he said. “As the State of Australian Cities reports, this trend is seeing more and more workers commuting into our city centres.”
There’s a bit of a myth (perhaps another one for our list) that Auckland’s city centre is somehow dying and becoming increasingly irrelevant as employment disperses wider and wider throughout the region. Furthermore, there are often quotes that only 13-15% of Auckland’s jobs are within the motorway ring that’s generally used to define the CBD. Yet as Matt showed in a recent post, the city centre and its fringe is actually still by absolutely miles the largest concentration of employment in Auckland. Furthermore, as shown in the map below, by far the greatest concentrations of employment – in terms of jobs per hectare, are in meshblocks located in the CBD:
There has long been debate between the Council and Central Government over the future projections for employment numbers in the city centre, which seems to be quite critical to how well the business case for the CRL stacks up. If we follow the trends that are increasingly seen in Australia – and which just seem pretty logical as our economy transitions more and more to a post-industrial state – then a reconcentration of employment downtown seems likely (and also incredibly desirable in terms of economic productivity). Which, of course, makes the case for CRL even more compelling.
Recently Auckland Transport and Ernst and Young hosted a seminar on the economics of urban transport. Sadly we didn’t get an invite but at least AT have videoed the presentations and put them up online.
First we have Paul Buchanan who is an international transport economist. The presentation is here.
There were a couple of things I found really interesting:
- His points on the use of travel time savings to justify projects as well as the failure to take into account land use changes as a result of the investment. Travel time savings are something that makes up the bulk of the benefits in projects like the RoNS and it suggests we need to radically change how we view our economic analysis.
- That we have to think stronger about how the impacts of safety as measures put in place in the name of safety often can have unforeseen negative impacts.
- The importance and impact that CBDs have on the economy.
- The importance of not only having a good natural environment but a good urban one to make it attractive to potential employees. This is something we are just starting to get with the improvements that have been happening in the CBD like the shared spaces.
- The development impacts that cars, buses and trains have on development patterns. In particular the upward spiral of development and demand that rail can generate that simply isn’t possible with cars.
- We have to be careful not to put too many buses into our city centre so that we don’t choke it and make it an unattractive place.
Next we have local economist John Williamson who gives a bit more detail on the things in Auckland and how they compare to the rest of NZ. You the presentation is here.
And last we have Joanne Ogg of Ernst and Young who talked about the move to their new offices right above the eastern entrance to Britomart. What I found interesting was once again more evidence of a generational shift that is occurring where young people are increasingly wanting different transport options and how rail in particular is key to that. My wife would fall into that category and chose the area we did because of the easy access to the train station simply because we want transport options available to us.
What I think these talks highlight is how important it is that we focus on the city centre if we are really keen to get good long term economic growth. Central to that is the need to be able to move more people into and out of the area at key times while at the same time making our street level environments much nicer places to be which will mean reducing road space. The only way we can really do that is through projects like the CRL. I wonder if any of those present were from the NZTA, MoT or Treasury because it seems like they could sure do with learning a bit more about this stuff.
..The City is never complete, never at rest. Thousands of witting and unwitting acts every day alter its lines in ways that are perceptible only over a certain stretch of time. -Spiro Kostof
Looking south along Queen Street from corner of Customs Street showing the Waitemata Hotel (Sir George Grey Special Collections, Auckland Libraries, 1-W519)
I was inspired by Patrick’s recent transit dividend post where he documented the laneways around the Pacific and Matt’s people buy stuff and wanted to look a little closer at the things happening on the street which to me are fascinating and representative of a highly dynamic urban ecosystem. In particular, over the last year I believe I have witnessed Auckland’s return as a walking city. Recall that before Auckland was conventionally considered a “car city”, it was a streetcar city, a walking city, and a water city, and of course many combinations of these all, and somewhere in there an airport city and PT city.
Melbourne Laneway (source: Patrick Reynolds)
Melbourne’s famous laneways are a fantastic story. They are symbolic of an urban transformation that the city has undergone over the last 20 years. Especially interesting to me is that these laneways weren’t built into the modern block structure. Instead they were introduced over the years by what urban scholar Arnis Siksna argues is an largely predictable process to provide better performance. Siksna studied (pdf) cities across North America and Australia and concluded that areas with high intensity of pedestrian traffic performed best with a short block system (a “pedestrian mesh”) of between 50-70m. Melbourne, like many other Australian cities, was designed with much larger block sizes closer to 200m. He documents that over time these over-sized blocks are predictably broken down, through “successive uncoordinated actions of individuals”, to facilitate a more efficient land pattern, one that provides better circulation patterns and more potential lot frontages.
Modifications to original block layout of Melbourne, Modified from Siksna (1996)
Auckland also has many examples of areas with short blocks, laneways, and arcades on some of the larger blocks. The real transformation in Auckland is occurring at the street frontage level- with the emergence of micro retail. While Melbourne’s laneway system developed over decades, this retail transformation and adaptation is occurring over night.
People rule: slow traffic, short crossing waits (20-30 secs.), frequent transport
There are several major shifts which have spurred this phenomenon. First, and most important, is the accommodation of pedestrians. This has been done through major signal timing and street crossing improvements, slower traffic speeds, and increased pedestrian mobility via a web of new shared space laneways. Second, is the increase concentration of pedestrians using the street as a conduit to and from public transport. And finally, the challenging urban retail environment itself has been adapting to the competition from both web-based and more suburban retail models.
According to Heart of the City there are over 25,000 people walking along Queen Street every day. If you have been downtown recently no doubt you have experienced the days with thousands of people walking shoulder to shoulder on footpaths while cars trickle down Queen Street. In one of my previous posts I suggested that streets are a platform for exchange, and nestled in a highly connected (laneways, short blocks, layers of transportation) create the most valuable real estate.
Retailers “plugging in” to the value of the street, Auckland
There couldn’t be a better example of the free market “plugging” into the value of the street, remember People Buy Things Not Cars. Using a scientific metaphor the micro retail trend, like it’s international counterpart the foodcart, is capitalising on the value of the street by increasing its surface-to-area ratio. Here’s wikipedia:
An increased surface area to volume ratio also means increased exposure to the environment. The many tentacles of jellyfish and anemones provide increased surface area for the acquisition of food. Greater surface area allows more of the surrounding water to be sifted for nutrients.
And how does a property owner increase surface area? In Melbourne, they broke down large blocks. While this was described as providing an efficiency for movement, I’m sure the business owners weren’t so altruistic, instead they were more likely attempting to “acquire their food”. In Auckland, it’s more of an effective increase of surface area by finely breaking down the store front space. Here’s what businesses looks like trying to plug in the value of the street. This crepery (below) measures 105 cm across its front. Most other shops are about 3 metres. At that dimension we are entering the domain of Venice, Italy store fronts which have a typical dimension of 3 metres. Yes, that Venice that is a car free city.
Pedestrian scale, Auckland (photos: Scot Bathgate)
As prominent urban designer Jan Gehl notes:
When buildings are narrow, the street length is shortened, the walking distances are reduced, and street life is enhanced.
This concept of store front variety is one among many urban design imperatives that is often turned into a endless list of guidelines, codes and regulations. For example, buildings should be placed on the street edge, have transparent glazing, not be too wide, have a diversity of uses, etc. It is my theory that these reasonable outcomes don’t create vibrant cities, instead they are the outgrowth of them. What creates vibrant cities is the existence and especially the accommodation of people within a traditional urban street network supported by various transportation options.
Surface-to-area, maximising the value of the street. Queen Street, Auckland.
As an extreme example, imagine a property owner choosing to provide parking in front of his store which would obstruct the other 25,000 people on foot. Or imagine a property owner who would allow a large monotonous land use like a bank take up excessive store front space and create a dead space. With the return to the pedestrian city these urban design issues become moot, since no one would jeopardise their premium real estate asset which is the street frontage.
Instead, what I think will happen, and largely what is already happening, is that the city centre will becoming increasing re-scaled for people on the street. The outcome will be closer to what typically could be considered traditional, almost European-type urbanism, what has traditionally only occurred on High Street. This means increasing micro-retail uses. Also, large office uses will be wrapped internally with street-serving business. This is typically how old theatres such as the Capital on Dominion Rd address the street, by a narrow passage allowing users into a large internal space but not wasting surface area unnecessarily. At some point there will be undoubtedly be increasing break-down of city blocks to further access property value of the street, just as what happened in Melbourne.
Micro retail: a dynamic and resilient urban model
The amount that the city has changed over the last year is remarkable. As someone who can’t wait for things to change, and has all but given up on formal planning, it’s exciting to see how much change is occurring on its own. While some of it is due the impressive physical improvements of he public realm, most of it is an outgrowth of thousands upon thousands of individual choices, many of which are facilitated the provision of public transport and by simply accommodating the people that are already there.
Most people who read this blog do so because they are interested in transport. But sometimes I do wonder if we lose sight of the fact that transport is (usually) a means to an end, rather than an end in itself (putting aside purely recreational travel).
The need for transport is usually derived from a need to overcome the barriers created by space (in the terrestrial sense). Put simply, “space matters”. To use a somewhat trivial example, have you ever been on Trade Me and seen precisely the item you were looking for, but have decided not to purchase it because the seller was based in the South Island and shipping costs were too high? Congratulations, you’re a victim of transport costs. Like inequality, transport costs are effectively “sand in the wheels of capitalism,” they prevent things from happening that would make us all better off.
Space is not just a barrier to economic activities, but it also makes our lives that much less fulfilling in a social sense. Have you ever not attended an event because it was “too far away” or “too expensive to get there.” I have – and it generally sucks not being able to do something simply because of the transport costs involved in getting there. Transport enables social interaction and this provides a whole host of benefits that go well beyond what is counted in a market economy. The ability to develop and maintain personal connections over longer distances is, for me, the single greatest contribution of social media sites such as Facebook. But internet communications only get you so far; after a while you do need to see the whites of someone’s eyes and touch the hair on their head.
Which brings us round to why New Zealand needs to take cities seriously.
In essence cities are little more than the physical manifestation of our attempts to overcome two important economic forces, namely transport costs and fixed costs. By co-locating a lot of people, businesses, and amenities close to each other, transport costs are indeed lower (even allowing for the presence of congestion). But the concentration of people also confers another advantage: Cities gain sufficient economies of scale that they can deliver services and infrastructure that have high fixed costs. Street lighting, for example, is expensive to provide in low density areas because most of their costs are fixed, as are ports, airports, and stadiums. Cities are therefore a mechanism through which we can spread these costs over more people, which in turn lowers the average cost per person.
But while cities have many advantages, they do bring their own suite of socio-economic problems, most notably congestion. Over time, however, humans have tended to do what we do well: Find innovative incremental solutions to the problems that confront us. Gas and electric street lighting, for example, had dramatic impacts on crime rates in post-industrial European cities, such as Paris. Similarly, the advent of elevators enabled us to construct taller buildings than we could previously, which is most evident during the sky-scraper boom in Manhattan. In terms of congestion, we have slowly developed alternatives to congested transport corridors and/or modes – or simply arranged our land use patterns to minimise the need to travel long distances.
A plethora of innovations has enabled us to overcome many of the problems that have previously detracted from urban life. In turn, they have enhanced the socio-economic advantage of cities over rural areas. Whereas rural areas by definition will struggle to overcome the disadvantages engendered by long distances and a dispersed population, the issues that detract from urban life are “softer” and more readily solved. For example, there are a range of transport technologies on the horizon that should gradually contribute to better urban air quality and lower noise. Another urban issue bites the dust so to speak.
To put it simply, while cities have their problems, these are gradually being solved. And this in turn confers cities with an increasing comparative advantage over rural areas. Hard data supports this suggestion: In 2008 the proportion of people living in cities passed 50% for the first time in human history, and it continues to increase. Rural populations globally are actually stagnant, i.e. all of our population growth is occurring in urban areas. In New Zealand the proportion of the population living in predominantly urban areas, or areas with high degrees of urban influence, passed 85% some years back and is probably now getting closer to 90%.
It now seems clear that cities are not only a magnet for young people and immigrants, both of which have driven growth until recently, but also empty nest baby-boomers who increasingly crave and need the services that cities offer. It’s hard getting a hip replacement in Te Kauwhata.
What does this all mean? Well, on a simple level I think it means that New Zealanders need to grow up and learn to love our cities. Back in 2010 my colleague Jarrett Walker wrote this post on Auckland, which he kicked off with the following comment (emphasis added):
Greetings from New Zealand’s largest city, the focal point of an agrarian nation’s ambivalence about urban life … To a visitor accustomed to North American or European levels of civic vanity, it often seems that Auckland still doesn’t know how beautiful it is.
Indeed, as Matt notes in this post Auckland is a beautiful city and this is increasingly being noticed. I think what we need now is to take this growing external awareness and start to foster our own internal appreciation for how cities contribute to our way of life. And for those of you who ponder these things, perhaps the best “gift” we can leave for future generations of New Zealanders are cities worth living in. Let’s start taking cities seriously; we might be surprised by how much fun we can have along the way.
P.s. As an aside economies of scale are very important, and I’d suggest that most places in New Zealand outside of Auckland suffer economically from a lack of scale. I’ve been spending a lot of time in Dunedin recently, for example, and everytime come away thinking that all the city really needs is another 20,000 people or so.
A really thought-provoking article in the Atlantic Cities looks at whether we need to fundamentally change our approach to congestion:
With a few notable exceptions, transportation planning practice in the United States is focused on managing or eliminating traffic congestion. Regardless of whether planners are advocating for highway infrastructure to improve level-of-service, or transit projects intended to “get cars off the road,” the underlying assumption is that congestion relief is an unmitigated good.
Such arguments are often based on the idea that traffic congestion and vehicle delay are bad for the economy. According to the Texas Transportation Institute, vehicle delay costs Americans $115 billion in wasted fuel and time each year. The common interpretation of such statistics is that our cities and regions would be so much more economically productive if only we could eliminate the congestion that occurs on urban streets.
But this begs the question: is traffic congestion really a drag on the economy? Economies are measured not in terms of vehicle delay or the amount of travel that people do, but in terms of the dollar value of the goods and services that they produce. If it is true that congestion is detrimental to a region’s economy, then one would expect that people living in areas with low levels of traffic congestion would be more economically productive, on a per capita basis, than those in areas with high levels of congestion.
It certainly seems that when it comes to transport planning, congestion is the ultimate evil that we will do just about everything to rid ourselves from. Auckland’s history, building such city-destroying pieces of infrastructure like spaghetti junction, Mayoral Drive, Grafton Gully and Hobson/Nelson streets, were all done in the name of getting rid of congestion. We also spend billions and billions of dollars of public money each year on transport – once again mainly in the name of ridding ourselves of congestion.
It had better be worth it right? Congestion must really be terrible for our society, our economy and our environment if we are willing to go to such extreme lengths to rid ourselves of it.
The researchers who wrote the Atlantic Cities article tested whether higher levels of congestion had some relationship with the economic success of a place. Presumably, if congestion is so utterly terrible for the economy (as is so often claimed, especially by road building companies interestingly enough) then cities with higher levels of congestion should also have worse economies. Except it seems the opposite is true:
With the help of my research assistant Wenhao Li, I sought to determine whether vehicle delay had a negative effect on urban economies. I combined TTI’s data on traffic delay per capita with estimates of regional GDP per capita, acquired from the U.S. Bureau of Economic Analysis. I used 2010 data for both variables, converted them to their natural logs, and modeled them using regression analysis.
And what did I find? As per capita delay went up, so did GDP per capita. Every 10 percent increase in traffic delay per person was associated with a 3.4 percent increase in per capita GDP. For those interested in statistics, the relationship was significant at the 0.000 level, and the model had an R2 of 0.375. In layman’s terms, this was statistically-meaningful relationship.Such a finding seems counterintuitive on its surface. How could being stuck in traffic lead people to be more productive? The relationship is almost certainly not causal. Instead, regional GDP and traffic congestion are tied to a common moderating variable – the presence of a vibrant, economically-productive city. And as city economies grow, so too does the demand for travel. People travel for work and meetings, for shopping and recreation. They produce and demand goods and services, which further increases travel demand. And when the streets become congested and driving inconvenient, people move to more accessible areas, rebuild at higher densities, travel shorter distances, and shift travel modes.
This is a really interesting finding. It suggests that congestion may not necessarily be something we need to worry about terribly as being an inhibitor of economic growth. In fact, some of the responses to congestion – moving to more accessible areas, building at higher densities, using public transport more – may actually boost economic growth through reducing the amount we need to spend on cars (money that generally flies out of the country to the Middle East) and also boosting things like agglomeration benefits: productivity gains when we cluster activity together.
Of course in some areas, congestion will have a dampening effect on economic growth. This is mainly in terms of adding time it takes to shift stuff around the city. But the answer to that issue may well not be in building more roads, or even undertaking any measures to actually reduce overall congestion. It’s to give freight a congestion-free alternative:
It is nevertheless true that goods movement is growing in the United States, making it a transportation issue that cannot be dismissed lightly. Should a region discover that it needs additional capacity for freight traffic, plenty of capacity can be found by converting a “free” highway lane into a truck-only toll lane, which not only allocates highway capacity for goods movement, but which also generates the revenues needed to pay for the highway’s maintenance. Given that highway infrastructure in the United States is aging and in growing need of repair, and that the ongoing decline of federal gas tax revenues has made it difficult for many state and local governments to fund basic highway maintenance, such solutions are likely to look increasingly attractive in the future.
From a freight perspective, who cares how congested the roads are if you’re able to avoid that congestion. The same is true for developing a top-class public transport system – congestion no longer become relevant if more and more people can simply avoid it by catching the train or catching a bus along a bus lane or busway.
I think it’s time we got over our obsession with reducing congestion. It seems pretty clear that higher levels of congestion don’t dampen economic growth. We’ve just always based our transport policy around reducing congestion because it’s annoying – but if we develop better alternatives: tolled freight lanes for trucks, better railways, busway and bus lanes for people, then congestion doesn’t really matter anymore. As a bonus there’s probably a good chance that would all be much cheaper, and certainly less destructive, than our obsession with getting rid of congestion. So we can spend our money on more important things like health, education or even return some of it to the people. And we can save our cities from further destruction.
It’s a whole new way of thinking though…. are we ready for it?
I’m reading a really interesting book at the moment, The Option of Urbanism: Investing in a New American Dream by Christopher B. Leinberger. It’s a good book because it takes a historical look at the shift in the mid 20th century away from what’s termed “Walkable Urbanism” and towards a “Drivable Suburbanism” as the main form of building cities and transportation systems and then starts considering more recent urban trends – suggesting a shift back towards walkable urbanism as the economics and environmental effects of drivable suburbanism start to no longer make sense. Changing demographics, particularly the shift away from “two parents with kids” households is also seen as a major cause of the trends back towards the type of urban form (and transport system to support it) that was more common before the Second World War.
There are potentially a few future blog posts to come out of the book, but one thing that I found particularly worth outlining are some of the economic effects of the extreme extent that urban development has gone down the drivable suburbanism path.
Transportation costs were eighteen percent of household income in 2005, second to the amount US families spent on housing (twenty-four percent). This compares with fourteen percent spent on transportation by the average family in Europe, where public transit is much more developed and there is more walkable urbanism. The geometric increase in VMT also indicates the increasing share that automobile transportation plays in US family finances. AAA calculated that the average cost of car ownership and maintenance for a typical car in 2006 was $7,800 per year. This covers loan payments, fuel, parking, maintenance, insurance and incidental costs…
…The result is that owning an average car is the equivalent of having an additional $135,000 mortgage (mortgage interest is tax-deductible, and this calculation assumes six percent mortgage interest). In essence, drivable suburbanism has probably been shifting family spending away from investing in a long-term appreciating asset (e.g. a house) or savings to a short-term depreciating asset (e.g. a car).
This is one of the hidden issues of auto-dependency. If people don’t perceive that public transport is good enough to meet their requirements then they will feel they have to buy that extra car in order to properly participate in society. And buying that extra car can end up being a huge financial burden. Thinking of Auckland, and the particularly crap public transport serving “blue collar” working areas like East Tamaki, Penrose, Mt Wellington, Auckland Airport, Wiri and so forth, the impact on lower income workers is likely to be particularly severe. This seem to be the case in the USA, as the book continues:
The above calculations were for a typical car-owning family, but the findings become even more grim for a working-class family. A 2006 study of eighteen metropolitan areas throughout the country found that working families spend even more on transportation than on housing, a reflection of the ‘drive until you qualify’ affordable housing strategy. “In their search for low-cost housing, working families often locate far from their place of work, dramatically increasing their transportation costs and commute times.” The unintended consequences do not stop there; this mean less time with the family, increased traffic congestion for the region, and greater greenhouse gas emissions.
Traditionally US cities had their poorest residents in the centre, with richer people shifting outwards as they acquired more money. This seems to now be changing, perhaps to reflect more how things are in a city like Auckland – where definitely the cheaper real estate is further out – creating that tricky trade-off of transportation against housing costs.
I think that it would be fascinating to look at the personal costs to families of Auckland being so auto-dependent. Many poorer parts of the city (Mangere & Massey immediately come to mind) suffer some of the worst public transport provision – probably forcing a large number of families to own more cars than they would ideally want to, pushing a big financial burden onto them and making it even more difficult for them to get ahead in life. I’m not sure how you would necessarily go about focusing transport investment in such a way so that it could help lower the extent to which these families need to have more cars than they’d ideally want – but car ownership rates in certain parts of the city could be quite a good measurement tool to work out whether transportation policies were working or not.
An opinion piece by sprawl advocate Owen McShane in the National Business Review refers to a series of research papers undertaken by the Ministry for Economic Development over the past few years. The papers relate to MED trying to get a better handle on what policy interventions in Auckland are likely to have the most impact on improving the city’s economic performance.
Reading McShane’s piece, I must say my eyes rolled a bit as it seemed as though the central government agencies had yet again outlined a policy position on Auckland that is straight out of the 1960s – much as they did on the Auckland Spatial Plan and their review of the City Rail Link:
The Auckland Policy Office, led by the Ministry of Economic Development, has released the nine reports generated by its three-year research programme on Auckland’s social and economic development.
These reports openly challenge many of the assumptions behind the discussion document “Auckland Unleashed” and provide substantial data in support of the Ministry of Transport’s skeptical response to the current proposal for a mono-centric, high-density, public transport dependent, Auckland Council…
…The reports also recognise the simultaneous decentralisation of work. “The availability of cars enabled people to live in locations far from the central city where land was cheap, life was less crowded, and where new firms were locating. The result is the decentralised, often sprawling and seemingly unplanned modern city, frequently characterised by a polycentric form featuring many subsidiary sub-centres far from the traditional city centre.
This sounds awfully similar to what the central government agencies have been saying about the spatial plan and the City Rail Link project, that they expect the trends of the past few decades to continue into the future. They expect more decentralisation, more sprawl, more auto-dependency and so forth.
Of course, this gets Owen McShane very excited indeed:
Surely, the best way to develop the Auckland brand is to exploit the green and blue arcadian spaces that penetrate and punctuate its existing and distinctive form. Future development should reflect the fractal nature of Auckland’s setting, its extensive rural hinterland, dramatic coastal and bush-clad edges and the desire of so many residents to live a “greener” lifestyle. The last thing our brand requires is more urban containment and its consequent congestion, pollution and over-crowding.
The council still seems convinced Auckland is a radial monocentric city in which future economic growth should be jammed into the circular central isthmus. In reality, Auckland’s natural destiny is to be a linear city, say 100km long, with a string of major and minor centres connected by fields of green overlooking seas of blue.
Auckland’s brand of Pacific green urbanism need not be beholden to a perverse Euro-envy. We don’t need to aspire to the splendid urban spaces of Sienna or Salzburg – or to the hideous concrete deserts and slabs of Halle-Neustadt, or Pyongyang, which would be our own more probable destiny.
Our brand should be about space, sea and sky; weather and vegetation; and openness. The “creative set” are leading the way.
It’s amusing how he equates a low density auto-dependent lifestyle with one that is ‘green’. I tend to think that his ‘anti-urbanism’ probably fitted quite well with the hopes and dreams of the baby-boomer generation – who seem to aspire to having a lifestyle block on the urban fringe, even if it means huge reliance on their cars. Whether anti-urbanism fits with younger generations is more dubious I think.
But anyway, getting back to the Ministry for Economic Development papers, I thought I’d go check them out just to see how bad they were in supporting a “what has happened in the past will continue to happen” approach to planning Auckland’s future. There are quite a number of papers, but helpfully there’s also a summary paper which puts together the major findings and then has some discussion of them. Here are some of the findings: On the transport issues, I am a bit surprised that Motu (who did most of the background research for MED) didn’t highlight their very own paper into the economic benefits of the Western Railway Line that I mentioned in this previous blog post. Perhaps the timing of the research papers was to blame? One thing that I do find interesting is the emphasis placed on the benefits of enhancing intra-regional, rather than inter-regional, transportation. This is explained further below: That doesn’t exactly match up with what Owen McShane was saying about transport in his opinion piece:
The northern “holiday highway” – with its splendid “portal to the sky” – will add to our other “holiday highways” with their own splendid views of our blue and green world, such as the Newmarket Viaduct, the Harbour Bridge, and the new Mangere Bridge. Let’s make all our highways “holiday highways” – they all add to our brand.
Hmmm… that must be the strangest justification for the “holiday highway” that I’ve come across yet. But how about what the MED study says about the built environment – does that match with what Mr McShane was saying the study had concluded – that Auckland continues to decentralise and that’s a good thing? Well, not really:
Enhancing the accessibility and attractiveness of downtown for mixed use development – well that sounds exactly like what the City Rail Link project intends to achieve. Connecting up subsidiary centres that service and provide local employment, well that potentially sounds a lot like what projects such as the southwest (Airport) railway line could achieve: connecting major employment hubs like Manukau City and the Airport with parts of the city that currently under-perform, such as Mangere and other parts of South Auckland.
Reading through the research papers in a bit more detail is something of a disappointment, in that what they most commonly seem to note is the absence of a logic or pattern to where people and businesses locate. This suggests that perhaps they are looking at the wrong issues – there seems to not be a particularly extensive analysis of planning controls other than the Metropolitan Urban Limit. Or alternatively, the absence of logic may be the result of the confused and contradictory planning and policy situation that Auckland currently has.
Either way, it seems that Owen McShane was either reading a completely different set of papers to what I have flicked through, or that he just cherry-picked a couple of small things and used them to try to pretend that the papers supported his utopian vision of Auckland as a completely decentralised auto-dependent city that stretches from Whangarei to Hamilton.