Transportation

Driving in Decline but Transport Policy Still Assumes Endless Growth

By Ryan McGreal
Published June 15, 2012

We've been hearing more and more of late about how the North American love affair with the automobile seems to be winding down. A recent op-ed in the Guardian notes that the same phenomenon is happening in the UK and the rest of Europe.

First, the breakdown between growth in Vehicle Miles Travelled (VMT) and Gross Domestic Product (GDP):

Individual vehicle travel in America lost its glamour - and its connection to economic growth. In 2003 when VMT was 2.9 trillion miles, US gross domestic product was just under $11 trillion. In 2011 GDP passed $15 trillion while total vehicle travel was still about 2.9 trillion miles. In 2011 alone, GDP went up 1.5 percent while VMT went down 1.5 percent. VMT per capita is receding as well, with each American now traveling less than 9,500 miles annually.

The same thing is happening in Europe:

The UK has experienced similar trends, with a 13 percent drop in annual trips by cars and vans since 1996, and a 4 percent reduction in annual distance traveled over the same time period. The ratio of vehicle miles traveled to GDP in the core EU 15 states has dropped by more than 10 percent since 2000.

The author notes the usual suspects: online shopping is displacing trips to the mall, mobile social media are incompatible with driving, and the rising cost of automobile ownership for young drivers.

The problem is that policy makers have not yet cottoned onto the fact that their projections of continued growth in driving no longer match the reality we observe:

Transportation policy has been slow to respond to this change in the way we prefer to travel and, at times, actively resists the shift in customer demand for cheaper, cleaner, on-demand travel choices. Forecasters continue to predict 1.6 percent annual increases in vehicular travel demand as far as the eye can see - and are designing road and highway expansions to match.

So the aggregate movement away from endless growth in driving is happening despite the prevailing pattern of public policy incentives to invest in easy motoring. The opportunity costs of a backwards-looking transport policy are deeply troubling: on a vast scale, we're mis-allocating scarce resources into infrastructure that will not meet our changing transportation and land use needs.

See also:

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website and has been known to post passing thoughts on Twitter @RyanMcGreal. Recently, he took the plunge and finally joined Facebook.

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By SpaceMonkey (registered) | Posted June 15, 2012 at 09:43:26

Any reason to think the trend might turn around (aggressively) if/when the economy starts to pick up again?

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By Ryan (registered) - website | Posted June 15, 2012 at 10:13:00 in reply to Comment 78540

The trend precedes the recession by about a decade.

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By SpaceMonkey (registered) | Posted June 18, 2012 at 15:45:43 in reply to Comment 78543

Hey Ryan,

Can you please post the data and/or source of the info that led you to that conclusion?

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By Data (anonymous) | Posted June 16, 2012 at 19:50:25 in reply to Comment 78543

I'd like to see the data you're using to come up with that statement. Source please?

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By A Smith (anonymous) | Posted June 15, 2012 at 15:50:23 in reply to Comment 78543

>> we're mis-allocating scarce resources into infrastructure that will not meet our changing transportation and land use needs.

Worse than that, we're allowing hundreds of thousands of people to sit idle and unemployed. Unemployment in Ontario is currently 7.8%, which works out to 571k people who can't find work.

Even if we assume that these people aren't very productive at building infrastructure, we would still be better off paying them to build it, rather than sitting at home.

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By DowntownInHamilton (registered) | Posted June 15, 2012 at 20:43:52 in reply to Comment 78551

My dad's currently unemployed. He's an accountant by trade and has a walking impairment. Is he a good fit for manual labour?

Seriously, stick to espousing how all our ails can be fixed by printing more money.

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By A Smith (anonymous) | Posted June 16, 2012 at 01:35:43 in reply to Comment 78558

>> Is he a good fit for manual labour?

Would his walking impairment stop him from doing this?...

http://en.wikipedia.org/wiki/Construction_accounting

>> stick to espousing how all our ails can be fixed by printing more money.

So, you're against giving people jobs. You'd rather they sleep in their cars. Nice attitude princess.

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By DowntownInHamilton (registered) | Posted June 16, 2012 at 15:01:45 in reply to Comment 78569

Would his walking impairment stop him from doing this?... http://en.wikipedia.org/wiki/Constructio...

No, it wouldn't. But, since he's having trouble finding any line of work right now, that's not helping your point since you said it would be better to have people doing construction rather than on EI looking for jobs in their field.

So, you're against giving people jobs. You'd rather they sleep in their cars. Nice attitude princess.

Not at all. I'm just talking about your rambling posts from a while ago where you said that by printing more money, we'd be out of the recession we're in. Inflation aside, that just doesn't solve the problem. Nice attitude, troll.

Comment edited by DowntownInHamilton on 2012-06-16 15:03:19

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By A Smith (anonymous) | Posted June 17, 2012 at 13:36:48 in reply to Comment 78576

>> you said it would be better to have people doing construction rather than on EI looking for jobs in their field.

No, I didn't. In fact, I never mentioned EI at all. But feel free to show me the quote.

What I did say, was that society would be better off paying idle workers to build infrastructure rather than sitting at home.

Here is a list of some of the infrastructure projects we could create...

http://en.wikipedia.org/wiki/Infrastructure

Are you suggesting that none of these projects would provide an opportunity, for people like your dad, to create value for society?

>> where you said that by printing more money, we'd be out of the recession...Inflation aside, that just doesn't solve the problem.

What I have been saying, is that recessions occur when people spend less and save more. Recessions occurred in 1973-75, 1980, 1981-82, 1990-91, 2001 and 2007-09.

If you compare those years with this chart( tinyurl.com/7hgyz3g), you will see that those recession years are correlated with an increase in private savings.

As for your concern about inflation, could you please explain why long term interest rates are at historic lows?

Canada 10 year bond: 1.74%
U.S. 10 year bond: 1.59%
UK 10 year Bond: 1.67%

Seriously DUDE, do you have any clue what you're talking about?

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By DowntownInHamilton (registered) | Posted June 17, 2012 at 22:35:00 in reply to Comment 78596

No, I didn't. In fact, I never mentioned EI at all. But feel free to show me the quote.

What I did say, was that society would be better off paying idle workers to build infrastructure rather than sitting at home. Here is a list of some of the infrastructure projects we could create... http://en.wikipedia.org/wiki/Infrastruct... Are you suggesting that none of these projects would provide an opportunity, for people like your dad, to create value for society?

You didn't say it, you implied it by saying previously, that (incorrectly) I'd like to see people sleeping in cars. Simply creating and investing in make-work projects will not get us out of the recession (did it work during the Great Depression? No, a world war did).

What I have been saying, is that recessions occur when people spend less and save more. Recessions occurred in 1973-75, 1980, 1981-82, 1990-91, 2001 and 2007-09. If you compare those years with this chart( tinyurl.com/7hgyz3g), you will see that those recession years are correlated with an increase in private savings. As for your concern about inflation, could you please explain why long term interest rates are at historic lows? Canada 10 year bond: 1.74% U.S. 10 year bond: 1.59% UK 10 year Bond: 1.67% Seriously DUDE, do you have any clue what you're talking about?

I'd like to think I know a thing or 2 about economics. I disagree completely with your opinions.Are people saving more? Is that why household debt is at record highs? Naturally, when jobs disappear and people are worried about the future, they tend to save more (but not in long-term investments as you suggest). I'd posit that your long-term investments are at historic lows because people can't afford to invest in things that don't have a quick payout.

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By A Smith (anonymous) | Posted June 18, 2012 at 15:38:36 in reply to Comment 78607

>> creating and investing in make-work projects will not get us out of the recession...a world war did

Right, but why did WWII create millions of jobs? Because the government bought lots of stuff, which forced businesses to hire workers.

Our federal government is laying off federal employees, cutting back on military purchases, which is the opposite of what they did during WWII.

>> Are people saving more? Is that why household debt is at record highs?

In 2006-07, Canadian corporations saved $42-43B each year. In the last two years, they have increased their savings to $62-63B. If you assume that a job pays $35k, that works out to 571k jobs that were not created because corporations saved rather than hired.

Canada's workforce is approximately 18M, which means those 571k jobs would translate into a decrease of 3.17% on our current 7.3% unemployment rate.

In 2006-07, households went into debt by an average of $47B/year. In the past two years, they have gone into debt only $33.7B. That's $14B in higher savings/less debt than in 2006-07.

If the feds wanted to counteract this higher level of private savings (approx $34B) they could do this quite easily. Just stop collecting the GST. That would put an additional $28B in the pockets of the private sector.

Don't you think an extra $28B in consumers pockets would help drive sales and jobs?

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By Undustrial (registered) - website | Posted June 19, 2012 at 13:21:33 in reply to Comment 78638

Works on paper...but such plans only work in the real world when such spending is needed. We could hire a lot of people right now to build roads to nowhere and bomb random waves in the Pacific Ocean with F-35s. Jobs would be created, but only as long as we're building these pointless boondoggles. Were we to stop, the costs of upkeep or retirement would be with us for years.

This is the situation we're starting to run into with automobile infrastructure.

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By A Smith (anonymous) | Posted June 20, 2012 at 13:13:45 in reply to Comment 78677

Take a look at this chart...

http://www.tradingeconomics.com/canada/government-bond-yield

The interest rate that the feds have to pay on their debt is at historic lows.

This next chart is the US 3 month bill...

tinyurl.com/c3pj25c

You will notice that current rates are as low as they were during the Great depression.

So, if people are calling this a depression and bond investors are calling this a depression (through their actions), why are fighting the last war, which was on inflation and too much government spending.

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By A Smith (anonymous) | Posted June 20, 2012 at 11:47:06 in reply to Comment 78677

>> We could hire a lot of people right now to build roads to nowhere and...F-35s

I guarantee you could give me 5 projects that Hamilton should be working on right now, but for a lack of funding (printed money). Why not work on those?

Once private spending picked up (due to the higher incomes of the previously unemployed, now working for the government), these programs could be scaled back.

Hamilton's unemployment rate is currently around 6%. That works out to 16,224 people (18.5M workers/34.8M) without a job.

Even if you assume that these workers all made minimum wage ($20K/year), that works out to an additional $320M to be spent at local businesses.

According to this document (tinyurl.com/7d89voz) Hamilton's tourism sector only generates $132 million.

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By StephenBarath (registered) | Posted June 15, 2012 at 09:46:26 in reply to Comment 78540

Strong auto sales so far in 2012 could suggest that.

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By Robert D (anonymous) | Posted June 15, 2012 at 15:08:41 in reply to Comment 78542

Strong auto sales simply mean people are finally trading in their old clunkers (auto sales were down in the past few years - probably people just hanging onto their existing vehicles for a few more years).

It doesn't necessarily mean people are driving more, simply that they're replacing vehicles.

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By StephenBarath (registered) | Posted June 15, 2012 at 09:44:37

Great link. Very interesting how individuals show signs of moving away from personal vehicles.

There is evidence to suggest Canada is behind this trend: in Canada between 2000 and 2007 (in other words, until the recession hit), kilometres travelled increased by around 1% each year. I don't know what has happened in that specific metric in the last four years since then, but the automobile generally did not fare well in 2008.

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By Borrelli (registered) | Posted June 15, 2012 at 13:03:38

It's a watershed moment, perhaps, to finally get drivers to pay their way. Many economists think now is the time for governments to inject cash into faltering economies through infrastructure renewal and expansion, and the default investment should be in mass/public transit, not more roads for private cars.

But will the non-driving voting public get their act together and insist on directing funds to this type of infrastructure development? I was pleased to hear Hazel McCallion's recent call for more taxes to ease gridlock, but in response to her comments, "Income tax, sales tax, (vehicle) registration tax . . . I have no preference", I think that fairness dictates that it should be vehicle registration taxes that are increased, not income or sales taxes.

Hell, all new roads and highways in Ontario should be tolled, too.

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By Stockholm Syndrome (anonymous) | Posted June 16, 2012 at 08:23:29

"She Said Kiss Me Somewhere Dirty So We Took One Of Many Convenient Public Transit Options To Hamilton"

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By Undustrial (registered) - website | Posted June 16, 2012 at 10:57:45

There is no natural law that states the 21st century must continue with the social norms of the 20th. Television viewership (once a month or more) dropped off by about 12% last year. A decade ago, suggesting something like this would have had you laughed off the stage. Things change. Things that don't change with them get left behind.

A huge segment of the population is starting to retire, meaning an enormous shift back into cities. Their children (my generation) tend to regard suburbia very differently than their parents - with all the cultural vibrancy of Soviet-style block apartments. Due to both factors, this trend is only going to accelerate.

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By ScreamingViking (registered) | Posted June 16, 2012 at 21:59:34 in reply to Comment 78572

Quite right.

There may be a demographic influence at work here - a change in the activity patterns of the boomers would easily affect indicators of a population's driving behaviour, just as their actions have influenced so many other things in society.

I'm not pro-transit or pro-automobile, but people do need to realize that just because something was does not mean it will be, or that it will be exactly as before

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By Weyland (anonymous) | Posted June 16, 2012 at 13:28:47

Suburbia is changing as well, though. It's not just new urbanists who have access to theory. (And "cities", in that analogy, is not strictly synonymous with "downtown," I don't think. Moreover, cities are more attuned to the energy of the young, and if you consider what was actually on offer in our parents' day, the choice may have been half-made for them.) Though I agree with you in large part, there are always variables. We once watched TV in real time and have access to discussed it in person. Now we stream TV shows on our computers or glut on DVD box sets and talk about them through social media. We once gathered around huge vacuum-tube filled radios; now we have satellite and interet feeds to any device able to pluck a signal from the air. Cars have not evolved, but that's not to say they won't. If nobody comes up with a cheaper, cleaner version of petrochem-fuelled internal combustion engines, or a hydrogen fuel cell...

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By ScreamingViking (registered) | Posted June 16, 2012 at 21:53:32

Not that I'm disagreeing with the overall trends, but has anyone looked at how types of trips have been changing? An overall drop in automobile VMT could mean several things - e.g., a reduction in total trips, a reduction in the number of short distance trips, a reduction in longer-distance trips, a reduction in trip lengths of all types, a reduction in trip length for longer trips, etc... It could also mean people have become better at how their trips are chained, so that their trips begin at home but cycle through several destinations without returning home as many times in between as before. And it could represent mode shifts to transit for certain types of trips.

This is all relevant to designing, as the last line of the article says, "transportation policies that suit our needs in the 21st century."

Comment edited by ScreamingViking on 2012-06-16 22:02:16

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