Smart planning can create green and low carbon cities

In the last 20-30 years, urban and industrial agglomerations have been growing at unprecedented levels.

Dr Adarsh Varma, Associate Director – Cities Economics, makes a case for smart planning to create viable business models for low carbon prosperous cities.

There are astonishing stats about cities contributing to global economic outputs, energy use, carbon emissions and air quality issues. For example, cities generate around 80% of global economic output, and around 70% of global energy use and energy-related GHG emissions, and account for 65% of the global population, and urban residents produce about twice as much waste as their rural counterparts.

This blog is part of a series about smart cities and how we overcome the current challenges that technology-driven solutions currently face (see introductory paper to the topic). It touches on what we know about how cities grow and raises some questions on how cities can grow more sustainably in the future by focusing on planning smarter cities.

What we know!

Some cities are much better economic performers than others, as competitiveness indices of different countries show. Large cities do not necessarily do better than smaller cities. GDP per capita and by city area (sq. mile) can also vary significantly between cities of similar size within the same country and in different countries. In terms of their environmental performance, some cities are decoupling emission growth from economic growth. Atlanta and Barcelona have similar populations and wealth levels but very different carbon productivities with CO2 tonnes per capita of 7.5 and 0.7 respectively. In most parts of the world urbanisation has happened without proper socio-economic and environmental assessment with the consequence of low housing density and high rates of car use.

The stakes are very high if we continue with this trend. Given the significant lock-in risks associated with urban infrastructure investments, the choices cities make now about their future model of urban expansion will play an important role in determining the global economic and emissions pathway for decades and even centuries to come. This is particularly the case for rapidly growing emerging cities and small urban areas in developing countries, due to lack of planning capability, limited budgets and reliance on informal economic activities.

What can we do to make cities grow more sustainably?

We know some cities do better than others. Singapore, Stockholm, Curitiba, Copenhagen have shown that compact, high density, connected cities can go hand in hand with economic growth. These cities also have high ‘investment attractiveness’ and ‘ease of doing business’ and ‘quality of life’ indices. The question is how cities that are lagging far behind can improve their performance to catch up with rivals.

City planners and urban policy makers have to deal with a lot of uncertainty. Capturing complexity of various interactions – human behaviour, policies, economics, technology – is not easy. So what options do we have? Guessing can be risky and preparing for the worst is a reticent approach. This is where I think better and smart planning tools can provide cost effective and practical solutions to create green, low carbon, and prosperous cities.

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Smart planning for a sustainable city should be a prerequisite. For very little additional effort technology systems can be introduced to improve the quality of service and efficiency. These systems would provide better performance monitoring, reduce risks of failures and be more resilient to shocks and stresses. The same systems can also provide the basis for revenue streams to accrue over time through a common data collection policy. And these systems exist now and are relatively easy to procure. Some examples include using inexpensive sensors, linking to existing municipal owned ICT networks, being clever about procuring new systems to work harder and cover more functions (i.e. new LED street lighting providing a wireless mesh, microcell deployment), and combining  environmental sensors through one contract. It is far easier and cheaper to undertake this exercise in the early stages of a project rather than waiting until it has been implemented. Furthermore an integrated approach for data management aligned with common billing platforms also allows scale efficiencies for municipalities by creating a ‘one bill’ philosophy.

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A key advantage of these smart planning systems is the ability to integrate urban infrastructure – energy, transport, buildings, water and waste – and this systems thinking provides the opportunity to ‘optimise individual systems’ and treat the city as a system of systems. There are already some interesting smart city opportunities and some basic business plans for individual solutions. For instance, cities are increasingly embracing circular economy principles[1]; updating and adapting policies, sharing knowledge, and encouraging innovation for less wasteful systems. Built-up, compact urban areas lend themselves particularly well to circular business models.  Some cities are taking a bottom-up approach, by incorporating circular models within city planning. Amsterdam recently announced it will be building 3,500 homes and 200,000m² of workspace in a “circular fashion”. The project is intended as a testing ground, and the site – in the neighbourhood of Buiksloterham – was chosen because it is already home to residents’ initiatives, housing associations and start-ups working on the circular economy. According to several reports by the Ellen MacArthur Foundation (in cooperation with McKinsey and Company and the World Economic Forum), a global transition to a circular economy could add US$ 500 million to the global economy by 2025 and create 100,000 new jobs within 5 years. Thus, there has to be large opportunities to look at more comprehensive and integrated smart city systems to future-proof cities.

There are some usual challenges to overcome

When it comes to planning, the first step is to understand the problem at hand. Smart planning can help to identify where there is scope for expansion/improvement and plan ahead for essential infrastructure and services. Smart planning supported by viable business models would ensure a high degree of integration of land use, transport policy, and infrastructure investment with wider economic, social, and environmental objectives. And yet, a recent analysis by World Bank staff found that only about 20 percent of the world’s 150 largest cities have even the basic analytic skills needed for low-carbon planning.[2]

Urban infrastructure financing gaps and needs are well documented. It is not very hard to see that the urban infrastructure investment decisions taken just over the next few years – especially in developing countries – will determine a significant share of global carbon emissions. According to the World Bank, only 4% of the 500 largest cities in developing countries are deemed creditworthy in international financial markets, rising to 20% in local markets. Smart planning by using revenue generating procurement systems and charging user fees for ‘data’ can improve creditworthiness of cities. This would make municipalities more attractive to private investors and help them access markets.

There are already some innovative financing solutions and initiatives such as municipal bonds, pooled municipal debt obligation, and infrastructure debt funds to help procure smarter solutions. World Bank and its partners have designed a City Creditworthiness Programme to undertake reviews of their municipal revenue management systems and to qualify for a rating. The initiative will also leverage the World Bank’s experience with innovative financing solutions to develop mechanisms to attract more private capital to the sub-sovereign market. The bank has proposed a mechanism to pool financing opportunities by connecting cities that want to finance the same type of investment. This initiative will help them access the market together at better financing terms[3]. It is up to engineers and economists to come together and help the market understand and accept the broader business model for smart cities.

A further significant challenge I see is that the group of stakeholders driving cities to become engines of growth do not engage meaningfully with the group trying to green our cities and deliver improved environmental and social credentials. I have been to a number of conferences on sustainable and green cities and they are not attended by the realtors, developers, technology providers who attend cities investment or growth summits. Those responsible for planning and administering cities have to create the right knowledge and engagement platforms to bring these two stakeholder groups together.

[Adarsh is an economist with over 14 years public and private sector experience in low carbon transition, climate finance, business models and urban development. He has a PhD in public policy and economics and has authored a number of publications on low carbon transition.]

We welcome comments, suggestions and participation from our colleagues across the globe on this subject. Please leave a comment below, or contact me directly on Adarsh.varma@burohappold.com

[1] This involves keeping products and resources in use for as long as possible through recovery, reuse, repair, remanufacturing and recycling. In addition to protecting the environment, this potentially offers substantial economic benefits.

[2] http://www.worldbank.org/en/news/feature/2013/09/25/planning-financing-low-carbon-cities 

[3] Same as above

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