Today, 54% of our global population lives in cities and by 2050 it is estimated to reach 66%, which is an increase of 2.5 billion in the urban population. While our cities face many challenges, such as climate change, social segregation, economic development and resource constraints, new business models and emerging technologies have disrupted the way urban services are being delivered and resulted in excess capacity within cities being efficiently utilized.
However, technology does not provide a silver-bullet solution to urban problems and instead a holistic approach is required that will transform planning, governance and regulatory aspects.
The “business of running cities” is changing rapidly due to the emergence of new business models and technologies, which cover a wide range of urban services, such as mobility, infrastructure, energy, water, waste management, health, safety, security, welfare, the environment, knowledge, skills and culture. It also requires the involvement of a large number of stakeholders in the planning and administrative process, including governments, citizens, the private sector and NGOs.
The World Economic Forum’s new report, Inspiring Future Cities & Urban Services, identifies the way in which emerging technologies and new business models are transforming how cities plan and operate. The report identifies how innovative business models – such as the sharing and circular economy, digital integration of services, public asset revitalization, innovative outsourcing – will unleash excess capacities in the urban realm and enable cities to do more with less. The report chronicles technology innovations such as the internet of things, mobile-based sensing, location and condition sensing, data analytics and open data, which will enable cities to tackle a myriad of urban challenges.
As cities try to embrace innovation in an effort to address major urban challenges, they are overwhelmed with issues such as budget constraints, flawed governance structure, lack of leadership commitment and talent, lack of trust among stakeholders (citizens, government and private sector), and external issues such as migration and demographic changes. The World Economic Forum recommends that city governments:
- Usher in regulatory reforms to attract capital and human resources in an increasingly competitive landscape
- Develop agile, transparent and city-scale governments to rapidly respond to an ever-changing global environment
- Develop institutional capacity by investing in people and processes
- Empower city leaders to change the default position of being risk-averse and take calculated risks
- Involve citizens, NGOs, the private sector and academics in decision-making to improve legitimacy and build trust
- Achieve the right balance to allow for organic growth while adhering to master plans
- Leverage standards and promote reuse to reduce cost and promote interoperability
According to Alice Charles, Lead, Urban Development, WEF, “In the Fourth Industrial Revolution we are likely to see the biggest industrial shifts in a generation, changing the way we work and live in the urban environment. Innovations such as 3D printing, artificial intelligence and next-generation robotics will shift models of work and production in ways that are impossible to predict. Cities and businesses need to be adaptive. Public-private collaboration will be required to enable cities to navigate the path of this urban transformation.
The report recommends that the private sector should be made an equal stakeholder across the entire urban development value chain, with the public sector driving phases such as policy-making, planning and monitoring, and the private sector taking a lead in design, implementation, operations and management, and financing. The risks associated with entering into public-private partnerships are different across the developing world (risks are more fundamental pertaining to business environment and apply to most project phases) and the developed world (risks are centred around project phases such as planning, construction and termination). The report recommends that government initiate actions, such as creating a stable regulatory environment, introducing administrative reforms and developing reliable dispute resolution mechanisms to address the risks. It also recommends that the private sector further engage with government and the local population to develop trust.
Cities will have to ensure that their DNA (fundamental social and economic characteristics) is retained while they make the journey towards urban transformation. Cities should be willing to experiment and at the same time learn from other cities while they develop unique city-specific solutions that leverage an accepted standard. Cities will have to create a balanced strategy which gives due considerations to social, economic, environmental dimensions.