3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 165 Chapter 3 Fostering an integrated approach to territorial development in Morelos This chapter examines the territorial development dimension of the state of Morelos. It provides a glance into urban policies, including spatial planning, mobility and environment, followed by rural policies, accessibility and connectivity and finally tourism and natural amenities. Each policy domain is evaluated in order to support the state government of Morelos in building on its key strengths and areas of opportunity in order to enhance the region’s economic development and well-being. This assessment draws on examples and best practices from across the OECD. OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 166 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS 3.1 Introduction Chapter 2 focused on the importance of adopting a holistic approach to human capital and innovation to lift productivity growth in the region over the medium and long term, but also to attain inclusive growth. The recently-created Council for Human Capital of the State of Morelos has a central role to play towards the achievement of those goals. However, equally important is to ensure the region is sustainable in its development path, taking into account the environmental dimension while benefiting from its growth potential. In this respect, urban and regional policies need to be well designed and integrated. Furthermore, Morelos registers important pockets of poverty that are concentrated in several municipalities, giving rise to unequal access to services and limited economic opportunities. Infrastructure and rural policies can help improve the situation of local communities by enhancing connectivity to markets, increasing the productivity of the primary sector and generating opportunities in the non-farming sector. These policies will need to be synchronised and implemented in parallel with the initiatives of the Council for Human Capital. The adoption of an integrated approach for regional growth in Morelos is paramount and supported by recent OECD analysis identifying several key drivers of growth that are common to all OECD regions. These drivers, also called “framework conditions”, are largely endogenous to the region and include agglomeration effects, sectoral specialisation, human capital, accessibility and infrastructure, innovation and institutional factors. To strengthen its regional economy, Morelos will need to leverage its diverse set of assets and comparative advantages by adopting a territorial, comprehensive approach to different challenges. This chapter is organised as follows. It starts with a section on urban and regional development through which metropolitan governance, mobility, spatial planning and environmental policies are reviewed. The next section examines rural policies focusing on the agricultural sector and non-farming opportunities. The chapter then reviews infrastructure policies designed to enhance accessibility and connectivity. The last point of focus is on the tourism sector taking account of the natural amenities that are present in the state of Morelos. 3.2 Urban and regional development Over the past few decades there has been growth in metropolitan forms of governance across the OECD. Metro regions across the OECD tend to have higher GDP per capita than their respective national averages, higher labour productivity and faster growth rates. Such agglomeration economies offer both highly-specialised and diverse value-added activities, tend to have strong human and physical capital endowments and are attractive to international businesses and investments. Despite these strengths, urban agglomerations are also home to large and persistent pockets of unemployment and have some of the highest rates of social-spatial exclusion and poverty. Furthermore, such factors as the congestion costs faced by larger agglomerations (e.g. traffic, air and water pollution, noise levels and degradation of green areas) ultimately detract from quality of life and well-being. These trends are apparent across OECD regions. Urban development is important to Morelos: the share of the population living in predominantly urban regions in the state is 74%, significantly higher than the national and OECD averages. The largest city in Morelos is Cuernavaca, home to 365 000 residents, followed by Cuautla (175 000), Jiutepec (162 000) and Temixco (108 000). The combined population in these four largest cities is roughly 800 000 inhabitants representing around OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 167 half of the state’s population. This suggests that the remaining half of the state’s population lives in medium and small-sized cities no larger than 100 000, and rural areas. The largest metropolitan areas in Morelos account for over half of the state's population The state has two metropolitan areas, Cuernavaca and Cuautla, which in 2014 were home to 49.24% and 24.66% of the region's total population, respectively. The growth of the metropolitan area of Cuernavaca prompted the expansion of construction activities around the city of Cuautla (only 44.5 km from Cuernavaca) and peripheral municipalities such as Ayala, Atlatlahucan, Yautepec, Tlayacapan and Yecapixtla, which nowadays encompass the metropolitan area of Cuautla (Gobierno de Morelos, 2016a). In twenty years (1990-2010), the metropolitan area of Cuautla’s population increased 55.22%; or more precisely by 16.63% from 2000 to 2010 and by 9.51% from 2010 to 2015 (INEGI, 2012). Table 3.1. Morelos’ Metropolitan Areas Metropolitan Area of Cuernavaca Metropolitan Area of Cuautla Cuernavaca Atlatlahucan Emiliano Zapata Ayala Jiutepec Cuautla Temixco Tlayacapan Huitzilac Yautepec Tepoztlán Yecapixtla Xochitepec Tlaltizapán Source: Gobierno de Morelos (2016a), Administrative registries. A third metropolitan area has been recognised by the state government of Morelos, despite not meeting INEGI's criteria that determine metropolitan areas in Mexico. This third metropolitan area is that of Jojutla and encompasses the municipalities of Zacatepec, Jojutla and Tlaquiltenango, which represents 6.73% of the population in Morelos. As such, as perceived by the state authorities, the three metropolitan areas account for more than 80% of the population in Morelos, encompassing 16 municipalities out of the 33 present in the state of Morelos. In Mexico, metropolitan areas are defined as a combination of two or more municipalities, or territorial areas in which a city of more than 50 000 inhabitants is located, and of which the urban area, functions and activities exceeds the limit of the municipality or demarcation that originally contained it (Gobierno de Morelos, 2016a). A metropolitan zone is predominantly urban and reliant on the influence of several municipalities in close proximity to each other and that experience a high level of socio- economic integration (Gobierno de Morelos, 2016a). Metropolitan forms of governance are very common across the OECD – more than two-thirds of metropolitan areas have such bodies (OECD, 2015a). However, their policy focus, scope and composition can differ greatly. While metropolitan areas face many common challenges, such as how to promote collaboration amidst diverse and sometimes conflicting interests; ultimately, metropolitan institutional solutions will be unique – reflecting local cultures, ways of working and historically embedded relationships. Metropolitan-wide planning can be achieved by either formal or informal institutions or a mix thereof depending on how sectoral competencies are divided. The effectiveness OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 168 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS of either institutional approach depends to a large extent on the types of issues that a territory faces, the relationships among the actors, the resources at their disposal and, in general, the capacity to implement a common agenda. The policies of upper level governments, i.e. regional or national, have a major impact on the adoption of inter-municipal or metropolitan planning frameworks. In countries with consensus-oriented politics and high capacity at the local level, soft co- ordination mechanisms are likely to work well. In other cases, such as the case of Mexico and Morelos, more stringent co-ordination mechanisms at the metropolitan level may be more effective. Metropolitan wide planning approaches raise questions about the appropriate scale to tackle land use issues; the democratic legitimacy of decisions that take place outside of formal governmental institutions; and the ability to secure stable forms of funding and achieve long-term goals. The governance of metropolitan areas in the state of Morelos relies on a large number of governmental actors from the federal, state and municipal level, as shown in Table 3.1 (Gobierno de Morelos, 2016a). However, an important player remains missing: the Ministry for Mobility and Transport. The involvement of a governmental entity responsible for transportation and mobility issues is critical to ensure that policies tackle metropolitan-wide challenges in a harmonised way, for transport policies are of great relevance to environmental and spatial planning objectives. Likewise, urban development and transport infrastructure should be jointly planned for new projects to fully correspond to accessibility