Reforming urban land use regimes need to ensure that they have the flexibility required for the urbanised knowledge economy and are able to channel development in ways that enhance, and do not undermine, the creative, innovative, and productive capacities of urban economies.
A new think tank jointly managed by the World Resources Institute and the C40 Cities Climate Leadership Group 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, focusing on national-level decision-makers whose policies affect cities.
Called the “Coalition for Urban Transitions”, the objective is about implementing the “New Urban Agenda”, implementing sustainable development goals (SDG) and driving and implementing national climate commitments (where there is commitment for such actions). There is a realisation that cities will carry the burden of implementing these agendas. National leaders need to be encouraged to develop and implement tools that enable and support cities to deliver on the SDGs and climate agenda.
There are limits to capacity, however, for cities to deliver on their SDG and climate agenda. With very narrow domestic revenue bases, it is reported that only four per cent 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.
Technical assistance to support cities to better manage their finances is critical to success. With some very modest technical assistance at the individual city level, there is potential for cities to achieve necessary credit ratings and start to mobilise capital for investment in sustainable urban infrastructure.
Cities also need powers to start to grow their domestic revenue bases. While it is likely that cities in developed countries have these capacities in abundance, their counterparts in developing countries likely do not. Cities in developed but financially distressed countries like Greece are also not immune to having limited financial ability to implement any SDG and climate agendas they may want to implement.
Any assistance to improve credit ratings and mobilise capital for investment will need to be undertaken with extreme care, and with appropriate fiduciary oversight and safeguards. National governments have a significant role to play:
- Facilitating access to international finance institutions’ money to support those processes
- 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
- Creating effective monetary, fiscal and taxation regimes that support development and minimise the opportunity for the under-collection of government revenues through loophole exploitation
Conversely, the bureaucratic and legal frameworks found in developed countries governing economic development and land use may not burden cities in developing countries, along with the developing countries themselves. This has allowed some cities to bypass the growting pains and fixed infrastructure limitations found in developed countries.
For example, micro-financing for families and small-to-medium enterprises, micro-grids for energy, mobile telecommunications and innovations in application development by local entrepreneurs in these countries are helping to drive economic activity and reduce the cost burden for communities. Only around a third of countries have national urban policies. In the most rapidly urbanising region in the world, Africa, less than a quarter have them.
Underpinning the ability of national governments and city governments to manage their futures with more effectiveness and shared beneficial outcomes for government, business and citizens, national and city governments need to work together (with stakeholder groups) to develop and implement:
- National urban policy frameworks to help guide land-use decisions
- Policies at the city level to help grow a domestic revenue base, and start to think about the interface between national and local taxation (both in form and rates)
- Frameworks and initiatives that work to raise capital for investing in sustainable urban infrastructure to help manage the impacts of very strong population growth and demand for access to electricity, telecommunications, healthy affordable housing and healthy food
- Investing in people and places to tackle poverty and inequity, helping to turn low-wage service and manual labour roles into higher wage, lower physical impact opportunities
National economic development strategies need to be aligned with national urban policies. Getting these policies and strategies aligned will help cities and nations manage urban sprawl and private vehicle travel and congestion, and improve economic, social and environmental consequences in cities where air pollution, congestion, urban productivity are all improved.
One initiative to innovate and grow the economy depends on the clustering of talent, companies, and other economic assets in cities. In developed and developing countries, metro areas are the dominant platforms for technological innovation and wealth creation, as well as for social progress and the fostering of open-mindedness and political freedom. They are frequently the best laboratories for devising and testing new strategies for creating high-paying jobs and raising living standards. However, the very same clustering force that generates economic and social progress can also create divisions within cities, and between cities.
Winner-take-all urbanism means that a few places capture a disproportionate share of the spoils of growth. Land is scarce precisely where it is needed the most to help deliver the benefits of clustering effectively, efficiently and within minimal negative impact on those unlucky enough to be located within the “clustering”/economic development focused geographies. It is not possible to make more land (certainly not without great expense, energy expense and potentially political and environmental expense as experienced in places such as Hong Kong and Malacca in Malaysia), but we can develop the land we have more intensively and efficiently.
One argument to redress these matters is by eliminating restrictive zoning and building codes that limit the market’s ability to build as needed; zoning and building codes do need to be liberalized and modernized. However, land use deregulation by itself is insufficient to address the full breadth of the problem. While it may result in new housing being built and in increased density, the high costs of both urban land and high-rise construction mean it is likely to add expensive luxury towers. It will do little to provide the kinds of affordable housing our cities really need.
Radical deregulation of land use, economic development and housing potentially runs the risk of creating massive distortions in urban development within and outside clustering geographies. The development of economic development zones (and similar manifestations of geographies with favourable land use planning and infrastructure planning provisions) may be beneficial to those who can afford to acquire and develop land within these spaces at a disproportionate rate than those locked outside.
Urban economies are powered not by extreme residential density and huge towers, but by the mid-rise, mixed-used density that promotes mixing and interaction for business and residents. Quality examples include the former industrial neighbourhoods of New York, San Francisco, and London which are filled with mid-rise buildings, factory and warehouse lofts, and the occasional high-rise, arrayed along streets that enable constant mixing and interaction to take place, where pedestrian scale rules.
There is a need to reform urban land use regimes to balance economic activity, environmental protection and social development, and provide the flexibility required to channel development in ways that enhance, and not undermine, the creative, innovative, and productive capacities of urban economies. What these favourable national urban policies, local land use schemes and policies, and fiscal, monetary and taxation policies look like will be dependent on where the individual, corporation, community and government sit within the political spectrum.
Consultation, negotiation, flexibility and long-term thinking and planning is required by all stakeholders.