What will it take to build sustainable cities and communities?

Wednesday, October 19, 2016

QUITO, ECUADOR — The ‘New Urban Agenda’ discussed at the once-every-twenty year Habitat III conference in Quito this week envisages cities and human settlements that are inclusive, sustainable, and resilient, fostering prosperity and quality of life for all.

That will be no easy task.

Today’s cities are growing at a relentless pace, including here in Latin America. In 20 years, the population in cities in the developing world double to 4 billion people, while their land area will nearly triple, often in vulnerable locations and without basic infrastructure in place.

Yet the density of people, goods, and ideas, also makes cities hubs of prosperity and engines of growth – representing 80 percent of global economic activity. No country has ever reached middle- or high-income status without the presence of vibrant urban centers. Countries that are highly urbanized have lower levels of poverty.

But in order to generate this growth, cities must work properly. They must be well-planned and well-managed. When cities fail to work, the poor are hurt the most.

Take the example of access to water, which costs 70 to 80 US cents to provide one cubic meter of piped water in urban areas. However, because they are not connected, residents in urban slum areas often are forced to tap onto non-networked sources, which cost them twice as much.

At the same time, cities are increasingly vulnerable to natural disasters and the impacts of climate change. Nearly 900 million urban residents are currently living in slums, an increase of 28 percent since 2000. Many are in high-risk locations, such as floodplains, and lack basic risk-reducing infrastructure. As we note in the World Bank Group’s Investing in Urban Resilience report, by 2030, up to 77 million urban residents across the world are at risk of falling into poverty if efforts aren’t made to improve cities’ resilience.

Violence, conflict, and displacement are also increasingly straining cities and the delivery of services. The rate of violent crimes is higher in larger cities – 63 percent of homicides in El Salvador took place in cities of more than 50,000 people.

Urgent action is needed to ensure that urbanization spurs inclusive, green growth, and that city-dwellers are able to lead decent lives – ones which include access to affordable and reliable basic services, jobs, education, housing, and transport. We must recognize that urbanization is a solution rather than a problem.

So, what will it take to build sustainable cities and communities?

The World Bank views planning, connecting, and financing as three essential policy tools to nurture inclusive urban economic growth.

Planning for land management and urban development should be taken as the top priority for countries and cities at all stages of urban growth. The infrastructure and policy choices made today will lock cities into patterns of urban development for decades to come, and these can prove difficult and costly to undo.

Secondly, cities need to connect people with jobs and schools, and businesses with markets, in order to help promote inclusion. We have seen how Medellin’s metro cable system has dramatically increased mobility and accessibility for urban residents, particularly those in poor and often violent communities.

The third policy tool is financing for rapid urban growth. This is challenging, but it becomes possible and more reliable if cities strengthen basic systems and take on innovative financing solutions. The most recent estimate of urban infrastructure financing is over $4.5 trillion per annum, a significant proportion of which is in developing countries, where cities are growing most rapidly.

At the World Bank Group, we invest an average of $3 to $4 billion in urban development and resilience projects every year. In addition, we have committed that, by 2020, as much as 28 percent of our funding would be directly linked to climate action, up from 21 percent today – a reflection of the growing need to address climate change and promote low-carbon growth.

Yet Official Development Assistance (around $132 billion annually), and existing revenue sources are not enough. It will require innovative forms of urban financing such as land value capture and leveraging private investment through municipal borrowing and public private partnerships. This, in turn, requires national governments need to adopt policies and regulatory frameworks that expand the abilities of cities to borrow responsibly. Meanwhile, city governments need to improve their revenue mobilization efforts, rationalize expenditures, build robust financial management systems, and generate financial data which investors can understand.

Finally, the capacities and mandates of city governments for urban planning, regulation, and enforcement have to be strengthened, and local and national authorities must undertake the institutional reforms needed for effective planning, coordination, and financing.

By working together with governments and partners to help urban communities areas plan, connect, and finance their development, we can build sustainable cities, while helping millions of people lift themselves out of poverty.