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Future cities: the economic impact and their influence on society

As the global urban population rises, making our cities smarter and more sustainable – from transport to water supply and food waste – is crucial.

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Our world is becoming more and more city-centric. Since the middle of the last century, the urban population has risen from 750 million to 4.4 billion. Today, more than half the world’s population lives in cities, and the share of the urban population is expected to reach more than two-thirds by the middle of this century.

Cities are amassments of natural resources used to build and run them. Simply by looking at megacities such as New York, London, and Shanghai, it is obvious how resource-intensive they are. Whether or not a city is resource-efficient is less obvious. While cities in general can be considered resourceefficient, there is ample room for improvement and investment, especially in developing countries.

Economic powerhouses
Cities are much more densely populated than the countryside, which means that people living in urban areas use less land per capita. In China, per capita living space in urban areas is around 20 per cent lower than in rural areas. Given that cities house more than half of the world’s population but account for four-fifths of economic output, this suggests that overall people in cities are using their resources more efficiently than people in the countryside. This is for two reasons: proximity and productivity.

 

Cities are much more densely populated than the countryside, which means that people living in urban areas use less land per capita.

Carsten Menke, Head of Next Generation Research

Proximity is directly related to urban density. Travel times within cities tend to be much shorter for goods and services, as well as for commuters. Moreover, journeys tend to be made on more efficient means of transportation such as buses and trains. Even though the Covid-19 pandemic is currently curbing the use of public transportation, we do not believe this phenomenon will last. Proximity within cities also adds to their productiveness. Productivity in cities is fostered by the fact that they allow us to specialise. Over time, we accumulate more and more knowledge in our area of specialisation, increasing our productivity. Cities also facilitate better skills matching, between employers and employees, between buyers and sellers, or between entrepreneurs and investors. Moreover, they do not only offer a higher probability of actually finding a match – a more difficult task in the countryside – but also offer a higher quality of available matches. All of this adds to the productivity and efficiency of cities.

Efficient management
Cities are not without their problems, though, and there are considerable differences across countries regarding resource efficiency. In general, it is fair to say that cities in developed countries are more resourceefficient than those in developing countries. It is also fair to say that well-planned cities are more efficient than those that sprawl in an unplanned, uncontrolled way. However, even cities with good infrastructure today could struggle as populations swell.

This raises the question of how cities can be better prepared for the future. Of course, we often think of the things we can see first – mobility, for example. Here, self-driving electric cars and sharing schemes could offer a way to reduce the overall number of cars in cities and improve the living environment. Constant improvement and expansion of mass transit systems will also be key. However, there are other, less obvious areas in need of attention. Water, both fresh and wastewater, is one resource that is dealt with very differently in different areas of the world. Some cities in water-stressed areas are suffering from enormous leakage levels in their fresh water supply. Places such as Rio de Janeiro, Mexico City, and Manila have leakage rates of 40–70 per cent, primarily due to poor infrastructure and theft.

In general, it is fair to say that cities in developed countries are more resource-efficient than those in developing countries.

Carsten Menke, Head of Next Generation Research

Many developed cities have been introducing plans and processes to reduce their leakage rates. These include same-day repairs and the replacement of old pipes during construction works. In addition, early detection systems are introduced in order to discover underground leaks. If similar leakage prevention methods could be implemented in waterstressed areas, this could have a considerable impact on the resource efficiency of those cities.

While more responsible water management would make a big difference in many cities, the water use needs of cities should be put into perspective. Municipal and industrial fresh water use account for roughly 10 per cent and 20 per cent respectively of all freshwater use worldwide, which is significantly less than the 70 per cent that is related to agricultural fresh water use. However, as much of the food produced globally is consumed in the world’s cities, their true water footprint is much higher if the concept of ‘virtual water’ (the water embodied in the production of food and fibre and non-food commodities, including energy) is considered. Therefore, finding innovative solutions for the production of food is also a pressing need that spans not only the topic of future cities, but also sustainable land use.

Waste not, want not
Further down the food chain, one of the key issues is food waste. Globally, around 30 per cent of all food produced is wasted, predominantly at the consumer level. Tackling this issue primarily requires changes in mindset and behaviour, irrespective of whether people are living in the cities or in the countryside. The same applies to waste in general – however, here we observe significant differences between the developing and the developed world. People in prosperous developed countries generate more waste – around 1.5 kg per capita per day, compared to 0.6 kg in developing countries. However, when it comes to the question of how all this waste is treated, around 30 per cent is recycled in the developed world, compared to only 5 per cent on average in the developing world. Furthermore, developed countries increasingly use waste-to-energy solutions, meaning that around 15 per cent of their waste is burned in order to generate electricity. Developing countries rely heavily on landfills or open dumps (75 per cent, compared to 50 per cent for developed countries), which are associated with significant environmental risks such as soil pollution.

When it comes to the question of how all this waste is treated, around 30 per cent is recycled in the developed world, compared to only 5 per cent on average in the developing world.

Carsten Menke, Head of Next Generation Research

Against this backdrop, the mantra for developed countries should be ‘reduce, reuse, recycle’ in that order to bring down their waste footprint. For developing countries, the priority needs to be introducing and expanding proper waste management systems that would be beneficial for both the environment and the population, and leaving ample room for investments. Independent of the country, cities should lead by example, as the economics of improved waste management are much more compelling in
densely populated cities than in the countryside.

Room for improvement
While cities are already relatively resource-efficient, they have lots of room to improve. These improvements should be facilitated with the help of technology, which has the potential to make cities fit for the future, becoming ever smarter as data-driven solutions are implemented in the planning process and data-based decisions are taken. The rollout of the digital infrastructure in cities and the implementation of Proptech (property technology) look like promising longer-term growth stories. Smart citysolutions, including water leakage detection and optimised water management and waste collection, as well as improved waste management systems, are also key areas for further development. Cities that invest in these areas will reduce their water and waste footprints, paving the way for a less resourceintensive future, so that future generations can live on a better planet with smarter, more sustainable and, in the end, more liveable cities.

《全球家族》特别报告

瑞士宝盛《全球家族》特别报告为您探讨在现今日益全球化的世界中,驱动家族需求转变的因素。在本报告中,我们还通过访问三位来自跨越全球的家族成员,了解他们及其家族如何应对种种挑战,以及聚焦家族的服务(如家族治理等)如何能在日益复杂的环境中发挥重要作用。

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