Post 57: Robotaxis Revisited - Part 1

 Autonomously driven taxis – generally referred to as a “robotaxis” – are nonexistent in midwestern and most east-coast cities, but they are a relatively common sight in San Francisco, Phoenix, Las Vegas and a few other test-bed locations.  I actually rode in a Waymo robotaxi in early 2023 and wrote about it a couple of months later (Post 34).  Those guinea pig cities have allowed the robotaxi companies to work out the details behind turning an interesting experiment into a viable business, and now the stage is set for expansion across the country and around the world.

Zoox Robotaxi Prototype

There are wildly different visions for how that expansion will play out and for the impact robotaxis will eventually have on urban life and the form of our cities.  Elon Musk, for example, has predicted that:

“By the middle of next year, we’ll have over a million Tesla cars on the road with full self-driving hardware, feature complete, at a reliability level that we would consider that no one needs to pay attention.”

And:

“From our standpoint, if you fast forward a year, maybe a year and three months, but definitely next year for sure, we’ll have over a million robotaxis on the road.” 

That prediction took place in April of 2019 and Tesla has still not initiated any public robotaxi service although they are apparently close to doing a test service with 10 to 20 cars in Austin, Texas.  In addition, the Tesla cars that ship now with autonomous driving hardware and software are not certified for driving without the driver being ready to take back control at any moment.  Elon Musk, of course, has made so many outlandish predictions that never came true that he isn’t a very reliable guide to the future. [1]  My goal with this post is to give you a factual assessment of where the robotaxi industry stands and what is likely to happen with its expansion over the next few years.  In part two of this post I will look a little further out to try to predict the long-term impact of robotaxi technology on urban transportation and urban form.

The Players

The companies that are making the biggest waves in the robotaxi industry have shifted somewhat from my previous post.  In particular, Cruise (General Motors) has apparently dropped out of the business entirely after a checkered experience with robotaxi service in San Francisco.  In addition, several Chinese companies have become major players in this market, particularly overseas.  I’m going to focus here on the U.S. market primarily, although I will mention other markets simply because what happens there will eventually affect the U.S.  This is also not going to be an exhaustive list of companies with their fingers in the robotaxi pie.  Instead, I want to emphasize the companies that I think are going to shape the future of robotaxi service and the ensuing impact on urban form.

Waymo (Alphabet).  The clear leader in domestic robotaxi service is Waymo, and the company is starting pilot programs in Japan and France with an eye toward building a worldwide presence.  While many competitors are still in the testing or limited service phase, Waymo has been providing paid service to the general public for several years in a variety of cities.  The Waymo fleet of robotaxis has now exceeded 25 million miles of autonomous driving and currently provides well over a million paid rides per month.  Operations are currently limited to San Francisco, Phoenix, Los Angeles and Austin, but Waymo has plans to expand to 10 additional cities over the next couple of years including Atlanta, Miami and Washington, DC.

Waymo adapts other production vehicles for robotaxi use rather than build its own custom robotaxi.  The Jaguar I-Pace has been the vehicle of choice for the past few years, but the Hyundai Ioniq and a Chinese vehicle from Geely are apparently in contention for the next generation Waymo product.  Each vehicle is fitted with numerous cameras, as well as Lidar and Radar sensors.  In the near term, Waymo expects to expand their fleet from 1,500 vehicles to 3,500 vehicles, but the eventual goal is to produce “tens of thousands” of robotaxis each year from their conversion factory in Mesa, Arizona.

Uber.  The ubiquitous ride-sharing company has abandoned plans to build its own robotaxis in favor of partnering with a variety of robotaxi producers in the U.S., Europe, Asia and the Middle East.  Waymo’s expansion into Austin, for example, is being handled through Uber instead of Waymo’s own ride-hailing app.  The Waymo/Uber partnership will expand to Atlanta later this year.  Uber has the advantage of having the most widely used app and millions of daily customers which simplifies expansion plans for robotaxi producers.  

Uber not only provides the internet platform, it will also handle fleet operations, including cleaning, maintenance and charging.  This partnership approach makes so much sense that I expect Uber to expand its robotaxi operations as rapidly as possible.  Uber CEO Dara Khosrowshahi has stated that the roughly 100 Waymo vehicles in Austin are busier than over 99% of Uber drivers in terms of trips completed per day.

Zoox (Amazon).  The approach that has been taken by Amazon-owned Zoox focuses mainly on a purpose-built vehicle rather than on adapting traditional cars, although it initially tested its autonomous driving software using Toyota Highlanders.  The all-electric, bi-directional, 4-passenger Zoox vehicle has no steering wheel or control pedals so it can’t be used for anything other than robotaxi service.  However, it does have wide doors, comfortable seats, 4-wheel steering, and high-tech interior controls which make the riding experience as pleasant as possible.  

Zoox has been doing intensive testing in Las Vegas, San Francisco and Foster City, California for several years and is reportedly near to providing public service.  They recently signed a deal to be the “official robotaxi partner” for Resorts World in Las Vegas, although it is not entirely clear exactly what that means.  In any case, Zoox has a unique product but needs to get real-world, paid-passenger experience if it is to keep up with the competition.

Tesla.  The wildcard in the robotaxi world is Tesla which hasn’t actually provided any public service, but which has sold millions of cars, many of which included their “Full Self Driving” (FSD) software and hardware package.  FSD is somewhat misleadingly named because it doesn’t actually provide fully autonomous driving – the human behind the wheel is still expected to take back control in certain situations.  Robotaxi service is expected to start this month in Austin, Texas, although it is likely to be just 10 to 20 cars operating within a tightly limited area and closely monitored with remote “teleoperators.”  Still, if the debut goes smoothly, Tesla hopes to be able to ramp up operations quickly and many analysts expect it to be a major player in the next few years.  There are, unfortunately, question marks galore surrounding Tesla’s robotaxi capabilities because it has been so hard to separate the hype from the reality.

In my opinion, the odds of Tesla rapidly becoming a dominant robotaxi service are about equal to the odds that its service falls flat on its face.  The more likely middle ground is that Tesla eventually masters the intricacies of providing robotaxi service, slowly gains traction in the robotaxi race, but ends up being just one of many providers.  The idea that current Tesla owners will convert their cars to part-time robotaxis strikes me as complete fantasy, and the company is years behind Waymo and other providers in building the corporate capacity to run robotaxi operations in multiple cities.

Tesla Cybercab Prototype

Tesla’s strength is their manufacturing capability and they have unveiled a slick, two-seat “Cybercab”product that is expected to enter production in 2026.  The initial robotaxis in Austin will likely be adapted Model Y vehicles, however, and the actual timeline for Cybercabs to play a significant role in the robotaxi service is up in the air.

The Chinese.  The U.S. has made it nearly impossible for Chinese companies to compete directly in this country’s robotaxi market for reasons that range from national security and data privacy concerns to global trade tensions.  That translates to less publicity in the American press, but it does not mean that they are lagging behind American technology.  Companies such as Baidu, Pony.ai and WeRide have already deployed thousands of driverless robotaxis in various cities in China and are actively expanding into the Middle East and Europe.  In addition to car-like vehicles, Chinese companies are leaders in driverless trucks, buses, and specialty vehicles such as streetsweepers.  Although their direct impact in the U.S. may be muted, their global aspirations means that Waymo, Tesla and Zoox may find it difficult to dominate the worldwide robotaxi market.

Safety

Advocates for autonomous driving technology have long predicted that computers linked with advanced sensors will eventually be much safer drivers than humans.  As robotaxis move from test deployments to a full-fledged public transportation option, the question remains whether they have reached the “safer than a human” tipping point.  Only Waymo has a large sample of real-world rides and a history of safety transparency at this point.  Other companies either don’t have many vehicles in public use or are being very tight lipped about their safety record.  Yet nearly everyone agrees that the public perception of safety is a key to robotaxi success.

A study was recently issued by insurance giant Swiss Re based on the 25 million miles of autonomous driving completed by the “Waymo Driver” and the resulting claims history for both property damage and bodily injuries.  The study included Swiss Re’s data from over 500,000 claims and 200 billion miles of exposure.  It found that compared with human drivers, the Waymo Driver had an 88% reduction in property damage claims and a 92% reduction in bodily injury claims.  Over its 25 million miles of driving, Waymo had just 9 property damage claims and 2 bodily injury claims.  For the same amount of driving, human drivers would be expected to have 78 property damage and 26 bodily injury claims.  This pattern holds true even when compared with late model cars equipped with advanced driver assistance systems such as emergency braking, forward collision warning, or blind spot warning. [2 ]

These results are largely due to Waymo’s extreme focus on passenger safety.  Their vehicles, for example, are typically equipped with 29 cameras, 6 Radar sensors and 5 Lidar sensors.  In addition, prior to providing public service Waymo does extensive testing and mapping of new service areas, and route selection is biased away from confusing intersections or dangerous roadways.

In contrast, Tesla relies primarily on cameras for the FSD system and Elon Musk has derided sensors such as Lidar as a “crutch” and “stupid.”  Although there are some recent indications that Tesla is now using Lidar for its FSD development and testing, their vehicles are still reliant primarily on cameras.  Tesla is just now starting actual robotaxi operations, but their prior FSD systems in the cars they have sold have been linked to a variety of serious accidents, including fatalities.  

Most other robotaxi companies are much closer to Waymo’s approach than to Tesla’s, although no one else has been as transparent with accident data as Waymo.  Still, I think most companies realize that just a few high-profile accidents could put a serious crimp in their business plans, so safety seems to be a high priority for just about everyone.

Profitability

So far, no one is making any money as a robotaxi provider.  Yes, there isn’t a driver to split the revenue with, but building and operating autonomous vehicles is expensive.  The prices charged for robotaxi rides are typically competitive with or slightly cheaper than a typical Uber ride, but each ride is losing money.  How much money is being lost is hard to say because no company is releasing that data, but the estimates are pretty high.

If robotaxis are losing money, why are so many big companies chasing this market?  The answer is that the eventual market is expected to be enormous and the cost of providing service is expected to fall dramatically over time.

Currently, the cost of running a robotaxi business is substantial.  There is the cost of the car with all its cameras and sensors, of course, which most analysts place at well over $100,000 per vehicle.  And then there is the cost of all of the people that are needed for cleaning, recharging, maintenance and monitoring.  Yes, the driver is gone but there is still a lot of labor involved, including “teleoperators” that monitor robotaxi operations.  They don’t generally operate the vehicles remotely unless there is a major issue, but they do track robotaxi operations continuously.  As autonomous driving software improves, the number of monitors will decline significantly but it will not go away any time soon because regulators will likely not allow it until the robotaxi safety record is not just “better than a human” but nearly spotless.

This ongoing need for teleoperations support despite 10 years of autonomous driving software development and testing underscores the difficulty in deploying truly autonomous operation in a complex urban environment.  It is not just hard, it is really hard. [3]  Is the ratio of active robotaxis to teleoperators 10 to 1?  20 to 1?  No one is really saying and it probably varies from city to city and provider to provider.  In fact, the teleoperations ratio is probably a significant negotiating point when providers are seeking approval to operate in a new city or state.  In any case,  it means that the dream of fully autonomous robotaxis is as much mirage as reality.

Plus, there is a lot of overhead involved with ride scheduling software and fleet maintenance, along with mundane stuff like marketing and insurance.  Again, all of this will decline in terms of cost per ride as volume scales up – perhaps to half or even a third of what it is now.  Robotaxi vehicles, for example, might end up costing $40,000 to $50,000 per unit.  But robotaxis rides will never be mostly profit, because while the costs will drop over time, the cost curve will flatten out eventually and it won’t be anywhere near zero.

On the flip side of this equation, just how big is the potential market?  Well, for starters Uber provides roughly 40 million rides per month in the U.S. alone, and Lyft probably accounts for another 10 to 15 million.  Robotaxis won’t be able to steal all of those rides, of course, but I think taking 50 percent is a realistic target five years out in the cities with robust robotaxi operations.  The real gold mine, however, is the roughly 20 billion trips Americans make every month in their cars.  If just five percent of those trips were converted to robotaxis that would be a billion trips per month.  Expand those numbers globally, and the potential market is staggering.

The Bottom Line

Very smart people are investing billions of dollars in the robotaxi race so I have little doubt that Waymo, Tesla, Zoox, et al will be spreading across the country.  Advocates believe that robotaxi service will usher in an era of convenient, safe, and stress-free transportation that will improve both our cities and our lifestyles.  The only questions seem to be when will they get to your city and will you be brave enough to trust them to get you from point A to point B?

Well, perhaps that’s not quite true.  There are actually dozens of unanswered questions surrounding how the robotaxi revolution will play out and it is certainly not clear whether it will lead to urban nirvana or whether we will need to amend Dante’s Inferno to include a tenth circle of hell.  I’m generally optimistic but that optimism is tempered by the knowledge that urban systems and human behaviors are inherently resistant to change.  As always, reality is likely to fall somewhere between nirvana and hell.  Check out part two of this series for my take on what is likely to work and what is likely to disappoint.

Notes:

1. Carlton Reid; “There’s a Very Simple Pattern to Elon Musk’s Broken Promises”; May 2025; Wired; https://www.wired.com/story/theres-a-very-simple-pattern-to-elon-musks-broken-promises/

2. “New Swiss Re Study:  Waymo is safer than even the most advanced human-driven vehicles”; December 2024; Waypoint, Waymo blog; https://waymo.com/blog/2024/12/new-swiss-re-study-waymo#:~:text=It%20found%20that%20the%20Waymo%20Driver%20demonstrated,damage%20claims%20and%20two%20bodily%20injury%20claims.

3. “Fleet response:  Lending a helpful hand to Waymo’s autonomously driven vehicles”; May 2024; Waypoint, Waymo blog; https://waymo.com/blog/2024/05/fleet-response#:~:text=Much%20like%20phone%2Da%2Dfriend%2C%20when%20the%20Waymo%20vehicle,for%20additional%20information%20to%20contextualize%20its%20environment.&text=Fleet%20response%20provides%20the%20Waymo%20Driver%20guidance,street%20and%20make%20way%20for%20the%20truck.

Post 56: Transportation Pricing and Behavior

 All of us realize that there are costs involved every time we travel from one place to another.  Some of those costs are obvious and we think about them almost every time we decide whether to travel or not.  For example, if I am traveling to another city I think about the expense and time involved with flying (e.g. buying a ticket and moving very fast) versus the expense and time involved with driving my car (e.g. buying gas and moving much slower).  

Other costs are more subtle or indirect and we give those a lot less consideration because we tend to form habits around those other costs that save us from having to think about them each time we travel.  For example, if I am going to the store to buy groceries I could drive my car, arrange for an Uber ride, walk to the store, or ride my bike.  All of those options aside from the Uber ride have zero out-of-pocket costs but they do have different costs in terms of time.  So if I’m in a hurry, the time cost of walking may be too great for me to take that option seriously.  But there are also indirect costs like exertion which people might value positively if they like exercise and fresh air, or negatively if they dislike those things or are disabled in some way.  

Driving a car has a boatload of indirect costs such as depreciation, maintenance and taxes, which we all understand that we pay but which are not associated with any given trip so we tend to minimize their impact on our decision.  My point is that while we understand these costs we tend to form transportation habits that eliminate the need for us to think about them for every trip.  Unfortunately, these habits can result in sub-optimal decisions.  On a beautiful day when I am unscheduled, a walk to the store might actually be my best option, but I generally end up driving my car without really considering the walking option because I am in the habit of doing so.

Finally, there are costs that are “hidden” because most people rarely think about them or even connect those costs to their own transportation decisions.  If I drive my car to the store to buy groceries, for example, I add to the congestion of the public streets that I share with other drivers and I add to the pollution of the air which all of us breathe.  These are costs that I impose partly on myself, but mainly on others in the community.  While real, these costs are abstract enough and my contribution is tiny enough that I am likely to write them off as too insignificant to worry about if I even think of them at all.

Although we might ignore most of these costs when we make individual decisions, city governments (and State and Federal governments as well) should be giving all transportation costs a great deal of thought before they make decisions about transportation improvements and their operating budgets.  Unfortunately, governments fall into habits just like we do as individuals which often leads to sub-optimal decision making – and in some cases not just sub-optimal but downright awful.  My goal with this post is to shine some light on transportation costs – particularly direct out-of-pocket costs and time – in order to shift the way we think about the options we have for moving from point A to point B and to potentially shift the way governments set transportation policy.

Place Matters

Before I get into the nitty gritty of transportation pricing, it is important to point out that there is no one-size-fits-all solution.  Your location at the time you are making a transportation decision will have an enormous impact on what decision is best.  A common example in midwestern cities is the proximity to transit.  Midwestern cities are so spread out that the distance from my starting point to the nearest transit stop and the distance from the transit drop-off point to my destination can be so great as to disqualify the transit option as a serious contender.  If the beginning and ending walk is just two or three blocks, then transit might well be a smart choice but the odds of that happening in most midwestern cities is small.

In very large cities such as New York, Chicago or Boston, the cost of parking – both the time-cost of finding a space and the out-of-pocket cost of the parking itself – is so large that driving is far less viable than in smaller cities.  Parking can be so expensive and inconvenient that even owning a car is financially unattractive which means that driving is seldom considered as a transportation choice.  Keep this point in mind as you read the rest of this post.  I’m writing primarily from the perspective of someone who lives in Kansas City, and while that might be relevant to many other midwesterners, it will be less applicable to those who live in much larger or much smaller locations.

Technology Has Changed Pricing

The second caveat to keep in mind is that technology has changed the entire pricing landscape in transportation (and most other industries as well).  The payment platform that has developed around the internet and our smartphones has not only made it more convenient to pay for transportation, it has also changed how much we pay and what exactly we are buying when we travel.  Over the past thirty years, the rise of internet commerce has largely eliminated the role of the travel agent which has reduced the cost of flying by cutting out an unnecessary middle man.  Now smartphones have largely eliminated paper tickets and have enabled the travel industry to shift to “al a carte” pricing.  Paying for checked luggage, snacks, drinks and WiFi access with a few taps on our phones has made possible a concept that previously would have been too convoluted to be feasible.  We can now customize our transportation choices and pay for exactly what we want.  This trend is so powerful it is essentially forcing Southwest Airlines to change their entire business model.

Technology is also changing the way we drive.  Tag sensors, online toll accounts, and now license plate readers are rapidly eliminating the need for toll booth operators and are increasing opportunities for governments to charge for the privilege of driving on certain roads or in certain lanes.  Many locations implemented High-Occupancy Vehicle (HOV) lanes to encourage car-pooling as a way to reduce congestion but those lanes are often underutilized.  So some HOV lanes are being converted to High-Occupancy Tolling (HOT) lanes which use modern electronic tolling systems to allow single occupant vehicles to use the restricted lanes simply by paying a toll.

Even the lowly parking meter has evolved to allow payment via your smartphone instead of requiring you to dig for loose coins.  The change (no pun intended) has not only allowed cities to charge more for parking, it has also made enforcement easier and enabled convenience features such as phone notifications when your time is almost up.  Collecting small payments, such as for metered parking, used to be so inefficient that it often was not worth the effort.  Now, collecting a small payment is just as easy as collecting a large one which opens up new potential revenue streams.

An underappreciated aspect of all of this technology is that it allows dynamic pricing of just about every transportation option.  This changes both how we travel and when we travel.  Pricing that changes instantly in response to demand means that transportation infrastructure can be used more efficiently by smoothing out normal peaks and valleys.  Many airports, for example, are busy in the early morning hours not because people like flying at 6:00 AM but because that’s when the cheapest flights are offered.  The result is a win-win:  people spend less money and airports spread out demand to avoid congestion.

The Hidden Cost of Free

We all like a bargain, and there is no better bargain than free.  Except, of course, that very few things are really free – someone ends up paying and that someone is almost always you.  That is particularly true with transportation choices, some of which appear to be free but really aren’t.  The misconception of free is sometimes beneficial or at least harmless, but it often skews our decision making in ways which are detrimental to ourselves and our cities.

There is a basic concept in economics that states that when people are given unfettered access to a finite but valuable resource, they will tend to overuse it to the point where it is damaged or destroyed.  It is not rational for any individual to exercise restraint because someone else will simply supplant them, but the inevitable result is bad for everyone.  This is often referred to as the “tragedy of the commons” and I wrote an entire post about it roughly eighteen months ago (Post 39).   

Mass Transit.  In the world of transportation, there are three primary examples of things that appear to be free but really aren’t.  The first is the occasional mass transit service that is provided at no cost to riders.  For example, I recently rode Miami’s Metromover which is a 4.4-mile elevated tram that loops through the frequently congested downtown area and a few adjacent neighborhoods.  I found it to be useful, although as a tourist it seemed too limited in its geographic coverage.  The locals must find it more useful because it averages more than 20,000 riders per day which is trending up over the past several years, but still a little short of the pre-pandemic year of 2019.  As I understand it, the system is funded primarily by a special sales tax levy, supplemented by general tax revenue and federal grants.

Similarly, Kansas City has a streetcar line that is also free to ride.  It follows a two-mile out-and-back route that primarily follows Main Street.  Construction is nearly complete on two extensions to that route which will triple its length to just over 6 miles.  Ridership has grown steadily over the past several years and now averages over 4,700 rides per day.  As with the Metromover, Streetcar ridership dropped steeply during the pandemic and is just now approaching 2019 numbers.  Funding comes from additional sales tax and property tax levies within a Transportation Development District that surrounds the streetcar route.

Transit services on a limited route such as Metromover and KC Streetcar may have occasional riders who are simply satisfying their curiosity, but generally they are free of the “overuse” issues that often plague free services.  There is no economic or personal advantage to be gained unless you actually want to travel to some point along the route, which is a naturally limiting set of people.  Despite the surface appearance, however, the rides are not free as I pointed out above.  In theory, the businesses and property owners who pay the added levies required for these transit services get a reasonable return on their investment from increased business or from increased property valuation, although that is certainly up for debate.  As with nearly every tax, my guess is that some reap benefits that exceed what they pay while others fall short.

Public roads and highways.  The second transportation service that has the perception of being free is the use of public streets and highways.  Toll roads and bridges are obvious exceptions, of course, but generally people can drive pretty much anywhere without an out-of-pocket expense.  In contrast to limited-route transit, the free use of public streets does influence behavior in ways that often causes significant congestion and thus damages the value of the street or highway as a public asset.  The phenomenon is known as “induced demand” and I discuss it at some length in the earlier post mentioned above.  I won’t go into detail here but all of us have experienced bumper to bumper traffic that approaches gridlock even on highways that have recently been widened.

Recent events in New York City provide an interesting illustration of the impact of “free” streets versus streets that have an explicit out-of-pocket cost.  In January of this year, New York City implemented a fee known as “congestion pricing” on vehicles entering Manhattan south of 60th Street.  The amount charged is $9 for cars, SUVs and light trucks during peak hours (Monday through Friday, 5 a.m. through 9 p.m.).  The fee falls to $2.25 in off-peak hours.  Specialty vehicles such as large trucks have separate pricing.

I have a modest level of experience with Manhattan traffic because I frequently travel to visit my daughter and her family in Hoboken, New Jersey.  I typically fly into LaGuardia Airport and take an Uber to a hotel near their apartment.  The trip takes me through Brooklyn, into Manhattan via the Midtown Tunnel, across Manhattan at roughly 34th Street, and into New Jersey via the Lincoln Tunnel.  During the day, traffic is heavy virtually the entire trip, but prior to this year, the portion across Manhattan was excruciatingly slow.  The distance from tunnel exit to tunnel entrance is less than two miles but it could often take nearly 30 minutes.  On a trip in late March, the same segment took just over 15 minutes – the difference was amazing.

It is way too early to draw definite conclusions from the congestion pricing program, but early results from the first quarter of the year are extremely promising.  Approximately 10 percent fewer vehicles are entering the congestion pricing zone each weekday, congestion levels are down, and average travel speeds are up.  Ridership levels on mass transit systems leading into the city are also up as would be expected.  What is unexpected is that restaurant reservations, Broadway ticket sales, and general retail sales are also up which means that with congestion down more people are willing to come into the city to do business.  Anecdotally, delivery drivers are wasting less time, emergency vehicles arrive sooner, and complaints about “excessive honking” are down substantially. [1, 2 ] Finally, the system has raised $159 million in the first three months (to be spent on transit improvements), an amount that is within 1 percent of projections.

Parking.  In midwestern cities, parking is typically provided at no direct cost to drivers.  There are exceptions in areas where demand is high such as downtown business districts or event venues, but those exceptions are rare.  The perception that parking is almost always going to be free and plentiful affects our transportation choices – with a clear bias toward driving – although most of us don’t think of parking explicitly when making a trip.  We just assume that parking will be free and readily available at the end of our trip and if it is not we are surprised, annoyed or both.

The result is that city planners, developers and landowners have a difficult time determining the optimal amount of parking to provide.  When a valuable commodity is offered on the open market, the price helps determine the quantity of that product that is needed.  Giving the commodity away for free means that market signal is lost and the result is that both demand and supply are likely to be overstated.  

I have written an entire article on the problems associated with over-supplying parking (Post 52) so I won’t go into great detail here.  The bottom line is that the perception of free parking is a form of market distortion that warps our behavior and harms our cities.

The Collective Good Versus Individual Choice

When we buy a ticket to fly from one city to another, most of us understand that the price of that ticket helps cover the cost of the airplane, the aviation fuel, the pilots, and a variety of other direct costs, as well as leaving a little money left over for profit that is distributed to the airline shareholders.  What most people don’t understand is that commercial air travel is subsidized by the government.  In fact, virtually every form of transportation is subsidized by the government.  Even people who walk to work are walking on sidewalks that someone else paid for.

That subsidy is not necessarily a bad thing.  After all, being able to move people and goods from one place to another is essential to our economy and our way of life.  However, many people have the perception that they are “paying their own way” when they make transportation choices when, in fact, they are not.

There are two issues related to our system of transportation subsidies that deserve more attention than they typically receive.  First, the amount of subsidy varies wildly from one form of transportation to another and from one place to another.  How do we know if we are subsiding in the right amounts?  Unfortunately, transportation subsidies come from so many sources and in so many forms that it would be difficult for anyone to accurately calculate the subsidy per passenger mile or similar statistics – and certainly not the average user.

Second, the indirect costs and benefits associated with each form of transportation also vary wildly and are often difficult to quantify.  Obviously there is a value in moving people and things from place to place and there are direct costs in terms of time and money.  But the deeper you dig into the topic, the fuzzier and fuzzier the issues become.  Mass transit, for example, has been shown to reduce both traffic congestion and air pollution. [3]  How exactly do we place a value on those benefits?  Building bike lanes is thought to provide health benefits, reduce bicycle fatalities, and reduce greenhouse gas emissions.  Is anyone doing the math in a systematic way to balance the subsidies against the advantages?  Not that I know of.

To make matters worse, transit, bike lanes and sidewalks all increase the mobility of people who can’t afford to drive a car or who can’t drive a car due to age or disability.  There is a definite value to both our economy and our society that flows from enabling that segment of our community to be independently mobile.  How much subsidy is that benefit worth?  I have no clue and I doubt anyone else does either.

The Bottom Line

The end result is that all of us make transportation decisions every day without even a rudimentary understanding of the cost (both obvious and hidden) of the options at our disposal.  Most of us, in fact, not only don’t know the answer, we don't even take time to think about the question.  Would knowing the answer change our behavior?  Maybe or maybe not.  The majority would probably choose whatever option seems most convenient regardless of the true price, but there is clearly a significant minority who are sensitive to cost and would adjust their behavior if the system were less opaque.

In addition, there are leaders at every level of government that routinely make decisions on infrastructure improvements and financial support of various transportation systems without a true accounting of the efficiency or fairness of those decisions.  They are practicing what former Yale professor Charles Lindblom called the “science of muddling through” – a decision making process based on making incremental changes to what has been done in the past rather than a comprehensive analysis. [4]  This process acknowledges the complexity of many policy decisions and the limitation of human analytical abilities, but it rarely questions the efficacy of past patterns or whether changes to underlying conditions might warrant a radically new distribution of resources.  Instead, we muddle through from year to year with only small changes at the margins, and even those small adjustments are driven more by the constituencies with the loudest voices rather than careful study.

Given the huge impact that transportation has on city building, this decision to muddle through means that our cities are largely stuck in the same form that they have had for the past hundred years or more.  Think of the enormous changes that have occurred in technology, the economy, and society in general during that time span.  If we were designing cities from scratch would we still copy patterns from a hundred years ago or would we balance transportation options differently?  Muddling through may be politically expedient but I suspect that it is making the goal of strong, resilient cities harder to reach rather than easier.

Notes:

1. Christopher Bananos; “How Well Is Congestion Pricing Doing?  Very.”; April 2025; New York/Curbed; https://www.curbed.com/article/100-dayscongestion-pricing-mta-results.html

2. “Clearer roads, faster trips:  The data behind NYC’s congestion pricing success”; April 2025; TomTom Blog; https://www.tomtom.com/newsroom/explainers-and-insights/the-data-behind-nyc-s-congestion-pricing-success/

3. Robbie Webber; “Contrarian research:  Transit relieves congestion, but park-and-rides do not”; April 2013; State Smart Transportation Initiative; https://ssti.us/2013/04/08/contrarian-research-transit-relieves-congestion-but-park-and-rides-do-not/#:~:text=Michael%20Anderson%2C%20an%20economist%20at,congestion%20would%20continue%20to%20drive.

4. Charles E. Lindblom; “The Science of ‘Muddling Through’ “;  19 Public Administration Review 79; 1959.

Post 55: The Climate Change Conundrum - Part 3

 Most climate change experts tend to describe the impact of unrestrained global warming in apocalyptic terms.  However, there are scientists and politicians who believe that climate change will have largely beneficial effects on much of the planet.  They point to fewer bitterly cold winter days, longer growing seasons, and more atmospheric carbon dioxide to boost plant growth.  To be clear, this group is a distinct minority but what if they are correct?  What if – at least in some places – a warming planet is an opportunity rather than a problem?

I am not going to take the time to discuss scenarios where agricultural output goes up by 25 percent or where living in Indianapolis is suddenly like (weather-wise) living in San Diego or Miami.  In my opinion, those are fantasies that aren’t worth serious contemplation.  But it is at least plausible that climate disasters in some areas could create beneficial ripple effects in other places as a result of climate migration.  In particular, the northern tier of midwestern states, as well as several areas in the northeastern U.S. have been mentioned as possible “climate havens” to which people will flock when they get fed up with hurricanes, high-tide floods, wildfires, and unbearably hot weather.  Just as the combination of COVID and remote work fueled a flow of young professionals to scenic rural areas and quaint small towns a few years back, perhaps rising sea levels will create a stream of migrants from Boston or Charleston to Madison, Wisconsin or Buffalo, New York in the relatively near future.

Buffalo, New York -- Photo 1
Source:  Getty Images

Thus, the third climate change conundrum is whether city officials in potential climate haven cities should actively market themselves to residents in climate challenged cities.  For example, tens of millions of people live in coastal areas that are likely to be affected by sea level rise in the next 25 years.  And millions more live in close enough proximity to the coast to be threatened by hurricanes that move inland.  If only 10 or 20 percent of those people moved to the midwest it would represent a significant population shift for cities that have either grown slowly or not at all.

In recent decades, Phoenix has grown rapidly from the in-migration of people largely from cold-weather states.  In addition to the normal problems that come with rapid growth, Phoenix is now starting to feel the effects of global warming.  In 2024, Phoenix experienced the warmest year on record.  There were 113 consecutive days with temperatures over 100 degrees, breaking the previous record of 76 days.  There were 70 days with high temperatures of 110 degrees or more, breaking the previous record of 55 days.  There were 39 nights when the low temperature never dropped below 90 degrees, more than 5 times the typical average. [1]  Similar records could be found across much of southern California, Arizona, New Mexico and most of Texas.  What if those residents simply got fed up with the unrelenting heat (and soaring energy costs) and sought out the cool summers and the now milder winters (thanks to climate change) of the northern midwest?

The potential appeal of branding your city as a climate haven might be irresistible to some, but is it a smart move to make?  Let’s dig a little deeper to see if this conundrum has an answer.

The Push/Pull of Migration

Meaningful migration (not simply a move within a metro area) usually has both a “push” component (a reason for leaving) and a “pull” component (a reason for moving to a particular place).  In order to really understand the potential dynamics, it will be helpful to look at both elements in more detail.  Although climate change is the generic reason that we will focus on, there are multiple types of “push” events that have differing results.

Catastrophic disaster.  Each year, there are tens or hundreds of thousands of people displaced in the United States by tornadoes, hurricanes, floods, wildfires, and other types of natural disasters.  If your home were heavily damaged or destroyed, it is certainly conceivable that you might want to relocate to a different region of the country.  As it turns out, however, most households displaced by a catastrophic event don’t actually move very far and often rebuild in exactly the same spot.  These households typically have jobs, family and friends in the area that are too powerful of an attraction to justify moving very far away.

Circling the drain.  Some places, such as New York City, Miami or Los Angeles, contain so many people and represent so much economic value that billions of dollars are being spent (and will continue to be spent) to protect them from whatever climate related disaster is most threatening.  But what about Myrtle Beach, South Carolina; Savannah, Georgia; Biloxi, Mississippi; Slidell, Louisiana; or Port Arthur, Texas; or dozens or similar communities that are much smaller and much less affluent?  Some protective efforts will certainly be made, but in many cases it will be too expensive to really salvage those communities in their current form.  This means that they will eventually come to accept the idea of “managed retreat” which means abandoning the most at-risk areas and moving to someplace safer.  That place might be a “climate haven” city, but more likely it is a place less than 50 miles away.  The wealthiest households are likely to move first, leaving the poorest to deal with the inevitable disaster.  These cities are likely to enter a slow, downward spiral of disaster, half-hearted rebuild, followed eventually by another disaster.

The final straw.  In my opinion, the most prolific source of climate migrants is likely to be people who have simply become fed up with the daily hassles or elevated cost-of-living caused by climate change.  Residents of Florida, for example, may have lived through multiple hurricanes and may be struggling with the high cost (and limited coverage) of homeowner’s insurance.  Residents of Arizona might be tired of the stifling heat, skin cancer risk, and water shortages that are increasingly commonplace.  Others might be stressed out over the potential for wildfires and the possibility of their home going up in flames.  This group has the highest potential to become climate migrants because moving a few miles isn’t likely to solve their problem.  If they are truly fed up, they might be willing to move across the country to someplace that is completely different.

Thus, there are a variety of scenarios that might push households to become climate migrants.  There is no reliable way to estimate how many people that might be, but I suspect it is currently just a trickle.  Under the right circumstances, however, that trickle might someday become a steady stream or even a flood.  Jesse Keenan, an associate professor of sustainable real estate at Tulane University, has estimated that as many as 50 million people could eventually relocate due to climate change over the coming decades. [2]  For that to happen, things would need to get really bad because – aside from people in their 20s – most of us just don’t like moving and we especially don’t like moving great distances.

Where Is the Pull?

Cities that want to become climate havens need to be able to attract those households that are considering a move.  After all, households fleeing east coast hurricanes, southern heat, or west coast wildfires have a lot of possible destinations.  What are the minimum qualifications for a city wanting to be considered a safe haven from climate change?

First, climate havens are going to need to be well away from the ocean.  Cities affected by sea level rise or potentially impacted by hurricanes need not apply.  Unfortunately, being away from the coast doesn’t narrow things down much.

Second, climate havens are going to need to be cool enough that people will consider them to be reasonably resistant to the heatwaves and extended droughts that are being forecast for the deep south.  The central plains might be acceptably cool in the near term, but most of the serious candidates are in the northern tier of states (e.g. Minnesota, Michigan, New York, Vermont, etc.) or at higher elevations in mountain states.

Third, climate havens are going to need to be moist enough to minimize wildfire potential, but not so rainy as to invite flooding or simply be too gloomy.  Unfortunately, it is difficult to guarantee the right level of rainfall.  Cities can point to past weather patterns, but with climate change that might not be indicative of the future.

Fourth, climate havens need to have a reliable and plentiful source of drinking water.  Past societies may have treasured salt, gold, or oil, but the key resource for the next century might well be potable water.  It is not only essential for human life, it is a key component for many forms of economic activity.  There are a variety of water sources, but cities near the Great Lakes can point to one of the world’s largest supplies of fresh water as a crucial asset.

Finally, most climate migrants are not looking to become hermits hiding from civilization.  That means that successful climate havens will need a reasonable quality of life component.  In particular, a strong job market and affordable housing market would be major advantages.  In addition, a robust transportation infrastructure and diversified recreational opportunities are important as well.  Those characteristics are likely to rule out most small towns with populations below roughly 50,000 people, and even that threshold might be much too small for households coming from major metro areas.

Climate Haven Candidates

I do not have the time, expertise or inclination to do a ranking of potential climate friendly cities, but there are several places that have started to market themselves as such.  Places like Buffalo, New York; Ann Arbor, Michigan; Duluth, Minnesota; Madison, Wisconsin; and Burlington, Vermont, have jumped on the climate haven bandwagon in recent years. [3]  This trend may have all started in 2019 when Buffalo mayor Byron Brown suggested that Buffalo might become a “climate refuge city”, a place where people could move to escape climate-induced disasters.

Buffalo, New York -- Photo 2
Source:  Getty Images

The movement picked up steam when research by Stephen Vermette, a geography professor at Buffalo State University, found no increase in extreme weather events in the Buffalo region.  Of course, the weather in Buffalo is not perfect nor is it immune to the effects of climate change.  Professor Vermette went on to say:

I’m not saying climate change is going to be good for Buffalo, or Buffalo is going to be an oasis.  We’re not an oasis, we suck less. [3]

That sums up one of the key problems with proclaiming your city to be a climate haven:  past weather patterns do not guarantee a future free from disasters.  Asheville, North Carolina, was sometimes mentioned as a climate haven until Helene dumped 15 inches of rain and washed away much of the city.

Another issue is that what constitutes a climate haven in one person’s mind might be completely unacceptable to someone else.  Duluth, Minnesota, picked up the nickname “Climate Proof Duluth” because of its cool weather and abundant water supply from adjacent Lake Superior.  However, a tongue-in-cheek review by Michael Kosta of the Daily Show pointed out some of the flaws in Duluth’s strategy (Click Here to view).

The Bottom Line

In the end, marketing a city as a climate haven strikes me as civic boosterism run amok.  Our ability to predict the long-term impacts of climate change is in its infancy, so claiming to be a haven is mostly speculation.  A better strategy, in my opinion, is for cities to focus on being as strong and resilient a community as possible.  Good schools, an affordable housing supply, a diversified economy, an efficiently run local government, and well-maintained infrastructure are going to be more attractive to potential residents and businesses than claims of being climate proof.  Cities should focus on those things they can control rather than something as fickle as climate change.

Notes:

1. “2024 Climate Year in Review for Phoenix, Yuma and El Centro;”  US Department of Commerce, National Weather Service; https://www.weather.gov/psr/yearinreview2024

2. Sheri McWhirter and Lindsay Moore; “Michigan Is a Climate Haven in a Warming World.  Will Everyone Move Here?”; January 2023; Council of the Great Lakes Region; https://councilgreatlakesregion.org/michigan-is-a-climate-haven-in-a-warming-world-will-everyone-move-here/

3. Mike De Socio; “US cities are advertising themselves as ‘climate havens’.  But can they actually protect residents from extreme weather?”; July 2024; BBC; https://www.bbc.com/future/article/20240628-us-climate-havens-cities-claim-extreme-weather-protection