Every week we read more than we can write about on the blog. To avoid letting good commentary and research fall by the wayside, we’re going to publish weekly excerpts from what we’ve been reading.
McKenzie Funk, “The Wreck of the Kulluk“, New York Times:
The Arctic was a long-term investment — Shell would not start production on such a big project in such a distant place until at least a decade after it found oil — but the future is always getting closer, and by 2010 the company was anxious. It took out ads in newspapers, hoping to pressure the Obama administration into opening the Arctic. One pictured a little girl reading in bed, a figurine of a polar bear next to the lamp on her nightstand. “What sort of world will this little girl grow up in?” it asked. If “we’re going to keep the lights on for her, we will need to look at every possible energy source. . . . Let’s go.”
Even with permission, getting to the oil would not be easy. The Alaskan Arctic has no deepwater port. The closest is in the Aleutian Islands at Dutch Harbor, a thousand miles to the south through the Bering Strait. In the Inupiat whaling villages dotting the Chukchi coast, only a handful of airstrips are long enough for anything other than a prop plane. There are few roads; human residents get around in summer by boat, foot or all-terrain vehicle. Shell was trying the logistical equivalent of a mission to the moon.
The Economist, “Nimble Opposition: A new study confirms suspicions about what drives planning decisions“:
Local opposition to new housing developments is common across Britain. It has long been argued that such opposition—NIMBYism to its critics—is linked to home ownership. Homeowners, unlike distant landlords, vote in local elections and receive planning consultations in their postboxes. They lose out from development in multiple ways. Loss of green space reduces their quality of life and increased supply of housing suppresses prices. Landlords managing diversified portfolios are less exposed to the value of one property. The idea that planning decisions are driven by the desire of homeowners to maximise house prices is known as the “home-voter hypothesis”.
On October 24th the Institute for Government, a think-tank, released a study supporting this theory with data. It looked at English local planning authorities (LAs) between 2001 and 2011 and found that for every additional ten percentage points in the proportion of homes that are owner-occupied, 1.2 percentage points were knocked off growth in the housing stock. Average growth was 8.8%, so the effect was marked. The authors are cautious about making a causal claim, but the correlation was observed after controlling for the number of planning applications and the amount of available land. A rough calculation suggests that, without the NIMBY effect, one million more homes would have been built during the period.
Brad Plumer, “Driving in the US has been declining for years. Will cheap gas change that?“, Vox:
The key concept here is price elasticity — how much the demand for gasoline changes in response to changes in price. The EIA estimates that, in the very short run, Americans’ demand for gasoline is fairly inelastic. The price of gas would have to fall 25 to 50 percent for US driving to rise by just 1 percent. (That is, the elasticity is -0.02 to -0.04.) …
Driving is on the downswing for a few reasons: 1) The US population is getting older, and retirees tend to drive less. 2) More and more young people are moving to cities, where there are better transit options. 3) It’s become much harder for teenagers to acquire drivers’ licenses. 4) Young people may be driving less for cultural reasons (possibly they prefer to hang out with their friends on Facebook than piling into a car and driving around aimlessly).
That may explain why American driving habits today seem to be less responsive to changes in gas prices than they were in the 1990s. Back then, the EIA estimates, it only took a 12 percent drop in gas prices to boost driving by 1 percent (elasticity was -0.08). Nowadays it takes a 25 to 50 percent drop.
Emily Badger, “Why no one likes indoor malls any more“, Wonkblog:
The mall that’s dying is, in fact, a specific kind of mall: It’s enclosed, with an anonymous, windowless exterior, wrapped in yards of parking, located off a highway interchange. It’s the kind of place where you easily lose track of time and all connection to the outside world, where you could once go to experience air conditioning if you didn’t have it at home…
The death of old-fashioned indoor malls is also the rebirth of shopping hubs that feel more like Main Street.
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Thanks Peter. I especially liked the Economist article “The nimble opposition”. Would it be possible to construct a graph like that for NZ or Auckland?
It is my thesis that NZ is following the UK with regard housing affordability. The UK supply restrictions started over 50 years ago whilst ours are more recent, starting about 15 years ago.
I would argue that if NZ had followed the German model of local governance, multi-modal transport provision, a right to build and a cultural attitude that ‘the city air makes you free’ (so policy settings for cities are such that the new cohort experience opportunity not exploitation) we would not face this problem.
Reading the Economist article did inspire me to look into the NZ-specific data – mostly the Census data. However, the results were not at all conclusive, due to several weaknesses in the data:
1. Problems with the area of analysis – NZ’s got about 70 district (or unitary) councils, but many of them are not building new houses due to weak economies and weak population growth. Controlling for this is difficult – I suspect that the best way to do it would be to look at variations between areas _within_ large NZ cities.
2. Lack of readily available data on several key variables, including the area of vacant land within urban areas and building consent application data. In principle, this data exists, but gathering it and analysing it would be difficult.
3. Lack of a good measure of the number of dwellings in cities – figures reported from the Census focus on occupied dwellings and often exclude unoccupied dwellings (e.g. vacation homes). In general, it is surprisingly difficult to come up with a consistent, reliable measure of the total amount of houses (let alone commercial floorspace!).
Of course, this doesn’t mean that it _can’t_ be done, just that it’s difficult to do. I prefer to be paid to do difficult things.
Peter what about the cohort graph, showing the home ownership rate at different ages for each cohort.
I know with regard to housing affordability, home ownership is not the actual goal. Affordable housing is. So medium house to medium income ratios and percentage of medium income the medium rental costs are the actual goals.
But changing home ownership rates do give some indication of what is happening big picture wise.
Here’s some cohort data for 2003-2008: http://greaterakl.wpengine.com/2014/09/26/auckland-cant-afford-to-eat-its-young/
Census data allows you to get a better view back to 2001 and forward to 2013. From memory, it does show declining home ownership rates in most age groups, but especially the under-35s.
Thanks Peter, that cohort data in your article was in bar graph form so maybe not so easy to compare how hard different cohorts found buying housing at different stages of their lives -(ages).
The Economist cohort data was in line graph form. So it is clearly seen that each newer cohort in the UK dating back to those born in 1953 is finding it harder and harder to buy their own home. The differences between cohorts were quite small to start with but are now quite significant.
Note the other important aspect of the German model is they construct the multi-modal transport provision in advance of development. I think it is commentators on this site who have seen German construction workers on new housing developments take the bus, tram …. to work.
This changes the dynamics of new developments in several important ways.
1. The German model ensures transport provision is not the cause of housing supply restraints.
2. The houses/plots in the development can be smaller and cheaper for no loss in value to the homeowner because they do not need all the paraphernalia of a two car+ lifestyle. One car is probably ideal.
3. For public transport additional users lowers average cost without cost to the existing users transport experience so using transport as a NIMBY excuse, like in the above ‘Nimble opposition’ article doesn’t make sense.
4. The German model still provides all the good automobile infrastructure/connections for those that need them. They just do it in a way that there is choice.
Build public transport first? It’ll never work here because…..well, just because. Biking of course. Why we don’t build busways through subdivisions and alongside arterial roads is beyond me. Tell you what, NZTA’s Northern and Southern motorways are in for a shock based on the level of development north and south, including in the Waikato region – Pokeno.
For an excellent description of the unjust British planning system. See this article written by Martin Wolf of the Financial Times. Titled “Britain’s self perpetuating property racket”.
http://www.reddit.com/r/unitedkingdom/comments/2rudtl/britains_self_perpetuating_property_racket_the_ft/
An older article comparing UK with Germany with regard to planning/housing affordability is here.
http://www.macrobusiness.com.au/2011/06/how-germany-achieved-stable-affordable-housing/
Is NZ property and transport suffering from the same supply and demand issues creating a false economy for both. The government seems keen to improve housing supply but not efficient transport supply but still have a one cylinder network. The transport bubble is an easy one to pop, but transport industry not keen why, because fact is the road is wide enough right now in 99% cases and congestion is fixable with direct mode share measures. Then they have lost 60% of road building income, and petroleum use down 60% plus. Plus your right only need one car maximum. But are these bad things for the public or just a few lobby groups.
It would be interesting to compare the price elasticities of fuel (petrol and diesel) in different regions of NZ. From what I am aware, the PED of fuel in NZ is around -0.04. i.e. to reduce fuel use (and driving) by 2%, fuel prices need to increase by 50%. It would be likely that the PED for fuel in inner Auckland, Auckland outer suburbs, Wellington, Chch, regional NZ etc, would be different. E.g. In inner Auckland, PED of petrol could be around -0.15, outer suburbs, -0.05, regional NZ, -0.02 etc. This would most likely be due to the fact that driving is definitely a necessity in regional NZ and outer suburbs, and the fact that there is plenty of alternatives in inner Auckland, for example.
As for the NIMBY effect, it would be very interesting to compare its effects on housing affordability, e.g. there could be a correlation between housing affordability and rates of NIMBYism. It is nice to know that there is now a negative correlation between the percentage of owner occupied homes and the increase in housing supply though.
Shopping mall still has its place in country with bad weather conditions.
Also the success of street shopping depends on the quality of streets. Well landscaped, Clean and Pedresdans only street with a decent mass transport to the area is the precondition of its success
Offtopic compared to the above, but that NYT story on the Kulluk is an amazing read. Reminded me of The Perfect Storm.
Yes I thought it was great for a number of reasons. Great journalism; get the facts, tell the story, but also that the NYT is still in a position to fund this sort of high cost investigation. How much longer will that last?
And of course as it shows just how unlikely Arctic oil production is, I expect the Russians to persist with it as they will continue to discount the environment and the lives of their personel. But the majors being able or willing to fund this sort of venture looks increasingly unlikely as their balance sheets weaken and their reserves wither away.
I didn’t know whether to laugh or cry reading that. The issue is we’re letting these retards have access to one of the world’s most pristine areas and yet they can’t seem to organise a pissup in a brewery. I was actually laughing as I was reading passages out to my partner. Probably the bit that tickled me the most was the fact that they’d designed the Kulluk’s crane that could only be used in perfect conditions – something that I’d gather would almost never occur in the Gulf of Alaska, let alone anything else up there.
It to me was just a story of cost cutting, shortcuts and ineptitude. “The fuel stack is too low, but lets embark on a trip that as far more dangerous than the one that screwed the boat last time – this will end extremely well”.
Oh, and the bit that they couldn’t go into better conditions in more open water because of a flag of convenience that they’d used to avoid government regulation.
To be honest, I think it’d make a great Dr Strangelove-esque movie.