Cities are home to half the world’s population and produce around 75% of the world’s GDP and greenhouse gas emissions. By 2050, between 65% and 75% of the world population is projected to be living in cities, with more than 40 million people moving to cities each year. That’s around 3.5 billion people now, rising to 6.5 billion by 2050; a huge and singular event in human history.
This places cities at the centre of economic activity affecting how economies grow, how resources are allocated, how innovation takes place, whether innovation is used well or badly and, if badly, how much damage it inflicts on others now and in the future. They can also be very exposed and vulnerable to climate risks such as water shortages, floods and heat stress. The mass congregating of people and rising demand for resources, under poor organisation and governance, make cities prime sources of pollution, congestion and waste.
However, cities are also a key part of the response. They afford multiple opportunities to dramatically reduce carbon emissions while sustaining prosperous standards of living. Indeed, there is no hope of reducing global emissions to safe levels if new and expanding cities are based on a sprawling, resource-intensive model of urban development.
Compact urban growth can create cities that are economically dynamic and healthy. The Global Commission on the Economy and Climate, a partnership led by 28 business leaders and former heads of state, and its flagship New Climate Economy project (NCE), found that compact, connected and coordinated cities are more productive, socially inclusive, resilient, cleaner, quieter and safer. They also have lower greenhouse gas emissions – a good example of the benefits of pursuing economic growth and climate action together.
Cities are all about efficiency. It is why they are there in the first place. Gathering people together near accessible transport nodes (often rivers or sea ports) allowed materials, water and food to be imported and distributed efficiently, while waste and exports were shipped out. But cities afford an even larger, dynamic source of efficiency gains - the spread of ideas.
Economic growth is driven by learning and innovation and the accumulation of ideas, skills and ‘knowledge capital’. Knowledge and innovation allow society to decouple growth from resource use to ensure that we can get more out of the resources we have. Unlike other resources, knowledge capital is weightless and does not deplete. Quite the reverse, knowledge builds on knowledge, making this a “magic resource” subject to unlimited economies of scale.
The intellectual economy is often reliant on investment in physical capital. New equipment enables new ideas and innovation in technologies. For example, investing in computers induces bright ideas about how to use them. Investing in integrated public transport and cycle infrastructure changes people’s modal behaviour and enables new apps to monitor and report real-time departures and arrivals and cycle dock availability.
Knowledge begets increased output and liberates resources for further investment. Its generation and use are closely related to its context: some of it will be very general, some of it location and community specific. Cities contain a concentrated mix of specialisation and diversity and economic activity which generates a fertile environment for innovation in ideas, technologies and processes. Ideas are shared and new techniques and innovations are learnt, scaled and deployed. Cities are well placed to benefit from strong action to reduce emissions while simultaneously improving resource efficiency, tackling waste, and reducing noise, congestion and pollution. The most dynamic and creative cities attract the best talent.
The physical shape of cities will determine the behaviours of its citizens and the responsiveness of its institutions. For example, providing cycle infrastructure will encourage people to invest in cycling. More cyclists will put greater pressure on politicians to provide better cycle infrastructure, a virtuous physical and behavioural spiral that encourages better physical and mental health, life satisfaction and reduces carbon emissions. A similar story can be told for pedestrianisation.
Cities have governance mechanisms and planning systems which, if they function well, can make the creation and delivery of resource-efficient and less polluting policies easier to implement: action is often more effective at the city level where policymakers are closer, physically and culturally, to their citizens than national governments. The consequences of policies on waste, transport and the urban environment are readily observable and local officials are held to account for their success or failure. At the same time, a community with a shared sense of purpose can be very fertile in innovation and ideas on how it can develop and improve.
Making cities effective can mean rethinking governance, planning and metropolitan finance. Reform of local public finances in many cases, including increased fiscal autonomy for cities and planning laws that provide mechanisms for local communities to share in the overall gains, is needed. This can help stimulate the significant private sector financing required for smart urban infrastructure development. Addressing corruption and containing the influence of local barons and mafias on town and city hall actions are also prerequisite to effective action.
Urban leaders can enable the delivery of low-carbon programmes at scale, for example, through recycling schemes, energy from waste, broadband networks, plug-in car points, integrated public transport systems, ‘smart’ buildings, congestion pricing and biking networks. These tend to receive popular support. Surveys suggest urban populations place a higher premium on sustainability, generating a popular and clearly understood mandate. Leadership and community action go hand in hand.
This is important because delaying action taken to counter climate change and aid resource efficiency will ramp up the long-term costs. This is because it is the stock of greenhouse gases in the atmosphere that has an effect on the climate, and not the annual flow into it. Every year of delay increases the stock and means the work we need to do to get back down to a stable equilibrium is harder (the same principle applies to the irreversible depletion of scarce resources).
Cities best exemplify the costs of delaying action on climate change and locking into resource-intensive infrastructure and behaviours. Cities in emerging economies are building the bulk of their infrastructures in the next two or three decades. The urban form they lock in to will have a massive impact on their resilience to resource costs for decades and centuries to come.
Compact urban growth can significantly reduce the cost of providing services and substantially lessen urban infrastructure requirements. Urban sprawl on the other hand locks in inefficiently high levels of energy consumption, and makes it harder to implement more efficient models of waste management and district heating. Planning laws may need to change to encourage dense development, backed up by connected infrastructure and public transport systems such as rail, bus rapid transit, bicycle lanes, pedestrian access, car- and bicycle-sharing, smarter traffic information systems, and electric vehicles with charging point networks using renewable energy sources.
For example, sprawling US cities in the United States use orders of magnitude more resources and create more emissions per capita than cities of similar income levels in Europe and Asia. The Organisation for Economic Cooperation and Development estimates that cities such as Cincinnati, Houston and Minnesota generate between 20 and 30 tonnes of carbon dioxide per capita compared to between 5 and 10 tonnes in Stockholm, London and Tokyo. Atlanta and Barcelona each accommodate just over 5 million people and are similarly prosperous, but the latter has 4% of the urban area of the former, and less than a tenth of the carbon emissions.
Opportunities and risks
Rapidly urbanising developing economies still have a choice as to whether to adopt high or low resource-intensive development paths. The former may appear cheaper in the short run and require less careful planning, but is likely to be extremely costly over the medium term and very difficult to reverse. Resources such as coal, for example, may look cheap (say US$50 a tonne) but are generally more than four times that cost once pollution and climate effects, which have very real costs in terms of lives and livelihoods, are taken into account.
A recent report by the World Resources Institute cites a valuation of the health impacts of pollution (including premature deaths) in OECD countries, China and India of $3.5 trillion a year. In some countries, such as China, costs are estimated by the World Bank, based on data from the World Health Organisation, to amount to more than 10% of GDP. As a proportion of regional GDP, the costs of traffic congestion are estimated at 4.0% for Cairo, 4.8% for Jakarta, 7.8% for São Paulo, and up to 15% for Beijing.
A recent paper by researchers at the University of California at Berkeley showed that particulate matter (PM2.5) pollution in China has been estimated to contribute to 1.6 million premature deaths a year, ie 4,000 deaths per day, with some estimating that the problem in India is worse than in China. Cities in the developed world are not immune. The UK Committee on the Medical Effects of Air Pollutants estimated that premature deaths resulting from PM2.5 air pollution totalled approximately 29,000 in 2008.
Denser cities with integrated transport facilities generate significant savings in operating costs. Yet suburban living remains a viable choice. People like suburbs, especially in weak cities suffering from ‘hollowed out’ centres. There is evidence to suggest that, all else being equal, richer people want more square metres, or – as economists describe it – the income elasticity of demand for space is high. However, all else is not equal and once the full list of externalities and the degree of lock-in and behavioural, institutional and technological feedbacks are accounted for, it is highly questionable whether wealthier societies are likely to benefit from sprawling urban design.
Indeed, vibrant well-planned urban centres have also shown equal appeal to mobile skilled and highly educated workers. But policies must be coherently planned. For example, efficiently reducing congestion and emissions requires complementary measures on public transport, cycling, electric and shared vehicle infrastructure, urban planning, zoning and carbon pricing.
It is estimated that people in Portland, Oregon, save $2bn annually through three decades of coordinated policies to change land use and transport systems. Measures include modest increases in building density, light rail transit schemes and policies to encourage walking and cycling. In many European cities, recycling levels are in the region of 50% of domestic waste, with Copenhagen sending a mere 3% of its waste to landfills.
Even for cities already locked into sprawling development, transport connectivity can be significantly improved through options like bus rapid transit (BRT) systems. The economic returns of Johannesburg’s BRT in its first phase were estimated by the New Climate Economy report to be close to $900m. In Buenos Aires, travel time savings from its BRT have been calculated at as much as 50%. BRTs and other public transit systems can reduce traffic, improve safety and boost productivity. A 20% reduction in congestion in Lagos would be expected to inject $1bn into the local economy annually. Cycling can also enhance mobility for the urban poor.
As already noted, community action is critical to much of this story. This includes recycling and reusing materials, district heating, public transport and car-sharing. Action on cities, productivity and climate is about strengthening communities. Many communities are revealed as economically unviable if the costs of pollution and congestion are taken into account. The costs of dealings with past mistakes in city development are immense: it is far better to think ahead while we have the opportunity.
Some of Europe’s most successful cities have also rapidly decarbonised. Stockholm reduced emissions by 35% from 1993 to 2010, but grew its economy by 41%, one of the highest growth rates in Europe. Since 1990, Copenhagen has reduced its carbon emissions by more than 40%, while experiencing real growth of around 50%. These statistics do not prove causality, but an examination of how and why this was achieved at the very least provides evidence showing that ambitious and innovative environmental targets need not impact negatively on competitiveness or economic performance. Other leading examples could include Barcelona in Spain, Hamburg and Freiburg in Germany, and Singapore.
Major cities and urban leaders the world over are taking the lead in setting strong numerical targets for emissions. New York aims to cut its annual greenhouse gas emissions by 30% over the period between 2007 and 2030; Los Angeles plans 35% cuts in emissions between 1990 and 2030; Seoul plans 40% cuts from 1990 to 2030; and Hong Kong plans 50-60% cuts over the period from 2005 to 2020. China’s low-carbon city project run by its National Development and Reform Commission (part of ‘local’ 12th five-year plans) includes Tianjin, Chongqing, Shenzhen, Xiamen, Hangzhou, Nanchang, Guiyang and Baoding. Strong action in cities has the potential to influence the national agenda and influence international negotiations.
International collaboration can help accelerate cost-effective climate action in cities. City networks such as C40, ICLEI, and United Cities and Local Governments allow for sharing best practices and facilitate new forms of finance. These organisations, together with the United Nations, helped jointly deliver the Compact of Mayors, committing to complying with a common accountability framework for tracking and reducing greenhouse gas emissions. This has been signed by 97 cities, representing 183 million people as of August 2015. With cities moving markets, joint procurement standards generate great potential for economies of scale, from buses to smart street lighting.
The need for coordinated policy does not end once the infrastructure for roads, buses railways and smart grids is in place; policy signals must continue to ensure sustainable behaviour and management, and harness the power of markets while limiting transaction costs and distortions. Pricing carbon pollution – explicitly via tax or trading, or implicitly through regulation - helps address numerous market failures without introducing policy failures.
Bringing forward lower carbon technology, through funding for research, development and deployment, and overcoming information barriers and transaction costs through publicity campaigns, regulation and standards, also have a central role to play. Finally, inducing change in social norms by promoting a shared understanding of responsible behaviour across all societies goes beyond sticks and carrots, with such trends often originating at the urban level. This underlines the importance of leadership and community action, as well as learning from the experience of others.
The future of sustained growth, poverty reduction, the world’s health and management of climate change, are tightly intertwined. Efficient cities are likely to be compact and ‘smart’ taking full advantage of the efficiency gains associated with the revolution in information and communications technology. Integrated technologies will help make dense complex cities work efficiently. A broadband digital infrastructure can connect people to people, people to city systems, and city systems to city systems, allowing cities and residents to respond to changing circumstances in near real-time. Cities are essentially tightly integrated systems, but with humans.
This means that cities that think, adapt and evolve will learn to make good use of their resources, food, energy, health, communications and climate through the use of smart grids and buildings with responsive energy management, connected healthcare and integrated public safety. Cities can be clean, unpolluted and uncongested, attracting mobile capital, talent and creativity.
The world is at a crossroads: inaction will reduce citizen welfare, increase costs and insecurity and eventually risk urban catastrophe as resources are depleted and climate damages mount. Resource- and carbon-efficient growth is the only sustainable long-term option. The choices made in cities today on transport, infrastructure, buildings and industry, as they grow rapidly over the coming decades, will determine the technology, institutions and behaviours they lock in and govern whether mankind can both manage climate change and capture the benefits of resource-efficient growth.
Professor Lord Stern of Brentford and Dimitri Zenghelis, are respectively, chair and co-head of policy at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science.
Urban Age is a worldwide investigation into the future of cities, organised by LSE Cities and Deutsche Bank’s Alfred Herrhausen Society. Its 10-year anniversary debates are held in conjunction with Guardian Cities
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