North America

Toronto Real Estate Prices – 5 Factors To Consider

I do not know what will happen to Toronto housing prices. I do think, though, that if you look at five of the big things happening in Canada’s economy at large — namely, automation, digitalization, Baby Boomers nearing their 60s or 70s, rapidly rising home prices in some major cities, and the fall in fossil fuel and other commodity prices — all suggest that Toronto land values are likely to rise more slowly than other assets in the coming years.

1. Automation

— Many people are drawn to Toronto because of its strong employment market, so if automation causes employment rates or real wages to rise relatively slowly, some people may decide to move to other places where housing prices are more affordable

— If automation causes transportation to become more convenient because of self-driving vehicles, people may also find it easier than ever before to live further away from downtown Toronto

—The process of building homes or buildings might itself increasingly be carried out by machines, computers, or robots, which could reduce the time and money involved in construction

— If automation makes it easier to live in lands that have rugged geographies — for example, if self-driving vehicles or autonomous snowplows make it easier to live in Lake Huron Snowbelt cities like Owen Sound, which gets three times more snow per year than Toronto on average — it could cause home values of those lands to rise more quickly than those of established cities like Toronto

        Great Lake Snowbelts                              Great Lake Cities
     great lake pop

2.Digitalization

— The Internet might allow people to “e-commute” to work in some circumstances, thus making it easier to live outside of major employment centres like Toronto

— The Internet might put downward pressure on real estate in general by, in effect, using cyberspace as a substitute for real space. For example, if more people shop online, then there may be less of a demand for retail real estate, as more goods are taken direct from warehouses to consumers

 — The Internet might lead some jobs to be outsourced to other countries with cheaper labour, which in turn could cause wages or employment rates in Canada to rise relatively slowly, causing employment to become less of a determinant in people’s housing preferences, and home affordability to become more of a determinant instead

— The Internet could make it easier than ever before for new immigrants to Canada to live outside of major immigrant clusters like Toronto

— The Internet might make it easier to live in geographically rugged areas like the Lake Huron Snowbelt, for example by allowing people to e-commute or buy their groceries online in the wake of a snowstorm

3. Demographics

—Canada’s demographic profile is quite different today than it was a decade or two ago. Not only is its biggest cohort, the Baby Boomers, made up of individuals who are now nearing or have already reached their 60s, but also there are now no longer very many Canadians younger than the ages of 15-20

—Baby Boomers may now be somewhat more likely to sell, and less likely to carry out a major renovation, of their homes than they were a decade ago

—Fewer children means that parents don’t need as large houses. It also means there may be fewer jobs available in day-care, child-care, or education. And it means that, in the decade or so ahead, there may be fewer first-time home buyers or home-renters entering the market

—While there are fewer kids and fewer people in their 40s than there were a decade ago, there are still plenty of people between the ages of 20-70; in other words, there is still a lot of competition for jobs and wages. Areas of Canada with fewer people in the labour force, and with more elderly people who need doctors or nurses, could do better at attracting immigrants or new residents

—Many bilingual, bicultural second- or third-generation immigrants have recently or will soon come of age. These populations can more easily move to areas of outside immigrant clusters like Toronto than could their first-generation parents or grandparents. In doing so, they  create new, smaller clusters which can in turn attract new first-generation immigrants. This has already occured to some extent with white immigrant groups that have been in Canada for several generations. When, for example, Soviet Jews came to Canada a few decades ago, they largely skipped the typical immigrant stage of moving to downtown Toronto (as European Jews had done after WW2) and instead linked up with second-generation and third-generation Jews who were living uptown or in Vaughn.

—A caveat here would be if Canada was to allow an immense increase in immigration, well above the 0.59 percent net annual migration (which is already high by global standards) it allows today. If that were to happen, then Canadian real estate prices could be expected to continue rising rapidly

4. Gravity 

— Given the extent to which cities like Vancouver and Toronto have seen their real estate markets increase, many people are being priced out, or are on the verge of being priced out, of those markets. This may make it less likely that these markets will continue increasing as rapidly as others going forward

— A graph from this week’s Economist magazine has Canada’s housing markets among the most overpriced when viewed in comparison to rent costs or income levels:


5. Commodities

— After a decade or so of very high energy and other commodity prices, in 2014 prices crashed, and they remain low today. Inexpensive commodity prices should put downward pressure on Canadian home prices in two ways

— First, by weakening the Canadian economy in general, as the Canadian economy is an enormous commodity exporter. Toronto, as the commercial capital of the country, may not be immune to this

— Second, by making suburban sprawl cheaper. Nearly every aspect of suburban living is much more energy-intensive and commodity-intensive than is urban living

— There is, not surprisingly, a historical correlation between commodity prices and Canadian real estate prices. When commodity prices reached their modern-day lows during the mid-1990’s, Canadian home prices declined by roughly 5% in spite of strong growth occurring in the general economy at the time. When, on the other hand, commodity prices reached their modern-day highs between 1979 – 1983 and between 2007 – 2014, Canadian home prices went up by roughly 10% and 35%, respectively, in spite of the fact that the country’s two most severe postwar recessions took place during the years 1982 and 2008-2009

So, What’s A Guy/Gal To Do? 

Well, you could rent. Or, you could buy in a different city or town. Or, if you are wealthy enough to afford it, you could rent an apartment in Toronto and buy a home somewhere else.

On the Other Hand…

Of course, that I could be entirely wrong about all this. The counter-theory to the one I have put forth is one that you might call “the Manhattan project”: namely, that Canada is bound to develop a city that is at least somewhat comparable to New York City at some point, and that city is likeliest to be Toronto. Today, the City of Toronto’s population density is 4,150 per square km; Manhattan’s is approximately 27,000, Brooklyn’s 14,200. The Greater Toronto Area’s total population, at 6.4 million, is only around a quarter the size of the New York Metropolitan Area’s. Viewed in that comparative manner — and Torontonians do have a reputation for seeing their city as a New York-in-waiting — Toronto has plenty of room to continue growing. (Though, on yet another hand, Canada’s population is only around a tenth of the US’s…). Indeed, as was mentioned above, a big wild card for the future of Canadian real estate is the future of Canadian immigration. There are 7.5 billion people in the world, but only 36 million in Canada. If we are willing to accept immigrants with open arms — far beyond the numbers we presently allow — the population of Canada could soar, and its home values too.

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North America

The Case For A DVP Relief Subway (and Gondola) in Toronto

Toronto’s subway plans contain a little problem and a big problem. The little problem is that over a third of the “preferred route” for the Downtown Relief Line subway (see map below) uses Pape, a street comprised almost entirely of houses rather than apartments or businesses. Pape is only 0.7-1.3 km east of the DVP, so it might become a bit redundant given that ride-sharing apps and eventually self-driving vehicles could turn the DVP into an efficient transit corridor. The far bigger problem, however, is that many of Toronto’s municipal councillors continue to vote in favour of extending subways into relatively sparsely populated areas like Scarborough, even as funding for transit construction remains scarce. Provincial policymakers too are loath to prioritize the Downtown Relief Line ahead of other, much less urgent subway projects within the GTA, like Yonge North. 

A compromise, it seems to me, might therefore be desirable. The Relief Line will finally receive top priority and funding, but in return it will will be reconfigured so as to become cheaper to build than the current preferred route, and more easily accessible to commuters from suburban and midtown Toronto who are ride-sharing on the DVP or Bayview Extension. It will be a DVP Relief Line.

I can envision two routes along which a DVP Relief subway might, just maybe, be worthwhile. In one, the subway would run under Queen to River Street, then under River Street to Gerrard. In the other, the subway would run under Queen to Parliament Street, then under Parliament to the Danforth. The Queen-River route would be just half the length of the preferred Queen-Pape route; the Queen-Parliament route would be roughly 58 percent the length of the Queen-Pape route. Also, unlike the Pape route, the Parliament and River routes would not involve crossing the Don Valley, which is one of the more costly necessities of the existing Downtown Relief Line plan.

queen-river

 Above: Queen-River — Below: Queen-Parliament

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The goal of either DVP Relief Line route would be threefold. One, to create ride-sharing transfer areas* for the DVP and Bayview Extension; areas that would be directly accessible to the Bloor-Danforth subway and the Relief Line subway. Two, to connect the Bloor-Danforth subway to the Relief Line subway. Three, to allow the DVP south of Gerrard or the Danforth to be gotten rid of in the long-run, so riverside parks and boardwalks could be put in its place and apartments built next to it.

*A ride-sharing transfer area is a place where anybody using a service like Car2Go, UberPool, or UberHop could disembark their vehicle and switch to a subway or to a different Car2Go, Uber vehicle, etc. A commuter in Markham, for example, could share an UberPool to the transfer area in Toronto with other people living in his or her neighbourhood, then travel from the transfer area to his or her office downtown by switching either to a Car2Go or to a different UberPool (one in which the other passengers are travelling to destinations near his or her office). Or, to give a different example, a commuter from Scarborough may take a Car2Go to the transfer area and then switch to a subway to reach his or her office, leaving the Car2Go car behind for others. Transfer areas of this sort would be especially useful if self-driving vehicles eventually become available.

A ride-sharing transfer area that would serve the DVP and Bayview Extension would need to be located within the Don Valley in order to prevent significant traffic bottlenecks from forming on the Parkway’s on/off-ramps. It would also need to be large enough to prevent significant traffic bottlenecks from forming at its own entrances and exits, and to leave a bit of room for parked vehicles like Car2Go. And it would need to be located next to the Bloor-Danforth and Relief Line subways. This leaves two possible locations: the area of the valley between Gerrard and the Danforth, or the area of the valley between the Danforth and Pottery Road. Both are 1.3 km in length.

dvp .png

If the Queen-River route was chosen, the accompanying ride-sharing transfer area would have to be located in the valley between Gerrard and the Danforth. This is where the gondola that is mentioned in the title of this article comes into play. What I am proposing is that the ride-sharing areas be located in part of the track field next to the DVP and in part of the baseball field next to Bayview. These two fields, which are already linked to one another by the Riverdale Pedestrian Bridge, would then in addition be linked to one another by a 1.3 km aerial gondola that would in turn connect both of them to Broadview Station in the northeast and to the intersection of Gerrard and River Street — where a DVP Relief Line subway station would be located — in the southwest.

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Queen-River Subway plus Gondola extension

This would only be a temporary solution to the overcrowding on the Yonge subway line. Over the longer-term, a direct subway connection rather than an indirect gondola connection would be needed between the Bloor-Danforth subway and the Relief Line subway. The Relief Line subway would then need to be extended east along Gerrard to reach the future GO/SmartTrack station at Pape-and-Gerrard (see maps below) and then turn north to reach Pape Station on the Danforth.

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  Source for Map Above: Toronto Star, June 2016

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 Long Term: Queen-River-Gerrard-Pape Subway plus Gondola extension

In the nearer-term, however, the gondola link might suffice to relieve the Yonge line, for three reasons. First, it would allow commuters who live along streets like Bayview, who might today take the Yonge subway, to instead ride-share down Bayview to the ride-sharing transfer areas and the Relief Line. Second, it would allow commuters who are not in a rush to transfer from the Bloor-Danforth subway to the Relief Line subway via the gondola, thereby avoiding the hectic mass of commuters at Yonge-and-Bloor station. (Ideally the gondola would even descend underground, into the subway stations, allowing transfers to be made from subway to gondola to subway without anybody needing to go up or down a flight of stairs, escalator, or elevator). Third, the Yonge line is likely to be relieved to a certain extent in the coming years by the fact that the Internet is increasingly allowing many people to work from home for a day or two a week, or at least to work from home in the morning sometimes, thereby avoiding the rush hour crush.

These three factors could buy time for the Yonge line, for the years in which the Queen-River portion of the Relief Line is complete but before the extension of the Relief Line to Pape Station is done.

dvp gondola images.png

 Images above from donvalleycablecar.com

If, alternatively, the DVP Relief Line was to use the Queen-Parliament route, the ride-sharing transfer areas would instead have to be located north of the Danforth. One such area would be put in the parking lots of the Evergreen BrickWorks. A gondola would link these transfer areas to Castle Frank subway station, then go beyond it to reach a Relief Line station beneath St. James Cemetery.

castle frank gondola .png

Above: BrickWorks-Castle Frank-Parliament Gondola — Below: Queen-Parliament Subway plus Gondola extension

queen-parliament subway plus gondola.png

In the long-term, this subway line could be connected directly to Castle Frank or Sherbourne stations. Castle Frank is 0.25 km away but is across the Rosedale Valley Road and is relatively remote as subway stations go, whereas Sherbourne Station is 0.5 km away but otherwise may be the better option. It could also be extended to reach the future Unilever GO/SmartTrack station and high-rise developments south of Queen and east of the DVP, just like the ‘preferred’ Relief Line route does. And perhaps eventually it could even be extended to reach Rosedale Station on the Yonge subway line, in order to further reduce the severe overcrowding at Yonge-and-Bloor.

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Queen-Parliament Subway, plus extensions to Unilever, Sherbourne, and/or Rosedale stations, plus Gondola extension

Those who want the subway under Pape — Papists — might say it is unwise that all the transit corridors should be concentrated downtown. In this plan, the University, Yonge, and Parliament subways and the DVP/Bayview/gondola would all be within 2.8 km from east to west, while the Bloor and Queen subways, Gardiner Expressway and Front St. GO line would be within 3 km north to south. But such transit inequality might actually make sense, as it reflects the inequality between the weakness of human legs and strength of an internal combustion engine. Downtown Toronto will hopefully be built around pedestrians’ weak legs, and so require subways as an aid, whereas the rest of the city would be built around the strength of the internal combustion engine (whether car or bus; personal or ride-share; human-driven or self-driving), and so might not need the extra subway. Parliament, unlike Pape or River Street, already has a high population density.

gondola icon.png

Ideally, this project will help to create the conditions to allow carpools or busses within the DVP and Bayview Extension to be used effectively, and to ease subway access and make the Valley simpler to cross over or into. Gondolas are very cheap and quick to build, relative to LRTs. They have decent capacities: up to 6000 people per direction per hour (ppdph) (by comparison, the Queen Street streetcar during rush hour has a capacity of 2000 ppdph, roughly speaking). That  said, without a DVP Relief Subway and a rise in ride-sharing on the DVP, Bayview, or in Toronto in general, any gondola would be frivolous. With ride-sharing, however, it could be an incredible boon.

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North America

The Blessings of St Catharines

If extremely high taxes on greenhouse gas emissions were to be enacted worldwide, which part of Ontario would be poised to lead in terms of population growth and economic development as a result?

My guess would be St Catharines-Niagara, which at the moment is Canada’s 12th most populous census metropolitan area (just ahead of Halifax-Dartmouth), home to approximately 400,000 people.

A low-emissions city should at least a few of the following five characteristics, all of which define Niagara. One, it should be easily accessible by barge, as water remains far and away the most fuel-efficient mode of transportation. Two, it should not have much suburban sprawl. Three, it should be located close to other major cities in order to create urban economies of scale. Four, it should have a mild climate: not too cold or snowy in the winter, not too hot in the summer. And five, it should have an abundant source of clean power — and ideally also the ability to store up its energy in order to assist clean but intermittent power sources like solar, wind, and run-of-river hydro.

1. Water Transport

St Catharines-Niagara is one of only two urban areas in Canada or the US to be situated on more than one Great Lake. (The other is Sault St Marie). It links Lake Ontario to Lake Erie via the Welland Canal, a canal 43 km long and, in most places, 100-150 metres wide. The canal has seven locks on its northern end and one lock on its southern end; it takes ships around 10 hours to cross in full. However it has a lock-free middle stretch that is close to 25 km long, next to the city of Welland (pop. 50,000). It runs perpendicular to the Erie Canal, the longest shipping canal in the United States, which links Niagara Falls and Buffalo to New York City and Lake Champlain via the navigable Hudson River, passing by Rochester, Syracuse, and Albany along the way.

LR Welland Canal Map

Canals, when they are not frozen in the winter, are in many ways the ideal form of water transportation. They lack the difficulties of rivers (bends, rapids, shallows, etc.) and seas (storms, tides, waves, etc.), and are not too wide to make building bridges or tunnels across them too expensive. According to the New York Times, “one gallon of diesel pulls one ton of cargo 59 miles by truck, 202 miles by train and 514 miles by [Erie] canal barge… A single barge can carry 3,000 tons, enough to replace 100 trucks”.

canal_map2

Erie Canal

As recently as the 1890s, prior to the modern age of highways, cars, and trucks, the Erie Canal allowed Buffalo to become the eighth most populous in the US and fourth most populous inland city in the US. And while Niagara never shared in Buffalo’s prominence (in part as it was too close to the US border for comfort; it was captured in the War of 1812, and became the refuge for William Lyon Mackenzie and his supporters during the Upper Canada Rebellion in 1837-38), the adjacent city of Hamilton did. Hamilton was Canada’s fourth most populous city during the 1890s, and was about half as populous as Toronto in 1870. Today, in comparison, Hamilton is only around 13 percent as populous as Toronto.

As land transport became dominant, however, Hamilton found itself blocked in by the Hamilton Harbour (which until then had been the main source of its success) as well as by the Niagara Escarpment. Toronto, in contrast, has been able to expand barrier-free, now reaching to Lake Simcoe in the north, Oshawa and Clarington in the east, and Hamilton’s suburbs in the west.

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Niagara Escarpment

Admittedly, it is still quite expensive to build bridges across harbours or wide canals; they must be either high enough to let large ships pass below, or else be lift-bridges. The Welland Canal overall has two tunnels and ten bridges, all but one of which are lift-bridges. Given that the population of the region is split by the canal (St Catharines and Hamilton are to its west, Niagara Falls and Buffalo are to its east), these lift-bridges and tunnel crossings could lead to traffic bottlenecks if its population or economic activity were to experience growth.

St Catharins .png

This canal-crossing problem can be managed, however, by switching over from cars to public transit. Luckily for St Catharines-Niagara, such a switch which would be necessary anyway if greenhouse gas emissions were to be highly taxed.

Public transit, including new transit services like Car2Go, Uber, and UberPool, can allow canals to be crossed more easily via bridge or tunnel, by reducing traffic bottlenecks and by letting its passengers relax rather than drive when there are traffic bottlenecks. In addition, public transit can allow for easier canal crossings via boat, pedestrian bridge, cable car, or even ice-sled, by making transit available upon crossing. For the same reason, crossing canals will also become easier as parking apps like Rover and PocketParker become common (and if cars that come equipped with parallel parking sensors or can parallel park themselves become common), as people will be able to park a car easily on one side of the canal and then take public transit after crossing.

In the St Catharines-Niagara area, public transit will be similarly useful in helping to cross the Niagara River (which is one of the widest and, in places, the most treacherous rivers in southern Ontario), Hamilton Harbour (which has two bridges crossing it at present, and no tunnels), and perhaps even the 45 km Lake Ontario shortcut that separates St Catharines (and Buffalo) from Toronto.


2. Suburban Sprawl

St Catharines-Niagara, as well as the nearby urban areas of Hamilton and Kitchener-Waterloo, are among the cities with a relatively high population density in Canada. Kitchener-Waterloo and Hamilton have the highest population densities among urban areas in Canada apart from Toronto, Montreal, and Vancouver, according to the 2011 census, while St Catharines-Niagara has the seventh highest population density (though this does not take into account the 50,000 people living in Niagara Falls, NY).

Niagara may be particularly well-placed to benefit if suburban sprawl in general is reversed as a result of eco-taxes. This is because many of the big cities around Niagara have had their suburbs sprawl away from Niagara during their recent generations of suburbanization. As a result, a reversal of this sprawl would bring people back closer to Niagara.

Toronto has sprawled north and to a lesser extent east, away from Lake Ontario and Niagara. Northern Toronto suburbs like King city, Caledon, and Whitchurch-Stoufville  tend have population densities that are far lower than in suburbs closer to the lake, like Mississauga, Oakville, and Oshawa — nearly 30 times lower in the case of Caledon compared to Mississauga. Indeed some of Toronto’s lakeside suburbs, particularly to its west (towards Hamilton and Niagara), are themselves among the cities with the highest population densities in the country. Toronto’s easternmost suburbs, on the other hand, like Clarington and Scugog, have relatively low densities too.

Buffalo’s suburbs sprawl away from the border with Niagara, meanwhile, and Detroit’s sprawl away from Windsor (which is 315 km from St Catharines). Cleveland’s suburbs away from Lake Erie,  mainly to the south and west. If, then, suburban sprawl gives way to urban re-densification, it could lead to population growth along the coasts of both Lake Ontario and Lake Erie, which Niagara shares, as well as along the Buffalo and Detroit borders with Canada, which Niagara either shares or is at least not too far away from.

Another energy advantage of de-suburbanization is that it frees up land to be re-converted into farmland. This is important, as importing food is highly energy-intensive; food is much more bulky than most other goods, and also often requires refrigeration or freezing while it is being transported. This means that areas that are not suitable to agriculture — areas that include most of Ontario, as the Canadian Shield generally is not farmable in the economic sense — will not benefit as much from de-surbanization in an eco-tax world as areas that are best suited to be used for agriculture.  For Ontario, these areas are  Southwestern Ontario and adjacent lands of the United States.

3. Proximity to Major Cities

St Catharines is around 50km from Toronto by way of Lake Ontario and about 100 km from Toronto via land. To put that into perspective, Oshawa, Burlington, and Newmarket, all three of which are in the Greater Toronto Area, are around 45 km from downtown Toronto, and Barrie is around 85 km from downtown Toronto. St Catharines is also around 40 km from downtown Buffalo (and Niagara Falls is less than 30 km from downtown Buffalo), 65 km from downtown Hamilton, 120 km from Kitchener-Waterloo and from Rochester, 270 km from Cleveland, 300 km from Pittsburgh, and 320 km from Detroit, and 500 km from New York City and Washington, D.C.

Hamilton and Toronto

St Catharine’s proximity to the New York City-to-Washington “Megalopolis” is unique and, in an eco-tax world, could be economically significant. If you extend the Megalopolis all the way north to Boston, however, then St Catharines’ proximity is less unique, as Ottawa and Kingston are both closer to Boston than St Catharines is. That said, the population density of the area between New York and Boston is quite a bit less than between New York City and Washington, so it is not clear Boston really should be counted as part of the Megalopolis core. St Catharines is also around 40 km closer to New York City and 250 km closer to Washington than Ottawa is, whereas Ottawa is only around 160 km closer to Boston than St Catharines is. Only Kingston then, among notable Ontario cities, can be said to be closer in proximity to the Megalopolis than St Catharines is.

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pop dens

Population density, US

4. Climate

Niagara, because of its relatively southern location and the temperate effect of the Great Lakes that surround it, has a mild climate compared to most other cities in Ontario. It tends to be around a degree warmer than Toronto in the winter and a degree cooler than Toronto in the summer, and it is much milder than the weather in more northern cities like Ottawa or Thunder Bay. It is also located outside any of the Great Lakes Snowbelts, unlike, for example, Sudbury or Barrie.

average snow in canada

Niagara’s position next to the US border may also be significant, as eco-taxes could lead Americans to come north to where the climate is more mild, at least during the summer. The average annual daily temperature highs in Buffalo is 14 degrees celsius, compared, for example, to 29 degrees for Miami or 31 degrees for Phoenix. Cool climate zones may also end up using more eco-friendly energy for heating than hot climates do for cooling, because the weather gets coldest at night when there are typically surpluses of electricity available (including low-carbon sources, like wind, base-load nuclear, and run-of-river hydro), whereas it is hottest during the day when no such energy surpluses typically exist. Admittedly only seven percent or so of American households use electric heaters, but a high eco-tax could cause them to be adopted more widely. Plus, it is possible to stay warm using clothing and blankets rather cranking the heat.

The arid climate and diffuse population settlement in the US Southwest in particular leads to a high energy footprint. Any extended drought in the Southwest, for example, would necessitate water desalination, water treatment, or increased food imports, all three of which are extremely energy-intensive. The most extreme of these, Las Vegas, which is a gambling and tourism competitor of Niagara to a certain extent, relies on long-distance air travel, long-distance food imports, air conditioning during the day, and heating at night (the desert can get cold at night, after all).

Owning, renting, or Airbnb-ing a home or cottage in upstate New York or upstate Pennsylvania, in contrast, will help keep air conditioning costs down in summer. Moreover, because both are located in the Great Lake Snowbelts and Appalachia, these also be used recreationally during the winter. This may be an advantage too, given that eco-taxes will make it far more expensive to fly to the Rockies to ski, and given that aging Baby Boomers are going to be switching from downhill skiing to cross-country skiing. Similarly, eco-taxes could make Canadian vacationers who head south to escape the winter forgo flying to places like Arizona, California, and Mexico, and instead travel by train or bus to the US Southeast (and perhaps from there on by cruise or plane to islands in Cuba or the Bahamas). Such train and bus journeys will usually pass through Niagara.

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Great Lake Snowbelts

US Snow Map

US average annual snowfall map

5. Energy Production

In a world in which greenhouse gas emissions are highly taxed, it would no longer be viable for Ontario to import so many manufactured goods from Asia, since Asia is so far away and relies on burning coal to power its industrial activity. Ontario would instead have to manufacture more products locally, making up for its lack of low-wage labour by using machines, having foreign engineers and other skilled labour e-commute from afar, etc. Such industrialization, particularly as it will depend on machines to assist or replace human workers, will need a lot of low-carbon energy.

Niagara Falls hydro (not counting the American side of the border) accounts for around 5-6 percent of Ontario’s power generation capacity, but more than 7 percent of non-fossil fuel generation capacity and more than 20 percent if you also ignore nuclear power. Niagara accounts for about a quarter of all Ontario hydropower, and its dams also happen to be located far further south than the majority of other dams in the province or country, meaning that the energy and capital used to maintain Niagara’s dams (and to maintain the electricity grid infrastructure that is connected to them) tends to be less than it is for other hydroelectric facilities. Most of Ontario’s other dams are either located near to or north of Ottawa – far north, in many cases – while most of the hydropower in the country comes from central or northern Quebec.

In addition, the hydropower facility on the US side of Niagara Falls produces 25 percent more power than those on the Canadian side of the Falls; it produces more power than all but three other dams in the United States and accounts for nearly 60 percent of New York state’s hydropower (and New York ranks third in hydropower among US states). It also has a pumped storage capability that by itself is larger than the hydropower storage available in all of Ontario outside of Niagara, which is significant since hydro-storage remains the leading method of assisting intermittent energy sources like wind and solar. (Batteries are still not generally up to the job of storing energy in a cost-effective or eco-friendly manner, in spite of all the hoopla surrounding Tesla).

Niagara is, similarly, home to nearly all of Ontario’s pumped storage hydro capacity. Moreover, it is located relatively close to the pumped storage facilities across the United States (apart from the pumped storage in California,  but those have been under-utilized in recent years as a result of drought), not just those on the US side of Niagara Falls.

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Niagara is also, along with the rest of Southwestern Ontario and the adjacent Bruce Peninsula, home to most of the province’s wind power production and solar power potential.

While 60 percent or so of Ontario’s electricity comes from nuclear, people do not want to live in urban areas that contain nuclear facilities. In addition, more than half of Ontario’s nuclear power capacity is located directly on the coast of Lake Ontario, 30-60 km east of downtown Toronto, which means that, when you combine their output with that of Niagara’s dams (not even counting the US Niagara dams), the coastlands of western Lake Ontario account for more than 40 percent of Ontario’s non-fossil fuel power capacity and nearly 40 percent of Ontario’s overall power capacity.

If, finally, you look at natural gas storage – both underground storage and LNG storage – Niagara is also well-placed. Natural gas could be useful in assisting intermittent sources like solar and wind, because like hydro, but unlike coal or nuclear, a gas-fired power plant can ramp up and down energy rapidly in response to the wind suddenly slowing or the sun suddenly being blocked by clouds. Most US underground storage is surrounding Niagara, in a broad sense.

Storage07

In Ontario, which in contrast to the US has very little gas storage capability, much of the gas storage is around Sarnia, with potential further development in Goderich, both of which are not too far away from Niagara. Most LNG storage and peakshaving capacity, meanwhile — which, while smaller in scale than underground storage, is better for delivering gas quickly in order to assist wind or solar intermittency — is located mostly on the Northeast coast, much of it within New York state.

storage

lngpeakshaving

The gas pipelines that bring US gas to Ontario also mainly run through or near to Niagara. Ontario used to get its gas from Western Canada, but with the shale boom in nearby US states, particularly in Pennsylvania which has led the shale gas boom, the province has begun to use US gas instead. The shale boom has revolutionized the gas industry, and should it continue it may be likely to put the border areas of Ontario in a strong position relative to non-border areas, in terms of their energy economics.

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Night Moves: The Future of Charging Electric Cars in Ontario

The Ontario government recently announced a plan to subsidize electric cars by up to $14,000 per vehicle and pay for them to be charged at night, among other things. Night-time charging is a key factor in electric vehicle ownership, as in most cases it takes several hours to charge an electric car.

This begs the question: what will the price of overnight electricity in Ontario be in the years ahead?

Today overnight electricity is cheap because most nuclear power plants in Ontario and coal plants in nearby states like Michigan cannot easily be turned off at night, in contrast to gas plants or hydropower facilities which can more easily ramp up and down their output to match real-time electricity demand. An estimated 60 percent of Ontario’s power is generated from nuclear, compared to around 15 percent in Canada as a whole and 20 percent in the US. Around 50 percent of the power in Michigan, Pennsylvania, Ohio, Indiana, and Illinois (states that are close to Ontario) comes from coal, compared to 33 percent in the US as a whole and 10-15 percent in Canada. Ontario and the Midwest are also among the leaders in wind turbines, which do not turn off at night either, and Ontario, Illinois, and Pennsylvania are by far the top three North American producers of nuclear power.

Going forward, however, there are compelling reasons to think that this overnight surplus of electricity will no longer exist.

The first reason is fracking. In the past few years the US has seen an enormous boom in shale gas production, which has been leading much of the country to begin switching off their coal plants and replacing them with cheap natural gas. The stock prices of US coal companies have already dropped by over 90 percent since 2014, and by over 97 percent since 2011. As more gas and less coal is used to generate electricity, the price of overnight electricity is likely to spike relative to the price of daytime electricity, since gas plants tend to be far easier to shut off at night than coal plants.

This is relevant to Ontario because the biggest gas booms in the US since 2010 have been in nearby states like Pennsylvania, and because Ontario already has the extensive natural gas infrastructure required to import and distribute American gas (especially via Michigan, which has the largest gas storage capacity in the US). Indeed fracking has made gas so cheap in the region that even Ontario might look to it again as a source of energy production, instead of building new nuclear plants or wind farms.

The second reason overnight electricity prices are likely to rise is robots. Machines that combine mobility with computation are highly energy-intensive, but, unlike humans, they do not need to sleep at night or relax in the evening. Take, for example, Amazon’s robotic warehouses: they have caused the company’s night-time electricity use to rise substantially since they were introduced, given that before they came along Amazon’s warehouses were either inactive overnight or else employed human workers who ran on food (and overtime pay) instead of electricity. If and when this robotic economy finally goes mainstream, then, such demand for overnight power could be replicated at large. We should expect late-night electricity use to skyrocket: robots are no longer science-fiction.

The final reason is environmentalism. In order to keep greenhouse gas emissions down (which is, after all, the main point of subsidizing EVs), many voters are pushing for more solar panels and wind turbines to be built. Solar and wind are complementary to one another, not only because the sun often shines brightly at different times as the wind blows strongly, but also because wind farms and solar farms usually inspire non-overlapping types of NIMBY-driven political backlash. Ontario already gets 5-6 percent of its electricity from wind compared to less than one percent from solar, so it might be that going forward its solar power growth will outstrip its wind power growth. Of course, solar power will not help to bring down overnight electricity prices. Even the wind, however, tends to blow less strongly overnight than during the day – a fact that runs contrary to conventional wisdom, since the wind can usually be heard more clearly at night.

As solar, wind, and gas replace dirtier coal in the regional electricity network, there will also be environmentalist-led pressure to stop heating homes with fossil fuels and instead adopt electric-powered heaters like those used in Quebec and the Pacific Northwest. This too would be likely to cause overnight electricity prices to rise. Quebec, for example, uses electric-powered heating and so has its electricity demand peak during frigid winter nights, whereas Ontario primarily uses gas-powered heating and therefore has its electricity demand peak during hot summer days. Should Ontario or nearby US states switch over to electric heating in order to reduce carbon and methane emissions from natural gas, the region’s overnight electricity usage will rise.

The need to help support solar and wind power could lead as well to the building of more pumped-hydro facilities, which pump water uphill so that it can flow back downstream through a turbine when other power sources are in low supply, such as when solar panels are blocked by clouds or the wind is not blowing. There has been talk lately of building more pumped hydro in Ontario, in places like Niagara and Marmora, as pumped hydro is the most efficient form of electricity storage. Given that Ontario’s daytime power is not cheap (at least, not by Canadian or American standards), this water would be pumped at night. It is an energy-intensive process, however, requiring 20 percent or so more energy to pump uphill than is generated from releasing it back downhill. Thus it would lead overnight prices to rise.

In closing, any electric-vehicle policy approach that assumes that Ontario’s overnight electricity costs will remain cheap is probably a shortsighted one. Ontario’s overnight electricity costs are likely to rise substantially as a result of natural gas replacing coal, robots working slavishly every night, and the move towards cleaner sources of energy like wind power and, especially, solar power.

Without being certain of future electricity prices,  the EV subsidy plan is like a leap, or Leaf, in the dark.

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