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Urban Development

Cities Take Control

MD Staff

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We live in an increasingly urbanized world. Every day, hundreds of people move to cities in search of job opportunities, better services, and infrastructure that can withstand natural phenomenon. Latin America and the Caribbean is the second-most urbanized region in the world and, as cities expand, their challenges also increase. Resilience in the face of disasters, better roads and transportation, more inclusion and access to financing are some of these challenges.

This week, more than 30 mayors and city leaders from around the world met in Buenos Aires to talk about the progress they have made and the obstacles they face, and  especially to discuss how cities – where the largest share of global GDP is produced –  can contribute to the global agenda. We spoke with two experts from the World Bank Group, Ede Ijjasz-Vasquez, Senior Director for the World Bank’s Social, Urban, Rural and Resilience Global Practice, and Gabriel Goldschmidt, director of the International Finance Corporation (IFC) for Latin America and the Caribbean, to discuss their vision for the future of cities, their main challenges and how to address them.

Question (Q): Ede, urbanistic discussions have recently focused on resilience. Could you define urban resilience and give us some examples?

Ede Ijjasz-Vasquez (EIV): While there is no standard definition for urban resilience, most definitions coincide in that it refers to the capacity to manage a wide range of impacts and stresses that can occur in a city. While resilience has traditionally focused on climate change and its impacts – floods, earthquakes, hurricanes, and volcanic eruptions – it is also the ability of an urban system to prepare and adapt itself to technological and socioeconomic changes.  The former ranges from a breakdown and interruption of the water or energy system of a city, to a gas leak, a water pollution event or an explosion at an industrial plant. Socioeconomic changes refer to economic crises, demographic changes, terrorism events, strikes or social and political conflicts.

Q: In Latin America, eight of every 10 people live in cities, but many of them – the poorest – settle in the outskirts and lack access to basic services. How can we promote social inclusion and improve their quality of life?

EIV: The poor live in both downtown areas and the outskirts. Many of them live near the downtown areas to access jobs, often in informal settlements where the housing is more “accessible,” but in precarious conditions. These settlements often lack quality infrastructure and services. For cities to be inclusive, it is necessary to improve these informal settlements. For example, with support from the World Bank and the Inter-American Development Bank (IDB), the government of the City of Buenos Aires is working to improve one of its most vulnerable and emblematic neighborhoods, Barrio 31.  On the outskirts, where most urban growth is occurring, cities must urgently adopt a planning process with a view to the future so that they can provide infrastructure and services along with well-located housing at prices that are accessible to the low-income population.

Q: With respect to employment, how can cities prepare for future labor market challenges?

EIV: Cities in the developing world will have to accommodate a growing youth population that will continue to migrate from the countryside to the city. At the same time, cities in the developed world will have to prepare now for migrations of youth populations from less developed countries, which will accompany the aging of the countries’ own inhabitants. Migrations of people in search of opportunities, displacement due to conflict and violence, as well as an increased incidence and intensity of natural disasters associated with climate change, will increase the size of cities.  At the same time, new technologies present challenges and opportunities for employment. While automation will replace many jobs, it will create new opportunities for others. New technologies have the potential to change the way people travel to work and transform complex markets such as that of real estate. Cities should work together with national governments to develop national urban policies that integrate local sector policies, rethink labor market and job training policies, and use those same technologies to manage cities.

Q: What role should development institutions such as the World Bank play, as well as city mayors, who have an increasingly key role in the future of the urban agenda at the global level?

EIV: Mayors are key players in the development of the global agenda. As cities concentrate the majority of inhabitants, and as they produce the largest share of GDP and greenhouse gas emissions, they are centers where the future of the world’s sustainability will be played out.  Even though this is obvious, cities have not been considered enough in the process to establish the global agenda. Local leaders and mayors have very interesting experiences to bring to the table; the expert knowledge they have of urban problems and their proximity to the population they represent make them key actors for developing alternative, creative solutions to the most complex global problems. For this reason, the World Bank, together with other multilateral agencies, is committed to helping cities promote the exchange of knowledge among them and with national leaders. Likewise, the World Bank is well-positioned to help municipal governments take measures to promote investment in projects that improve the population’s quality of life.

The private sector, a key actor in urban development

Q: Gabriel, transforming cities is expensive. National and local governments have limited resources and high fiscal pressures. How can the private sector be persuaded to help cover the infrastructure deficit in Latin America, which according to some estimates is US$ 180 billion?

Gabriel Goldschmidt (GG): Cities are important centers of investment and economic growth. However, most cities in Latin America and the Caribbean have not grown in a sustainable way in recent decades. In a context of limited public budgets, it is important to consider mechanisms that can  attract private-sector participation while maintaining the objective of improving the quality of life of the population.

City governments cannot do this alone: the needs are simply too great. Innovation and investment of the private sector are crucial for addressing the complex challenges of cities in key areas such as infrastructure, climate change and job creation.  Where private-sector solutions exist, but are limited by weaknesses in the regulatory framework, the public sector and other players that should work together to create policies that enable the development of private-sector proposals. Finally, governments should reserve their limited fiscal budgets to invest in solutions for which there is no private-sector alternative.

For example, for the past 15 years, IFC has invested more than US$ 12 billion in 350 urban projects and advisory services in more than 60 countries, contributing to creating sustainable, competitive cities that attract the necessary private investment for inclusive growth and poverty reduction. Currently,  IFC is working throughout the region with cities as diverse as Buenos Aires, Bogota, Barranquilla, Lima, Tegucigalpa and, soon, San Jose.

Q: How can these ideas of financing and innovation be leveraged to create more inclusive cities?

GG: Well-structured, well-managed private-public partnerships can contribute innovation, efficiency and financing of the private sector in a single package. Bogota has two interesting examples of public-private partnerships. IFC is supporting the city in the development of these partnerships in the health sector for the building of hospitals, something that is highly innovative. The public-private partnership model for educational institutions is also being supported in Medellin and Barranquilla.

Green bonds are another tool that cities can use to attract commercial financing for sustainable projects. Cities are responsible for more than 80% of greenhouse gas emissions in the region. Currently, buildings generate 19% of the greenhouse gases associated with energy and consume 40% of electricity worldwide. Fortunately, many cities are proactively promoting sustainable infrastructure. IFC works with municipalities to implement green building codes. With the banking industry, it facilitates financing of sustainable projects while with real estate developers it supports the adoption of international sustainability certificates for buildings. For example, the EDGE certification, which was created by IFC, requires savings of at least 20% of water and energy and has been implemented in a variety of structures, including accessible housing.

Finally, land value capture is a way for municipalities to recover the value that public infrastructure generates (for example, property taxes, land improvement taxes and others).

World Bank

Urban Development

Structural Transformation Can Turn Cities into Engines of Prosperity

MD Staff

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By 2050, the population of cities is projected to double from its current size, with nearly 70 percent of the global population residing in urban areas. For many, cities are beacons of hope that offer the prospect of a better job or education, but a new body of research is highlighting how the complex interactions between cities, their surrounding rural areas, and structural transformation can make or break cities as engines of prosperity.  

“Poverty reduction is almost universally accompanied by a transition of the workforce from agriculture into higher-productivity jobs in the manufacturing and service sectors,” said Francisco Ferreira, Acting Director of Research at the World Bank. “Urbanization plays a central role in this process, but getting this right requires an understanding of how cities are shaped by investments in infrastructure as well as human capital.”  

At a recent Policy Research Talk, World Bank Senior Economist Forhad Shilpi shared insights into how to manage this process based on more than a decade’s worth of research spanning many of the world’s poorest countries. According to Shilpi, all cities share certain common features: higher population density, a predominance of non-agricultural activities, a high degree of labor specialization, and a diverse set of economic activities.

But history demonstrates that the underlying economic structure of cities can vary significantly.  Prior to the industrial revolution, cities like ancient Rome grew through concentrated trade and services. The growth of manufacturing in the 19th century produced the modern industrial town, exemplified by Manchester. More recently, knowledge-intensive industries have helped shape post-industrial cities like San Francisco.

According to research by Shilpi and her colleagues, cities in many developing countries still bear a greater resemblance to ancient Rome than to Manchester or San Francisco. In Nepal, for instance, Shilpi found that the size of manufacturing firms in cities was on average no larger than in rural areas and these firms employed no more skilled managerial workers than those in rural areas. Both of these characteristics point to an absence of the kind of high-productivity jobs that are associated with economic specialization.

Worryingly, this pattern applies more generally for cities across South Asia and to an even greater degree for many cities in Africa. According to a widely-cited study published in 2000, African countries are prone to urbanization without economic growth. More recent research has found that African cities are relatively closed to the world, with only half of economic activity taking place in sectors that produce tradable goods and services. Some cities have even been described as consumption cities that live off the proceeds of resource exports rather than more dynamic manufacturing and services sectors.

Despite this depressing portrait, Shilpi still offered her audience cause for optimism. In 1999, Shilpi’s native country of Bangladesh opened the World Bank-supported Jamuna Bridge, which crosses the Jamuna River and connects the rural and poorer northwest part of Bangladesh to the rest of the country. The nearly 5-kilometer bridge brought about a dramatic reduction in trade costs with travel time cut by at least four hours and freight costs reduced by 50 percent.

According to Shilpi and colleagues’ research, the greater integration of the northwest with the rest of Bangladesh following the opening of the Jamuna bridge transformed both rural and urban areas. In the northwest, population density increased and rice yields rose significantly. Manufacturing moved to urban areas, while the agricultural and services sectors generated more employment in rural areas. 

“In 1974, Bangladesh suffered a devastating famine. The northwest region was hardest hit,” said Shilpi. “But by 2010, that region had become the breadbasket of the country.”

Additional research on trade costs in Burkina Faso and Mali confirms a broader point: bringing down trade costs through smart investment in infrastructure can allow rural and urban areas to specialize in the sectors for which they are best suited, with benefits for both rural and urban populations.

Another key element that connects cities to their surrounding areas is internal migration. Cities are almost always the destination of choice for internal migrants, but a study by Shilpi and her colleagues of migration in South Africa suggests that the decision about which city to migrate to is far from arbitrary. The study found that unskilled migrants were more concerned with levels of unemployment across cities, while skilled workers were driven more by wage differences.

The results point to the role that migration can play as an engine for equality between regions—those without jobs move to where the jobs are, while those seeking higher wages move to where wages are higher.

For individual cities, this presents a challenge, since efforts to create new jobs will only have a partial impact on their own unemployment rate. Migration can also further exacerbate inequality within a city, as unskilled job seekers find themselves concentrated in areas lacking basic amenities like electricity that the wealthier residents can afford. Shilpi highlighted the positive role that targeted policies—especially education initiatives targeted to poor areas—can play in helping manage these challenges.

Managing cities not as islands, but as parts of an integrated whole, may serve as one of the most effective methods for building a world without poverty.

World Bank

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Urban Development

Smart housing prototype shows promise in rapidly urbanizing Africa

MD Staff

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photo: UN Environment

Africa is urbanizing fast, as its population grows and many flocks to cities in search of jobs, education and healthcare.

Studies show that hundreds of millions more Africans will live in cities over the next three decades.

Many of these new urban Africans, however, are likely to end up in informal settlements. Already an estimated 200 million Africans live in informal settlements—often without access to energy and sanitation.

The growing class of urban poor need access to decent housing. But the challenge is that the global housing sector already emits almost a third of global greenhouse gas emissions and uses up to 40 per cent of the planet’s total resources. New approaches are clearly needed.

As the housing sector grows—and it must grow if we want an equitable world—we need to reduce its environmental impact, not raise it,” said UN Environment Acting Executive Director, Joyce Msuya. “Smart design is the only way to meet our housing needs and stay within planetary boundaries.”

UN Environment, UN Habitat, the Yale Center for Ecosystems in Architecture and associated partners are working on these designs, one of which is on display at the UN Environment headquarters in Nairobi, Kenya.

First unveiled at the fourth United Nations Environment Assembly, the 3D-printed modular structure, made from biodegradable bamboo, aims to spark ideas and debate on how future biomaterial processes can help meet the Sustainable Development Goals, Habitat III New Urban Agenda and Paris Agreement.

The pavilion shows how post-agricultural waste—like bamboo, coconut, rice, soy and corn—can be turned into construction materials. It demonstrates solar energy and water systems that make homes self-sufficient and zero carbon. It highlights how micro-farming can be achieved with plant walls. All these features, and more, are integrated, monitored and managed by sensors and digital controls.

“As urbanization gallops forward, people around the world are tired of seeing precious natural habitats paved over with toxic, energy-intensive materials such as concrete and steel,” said Anna Dyson, Director of the Center for Ecosystems in Architecture at Yale University. “In the 21st century, global construction practices must innovate towards nature-based solutions for future cities. Our research consortium with East African collaborators is devoted to advancing state-of-the-art locally produced building systems.”

It is fitting that the pavilion is based in Kenya, as the government there has prioritized affordable housing as a key pillar of its Big Four Agenda, which aims to make the East African nation an upper middle-income country by 2030. Over the next five years, the government plans to build over 500,000 affordable houses across the country to meet the ever-growing housing demand.

To achieve the low-cost housing agenda, however, the industry needs to embrace technological changes that will result in the use of innovative sustainable construction, the aggregate effect of which would be to lower the embodied energy and average cost of manufacturing and housing. “Architecture must address the global housing challenge by integrating critically needed scientific and technical advances in energy, water, and material systems while remaining sensitive to the cultural and aesthetic aspirations of different regions,” said Deborah Berke, Dean of the Yale School of Architecture.

The pavilion serves as a starting point for those in government and industry to think about what they can do better. It is part of a series of demonstration buildings, which started with a 22-square-meter “Ecological Living Module”, powered by renewable energy and designed to minimize the use of resources such as water. This module was displayed at the United Nations High-level Political Forum on Sustainable Development in 2018.

UN Environment

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Urban Development

First ever Cities Summit calls for integrated approach to urban infrastructure

MD Staff

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While Member States were adopting a resolution on sustainable infrastructure at the UN Environment Assembly, the Cities Summit reinforced the importance of local action and the need for an integrated approach to urban infrastructure.

Already 60 per cent of waste and three quarters of resource use and greenhouse gas emissions come from cities, making them great places to tackle sustainable consumption and production. But preserving the well-being of an increasingly urban population, many of whom still lack access to affordable and adequate housing and basic services, is just as important as we seek to achieve the sustainable development goals.

An integrated approach to urban infrastructure can help do both.

In the São Paulo neighbourhood of Jardim Helian, around 14,000 people live in an informal settlement, where the unplanned nature of the area has led to obvious problems.

“One of the issues is when houses invade the river’s territory, leading to forced channelling [which causes floods during the rainy season],” said local resident Mohammed. “Another is that sewage is thrown directly into the creek.”

The Sustainable Cities Programme and UN Environment is helping create an integrated “neighbourhood approach”, which addresses multiple environmental issues by bringing locals together with government and including their concerns in city planning. Lifestyles are already becoming more sustainable there thanks to the intervention.

According to the International Resource Panel Report Weight of Cities, optimizing systems and creating cross-sector synergies between buildings, mobility, energy and urban design can reduce greenhouse gas emissions and resource use by up to 55 per cent.

“Close to 70 per cent of the urban infrastructure that we will see in 2050 is yet to be built,” said Joyce Msuya, Acting Executive Director of UN Environment, at the summit. It is a huge opportunity to solve different for our cities and future-proof investments.”

UN-Habitat head Maimunah Mohd Sharif, who opened the summit alongside Msuya, concurred, saying that cities are where “the most-severe challenges arising from human-made climate change will have to be confronted”.

Solutions are everywhere

Many solutions exist, such as smart supermarkets and district energy systems, which allow wider systems integration. The retail chain Aktiv & Irma in Germany, for example, has installed an integrated system that links refrigeration, lighting, heat, ventilation and air conditioning. This optimizes power use and cuts 20 per cent off energy costs.

“Remember whenever you hold your hand behind the fridge, it is warm. And today, most supermarkets don’t use this heat,” said Ziad Al Bawaliz, Danfoss Chief Executive Officer, Turkey, Middle East and Africa. “By using waste heat from all the supermarkets in just Europe, we could replace 10 coal power plants.”

With a district energy system—a network of underground pipes that heat or cool multiple buildings—waste heat can even be stored. This includes heat from data centres, industry and metro systems, as seen in countries like Japan, Korea or Chile.

But integration is also needed at different levels, from vertical governance to horizontal, cross-sectoral planning, policy, and finance.

“A sustainable city needs sustainable infrastructure and an integrated, holistic and circular approach to sustainability challenges,” said Tserenbat Namsrai, Mongolia’s Minister of Environment and Tourism, who backed the resolution on creating sustainable infrastructure.   

The Cities Summit showed that visionary local governments, companies and communities are developing solutions that link systems like transport, energy, housing, water and waste. Some cities have set high climate and/or circularity targets.

Osaka, Japan is including energy policy and climate change measures within urban development planning to enable integrated solutions. Dakar, Senegal emphasized the need for good data to undertake holistic planning, while and Buenos Aires and the Ministry of Environment in Argentina demonstrated how multiple levels of government can jointly address the sustainable management of land, transport, and energy.

A new initiative on infrastructure

Integration of partners is just as important, which is why leading companies—including ENGIE, Siemens, JCI and Danfoss—said at the Summit that they would join forces with the UN Environment on a new public-private partnership to promote and implement urban system integration

“The technology is there, finance is there, but we need capacity, said Michael Schack, Director of Networks and Cogeneration ay ENGIE. “Only the UN can address this gap. And we, as the private sector, stand ready to launch a new partnership with UN Environment.”

The new UN Environment Urban Systems Integration programme will help local and national governments accelerate their transitions to circular and low-carbon economies, enhance efficiency, and reduce cities’ resource demands while improving health and well-being. Country participants, including Korea, Poland and Germany, also expressed support for such a partnership.

“Our specialty is to integrate things in Korea and we stand ready to assist any city and country to fast track to integration,” said Benjamin Yoon of the Korean District Heating Corp and a member of Korea’s delegation to the UN Environment Assembly.

The initiative aims to support cities in developing integrated approaches to cross-sectoral infrastructure planning and policies and in implementing key technologies that can facilitate connections and interactions across buildings, energy, transportation, wastewater treatment and waste management.

As United Nations Secretary-General’s Special Envoy for the 2019 Climate Summit Luis Alfonso de Abla, said in the closing panel, “we need concrete, bold and ambitious climate actions”.

The commitment by UN Environment and partners to accelerate integrated urban infrastructure is undoubtedly one such action.

UN Environment

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