- Daintree Advisory
The Future of Cities: Economic Recovery With Better Nature Coexistence
Article By Alison Gross for Daintree Advisory
Bringing innovative approaches in planning and urban design will ultimately provide long-term, sustainable balance between population growth, urban expansion and environmental stability.
“COVID-19 has brought along a retrenchment of human life. In many cities, that has led to the natural world reoccupying some of the space it had long lost. We have all been pleasantly surprised by pictures of jellyfish swimming in Venice’s canals, fallow deer walking in East London, or the newfound sights of the Himalayas from the urban centers of Northern India,” Carlo Ratti, director of MIT’s SENSEable City Laboratory, wrote in the piece “Towards a Greener Future for Cities After the Pandemic,” included in a 2020 World Economic Forum report. “For a brief but intense period, city dwellers experienced—amid the real suffering brought by fear, sickness and lockdowns—a glimpse of how different cities could be: without pollution, congestion and automobiles, and with more space for nature. The new skills we have learned during our coexistence with COVID-19 will be useful in dealing with the even more significant threats that we will soon be confronted with vis-à-vis nature. COVID-19 might have been a timely fire drill.”
The World Economic Forum report, The Future Of Nature And Business, published in collaboration with AlphaBeta in July 2020, identifies that 80 percent of biodiversity loss is driven by three economic sectors, which together represent over a third of the global economy and provide up to two-thirds of all jobs. Three of the key findings in these sectors are:
● Food, land and ocean use - Protecting and restoring nature to prevent critical ecosystems, including biodiversity hotspots, from being converted for farming or fishing will be vital in building nature’s resilience to continued land and ocean use.
● Infrastructure and the built environment - Business as usual in the infrastructure and built environment system is no longer sustainable. Its impact on biodiversity and the challenges arising from rapid urban population growth, poorly planned expansion, financing gaps and climate change need to be urgently tackled.
● Energy and mining - Curtailing the impact of the energy and mining systems on the natural world requires a sharp change from its current path. Global resource mining has tripled since 1970, while 840 million people still lack access to electricity. “Material productivity,” defined as GDP relative to material and energy inputs, has stagnated since the turn of the century. The system’s negative impact—air pollution and carbon emissions—equate to $9 trillion annually, or around 10.5 percent of global GDP. Identified oil, gas, metals and mineral reserves are increasingly difficult to extract.
The report estimates that these three sectors represent annual business opportunities worth $10 trillion that could create 395 million jobs by 2030. The Infrastructure and the built environment accounts for $3,015 billion in business opportunities by 2030. And 117 million total jobs by 2030.
Cities Are the Engine of the Modern Economy
Cities provide the density, interaction and networks that make societies more creative, productive, prosperous and healthy. Today, over half the world’s population lives in cities, and this share is expected to rise to 68 percent, or nearly 7 billion people, by 2050. If left unchecked, the built environment’s contribution to nature loss will be intensified by this growth.
Business as usual in the infrastructure and built environment is no longer sustainable. Under a business-as-usual scenario, the built environment will continue to expand rapidly. Every week until 2030, around 1.5 million people will be added to cities around the world. Demand for infrastructure investments is estimated at $6 trillion per year.
With an estimated 40 percent of global GDP currently originating from cities, urban areas are of crucial importance to the global economy. Global spending on construction alone is estimated to have exceeded $13 trillion in 2019, around 15 percent of global GDP, and contributed to around 7 percent of global employment. In recent decades, spending in cities has been critical to driving economic growth. However, the rapid expansion of the built environment—which has increased 66 percent in the first 12 years of the century—has significantly impacted the surrounding ecosystems.
COVID-19 and Economic Recovery
Stimulus packages for COVID-19 recovery will have long-lasting impacts and will play a crucial role in influencing the future of cities and our relationship with nature. These stimulus packages present both risks and opportunities, as public funds are likely to focus heavily on infrastructure investment to boost employment and growth. Recovery packages should include funding for investments in sustainable, nature-positive solutions. However, the urgency to boost employment and economic growth creates a counterbalancing risk that nature will not receive enough attention.
To address and offset that risk, partnerships will be needed. Government budgets, already constrained by COVID-related demands and emergency programs, are at risk of generating post-pandemic recessions. Businesses can join or build alliances and collaboration platforms, including public-private partnerships, joint ventures and industry/regional consortiums. Together, the business opportunities associated with these collaborative platforms could create over $3 trillion of additional annual revenues and create 117 million jobs by 2030, according to the WEF.
The development of initiatives and partnerships is just the beginning. Businesses need to determine the mix of partners that would unlock success—including new sources of capital investment, sources of labor, new technologies. As a result of their inherent sustainability, green stimulus measures will generate more jobs and better growth than non-green alternatives. This is supported by facts: For example, according to the IEA, improving energy efficiency in buildings generates an average of 14 job years of net employment for each $1 million invested—up to three times the number of jobs for the same investment in fossil fuels.
In contrast, poorly planned and uncoordinated expansion of cities not only impacts biodiversity but is also economically inefficient. As far back as 2012, the ADB reported, in low-density cities with high rates of car usage, providing utilities and public services costs up to 30 percent more than it does in high-density cities. While traffic congestion, which often results from poor land and mobility planning, lowers national GDP by as much as 5 percent due to negative impacts such as time loss, wasted fuel and air pollution.
Pursuing these opportunities will require substantial new investments. The WEF estimates that in the United States, the total annual investment required through 2030 for all opportunities that they identified is around $2.7 trillion. Although significant, this investment is comparable to the recent stimulus package of $2.2 trillion announced by the United States in March of 2020 in response to COVID-19.
Embracing this paradigm shift, philosophically, economically and governmentally, in how our cities are designed, constructed, serviced and connected will enable cities to sustain both nature and human living conditions going forward. The public sector has a prominent role to play in shaping the development of the built environment. Success is predicated on effective public policies. Yet successful public-private cooperation, extending from the planning and design process through implementation and maintenance, is key to addressing social and environmental issues, while reducing public budget deficits. Bringing innovative approaches in planning and urban design, and ensuring greater efficiency and budgetary certainty in the construction and management of services to our cities, will ultimately provide long-term, sustainable balance between population growth, urban expansion and environmental stability.