Monday, July 29, 2013

Sprawl and Economic Mobility: A Comment

Last week the Equality of Opportunity Project released a report about inequality in the United States. Many people have picked up on this report from the NY Times front page story about the findings. This is an important and interesting piece of research that focuses on how tax expenditures affect intergenerational economic mobility. What this research does not do is relate the findings to urban sprawl, though some other people have. See here, here, here and here

In the EOP report, the authors use Commuting Zones, which are similar but not identical to Metropolitan Statistical Areas, to evaluate intergenerational mobility. They found that tax expenditures play some role, and that:
Although tax policies may account for some of the variation in outcomes across areas, much variation remained to be explained. To understand what is driving this variation and better isolate the effects of the tax expenditures themselves, we considered other sets of factors that have been proposed in prior work. Here, we found significant correlations between intergenerational mobility and income inequality, economic and racial residential segregation, measures of K-12 school quality (such as test scores and high school dropout rates), social capital indices, and measures of family structure (such as the Summary of Project Findings, July 2013 fraction of single parents in an area). In particular, areas with a smaller middle class had lower rates of upward mobility.
The results show that Atlanta has poor economic mobility. You can see the city rankings here, and keep in mind these are county level data reported at the Commuting Zone aggregation. This is why you have New York and Newark reported differently as they are two Commuting Zones but the same Metropolitan Statistical Area.

The Atlanta case has been used to argue against sprawl (see links above). Yet the best performing cities (CZs) in the study are sprawling, too. Sorting the 100 largest cities we see that Bakersfield, California performs best, followed by Santa Barbara and Salt Lake City. Bakersfield is a poster child for sprawl. New York, paragon of density, performs above average in the EOP research but the city remains very segregated. Richard Green's quick analysis suggests that density is positively related with EOP metrics, but city size is negatively correlated. This presents a conundrum for causality but perhaps suggests something else is at play. For instance, density may not cause economic mobility but rather places with economic mobility and vibrancy also represent better employment pools and more productive workers. This might lead to higher land prices (firms find it more desirable to be there) and more intensive use of space. There are many reasons to suspect that density is an effect, not a cause.

But let's get back to the example in the NY Times, which seems to have gotten everyone thinking about Atlanta in the first place. Here is the first paragraph:
ATLANTA – Stacey Calvin spends almost as much time commuting to her job — on a bus, two trains and another bus — as she does working part-time at a day care center. She knows exactly where to board the train and which stairwells to use at the stations so that she has the best chance of getting to work on time in the morning and making it home to greet her three children after school.
This opening misleads the reader as to what the report says as the report does not look at any transportation or land use variables. But does this unfortunate situation for Ms. Calvin represent a problem with sprawl? I don't see it. She lives in an area with lots of transport choices, including buses and trains. She even considered moving but decided against it. It strikes me that the real problem is that she--for whatever reason--is working a common, part-time job so far away. Why? I have a hard time believing that there is not an equivalent or better part-time job available closer than two bus rides and two train rides away. Of course, a job is more than a paycheck for many people, but that's a different set of issues than sprawl.

We know that social contacts are critical for job searches, and this was measured in the EOP report. Concentrated poverty and social isolation creates a vicious spiral of greater isolation because social networks contract. This is not necessarily a transportation and land use problem. Better cities will benefit everybody, but at least from the EOP report we can't claim any type of causal relationship between sprawl and economic mobility. You can construct a plausible scenario where a sprawled metro where each worker has a car offers the greatest economic mobility because households are not limited to employment only where transit goes.

Overall, the results from the EOP study are provocative, and the relationship between metropolitan spatial structure and economic performance needs much more research. These types of questions require time-series analysis, however, as snapshot correlations really don't mean anything and will provide evidence for whatever point of view is desired. What I suspect is likely the case is that the value or cost of sprawl on economic mobility depends greatly on when the data are measured. What holds true now may not be at all the same as what was true forty years ago. I also suspect there are multiple equilibria for optimal city size and form.

Friday, July 26, 2013

Watch Uber Accuse Lyft of Regulatory Arbitrage

Watch as the CEO of Uber calls what Lyft does regulatory arbitrage, but when Uber does it they are simply taking advantage of regulatory ambiguity:

I'm not defending the status quo of taxi regulations here, but this is the pot calling the kettle black.

Congressional Brief on Road Tolls and Freight

Freight transport is relatively under considered within transport policy and planning. Most scholarship and public discussion focuses on passenger travel, especially in the context of how to pay for infrastructure. Road tolls and congestion pricing will affect passenger travel and goods movement differently, and not necessarily in complementary ways. For instance, one potential solution for drivers who want to avoid high travel costs is to substitute their personal travel for freight travel and simply have the goods and/or services delivered. This is common and a growing share of overall travel.

Road tolls also can influence regional competitiveness of ports and intermodal facilities. Tolls are a huge issue in the New York metro already as about one-quarter of all road tolls collected in the country are collected in the region. Between high tolls and congested roads, the costs of shipping in and around the largest market in the country are very high and does have an impact on the competitiveness of the Ports of New York and New Jersey. I have been doing work on tolls and freight in the Northeast with Jon Peters and Cameron Gordon, and today we submitted a brief to the U.S. House of Representatives Committee on Transportation and Infrastructure about this topic. Here is what we wrote:
Statement from David A. King, Ph.D. and Jonathan R. Peters, Ph.D. to theCommittee on Transportation and Infrastructure of the U.S. House of RepresentativesPanel on 21st Century Freight Transportation July 26, 2013New York, New York Dear Members of the Panel, We are pleased to be able to contribute to the discussion regarding freight movements in the United States.  We are academics who are engaged in the research of transportation matters on a national and international scale.  We have a particular interest in matters related to the New York Metropolitan Region, as we are located in this area. 
The Port of New York and New Jersey is the third most active maritime port in the Nation and the most active port on the Eastern Seaboard.  As such, the success of this port has regional importance as well as for the United States as a whole.  Your committee is studying the future national policy as it relates to freight and we commend your efforts.  Unfortunately, we have a long way to go to get to a single and clear national policy on freight movements. 
The Port of New York and New Jersey is an excellent case to study with respect to conflicting goals and outcomes for freight movements.  The physical infrastructure of this large and important maritime freight port is located in various areas - some on the mainland of the United States, some on a somewhat isolated peninsula and the rest on two islands around the fabulous deep and safe natural harbor.  Over the last 150 years, regional planners have developed highway, bridges and tunnels to link these various port facilities to facilitate freight movements. 
Yet, these facilities face very divergent futures if the current policies continue and operational practices are not coordinated.  Like all ports around the world, The Port of New York and New Jersey needs significant capital investment to remain competitive in the world freight market.  These investments are both on the land side as well as in the actual maritime facilities.  The Port Authority of New York and New Jersey is actively engaged in moving forward some of these capital investments - but the benefits of these investments seem to be biased towards certain states and will come at the expense of other areas. 
The Committee should seriously consider the impact of regional policies such as toll rates and road pricing and their impacts on national transportation assets.  Your committee is being charged with examining our national policy to address the needs of national freight movements.  Much as we need to discuss the national interest and funding for these projects – so we should also consider how regional policies impact national assets.  With the need to commit billions of dollars to deepen ports and raise bridge facilities, the sad reality is that the pricing of the road assets may render these investments unproductive. 
In our recent work, “Does Road Pricing Affect Port Freight Activity: Recent Evidence from the Port of New York and New Jersey”, which is currently under review for publication, we found that by examining port trucking data in New York and New Jersey, we estimate that bridge and tunnel toll costs may represent over 50% of the cost of moving freight into and out of the port facilities for the facilities located in New York State.  This is way above the national norm and significant higher than the cost of moving goods into and out of the New Jersey port facilities. 
These toll costs for the New York – New Jersey crossings are not driven by cost of providing the actual service – but in fact are linked to other expenditures and costs at the Port Authority of New York and New Jersey.  Bridge tolls have increased 60.2% percent over the last three years and the Port Authority has already approved a series of three additional increases that will result in bridge prices that will be roughly 241% of the 2010 rates – or about $110.00 per trip in 2015 for a five axle truck (an 18 wheeler).  These bridge tolls will be 81.9% profit to the Port Authority by the year 2015 if this occurs. 
The net effect of this is that maritime port facilities that are located in New York City in Brooklyn and Staten Island will effectively be driven out of business by these costs.  They will be unable to compete with other regional facilities and we may in fact drive cargo that should naturally flow into the Port of New York and New Jersey into other ports that are more remote from the final demand for the products.  This will increase road congestion, increase greenhouse gas emissions and lower our regional job base. 
We thank you for this opportunity to inform the committee and we would be happy to discuss these matters further with the committee or staff if they would help in your deliberations. 

Friday, July 19, 2013

How Much is Your Travel Time Worth?

John Whitehead linked to this great online tool for quickie calculations of value of time used to justify transport projects. From the Political Calculations site:
Suppose, for a moment, that the people who run your local government really cared enough about you and your fellow citizens to do something that might actually benefit you, by funding a fancy transportation project that could shave 13 minutes off your time while commuting once it's done.

Is it worth it? 
The answer, at this point, is "it depends". And honestly, what it depends upon is what your and your fellow commuters' time is really worth.
 And here is the explanation of their default model, based on an actual project:
All the default numbers in the tool above are taken from a federally-funded transportation project in North Carolina, which promised to spend $461 million to reduce the travel time of some 100,000 train commuters between Charlotte and Raleigh by 13 minutes a trip, which would bring their one-way transit time down to just under three hours. We then adapted the math developed by John Whitehead for determining the benefit-cost ratio for the project to estimate what value per hour saved per individual that the state's politicians were assigning to the primary declared benefit of the project.
In case your value of time is sufficiently high that you won't check the model yourself, the value of time that justifies this particular project is $638 per hour.  Yikes.

Monday, July 1, 2013

Why Are Planners Mad About Koontz?

Last week the Supreme Court ruled on a case that challenged local land use regulations. The case was Koontz v. St. Johns Water Management District and an overview of the ruling and case is at SCOTUS Blog. Many planners and urbanists are upset about the ruling. See here and here and here and here and here for a few examples. It seems that the negative feelings against the ruling are shaped by concern for the environment and weakened local regulations.

It strikes me that the merits of the case, and the implications of the SCOTUS ruling, should be measured against a couple of factors. First, do these types of exactions work? At the heart of the Koontz case was a requirement for wetlands reconstruction in an area away from the development site, which was going to destroy some wetlands. As it turns out, these types of habitat restoration projects have mixed records of success. Here is a link to a timely story in New Scientist about habitat replacement. From the story:
So far, the evidence that eco-offsetting works is not exactly overwhelming. In the biggest and longest-running offset market, the US, auditing of outcomes has been paltry, says Hannah Mowat of FERN, a non-profit European environmental policy think tank. One study that was carried out in Ohio found that two-thirds of wetland offsets did not deliver what they promised.
Planners should be wary of requiring ineffective policies. We must consider the evidence as to whether policies work, and in this case the evidence doesn't suggest that this type of exaction is necessarily worth the expense, at least as a generalized policy. 

Second, it is currently popular in planning circles to blame onerous regulations for high housing and commercial real estate prices. Well, the regulations addressed in Koontz are exactly the types of regulations that coastal areas have and that increase the cost of supplying new development. You won't see a lawsuit like this come from Texas. Height restrictions are often used as a boogeyman to blame for high costs but in reality the environmental regulations add far more cost to new development than height, density or FAR constraints. 

So where does that leave planners? If we value the environment as our priority then all development should be restricted, but of course we need to balance our environmental concerns with economic ones. The court ruling may help planning by focusing regulations on the rational nexus that is the legal basis for these types of interventions in the first place.  If we want to encourage better development in the future then we shouldn't make new development economically infeasible. If we want to encourage affordable development in the future then we need to consider what types of regulations we are willing to forego. The Koontz ruling in no way invalidates urban planning. It does remind planners that there are limits to what we can require.

Also consider who was the defendant. The St. Johns Water Management District is overseen by an appointed body (Appointed by the governor. Details here.). These aren't planners in the conventional sense of police power. They weren't elected, and while I am sure they are all good people, why should they decide local land use regulations? The water district doesn't sign on to long range transportation and land use plans. They serve to protect and manage water.

It may be that this ruling makes regulating land use more difficult, but this remains to be seen. At this point, the ruling limits a policy (eco-offsetting) that doesn't have strong empirical support.  Perhaps the defense would have been stronger had the evidence supporting the benefits of these policies would have been clear. Planners who are concerned that regulations are making new development too expensive should be mildly encouraged, I think, but I am open to considering all sides for this issue.