Walkability economics

Economic benefits of walkability part 1: Building neighbourhoods without shops is like building homes without bathrooms

GUEST BLOG
Tristan Cleveland

Despite the internet, most economic activity still takes place in person. In 2015, United States residents physically transported themselves to a cash register to make at least 84 billion purchases with debit or credit cards. For a large proportion of those trips, they took a car, racking up an average of 17,500 kilometres driving each. Switching some of those trips to foot could be a powerful tool for economic growth.

Few things can matter more for economic efficiency than how people get to each and every transaction, and the car is an expensive way to get there. They are large machines that depreciate while moving, require gas, create congestion, and have to be stored somewhere for each purchase. The more people can instead just throw on a pair of sneakers and walk for those billions of transactions, the more efficient the economy will be. The most productive places today are, after all, walkable downtowns.

This observation stumbles, however, over two ideas that can make walking seem irrelevant to the economy. First, the speed of cars, trucks, and planes helped generate the last century's economic growth, so how can switching back to walking be progress? Second, if the nearest grocery store is a two-hour walk away, getting there by foot is not more efficient than driving.

The response to these objections is simple: driving is more cost-effective than walking for long distance, but that does not mean it is for short distance. When travelling across town to buy a sofa, a two-ton vehicle is the right tool. For buying bread, it is overkill. Airplanes, similarly, are more efficient than driving for getting from New York to Buenos Aires, but not for getting from Bronx to Manhattan. Being faster and more effective at one scale does not make a technology more cost-effective for all trips.

Most households need to buy bread week after week, so building communities with no local business to sell it imposes regular, avoidable transportation costs. It is like building a house without a bathroom, forcing people to drive to do something designers know they need to do. A fundamental principle for improving the efficiency of cities is this: the more regular the need, the closer it should be to all homes.

Lest the financial consequences of car-dependency seem exaggerated, consider this partial list of costs:

  • Fuel, parking, insurance, lease payments, repairs, etc. According to CAA, the total average costs of owning and operating a car for a year are $9,500 in Canada.
  • Traffic accidents. By one estimate, car accidents are the second biggest source of costs for driving after ownership, and more than the cost of gas or parking.
  • Inefficient use of space. Surface and on-street parking reduces land available for other, more economically productive uses. The space required to park two cars at home and work is the same size as a small retail store, for something not used 95% of the time.
  • Infrastructure costs. A single structured parking spot costs about $24,000 to build, or $34,000 if it is underground. If building compact development can avoid the need for a new four-lane urban road, it can save a city about $3.3 million a kilometre. Adding a concrete sidewalk to an existing road, in contrast, costs $89 thousand a kilometre. A recent effort to calculate the full spending by all levels of government and individuals on everything required to drive in Quebec estimated the cost at $43 billion a year.
  • Time looking for parking. In New York, drivers spend on average 15 minutes looking for a spot, costing them a total of about $4.3 billion a year. This number does not capture the congestion generated by people searching, or the stress.
  • Congestion. Standing still, a car takes up about 87 times more area than a human body. At highway speeds, a car and its headway take as much space as a large home, about 300 square meters. In a major city like Toronto, drivers quickly consume all available road space and slow traffic daily, costing the city’s economy $6 billion a year.
  • Foregone trips. Congestion and scarce parking not only create costs in time, but discourage people from taking trips at all. The C.D. Howe Institute find about $1.5 to $5 billion of economic activity a year is lost in Toronto because traffic places too high a cost on participating in society. 

There are few places in the world where a pedestrian will hesitate to go outside due to foot-traffic congestion or for lack of space to park their shoes. A competitive advantage enjoyed by main streets and malls alike is that the transaction cost of travelling from one store to another is almost nothing. On the contrary, it feels good. People fly around the world to enjoy the seamless experience of walking door to door on a good shopping street.

Cities that support walking do show signs of these economic benefits. Smart Growth America finds the greater proportion of a city is walkable, the bigger the city’s overall GDP. In many cities, their downtowns take up only a fraction of total land area, yet account for over 10 or 20% of tax revenues.

If it were not for walking, highly dense, successful downtowns like New York and Hong Kong could not exist. As Daniel Graham points out, for cars, congestion effectively reduces density. Since proximity depends both on distance and how fast people can move, increasing congestion removes the benefits of packing people and jobs together — but only where driving is the only option. Luckily for New York, it takes many times more people on a sidewalk to slow each other down, and so increasing density only reduces the average distance people have to walk to get places. For the car, density slows things down, while for walking, it speeds things up.

These economic benefits help explain why anyone is willing to pay to locate in dense cities. Companies pay 90% more for office space in walkable downtowns than in car-dependent areas, and three times more for an employee in San Fransisco than Brownsville, Texas. Residents pay four times more for a home in Vancouver than Thunder Bay. According to Starrett’s “spatial impossibility theorem,” if cities weren’t somehow providing more value than this extra cost, they wouldn’t exist. Theorists have explained that value in terms of access to talent, services, ideas, and opportunities to learn skills. But as Glaeser and Gottlieb point out, the benefits should come down to one thing: “Cities are ultimately nothing more than proximity,” so the economic advantage of cities must be, at its root, “reductions in transport cost.” And nothing requires lower transport costs than a pair of sneakers.

The kinds of efficiencies that can be gained from walking need not be something enjoyed only by downtowns. To support a high proportion of trips on foot, there must be at least 35 residents and jobs per hectare, a very achievable target for the main street of a quiet suburban or rural community. And while I have focused on walking, effective transit is critical to ensuring people can enjoy a lifestyle where walking is viable for most trips.

Public health advocates should take a much stronger stance on the economic advantages of communities where walking is viable. A recent OECD report, Pedestrian Safety, Urban Space and Health, identifies healthcare savings as the only economic benefit. I omitted this topic from the costs listed above to make it clear that building walkable communities is itself foundational to economic growth, before even considering social costs.

Supporting an active lifestyle would, however, be enough reason to build complete communities. The economic burden of the health impacts of inactivity in the US alone is $24 billion a year. Reducing air pollution or lowering carbon emissions would also be enough reason to build them. Given all this evidence, the correct policy response is not to reduce the number of car-dependent urban communities, but to stop building them. This represents a much stronger stance than that taken by most public health experts.

That cars are efficient for long-distance trips, but not short-distance trips, is not a complex distinction. Yet a failure to recognize it was one of our greatest failings for the health and economic success of cities in the 20th Century. Hopefully in the 21st, we can ensure more people enjoy the convenience of being able to take a simple walk to get most of what they need.

Part II: Health community design need not just cut costs, but attract growth.

 

Photo by Tuce on Unsplash

 

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