Last week we saw some images of what the proposed flyover around the basin reserve might look like. They came about as the proposal is currently going through the fast tracked Board of Inquiry (BOI) process and the board required the NZTA to provide them. Also released along with the images is a peer review of the traffic and transportation related aspects of the NZTA’s application. The outcome of the review is extremely interesting and raises a number of questions not just about this particular project but many others too. The most concerning part of the review relates to how the preferred option was chosen however there were other important issues raised.
The information provided for the BOI process shows that the NZTA had examined quite a decent number of alternatives from different consultants in the past. Opus who were doing the alternatives review for the NZTA narrowed the alternatives down to 5 main options (each with some sub options). These were described as options A to E of which A and B involved the use of an elevated structure – like currently planned while options C and D were at grade options. Option E retained State Highway 1 at grade and raised the local roads over it but was not thought to be feasible.
Opus then put the various options through a qualitative evaluation and selected Option A as the best one. The peer reviewers say they have attempted to replicate the results and they say that their analysis shows that actually option D performed best. What’s more is that the numbers from Opus suggest that Option D is $25m to $60m cheaper and has a better Benefit Cost Ratio too. So why did option A come out on top? the reviewers have noted the comment ”…the differences between the at-grade and grade-separated options in terms of economic benefits and BCR is relatively small for an urban project of this nature…“. In other words it doesn’t really matter about the cost and while Option D had a better BCR and was cheaper yet it it was dismissed as the predicted traffic time savings from Option A were much better. They say this doesn’t mean that Option A shouldn’t have been chosen but it becomes important when considering the next part.
After the government started talked about putting Buckle St into a tunnel in front of the War Memorial the NZTA looked at a range of tunnel options for the project. These were named Option F to M with Option F being the preferred one out of that group. It was then compared against Option A but crucially it used different assessment criteria to what was used in the earlier stages. In the assessment criteria the tunnel performed much better than Option A but was dismissed due to the estimated cost of the project. They note (and the emphasis is theirs:
2.17 – In the opinion of the reviewers, Option F provides better overall outcomes to Option A in respect of the criteria it has been assessed against. However, it appears that Option F has not been selected on the basis of it being too expensive to construct.
2.18 – While the reviewers acknowledge that cost is a very important consideration in the evaluation of any project, the weighting assigned to this factor does not appear to be consistent with the approach used to identify Options A and B as being preferred to Options C and D in the evaluation of the initial options. In that instance, the assessment concluded that a difference in BCR of circa 0.5 was insignificant for a project of this scale. Whilst the reviewers do not share this view, the difference in BCR between Option A and Option F is likely to be of this magnitude given the additional costs of Option F and the similar level of benefits generated by each option.
2.19 - The apparent inconsistency and lack of transparency in the underlying process by which options have been compared at different stages of the project is a significant concern of the reviewers.
So cost wasn’t a factor when deciding to go for a bridge vs an at grade option but was a factor when choosing between a bridge and a tunnel.
The reviews go further saying that they aren’t able to double check the actual tunnel costs as the breakdown of them wasn’t included in the report like the other options were. That’s not to say the costs mentioned are wrong but that they haven’t been able to be reviewed.
There was also quite a bit of concern around the pedestrian and cycling facilities being provided. They say:
Whilst the project upgrades existing facilities and provides new facilities to the north, east and to a certain extent to the south, there is almost no provision to the west of the reserve in terms of cycle or shared paths or crossing facilities for pedestrians / cyclists. Cyclists travelling northbound on Adelaide Road who then wish to head west would be required to travel through the Basin Reserve coming out onto the shared area and use the crossing on Cambridge Terrace before continuing westbound through the War Memorial Park. This is a circuitous route compared to following Rugby Street and Sussex Street and is unlikely to appeal to all cyclists. The reviewers observe that the provision for cyclists on the western side of the Basin Reserve is not ideal.
Section 7.1.3 of TR4 also assumes that pedestrian and cyclist demand “is forecast to grow at 2% per annum”. However this does not match with Mr Dunlop’s evidence which provides information obtained from the WCC Transport Monitoring Surveys (2009 – 2013) that show a 62% increase over a five year period for cyclists at the John Street intersection (which may in part be due to the Countdown supermarket opening in the interim) and 123% increase over a five year period for pedestrians at the crossing of Buckle Street west of the Basin Reserve.
It is unclear if there is a particular reason for these significant increases. For example, if the increase in cycling demand at the John Street intersection is due in part to the opening of the Countdown supermarket then this may suggest a similar increase could occur on Rugby Street where the consented New World supermarket is to be built. If the future pedestrian and cyclist demand follows the trend shown in the WCC Transport Monitoring Surveys rather than the predicted 2% then potentially the pedestrian and cyclist facilities could be insufficient or under-designed
The evidence of Mr Dunlop also states that pedestrian and cyclist movements could “…double following the duplication of the Mt Victoria tunnel and associated improvements to the existing poor cycle and pedestrian facilities linking the south east”. This, in combination with the recent large observed increases in pedestrian activity in the general vicinity of the project, raise some questions over the suitability of the design of the proposed shared path facility. The reviewers consider the suitability of the 3m wide shared facility should be reviewed in light of the potential significant increases in walking and cycling activity that may eventuate over that currently experienced. Of particular interest to the reviewers is the large speed differential that may exist on the ramp between cyclists travelling downhill and other users, and the lack of escape route for users travelling too fast to avoid a collision.
If the growth in cycling continues like it has then getting the cycling facilities right will be crucial.
All up the reviewers have listed 49 key issues they found with the report, some serious where they are saying the NZTA needs to provide a lot more information though to some which are just a comment but no action is required for. I wonder if we will be able to get the BOI for Puhoi to Warkworth to require a similar independent peer review?
The prime minister has announced that work on Transmission Gully will start next year, just before the elections.
Construction on Wellington’s controversial Transmission Gully road link will begin in the second half of next year – and open to traffic in 2020.
Prime Minister John Key confirmed the move at a keynote speech to Wellington’s Chamber of Commerce this afternoon.
It follows contentious comments he made earlier this year, claiming the city is “dying”.
Key confirmed work on the $2.5 billion “northern corridor” – from Levin to the city’s airport – will begin next year.
The preferred bidder would be announced early next year, probably February, Key said.
He emphasised the Capital’s importance as a transport hub.
“The recent earthquakes have boosted the already-strong case to upgrade routes into and out of the region so it can better cope with such events,” he added.
The upgrade will shave 40 minutes off the morning peak travel time from Levin to the Capital, he said. It will also cut road fatalities from 140 to 100 within five years of opening.
And he claims it will create “thousands of new construction jobs”.
However, the project has encountered opposition from locals.
The route also lies on a fault line.
Others say the money should be spent on upgrading a rail link.
A public-private partnership will maintain and operate the link for up to 25 years.
There are a lot of issues with Transmission Gully that I will try to go into in greater detail in a future post however the main problems are that:
- it performs poorly economically -primarily due to its massive cost at about $1 billion.
- it isn’t all that clear it would perform any better in an earthquake than the existing coastal road
- it will be built as a PPP which will save us the upfront cost but will lock us in to paying huge annual fees over a 25 year period that will see us paying about 3 times what it cost to build. The NZTA have even removed the risk for the winning companies as they will have to pay for the road even if no one uses.
- Due to some steep elevation changes it is unclear that trucks will even bother using the route, especially if it is tolled
The map below shows where the road is going
The image below shows the change in elevation over the route.
While the videos below give an idea of what it will look like. You can see there are going to be some absolutely massive cuts into the sides of hills along with some massive embankments just to build the route.
We’ve covered this before, but it’s worth repeating. The OECD nations are all driving less, while developing nations are all driving more. Basically, and I bet almost 99% of westerners will be shocked at this thought, but people in China, India, and, yes, Iran, are increasingly more able to do what we used to do without thinking about it: They are outbidding us for oil. More on that later, but first here is a nice summary of the US situation from the New York Times:
Here are some quick points from the article:
1. decline preceded financial crises by 2 to 3 years [but that crisis intensified it]
2. US Vehicle Miles Travelled is now 9% below peak and equivalent to 1995 percent level per capita.
3. it definitely reflects a generational shift:
‘From 2007 to 2011, the age group most likely to buy a car shifted from the 35 to 44 group to the 55 to 64 group, he found.’
4. and seems to be related to new technology:
‘The percentage of young drivers is inversely related to the availability of the Internet, Mr. Sivak’s research has found.’
Perhaps Joyce’s investment in Ultra Fast Broadband will be the complete undoing of the longed for great economic outcomes from his other and much much more expensive idea; The RoNs programme?!
A couple of charts from Advisor Perspectives:
Anyone still think that pushing up the petrol price won’t or can’t influence driving behaviour? More contradiction in government policy; the recent and continuing fuel tax rise is in order to fund their lavish road building programme but those extra nine cents are adding to the incentive to park the car and find another way around. This government is over investing in the wrong mode for the times.
These charts also make it clear that this is no blip; this is a discontinuity. A once in a lifetime shift in direction by our culture. We really, really, need to be designing policy with this fact in the front of our minds. It seems there is a problem here, because if there is one group that haven’t got the memo it’s the older wealthier male, that’s right, the group that makes all these kinds of decisions for us:
The Driving Boom — a six decade-long period of steady increases in per-capita driving in the United States — is over.
Americans drive fewer total miles today than we did eight years ago, and fewer per person than we did at the end of Bill Clinton’s first term. The unique combination of conditions that fueled the Driving Boom—from cheap gas prices to the rapid expansion of the workforce during the Baby Boom generation — no longer exists. Meanwhile, a new generation — the Millennials — is demanding a new American Dream less dependent on driving.
From the Frontier Group, PDF here [my emphasis]. And here’s how they illustrate this change to the American Dream:
Nevermind, cos all that fracking business is going to make petrol as cheap as chips again isn’t it? Er, No. Here is a link to a long [50mins] interview with a Texan Oil Geologist, Jeffery Brown, who explains the technicalities and economics of this in a straightforward language just why, despite all this talk of abundant supply, the price of oil stubbornly stays high and will almost certainly keep going up:
Jeff Brown and JH Kunstler
In short, we are scrapping the bottom of the barrel; not in total, there’s still a lot of oil in the ground, but for the rate at which we are consuming it the corresponding production flow is too low because all the easy to get fields are diminishing. The supply demand balance is now determinedly hitting into geological and practical limits. We have to use less.
But we are aren’t we? Well if that ‘we’ is the OECD then that’s true, the US and Europe certainly are. In fact these two areas have shed about 5million barrels a day in consumption at just the same time that China and India have increased their imports by this amount and then some:
The developing world is outbidding the ‘west’ for this most crucial of commodities. Listen to Jeff Brown above for how this can be. Basically the developing countries can put that same oil to more productive use than we can. Because they are only beginning to base their economies on liquid fuels their uses of this valuable resource are more useful than ours. Jeff Brown’s example above is that the fuel an Indian farmer uses to run a pump to irrigate his fields is a more productive use of that fuel than us westeners burn driving to the mall to pick up a latte in an SUV.
While this is true for now these countries will also hit a limit to what they can afford as well, especially as they are beginning to use it less efficiently too [many there are pursuing last century's lifestyle too] and that includes the producing countries, especially when, because of either rising consumption or falling production or both, they flip from being net exporters to becoming net importers. As have the UK, Indonesia, Vietnam, Egypt, and a few others recently.
Egypt seems topical so here’s the oil history, note it’s much more the rising consumption than the decline in production that is troubling them. But still that’s half a million barrels not on the global market for other net importing countries like New Zealand to buy and burn. It basically is not good for social harmony to run low on energy:
From here: The Energy Data Browser
Here’s a brilliant comparison. Italy has been hard hit by recession, in 2011 apparently more bicycles were bought there than cars, but there’s a different story in Iran, despite the US sanctions:
Both of these charts are from Gail the Actuary on The Oil Drum, in a fascinating article on the politics of oil, here. And basically illustrate how the old postwar definitions of the world are being inverted.
It is true that the US/Canada are in different shape compared to Europe because of the Shale and Tar Sands resource, as Gail’s charts below show. But while that uptick in US production is significant the really good news is that drop in consumption. Europe’s chart is showing the rapid decline of the North Sea fields swallowing any new production. And remember Shale Oil faces swift almost immediate declines unlike conventional fields and is extremely expensive to extract. The US production honeymoon is only half the story and will not be permanent.
What matters now more than ever is what sources and forms of energy we have available and especially what uses we put it to. If only the US were putting more of that Shale resource into transitioning away from oil-dependency, and from other fossil fuel sources for electricity, then it would be of even greater value. And here in New Zealand if only we understood our wealth in electrons and our relative poverty in hydrocarbons must shape the way we live more if we are to prosper through the coming century. Unfortunately those in charge are determined to cling to old models despite of the facts.
And the key to people understanding that this shift is necessary and is not to be feared is that prosperity and happiness are not dependant on us all burning ever more amounts of oil and other fossil fuels, in fact quite the reverse is clearly the case. I do believe as a society we are going to power down, but that will not necessarily mean a step back in time to a less comfortable existence, but if we do it well it will mean a more sophisticated society just one based on less brute force.
There is a Saudi proverb I really like [for they too, despite their current riches, face the same problem, perhaps even more so]:
“My Grandfather rode a camel, my father drove a car, I fly a plane; my son will ride a camel”
It seems to me that the son’s camel will be different from the grandfather’s one:
[Solar Camel: delivering vaccines in the desert]
This is a guest post by Peter Nunns, an economist working in Auckland with an interest in transport past, present, and future. (Disclaimer: The opinions expressed here are his personal views and do not reflect upon the position of any organisation with which he is associated or constitute professional advice.)
Readers of this blog will be familiar with the notion of the benefit cost ratio (BCR), a figure that compares the forecasted benefits of a project with the financial cost of building it. It’s often used as a shorthand for the quality of a project: If the BCR is high (i.e. substantially above 1) it is seen as a good use of public money; if not, it can be criticised as a boondoggle.
Everyone plays this game. Opposition politicians often criticise motorway projects such as Puhoi-Wellsford and the Kapiti Expressway on the basis of BCRs that fall below 1, while the Minister of Transport has in the past expressed scepticism about the City Rail Link on the same grounds.
However, there is relatively little public discussion of the hows and whys of these seemingly consequential numbers. How, exactly, does one calculate a BCR?
The procedures for conducting an economic evaluation of a transport project are set out in excruciating detail in the Economic Evaluation Manual (EEM) published by the New Zealand Transport Agency. This manual defines the exact procedures that need to be followed when evaluating any transport project and specifies the values that should be used in the evaluation.
Read it at your leisure (or peril). Here’s the summary version.
The traditional method of estimating the economic benefits of a transport project involves three main steps.
First, you need to define the project carefully – that is, you need to figure out what you are planning to build, when you will build it, and the new service patterns that you’ll introduce as a result. Take, for example, the case of the Avondale-Southdown rail line, which is in the Auckland Plan but hasn’t been defined carefully enough to enable us to figure out what it will do. We can’t evaluate that until we know exactly what we’re building and when.
Second, you need to forecast the effects that the project will have on travel behaviour. Let’s stick with the example of Avondale-Southdown. In the short term, we might expect adding a new rail line to encourage some people to switch from buses or cars, thereby reducing congestion, and to encourage some people to take trips when they wouldn’t otherwise have travelled. In the longer term, it might change the patterns of population and employment location, by making it easier for people to live and work in certain places.
This forecasting is typically done by regional transport models, which estimate (on the basis of existing travel patterns and forecast changes to land use in a region) how people will get around in the future and how much time it will take them.
Third, you need to quantify the benefits of changes to travel behaviour. This is where the EEM comes in. It summarises the types of benefits that you should expect from transport projects, and defines values that allow you to monetise those benefits. Broadly speaking, the benefits considered in the EEM fall into four main categories:
· Reduced travel time
· Reduced vehicle operating costs
· Reductions in accidents and health costs
· Reduced vehicle emissions.
(There are obviously a whole bunch of important things that are not assigned any value under this framework. We might, for example, want a transport system that provides us with a choice of multiple modes, or increases our resilience to shocks such as tectonic plate activity or sudden oil price increases. These benefits are often considered in other stages of the evaluation but not quantified.)
NZTA considers travel time savings to be the most consequential economic benefit. Forecast travel time savings make up the largest share of quantified benefits from most large transport projects in and around Auckland. This is based on the idea that the time we spent in transit could be spent more productively on other activities. If we weren’t stuck on congested road and PT networks, we would be working more, or doing things that we found at least as satisfying or remunerative as work. For many projects, the time savings on an individual trip might be small – but they can add up quite rapidly over large numbers of trips.
Take the case of the CRL. Removing the Britomart bottleneck is expected to increase capacity and hence frequency across the whole network. This will make it quicker for PT riders to get into the city centre. The effects are larger on the Western Line but still significant from the South and East, as this table released by Auckland Transport indicates:
CRL time savings
In short, reductions in travel time are an important topic! So how, exactly, do we place a monetary value on them?
The answer is buried in the appendices to the EEM – Tables A4.1 and A4.2 to be exact. I’ve summarised some of the key features in two handy charts. Unfortunately, the figures themselves present some logical conundrums.
The first chart compares the value of time assigned to trips on urban arterial routes and in rural areas. Urban travel during the weekend is considered to be less valuable than weekday travel – which is fair enough, as most people work during the week. But – perplexingly – urban commuter travel is considered much less valuable than rural travel of any type.
In plain English, the EEM places a much higher value on the average JAFA’s time when s/he is on holiday in the Bay of Islands than commuting across the Harbour Bridge to get to work.
Is this logical? It’s hard to say, because the EEM contains no attribution or explanation for these figures. They are apparently derived from willingness-to-pay surveys , in which people are asked what value they place on their own time. But they don’t seem to bear any relation to differences in productivity, which is another important measure of the value of time.
The econometric research suggests that urban areas in New Zealand, and in particular the Auckland city centre, have a large productivity premium over other areas. Take, for example, the findings of a 2008 paper by David Mare (“Labour productivity in Auckland firms” ). Based on this, one would expect Aucklander’s time to be counted as relatively more valuable, not less:
So far, so strange. Now look at the second chart, which compares the additional value of time assigned to commuter trips on different modes. The EEM places a much lower value on trips that aren’t taken in single-occupant cars. If you’re walking or cycling rather than driving, your time is worth $1 an hour less; if you’re taking the bus or train, it’s worth $3 an hour less.
Once again, it’s impossible to say whether or not these values make any sense, because no source or attribution is provided. In theory, there might be some logic to these differences. For example, time spent in a bus might be less onerous as it enables one to multitask while travelling. And people might not object to time spent walking or cycling due to the health benefits. But counter-arguments could also be raised – many people enjoy driving cars and don’t mind spending a bit more time on the road.
What can be said is that the values of time defined in the EEM have consequences. They allow the transport outcomes from different projects to be quantified and compared with each other. Decisions about what to build and not to build are then based on those comparisons. So it’s tremendously important to know that we are evaluating projects using a method that undervalues the time of urban travellers relative to rural travellers, and undervalues the time of PT users, cyclists, and car-poolers relative to drivers.
Some big news out of Wellington yesterday with the release of the Public Transport Spine Study as well as more news on the Basin Flyover and Duplicate Mt Victoria Tunnel. Both are actually fairly intricately tied together. Here are the two press releases from the NZTA about the spine study (why did we need two). First let’s look at the PT spine study. It was described by the Greater Wellington Regional Council (GWRC) as:
The Public Transport Spine Study (PTSS) is about determining what a future public transport solution for Wellington city might be – one that is high quality, modern and meets the longer term aspirations and demands of our city.
The study has been undertaken by AECOM, and was commissioned jointly by Greater Wellington Regional Council, Wellington City Council and the NZ Transport Agency. These three agencies are working in partnership to ensure this work is aligned with economic and transport developments in Wellington City and the wider region.
This PTSS is a key action from the Ngauranga to Airport Corridor Plan (2008), which seeks major improvements to public transport to provide a high quality, reliable and safe service between the Wellington Railway Station and the regional hospital. It sits alongside significant improvements to the strategic road network that are now being planned and designed as part of the RoNS programme and major upgrades to rail network.
The study initially looked at a number of different options from simple bus lanes all the way up to extending the existing heavy rail network. From there the options were narrowed down to three:
- Bus priority – $59 million, which involves more peak period bus lanes and priority traffic signals for buses, along the Golden Mile and Kent Terrace, through the Basin Reserve and along Adelaide Road to Newtown and through the Hataitai bus tunnel to Kilbirnie.
- Bus Rapid Transit (BRT) – $209 million, which involves a dedicated busway, for modern, higher capacity buses separated from other traffic as much as possible, along the Golden Mile and Kent/Cambridge Terrace then around the Basin Reserve and along Adelaide Road to Newtown and through the (duplicated) Mt Victoria tunnel to Kilbirnie.
- Light Rail Transit (LRT) – $940 million, which involves new tram vehicles running on dedicated tracks along the Golden Mile, Kent and Cambridge Terraces then around the Basin Reserve along Adelaide Road to Newtown and through a separate Mt Victoria tunnel to Kilbirnie
One I noticed straight away which is odd is that the LRT option required its own tunnel under Mt Victoria whereas the BRT option was using the duplicated road tunnel. I imagine that this is a large part of the cost difference between the two. The NZTA say that the road tunnels will be limited to 50kph so I’m not sure why buses can use it but why LRT can’t (the official reason given is concerns over fire and safety issues of LRT in mixed traffic – something that doesn’t seem to be a problem elsewhere in the world). It’s also worth noting that buses through the tunnels wouldn’t have any bus priority. One thing that is crucial to later on in this post is the report notes that buses would also be able to run in the LRT corridor. Anyway here are the routes that were assessed.
The report also contains cross sections of various parts of the routes showing where the lanes would be located within the street environment. For both the BRT and LRT options this means on either one side of the road or down the centre. But it isn’t just routes or modes that are important, so on to the impacts these options would have. As you would expect, each option seems to have been assessed multiple ways. The ones I’m most interested in are the impacts on patronage, travel times and the economic assessments.
The travel time savings for both the LRT and BRT options seem fairly impressive. From Kilbirnie these two options each save over 10 minutes while they also save 6-7 minutes from Newton.
Each option has been assessed at both a regional level and in the South and East, the area served by the infrastructure and here is where I think things get interesting. The modelling only looks at the AM peak period – something that has been happening in Auckland too – and even in the reference case shows patronage dropping between 2021 and 2031. Presumably this is caused by the RoNS making it easier to drive. At the regional level the report suggests that even the best performing option – BRT – will only add 900 passengers (2.6%) to the morning peak period by 2041. By comparison it suggests that LRT will only add 400 (1.1%).
The impact in the South and East gets even weirder with LRT only being suggested to increase patronage over the base case by 80 passengers (1.1%) compared to 220 (3.1%) for bus lanes or 550 (7.8%) for the BRT option.
To be honest, it wouldn’t surprise me if there is something funny going on in the modelling. We know from the CCFAS that our modelling of PT usage is very poor, and even after a lot of effort is put in to improving it. Considering that we don’t have any cities in New Zealand using LRT for PT purposes the impacts of it are probably not being assessed properly. Further when considering just how much time the BRT and LRT routes save, it seems even weirder that patronage numbers are so low.
All of the options appear to perform very poorly in an economic assessment however reading through some of the report it is clear that there is a massive issue identified in the standard assessment.
There is no limitation on the number of car trips that can be made to the CBD, the implication is that parking will increase to meet demand.
So effectively I read this as saying is that the RoNS will create a whole heap of road capacity which will encourage people to drive and that our economic assessments assume that more parking will magically appear in the city centre to cope with this. The report says that capping parking would increase the patronage from both the BRT and LRT options by 1600-2100 peak trips which is a fairly significant increase. Even with that in place the BRT option only just scrapes over the line.
One other comment from the press release caught my attention
The benefits are calculated using NZTA guidelines. These apply a monetary value to travel time savings experienced by existing and new public transport users and are offset by ‘disbenefits’ experienced by motorists because road space has been allocated to public transport.
Now I agree that when assessing these options the impact on road users from less road space being available needs to be taken into account however I would almost guarantee that the opposite thing isn’t taken into account when roads are being assessed.
Looking over all of the different aspects of the report it is fairly clear that the BRT option is what has come out on top. This doesn’t surprise me and as much as I might like to see light rail installed, even if it were half the price it just doesn’t seem feasible.
The other major piece of news mentioned is that hat NZTA has lodged applications to the Environmental Protection Authority for the Basin Flyover. They like to call it the Basin Bridge to make it sound cuter than it is but that doesn’t change the fact it is likely to end up a very imposing piece of infrastructure. This kind of thing is what cities around the world are now starting to tear down. Even the NZTAs own very pretty videos don’t make it look appealing – unless you are driving.
Nerd alert; this post is chock-full of graphs. Plus a few “hypotheses”, just to keep things exciting. And a dog, because I like dogs.
For those of you who are new to the data game but want to participate in the nerdy excitement, let me first explain the rules. The game starts when an economist, such as myself, formulates a “hypothesis”. In doing so we’re basically statistical crystal-ball gazing. Not only is this fun, but it’s actually essential.
It’s essential because formulating a hypothesis sharpens/hones subsequent analyses. It’s also essential because of what it reveals about our own internal biases. Economists have long recognised that we’re at least as biased as anyone else (and typically more selfish) – so it just seems kosher to clearly state our biases from the outset. That way other people know what game we’re playing.
I’d encourage you to play the economics game sometime, with just one word of caution: Be prepared to be wrong. I’m 100% certain, for example, that I will – at some point in the near future – be wrong. Keep that in mind whenever you are tempted to believe your own EBS (economic BS). I might also add, however, that economists don’t care much for being right, we just try and make damned sure we’re less wrong than the engineers.
Professional happiness is, after all, largely a relative frame of mind.
The primary hypothesis (it’s not really “mine” – we’re all standing on the shoulders of nerdy giants here) is something that has been articulated in previous posts here and here. Kent recently talked about it again here, where he also came up with the crazy notion that I should write a follow-up post. Thanks for that hospital pass. But other people have also asked for it, so I finally pulled finger and cranked this out. Unfortunately the cacophony of requests for follow-up posts misses an important issue: Not much additional data has been released since my last posts on the topic. Nonetheless, even in covering well-trodden ground I did find some interesting new nuggets.
The hypothesis is this: The demand for vehicle travel in NZ (when measured in terms of vehicle-kilometres travelled per capita) is falling in response to powerful wider forces, including:
- Demographic trends, such as an ageing population (which has both age-related and income-related effects)
- Socio-economic preferences, such as reduced attachment to private vehicles or increased awareness of health/environmental impacts of driving
- Technological developments, such as smart phones, PT journey planners, tablets (which help to demystify public transport and lower the perceived costs of in-vehicle time)
- Trends in transport costs, most notably sustained higher fuel prices but also reducing costs of air travel (Air New Zealand recently launched $29 late night fares between AKL-WGN)
Stylized facts support this hypothesis. In the graph below, for example, I’ve plotted VKT per capita p.a. in New Zealand over the last decade (source). You can see there was a trend towards higher VKT per capita until circa 2004, after which the trend turned negative. Since it’s peak VKT per capita has fallen by about 6% (NB: I’ve base-lined results to 2001 levels, so the graph measures the % change from that year onwards. Doing so makes it easier to identify and compare trends, which will be useful later in this post).
The good news is that this graph suggests I’m not a complete moron. But nor does this mean my hypothesis is necessarily correct.
An alternative hypothesis, which has been advanced by the Government, is that the drop in VKT per capita that has occurred since 2004 is a temporary aberration caused by post-GFC economic malaise (which sounds suspiciously like a budget form of mayonnaise). Well, let’s investigate what I call the “budget mayonnaise” hypothesis by adding (indexed) real GDP per capita to the same graph (source).
Hmm. On the basis of this evidence it’s fair to say that the Government is more wrong than me: Budget mayonnaise does not seem to explain VKT per capita trends very well. The data actually contradicts their hypothesis; unless they’re going to suggest that drivers started preparing for the 2008 GFC way back in 2004. Now it is true that the GFC has a negative impact on GDP per capita, but this impact was relatively slight and has since been more than wiped out. In fact, since 2004 – which was the peak in per capita VKT – our GDP per capita appears to have increased by about 12%, whereas per capita VKT fell by about 6%.
At this point, ardent purveyors of the budget mayonnaise hypothesis might suggest GDP per capita is not the only indicator of economic activity, and dog-yarned it they’d be right. Wages, in particular, tend to “lag” movements in GDP, such that it is possible that post-GFCNZ is experiencing suppressed wages. But why bother asking when we can get busy answering – in the figure below I’ve added inflation-adjusted hourly earnings (source).
Here we see earnings rising steadily from 2001 to 2009, since which time they have fallen. This drop probably reflects the lagged effects of the GFC plus the Christchurch Earthquakes. I should say that 2012 data shows earnings rebounding back up to 2009 levels, which is good news. But overall these indicators do not provide much evidence to support the view that a slowdown in economic activity is primarily responsible for declining VKT per capita. It seems fair to conclude that the budget mayonnaise hypothesis does not cut the mustard (how does one actually cut mustard?).
That’s not to say economic activity in general does not impact on VKT per capita; I definitely think it does. And I certainly expect that as the economy gathers momentum (as it seems to be) VKT per capita should “rebound” somewhat. Whether this rebound is sufficient to counteract factors that are causing it to decline is hard to say. My hunch is that if fuel prices stay low then we may see some VKT growth, but that’s not really something the Government can point to and say “we told you so”; that just strikes me as getting lucky.
So for now at least, I’m sticking to my story – even if I look forward to the MoT updating their vehicle fleet spreadsheet with 2012 VKT data so that I can finally be proven wrong, and in turn get to start the game again with a new hypothesis (plenty more where that came from).
But I’m also sticking to my story because, in writing this post, I uncovered another little piece of data that seems to support my hypothesis. But it does so in a somewhat unusual way, in that it suggests that VKT per capita should have actually grown in the last decade. The source of this indicator is this delicious data set from Statistics NZ,which presents New Zealand’s population from 1991 to the present. You might think that’s not particularly exciting or novel. Think again – because in this data set Statistics NZ has split the population by their precise age at the time. It’s rather useful I think.
Using this data you can estimate the number of people of driving age (which I’ve defined to be 16-70 years). You can then calculate the ratio of people of driving age per capita, which measures the proportion of the population who are of an age where they could get a drivers license, if they were so inclined. I’ve plotted this ratio below for the period from 1992 to 2012.
Holy bandages. What this graph shows (if the Statistics NZ data and my calculations are correct) is that the proportion of people of driving age in New Zealand is now at the highest level it’s been for two decades. Moreover, most of the growth in this ratio has occurred within the last decade. The very same decade that has seen a fairly significant decline in VKT per capita.
Thus in the same decade when the proportion of people of driving age appears to have increased, we have witnessed declining VKT per capita.
Fairly interesting stuff. And well worth chucking into a regression model, if we have more than 10 years of data.
Where this ratio may head in the future I just don’t know, although Statistics NZ might be able to tell us. Perhaps I’m over playing it’s importance – after all the ratio only changes by 2.5% over a period of ten years (note the graph’s truncated vertical axis). But I would have intuitively thought (here we go again with the same old EBS) that the proportion of people of driving age would have a relatively large impact on VKT per capita. Actually, in a situation where young people behave exactly like their parents you might even expect an elasticity approaching 100% (i.e. a 1% increase in the proportion of people of driving age would cause a 1% increase in VKT per capita).
Of course, the proportion of people of driving age is only one part of the VKT equation. One useful (albeit incomplete) way to visualise the VKT equation is to consider a Russian doll of overlapping circles, where each circle captures related but distinct demographic and socio-economic variables, which ultimately combine to determine VKT per capita in any given year, like I’ve shown below.
The outer-most circle is population, which is important only in a “multiplier” sense. That is, we can forecast total travel demands by multiplying VKT per capita by NZ’s total population. What the previous graph showed is that the lilac-coloured circle has increased in size relative to the outer circle, i.e. a greater proportion of the total population are now of driving age per capita.
We also know from our previous analyses that the inner-most (orange) circle labelled “DRIVE” (i.e. VKT per capita) is currently declining. These two results thus suggest that the reduction in VKT per capita is most likely to have arisen in response to either 1) a reduction in proportion of people with drivers license per capita (green) and/or 2 ) a reduction in vehicle ownership per capita (blue circle).
The graph below shows the latter (per capita vehicle ownership) superimposed on top of the previous VKT trend.
So it has declined, by not by much. And what is most interesting about this graph is that the peak in vehicle ownership occurs a couple of years after the peak in VKT per capita. Does this suggest that travel demands are actually the egg and vehicle ownership is the chicken? Could it be that NZers are choosing to reduce their VKT first and only subsequently reducing the number of cars they own? Or maybe it’s both – maybe lower VKT results in lower vehicle ownership, and lower vehicle ownership results in lower VKT. I should say that 2012 data shows a small rise in vehicle ownership per capita back to 2010 levels, but it’s still down on the 2005 peak.
The final piece of my little diagram is the proportion of the population with drivers’ licenses. I don’t have this data on hand, although I’m sure it’s out there (please point me to it if you know of good data sets). Anyway, I think that’s quite enough statistics (and lies) for one day, so let’s finish with something that is 100% certain: Puppies that try to chew tennis balls even when lying down are 100% adorable.
Data visualisation specialist Jonathan Callahan has produced by far the most interesting response to the death of Margaret Thatcher I’ve yet to see, originally posted as a comment on The Oil Drum and reproduced below. Using his Energy Data Browser he has linked significant points of Thatcher’s career to the North Sea Oil boom. This connection is useful to further unpack issues around the vulnerabilities of nations [and governments] more generally to oil dependancy.
Before having a look it is worth noting a couple of things. The Data Browser turns the figures from the annual BP Statistical Review into visualisations of where regions and nations sit on the Energy Import/Export seesaw. As such it depends on BP’s policies and accuracy. For instance the oil category is an ‘all liquids’ measure not crude oil only [the best stuff], so biofuels, lease condensate, bitumen and all sorts of products with different energy content and utility are all included. The key issue, however, is illustrated very clearly: North Sea Oil gave the UK some 25 years as a net exporter of liquid fuels. And that’s now over. Thatcher’s achievements, whatever your view of them need to be seen in the context of this temporary boom, as do Blair’s. For example; it is easier to close down one energy industry [coal mining] when you happen to have a new one just coming on stream [North Sea Oil].
UK Liquid Fuels and Thatcher. J Callahan
This approach should also be extended to include the Prime Ministers that followed Thatcher: Major and Blair both also had the good fortune to preside over the North Sea oil bubble. And Blair, like Thatcher, took his country to war and failed to plan for the decline of this energy windfall. Neither of these following PMs deviated from Thatcher’s line; taking the short term opportunity offered by this finite resource with no attempt to either husband it nor use it to invest in its replacement [unlike the other beneficiaries of the North Sea resource; The Netherlands, Denmark, and Norway, all of whom have been more circumspect with their shares]. Also the focus through this period in the transport sector was all on privatisation, PPPs, and other financial rearrangements but nothing on core issues like energy security [part of what is meant by the term sustainability] just gaming the market. In the UK the North Sea hydrocarbon riches have been used by both Parties to pursue social agendas and to fund foreign adventures.
This energy-centred analysis can also be extrapolated to the present which is looking increasingly like a direct continuation of the difficult economic crises of the 1970s in Britain [energy supply costs as cause of economic and social problems]. It’s almost as if the North Sea bounty never happened. Much harder for Cameron to continue Thatcher’s social confrontations without the happy boon of both the oil and its excise revenue. With North Sea production now increasingly in the rear view mirror, it looks very much like a wasted opportunity, most of it sold, after all, at around $10-15 a barrel. Nothing like an unrestrained free market to efficiently strip a resource as quickly as possible [again; compare and contrast to the more controlled exploitation by the other beneficiaries of this same resource]. So whenever I read praise of Thatcher’s or Blair and Brown’s financial management with no mention of the North Sea largess I find it hard to take seriously.
Given the example of Thatcher’s long hold on power and the lasting changes her government was able to make to British society it is easy to see why our current government is so keen on the idea that there must be oil under our land or seas somewhere; bending over backwards with sweetheart deals and law changes to try to entice oil companies to look for it. The search for oil has been going on for many decades here yet New Zealand has always been a net oil importer and the gap between production and consumption [see below] has widened considerably over the last 20 years. Our entire economy is extremely vulnerable to either restrictions in supply or rises in price of this commodity [two sides of the same coin].
NZ OIL 1974-2011
Therefore I would argue, and the example of the UK North Sea resource supports this, that the far better direction for any government is to work on reducing our dependancy on this very hard to replace input. With urgency. To work towards a situation where the quantities we are either producing or importing are used in the most value-added and vital parts of the economy and not simply squandered on more inefficient and wasteful uses.
Oil can be replaced by other energy sources in many applications [like electricity generation, which largely happened after the 1970s oil shock] but this is most difficult in the transport sector, oil is by far the best and most efficient source of liquid fuels: Oil issues are transport issues and visa-versa.
Because the vast majority of the use [and waste] of oil products is in the Transport sector this is the area that desperately needs new thinking and leadership from all levels of government. This is not easy but there are significant things that can be done now, changes that do not require currently unavailable or unaffordable technologies. For example the provision of much more effective urban public transport and in the electrification of as much of freight and passenger transport systems as is possible. As well as much more imaginative management of alternatives systems like our legacy rail network that are almost certain to become part of the answer to this problem.
The more we can bring that pink line in the chart above down, and in a structural way, the better. Consumption has plateaued since around 2004 but it will take a great deal more effort than just hoping people will buy smaller/hybrid/EV cars or spending enormous sums [virtually the entire transport budget] to straighten out some State Highways to get it meaningfully lower. This is true whether someone gets lucky and finds significant new oil or not; the less we are wasting the more beneficial any find would be [as well, of course, helping to reduce the production of the negative externalities that comes with burning all these fossil fuels]. The key metric for every country is the net figure; imports minus exports and the closer consumption is to zero the better this this sum will always be.
We are, unlike the UK, in a very much better position with regards to electricity generation, and there is still a great deal that can be done to improve from the current 80% renewable figure. 100% renewable generation is an important task; it certainly would be better to not be burning gas and coal to make electricity. [Although they are making some good moves in the UK now too].
Unfortunately I guess our extremely short election cycle is one thing that works against longer term views, but then the UK’s five year cycle didn’t help them plan better for the future either. So the lack of any vision simply beyond trying to maintain ‘business as usual’ for a just little bit longer is really the problem. Shame.
And there is less excuse now with the very clear example above.
We tend to focus on issues related Auckland however a recently a video from the NZTA caught my attention. The main purpose of the video is to show some very pretty animations of what stage 2 of the Christchurch Southern motorway will look like. The project is part of the Chistchurch RoNS and is currently going through the Environmental Protection Authority process to get consent, it’s open for submissions. I guess the video was put together for to help show the impact.
I don’t know enough about the project to say if it is needed or not so won’t comment on that aspect. What struck me in the video is the amount of sprawl that is suggested will occur over the next 30 years. This is highlighted as occurring in Rollerston, Lincoln and Prebbleton. Showing each area separately helps to reduce the impact but when you look at the the areas shown, you see they all merge together forming one large continuous mass in an area that it appears would almost rival Christchurch for size. Here are the images I’m referring to:
Now perhaps the video is just trying to show the potential area where growth could occur but if that is the case then it just seems sloppy. If that much land is actually planned for growth then I am very very worried for Christchurch and it would be another case of them making many of the same mistakes Auckland has made.
The NZTA have also put this video out showing what the road may look like from the drivers seat. Do they really have that much money floating around for crap like this? Silly question, of course they do.
In an opinion piece in this morning’s Herald Michael Barnett of the Auckland Chamber of Commerce expresses his most unequivocal support for the City Rail Link [CRL] yet. It seems that the Centre City Future Access Study [CCFAS] has given Barnett and the Chamber’s members the final nudge needed to not only see the need for this project but also confidently call for it against the government’s expressed position:
“I represent a group of business leaders who strongly support the principle of the city rail link and accelerating other long-agreed key transport projects. If it is going to require new faces at the table with central Government to explain their urgency to helping drive Auckland’s economic growth agenda, then we would welcome a meeting with Transport Minister Gerry Brownlee to find a solution.”
“…the view within business is that it needs to happen sooner rather than later. It therefore doesn’t help that a central government agency becomes a roadblock to its progress.”
It really shows that it is only this government that sees improving Transit in Auckland through a party political lens. Perhaps such strong support for the CRL from a group that can generally be expected to agree with National Party policy and that they express their frustration with what they see as its political ‘blockage’ should lead to a rethink in Wellington.
“By putting political parameters around our decision-making, all we end up achieving is to deny ourselves the chance of making progress to confirm a solution and accelerate action.”
“The recent transport report showing Auckland faces a looming congestion crisis in the city centre if we don’t invest in improving rail and bus systems once again reinforced what has been abundantly clear for a number of years. We need more people out of cars and into public transport. In order to do that, we need a good and efficient network.”
It is great to see such an influential group calling for the CRL expressly in order to support the economic performance of the city because this government’s policy has always seemed one that at very best shows little understanding of the economics of cities. Largely conceiving them as nothing other than obstacles to the movement of bulky goods from the countryside rather than as centres of economic value and wealth creation in themselves.
“Removing roadblocks to allow for decisive action on Auckland’s critically important economic growth agenda is emerging as the top issue facing the city in early 2013.”
The rest of the article shows an interesting softening in attitude to the Green Party too by this business group so perhaps in their frustration they are casting around for other parties they feel they may be able to work with…?
Preceding Barnett’s column was a media release by another business group the Employers and Manufacturers Association: Auckland’s Central Rail Loop Must be Fast Tracked. Again the support for the project is because of its economic impact.
“Without far more investment in Auckland’s transport infrastructure there’s no way we can lift exports from 30 to 40 per cent of GDP by 2025.
“Auckland’s GDP is growing at 2.4 per cent a year currently, but long before 2025 the people we need to house and transport to and from work for our export campaign will be stuck in the traffic far from where their jobs are.
“But more than this, the CRL is itself an engine of growth for the coherent development of the city.
Again emphasising a very large gulf between what business people in Auckland believe is needed to support a successful economy and our government’s view.
From another perspective yesterday’s Herald on Sunday ran this piece from opinion writer Kerre Woodham: Nats Run out of Petrol. While she falls short of connecting the dots between the aggressive pace and high cost of the RoNS programme and the recently announced petrol tax increases she does point to an increasing level of frustration among ordinary New Zealanders with the policies of the Key Government, suggesting that this tax rise might just be a bit of a last straw for a number of people.
I thought John Key said that by cutting income tax rates we would be able to stimulate the economy. Guess that didn’t work. I thought Key said that he would be able to stem the flow of New Zealanders to Australia by building a competitive economy and offering after-tax earnings on a par with those across the ditch. Well, that hasn’t worked, either.
I guess the problem is that having so politicised transport investment it may be all but impossible for Brownlee and Joyce to change their position on the CRL now. Especially after Brownlee’s petulant reaction to the CCFAS as surely this was the best opportunity to shift position with grace; the report was made in response to their request and involved central government agencies and ministries. They could have, with some justification, claimed ownership of this process that led to such a clear outline of the need for the CRL if they had only responded with objectivity and openmindedness.
But then there’s the real problem: The RoNS, and in particular the pace of the programme, as it is sucking every penny out of a declining fund. The Road User Forum’s quiescence over the rise in RUC and FEDs shows how completely on board this assertive lobby group are with the government’s policy of total investment in State Highways. I doubt there is any room for the government to waiver in their promises to big trucking by moving even 10% of the funding to the CRL and away from the trucking subsidy. And that’s all we are talking about too, around 10% of the recently announced RoNS programme.
Lastly we come to Brian Rudman’s somewhat grumpy little complaint about terminology also in today’s Herald. The L in CRL does stand for Link and not Loop but Rudman, perhaps in a fit of silly season column filling, goes to some length to explain his insistence on inaccuracy . Even going as far as appealing to the ‘L’ system in Chicago as precedence. Sorry to be a pedant Brian, but it isn’t know as The Loop, that is the name of the central city area contained within the loop of the tracks; the system itself is called the ‘L’ [for Elevated]. But I think we can all agree with Rudman when he says this:
If I thought changing the name would persuade the naysayers to change their minds, I’d happily abandon the offending word. But it wouldn’t, and anyway, gaining popular support is not the issue. A poll last month says 64 per cent of Aucklanders support the loop/link. It’s the Prime Minister and his Transport Minister who need convincing, and somehow I don’t think it’s the name that’s holding them back.
So in summary; 2013 looks like a very interesting year, the logic behind the CRL is just going to keep building yet the government seems to be painting itself into more and more of a corner on transport policy. Are they capable of a u-turn?, have they left themselves enough space to do so even if they see the need? Or will this and their determination to cling to other increasingly unpopular policies just lead to a fractious and even more polarised year?
Lastly I’m a little appalled at putting up a post with no pictures so here’s a little festive number; some drinking but no driving was involved in its creation-promise….
Merry Christmas from the ATB editorial team, thank you for all your comments and contributions in 2012 [which has been a huge year for readership] and remember to avoid driving north on SH1 on the 27 December or you will be both in for a hot and dull time in your car and be adding to the Herald’s annual front page Holiday Highway pump piece. And we look forward to *seeing* you all again next year. Onward.
This had to happen eventually, in fact I’m surprised it took this long:
After a long night of discussions, the Wellington City Council has voted in favour of exploring alternative options to the proposed Basin Reserve flyover.
The decision came the same day Auckland architect Richard Reid announced he has drafted a solution to the traffic congestion, without needing the $90 million dollar flyover proposed by the New Zealand Transport Agency.
Councillor Justin Lester said the council will apply $50,000 toward looking at different options including Mr Reid’s idea of a second tunnel.
The vote was won eight to seven.
The flyover proposal is straight out of the 1950s transport engineering handbook – the kind of thing that most cities around the world are tearing down. Let’s check what it might look like:
There has also be a bit of a row break out about this process as the NZTA sent a letter to the council effectively saying that if the council changed its mind then it would re assess a whole host of other transport projects in the region, this has led to accusations that the agency is trying to bully the council into accepting the deal. This part in particular is probably what is causing the most offence and I had to particularly laugh at the line saying that the NZTA won’t invest in sub-optimal transport developments.
My understanding of part of what has caused both the regional and local council to start reconsidering their support of the flyover has been the governments decision to underground Buckle St to remove traffic from between the National War Memorial and Memorial park, a project I believe the NZTA weren’t previously keen on.
I think out of all the Roads of National Significance projects, the Wellington Northern Corridor is probably the worst – for a variety of reasons:
- Wellington’s population is hardly growing so there unlikely to be massive future demand for transport improvements, unlike Auckland which may grow by up to a million extra people over the next 30 years.
- The cost-benefit ratios for sections of the Wellington RoNS are simply terrible: 0.6 for Transmission Gully and 0.2 for the Kapiti Expressway.
- The urban impact of many sections of the Wellington RoNS are horrific, with the Basin Reserve flyover being the worst example of this.
I don’t know Wellington’s transport situation that well, but it seems that there must surely be better and more sensible options available than the $3 billion proposed to be ploughed into an unnecessary and destructive motorway?