Cities look to the future

It’s no exaggeration that humanity’s biggest challenges over the coming decades will be tackled in the cities. As cities grow, they face the difficult task – and the opportunity – of creating solutions to reduce global poverty as well as chronic air pollution, gridlocked streets and mounting crime. Preparing for the future requires nothing short of a transformation in the way cities are managed.

The world is in the midst of a great migration from rural to urban life. Already, there are signs of what’s to come. Urbanisation is credited with increasing prosperity across much of Asia, where the city-dwelling middle classes are expanding fast. But it can also lead to congested streets, life-threatening pollution and sprawling slums, not to mention social inequalityand corruption.

Underpinning the benefits of urbanisation are economies of scale as well as fruits of diversity. Large cities enjoy scale in areas such as energy, mobility, distribution of goods, housing, healthcare and so on. Culturally, they are melting pots that catalyse the rich exchange of ideas, spark innovation and stimulate economic growth. This can create wealth and higher standards of living, though at their most extreme, megacities can become excessively complex, descending into polluted urban sprawls that seem ungovernable.

Alert to the challenges they face, mayors across the world are working to transform cities. Success depends on implementing and scaling up holistic strategies spanning socio-economic issues, the environment, technology and transportation. With such a large proportion of the world’s population moving to cities, nothing less than the United Nations’ 17 Sustainable Development Goals (SDGs) are at stake. These have targets for tackling wealth inequality, health, education and prosperity, climate change and environmental degradation by 2030.

A smart city is much more than technology.

 

Kari Aina Eik, Executive Director of the United Smart Cities programme

While the commonly-used phrase ‘smart cities’ suggests technology is the answer, it is in fact just a tool for bringing together the solutions that make cities prosperous, happy places. Kari Aina Eik, Executive Director of the United Smart Cities programme, explains: “For me, a smart city is much more than technology. It has to do with Intelligent systems and how you build a city that is smart for the people. And now with the Sustainable Development Goals, and people becoming much more conscious that we need to save our planet for future generations, cities need to be smart and sustainable.”

43 megacities by 2030

Already, more than half (55 per cent) of the global population lives in cities, with that proportion expected to increase to more than two thirds (68 per cent) by 2050, according to the UN World Urbanization Prospects report. As recently as 1950, there were just 751 million city dwellers, according to the UN, while today, there are 4.2 billion and that number is expected to increase by another 2.5 billion by 2050.

As cities grow fast in countries such as China, India and Nigeria, they will have opportunities to maximise and difficulties to mitigate. In just over 10 years, by 2030, the world is projected to have 43 megacities – defined as having more than 10 million inhabitants – most of them in developing regions. But some of the fastest-growing will be cities with fewer than one million citizens, where economies of scale are easier to achieve.

The bigger cities become, the more complex they are and the more difficult to manage. Some of today’s megacities are already verging on the dysfunctional, with air pollution at emergency levels, water shortages and slum housing. New Delhi, the world’s second largest city with 29 million inhabitants, and Shanghai, the third largest with 26 million, both have smog problems. Mexico City and São Paulo, each with 22 million inhabitants, have high crime rates. And Cairo, Mumbai, Beijing and Dhaka – with close to 20 million inhabitants each – all face some of these problems.

Scaling up and connecting solutions

Future-proofing cities is an urgent and multi-faceted task. The IESE Business School at the University of Navarra has defined nine dimensions for the model behind its Cities in Motion Index. Cities must implement solutions for each dimension, and connect them, to achieve their full potential. Every city will require a different answer, depending on its specific circumstances, with technology often playing a role.

The nine dimensions of the Cities in Motion Index

“The introduction of technology brings opportunities for the interaction of different systems, which is important,” says Professor Joan Enric Ricart, co-director* of the IESE Business School’s Cities in Motion Strategies. “Now there is an opportunity to do trade-offs. For example, energy and mobility happen to be quite connected.”

Mobility and energy show the need for connections. Tomorrow’s autonomous shared vehicles will not work without a charging network. But the rewards for success are enormous: with shared – rather than owned – vehicles rarely lying idle, congestion will be relieved and energy saved.

The nine dimensions of the Cities in Motion Index (cont’d)

Cities need long-term strategies, as well as specific solutions in areas as varied as affordable housing, waste management, air pollution, the creation of high-value employment, crime prevention, energy and mobility. While complex solutions play a big part, often the simplest ideas like harvesting rainwater from rooftops are invaluable. Many cities are having success in individual dimensions, yet creating a single multi-dimensional solution is far more difficult.

“We need to find better ways to scale it up,” asserts Eik. “That is a challenge. How do you scale this up and how do you get everybody around the table? How do you engage with the companies that have these solutions in a good, strategic way?”

The nine dimensions of the Cities in Motion Index (cont’d)

Borrowing best practices

Cities have much to learn from each other and from business. All top 50 cities in IESE’s 2019 Cities in Motion Index were in the developed world although most urbanisation today is taking place in the developing world. Cities in Africa and Asia can adopt the leaders’ best practices while seeking to avoid their mistakes.

IESE’s top three cities for 2019 were London, New York and Amsterdam respectively, each scoring well in dimensions such as international outreach, the economy, mobility and transportation and urban planning. By contrast, all three had weaker performance on governance, with New York also judged to have a poor environmental record. “We have seen some real improvements in cities in economic and environmental terms, but progress is slower when it comes to social cohesion,” remarks Professor Ricart. “It looks like the trade-off between economics and social cohesion is difficult.”

We have seen some real improvements in cities in economic and environmental terms, but progress is slower when it comes

to social cohesion.

 

Professor Joan Enric Ricart, IESE Business School Cities in Motion Strategies

Over the six years that IESE’s index has tracked cities, those that have climbed the index tend to encourage different stakeholders working together, including business, communities and universities, according to Professor Ricart.

The four P’s of financing

Private sector finance is essential for the huge task of transforming cities. In fact, the UN estimates that between USD 5 – 7 trillion in annual investments in areas such as infrastructure, clean energy and water and sanitation will be required to meet the SDGs by 2030. “It is known that it is a make-or-break situation for the SDGs, the Paris Agreement [on climate change] and all of these challenges that the Earth is facing, if we cannot build this bridge between the public and the private sector,” says Eik.

“There has been so much talk about it. There has been a lot of testing of PPPs (public-private partnerships), but it’s not really working at scale. So, you need better models. Actually, you need PPP – P’s; you need the people to be involved, too.”

The UN estimates that between USD 5 – 7 trillion in annual investments will be required to meet the SDGs by 2030.

 

Managing the historic megatrend of urbanisation is critical. How cities do so, learning from each other, will determine whether mankind leverages the benefits of scale to solve its looming challenges or lets urban decay proliferate.

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