3 minute read 28 Mar 2018
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Why we need to future proof our cities for sustainability

By

Bill Banks

EY Global Infrastructure Leader

Committed to building resilience in our cities and making them better places to live. Father, husband, football fan, malt whisky connoisseur and karaoke tragic sometimes all at the same!

3 minute read 28 Mar 2018

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Cities that build resilience into their planning for major infrastructure will see long term economic, social and physical benefits.

The future’s urban. Over half of the world’s population currently lives in cities. Ongoing urbanization could see that number rise to 70% by 2050. And by 2030, experts predict that there’ll be 41 cities with more than 20 million residents. (There were two in 1950.)

As a result, cities are now the engines of economic growth in many countries: the OECD estimates that metropolitan areas with more than 500,000 residents drive 55% of the GDP of its member countries, and more than 60% of the growth.

Of course, urbanisation isn’t a new phenomenon. Cities have been steadily taking over from rural areas as the main drivers of growth and jobs since the first industrial revolution. And where the work goes, the people follow.

The differences are the speed at which it’s now happening (400,000 people move into East Asian cities each week), and the fact that we’re moving ever closer to one global market for goods and services. This means that cities in the developing world now have to compete directly with those in developed markets for everything from investment to tourism. 

Build the right infrastructure and become a better place to live

In this highly competitive world, there’s only one way to stand out: by becoming a better place to live.

At EY, we’ve long believed that affordable and sustainable transport systems, housing and public services are the key to achieving this. But many infrastructure projects neglect to build in the most important thing – resilience.

Resilience is a city’s ability to respond to shocks, such as floods and terrorist attacks, and stresses, such as unaffordable housing.

Failing to consider it can be very expensive: the 2011 Bangkok flood caused estimated damages of $45 billion to the global supply chain, of which only $10 billion was insured. Yet very few really ask: “What’s the cost of not building resiliency into a project?”

At the other end of the scale, integrating resilience into infrastructure projects that solve multiple urban challenges can bring physical, social and economic benefits in the long term. In New York City, for example, development sparked by the High Line project is predicted to bring $4 billion in private investment and $900 million in revenues over the next 30 years.

Crowded market

Consider tomorrow’s benefits, today

So why do so many cities fail to prioritize integrated projects?

Much of the problem lies with funding. Many planners believe it’s easier to secure investment for ‘pure’ infrastructure projects, because of the return they’ll bring. Others are so grateful for government-driven investment that they don’t question whether the projects are forward-looking enough. Instead, they’re swayed by the economic benefits of doing projects today, to meet current challenges.

Through our work with clients, plus our partnership with 100 Resilient Cities, we’ve seen some interesting ways that cities can overcome these issues – and become better places to live. Here are three:

  1. Mobilize the private sector capital available for investment. Multilateral development banks, such as the Asian Infrastructure Investment Bank, the Asian Development Bank and the World Bank, are a key platform for doing this. By supporting initiatives such as the ‘One Belt, One Road’ strategy, these institutions ‘crowd in’ private sector capital alongside their own investments. This in turn makes it easier to attract interest from the capital markets. 
  2. Create a unique sense of purpose for investment in urban development. Cities that have a clear strategy for what they want to invest in, then develop detailed plans to execute that strategy, reap real rewards. Da Nang in Vietnam is a good example: it had a stated strategy to become a major tourist hub for Southeast Asia. To bring this into effect, it rolled out a program of investment in major hotels and tourist-related activities. It also developed the supporting infrastructure the city needed, such as transport and utilities.
  3. Consider the economic benefits of resiliency when planning major infrastructure. Cities that do this from the outset can then prioritize projects based on the total future economic benefits (and associated costs) they bring. And by viewing initiatives through the lens of long-term resiliency, they’ll be able to future-proof their investment, too.

Summary

To build sustainable cities in the future, organizations need to create resilient infrastructure today.

About this article

By

Bill Banks

EY Global Infrastructure Leader

Committed to building resilience in our cities and making them better places to live. Father, husband, football fan, malt whisky connoisseur and karaoke tragic sometimes all at the same!