For several decades productivity in New Zealand has lagged behind leading OECD countries. A couple weeks back Peter (Connecting cities: it’s a matter of scale) mentioned Phil McCann’s great paper that convincingly explains New Zealand’s productivity problem (“Economic geography, globalisation, and New Zealand’s productivity paradox“). As our economy shifts to more skills-based occupations with digitalisation our distance to markets becomes less important. Instead, McCann argues our poor productivity can be explained by our economy’s lack of scale and scope.

The reason for the lower productivity appears to be related to both scale and connectivity. All the available economic geography evidence suggests that scale matters. Even though there is no simple direct relationship between urban scale and productivity, all of the world’s most productive cities are at least twice the size of Auckland, and most are between three and five times the size of Auckland (OECD, 2006a).

We know that people working in Auckland are more productive on average than other New Zealanders. People working in the city centre are even more productive relative to the rest of Auckland. This can be explained by agglomeration forces where productivity is enhanced when firms locate (or cluster) close to other firms.

Unsurprisingly, a CEO survey (Research: Drivers of Firm Location) reveals that one of the stated reason firms locate in the Auckland city centre is to benefit from agglomeration.

Proximity to clients and customers is also a key location criteria for all professional services firms, both perceptually and also to maximum efficiencies in terms of getting to and from meetings etc. Locating “in the centre of things” also means it is easier to meet people more often; whether it be a quick catch up coffee, a meeting with a number of people from different organisations, or simply bumping into people on the street – it is easier and less time consuming:

Clearly, the transportation and transaction costs that shape cities has returned with a new vengeance.  Again, here is McCann:

The increased spatial transactions costs for knowledge activities and the resulting premium for face-to-face contact for high knowledge inputs also accounts for the increasing importance of cities and agglomeration in the current era of globalisation.

The evidence therefore suggests that there are major advantages associated with industrial clustering and agglomeration for high knowledge-intensive and high value-added activities, and that the geographical concentration of these types of activities is becoming ever more important.

A fascinating new study by Auckland Council’s research unit (RIMU) estimates how connectivity between workers is related to productivity in the Auckland city centre (“The relationship between pedestrian connectivity and economic productivity in Auckland’s city centre“”).

Agglomeration theory tells us that productivity increases with job density. Using building level spatial data (job by industry type), this study tests how job density (as measured by effective job density) relates to productivity in the “engine room” area of the city centre. In this case effective job density measures the proximity of jobs that can be accessed by walking. Labour productivity is estimated using an established proxy, the mean wage per worker by industry in the study area.

From the report:

Several studies have found that better walking connectivity and/or accessibility to jobs within close proximity within city centre environments is associated with higher productivity (Rosenthal and Strange, 2003; Arzaghi and Henderson, 2008; SGS, 2014). Furthermore, some studies found that density of jobs, rather than city size, is a primary driver of agglomeration economies (Ciccone and Hall, 1996 and Cervero, 2001). However, these relationships have not been investigated in Auckland or even in New Zealand. This study is the first research in New Zealand that investigates the correlation between walking connectivity and labour productivity.

Here is an overview of the method:

  • A walking network including footpaths, lanes, stairs, etc was was developed. For each network facility type a travel speed was assigned. For example, intersections with long signal cycles were assigned a low travel speed and streets that could be crossed easily had fast walking speeds. etc.

  • Using this pedestrian network, pairs were created between building centroids. Each building was given a score of it’s proximity to other jobs. A distance decay factor was assigned between jobs to reflect that closer jobs tend to be more important.

  • The result is a measure of effective job density (EJD) an established measurement for agglomeration.
  • EJD was compared to productivity to determine the statistical relationship between EJD and labour productivity.

Here are the headline findings of the paper:

Consistent with other studies (e.g. 2014 Melbourne city centre), this study concludes that there is a positive and statistically significant association between walking EJD and estimated labour productivity within the Auckland city centre. Locations that are more walkable tend to have higher productivity. This relationship is robust with them inclusion of controls for (estimated) industry composition at a building level, suggesting that it does not simply reflect the fact that higher-productivity industries choose to locate in more walkable places.

The point estimate [above] suggests that a 10 per cent increase in walking EJD is associated with a 5.3 per cent increase in productivity. This compares to the SGS (2014) results of 0.66 per cent. This means that a one per cent increase in walking EJD within each travel zone will increase the value of economy of the study area by 0.53 per cent or approximately $42 million based on the authors’ estimate of $8.01 billion GDP for the study area.

The findings clearly demonstrate the value of being able to walk around easily in the city centre. An accessible walking environment increases the scale (and thus productivity) of the city centre economy by allowing people to work closer to other people.

Economic development strategies to scale-up the economy are usually focused on regional transportation interventions that connect people to the city centre. The irony is that while we are happy to spend billions of dollars on mass transit to shave off a few minutes in travel times to get to the city, we don’t consider the time wasted standing at intersections on the way to a meeting.

As an urban designer it is common practice to connect-up places, resolve barriers and open up access by transportation networks. With this methodology we are closer to having an analytical framework to estimate he underlying value of urban design. This has the potential to promote the importance of short trips that currently go uncounted in today’s transportation evaluations.

In Stage 2 of this work, the authors Merhnaz Rohani and Grant Lawrence will be testing the productivity benefits from specific walking improvements: shorter signal timing,  new pedestrian links, and additional shared streets. I’ll follow-up on their findings when they are available.

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76 comments

  1. +1 Really need to do better with ped signal cycles and also be more interested in user LOS rather than just vehicle LOS

    1. What gets measured gets managed, so this is a good start. That the Pedestrian Network had to be constructed (vs a road network that has existed for years) is also illustrative.

  2. It would be interesting to see an expanded EJD heat map covering the whole of the city centre. Based on the map above I think it will confirm what’s evident on the ground, that the western side of the city (Albert/Nelson/Hobson) is a comparative wasteland when compared to the eastern side. Surely, if this is the case, it becomes imperative for AC/AT to work together to remedy the situation, starting with AT pulling its head in on designs for Albert Street and the linear park. We simply cannot afford to leave so much central land so poorly utilised when we’re struggling for space admit is.

  3. Haven’t they just defined what the centre is? You can walk to more bits of the CBD from the centre than from the edge and at some time in the past when people were building offices in this part of town the Council zoned higher buildings in the middle.

      1. My point is this: 1/they don’t have data on productivity so they added together wages and profits- that means they are kind of claiming changes to walk time might increase the profit of a company based in the CBD like say Air NZ. It is also like saying a lawyer is more productive than a nurse because a lawyer is paid more. 2/ the EJD looks like a simple geometry fact, like saying the centre is closer to other bits or a 1st moment of area. 3/ they picked the area where the accountants and lawyers work in tall buildings as their study area and proved those people get paid a lot. So Patrick call me educated now, all we need do is build more footpaths and people will become more earn more. Why did we bother with all that education crap?

        1. GDP is an imperfect metric but I like Krugman’s take: Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living overtime depends almost entirely on its ability to raise its output per worker.

          1. Krugman is suffering from a bad case of the McNamara fallacy.
            Countries do not enjoy standards of living. People do. From the point of view of the individual an increase in gross output (presumably measured by their income if we are to be consistent with Mare) may not make their standard of living any better at all, particularly if it involves devoting more time to produce this output. A rational individual will consider net income and the total time devoted to obtaining this net income…and that is before taking into account the hard-to-quantify aspects of standard of living.

          2. GDP is more than just an imperfect metric. People may be better off when they sew their own clothes, grow and cook their own food, look after their own children, or do so for family members, etc, but none of that shows in GDP. Bhutan’s Happiness Index is more relevant.

            However, MFD, we’re up against a system where Big Development, favouring the road construction industry and a few others, is justified by poor accounting and poor traffic modelling. In a world where GDP is king, you kind of have to argue using GDP… and if that means starting to measure some of the obvious things that aren’t being measured, and therefore aren’t being modelled, so be it.

          3. Good discussion in Happy City about how “Economic Man” doesn’t really exist, too. People make irrational lifestyle decisions all the time. For example, the commuting paradox…

          4. Heidi, I request that you put aside GDP for the moment and come and bark up my tree. I don’t buy the productivity/agglomeration canard with respect to Auckland.
            I have read and re-read Dave Mare’s papers on productivity as a function of job density. He uses a productivity metric of value added per employee for companies. Since GST is a value-added tax I guess that he indirectly has access to GST data in order to gauge the magnitude of value added for various companies in NZ. In broad terms this is outputs less inputs. The metric is very corporate-centric insofar as this is what we have data for (McNamara)

            If, however, we look at productivity from the individual’s standpoint using a similar approach to Mare we would consider the costs associated with producing the output (such as travel and/or the additional costs of proximate housing) and the total time (home-to-home) dedicated to producing that output (as measured by wages or salary). Since the costs associated with generating wages or salary are generally not a tax-deductible expense there is no data. (McNamara).

            …but there is more. If an individual takes a job in the allegedly productive CBD and, as a result gets a higher salary they pay a higher proportion of their income in income tax.

            I suggest that increases in the productivity of companies by agglomeration do not result in a proportional increase in productivity as experienced by the individual; I was agglomerated by my employer (a very large UK-based multinational) back in the 90s. It added 2 hours a day in commuting time, considerable cost to me, no increase in income and I was less motivated and arrived at work pre-stressed after negotiating country roads, the M40, M25 and M4. I endured it for 3 years before moving to the US where I enjoyed a massive increase in quality of life in a de-agglomerated environment (your mileage may vary).

          5. OK, I’m willing to learn… I was applying all this stuff to a different scenario in my head. I was trying to think outside the CBD to the burgeoning small business environment I live in. But I ain’t no fan of long commutes, if that’s what this entails. I’ll put Mare on my reading list and maybe next time it comes around I’ll be barking up your mandarin tree…

          6. MFD your long commute is no argument against agglomeration economies of a centrally placed office; it is simply a reflection on your decision to live in the countryside…

          7. My long commute, Patrick? It’s all of 6 minutes.

            The point I have made is that the productivity benefits of agglomeration (as set out by Mare) accrue overwhelmingly to employers rather than employees…and that is a very skewed way to gauge standard of living.

          8. “I’ll be barking up your mandarin tree…”

            Might be more useful if you helped pick, Heidi! 200 kg of satsumas, clementines and navel oranges picked in the sunshine this morning for tomorrow’s farmers’ market. Very soothing. 50 kg of clementines from last week to give away (since they didn’t sell well last Sunday).

            As for “economic man” not existing…I think, therefore I am, and I eat leftovers from time to time ergo economic man exists and it is me.

          9. It’s amazing how much time harvesting takes! It’s a big part of my gardening timetable. I’m still enjoying fresh citrus, medlars, persimmon, rhubarb… and strawberries!! What’s up with strawberries in July??

          10. So, MFD, do you see a benefit in trying to improve Krugman’s research by measuring standard of living and its correlation with agglomeration?

  4. “We know that people working in Auckland are more productive on average than other New Zealanders.” For an average OECD metropolitan city in a developed country the GDP per capita is over 50% higher than the remainder of the country. But Auckland is atypical with a margin ahead of the rest of the country of 8% and unlike other countries it is sinking because it used to be 14% in 2005. If NZ had exploited vast iron ore deposits like Australia or Oil like Norway this might be explained easily.
    So why is Auckland failing? Maybe it is a rapid, unplanned influx of comparatively poor people. Obviously there are many wealthy newcomers from NZ and abroad but their wealth has in the main gone into property investment not business and for every wealthy newcomer we have at least one poor one; not surprising when our ‘skilled’ immigrants who are chefs and bakers and tourist guides out number the academics and IT professionals.
    Existing Auckland businesses are coasting along on a rapidly growing local customer base rather than as in other big cities searching for new markets – exporting to the rest of the country or abroad.
    Someone with a great idea for a business may locate outside of Auckland because of the salaries needed to keep people where rents and property prices are so high. No problem for a new law firm employing highly paid lawyers but I heard of Aucklanders who moved to Oamaru to start a new brewery: far from their market but far cheaper to start and maintain a business.
    I remain skeptical of agglomeration theory – it is a germ of a good idea but the exceptions over whelm it.

    1. +1 Bob. Wealthy investors investing in housing has pretty much no nett benefit to the economy (yes they are buying something that is built locally – often with a lot of imported components, however in the process they reduce the availability of housing and drive up prices meaning that existing residents have to pay more for their houses/mortgages which means less disposable income or money to be invested in productive assets – not too mention the profits from those mortgages going offshore to the foreign owned banks draining the economy).

      Then there are the low-skilled/low-paid immigrants that as you rightly point out make little benefit to the economy (and deny a local who while maybe not quite as good an employee could still do the job rather than sitting on the unemployment benefit – costing the country).

      I have no problem with a bigger Auckland population in theory (would love to see it as a city of 3 million) however it needs to be done in a way that is higher density in the appropriate places, in the appropriate time-frame (see below), with the appropriate infrastructure, and with the appropriate people (ie not low-skill immigrants from developing countries and not wealthy immigrants unless they actually are going to invest in productive investments here ie not houses. We could certainly do with more scientists and engineers and IT professionals).

      We also need to not be bringing in people for the sake of it as with technology improvements we are going to need less people not more (a lot of jobs are going to be redundant and there may well be a lot of unemployment or less work available for people). This is particularly true of low-skilled jobs in particular (less McJobs).

      The benefits of agglomeration in Auckland will come to naught if we don’t sort out our housing crisis and our transportation infrastructure. Any benefits will be more than cancelled out if people are spending 2 hours a day commuting and having to pay more than a third (let alone more than half) their income on housing. All cities of scale in developed countries have expensive housing. The difference is that most of them only have expensive housing in parts of the city and that they have affordable housing in places (even New York and Tokyo have affordable housing away from the city centre).

      1. +1, sorting out housing is absolutely vital to the future success of Auckland, closely followed by transport.

        It’s a bit of a vicious cycle in terms of highly skilled migrants, NZ needs to be successful for them to want to come here. This has actually happened in the last few years as our economy has been going better than many other countries, which means despite a tightening of the rules around migration.

        1. Our GDP is going up. Our population is going up too. But we are only thriving if our GDP per capita is going up. And it is. But much slower than in other countries. In my lifetime NZ has gone from about No1 to No30 on the OECD list of successful countries.
          OK like most of the contributors to this blog I love living in Auckland and if I didn’t I would move out but we must fool ourselves into thinking Auckland is performing well economically because it is clearly under-performing. I read this blog looking for solutions.

          1. Agree completely. My main point was in the last few years NZ has done well compared with other OECD countries, it is of course a very small trend and we are still well behind.

          2. Jezza – by recent years do you mean we survived the GFC better than many other OECD countries because if so then maybe it is time we said thanks to the big Aussie banks for not being like the banks in the USA and UK and parts of Europe. If you mean growth in GDP per capita in the last 5 years I’d be interested in the evidence.

          3. I haven’t crunched any numbers so you may well find fault in my argument, but just by eyeballing this it appears we are ahead more often than not over the last few years when compared with the other English speaking and western european countries (those preferred by skilled migrants). Ireland seems to be an exception.

            https://stats.oecd.org/Index.aspx?DataSetCode=PDB_GR

            Agree completely regarding the Australian banks, although I think it is their government and its regulation we really need to thank.

          4. Thanks for the link. Just out of amusement I decided to do a little crunching and of the 35 countries NZ came 14th in the last 5 years and 16th in the last 3 years (that is to 2016). Not stellar and not bad.
            Some at the top would be hard to match because they are countries that have thrown off communism and are now beginning to find their true place in the world: such as Poland and Hungry. And at the bottom their are some very wealthy countries and some that have been hit hard by either incompetent government or illegal immigration or both: France, Italy, Greece.
            But that is comparing countries and the point is metropolitan areas and walking. Compared to the issues that Greece has to deal with pedestrians in the CBD is really insignificant. However I expect to be in the latter location soon.

          5. You should be careful conflating refugees with illegal immigrants. Most people turning up in Europe have come from countries occupied in part by ISIS, or from South Sudan or Somalia. i.e. they are refugees.

          6. There is evidence that most of the Syrian graduates have ended up in Germany. But my very mild point was some countries have had their economies temporarily hit by unexpected arrivals whether from West or East Africa.

    2. I’m not sure what you’re describing is any different to other cities overseas. Sydney for example has the same problems in terms of money being sunk into property and also a pretty decent supply of immigrant workers willing to work for lower pay.

    3. I think the agglomeration theory is fine, it worked in the past even when the canals were the fastest way to transport goods, 1 horse could transport over 20 tons. what it comes down is available energy and it’s efficient use something modern economic studies fail to take into account.

      Countries we compete with use energy in 2 ways, one to produce goods and services or like we do wastefully, moving it’s working population around by car, and you can’t waste energy today like we could in 1950s to early 1970s when oil production was rising by 7% per year and the National Government started it’s destruction of the railways, this is a graph of oil over the last century

      https://grandemotte.files.wordpress.com/2009/11/bp-historical-worl-oil-production-1900-to-2006.png

      To raise our standard of living we have to have economic growth but that usually comes at a cost usually to the destruction of some part of the natural world. we live in a finite world. and simple solutions like walking and cycling are the modern way to overcome one of the excesses of the modern world.

      1. One of the advantages of cities is the can potentially reduce the overall impact on the natural world be consolidating the “man-made” effects in a tighter space.

        That’s of course assuming we don’t spread out using cars.

        1. +! Yes, and assuming we plan for regeneration and green infrastructure. A slightly less dense city with a far higher rate of closed resource loops is better than a very dense city with huge input of resources and export of pollution.

  5. Hmm – I’m pretty crap at anything involving numbers. Having said that – Is the EJD even relevant? How do they choose which buildings to pair?

    Let’s take Shortland St (because I’m familiar with it). You’ve many cafes, eateries, barbers and high-end clothing stores (right term for suits?) in very close proximity to insurance workers, lawyers and accountants. All these businesses should do well by being close and well connected to each other, however I’m not able to see why the trip from the new council building to Flight Coffee is a valid trip (figure 12). If an assumed trip isn’t realistic, nor is the outcome of the modelling.

    This isn’t to say that I disagree with the concept, or even expect different findings, only that I’d love to know which buildings were paired and why. The article as presented sounded like an oversimplification with too much fudge, sorry.

    1. Without reading the study I’d guess that all buildings within the defined area were paired with all other buildings.

    2. All buildings were paired (up to 30 minutes via walking speeds) with each other. For the EJD score a decay factor was applied that values close buildings higher than ones further away. Shortland St has a high EJD because of the concentration of office towers, not because its’ particularly walkable.

  6. It hardly needs a complex study with fancy graphs to establish what anyone with sense can see: Auckland CBD needs to improve the walking experience. Which in the main means controlling vehicles. Many of the roads in the CBD should be buses only and one way.
    However when comparing with other countries (my experience is London and New York) the problem for pedestrians in Auckland is the slope up to K’Rd and the unpredictable weather. I used to go from near Shortland St to K’rd for lunch but ran the risk of being soaked with either my own sweat or rain.
    It may not need a study but I’m glad they did one because it gives the council more ammunition to fight the pro-car lobby.

    1. Yes, this is all intuitive, and sensible, but there are no metrics currently to evaluate walkability.
      Transport, urban design decisions are still highly influenced by traffic capacity/delay, because that’s what the system is set up to measure. (see Linear Park on Victoria Street).

      1. Another factor is the profile of the walker – what is good walking for a young person on their own is quite different for the elderly (like me and most of the tourists arriving by cruise liner) or anyone with a child. Just try walking up Queen st with a 6 year old and a pushchair.

        You are right – if a street is measured for its performance at moving through traffic then the CBD has problems but by separating streets into ones for pedestrians and others for traffic they might find improvements for both traffic and pedestrians.

        1. This will be one of the best things about LRT. It will allow people to ride the LRT up the hill, but still walk down to their destinations.

          1. I agree. And while I am a fan of the LRT project, it makes you wonder if there would not be a significant benefit to introducing the pedestrianisation planned for lower Queen Street (Mayoral Drive north?) in advance of the LRT project. It seems likely to have significant benefits in its own right.

          2. Well we’ve had the red city link buses for a long time. But they’re so damn slow, if I walk on Queen Street from the wharf to Aotea Square I often overtake one of them.

            More generally, this type of movements (between random places within the central city) is very poorly served by PT. Try getting to K’road from Victoria Quarter. And this is even worse if you try to go east – west. Apart from walking being a seriously unpleasant experience, you also have no fallback to transit if the distances is a little bit too far to walk.

          3. Indeed the glorious rain of the last few weeks has put my knowledge of Auckland to the test. No use believing AT Journey Planner – it doesn’t have an “under cover” option for the walking segments. It’s also one thing to be pelted by the rain as you walk along – at least you’re making headway. Quite another to be waiting for long periods at traffic lights without any cover.

          4. “Well we’ve had the red city link buses for a long time. But they’re so damn slow, if I walk on Queen Street from the wharf to Aotea Square I often overtake one of them.”

            They wouldn’t be slow if we kicked all of the cars out. None of them are adding anything to Queen Street, why the hell are they still there?

  7. The location of their new office does not bode well for the productivity of AT staff. On one side you have Fanshaw street with pedestrian crossings designed to add a forced sideways walk so you cannot cross the street in one phase. On the other side of their office you have Halsey Street, which you’d assume as part of 30km zone of Wynyard would be narrow pedestrian focussed, but instead has been transformed to 5 lanes wide and with a garden planted down the edge an entire city block to act as a barrier preventing pedestrians from crossing anywhere other than the traffic lights. Could it get any worse for access?

    1. The number of pedestrian routes isn’t likely to affect the productivity of AT noticeably. The have far bigger problems. AT are probably the perfect example of why you should never use salary level as a proxy for productivity. I would suggest that in that organisation the higher paid people are the least productive.

      1. It is called promotion to their level of incompetence. How about a mild reform of AT – sell all those nice new ‘AT’ cars. Give them three offices in say Papakura, Takapuna and Onehunga. Then let them try moving from office to office alternatively by car and public transport.

  8. Of course the other factor is the pleasantness of the walking environment – is it at a human scale, are there things to look at, are there shop awnings to keep the rain and sun off, are pedestrians bombarded with traffic fumes and noise, how safe is the environment etc? Would be great to be able to integrate these factors into a measure of walkability rather than just time/distance. There are studies that have done this and some methodologies involving street audits and pedestrian level of service scores. It would probably give the council more ammunition for streetscape and pedestrian improvements in the CBD also.

    Personally I think we should just pedestrianise as much as possible and only allow buses and future light rail into most of the centre of the CBD, like many of the European cities are doing. With growth in future PT services this might be the only option to allow space for all the buses, light rail, peds and cyclists.

    1. To facilitate this increase parking charges now!
      All streets with bus routes have no parking and bus lanes now!
      Do these things now!!

        1. I don’t understand this either. Why is Queen Street still open for cars? Last time I checked Mayoral Drive was already completed, so… But the reality is, it’s still open for cars, and I assume it will be for a long time. Too bad for buses. And it’s looking like we’re not getting a “Victoria Street Linear Park” either.

          And just when you think you’ve seen everything, you get this story about that missing zebra crossing at the Takapuna Beach playground. I guess we’ll eventually make progress, but given the resistance against even stupid little things like a zebra crossing on a parking lot, it’s maybe still a generation away.

  9. Job access is only one reason for improves productivity.

    A compact dense city with quality pedestrians access can also give people better choice of food, entertainment and shopping needs in an active vibrant atmosphere.

    That would lead to higher satisfaction, happiness, drive and productivity.

    1. Yes, the agglomeration of consumption element of the equation is really important too. For example with staff attraction and retention…

  10. Most comments here seem to simply express bafflement at the idea of agglomeration. Is this really such a difficult concept to grasp? It is exactly the economic force that has lead to the universal creation of cities. And when I say universal I mean across all cultures and all of human history. Sure there are other factors, like collective defence, but without a very real and powerful economic upside to the creation of cities they wouldn’t be anywhere as consistently found globally and through time.

    Perhaps because almost everyone who is an adult today has lived through the only period of active dis-agglomeration in recorded human history, the late 20thC, the auto/sprawl era, that there this cognitive dissonance about the value and power of cities…?

    Time to get over it, that experiment is over anyway, in as much as it was ever real. In historical terms it’s just a blip, a weird function of a technological innovation plus an over played policy response to it, that’s settling down back into the standard pattern.

    The power of proximity is firmly back to normal, regardless of both cars or the internet: It trumps both, otherwise city centres would have entirely collapsed by now.

    1. I’m not so sure you can push agglomeration back in history like that. The formation of villages was to provide protection from attack. Cities only form when there is a non-perishable natural resource to protect. So in PNG they had agriculture with drainage ditches and villages 50,000 years ago when my ancestors were probably fighting sabre-toothed tigers in Europe. But the first PNG village to have over 200 people in it was probably Hanubada and that was less than a century ago. Sumeria, China, Greece and Rome and later medieval Europe had cities and certainly they were the foundation of literacy and the arts but their purpose was security. They built walls because the needed them. My Breton relatives ancestors were allowed into the French cities (such as Calais) to sell their produce but they had to be outside the walls by sunset. When security is assured it is natural for people to spread out with the densest rural populations in the Netherlands followed by the Waghi valley in the PNG highlands. It is even true for the upper middle class Aucklanders who buy their lifestyle blocks.

      If success only required density of population then we may as well give up now – we will never compete with Manila, Mexico city, Mumbai or Lahore. Meanwhile the jetboat was not developed in a big NZ city. Walmart HQ is still in Bentonville, Arkansas and the sage of Omaha lives in Omaha. Maybe the absence of bright lights and business forums and local consultants allowed them time and space to contemplate.

      1. First, villages aren’t cities. However there are still likely agglomeration effects observable in villages too, but not on the scale of cities.

        Second, there is no need to stretch this fact to breaking point. It isn’t a zero sum game where only the most efficient cities will survive, it is more about working to improve the performance of the city we already have.

        Third. Yes cities fail. Especially ones that are inefficient! But primarily ones that have lost the reason they began and have failed to find a new one. All cities are where they are for good reason, (even ‘unnatural’ ones like Canberra and Brazilia- politics) some resource or other physical or societal advantage, including defendability. And all cities can lose their economic basis for being, technology changes, values or sources of resources change, big political shifts. NZ’s first city, Dunedin, was built on gold, and has simply flatlined ever since that resource declined, first with some industry (still declining), now as a minor port, regional service centre, and education and social service centre. Tourism should be good for it now…

        Auckland and Wellington are where agglomeration economies are most visible in NZ. And particular AKL now that it has properly flipped into a real city scale. Perhaps that is another reason this seems so hard to be grasped here; in NZ we aren’t really used to real urban economics, just that of towns, of rural service centres. Well Auckland absolutely is no longer a rural service centre, it has its own heat engine: our urban services economy. A thing that is absolutely responsive to the economics of agglomeration.

        1. I must admit to rather pushing the point. mainly to contrast the original idea of a city as a place to keep other people out. In the past they had city walls now we have SH1. IMy geography teacher 50 years ago explained how to pass exams by intelligent guessing – look at a map of say Argentina and you can guess that Buenos Aires will have clothing manufacture and food processing and shoe making and of course government offices. And you can guess that given normal topography halfway between any two cities you will find a medium sized town and that is why Huntly exists. You have to know a little more to work out why our harbour is on the wrong side of the country and Kaipara harbour has the wrecks to prove it took the Victorians a while to work it out.
          However I still think the main feature of agglomeration is human nature. Trendy people like to live shoulder to shoulder just in case they are missing out. Meanwhile most families want to bring up our children in a protected outdoor space so if we live in apartments with kids it is simply because we can’t afford our own detached house.

      2. “I’m not so sure you can push agglomeration back in history like that. The formation of villages was to provide protection from attack. ”

        Improved defence is an agglomeration benefit though. There are more people which allows specialization. In an ancient village of 200 people there might be one dude who only ever maintains the fortifications. He is a lot better at maintain the fortifications than someone in a village of 20 who only does it 10% of the time.

      1. Which one? I found several articles but wasn’t sure which is the website you mean. I’d be interested to read what topics they cover, given that it is those cities that will be the hardest hit with being unable to keep the crumbling US infrastructure maintained.

        Always something to keep in mind when we have both small and big alternative solutions to problems…

        1. No definitive website that I am aware of. Started with https://en.wikipedia.org/wiki/List_of_shrinking_cities_in_the_United_States and I was rather surprised by some of the places I’ve been to; particularly by Cleveland which I remember as being a big place. However the big place is the Cleveland metropolitan area. And that is where the difficulties start with many cities it is difficult to decide where the boundary is. Not legally but common sense logical boundary. When I’m north of Warkworth I feel well out of Auckland. Is London whatever is inside the M25 or can it stretch to Cambridge, Woking, Maidstone?

          This site is excited by growth and I can see why – not much to discuss otherwise. But as with business (and life!) decline can be harder to manage and has its fascinations.

          1. Lapun, I’d love to read a post about decline. I think there is relevance to Auckland: although we are looking at population growth, so were all the cities that are now in decline, at some point. What aspects of their growth could they have managed better, in terms of not leaving an imposible-to-maintain, polluting infrastructure legacy? How do they repurpose over-engineered infrastructure? Even just the decline of parts of cities as other parts grow is fascinating. Keen to write it?

          2. Heidi, Lapun, for cities in decline, you might want to look at Japan, surely? Population there is in a good steady decline, as people get too old to breed, and the younger Japanese are not having as many children. Presumably, things like house prices will get cheaper over time, etc. But Japan has enough cash in the bank so that they can decline gracefully, rather than do a Detroit and collapse…

          3. I do find Japan fascinating. But the cash in the bank thing is probably why there is less to learn there. Auckland can’t even seem to pay for its infrastructure when we’re growing. How will we be able to maintain it when we’re in decline?

    2. I think most of us get agglomeration. Businesses that can afford the rent prefer being in the centre. But this report seems to be suggesting pedestrian connectivity increases productivity. Maybe it does but their method doesn’t prove that. You could rerun there analysis using car travel times and conclude the same thing, or rerun it based on potential zip line distances and conclude the potential zip line distances improve productivity. Correlation ain’t causation and productivity isn’t simply high wages or company profit.

  11. Thanks, Kent. A really interesting post, particularly on top of having just read Stu’s post from last year about how agglomeration is purportedly the second biggest benefit of the vast Mill Rd project.

    https://www.greaterauckland.org.nz/2015/04/16/mill-road-economic-evaluation/

    It may be easy to say that Council’s study on agglomeration is a waste of time, because it is just common sense. However, in Mill Rd, agglomeration is being used as reason for a sprawl-inducing road project. It’s clear we need a bit more data. Good on the Auckland Council Research Unit for doing this study.

      1. Of course. Sometimes I wonder if all the really good research is only being done to try to prevent simple concepts being so badly misappropriated…

  12. I would like to agree with the premise and maybe I just misread the study, so I’m happy to be proven wrong, but I think the entire argument is based on faulty logic.

    Over and over I see people seeing two unrelated elements and trying to draw a link between them.

    I walk up to a train station and see the platform fill up with people and then a train appears and the people get on and the platform is empty again. Did the people cause the train to appear? No. Did that specific train cause people to appear? No. They both were following a time table.

    Element 1: This area of the city has more office desks located more closely together. (because essentially land is expensive enough to justify the office density).

    Element 2: This area of the city also has the most high paying jobs. (because only the most profitable companies can afford space in the most expensive part of the city)

    Faulty conclusions: Jobs closer to each other are more productive or that productivity increases with job proximity.

    I see no evidence that a walkable city is a productive city, just people trying to explain the correlation of two things on the basis of proximity without any real proof.

    The only cause I can see is that the more expensive the land, the more dense the office space and the higher the rent that only the most profitable companies can afford.

    Did you know one of NZ’s most productive companies (revenue per employee) is a manufacturing company called F&P Healthcare. Their offices are all based out in the Highbrook urban sprawl PT dearth zone in their own campus.

    The most productive(and polluting) sector in NZ is the dairy sector by far on the basis of revenue per employee and by how much foreign money it brings into the country. No farms in the CBD, but Fonterra’s office is (not in the study area). Is it the Fonterra office building that generates the productivity or the farmers? Are the Fonterra office workers high wages the result of their close proximity to other offices or because of farmers? Same for all of the other office buildings in the CBD. I don’t think this study takes this into account which is a huge, enormous gaping flaw.

    You may as well argue that the whole population of the country should live in a single 2km high building and we would be the most productive country in the world.

    I would love to use these studies as proof to back up my belief that better walk ability is a good thing, but I can’t because I see the whole thing as flawed.

  13. There is a lot of other factors for higher productivity such as management styles etc so this is just one factor. To me it’s more just common sense. I was wondering and the study did have a control for one factor: “This relationship is robust with them inclusion of controls for (estimated) industry composition at a building level, suggesting that it does not simply reflect the fact that higher-productivity industries choose to locate in more walkable places.” I think a lot of industries would have offices in the CBD, but the high cost per sqm or suitability of size offsets the advantage they may gain, they may not be profitable enough to justify it which would distort this study I guess. Does a productive set of businesses located together create a city or the other way around? – pretty much would work both ways I think. Just my 2c worth.

  14. While you’re looking at EJD for Connectivity etc, I’m just thinking: Space Syntax. Their lab has done some lots of work on methods of expressing connectivity. And then Jan Gehl did studies of Auckland a few years ago, right? Studying the Auckland landform and streetscape for connections? Would be interesting to do a comparison, yes?

    1. Thanks Guy, I hadn’t realised that, but have found the old posts with his comments on Auckland. Imagine if we’d taken his advice back in 2010 and closed one of Quay St or Custom St to traffic, narrowed the other one, and narrowed Queen St to two lanes. We’d be in much better shape now. Seems shameful to get him over here and then ignore his advice.

    2. Guy, yes Gehl’s work formed the basis for much of the CCMP. Most of the interventions proposed in the CCMP are designed to resolve the spatial barriers in the city centre: city to villages, east-west stitch, etc.
      It doesn’t take a rocket scientist to observe the opportunity to better connect the city to the water’s edge, or to fix Fanshawe St so people can cross the street, but until now, we had few tools to measure the value.
      The network analyst tools to do this work would yield similar results to Space Syntax formulae (centrality, connectivity) I think.

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