Urban development -- risk or opportunity?

By 2050, three-quarters of the world's 9 billion people will live in cities. How can these challenge

By 2050, three-quarters of the world's 9 billion people will live in cities. How can these challenges be met?{C}

By 2050, three-quarters of the world's 9 billion people will live in cities. According to the United Nations' Habitat group this population rise would require development equivalent to a new city of one million people every week for the next 30 years. Some estimates predict that as many as half of those could be in city 'slums', with limited access to power for heat and light.

Recent research puts the costs of development and operation of urban infrastructure at $350 trillion to 2040 -- seven times current annual global GDP 1. But how will that investment be deployed? If development is chaotic, we can expect cities with sprawling mobility needs, highly inefficient energy consumption and large slums. If smarter development is achieved, there will be more compact cities with high population density, mass-transit infrastructure and energy-efficient combined heat and power (CHP) developments. Integrating the transportation, energy, water and waste systems which contribute to the physical infrastructure of modern cities is important. From a climate perspective, scientists predict that the management of energy use in cities -- from which almost 80 per cent of CO2 emissions emanate -- will be a decisive factor in the coming years.

Dramatic urban growth is being most keenly observed in the rapidly expanding economies of the East and particularly evident in two categories of city:

  • Rapidly growing smaller cities -- population <1 million -- with fewer existing resources but so called 'upstart' advantage. Their carbon footprints are lower by virtue of their relative size and their infrastructure is yet to be developed.
  • Second-tier or midi-cities -- whilst having little global name recognition currently, their rapid economic growth and burgeoning populations -- 1-5 million people -- means that their need for effective urban infrastructure planning is real and urgent.

Based on historic patterns of urban development -- typically evolutionary and driven by the demands of unmanaged economic migration -- failure to plan and manage city growth will render cities powerful forces for environmental destruction through their emissions and waste.

As a recent study from the WWF and Booz&Company concludes, cities are immensely diverse but the case for sustainable planning processes are common to all major urban environments. "Whether Sweden, Nigeria or China, urban leaders need to focus infrastructure spending on three kinds of activities... aggressive energy reduction plans; investment in cutting edge technological advances; [and]...innovative financing...."

Energy, resources and infrastructure companies face a significant opportunity to innovate in new supply chains for an increasingly urban world. But they also face major up-front investment costs. Already multinational companies like IBM and Siemens have reshaped their organisations for the urban world in an effort to capture market demands for urban mass-transit systems, electric mobility, energy-efficient heating and power schemes, and high-speed information technologies.

We must ask: To what extent will policies enable better management of future city development to ensure a more stable transition? If this can be achieved -- and it is a bold assumption on the evidence of history -- then the challenge to business will be whether rewards for innovation offset the risks of diversifying early.