PASSENGER CAR FLOWS ACROSS THE CANADA-US BORDER:THE EFFECT OF 9/11

Bill Anderson, Hanna Maoh,(University of Windsor)

and Charles Burke (McMaster University)

Borders in Globalization ConferenceCarleton University and University of Ottawa

September 25-27, 2014

September 25, 2014

2

Identify factors that influence the level of passenger vehicle movement across the Canada-US border for the period 1972 – 2011

Isolate the effect of enhanced security regime in the aftermath of 9/11

Objectives

3

DATA

Data on the number of passenger vehicle crossings the Canada-US border are obtained from the Statistics Canada International Travel Survey Frontier Counts series (CANSIM Table 427-0002)

All vehicles are counted as they pass through Canadian border inspection plazas

Vehicles are separated into US residents visiting Canada and Canadian residents returning from a visit to the US

The number of vehicles crossings are separated into same day trips and trips that involve staying over one or more nights (hereafter called “overnight” trips)

Data and Trends

4

DATA

The data do not identify trip purposes such as shopping trips and commute trips

The data are also disaggregated by the Canadian province in which the crossings occur

Data and statistical results are presented both for all of Canada and for the province of Ontario

Ontario accounts for the largest share of crossings.

The share of commuting trips is almost certainly higher in Ontario than in other provinces

Data and Trends – cnt’d

5

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000 Ontario: US Vehicle Crossings: Same Day

Canada: US Vehicle Crossings, Same Day

Annual Vehicle Crossings from US to Canada: Same Day

Trends

6

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000 Ontario, CAN Vehicle Cross-ings, Same Day

Canada: CAN Vehicle Crossings, Same Day

Annual Vehicle Crossings from Canada to US: Same Day

Trends – cnt’d

7

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000 Ontario: US Vehicle Crossings, One or More NightsCanada: US Vehicle Crossings, One or More Nights

Annual Vehicle Crossings from US to Canada: Overnight

Trends – cnt’d

8

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000 Ontario: CAN Vehicle Crossings, One or More Nights

Canada: CAN Vehicle Crossings, One or More Nights

Annual Vehicle Crossings from Canada to US: Overnight

Trends – cnt’d

9

Annual time series regression models are specified for passenger vehicle crossings to the US and to Canada

Separate models are estimated for same day trips and for overnight trips, making a total of four basic models

Each of these models is then repeated for the subset of trips that pass through Ontario border crossings, making a total of eight regression models

Multivariate Regression Analysis

10

Where,is the number of passenger crossing year t

are the independent variables used in the regression (K = 1, 2, …, k)

’s are parameters to be estimated and

is the unobserved error term

Basic Form of Time Series Regression Model

11

Variable Definition CAN. GDP Real annual Canadian gross domestic product (GDP)

ONT. GDP Real annual Ontarian gross domestic product (GDP)

USA. GDP Real annual US gross domestic product (GDP)

CAN. GDP (%) Annual percent change in Canadian real GDP

ONT. GDP (%) Annual percent change in Ontarian real GDP

USA. GDP (%) Annual percent change in American real GDP

US EXR US Exchange Rate as the value of $1 US in Canadian currency

Post911 1 if year is greater than 2001, 0 otherwise

TD1 1 if year is greater than or equal to 1987 and less than 1992, 0 otherwise

TD2 1 if year is greater than or equal to 1992 and less than 1996, 0 otherwise

TD3 1 if year is greater than or equal to 1980 and less than 1982, 0 otherwise

TD4 1 if year is greater than or equal to 1995 and less than 2000, 0 otherwise

1

Independent Variables used in Regression

Note: Time dummies TD1 to TD4 are used to capture popularity of Sunday shopping (TD1), introduction of GST (TD2), brief period when gasoline was cheaper in Canada due to the Iraq-Iran war (TD3), and opening of casinos in Canada-earlier than in the US(TD4) .

Factors captured by dummy variables

• Popularity of Sunday shopping (87-92)• Introduction of GST (92-96)• Brief period when gasoline was cheaper in

Canada (80 – 82)• Opening of casinos in Canada (earlier than in

the US.) (95-2000)

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Variable Same day crossings One or more nights crossings CAN to

USA ONT to USA

USA to CAN

USA to ONT

CAN to USA

ONT to USA

USA to CAN

USA to ONT

Constant 0.629 1.243 0.201 0.038 0.705 1.303 0.856 0.861 CAN. GDP 1.095 1.095 ONT. GDP 1.739 1.460 USA. GDP 0.571 0.629 0.389 0.189 CAN. GDP (%) -0.017 -0.017 ONT. GDP (%) -0.013 -0.012 USA. GDP (%) 0.006 0.005 0.009 0.007 US EXR -0.585 -1.301 0.115 0.192 -0.572 -1.196 -0.250 -0.127 Post911 -1.474 -2.859 -1.639 -1.616 -0.732 -1.741 2.803 2.031 Post911 x US EXR 0.798 1.722 1.067 1.027 0.362 1.031 Post911 x US GDP -3.096 -2.232 TD1 0.215 0.139 TD2 0.255 0.201 0.213 0.223 TD3 0.303 0.334 TD4 0.112 0.123 Number of Obs. 40 30 40 40 40 30 40 40 R2 0.842 0.846 0.936 0.947 0.849 0.847 0.508 0.485 Adj. R2 0.807 0.806 0.922 0.935 0.816 0.807 0.436 0.409 Augmented Dickey-Fuller (DF) test statistic

-5.425* -5.585* -4.221* -4.359* -5.297* -4.687* -4.187** -4.072**

1 2 3 4

Results

Highlights

• GDP growth rate has negative impact on trips from Canada

• Effect of exchange rate as expected (negative for Can-US, positive for US-Can but not significant for US-Can.)

• Effect of 911:– Negative effect on all trips– Eliminates exchange rate effects for Can-US trips

15

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000Predicted (No Post911 Effects)

Predicted (Post911 Effects)

Observed

Estimated Impact of 9/11 on Same Day Passenger Vehicle Crossings from Canada to the US

Results-cnt’d

16

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000Predicted (No Post911 Effects)

Predicted (Post911 Effects)

Observed

Estimated Impact of 9/11 on Same Day Passenger Vehicle Crossings from the US to Canada

Results-cnt’d

17

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000Predicted (No Post911 Effects)

Predicted (Post911 Effects)

Observed

Estimated Impact of 9/11 on Same Day Passenger Vehicle Crossings from Ontario to the US

Results-cnt’d

18

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000Predicted (No Post911 Effects)Predicted (Post911 Ef-fects)Observed

Estimated Impact of 9/11 on Same Day Passenger Vehicle Crossings from the US to Ontario

Results-cnt’d

19

Same day passenger vehicle trips from the US to Canada have plummeted while same day trips from Canada to the US have stagnated

Results suggest that had it not been for the attacks of 9/11, same day trips from the US to Canada would have held steady and trips from Canada to the US would have reached new peaks

Conclusions

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CANSIM Table 427-0002 : Table 427-0002 - Number of vehicles travelling between Canada and the United States, monthlyhttp://cansim2.statcan.ca/CII/Dir/4270002-eng.htm

William P. Anderson, Hanna F. Maoh and Charles M. Burke, 2014, “Passenger car flows across the Canada-US border: The effect of 9/11,” Transport Policy, 35:50-56.

References

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Acknowledgments

This research is supported by the Government of Ontario through the Ontario Research Chairs in Public Policy program

Authors’ Contact Info Bill Anderson Cross Border Institute, University of Windsor (bander@uwindsor.ca)

Hanna Maoh Associate Director, Cross Border Institute University of Windsor (maohhf@uwindsor.ca)

Charles Burke PhD. Candidate, School of Geography & Earth Sciences McMaster University (burkecm@mcmaster.ca)