How to move from creating to implementing a national urban policy
If the world’s cities are truly going to embark on a more sustainable path, they’re going to need a lot of advice. That’s where the Coalition for Urban Transitions comes in.
A new think tank jointly managed by the World Resources Institute and the C40 Cities Climate Leadership Group, the coalition will draw on academic, NGO and private sector expertise to provide evidence-based guidance on how urban growth can benefit both people and the planet. The coalition is a subset of the New Climate Economy, a similar effort aimed at providing research for countries transitioning into more climate-friendly economies.
While the coalition will work on sustainable urbanization, its target will not be cities themselves. Rather, the effort will focus on national-level decision-makers whose policies affect cities, from heads of state to ministers. That will include work on national urban policies, the focus of a key meeting this week in Paris.
Citiscope’s Gregory Scruggs recently spoke with economist Nick Godfrey, the New Climate Economy’s head of policy and urban development. This interview has been edited for length and clarity.
Gregory Scruggs: What is the Coalition for Urban Transitions?
Nick Godfrey: The Coalition for Urban Transitions is a new international collaboration that will help make the economic case for better urbanization. It brings together leading thinkers across the public, private and third sector on sustainable urbanization from all around the world. What’s pretty distinctive about the coalition is that its focus is not at the city level: Its focus is on working with key national decision-makers. The reason for this is that many of the powers and levers that impact the performance of cities are in the hands of national leaders — so heads of state, finance ministers, energy, transport and urban development ministers.
This is really about implementing the New Urban Agenda. It’s also about implementing the Sustainable Development Goals (SDGs), and it’s about implementing the national climate commitments. Because ultimately, to deliver on the Sustainable Development Goals, national leaders will have to rely on cities to do a lot of the pulling. It’s the same with the [New Urban] Agenda — it’s absolutely going to have cities at the front and centre. And when it comes to the Paris climate commitments, to actually execute on any of those national commitments, cities are going to have to play a really important part. This is about equipping national leaders with the tools to enable and support cities to deliver on the SDGs and climate agenda.
Q: What do you see as the primary barriers for cities to help their national governments deliver on these commitments?
A: There’s a whole bunch, and they vary markedly by geography. C40 just did some analysis on this, and they basically asked the question, “What levers do cities have to deliver on their ambitious climate action plans?” And it turns out that cities have made all of these very ambitious climate commitments, but they only unilaterally have the powers to deliver on 5 percent of that commitment.
For example, finance is a huge barrier. Many cities have very narrow domestic revenue bases. Only 4 percent of the 500 largest cities in the world are creditworthy in international finance markets. That makes it very difficult for them to leverage and raise financing for sustainable urban infrastructure, which would enable them to deliver on their climate commitments, for example.
Q: How can national governments help their cities become creditworthy?
A: National governments can do a hell of a lot. There are national governments that are really considering how do they help not just one city but multiple cities across a country. The Indian government is looking at this very seriously: As part of their 100 Smart Cities programme, they’re basically saying, “How do we take our 20 largest cities and most important cities, and make sure that they are able to graduate to investment grade status within a period of time?”
“Even those countries that have a national urban policy, most of them have very limited ability and capacity to actually implement it. And even fewer have actually embedded a national urban policy right at the heart of their economic development strategy.”
Part of this is technical assistance. There are cities like Kampala, for example, in Uganda — a relatively poor city which received technical assistance and effectively doubled its domestic revenue base in the space of a year by making some very modest changes related to tightening loopholes related to tax collection, etc. With some very modest technical assistance, it was able to very quickly achieve a credit rating and start to mobilize capital for investment in sustainable urban infrastructure. Technical assistance to support cities to better manage their finances is really critical.
A second key thing has got to be about providing cities, where appropriate, with some of the powers that they need to start to grow their domestic revenue bases. Clearly this needs to be done very carefully and with the right fiduciary oversight and safeguards, but it is important for national governments to work hand in hand with cities to make that happen.
A third element to this, which national governments can help with, is facilitating international finance institutions’ money to support those processes. There are big facilities like PPIAF — a big technical assistance program that, for example, helped Lima improve its credit rating recently, essentially allowing it to access capital markets, to invest in a [bus rapid transit] system. There are lots of examples where national governments can help facilitate a relationship with international financing institutions and help improve that.
I think empowering cities to experiment with things like municipal green bonds is important. Johannesburg had a very successful bond issuance relatively recently, and that was supported by national government.
Often things that national governments can do is embedding in legislation the ability for cities to start to develop development-based “land value capture” mechanisms, which enable cities to effectively levy the increased value of land when they invest in sustainable urban infrastructure such as transport systems. London’s done this with Crossrail, and there’s a whole bunch of other examples in many other cities. That was enabled by primary legislation through national governments.
Q: Do you hear a common concern from national governments that, “Well, ultimately the buck stops with us”?
A: There is absolutely that concern. This is why it’s so important that national governments and cities work so closely together, and that any level of increased devolution of fiscal and other powers to cities has to be done very carefully and in a very sequenced way, and in line with building the capability and capacity of cities to prudently manage their finances. There are plenty of examples of cities all around the world that have done this very successfully, so there is a lot of best practice that can be drawn on.
Q: Are you generally bullish on the prospects of more robust municipal bond issuances and other such actions?
A: Municipal bond issuances are just one mechanism, and there are lots of ways the national government can support cities. It really depends on the level of financial maturity, nationally and in the cities themselves.
“If you have a national urban policy, the first thing that any country should do is think about putting in place a vision for your urban future. How do you want to manage your urbanization process over a multi-decade period? And then, put in place a national urban planning policy framework to help guide land-use decisions.”
We’ve started to develop a framework so that cities and national governments that are in a relatively early stage of financial maturity — in terms of the depth of their financial markets and some of the fiduciary oversights and safeguards they have in place — can start with some of the really basic things. For instance, about how do you start to grow your domestic revenue base, start to think about the interface between national and local taxation, etc. Then once some of the basics are in place, cities can, with the national government, start to think about more sophisticated ways of raising capital for investing in sustainable urban infrastructure.
We’ve started to lay out a framework where no matter where you are on the spectrum of financial maturity, as a country and as a city, you can start to think about some of the mechanisms that are most appropriate for your level of development. There’s a whole range of mechanisms which national urban development ministers and other ministers typically hold related to national urban planning policy. You know, a lot of countries don’t have a national urban planning policy, and at a higher level, only a third of countries have any form of explicit national urban policy.
Q: On national urban policies, is there even a clear understanding among governments what that is and why they should do it?
A: Only around a third of countries have national urban policies. If you look at the most rapidly urbanizing region in the world, Africa, less than a quarter have. But that isn’t even the most worrying thing: Even those countries that have a national urban policy, most of them have very limited ability and capacity to actually implement it. And even fewer have actually embedded a national urban policy right at the heart of their economic development strategy.
For example, there are very few countries that have a policy toward cities embedded and well understood by a Ministry of Finance, which often holds a lot of the infrastructure capital to implement it. A great objective would be to get half of all countries by 2025 to have a national urban policy, but it’s equally important to make sure that they have also have the capacity to implement it. And lastly, it’s critical that that national urban policy also helps to support well-planned urban growth which supports economic, social and environmental outcomes concurrently, so that its urbanization supports current and future generations.
We’ve spent a lot of time looking at what are the economic, social and environmental benefits of getting urbanization right. “Business as usual” on a global basis is characterized by growth in urban sprawl and conventional private vehicle travel, and that creates a whole range of economic, social and environmental consequences in cities — air pollution, congestion, vast reductions in urban productivity, significant increases in urban infrastructure capital costs, as well as massive and accelerating rises in carbon emissions.
So it’s really important that any national policy put in place also is in line with what we call “Three C’s” principles. The first C is that it’s appropriately compact, so efficient land use. That it’s connected — i. e. that you’re investing in decent urban mobility and public transport systems. And, three, that it’s coordinated, so that all of the key line ministries at a national level are coordinating across the urban sphere, and that that national policy coordination is also coordinated with local policy formulation in cities themselves.
We would be supportive of the general intent and thrust of that on a global basis, but it’s also important to focus on implementation and the right kind of policy.
Q: What’s something that an official at a Finance Ministry might do differently if they were to have a national urban policy lens that they were taking seriously?
A: One thing that we would advocate all national governments do, national urban policy or not, is to start to think about phasing out fossil fuel subsidies. Half a trillion dollars is still going into fossil fuel subsidies, and a lot of that remains in the transport sector — a significant increase and encouraging fossil-fuel-based private vehicle travel. That’s a profound impact on urban areas, economically, socially, environmentally and all sorts of ways.
If you have a national urban policy, the first thing that any country should do is think about putting in place a vision for your urban future. How do you want to manage your urbanization process over a multi-decade period? And then, put in place a national urban planning policy framework to help guide land-use decisions.
That is the most important thing — efficient land use is so important economically, socially and environmentally. Urban sprawl, for example, has a significant detrimental impact on urban productivity. For example, poorly planned, sprawled urban development in India could cost in the region of 6 percent of gross domestic product by mid-century — around USD 1.8 trillion.
Q: Which countries have started to understand this in recent years and are starting to make some important changes?
A: I would start with perhaps a surprising example. China’s doing an awful lot on national urban policy. In 2013 they released a major new national urban policy and embedded within it an intention to encourage better-planned urban growth, more low-carbon development. They have identified a whole range of pilot cities, basically as low-carbon pilots, and are providing significant resources to help municipal authorities and mayors and leaders there to help make that a reality. There’s a lot more that China can do in implementing that policy, which is where the implementation challenge comes. But I think the Chinese government really does understand the importance of getting urbanization right.
There’s a number of driving factors for this. One is municipal finances in certain Chinese cities are a bit of a mess. And this has been primarily related to cities having to rely on a very narrow domestic resource base — selling landholdings, primarily, which has promoted urban sprawl. So tackling that issue is really important economically for the Chinese government. Air quality is a major issue, as well, partially related to the vast growth in fossil-fuel-based vehicle travel. And socially, urban sprawl in China has started to encourage inequality within cities and between cities, and so China is really demonstrating some level of leadership.
The other example is India. They’re at an earlier stage, but with its 100 Smart Cities programme, we’re starting to see quite a lot of leadership from the Indian government.
Across Africa there’s a whole bunch of countries where this agenda is really starting to be important to them. We’re doing some initial work in Tanzania, which has just developed a new five-year plan, and getting urbanization right is one of four major priorities. There’s a number of countries like that across Africa which are demonstrating leadership.
So I have some level of optimism that there is momentum there. A third of countries do have a national urban policy, and it’s important that we build on that.