In a recent post on the failures of toll roads, I argued that marginal analysis can be a powerful tool for understanding transport markets:
Economists understand the importance of marginal analysis when making decisions about what to build and how to charge for it. Businesses typically make pricing and production decisions “on the margin”. In other words, they look around for the next potential customer and ask: “Can I produce one additional unit and sell it to that person for a profit?” If the answer is yes, they produce it; if it’s no, they don’t as it would reduce their overall profits.
While transport infrastructure isn’t (and probably can’t be) run as a business, transport agencies could stand to take a few lessons from businesses. In particular, they should be asking: What does the next transport user want, and how can we best serve them?
Businesses that don’t ask this question don’t grow, because they don’t look for new customers. Over time, they will fail as their existing customers age out or lose interest. I’d argue that the same can be true for cities as well – cities that fail to respond to the needs and desires of the next potential resident (or business) will eventually decline. This is eventually bad for existing residents, as the tax base shrivels up and businesses close.
With that in mind, what does the data tell us about the transport desires of the next Aucklander?
Stu Donovan and Matt L have already taken a good look at the ongoing decline in vehicle kilometres travelled in Auckland (and lots of other places) – essentially, people are no longer willing to drive longer and longer distances every year. Rather than covering that issue again, I’d like to take a look at Aucklanders’ choices about travel mode using data from the 2006 and 2013 Censuses.
I used Census data to take a look at changes in changes in mode choice for commute trips in recent years. The analysis is summarised in the chart below. While growth in car use has been pretty anemic – a mere 2.3% increase – demand on all other modes is growing like crazy. There have been double-digit increases in bus trips (up 18.8%), train trips (up an astonishing 67.3%), and bike trips (up 26.4%). Ferry and walking trips have also done extremely well.
While most Aucklanders still commute in cars, alternative modes have captured the overwhelming majority of the growth in recent years. 61% of new commute journeys between 2006 and 2013 were made on public transport, on the bike, or on foot. (Broken down as follows: 22% of new demand was on the bus, 16% on trains, 7% on ferry/other, 6% on the bike, and 10% walking or jogging.)
This is an amazingly strong market signal. It’s remarkable that people are eagerly taking up alternative modes even with Auckland’s underdeveloped public transport options and dangerous walking and cycling infrastructure. Transport agencies need to recognise this market signal and build for the next Aucklander. That means:
- Unlocking the potential of Auckland’s rail network by building the City Rail Link
- Recognising the runaway success of the Northern Busway and accelerating investment in similar projects in underserved areas of south-east and west Auckland
- Installing a safe, complete cycle network
- Rolling out Auckland Transport’s new frequent bus network and complementing it with integrated fares.
The next Aucklander is likely to want to travel by bus, train, or bike. Will we invest to give them that choice? Or will we ignore all the market signals?