Category: Local Government

Categories
development Economics Infrastructure Local Government Transport

Boston Infrastructure

When Lytton Advisory was in the US last month we visited Boston. Moving around the old parts of the city, a number of infrastructure challenges were evident.

Boston’s infrastructure is aging, with many of its roads, bridges, and transit systems in need of repairs and upgrades. This can lead to increased maintenance costs and disruptions to transportation and other services, which can impact the city’s economic competitiveness.

A significant part of the old city is on reclaimed land. The city is practically the Venice of the US. It is vulnerable to the impacts of climate change, including sea level rise, which could have significant impacts on the city’s infrastructure. This can lead to flooding and damage to critical infrastructure, such as roads, bridges, and buildings, which could be costly to repair and disrupt economic activity.

Like many other cities, Boston is facing a housing affordability crisis, with high housing costs and a limited supply of affordable housing options. The city has some of the highest rents in the nation. This can make it difficult for low- and middle-income families to find suitable housing, which can limit economic opportunities for those who cannot afford to live in the city.

Boston also experiences significant traffic congestion, which can impact the city’s economic competitiveness by increasing commuting times and reducing productivity. According to the Global Traffic Scorecard, Boston drivers lost about 134 hours of their lives sitting in traffic in 2022. That’s a jump up of 56 hours from 2021 as more workers head back to the office, though still 10% less than pre-pandemic levels. This can also have negative environmental impacts, such as increased air pollution.

Finally, some locals mentioned to me that Boston is also facing challenges related to digital infrastructure, such as access to high-speed internet and other digital technologies. This can impact economic growth and innovation, as well as limit access to important services and resources for residents. Nearly 15% of households in Boston do not have a subscription to Internet service at home, and more than 32,000 households have no Internet access at all. However, I am not as sure how significant the digital divide is in Boston.

These challenges are all known and potentially solvable. Focus and resources are needed to resolve them. The city has huge potential to address these issues given its role in Massachusetts and the nation’s life, as well as its long history of development and adaptation.

Categories
Economics Infrastructure Local Government

New York City Infrastructure

In February Lytton Advisory spent a week in New York City, mainly in Manhattan. It is hard to comprehend the scale and scope of this metropolis and the infrastructure challenges that the City and its residents face. We believe there are three key infrastructure challenges that NYC faces:

  1. Aging Infrastructure: New York City’s infrastructure is aging, with many of its bridges, tunnels, and other transportation facilities built over 50 years ago. This has led to increased maintenance costs and disruptions to transportation and other services, which can impact the city’s economic competitiveness.
  2. Affordable Housing: New York City has one of the highest housing costs in the country, which is a major challenge for many of its residents. The lack of affordable housing options can make it difficult for low- and middle-income families to find suitable housing, which can limit economic opportunities for those who cannot afford to live in the city.
  3. Economic Inequality: Despite being a global economic hub, New York City has one of the highest levels of income inequality in the country. This can create a variety of economic challenges, including limiting access to quality education, healthcare, and other services, as well as limiting economic mobility for those at the lower end of the income spectrum.

In a heavily built urban form solutions are never easy, but there are some possible answers:

  1. Aging Infrastructure: To address the aging infrastructure in New York City, the city could invest in a comprehensive infrastructure renewal plan, which would prioritize repairs and upgrades to critical transportation, water, and energy systems. The plan could also include public-private partnerships to help fund infrastructure improvements and ensure they are completed in a timely and efficient manner.
  2. Affordable Housing: To address the lack of affordable housing options in New York City, the city could invest in new housing construction and rehabilitation of existing properties. The city could also create incentives for developers to build affordable housing units, such as tax breaks or streamlined permitting processes. Additionally, the city could explore policies like inclusionary zoning, which requires a certain percentage of new developments to be affordable for low- and middle-income residents.
  3. Economic Inequality: To address economic inequality, the city could invest in education and workforce development programs that provide training and support to residents from disadvantaged backgrounds. The city could also work to promote small business development and entrepreneurship, which can help create jobs and economic opportunities in underserved communities. Finally, the city could implement policies like minimum wage increases, paid sick leave, and other labor protections that help ensure workers are able to earn a livable wage and have access to essential benefits.

All of these require money and a critical challenge is how NYC could fund the investments needed to address its economic infrastructure needs:

  1. Government Funding: One possible funding source is government funding, such as federal or state grants, which could be used to support infrastructure improvements or affordable housing projects. The city could also allocate funds from its own budget to support these initiatives.
  2. Public-Private Partnerships: Another potential funding source is public-private partnerships, which could help finance infrastructure projects and affordable housing developments. Under this model, private investors or companies would provide financing in exchange for a return on their investment.
  3. Tax Credits: The city could also offer tax credits to incentivize private investment in infrastructure and affordable housing projects. These tax credits could be structured in a way that encourages long-term investment and helps ensure that projects are completed in a timely and efficient manner.
  4. Municipal Bonds: Another option is for the city to issue municipal bonds, which would allow it to borrow money from investors to fund infrastructure improvements or affordable housing developments. These bonds would be repaid over time, typically with interest.
  5. Impact Investing: Impact investing is a relatively new form of investment that aims to generate social and environmental benefits in addition to financial returns. The city could explore opportunities to attract impact investors who are interested in supporting infrastructure improvements and affordable housing projects.

The matrix of need and funding needs to be carefully assessed to make sure the right incentives are generated to do the right projects with the right funding. The problems are not particularly unique, but the scale and scope of work of a key node of the global economy means the investigation is definitely worth the effort.

Categories
Circular Economy Economics Local Government Waste Management

Incentivising Recycling

All too often it is too easy to simply offer financial incentives to encourage greater recycling to households. Municipal waste management often considers that education of households can lead to improvements in recycling outcomes. While this is intuitively appealing, there is often little genuine analysis.

Behavioural economics offers an approach driven by empirical analysis and fieldwork, rather than theory or ‘gut feel’, to develop tailored approaches to achieve better recycling outcomes. Large numbers of household units offer the opportunity to experiment with the recycling incentive architecture before a full roll out across a municipal area.

Behavioral economics is important in recycling because it can help understand why people do or don’t recycle, and how to design policies and programs that encourage more recycling. Here are a few specific reasons why behavioral economics is important in recycling:

  1. People’s behavior is influenced by more than just economic incentives. Traditional economics assumes that people make decisions based on rational self-interest, but behavioral economics recognizes that people’s decisions are also influenced by factors such as social norms, emotions, and cognitive biases. By understanding these other factors, behavioral economics can help design policies and programs that are more effective in encouraging recycling.
  2. People’s behavior is influenced by the design of the recycling system. The way recycling is presented to people, such as the location of recycling bins and the clarity of recycling instructions, can have a big impact on whether or not people recycle. Behavioral economics can help identify ways to make recycling more convenient and understandable, increasing the likelihood that people will recycle.
  3. People’s behavior is influenced by their perception of the benefits and costs of recycling. Behavioral economics can help identify ways to communicate the benefits of recycling more effectively, such as highlighting the environmental and economic benefits of recycling, and can help identify ways to increase the perceived costs of not recycling, such as highlighting the environmental damage caused by waste.
  4. People’s behavior is influenced by the way decisions are framed. Behavioral economics can help identify how to frame decisions in ways that encourage more recycling, such as by highlighting the social norm of recycling or using loss aversion to encourage recycling.

Overall, behavioral economics can help design more effective policies and programs that encourage more recycling by understanding the factors that influence people’s behavior, and by designing the recycling system in ways that take these factors into account.

To what extent are the incentives in your organisation grounded in analysis, recognise bias factors, presented to encourage action, framed to encourage positive decision making by households?

Categories
Economics Local Government Lytton Advisory Waste Management

How do local governments manage waste costs?

Staying on top of municipal waste costs is a significant challenge for many local councils.  There are several ways local governments can manage these costs.

Implementing recycling programs: By promoting and facilitating recycling, local governments can reduce the amount of waste going to landfills, which can help lower disposal costs.

Negotiating contracts with waste management companies: Local governments can negotiate contracts with waste management companies to secure lower prices for waste disposal.

Implementing pay-as-you-throw programs: These programs charge residents based on the amount of waste they generate, encouraging them to reduce their waste and lower their costs.

Promoting waste reduction: Local governments can promote waste reduction initiatives, such as composting, to reduce the overall amount of waste generated in the community.

Partnering with private sector companies: Local governments can partner with private sector companies to create new waste management technologies or recycle more materials.

Implementing waste-to-energy programs: Some local governments have implemented waste-to-energy programs, which use waste as a fuel source to generate electricity, reducing the need for traditional fossil fuels and lowering energy costs.

To what extent is your local government doing some, all or even more than this?

Categories
Local Government

Building our Regions

The Queensland Government has replaced the former government’s Royalties for Regions program with its own  200 million ‘Building our Regions’ Program and is calling for applications from local councils.  See:

http://www.statedevelopment.qld.gov.au/regional-development/building-our-regions.html

A commendable aspect is the requirement to provide a cost benefit analysis on applications for funding over $500,000.  Application for amounts below that will still be subject to a benefit analysis.

There are pros and cons with this type of handout – are projects genuinely additional, will co-contributions be effective, is effective, long term infrastructure planning distorted?

However, it can hardly be argued local councils are drowning in funds to invest in infrastructure.

Recognising the Government is looking for shovel-ready projects, applications close 11 September.

Categories
Local Government

Waste Management in Local Government

Effective and efficient provision of waste management is a key municipal service. As elements of local government waste management systems are contracted out councils increasingly need to be able to assure rate payers they are achieving value for money.

Also, some councils are moving to separate charges for waste services. Complexities around collection, recycling and disposal tie together environmental issues, land planning, transport logistics and commercial arrangements with continuing governance oversight by councils.

A robust approach to full cost pricing enables councils to see where key costs lie, what drivers are involved and where community service obligations may be introduced. It also enables better investment planning and funding.

Lytton Advisory is currently developing a full cost pricing approach to waste service infrastructure for a local council in Queensland.