Assessing the Employment Agglomeration and Social Accessibility Impacts of High Speed Rail in Eastern Australia: Sydney-Canberra-Melbourne Corridor Professor David A. Hensher FASSA Founding Director Institute of Transport and Logistics Studies The University of Sydney Business School The University of Sydney NSW 2006 Australia David.Hensher@sydney.edu.au http://sydney.edu.au/business/itls/ HSR Forum 22 May 2013
The particular focus is on: Focus To provide advice on the potential economic and social benefits of a high speed rail (HSR) service between Sydney and Melbourne (via Canberra). The identification of employment agglomeration impacts (EAI) of HSR for regional centres in NSW and Victoria, - who might benefit in terms of improved access to jobs (including improved access to particular locations for work-related activities), and The identification of social accessibility impacts (SAI) - the reduction in social exclusion consequent - on increased potential accessibility to activities (additional to jobs), and - on greater connectivity offered by HSR associated with increasing nearness of potential opportunities. 2
Of particular interest The extent to which HSR, when added to the existing modal mix of available services to and from each Local Government Area (LGA) in NSW and Victoria, will deliver additional economic and social benefits, - the former expressed as a proportion of real gross domestic product (GDP) and the latter as a proportion of total household income (THI). To be able to obtain a forecast of EAIs and SAIs and link them to GDP and THI, we need to build a model system that can reveal the potential economic and social impacts of new transport infrastructure. 3
The first input includes Critical inputs into the model - a regional origin-destination (OD) matrix of trips and trip characteristics (travel times, travel costs and trip distances) for all existing modes (car, air, train, bus) before and after introduction of HSR. The OD matrix is defined spatially at the LGA level - HSR market shares, and - HSR trip characteristics. The second input is two indices, respectively measuring - effective economic (employment) density (EED) to provide evidence of the potential gains in work-related output (often referred to as productivity gains) and - effective social density (ESD) to provide evidence of the potential gains in nonwork-related outputs. These in turn are associated with gains in individual (worker) and household benefit attributable to improved accessibility to services linked with populations and particular locations. 4
Route and station locations of proposed HSR 5
Agglomeration Agglomeration economies occur when agents benefit from being near to other agents The key question: Does high-speed rail investment give rise to agglomeration (economic and social) benefits, and if so, how substantial might these benefits be? Levinson suggests that, [t]he magnitude of agglomeration economies is uncertain (and certainly location-specific), but I think presents the best case that can be made in favor of HSR in the US. (Levinson 2012, p.4). 6
What is and What is not Included The empirical work undertaken gives general orders of magnitude of agglomeration benefits that may arise from improvements in long-distance connectivity. We do not make any statements about the impact on land values or relocation of firms and hence jobs. These impacts would be additional to the impacts identified in this study. A review of land use impacts is provided in a separate report: Hensher, D.A., Li, Z., and Mulley C. (2012) Impact of HSR on land values a review of the evidence, Roads and Transport Research, 21 (4), December. 7
Agglomeration benefits (AB) of HSR For Employment agglomeration Impact (EAI), AB is a function of - Effective economic density (EED) - AB represents how output changes when effective economic density changes (i.e., the output (production) elasticity with respect to effective economic density) - And is expressed as a proportion of Gross Domestic Product (GDP) For Social accessibility impact (SAI), AB is a function of - Effective social density (ESD) - AB represents how non-work travel behaviour changes when effective social density changes (measured by the generalised cost (or accessibility) elasticity with respect to effective social density for non-work related travel) - And Total Household Income (THI) 8
EAI and SAI EAI HSR EED =. EED y ε EED.GDP SAI HSR ESD =. ESD y ε ESD.THI EwD (defining w=e=economic or w=s=social) is a measure of effective density, defined below; y ε EED is the output (production) elasticity with respect to effective economic density (Graham et al., 2009) for work-related travel, and The effective density (EzD) is defined as y ε ESD is the generalised cost (or accessibility) elasticity with respect to effective social density for non-work related travel; GDP is the Gross Domestic Product (either for the study area or Australia as a whole), and THI is total household income (either for the study area or Australia as a whole). N j EwD =,i j i= 1 z αd exp( ) ij ; i=1,,n locations z j is the measure of the level of opportunities at destination zone j. as measured by population for non-work related flows, and employment for work-related flows. 9
Main Analytical Elements: The Measurement of Effective Employment and Social Density as Measures of Economic and Social Impact Gravity Models for All Trips to obtain α expression (Data based on 2006 Census), t-value in brackets Dependent variable: Natural log of Trips (in 000s) Explanatory Variable Work-related trips Non-work related trips Constant 1.8717 (183.2) 4.2803 (180.1) Natural log of population in origin 0.0775 (169.3) 0.17052 (225.2) Natural log of population in destination - 0.15837 (212.4) Natural log of employment in destination 0.05576 (88.7) - Distance (km) 0.00019 (56.7) 0.00079 (117.3) Natural log of Quadratic of distance (km 2 ) -0.13675 (-127.1) -0.50106 (-249.1) Observations 39,204 OD pairs Goodness-of-fit (adjusted R 2 ) 0.914 0.970 Controls: Capital city origin 0.02786 (23.3) 0.08672 (38.2) Capital city destination 0.10283 (95.9) 0.07345 (32.6) We expect work related travel to be connected with labour market pooling externalities (reflecting a more productive matching between job and worker skills), while non-work movements are expected to be related to population linkages (ease of access to other people, including friends and relatives and specialised professional services). 10
Distance Decay (alpha) work: α =0.00019-0.13675/distance squared nonwork: α = 0.00079-0.50106/distance squared There will be a different α for each LGA-pair for each trip purpose in the full calculation of EAIs and SAIs. The average distance between LGAs, across all LGA pairs is 662km. Evaluating the formulae above at this average gives α (work) as -0.000189, and α (non-work) as -0.00079. This suggests a reduction in trip flows, varying between 0.019 to 0.079% over the average distance range for one additional kilometre. Thus, for every additional 100 kms, a reduction in average trip flows, varying between 1.9% and 7.9% is implied. 11
EA and SA Impacts from Improvements in Travel Times $2006: Summary GDP and THI values used are for NSW plus Victoria, whereas the evidence based on GDP and THI for Australia as a whole is denoted with a * Data Item Work related travel Non-work related travel Scenario A: HSR average speed (kph) 150 Mean distance decay (α) after HSR introduced -0.000183-0.000762 Change in effective density (ΔED/ED beforehsr ) 0.0043 0.0142 Employment agglomeration impact (EAI) from HSR (AUD$million) 5.80 (10.24*) EAI from HSR (% of GDP) 0.0011 Social accessibility impact (SAI) from HSR (AUD$million) 2,131.6 (3,620.5*) (SAI) from HSR (% of THI) 0.67 Scenario B: HSR average speed (kph) 200 Mean distance decay (α) after HSR introduced -0.000180-0.000752 Change in effective density (ΔED/ED beforehsr ) 0.0067 0.0227 Employment agglomeration impact (EAI) from HSR (AUD$million) 9.03 (15.96*) EAI from HSR (% of GDP) 0.0017 Social accessibility impact (SAI) from HSR (AUD$million) 3,407.6 (5,787.7*) (SAI) from HSR (% of THI) 1.08 Scenario C: HSR average speed (kph) 250 Mean distance decay (α) after HSR introduced -0.000179-0.000745 Change in effective density (ΔED/ED beforehsr ) 0.0082 0.0275 Employment agglomeration impact (EAI) from HSR 11.06 (19.53*) (AUD$million) EAI from HSR (% of GDP) 0.0021 Social accessibility impact (SAI) from HSR (AUD$million) 4,128.2 (7,011.5*) (SAI) from HSR (% of THI) 1.30 12
Spatial Impact of HSR: Percent changes in Travel Time, HSR = 250kph 13
Spatial Impact of HSR: Percent changes in Effective Employment Density HSR = 250kph 14
Spatial Impact of HSR: Percent changes in Effective Social Density HSR= 250kph 15
NSW LGA Travel Time Changes inter LGA NSW, Vic, ACT 16
Victoria LGA Travel Time Changes inter LGA NSW, Vic, ACT 17
ACT LGA Travel Time Changes inter LGA NSW, Vic, ACT 18
Thank You