Several recent articles present strong support for the
concepts I have been describing of using new modes of transportation to improve
efficiency, productivity and pollution. As the articles note, the situation in
the US is different from China, but that’s why my proposals are different, moving
on to the next generation of transportation technology beyond the “conventional”
high-speed trains and subways.
Improved transit speed provides access to a
greater labor pool, larger markets, and enhances competition.
The World Bank report describes why improving transportation
speed improves productivity, with impacts equal to the conventional benefits of
reduced travel time, etc. The report also describes differences between developed
and developing economies, with a focus on China’s new High-Speed Rail
installations.
The World Finance article provides a history and compares the
size of high-speed rail networks in major countries.
The NY Times article expands on the World Bank description
of specifics on the China high-speed rail impacts.
I will include sample results from each article, but they
are worth reading in their entirety.
High-Speed
Rail, Regional Economics, and Urban Development in China, Andrew Salzberg,
Richard Bullock, Ying Jin, and Wanli Fang, World Bank Office, Beijing, China
Transport Topics No.08, January 2013, 74736:
“Traditional
economic evaluations of major transport infrastructure investments focus on the
direct costs and benefits arising from travel, including user time savings,
operator cost savings, and reductions in externalities including air pollution,
noise, and accidents. There is an emerging consensus that major transport
investments may have significant impacts that are not well captured by this
type of conventional cost-benefit analysis. In China, the World Bank Transport
team has supported both econometric studies and on-the-ground surveys that
begin to identify and quantify these impacts in the context of China’s emerging
high speed rail (HSR) program. Based on this and other research, the Bank team
has begun to pilot a methodology to evaluate wider economic development
benefits for several HSR projects, and has found them to be significant - of
the same order as, but additional to the direct transport benefits that are
traditionally measured. Crucially, these benefits of larger and better
connected markets accrue to businesses and individuals even when they
themselves do not travel. This paper highlights this research and methodology
and the policy implications related to maximizing these benefits in practice.
”All else being equal, a new business located within daily
reach of such hubs will be more accessible to a larger pool of labor and other
businesses, raising productivity. [UK Department for Transport (2006).
Transport, Wider Economic Benefits, and Impacts on GDP.] This link is an
important element of what are broadly referred to as agglomeration economies,
the benefits that accrue to firms and individuals from the clustering of
economic activity.
– This is significant support for my proposals, both for
transportation and for the Sustainable Communities that will grow with them.
“The concept and measurement of economic mass is relatively
straightforward; where research has progressed in recent years has been in
identifying the relationship between the economic mass of a region and its
overall level of productivity. This link is based on four propositions:
a) economic mass rises with transport improvements;
b) the average output of employees, and hence their
wages, varies directly with economic mass, even after controlling for other
variables;
c) there are positive externalities from transport
improvements which increase output for some firms independently of their use of
the transport network; and
d)
this increase in output is not included in the
standard evaluation of transport projects.
“A major UK study that attempted to quantify this
relationship estimated that, other things being equal, a doubling of economic mass would
give rise to an increase in per worker productivity of 3.5% [ Rice,
P.G., A.J. Venables and E Patacchini (2006). Spatial determinants of
productivity: Analysis for the regions of Great Britain. Regional Science and Urban Economics, Vol 36,
pp727-752.]. Crucially, these productivity benefits accrue to businesses and
individuals even where they do not themselves travel.
– These results are for developed economies, so this study
examined the results for China, a developing economy.
“Overall, the best
estimates of the elasticity of productivity with respect to economic mass are
over double the economy-wide results obtained in comparable studies in
developed countries. The best models in our estimation so far imply that
doubling economic mass would give rise to an increase of per worker productivity
of 9-15%. This is higher than the consensus view from a comprehensive review of
such evidence in the developed economies that such a doubling would increase
productivity by an amount that ranges from 5-8% [Rosenthal, S and WC Strange
(2004). Evidence on the nature and
sources of agglomeration. Review of
Economics and Statistics, Vol 85, pp377-393.].
“Benefits were calculated for the 30-year period following
project completion. Direct benefits including time savings for passengers and
freight, reductions in operator cost, and generated traffic, yielded net
present benefits of approximately 50 billion RMB in 2009 RMB. Using the
elasticity of productivity with respect to economic mass adopted above, the
agglomeration benefits were estimated at 49 billion RMB (both weighed against
the 2009 present value of project costs of 47.9 billion RMB, all discounted at
12%). In our analysis, then, agglomeration
benefits were found on the order of (and in this case only slightly lower than)
traditional project benefits."
A World Finance article The
Need for high-speed rail, July 3, 2013 gives a wider, and historical context.
“Just five years after China’s high-speed rail system
opened, it is carrying nearly twice as many passengers each month as the
country’s domestic airline industry. With traffic growing 28 percent a year for
the last several years, China’s high-speed rail network will handle more
passengers by early next year than the 54 million people a month who board
domestic flights in the United States.
“China’s high-speed rail system has emerged as an unexpected
success story. Economists and transportation experts cite it as one reason for
China’s continued economic growth when other emerging economies are faltering.
“For example, Chinese workers are now more productive.
Chinese cities connected to the high-speed rail network, as more than 100 are
already, are likely to experience broad growth in worker productivity. The
productivity gains occur when companies find themselves within a couple of
hours’ train ride of tens of millions of potential customers, employees and
rivals.
“Productivity gains to the economy appear to be of the same
order as the combined economic gains from the usual arguments given for
high-speed trains, including time savings for travelers, reduced noise, less
air pollution and fuel savings, the World Bank consultants calculated.
“Companies are opening research and development centers in
more glamorous cities like Beijing and Shenzhen with abundant supplies of
young, highly educated workers, and having them take frequent day trips to
factories in cities with lower wages and land costs, like Tianjin and Changsha.
Businesses are also customizing their products more through frequent meetings
with clients in other cities, part of a broader move up the ladder toward
higher value-added products.
“'More frequent access to my client base has allowed me to
more quickly pick up on fashion changes in color and style. My orders have
increased by 50 percent,...'”
“Statistics suggest that China's high-speed trains have
actually proved to be one of the world's safest transportation systems so far.
“Nearly every train from Changsha station, leaving minutes
apart for cities across China, is sold out, and a big expansion is already
planned.
“China relocated large numbers of
families whose homes lay in the path of the tracks and quickly built new
residential and commercial districts around high-speed train stations.
“The new districts, typically located
in inner suburbs, not downtown areas, have rapidly attracted large numbers of
residents, partly because of China’s rapid urbanization. Enough farm families
become city dwellers each year to fill New York City.
“China’s success may not be
easily reproduced in the West, and not just because few places can match
China’s pace of urbanization. China has four times the population of the United
States, and the great bulk of its people live in the eastern third of the
country, an area similar in size to the United States east of the Mississippi.
“'Except for Boston to Washington, D.C., we don’t have the corridors of high population density that China has,'" said C. William Ibbs, a professor of
civil engineering at the University of California, Berkeley.
“China’s high-speed rail program has been married to the world’s most
ambitious subway construction program, as more than half the world’s large
tunneling machines chisel away underneath big Chinese cities. That has meant
easy access to high-speed rail stations for huge numbers of people.
