Last year I started to take a look at demand for new transport investments. I found that demand for toll roads has massively underperformed, showing that people are unwilling to pay for new roads. On the other hand, demand for new public transport facilities has taken off more rapidly than projected. All alternative modes are growing rapidly in Auckland, while driving has stayed flat for the past decade.
The conundrum is, basically: Why is this happening? I argued that declining willingness to pay for new roads is consistent with a saturated market – i.e. all the people who value driving are already on the road. But that doesn’t explain why demand for public transport, walking, and cycling has been so robust over the past decade.
Here, I want to investigate a potential reason for the boom in demand for Auckland’s “missing modes”: the “complete network” effect. I discussed this briefly in a post on the benefits of cycle investments:
Importantly, the researchers found that a larger, more ambitious programme of cycle upgrades will deliver a higher benefit-cost ratio than a smaller programme. This is what economists sometimes call the “complete network” effect – in effect, the more places you can get to easily and safely on a bicycle, the more likely you will be to cycle. (This is also why Facebook has so many users: You have to have an account because everybody else also has an account!)
Here, I want to take a deeper look at demand for relatively new, expanding networks. A 2008 working paper by Arthur Grimes (“The role of infrastructure in developing New Zealand’s economy”, pdf“) provided some historical data on how demand evolved for two important 19th-century infrastructure networks: telegraphs and railways. Grimes suggests that growth in demand on these networks followed an “S-shaped pattern” of rapid initial growth, a period of modest growth, and then a second period of rapid growth after the network reached a certain size:
A forecaster in 1866 would have had little ability to judge the extent of use of the new infrastructure over subsequent years given the lack of precedent for it. A forecaster in 1896, having seen 15 years of constant messages per person may confidently have forecast a stable outlook for that variable over the coming decade. He would have been mistaken almost by a factor of two within ten years.
Grimes’ data is summarised in the following graphs, with telegraphs on the left and railways on the right. The bottom two graphs show the “S-curve” in per-capita demand clearly:
This nonlinear pattern in demand is likely to reflect two factors. First, growth in demand is fast at first because infrastructure builders start by constructing the best projects – i.e. the ones that will attract the most customers quickest. Once these projects are built, the next ones attract demand more slowly – roughly at the rate of population growth.
Second, the later upturn in the curve occurs after the network reaches a sufficient “critical mass” to become increasingly useful for more purposes. This is the complete network effect in action: filling in the missing links in a network can enable it to serve many more trips (or messages).
I would argue that demand for Auckland’s “missing modes” is following a similar trend. So: Where are we on the “S-curve”?
First, we cannot expect an uptick in demand after the construction of Waterview finishes off Auckland’s motorway network. While Waterview is a sensible stopping place for expansions of Auckland’s motorway network, it is at best a marginal improvement in the city’s road networks. There are already a number of roads that connect the north and northwest to the south.
Second, in public transport, I would argue that we are probably on the tipping point to sustained rapid growth:
- We’ve got an existing bus network which supports steady if not spectacular growth in demand. Auckland Transport is currently in the process of reorganising it into a New Network that provides more frequent all-day services that serve many more destinations than before. This could easily lead to a boom in bus trips.
- We have an existing rail network that has experienced a revival in demand since the development of Britomart in 2003. The City Rail Link will transform the usefulness of the rail network by breaking out the bottleneck in the city centre and enabling a doubling in train frequencies.
- New rapid transit infrastructure can capture significant new demand when it’s made available – as the Northern Busway has done.
Third, the cycling network is probably a few steps behind in the process. There’s likely to be a period of steady if not spectacular growth in demand as new projects come online, but under NZTA and AT’s current investment plans there will be gaps in the network for a number of years. At a certain point, though, the gaps between safe cycle infrastructure will be filled in, enabling rapid growth in demand as cycling becomes safe and useful for many more trips.
In short, the “S-shaped pattern” of uptake for new transport networks will shape demand within New Zealand’s cities following new investments in public transport, walking and cycling, just as it has done on previous infrastructure networks. The only question is: Are we willing to invest in our “missing modes” to make them increasingly useful for more and more trips?