The most important graph in British economics

Birmingham: somehow less than the sum of its parts. Image: Getty.

“Is there a relationship between city size and productivity?” the Centre for Cities asked in February 2015. The blog takes two reports and hundreds of pages from the OECD and distils it down to the biggest topic in city economics today – does being bigger make you richer?

It’s a question that I’ve been asking myself since I was 19, when I moved to London and Paris to study. I’ve been asking myself the same questions consciously since I was 25, and I couldn’t find a job in science after finishing a PhD in Leeds.

And now, thanks to some more great work by Centre for Cities, I can get a lot closer to answering the question than the OECD did.

I think that these questions are going to matter even more in the coming years because, for a number of reasons.

  • Manchester and Birmingham, the UK’s two biggest underperformers, have since elected their own mayors. Both cities are determined to make up the 30 per cent gap between them and comparable cities in the EU.
  • Richard Florida’s recent book, The New Urban Crisis, has started informing debates in the UK in the same way that Edwards Glaeser’s Triump of the City did five years ago.
  • Theresa May’s government has said it is determined to “build a country that works for everyone”. It will try to expand the UK’s successful industrial strategy beyond South-East England to more of the country. The loudest voices in opposition to this will claim that focusing on London will always deliver greater returns due to its size.

So what does the data say? Do agglomeration benefits exist? Are bigger cities richer?

French and German cities show agglomeration benefits

In France and Germany there’s a pretty clear answer: yes. The line of best fit slopes up with size. It is statistically significant. It’s the same in the USA. (GVA is a measure of how much economic value is created in a place.)

Click to expand.

Cities in Scandinavia and the Low Countries show large agglomeration benefits

There aren’t enough cities in Sweden, Denmark, Belgium, and The Netherlands to do a proper regression. But their economies are similar enough, so I just lump their cities together.

And there’s a very strong agglomeration benefit.

Click to expand.

Spanish and British cities show no agglomeration benefits at all

Spain and the UK are different. Size doesn’t matter. In fact in the UK the best fit line slopes down a bit, but not significantly so.

Click to expand.

The most important graph in British economics

And now the most important graph. The one’s that’s frustrated me all my life. The one that I don’t accept that the UK has ever tried to fix. And the one that makes taking lessons from books written in America and applying them to UK cities risky.

Remove London from the graph of UK cities, and the larger a city gets, the poorer it is. This doesn’t happen in France or even in Spain.

Click to expand.

I think that we can fix this. The Northern Powerhouse is the right strategy; metro mayors will help, moving things the way that we moved 10 per cent of the BBC to Manchester will help; and investing in transport and science in big cities where businesses want to grow will help.

But my faith in all those things is based on a belief that we can make our country more German, French, American, and Dutch in terms of agglomeration benefits. I hope that I’m right.


Want the data and graphs? They're here in Excel. Ecept France which broke.

Tom Forth is an associate at ODILeeds. This article first appeared on his blog.

 
 
 
 

What can other cities learn about water shortages from Cape Town’s narrow escape from ‘Day Zero’?

Cape town. Image: Pixabay/creative commons.

Cape Town was set to run dry on 12 April, leaving its 3.7m residents without tap water.

“Day Zero” was narrowly averted through drastic cuts in municipal water consumption and last-minute transfers from the agricultural sector. But the process was painful and inequitable, spurring much controversy.

The city managed to stave off “Day Zero,” but does that mean Cape Town’s water system is resilient?

We think not.

This may well foreshadow trouble beyond Cape Town. Cities across the Northern Hemisphere, including in Canada, are well into another summer season that has already brought record-setting heat, drought and flooding from increased run-off.

Water crises are not just about scarcity

Water scarcity crises are most often a result of mismanagement rather than of absolute declines in physical water supplies.

In Cape Town, lower than average rainfall tipped the scales towards a “crisis,” but the situation was worsened by slow and inadequate governance responses. Setting aside debates around whose responsibility it was to act and when, the bigger issue, in our view, was the persistence of outdated ways of thinking about “uncertainty” in the water system.

As the drought worsened in 2016, the City of Cape Town’s water managers remained confident in the system’s ability to withstand the drought. High-level engineers and managers viewed Cape Town’s water system as uniquely positioned to handle severe drought in part because of the vaunted success of their ongoing Water Demand Management strategies.

They weren’t entirely mistaken — demand management has cut overall daily consumption by 50 per cent since 2016. So what went wrong?


Limits to demand management

First, Cape Town’s approach to water management was not well-equipped to deal with growing uncertainty in rainfall patterns — a key challenge facing cities worldwide. Researchers at the University of Cape Town argued recently that the conventional models long used to forecast supply and demand underestimated the probability of failure in the water system.

Second, Cape Town’s water system neared disaster in part because demand management seemed to have reached its limits. Starting late last year, the city imposed a limit on water consumption of 87 litres per person per day. That ceiling thereafter shrunk to 50 litres per person per day.

Despite these efforts, Cape Town consistently failed to cut demand below the 500m-litre-per-day citywide target needed to ensure that the system would function into the next rainy season.

The mayor accused the city’s residents of wasting water, but her reprimanding rhetoric should not be seen as a sign that the citizens were non-compliant. The continuously shrinking water targets were an untenable long-term management strategy.

Buffers are key to water resilience

In the end, “Day Zero” was avoided primarily by relying on unexpected buffers, including temporary agricultural transfers and the private installation of small-scale, residential grey-water systems and boreholes in the city’s wealthier neighbourhoods. The former increased water supply and the latter lowered demand from the municipal system. These buffers are unlikely to be available next year, however, as the water allocations for the agricultural sector will not be renewed and there is uncertainty in the long-term sustainability of groundwater withdrawals.

For more than a decade, Cape Town has levelled demand, reduced leaks and implemented pressure management and water restrictions. This made Cape Town’s water system highly efficient and therefore less resilient because there were fewer reserves to draw from in times of unusual scarcity.

The UN Water 2015 report found that most cities are not very resilient to water risks. As water managers continue to wait for climate change models to become more certain or more specific, they defer action, paralysing decision-makers.

If we really want our cities to be water-resilient, we must collectively change long-held ideas about water supply and demand. This will require technological and institutional innovation, as well as behavioural change, to create new and more flexible buffers — for example, through water recycling, green infrastructure and other novel measures.

Although Cape Town avoided disaster this year, that does not make it water-resilient. Despite the arrival of the rainy season, Cape Town is still likely to face Day Zero at some point in the future.

The ConversationThere’s a good chance that the city is not alone.

Lucy Rodina, PhD Candidate, University of British Columbia and Kieran M. FindlaterUniversity of British Columbia.

This article was originally published on The Conversation. Read the original article.