I was a member of the Los Angeles County Transportation Commission from 1977 to 1985 (appointed to three terms by Mayor Bradley) and a resident of the Valley (Chatsworth). It was my motion that created the Proposition A set-aside for rail construction in 1980. I supported rail at that point because of consultant and staff claims that it would make a material difference in traffic congestion --- indeed, it was that concern that led me to enter transportation public policy in the middle 1970s.
Since that time, it should have become painfully clear that rail has made virtually no difference in traffic congestion in Los Angeles. This should not be surprising, because new urban rail systems have not reduced traffic congestion anywhere in North America or Western Europe. As for the Sepulveda Pass (I-405), it is a classic corridor for which there is no transit solution. The basic problem is simply that not enough people are going to the same place. The destinations of people driving on such a peripheral (as opposed to downtown oriented) corridor makes it impossible to deter anything but a very small percentage of the traffic, and that would be quickly replaced by growth.
Because transit cannot serve door-to-door travel, nearly all trips by transit are much longer than by car --- the national average is double and the data in Europe is not much different. Regrettably, proposals such as monorails, subways and even express buses are a reflection more of rhetoric than reality. They will make little difference and that is especially true in a corridor like Sepulveda Pass.
As politically incorrect as it may be, there is no way to reduce traffic congestion and improve travel times except by expanding roadways. High occupancy toll lanes can be very effective and could make a real difference, especially in light of the fact that Census Bureau estimates indicate a near stagnation of population growth in Los Angeles County (and even Orange County)
2008/08/25
Las Vegas Monorail Bonds: More Bad News
According to a Business Wire story, “a default of some kind appears probable” on the bonds of the Las Vegas Monorail, based upon a “CC” Fitch Rating.
The monorail was developed as a private venture and supported by tax-exempt industrial development bonds issued by the state of Nevada. Project promoters produced an “investment grade” projection of 53,500 daily riders for 2004. In 2007, the average daily ridership was 21,600—60 percent below projection. This author had produced a report during the planning process projecting between 16,900 and 25,400 daily riders for 2004, the mid-point of which, at 21,200, was five percent below the actual 2008 year-to-date ridership (www.publicpurpose.com/ut-lvmono-0006.pdf).
The eventual results in Las Vegas may be unfortunate for investors. Moody’s Investors Services has downgraded the bonds to “junk” status and has indicated that “At current ridership and revenue levels, a payment default is anticipated by 2010 once reserves are exhausted.” (www.kvbc.com/Global/story.asp?S=7797066 and www.reuters.com/article/companyNews/idUSN2959008320080129). Finally, the bond insurer, AMBAC Financial Services, has run into financial difficulties and has had its credit rating dropped two levels (www.bloomberg.com/apps/news?pid=20601087&sid=asLtTQyLRQQs&refer=home). Holders of insured Las Vegas Monorail bonds could lose their investments, along with holders of uninsured bonds.
The monorail was developed as a private venture and supported by tax-exempt industrial development bonds issued by the state of Nevada. Project promoters produced an “investment grade” projection of 53,500 daily riders for 2004. In 2007, the average daily ridership was 21,600—60 percent below projection. This author had produced a report during the planning process projecting between 16,900 and 25,400 daily riders for 2004, the mid-point of which, at 21,200, was five percent below the actual 2008 year-to-date ridership (www.publicpurpose.com/ut-lvmono-0006.pdf).
The eventual results in Las Vegas may be unfortunate for investors. Moody’s Investors Services has downgraded the bonds to “junk” status and has indicated that “At current ridership and revenue levels, a payment default is anticipated by 2010 once reserves are exhausted.” (www.kvbc.com/Global/story.asp?S=7797066 and www.reuters.com/article/companyNews/idUSN2959008320080129). Finally, the bond insurer, AMBAC Financial Services, has run into financial difficulties and has had its credit rating dropped two levels (www.bloomberg.com/apps/news?pid=20601087&sid=asLtTQyLRQQs&refer=home). Holders of insured Las Vegas Monorail bonds could lose their investments, along with holders of uninsured bonds.
2008/08/21
Counterproductive GHG Policy in California
California’s Senate Bill 375 appears likely to pass tomorrow. The bill would establish greenhouse gas emissions targets for the state’s metropolitan areas and includes financial incentives that would seek to encourage more dense development and would ultimately interfere with local zoning prerogatives. The underlying assumptions of SB 375 are at best unproven and at the worst could lead to serious economic disruption.
One of the principal concerns in reducing greenhouse gases is to do so in a manner that allows strong economic growth to continue. Strong economic growth is much more than theoretical --- it is required to minimize poverty and to preserve the quality of life. Because of this concern, considerable research has been undertaken by the International Panel on Climate Change, which has concluded that significant (and sufficient) reductions of greenhouse gas emissions can be achieved at from $20 to $50 per ton.
The problem with SB 375 is that it applies no cost test. It is simply assumed that suburban development and driving are “bad” and that they must be curbed. There has been no cost-based modeling to justify this view. Indeed, Australian research indicates that, overall, GHG emissions per capita are less in suburban areas than in higher density areas (in a process that allocates every gram of GHG to a household location). Similarly, the average new car is as GHG friendly as the average transit ride (on a passenger mile basis) outside New York.
By skipping over the issue of costs, SB 375 could do far more harm than good. It will effectively ration land for development, which is likely to substantially increase its costs. This will lead to less affordable housing and higher product costs. Further, SB 375 would increase traffic congestion. Virtually all of the evidence from around the world indicates that more dense development, which will occur as a result of SB 375, leads to greater traffic congestion. This will increase the intensity of local air pollution and thereby local health risks. It will also increase GHG emissions, because cars emit more GHGs when they operate slower and in stop and go conditions.
All of this comes at a time that California faces a financial crisis, while there is a strong out-migration of residents to other states, according to United States Census estimates (1.2 million just from 2000 to 2007).
SB 375 represents a triumph of ideology over reason.
One of the principal concerns in reducing greenhouse gases is to do so in a manner that allows strong economic growth to continue. Strong economic growth is much more than theoretical --- it is required to minimize poverty and to preserve the quality of life. Because of this concern, considerable research has been undertaken by the International Panel on Climate Change, which has concluded that significant (and sufficient) reductions of greenhouse gas emissions can be achieved at from $20 to $50 per ton.
The problem with SB 375 is that it applies no cost test. It is simply assumed that suburban development and driving are “bad” and that they must be curbed. There has been no cost-based modeling to justify this view. Indeed, Australian research indicates that, overall, GHG emissions per capita are less in suburban areas than in higher density areas (in a process that allocates every gram of GHG to a household location). Similarly, the average new car is as GHG friendly as the average transit ride (on a passenger mile basis) outside New York.
By skipping over the issue of costs, SB 375 could do far more harm than good. It will effectively ration land for development, which is likely to substantially increase its costs. This will lead to less affordable housing and higher product costs. Further, SB 375 would increase traffic congestion. Virtually all of the evidence from around the world indicates that more dense development, which will occur as a result of SB 375, leads to greater traffic congestion. This will increase the intensity of local air pollution and thereby local health risks. It will also increase GHG emissions, because cars emit more GHGs when they operate slower and in stop and go conditions.
All of this comes at a time that California faces a financial crisis, while there is a strong out-migration of residents to other states, according to United States Census estimates (1.2 million just from 2000 to 2007).
SB 375 represents a triumph of ideology over reason.
2008/08/20
"Ways to Work:" A Nobel Prize?
Ways to Work Program: A Nobel Prize?
The national Ways to Work program has improved the employment and education opportunities of low-income households across the United States. The model is similar to that used Mohammed Unus, who won the Nobel Prize for his small loan program in Bengladesh.
WAYS TO WORK PROGRAM
Economist Mohammed Unus recently won the Nobel Prize for his groundbreaking project that makes small loans available to the low-income residents of Bengladesh. In making the award, the Nobel Committee noted the importance of finding ways for people to break out of poverty. Unus’ Grameen Bank has developed an impressive record of assisting poor households to enter the mainstream of economic life in Bangladesh.
The applicability of the Unus model is not limited to low-income nations. The national Ways to Work program has been working for more than 20 years to bring low-income households across the United States into the economic mainstream. A principal strategy has been to provide loans, like Unus, to low-income households. Ways to Work helps households buy cars.
Why cars? Simply because in modern urban areas, whether in the United States, Western Europe or the low-income world, cars expand exponentially the geographical area in which people can search for employment. Research at the University of California, the Brookings Institution and the Progressive Policy Institute demonstrates that cars are crucial to obtaining better employment. The problem is, of course, that despite the romantic affection for transit, it is simply unable to provide mobility to much more than the downtown area, and that’s not where most of the jobs are.
A recent evaluation report looked at a representative sample of Ways to Work borrowers, and found the following:
It may be time for the Nobel Committee to honor the model Ways to Work program.
The national Ways to Work program has improved the employment and education opportunities of low-income households across the United States. The model is similar to that used Mohammed Unus, who won the Nobel Prize for his small loan program in Bengladesh.
WAYS TO WORK PROGRAM
Economist Mohammed Unus recently won the Nobel Prize for his groundbreaking project that makes small loans available to the low-income residents of Bengladesh. In making the award, the Nobel Committee noted the importance of finding ways for people to break out of poverty. Unus’ Grameen Bank has developed an impressive record of assisting poor households to enter the mainstream of economic life in Bangladesh.
The applicability of the Unus model is not limited to low-income nations. The national Ways to Work program has been working for more than 20 years to bring low-income households across the United States into the economic mainstream. A principal strategy has been to provide loans, like Unus, to low-income households. Ways to Work helps households buy cars.
Why cars? Simply because in modern urban areas, whether in the United States, Western Europe or the low-income world, cars expand exponentially the geographical area in which people can search for employment. Research at the University of California, the Brookings Institution and the Progressive Policy Institute demonstrates that cars are crucial to obtaining better employment. The problem is, of course, that despite the romantic affection for transit, it is simply unable to provide mobility to much more than the downtown area, and that’s not where most of the jobs are.
A recent evaluation report looked at a representative sample of Ways to Work borrowers, and found the following:
Working families who have received Ways to Work loans have, on average, increased their incomes more than 40 percent in the first year.
More than 80 percent of the borrowers who were previously on cash grant public assistance programs saw their incomes rise so much that they were able to leave the public assistance programs.
Many of the borrowers indicated that having the car made it possible for them to complete education and training programs.
Demonstrating how success breeds success, one-third of borrowers have since been able to obtain new loans through conventional sources.
Finally, nearly all of the borrowers said that having a car increased the time they could spend with their families and improved their quality of life.
It may be time for the Nobel Committee to honor the model Ways to Work program.
China: Send the Western Urban Planners Home
A cadre of Western urban planners has descended on China offering advice. Chinese officials are admonished “not to repeat our mistakes.” The mistakes, they explain are urban sprawl (a pejorative term for suburbanization) and automobile use. Chinese officials who visit the West must marvel as for the mistakes at the myopia of our planners after witnessing the high standard of living, which is something they would like to replicate. For good reason, they are largely ignoring the bankrupt advice they are receiving from the Western planners.
INTRODUCTION
China is experiencing unprecedented economic growth. Over the past two decades, living standards have risen seven fold. Gross domestic product per capita still remains below high-income world standards, at one-sixth that of the US level. Nonetheless, there is great regional disparity, with incomes in east coast urban areas up to three times that of urban areas in the central and western regions.
Like many developing nations, China remains more rural than urban. According to United Nations data, China’s population was only 40 percent urban in 2000. This compares to urban rates of over 70 percent in many high-income nations. People are moving in large numbers from rural areas to the urban areas, following the pattern of development that has occurred virtually wherever incomes have risen markedly. Opportunities are much greater in the large and expanding urban labor markets, and the standard of living is better in urban areas than in rural areas. The United Nations estimates that by 2030, 60 percent of the Chinese population will live in urban areas. This represents a staggering migration --- the movement of 340,000,000 people --- a population greater than that of the United States and Canada.
Already, China has very large urban areas. Shanghai, Shenzhen and Beijing have 10,000,000 or more residents. A number of other urban areas have approximately 5,000,000 people, such as Guangzhou, Wuhan, Tianjin, Shenyang and Dongguan. There are more than 25 additional urban areas with populations above 1,000,000 See DemographiaWorld Urban Areas.
The Western Planners
Not surprisingly, a cadre of Western urban planners has descended on China offering advice. Chinese officials are admonished “not to repeat our mistakes.” The mistakes, they explain are urban sprawl (a pejorative term for suburbanization) and automobile use.
The Reality of the West
And, as for the mistakes of the West, Chinese officials who visit the United States, Western Europe, Canada or Australia must wonder at the disconnect between the wasteland described by Western planners and the unparalleled quality of life enjoyed by people in the West.
It is not a mistake that the automobile has created mobile urban areas in which employers and employees have far greater choices and labor markets are more efficient. It is not a mistake that housing built on inexpensive land on the periphery of urban areas has made it possible for so many millions to build up financial equity in their own homes. Nor is it a mistake that nearbly inexpensive land has been developed by retailers and other businesses who are, as a result, able to provide lower prices than would otherwise be possible.
The West has achieved its unparalleled affluence because it was largely able to accomplish all of this before the planners were in a position to impose their wills that would have prevented suburbanization and the expansion of mobility. The planners would have imposed greenbelts and urban growth boundaries, making it impossible for low cost housing to be developed. Western nations would now be principally inhabited by renters rather than homeowners. Employees would be limited to those few places they could get on foot or public transport, rather than the whole urban area that the automobile has opened up. There would be less wealth and it would be less broadly distributed. The planners would not have allowed the “big-box” stores on the urban fringe, and as a result people would have had to pay higher prices with their smaller incomes.
Indeed, for any who might wish for China to stumble in its competition with the West, it is hard to imagine a more promising strategy than to export Western planning ideas, if not the planners themselves, to China. China would do well to ignore the Western planners, whose advice would retard the growth of the economy and spread of wealth. To China’s credit, the “fools gold” of Western urban planning principles is largely being ignored.
INTRODUCTION
China is experiencing unprecedented economic growth. Over the past two decades, living standards have risen seven fold. Gross domestic product per capita still remains below high-income world standards, at one-sixth that of the US level. Nonetheless, there is great regional disparity, with incomes in east coast urban areas up to three times that of urban areas in the central and western regions.
Like many developing nations, China remains more rural than urban. According to United Nations data, China’s population was only 40 percent urban in 2000. This compares to urban rates of over 70 percent in many high-income nations. People are moving in large numbers from rural areas to the urban areas, following the pattern of development that has occurred virtually wherever incomes have risen markedly. Opportunities are much greater in the large and expanding urban labor markets, and the standard of living is better in urban areas than in rural areas. The United Nations estimates that by 2030, 60 percent of the Chinese population will live in urban areas. This represents a staggering migration --- the movement of 340,000,000 people --- a population greater than that of the United States and Canada.
Already, China has very large urban areas. Shanghai, Shenzhen and Beijing have 10,000,000 or more residents. A number of other urban areas have approximately 5,000,000 people, such as Guangzhou, Wuhan, Tianjin, Shenyang and Dongguan. There are more than 25 additional urban areas with populations above 1,000,000 See DemographiaWorld Urban Areas.
The Western Planners
Not surprisingly, a cadre of Western urban planners has descended on China offering advice. Chinese officials are admonished “not to repeat our mistakes.” The mistakes, they explain are urban sprawl (a pejorative term for suburbanization) and automobile use.
The Reality of the West
And, as for the mistakes of the West, Chinese officials who visit the United States, Western Europe, Canada or Australia must wonder at the disconnect between the wasteland described by Western planners and the unparalleled quality of life enjoyed by people in the West.
It is not a mistake that the automobile has created mobile urban areas in which employers and employees have far greater choices and labor markets are more efficient. It is not a mistake that housing built on inexpensive land on the periphery of urban areas has made it possible for so many millions to build up financial equity in their own homes. Nor is it a mistake that nearbly inexpensive land has been developed by retailers and other businesses who are, as a result, able to provide lower prices than would otherwise be possible.
The West has achieved its unparalleled affluence because it was largely able to accomplish all of this before the planners were in a position to impose their wills that would have prevented suburbanization and the expansion of mobility. The planners would have imposed greenbelts and urban growth boundaries, making it impossible for low cost housing to be developed. Western nations would now be principally inhabited by renters rather than homeowners. Employees would be limited to those few places they could get on foot or public transport, rather than the whole urban area that the automobile has opened up. There would be less wealth and it would be less broadly distributed. The planners would not have allowed the “big-box” stores on the urban fringe, and as a result people would have had to pay higher prices with their smaller incomes.
Indeed, for any who might wish for China to stumble in its competition with the West, it is hard to imagine a more promising strategy than to export Western planning ideas, if not the planners themselves, to China. China would do well to ignore the Western planners, whose advice would retard the growth of the economy and spread of wealth. To China’s credit, the “fools gold” of Western urban planning principles is largely being ignored.
School Buses: Principal Mass Transit System
Most people, if asked, would probably respond that buses or subways are the most frequently used method of mass transit in the United States. They would be wrong. One of the best kept secrets in transportation statistics is the extent of school bus ridership. Part of the reason is that statistics are not as readily available as for school buses as they are for other modes of transport. Every school day, school buses carry 65 percent more travel than the nation’s transit buses, subways (metros), light rail, trolleybuses (electric buses), commuter rail and dial-a-ride services combined.
Of course, many school buses are operating in rural areas. Yet, even in urban areas, school buses carry a huge volume of travel. On school days, school buses operating in the nation’s urban areas carry 85 percent as much travel as all transit bus and rail services combined.
Sometimes it is suggested that school buses services should be merged into transit agencies, to save money. However, that would hardly do, since transit expenditures per passenger mile are approaching three times that of school buses. Transfering transit services to school districts would make more sense.
Of course, many school buses are operating in rural areas. Yet, even in urban areas, school buses carry a huge volume of travel. On school days, school buses operating in the nation’s urban areas carry 85 percent as much travel as all transit bus and rail services combined.
Sometimes it is suggested that school buses services should be merged into transit agencies, to save money. However, that would hardly do, since transit expenditures per passenger mile are approaching three times that of school buses. Transfering transit services to school districts would make more sense.
2008/08/11
Beware Unfair Son of Kyoto Targets
G8 leaders agreed upon a 50% reduction in greenhouse gas (GHG) emissions by 2050. The agreement was subsequently rejected by countries of the developing world, principally India and China.
Negotiators for the United States, Canada, Australia and New Zealand need to be careful in the next round of climate agreement discussions. Each of these nations is experiencing strong population growth. Australia will grow 40% between 2005 and 2050, according to UN projections. The United States and Canada will each grow about one-third, while New Zealand will grow slightly less than 30%.
Any agreement that imposes an overall target, such as 50% below current emission rates will greatly disadvantage these nations. By comparison, Japan will lose 20% of its population, while the European Union will lose 2%.
Because of the higher growth rates, 50% national reduction from 2005 would thus translate into at least a 60% GHG emission reduction per capita in Australia, the United States, Canada and New Zealand, while requiring only a 40% reduction in Japan and 50% in the European Union.
Negotiators for the United States, Canada, Australia and New Zealand need to be careful in the next round of climate agreement discussions. Each of these nations is experiencing strong population growth. Australia will grow 40% between 2005 and 2050, according to UN projections. The United States and Canada will each grow about one-third, while New Zealand will grow slightly less than 30%.
Any agreement that imposes an overall target, such as 50% below current emission rates will greatly disadvantage these nations. By comparison, Japan will lose 20% of its population, while the European Union will lose 2%.
Because of the higher growth rates, 50% national reduction from 2005 would thus translate into at least a 60% GHG emission reduction per capita in Australia, the United States, Canada and New Zealand, while requiring only a 40% reduction in Japan and 50% in the European Union.
On the Australian Housing Shortage
On the Australian Housing Shortage
For anyone who thought that housing policy was tending in the right direction in Australia, a recent statement by ANZ Bank’s senior economist, Paul Braddick should hit like a bucket of cold water. Braddick was widely quoted in the media to the effect that the growing housing shortage is setting Australia up for the “mother of all housing booms.” Commonwealth Securities chief equities economist Craig James predicted that both house prices and rents would be driven higher by the shortage.
And then there was the BIS Shrapnel Residential Property Prospects report, which predicts huge increases in median house prices by 2011. Overall, BIS Shrapnel projects house price increases that would add nearly another year’s median household income to pay for the median priced house. Already housing is more than twice as expensive as it should be relative to historic income norms. Indeed, if the trends BIS Shrapnel projects are accurate, Sydney would become the most expensive market in the Anglosphere, as Californian markets implode due to their unsustainable cost inflation.
But wait a minute. Housing shortage? Australia? Is there not enough land? Are there not enough builders?
True, population growth is greater than in nearly two decades. However, fast population growth is nothing new in Australia. Much higher growth rates were accommodated in previous decades. In the 1950s, the annual growth rate was a full one-half greater than the present elevated rate. During the 1960s, the annual growth rate was a quarter greater. Yet, somehow, Australia was able to provide housing for this strong growth both from both domestic expansion and immigration. Thus, the higher present population growth rates, in and of themselves, do not justify a housing shortage.
There could be a problem if there is not enough land or if the housing industry is not up to the challenge. However, that is hardly the case.
Consider this:
Less than 0.3 percent of Australia is urbanized. That means there is plenty of land in Australia. There is substantial land for growth around all of the nation’s major capital cities.
Australia has, according to international studies, one of the most entrepreneurial home building industries in the world. That industry is capable of providing whatever level of new housing is required to accommodate whatever should be the number of new Australian households.
The problem is thus neither a shortage of raw land for development or a shortage of building capacity. It is policy.
The problem is the land use policies that have been adopted in the states. In every state, as well as the Northern Territory and the ACT, conscious policies have been adopted that to severely restrict the expansion of the housing supply. Arbitrary lines --- sometimes called urban growth boundaries --- have been drawn around urban areas. Generally, new housing must be built within these constraining belts. As anyone remotely familiar with economics knows, restricting supply drives up prices.
The net effect of the restrictive policies is to cartelize the market for land. Owners of land that can be developed ask a higher price. It is important to understand that house prices have not gone up much at all, indeed they have fallen relative to inflation in some areas. What has risen is the price of land. It is the escalation of land prices in a rigged urban land economy that is responsible for Australia’s housing shortage.
There are other issues too, such as huge infrastructure fees and master planning requirements that add so much to the price of housing. The stark reality is that if the urban planning policies of today had been in place in 1947, all of the efforts of Labor and Coalition governments to encourage home ownership would have failed --- as miserably as have the recent efforts.
Put in human terms, Australia’s housing shortage represents the deliberate government withdrawal of the Great Australian Dream for many households. Worse, the economists tell us that things are only going to get worse.
For all the rhetoric about housing affordability, there is a single, simple answer --- the regulations must be relaxed. There is no other affordable or sustainable way to restore housing affordability. It is truly remarkable --- and unfortunate that the “lucky country” may not be able to adequately house its hopeful and growing population.
For anyone who thought that housing policy was tending in the right direction in Australia, a recent statement by ANZ Bank’s senior economist, Paul Braddick should hit like a bucket of cold water. Braddick was widely quoted in the media to the effect that the growing housing shortage is setting Australia up for the “mother of all housing booms.” Commonwealth Securities chief equities economist Craig James predicted that both house prices and rents would be driven higher by the shortage.
And then there was the BIS Shrapnel Residential Property Prospects report, which predicts huge increases in median house prices by 2011. Overall, BIS Shrapnel projects house price increases that would add nearly another year’s median household income to pay for the median priced house. Already housing is more than twice as expensive as it should be relative to historic income norms. Indeed, if the trends BIS Shrapnel projects are accurate, Sydney would become the most expensive market in the Anglosphere, as Californian markets implode due to their unsustainable cost inflation.
But wait a minute. Housing shortage? Australia? Is there not enough land? Are there not enough builders?
True, population growth is greater than in nearly two decades. However, fast population growth is nothing new in Australia. Much higher growth rates were accommodated in previous decades. In the 1950s, the annual growth rate was a full one-half greater than the present elevated rate. During the 1960s, the annual growth rate was a quarter greater. Yet, somehow, Australia was able to provide housing for this strong growth both from both domestic expansion and immigration. Thus, the higher present population growth rates, in and of themselves, do not justify a housing shortage.
There could be a problem if there is not enough land or if the housing industry is not up to the challenge. However, that is hardly the case.
Consider this:
Less than 0.3 percent of Australia is urbanized. That means there is plenty of land in Australia. There is substantial land for growth around all of the nation’s major capital cities.
Australia has, according to international studies, one of the most entrepreneurial home building industries in the world. That industry is capable of providing whatever level of new housing is required to accommodate whatever should be the number of new Australian households.
The problem is thus neither a shortage of raw land for development or a shortage of building capacity. It is policy.
The problem is the land use policies that have been adopted in the states. In every state, as well as the Northern Territory and the ACT, conscious policies have been adopted that to severely restrict the expansion of the housing supply. Arbitrary lines --- sometimes called urban growth boundaries --- have been drawn around urban areas. Generally, new housing must be built within these constraining belts. As anyone remotely familiar with economics knows, restricting supply drives up prices.
The net effect of the restrictive policies is to cartelize the market for land. Owners of land that can be developed ask a higher price. It is important to understand that house prices have not gone up much at all, indeed they have fallen relative to inflation in some areas. What has risen is the price of land. It is the escalation of land prices in a rigged urban land economy that is responsible for Australia’s housing shortage.
There are other issues too, such as huge infrastructure fees and master planning requirements that add so much to the price of housing. The stark reality is that if the urban planning policies of today had been in place in 1947, all of the efforts of Labor and Coalition governments to encourage home ownership would have failed --- as miserably as have the recent efforts.
Put in human terms, Australia’s housing shortage represents the deliberate government withdrawal of the Great Australian Dream for many households. Worse, the economists tell us that things are only going to get worse.
For all the rhetoric about housing affordability, there is a single, simple answer --- the regulations must be relaxed. There is no other affordable or sustainable way to restore housing affordability. It is truly remarkable --- and unfortunate that the “lucky country” may not be able to adequately house its hopeful and growing population.
Apples, Oranges & Transit Oriented Development
A new TCRP report (#158, Effects of TOD on Housing, Parking and Travel) concludes that automobile trips are approximately one-half as frequent per dwelling unit in transit oriented development (TOD) apartments as in all other apartments. The report, however, raises more questions than it answers.
Based upon a quick review, it appears that the study suffers from three important biases.
What this report does not demonstrate (contrary to its claims) is that people in TODs drive less than their neighbors. Examining that question would require much more focused methodology. Rather, the report merely provides evidence transit is used more where it better connects people with downtowns. In the larger urban fabric, with its dispersed trip patterns and dispersed employment, sufficient levels of transit service simply cannot be afforded, whether in American or Western European urban areas.
The conclusion: TOD apartments and apartments in general are like apples and oranges with respect to trip generation.
Based upon a quick review, it appears that the study suffers from three important biases.
1. Usage of a "trips per dwelling unit" measure prejudices the results in favor of transit oriented development. The authors note that TOD residents tend to be single or couples, with no children. In contrast, the average number of persons per household in all apartments is 2.1 (American Community Survey, 2006). With fewer people per household in TOD developments, it is not surprising that trip generation rates per dwelling unit should be less. A good portion of the observed difference appears to be simply the result of differing types of households.
2. Usage of an overall apartment trip generation rate also prejudices the results in favor of TODs. That is because TODs, by definition, are generally close to rail transit lines that provide good access to downtown areas. On the other hand, non-TOD apartments are spread throughout urban areas, with more than 40 percent being in the suburbs. A good portion of the observed difference appears to be simply geographical location.
3. TODs tend to attract people who are more inclined than others to ride transit. This “self-selection” has been documented in research by one of the authors of the TCRP report (Robert Cervero) and is acknowledged in the report. Yet the report does not attempt to correct its conclusions for this bias.
What this report does not demonstrate (contrary to its claims) is that people in TODs drive less than their neighbors. Examining that question would require much more focused methodology. Rather, the report merely provides evidence transit is used more where it better connects people with downtowns. In the larger urban fabric, with its dispersed trip patterns and dispersed employment, sufficient levels of transit service simply cannot be afforded, whether in American or Western European urban areas.
The conclusion: TOD apartments and apartments in general are like apples and oranges with respect to trip generation.
2008/08/08
More Empty Hype About Transit in San Diego
Re:
North County Times Article
Dear Mr. Downey...
Just a quick note on your story on Wednesday. There is no doubt but that the Coaster's ridership increase is related to the increasing price of fuel. On the other hand, it needs to be undestood that the Coaster ridership increase is but a small fraction of the reduction in driving along the I-5 corridor (a quick review of the data in your article and data from the USDOT and Caltans). It appears that the Coaster ridership is about 1/8th the decline in traffic.
Best regards,
Wendell Cox
North County Times Article
Dear Mr. Downey...
Just a quick note on your story on Wednesday. There is no doubt but that the Coaster's ridership increase is related to the increasing price of fuel. On the other hand, it needs to be undestood that the Coaster ridership increase is but a small fraction of the reduction in driving along the I-5 corridor (a quick review of the data in your article and data from the USDOT and Caltans). It appears that the Coaster ridership is about 1/8th the decline in traffic.
Best regards,
Wendell Cox
2008/08/04
Transit Market Share Inches Up
Transit Market Share Inches Up
Latest annual data available from the United States Department of Transportation indicates that the market share of transit rose slightly in 2006, from 1.51% of passenger miles to 1.55% in 2005. Over the same period, gas prices rose 13% in the United States.
Annual data is at US Personal Vehicle and Public Transport Market Share from 1900
Latest annual data available from the United States Department of Transportation indicates that the market share of transit rose slightly in 2006, from 1.51% of passenger miles to 1.55% in 2005. Over the same period, gas prices rose 13% in the United States.
Annual data is at US Personal Vehicle and Public Transport Market Share from 1900
Louvre Café Syndrome Strikes Neal Peirce: Misunderstanding Amsterdam and America
Louvre Café Syndrome Strikes Neal Peirce: Misunderstanding Amsterdam and America
Tourists, journalists and urban planners are often smitten with what might be called the “Louvre café syndrome.” This occurs when Americans sit at Paris cafes in view of the Louvre and imagine why it is that the United States does not look like this. In fact, most of Paris doesn’t even look like this, nor do other European urban areas. Like their US counterparts, European urban areas rely principally on cars for mobility (though to a somewhat lesser degree) and their residents live in suburbs that have been built since World War II.
The last example of Louvre Café Syndrome comes from Washington Post Writer’s Group columnist Neal Peirce, who suggests that Amsterdam, with its bicycles, is the model for America to follow in a time of high energy prices (See Multiple Transit Options -- A Dutch Treat We'll Be Needing.
Not only is this view incorrect, but Amsterdam is not even a model for the Netherlands. The largest urban areas of the Netherlands, Amsterdam and Rotterdam, have been “stuck in neutral” with respect to growth for at least 45 years. United Nations data indicates that since 1960, 97% of urban growth in the Netherlands has occurred outside these two large urban areas. While the population of the two largest urban areas has increased approximately 10%, the urban population outside these areas has increased 120%. And how do these urbanites that have chosen not to live in Amsterdam or Rotterdam travel? Try by car. Overall, in the Netherlands, approximately 85% of travel is by car --- a figure that is nearly identical to the United States. All of the subway and light rail ridership in the Netherlands is less than the annual increase in car use. Some model.
America is a growing nation. Between now and 2030, approximately two-thirds of the urban growth in the developed world is projected to occur in the United States --- that is a considerable number given the fact that the US accounts for less than one-third of the developed world’s urban population today. The strategies that work in urban areas with stagnant growth --- such as Amsterdam --- will not work here.
As for the bicycles, one could also point to walking and the large share of travel that it represents in Manhattan or the Chicago Loop. A European felled by Louvre Café Syndrome might visit these places and imagine that the urban area looks the same all the way to the urban fringe --- that the citizens of New Brunswick, Westfield or Aurora live in residential skyscrapers and that they walk everywhere. Such a view would be as faulty as Peirce’s vision of Amsterdam.
It helps to think of things in context. Amsterdam would barely rank in the top 50 metropolitan areas of the United States. The Netherlands has a population less than that of two American metropolitan areas (combined statistical areas), New York and Los Angeles. Finally, all of the Netherlands --- urban and rural areas --- would fit into an area approximately 1.5 times that of the New York metropolitan area.
You can’t see everything from the Louve.
Wendell Cox
Visiting Professor, Conservatoire National des Arts et Metiers, Paris
Related articles: Little of Driving Decrease Captured by Transit
Tourists, journalists and urban planners are often smitten with what might be called the “Louvre café syndrome.” This occurs when Americans sit at Paris cafes in view of the Louvre and imagine why it is that the United States does not look like this. In fact, most of Paris doesn’t even look like this, nor do other European urban areas. Like their US counterparts, European urban areas rely principally on cars for mobility (though to a somewhat lesser degree) and their residents live in suburbs that have been built since World War II.
The last example of Louvre Café Syndrome comes from Washington Post Writer’s Group columnist Neal Peirce, who suggests that Amsterdam, with its bicycles, is the model for America to follow in a time of high energy prices (See Multiple Transit Options -- A Dutch Treat We'll Be Needing.
Not only is this view incorrect, but Amsterdam is not even a model for the Netherlands. The largest urban areas of the Netherlands, Amsterdam and Rotterdam, have been “stuck in neutral” with respect to growth for at least 45 years. United Nations data indicates that since 1960, 97% of urban growth in the Netherlands has occurred outside these two large urban areas. While the population of the two largest urban areas has increased approximately 10%, the urban population outside these areas has increased 120%. And how do these urbanites that have chosen not to live in Amsterdam or Rotterdam travel? Try by car. Overall, in the Netherlands, approximately 85% of travel is by car --- a figure that is nearly identical to the United States. All of the subway and light rail ridership in the Netherlands is less than the annual increase in car use. Some model.
America is a growing nation. Between now and 2030, approximately two-thirds of the urban growth in the developed world is projected to occur in the United States --- that is a considerable number given the fact that the US accounts for less than one-third of the developed world’s urban population today. The strategies that work in urban areas with stagnant growth --- such as Amsterdam --- will not work here.
As for the bicycles, one could also point to walking and the large share of travel that it represents in Manhattan or the Chicago Loop. A European felled by Louvre Café Syndrome might visit these places and imagine that the urban area looks the same all the way to the urban fringe --- that the citizens of New Brunswick, Westfield or Aurora live in residential skyscrapers and that they walk everywhere. Such a view would be as faulty as Peirce’s vision of Amsterdam.
It helps to think of things in context. Amsterdam would barely rank in the top 50 metropolitan areas of the United States. The Netherlands has a population less than that of two American metropolitan areas (combined statistical areas), New York and Los Angeles. Finally, all of the Netherlands --- urban and rural areas --- would fit into an area approximately 1.5 times that of the New York metropolitan area.
You can’t see everything from the Louve.
Wendell Cox
Visiting Professor, Conservatoire National des Arts et Metiers, Paris
Related articles: Little of Driving Decrease Captured by Transit
2008/08/03
World Urban Areas Strong Association Between Lower Density & Higher Incomes
The latest Demographia world urban area population estimates confirm the strong association between lower urban population densities and higher incomes (gross domestic product per capita on a purchasing power parity basis).
A linear regression analysis indicated a 0.300 “R2,” for 138 geographies (nations and separate territories), using the population density of urban areas (urban agglomerations, or urban footprints) with 500,000 or more population. This is significant at the 99% confidence level. The analysis included all of the 740 world’s urban areas with more than 500,000 population.
The data shows an association such that each percentage point increase urban density is associated with a nearly 0.8 percentage point decline in gross domestic product per capita. The data is illustrated in charts on pages 88 and 89 of the following recently report, released today.
Demographia World Urban Areas: Population & Density
Current population estimates and population projections were also released for all urban areas expected to have a population of 2,000,000 or more in 2030:
Demographia World Urban Areas: 2025 & 2030 Population Projections
A linear regression analysis indicated a 0.300 “R2,” for 138 geographies (nations and separate territories), using the population density of urban areas (urban agglomerations, or urban footprints) with 500,000 or more population. This is significant at the 99% confidence level. The analysis included all of the 740 world’s urban areas with more than 500,000 population.
The data shows an association such that each percentage point increase urban density is associated with a nearly 0.8 percentage point decline in gross domestic product per capita. The data is illustrated in charts on pages 88 and 89 of the following recently report, released today.
Demographia World Urban Areas: Population & Density
Current population estimates and population projections were also released for all urban areas expected to have a population of 2,000,000 or more in 2030:
Demographia World Urban Areas: 2025 & 2030 Population Projections
2008/08/01
"SmartMoney.com" Misses by 85% on Transit
SMART MONEY MISSES BY 85 PERCENT
Smartmoney.com reports on the increase in transit ridership, posted at “yahoofinance.com:”
Thanks to sky-high fuel costs, public transit ridership is at its highest level in 50 years, according to the American Public Transportation Association, an industry group. In the first quarter of this year, riders took 51% more trips on subways, commuter rails, streetcars, trolleys and buses than they did during the same period in 2007.
Actually the American Public Transportation Association has reported a 3.4% increase in ridership. Smartmoney.com missed the mark by about 85%.
There is no doubt that the increase in transit ridership is due to high gas prices. On the other hand, much of a “clueless” media has missed an even bigger point --- that more than 97% of the decline in car travel has not transferred to transit.
Smartmoney.com reports on the increase in transit ridership, posted at “yahoofinance.com:”
Thanks to sky-high fuel costs, public transit ridership is at its highest level in 50 years, according to the American Public Transportation Association, an industry group. In the first quarter of this year, riders took 51% more trips on subways, commuter rails, streetcars, trolleys and buses than they did during the same period in 2007.
Actually the American Public Transportation Association has reported a 3.4% increase in ridership. Smartmoney.com missed the mark by about 85%.
There is no doubt that the increase in transit ridership is due to high gas prices. On the other hand, much of a “clueless” media has missed an even bigger point --- that more than 97% of the decline in car travel has not transferred to transit.
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