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Megacity Challenges A stakeholder perspective

A research project conducted by GlobeScan and MRC McLean Hazel Sponsored by Siemens

Sponsored by Siemens Challenges Megacity Preface

Acknowledgements This report was written by the Economist Intelligence Unit, based on research conducted by MRC McLean Hazel and GlobeScan. We would like to thank all those who participated in the survey for their valuable insights and time.

Shanghai

Megacity Challenges Content

t some point in 2007, humanity will contributes to economic prosperity, further Chapter Page Areach a significant demographic mi- improving quality of life. Unfortunately, lestone: for the first time in history more the infrastructure in many cities lags be- people will live in cities than the coun- hind the population’s needs — a major 01 Key Findings 4 tryside, according to predictions by the challenge for city governments in both United Nations. By 2030, over 60% of emerging and industrialized nations. 02 Megacity Challenges: an Overview 10 people will live in cities. The growth rate is particularly rapid in many of the so-cal- This report summarizes the key find- led megacities, cities with more than 10 ings of a unique global research project 03 Stakeholder Priorities: the Big Picture 18 million inhabitants. The megacities listed undertaken by two independent research by the UN already have a total population organizations with the support of 04 Five Infrastructures 24 of around 280 million. They are increa- Siemens, the infrastructure provider. The singly the growth engines of their respec- goal of the project was to carry out re- tive national economies. But as these search at the individual megacity level to 05 Transportation 26 cities and economies grow, so do the gather objective data as well as perspec- challenges. One key issue is the burden tives from mayors, city administrators 06 Electricity 32 that growth is placing on urban infra- and other experts on local infrastructure structures. challenges. Over 500 public- and private- sector experts from 25 cities were inter- 07 Water and Waste Water 38 Urban residents the world over want viewed for this purpose. — and deserve — a good quality of life. They need good air to breathe, good wa- The result is a fascinating and, we 08 Healthcare 44 ter to drink and reliable electricity to hope, useful picture of how challenges power their lives. People need healthcare. are prioritized and what infrastructure 09 Safety and Security 50 They also need to be mobile — so trans- solutions are best able to improve the portation systems must be capable of local economy, environment and quality transporting millions of people while of life of megacities. 10 City Governance and Finance 56 putting as little strain as possible on the environment and city budgets. In other We hope you enjoy reading the report! 11 Conclusions 64 words, a good quality of life requires a Prof. George Hazel, OBE, well-functioning infrastructure. More- MRC McLean Hazel over, an effective infrastructure in turn Doug Miller, GlobeScan 12 Appendix: Methodology 66

2 Megacity Challenges Megacity Challenges 3 Key findings

New York City Key Findings

01

Key findings will be the year that, for the first edge and industry, but on an unprecedented trends that will shape urban development in 25 2007time in history, more people will scale. In varying forms, they all face hugely global cities over the coming years. The find- ■ Megacities prioritize economic competitiveness and employment live in cities than in the country. For many, it is complex social and environmental challenges. ings are based on an in-depth survey of over ■ The environment matters, but may be sacrificed for growth the megacity that symbolizes everything that is Achieving the opportunities for human and 500 megacity stakeholders, including elected ■ Transport overtakes all other infrastructure concerns inspiring and troubling about this era of rapid economic development that megacities afford, officials, public- and private-sector employees, ■ Better governance is a vital step towards better cities urbanization. while improving their many problems, will and influencers such as academics, NGOs and ■ Holistic solutions are desired but difficult to achieve Today’s megacities are home to almost one require the development of innovative infra- media. This survey was supplemented with ■ Cities will seek to improve services, but could do more to manage demand in ten of the world’s urban population. Like all structure solutions and new approaches to met- extensive secondary research, enabling us to ■ Technology will help deliver transparency and efficiency great metropolises before them, these mega- ropolitan governance. shed light on the key challenges faced by global ■ The private sector has a role to play in increasing efficiency cities act as magnets for trade, culture, knowl- This report explores the key challenges and cities at various stages of development.

4 Megacity Challenges Megacity Challenges 5 Key findings

Buenos Aires

Megacities prioritize economic competi- the top megacity infrastructure challenge by a the different levels of municipal government, this context, the proper pricing of services Key findings of the research tiveness and employment. When asked large margin. It is the one infrastructure area together with a lack of strong leadership, could be a step forward. which issues drive decision-making, 81% of that stakeholders believe has the biggest according to the survey. Stakeholders express include the following. stakeholders involved in city management impact on city competitiveness. They are also a clear desire for a more holistic approach to Technology will help to deliver trans- cite the importance of the economy and highly aware of its environmental impact (for city management, but this is rarely the reality parency and efficiency. Technology can employment. There is a strong focus on creat- example, air pollution) and are keen to move to today. Many megacities have a multitude of help city governments in two major ways: by ing jobs, with unemployment emerging as the greener mass transit solutions. It is not surpris- administrative bodies with overlapping and making them more efficient, and more top economic challenge for survey respon- ing therefore to find that transport also poorly defined responsibilities, which inevita- accountable to their citizens. Eight in ten dents from Emerging and Transitional cities. emerges as the top priority for investment. bly saps efficiency and makes strategic plan- respondents think that their city will increas- Competitiveness in the global economy is Stakeholders acknowledge that the four other ning difficult. Governance structures need to ingly integrate advanced information technol- another important consideration. Six in ten infrastructure sectors covered by this study – balance the needs of the city with the wider ogy into their administration and operations stakeholders think that their cities place a water, electricity, healthcare and safety & secu- metropolitan area, and also take into account over the next five years. Moreover, city man- high importance on making themselves com- rity — are also in need of investment. Interest- the interdependencies between the various agement specialists predict a strong emphasis petitive to attract private investment when ingly, they are less likely to see a strong link infrastructures (water and healthcare, for on digitalization or e-government rather than deciding on infrastructure issues. between spending in these areas and improved example). Cities and their needs are complex on recruiting more staff (64% to 36%). Fur- competitiveness, despite the fact that each has and the traditional, departmentally organized thermore the value of technology is not The environment matters, but may be an important impact on the overall attractive- approach to city governance needs to be restricted to rich cities. Cash-strapped Emerg- sacrificed for growth. Stakeholders through- ness of the city for investment. rethought to enable more holistic solutions ing cities place almost as much importance on out the survey place a high importance on on the one hand, and more responsiveness e-government and digitalization as those in environmental issues. They see air pollution Better governance is a vital step towards and accountability to citizens at a local level Transitional and Mature cities. as the most significant environmental chal- better cities. With so many areas crying out on the other. lenge, followed by congestion issues. Six in for investment in better infrastructure, it is The private sector has a role to play in ten stakeholders believe their city’s leadership not surprising that funding emerges as a big Cities will seek to improve services, but increasing efficiency. The stakeholder sur- recognizes the vital role that infrastructure issue for many stakeholders in the survey. But could do more to manage demand. Faced vey provides a mixed picture on attitudes to decisions can play in protecting the environ- for those involved in city management, it is by huge pressures on public services, cities privatization. Most respondents predict ment. Environmental issues also feature improvements to governance — rather than tend to emphasize direct and immediate sup- strong public ownership and control of infra- prominently in the thinking of the infrastruc- just money — that are the top priority going ply-side solutions. This does not always mean structure sectors and services. However, the ture specialists in the survey: those in trans- forward. Over half of respondents with know- adding more capacity: in many cases stake- majority of stakeholders also say that they are port predict an emphasis on mass transit solu- ledge of urban management see improved holders emphasize the need to increase the open to public-private partnerships (PPPs). tions, and those in the energy sector show a planning as the priority to solving city prob- efficiency of existing infrastructure over buil- Private-sector respondents are naturally the strong inclination for solutions based on lems, compared with only 12% that prioritize ding new roads, railways, hospitals and so on. biggest enthusiasts, but more than 70% of renewables. But if a choice has to be made increased funding. In addition to more strate- By contrast, although it gets mentioned by a public-sector and elected respondents view between the environment and economic gic planning, there is also a strong focus on minority of respondents, demand manage- PPPs as a viable means to implement infra- growth, it is the latter that often wins out. managing infrastructure and services more ment never emerges as a priority. Demand structure solutions and more than 60% This is particularly so in the developing world, efficiently. Both these goals will require cities management approaches have been advocat- believe that privatization of infrastructure where 55% of stakeholders predict that their to make the step from passive administration ed in a variety of areas, but even the special- would increase its efficiency. Again, it turns cities will sacrifice environmental considera- of existing services, to a more active style of ists in specific infrastructure sectors do not out that efficiency, rather than just funding, is tions for the sake of increased capacity, com- managing systems that focuses on improved see managing demand as the primary solu- the main perceived advantage of moving pared with only 14% respondents in Mature efficiency and more measurable outcomes. tion to their challenges. Yet with consumption towards greater participation from the private cities who believe that this will happen. consistently outstripping supply in many sector. But even where cities move towards Holistic solutions are desired, but are dif- cities and infrastructure areas, there is a the private operation of services to improve Transport overtakes all other infrastruc- ficult to achieve. The main barriers to strate- strong case for the wider adoption of demand efficiency, they want to retain strong public ture concerns. Transportation emerges as gic management are poor coordination between management strategies on a global basis. In leadership and control.

6 Megacity Challenges Megacity Challenges 7 Key findings

London About this report

This report looks at the challenges facing megacities in city management and five critical infrastructure sectors: Transportation, Electrici- ty, Water and Waste Water, Healthcare, and Safety and Security. The conclusions are based on a survey of 522 stakeholders spread across 25 cities. Stake- holders were divided into four groups: Elected political leaders (described in this re- port as electeds). Employees of the municipality (employees). Private sector infrastructure providers, con- Infrastructure highlights struction company managers, and financiers Cities surveyed (privates). People who are in roles that influence infra- City Country 2003 2015 Area Share of structure decision makers such as thought lead- Population Population in km2 GDP Transportation: More action needed to But only 3% of stakeholders cite water as the ers, academics, NGOs, and media (influencers). in Mio. in Mio. in % manage demand major contributor to growth and competitive- The survey included general questions on Tokyo Japan 35.0 36.2 13100 40 Congestion costs are huge for the megacity ness. Page 38 megacity issues that were addressed to all 522 New York USA 21.2 22.8 10768 <10 economy and environment. But despite some respondents. More detailed sections on specif- Seoul-Inchon South Korea 20.3 24.7 4400 50 success with congestion charging schemes in Healthcare: Increased spending must be ic areas (ie. the five infrastructure sectors as Mexico-City Mexico 18.7 20.6 4600 40 several cities, the idea of road pricing has yet combined with better management well as city management and finance) were São Paulo Brasil 17.9 20.0 4800 25 to become a major focus for city stakeholders Our survey indicates an emphasis on more addressed to those respondents with the most Mumbai India 17.4 22.6 4350 15 around the world. Page 26 efficiency, delivered through common shared relevant knowledge and experience. For the Los Angeles USA 16.4 17.6 14000 <10 healthcare infrastructure, ahead of simply latter, we use the terms specialist or stakehold- Delhi India 14.1 20.9 1500 <5 Electricity: Strong focus on renewables building more facilities. Preventative er (as in transport stakeholder, or city manage- Manila-Quezon Philippines 13.9 16.8 2200 30 With demand again outstripping supply, there approaches are desired, but external factors ment specialist) as convenient shorthand Calcutta India 13.8 16.8 1400 <10 is an emphasis on allowing electricity to be are sometimes overlooked: no healthcare throughout this report. Sample sizes range Buenos Aires Argentina 13.0 14.6 3900 45 priced by the market rather than subsidized. stakeholder mentions water quality as a major from 124 in transportation to 72 in electricity. Shanghai China 12.8 12.7 1600 <10 Specialists in this sector also display a strong issue even in Emerging cities, indicating the To understand the different challenges and is- Jakarta Indonesia 12.3 17.5 1600 30 appetite for renewable fuels, but it is likely lack of a more holistic view to problem solv- sues facing megacities at different levels of de- Dhaka Bangladesh 11.6 17.9 1500 60 that surging demand will lead many growing ing. Page 44 velopment, the research analyzes three cate- Rio de Janeiro Brasil 11.2 12.4 2400 15 cities to continue to rely primarily on cheaper gories of city: Emerging cities, Transitional Karachi Pakistan 11.1 16.2 1200 20 fossil fuels in the near future. Page 32 Safety & Security: Organized crime is a cities and Mature cities. Although every city is Ruhr Area Germany 11.1 11.1 9800 15 bigger threat than terrorism unique, those in each of these archetypes Cairo Egypt 10.8 13.1 1400 50 Water and waste water: Still fighting for Organized crime is the biggest security chal- share many characteristics and face many simi- Beijing China 10.8 11.1 1400 <5 attention? lenge for megacities, and is cited as such by lar problems. Throughout this report, we high- Lagos Nigeria 10.7 17.0 1100 30 In many megacities, large sections of the pop- twice as many stakeholders as those who light challenges and priorities for each of the Moscow Russian Fed. 10.5 10.9 1100 20 ulation live without access to clean water or mention terrorism, the second most promi- megacity archetypes, as well as key areas Paris France 9.8 10.0 2600 30 basic sanitation. Research indicates that the nent issue. Interestingly, surveillance is where action is needed to enable cities to bal- Istanbul Turkey 9.4 11.3 2650 25 economic, not to mention social, costs of a emphasized well ahead of concerns for privacy. ance competitiveness with quality of life and Chicago USA 9.2 10.0 8000 <5 London Great Britain 7.6 7.6 1600 15 failure to address this problem are significant. Page 50 environmental sustainability. Re, 2005 Munich Source:

8 Megacity Challenges Megacity Challenges 9 Megacity challenges: an overview

Mumbai Megacity Challenges

02 he rise of the megacity often divides Key findings Tobservers between wonder and conster- nation. On one level, these super-sized cities ■ The number of megacities has multiplied over the past 50 years, are seen as the engines of the global econo- to the extent that they now provide a home to 9% of the my, efficiently connecting the flow of goods, world’s urban population people, culture and knowledge. They offer, at least potentially, unprecedented concentra- ■ Their importance in the national and global economy is tions of skills and technical resources that can disproportionately high bring increased wealth and improved quality of life to vast numbers of people. ■ City governance is having to adapt to the challenge of But megacities also conjure up an alto- delivering holistic solutions across vast metropolitan regions gether darker vision. All the cities covered by this research face huge challenges ranging ■ City managers must strike the balance between three overriding from congestion and pollution to security concerns: Economic competitiveness, environment and threats and inadequate services groaning quality of life for urban residents under the weight of excessive demand. Those

10 Megacity Challenges Megacity Challenges 11 Megacity challenges: an overview

Karachi

in the developing world also struggle to cope namely economic competitiveness; quality of increasingly competing with, and dependent with the rapid growth of informal settle- life; and the environment. Mega-growth, mega-complexity on, relationships with other cities in the glob- ments. Today almost one in three of the The following sections look at the key chal- al economy. At the same time, we are witness- world’s urban population lives in slums, with- lenges faced by cities at different stages of ing the emergence of new city regions — out access to good housing or basic services, development. We reveal the overall priorities he megacity is a relatively new form of Africa), placing huge pressure on infrastruc- sprawling conurbations that extend far according to UN-HABITAT’s 2006 State of the for stakeholders in a world where resources Turban development. In 1950, there were ture in those locations. By 2020 Mumbai, beyond the boundaries of a single city. Exam- World’s Cities report. are all too finite. The research also sheds light only two cities with populations of over 10 Delhi, Mexico City, São Paulo, Dhaka, Jakarta ples include the “BosWash stretch” (extending At one level or another, all of the stake- on trends and strategies in five critical areas million: New York and Tokyo. By 1975, two and Lagos will each have populations of over from Boston, MA to Washingon, DC) in the US, holders surveyed as part of our research must of infrastructure — transportation, electricity, more locations, Shanghai and Mexico City, 20 million. For many Emerging cities, soaring and Chongqing in China. deal with this dual reality on a daily basis. In water, healthcare and safety & security — as joined the club. But by 2004, the number of populations are extremely difficult to man- These huge megacity regions create a new their own areas, they hold significant respon- well as through new approaches to metropoli- megacities had rocketed to 22* and, together, age: at current rates of growth, the number of urban dynamic. Commuters travel large dis- sibility for overcoming the multitude of chal- tan governance. these cities now account for 9% of the world’s inhabitants in Nigeria’s Lagos will double by tances from densely populated suburbs. Eco- lenges that, to greater or lesser degrees, con- Megacities have been described as the urban population. 2020, mainly through expansion of informal nomic activity frequently becomes deconcen- front the 25 megacities covered by this urban phenomenon of the 21st century. Their Urban growth is spread unequally around settlements. By contrast, most Mature cities trated, dissipating from the center to the report. Many of them are also tasked with unprecedented size and complexity, and their the world, and the same is true of its largest (as well as many Transitional ones) will need periphery. Often fragmented systems of met- delivering the solutions and services that will critical role as gateways in the global econo- cities. Most of the megacities in the devel- to address a different kind of demographic ropolitan governance have not caught up enable their cities to compete in a globally my, pose huge challenges for sustainable oped world are growing slowly, if at all. Tokyo challenge in the form of population ageing. with this trend, with the result that it is diffi- connected economy. urban development. We hope that this report remains the largest with 35 million inhabi- Today’s megacities are not only bigger cult to deliver an efficient, holistic approach This report looks at how stakeholders will stimulates new thinking on the solutions tants, but the fastest growth will be in the than the cities of the mid-20th century, they to infrastructure challenges at a metro- balance these demands in three major areas: required to meet the Megacity challenge. developing world (particularly in Asia and are also more complex. For one, they are regional level.

Population density (per km2)

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0 various from Demographia, Source: Istanbul London Mumbai São Paulo Lagos Moscow New York Shanghai

12 Megacity Challenges * According to UN definition of megacity Megacity Challenges 13 Megacity challenges: an overview

São Paulo

t would be wrong to assume that megacity example, air quality has improved over the Competitiveness Striking Environment Igrowth is automatically bad for the environ- last 50 years. In Shanghai and Kuala Lumpur, ment. It is obvious that a city with 20 million it has gone down. a balance people will have a large environmental Historically, cities tend to get rich first, impact, but it is less clear whether that impact then clean up later. Unfortunately that n megacities, the complexity of building is bigger than if the same number of people approach could be disastrous in the context of Iand maintaining infrastructures, and of lived rurally. Certainly there are those who climate change: this is one reason for the meeting the needs of a huge and often grow- argue that clean, modern cities, where dense growing focus on sustainable urban develop- ing urban population, reaches new levels. As living enables resources to be consumed effi- ment. Sustainable solutions promote greater they seek to address that challenge, those ciently, provide an environmentally sustain- use of alternative energy sources and more involved in the delivery of services and solu- able model for the future. energy-efficient buildings and transport, tions must balance three overriding concerns. Whatever their potential, however, many measures to combat congestion and CO2 of today’s megacities feature a catalogue of emissions, water and waste recycling, and the Governance environmental problems. Congestion, air and use of vegetation to filter pollution and cap- water pollution, waste management and ture carbon dioxide. While several cities have degradation of green areas are familiar issues started implementing at least some of these in most large cities around the world, and are measures to good effect, there will be a need particularly extreme in the megacities of the for more concerted efforts if the environmen- developing world. In London and Tokyo, for tal cost of urbanization is to be reduced.

Quality of life Environment

World’s most polluted Cities Particle matter in 2002 (micrograms per cubic metre) Competitiveness 0 50 100 150 200

Delhi 1st egacities are the gateways of globaliza- metropolitan regions have a higher GDP per are also hugely important, as evidenced by the (India) Mtion, driving the flow of people, goods, capita than their national average, higher offshoring trend that has itself fuelled the Cairo 2nd knowledge, and money around the world. labor productivity levels, and many of them growth of cities like Bangalore in India. Anoth- (Egypt) Already, one-fifth of the world’s GDP is gener- tend to have faster growth rates than their er crucial (although sometimes less obvious) Calcutta 3rd (India) ated in the ten economically most important countries. factor is the quality of basic services: people Mexico City 41st cities. Megacities also make a disproportion- Given their weight in their respective natio- with access to quality housing, education and (Mexico) ately large contribution to economic growth at nal economies, the ability of these megacities good basic services such as water and electric- Tokyo 57th a national level. According to a Munich Re to compete at a global level is paramount. To ity are much more likely to fulfill their potential (Japan) study, Tokyo accounts for 28% of the Japanese attract investment, these cities need modern, and contribute to economic growth. The wider London 91st population, but 40% of the country’s GDP. efficient infrastructures. Transportation is an business environment is also a key factor: (UK) Pollution levels Paris is home to 16% of the French population, obvious case in point, and megacity mayors research from the Economist Intelligence Unit New York 96th Population levels (US) but is responsible for 30% of its GDP. In the are eager to improve often overloaded road indicates that clear, business-friendly policies Source: The World Bank The World Source: developing world, Lagos is home to 8% of and rail networks, ports and airports. Abundant and regulations is a more important factor in 0 5 10 15 20 25 30 35 40 Nigeria’s population but contributes 30% of (and preferably skilled) labor together with attracting international investment than in- Population in 2005 (millions) the country’s output. In OECD countries, most modern IT and communications technologies centives such as subsidies and tax breaks*.

14 Megacity Challenges * World Investment Prospects Survey, 2004 Megacity Challenges 15 Megacity challenges: an overview

São Paulo

egacities may be engines of economic affect their productivity”.* Poverty may be organizationally. Increasing affluence in these Quality of Life Mgrowth, but they feature huge inequali- less extreme in the more developed cities, but Three City Archetypes cities places additional new demands on infra- ties in the distribution of wealth and econom- social problems still abound. The OECD’s structure as growth in demand for transporta- ic opportunity. In its recent report on urban- report on competitive cities notes increased tion, water, energy, and services often greatly ization trends, UN-HABITAT describes cities as socio-economic inequalities even in some of s is clear from the research, each megaci- Populations tend to be younger and more outpaces population growth. “the new locus of poverty”. World Bank esti- its most dynamic metropolitan regions. It Aty has its own unique issues that require male, with a high proportion of poorly edu- mates predict that while rural areas are cur- points to large and persistent pockets of specific, local solutions. Nevertheless, cities cated rural migrants. Social polarity, and the Mature Cities: Mature megacities have much rently home to a majority of the world’s poor, unemployment: about one-third of the 78 at similar stages of economic and social devel- gaps in wealth, health, education, and politi- slower growth rates than both Emerging and by 2035 cities will become the predominant metropolitan regions covered in the OECD opment face a number of common chal- cal power between groups is generally high- Transitional megacities, at around 1% on aver- locations of poverty. report have above average national unem- lenges. With this in mind, we have identified est in Emerging cities. age. In some of these cities, the population has The consequences of a failure to improve ployment rates, and between 7-25% of popu- three basic “archetypes”: Emerging cities, stagnated or is shrinking. Mature megacities quality of life for the urban poor are huge. The lations live in deprived neighborhoods that Transitional cities and Mature cities, depend- Transitional Cities: Transitional megacities also have older population profiles. They exist UN-HABITAT research indicates that people often have reduced access to public infra- ing on their stage of economic and social have often developed mechanisms to more in countries that are typically around 75% living in slums, where a large proportion of structure and services. The report concludes development. effectively manage dynamic growth, and may urban. Mature megacities have built out their the urban poor reside, are more likely to be that poverty and social exclusion lead to sig- be seeing a slowing of annual growth rates. basic infrastructure to serve their populations affected by child mortality and acute respira- nificant costs including high levels of crimi- Emerging Cities: Emerging megacities tend Continued population growth stems largely one or two generations ago. With high-quality tory illnesses and water-borne diseases than nality (on average 30% higher in urban areas to be characterized by high growth rates dri- from migration, with lower natural population infrastructure in place the challenge has shift- their non-slum counterparts. They are also than the national level). Failure to address ven by migration and natural growth, much of increases; several of these cities are seeing the ed to coping with the need for renewal of age- more likely to live near hazardous locations, these inequalities risks making megacities which occurs in informal settlements not first signs of an ageing population. Growth ing systems or to dealing with obsolescence making them more vulnerable to natural dis- centers of deprivation and instability with a served by the installed base of infrastructure rates are typically of the order of 2%-3% per where the installed infrastructure no longer asters such as floods. Inadequate access to consequent negative effect on their economy. and services. Annual growth rates are on the annum and Transitional cities are often in meets regulatory requirements or changing basic services saddles them “with heavy Development decisions are often seen in order of between 3% and 6%. A 3.5% growth countries that are more than 50% urbanized. service expectations. The other, growing, focus health and social burdens, which ultimately terms of difficult trade-offs between growth rate implies a doubling of population in 20 Transitional cities have similar infrastructure of Mature megacities is responding to the and greenness, or growth and quality of life. years. Emerging cities are typically in coun- challenges as compared with Emerging cities increased and changing demands for services But there are obvious interdependencies tries with urban populations of less than 50%. but are better able to respond financially and of all types posed by their ageing populations. between the three concerns. Competitive Proportion of urban population cities are more likely to have the wealth and living in slums resources to invest in high-quality infrastruc- ture and services, and to create economic and social opportunities for large numbers of the urban population. All things being equal, environmentally clean, modern cities create more attractive locations for a broad spec- trum of business activities than those with heavy pollution. Equally, cities with a healthy, well-educated urban population are better positioned to attract investment than those ■ over 40% where deprivation and inequality blocks large ■ 20 – 40% swathes of the population from participating ■ 10 – 20% ■ under 10% in economic growth. This suggests that, in the ■ High-income long run, focusing on one of these concerns countries to the detriment of the others will be a recipe Source: UN Millennium Project 2005 (UN-Habitat 2003) UN Millennium Project Source: for failure.

16 Megacity Challenges * State of the World’s Cities 2006/7, UN-HABITAT Megacity Challenges 17 Stakeholder priorities: The big picture

Moscow Stakeholder Priorities

03 uge cities create huge challenges, yet Key findings Hthe money and resources to address them are distinctly finite. How will the city ■ Unemployment is the top economic stakeholders responsible for delivering solu- challenge tions respond? Having summarized the key characteristics and issues faced by today’s ■ Air pollution and congestion are the megacities, we now turn to the priorities and principle environmental concerns key factors that drive decision making in the 25 cities covered by this report. ■ Stakeholders see transportation as the The entire sample of 522 stakeholders was main infrastructure issue and the top asked the survey questions referred to in this priority for investment section. It is immediately clear that the survey respondents are balancing a wide range of ■ Most stakeholders are optimistic that they economic, social and environmental con- can solve city challenges, although cerns. Nevertheless some clear priorities influencers in the survey are more skeptical emerge.

18 Megacity Challenges Megacity Challenges 19 Stakeholder priorities: The big picture

London

Economy: Unemployment and underemploy- the problem to transportation and vehicle Infrastructure: Transportation is perceived infrastructure challenge by just 6% of respon- ment emerge as the predominant economic emissions. General pollution and water prob- as by far the biggest infrastructure challenge dents overall and 8% in Emerging cities — this challenge in the survey (cited by 20% of lems are also cited, but are considered to be by stakeholders in the survey. Responding to despite the fact that several cities covered in respondents overall). It is the top economic less of a priority. an open-ended question in the survey, 35% of the study face severe problems with water challenge according to respondents in Emerg- all stakeholders mention the transport system scarcity/quality. Even lower proportions men- ing and Transitional cities, and comes second Social issues: Stakeholder respondents men- or traffic problems as their city’s most signifi- tion electricity (2%) and healthcare (1%) as only to economic development as a concern tion a wide range of social concerns, with no cant infrastructure challenge. In distant sec- the main infrastructure challenge facing their in Mature cities. The next most commonly clear priority emerging. Topping the list by a ond place is the inadequacy of the city’s infra- city. cited issues are economic development and small margin is poor quality housing and living structure (10%). Surprisingly, only 6% cite the rising cost of living (both 14%). conditions, cited by 14% of all respondents. finance issues as a big infrastructure chal- Investment needs: Stakeholders were asked This issue is particularly emphasized by stake- lenge. to rank 13 different areas according to their Environment: Air pollution is considered by holders in Transitional and Emerging cities. need for investment over the next five to ten far the most serious environmental challenge Other key issues included the gap between Other infrastructure areas appear to be years. Once again transportation comes out facing megacities (26%), especially by those rich and poor (11%) and poverty (9%). Public much lower on the agenda for stakeholders as as the top priority by a significant margin, in Mature cities (36%). A large proportion of safety and crime also feature as a significant a whole. Even when added together, lack of cited by 86% of respondents. In joint second stakeholders mentioning air pollution relate issue for respondents in Emerging cities. water and water sanitation is cited as a critical place comes environmental protection and

Most serious economic Most serious environmental Most serious social challenge Most serious challenge facing city’s challenge challenge infrastructure Poor living conditions 14% % of respondents mentioning Emerging Transitional Mature 11% Unemployment 20% Air pollution 26% Gap between rich and poor Transportation 9% 17 43 45 Cost of living 14% Transportation 15% Poverty Inadequate /inefficient 7% Infrastructure 9 10 14 Economic development 14% General pollution 14% Education Planning 7% 9 9 8 Inadequate infrastructure 8% Water pollution 13% Population growth Lack of funding 7% 3 4 11 Financing 7% % of respondents Solid waste 9% % of respondents Public safety mentioning mentioning Environment/ 9 2 4 Unemployment 7% % of respondents pollution mentioning

20 Megacity Challenges Megacity Challenges 21 Stakeholder priorities: The big picture

Beijing

education, both cited by 77% of stakeholders. other cities around the world, transportation Not surprisingly, respondents in the have an optimistic outlook, while influencers The need to invest in environmental protec- is by far the most mentioned, followed dis- Mature cities were more likely to rate their in the survey tend to be more skeptical. The tion is emphasized particularly highly in Tran- tantly by safety and security. Far lower num- cities as better than average, while respon- findings suggest that cities will attempt to sitional cities, indicating that the desire for bers of respondents cite education and dents in Emerging cities were more likely to juggle economic, social and environmental ecologically sustainable solutions is not healthcare as key factors in attracting invest- rate their cities the worst among the three concerns, but when push comes to shove, the restricted to the rich cities. ment. Communications and energy are seen archetypes; but even here, almost one-half overriding issue in decision-making is eco- Water comes lower down the list of invest- as more important issues for attracting invest- consider their cities to be average in terms of nomic competitiveness. ment priorities overall, but is cited by many ment by respondents in Emerging cities. quality of life. This perspective filters down to the prioriti- more stakeholders in Emerging cities (81%) When respondents were asked to rate their zation of investment into transportation, where access to clean water and sanitation is Stakeholder outlook: Although stakehold- city’s probability of successfully managing its which is seen as central to a citiy’s ability to often a major issue. ers are acutely aware of the economic, social future over the next five years, overall, two- generate wealth and attract investment. and environmental challenges faced by their thirds responded positively (67%), with only High awareness of the need to invest in Competitive drivers: When asked, again cities, the majority have an upbeat outlook. slightly better odds expressed by respondents environmental protection, however, suggests with an open-ended question, which single For example, almost one-half of respondents in Mature cities. that cities will seek to balance growth with area of their city’s infrastructure is the most (44%) rate their city’s quality of life as better It is notable, however, that elected officials sustainable solutions wherever this is viable important in attracting investment versus than average. and public-sector employees are most likely to and affordable.

Need for investment over the next five Infrastructure area most important City’s probability of successfully to ten years by infrastructure area in attracting economic investment managing short-term future 100% 100%

Transportation 86% Transportation 27% North America 71%

Environmental protection 77% Safety and security 9% Africa/ Middle East 66%

Education 77% Education 6% India/China 57%

Health care system 74% Communications 6% Europe 55%

Public safety and security 71% Energy supply 6% Latin America 50%

Waste management 71% Leisure and culture 6% Other Asia 42%

Water 70% City management 6% Net rating — High minus Low Public housing and 69% 5% civic buildings Environment Energy supply 67% Health care 4%

Social services 66% Water 3% % of respondents selecting % saying high need for investment

22 Megacity Challenges Megacity Challenges 23 Five infrastructures

Shanghai Five Infrastructures

04

ll cities need high-quality infrastructure increasingly unfit for purpose. It is also true of ture solutions that are environmentally sus- Ato facilitate the movement of people and the Transitional cities, which are struggling to tainable. goods, and the delivery of basic services to cope with demographic change, and Emerg- The following section of the report deals their populations. But the challenge of deliv- ing cities where even basic services are badly with five major infrastructure areas: trans- ering these infrastructures and services in lacking, particularly in the rapidly expanding portation, electricity, water and waste water, today’s megacity regions is immense. This is informal settlements. Moreover, in all three healthcare, and safety and security. For each true for Mature cities where, for example, city archetypes there are complex issues to be infrastructure sector, survey questions were roads, rail networks, sewers and hospitals resolved over the funding, management, answered primarily by those stakeholders were often built decades or even centuries maintenance and efficient running of ser- with the most relevant knowledge and influ- ago and in some cases are now becoming vices, as well as the need to find infrastruc- ence, unless otherwise noted in the text.

24 Megacity Challenges Megacity Challenges 25 Transportation Transportation

05 ransport preoccupies the stakeholders tant area for investment. Transportation is top (CBI) estimates that the cost of congestion is Key findings Tlike no other infrastructure issue. As of the pile for a number of reasons. Whereas £20 billion (US$38 billion) a year**. Stake- noted above, the general survey marks trans- some infrastructure problems, such as lack of holders in the overall survey are acutely aware ■ Transportation is seen as the single biggest infrastruc- port out as the single biggest infrastructure water, primarily affect the poorer areas of the of the importance of transport networks in ture challenge by a large margin, and is a key factor in challenge faced by their cities, and by a large city, congestion, crowded trains and traffic- driving the economy: 27% mention transport city competitiveness margin*. That focus is particularly high in linked pollution are very visible at all levels of as the one area of the city’s infrastructure that Mature cities (45%) and Transitional cities society. But there is also a clear and direct link is most critical in attracting investment, far ■ With air pollution and congestion emerging as the (43%) and in Europe (52%), where car owner- with city competitiveness. If megacities are ahead of the second most cited issue (safety two top environmental challenges, stakeholders predict ship in the EU has risen ten times more quickly the engines of the global economy, it is the and security, 9%). a strong emphasis on mass transit solutions than the population over the past ten years. In transport network that keeps those engines Emerging cities, the emphasis on transport is working efficiently. When roads and railways Coping with growth: As well as cutting ■ Cities are more likely to focus on incremental improve- less pronounced, but at 17% is still far ahead seize up, or when ports and airports become across all levels of civic society, transport ments to existing infrastructure, rather than new systems of the other infrastructure mentioned such as overloaded, the cost to the economy is high. problems affect cities at all levels of develop- water (8%) and electricity (5%). Transport is In the UK, where many cities including Lon- ment, although they manifest themselves in ■ Demand management is rarely mentioned as a major also the priority for spending, with 86% of don are struggling to keep up with travel different ways across our three archetypes. strategy for addressing the cities’ transport problems stakeholders overall citing this as an impor- demand, the Confederation of British Industry For Mature cities, the primary problem is old

26 Megacity Challenges * Transport questions in the survey encompass mass transit, individual motorized transit, air and surface transport, and people as well as freight transit Megacity Challenges 27 ** “Running out of Road”, The Economist, 2 December 2006 Transportation

or obsolete systems (40%), then system monorail, despite the fact that the idea for metro projects over the coming ten years, lenges outlined above, or seek to increase pollution and traffic problems came hand-in- capacity (35%), according to respondents one was floated as far back as 1952. Mean- over and above the US$1.6 billion on current efficiency of existing infrastructure. Even hand as the top two environmental problems with specialist knowledge of transport in their while the number of public transport vehicles schemes*. The main cause of these problems, where new investment is made available, in the survey. Travel by road or air is a major city. With its ageing rail and underground sys- is insufficient for the population of the city, according to stakeholders in transport, is lack however, it will most often be used to deliver source of pollution: road transport alone is tems, London is a prime example. In a metro- forcing commuters to travel on the rooftops of resources, which usually means lack of incremental improvements to the transport responsible for over 40% of discharges of sus- politan area where an estimated 30 million of buses with all the inherent safety issues money (although skills and technology limita- system (for example, adding new lines to an pended particles into the atmosphere***. journeys take place every day, transport that this implies. tion are also noted). The second most cited existing metro or new bus services) rather Although decisions on transport invest- investment over the past two decades has Istanbul, a Transitional city according to underlying cause, however, is governance- than outright spending on new transport pro- ments are first and foremost driven by eco- barely been sufficient to maintain the system, our methodology, faces both problems. The related: poor planning is selected by 21% of jects. The most frequently mentioned solu- nomic and employment considerations, let alone to increase capacity to cope with city’s geography poses its own problems, with transport specialists overall, and is especially tion to transport problems is to reorganize or according to our transport specialists, envi- soaring demand. As a result, congestion and many of its residents commuting daily across emphasized by those in Transitional cities. revitalize the existing infrastructure (33%), ronmental impacts are also deemed impor- overcrowding is already acute on all of Lon- the Bosphorus from one part of the city to the Again, this is a significant challenge in Istan- whereas building new roads and facilities gets tant by three-quarters of respondents. This is don’s transport networks, according to a other. With its many hills and narrow streets, bul’s case. The city has varying administrative mentioned by only 12% of respondents. This probably a key reason why the vast majority of recent report from Transport for London (TfL). Istanbul has a major problem with traffic con- bodies that have similar and sometimes over- finding seems to reflect a growing trend. In the transport specialists predict that their In Emerging and Transitional cities, stake- gestion, particularly at peak travel times. lapping responsibilities. The result, a recent the UK, for example, the recent review of UK cities will emphasize the development of holders with specialist knowledge of trans- There is also a serious lack of public transport report concluded, is that the city lacks any transport policy by Rod Eddington empha- mass transit infrastructure over cars and port tend to be more concerned about inade- capacity on the Asian side of the city. Istanbul form of holistic transportation planning**. sized the need for incremental improvements motorbikes by a margin of 71 to 29. This is quate system capacity than ageing infra- is having to make major investments to to existing systems rather than new, show- usually borne out in practice. An analysis of structure. Indeed, sometimes basic infrastruc- address these problems. A 22km light metro Incremental improvements over new in- case infrastructure projects. planned capital expenditures for 2005-10 for ture is non-existent. For example, Karachi is line is currently under construction, and fur- vestments: Stakeholders are split over Problems with congestion have, of course, eight of the cities under study generally the only megacity in the world without a mass ther lines are planned. In total, Istanbul plans whether they will invest in new transport major environmental as well as economic shows an emphasis of investment on mass transit system such as a metro system or to invest a further US$4.9 billion in tram and capacity as the primary solution to the chal- costs. As noted in the previous section, air transit (that is, rail) over roads, with two

Main cause of transportation problems Predicted approach of transport experts

Individual Mass transit motorized infrastructure trans- portation Limited resources 30%

Poor planning 21% 29% 71%

Insufficient infrastructure 19%

No transportation network 16%

Poor infrastructure quality 9% % of respondents mentioning

% = predicted emphasis

28 Megacity Challenges * Briginshaw, International Railway Journal, June 2005, ** Evren & Caliskan, Fundamental Problems of Istanbul Transportation, Megacity Challenges 29 *** http://www.mobilityweek-europe.org Transportation

notable exceptions. Moscow has a world-class port. In Shanghai and other Transitional cities motorists with alternatives to using their cars, fits. In London and Stockholm, congestion has to predict an emphasis on public ownership mass transit system, with high rail investment where car ownership is set to soar, there are primarily by increasing the attractiveness of been reduced by approximately 30%. Both rather than private (72% versus 28%). Analy- levels that are comparable with London, but no easy answers to the issues posed by con- public transport; and “push” measures that cities have experienced a reduction of sis of eight of the cities in the study supports current planned expenditure shows an em- gestion. increase the cost or difficulty of using a car to between 10-20% in fuel emissions and road the view that transportation in general phasis on road over rail that is driven by a rise reach a specific area. Various cities have accidents*. The economic impact has been remains firmly within the realm of public in vehicle ownership. Lagos shows high-lev- Putting demand management on the map: experimented with demand management in more difficult to assess — TfL, for example, responsibility, with high-levels of ownership els of investment in roads because urban rail In recent years demand management solu- the form of road pricing or congestion charg- found no evidence of either a positive or neg- and control through regulation and relatively is virtually nonexistent and the city therefore tions have been posited as a way to promote ing, including London, Stockholm and Oslo. ative impact of congestion charging on aggre- low levels of private-sector participation in relies heavily on buses. more sustainable modes of transport over Singapore introduced the world’s first signifi- gate business performance in central Lon- operations, with occasional exceptions. Mass transit may be favored, but there is cars, but — somewhat surprisingly — this cant road pricing initiative to control entry don**. But the London transport authority However, when asked to predict whether no doubt that the pace of demand growth in emerges as a low priority in this part of the into its central business district in 1975. The says that congestion charging brought in net their cities would emphasize public or private many of these cities makes delivering sustain- survey. Only 9% of stakeholders involved in city today has electronic road pricing based on revenue of €174m in 2005-06. TfL now plans operation of transportation infrastructure in able solutions a huge challenge. Shanghai transport mention demand management a system that uses on-board tags to identify to extend the scheme in 2007, a move that the future, there was more of an equal split alone is expected to see a quadrupling of cars solutions as the best approach to resolving vehicles. will roughly double the charging area. (53% public versus 47% private). Compared and trucks by 2020. The very dense urban transportation issues. Road pricing in Singapore runs in parallel Projects like London’s are high profile, but with current levels of private operation of area and lack of parking and road space for This is despite a variety of schemes in glob- with a more radical “push” solution: a massive only a handful of cities currently have such transport, which is low on a global basis, this vehicles has pushed growth outside the city, al cities that indicate a role for demand man- tax of over 100% on new car purchases. schemes in place. There are only a couple of may indicate growing openness to private- thus setting in motion a spatial development agement in reducing congestion. Such solu- Where it has been implemented, there is evi- current examples in the US, such as the SR 91 sector management of services. Currently, pattern that will be increasingly difficult to tions generally divide into two categories: dence that demand management in the form Toll Lanes in Orange County, California. In the rail sector is almost entirely publicly con- serve by more sustainable modes of trans- “pull” measures that focus on providing of road pricing has delivered significant bene- many cities, the cost of car use in cities is actu- trolled and operated, with the notable excep- ally falling. In Shanghai, car ownership was tion being London where private operators historically suppressed through high fees and exist in a climate of regulatory control and limited permits. In recent years, however, this government involvement in infrastructure has been reduced (partly as a result of the provision. The best solution to transportation presence of vehicle manufacturing), and Globally, the road sector is largely public problems incomes are rising. In Mumbai, despite the with occasional examples of toll facilities/road congestion and pollution caused by private pricing. Airports retain a surprising degree of motorized transport, road taxes and parking public control despite trends to privatization Reorganize/revitalize 33% existing infrastructure fees remain low (demand management is and increasing evidence of private-sector now being discussed). One would have to operations. Ports are almost entirely publicly Allow private investment / 17% increase investment conclude that, globally, demand manage- controlled and typically take the form of state- ment as a solution to congestion remains an controlled companies that operate in a quasi- Build new roads 12% and facilities emerging concept that has yet to become a private fashion. Overall, private-sector partici- Better management/ 12% priority in many of the cities under study. pation in operations remains rare except in a governance few cities. New equipment 11% The public and private sectors: For trans- For those that predict a greater role for pri- port and other infrastructure sectors, the sur- vate-sector operation, surprisingly the major Better use of mass transit systems 10% instead of personal cars vey also explored survey respondents’ views advantages of this approach are not financial, on the involvement of the private sector in according to the survey, but rather improved Manage demand 9% % of respondents mentioning delivering solutions. Here, transportation is efficiency and better management. Perceived primarily seen as a public rather than a private disadvantages of private operation are pri- task by respondents to the survey (59% versus marily higher user costs, inability to meet 41%). Mature cities in particular are inclined demand, and a profit-seeking mentality.

30 Megacity Challenges *Sources: TfL, City of Stockholm, **TfL fourth monitoring report, June 2006 Megacity Challenges 31 Electricity Electricity

06 ny discussion of electricity infrastructure generation, transmission and distribution electricity stakeholders in Transitional and Key findings Ahas to take place against the backdrop of during those years, while developing coun- Mature cities, old or obsolete infrastructure is rapidly escalating world demand. Simply put, tries will require some US$5.2 trillion*. the main problem. Then comes efficiency, fol- ■ Cities at all levels of development face a expanding cities need additional electricity to Only 2% of those questioned described lowed close behind by lack of capacity. An challenge in keeping up with rapidly rising live and economies need it to grow. Between electricity supply as their most serious infra- example of the tight constraints weak infra- demand for electricity 1972 and 2002, world GDP increased at 3.3% structure challenge. Moreover, the impor- structure can place on the power system even per annum while electricity consumption tance of investment in this area ranks below in the richest places comes from New York. ■ The impact on the environment is a major con- more than kept pace at 3.6%. Even with fields such as transportation, water, educa- There, 80% of power must by law be generat- sideration in decision making on energy issues expected efficiency gains, the International tion, public housing and security. Not surpris- ed in the city because the transmission lines Energy Agency predicts that between 2002 ingly, Emerging cities see the issue as much to bring electricity from outside simply cannot ■ Stakeholders will emphasize renewable energy and 2030 worldwide electricity demand will more important. cope with the higher load. Companies are try- sources in the future as much as fossil fuels double. Most of this increase will come in the ing to build small generating plants but there developing world, especially the rapidly grow- Demand outstrips supply: The three city is little land available on which to do so. With- ■ More stakeholders predict a leading role for ing economies of India and China. The IEA fur- archetypes face different difficulties, but they out a solution, maximum capacity will equal the private sector in electricity than in any ther foresees that OECD countries will need to all revolve around the fact that demand maximum demand by 2008**. other infrastructure sector in the survey make nearly US$4 trillion in investment on growth is outstripping supply. According to In Emerging cities, on the other hand, the

32 Megacity Challenges * International Energy Agency, World Energy Report 2004 Megacity Challenges 33 ** New York City Energy Policy Task Force, New York City Energy Policy: An Electricity Resource Roadmap, January 2004 Electricity

lack of sufficient generating capacity is by far infrastructure is the biggest difficulty. This maximum generation capacity cannot meet create the great California energy crisis of handed version of demand management — the most pressing concern, according to the can describe both average and peak load. the 8,500 MW that the city requires on aver- 2000-01. Like their colleagues in Transitional came fourth (11%), but had no takers in survey. Old infrastructure and inefficient Mumbai, for example, has seen hard to meet age before even considering repressed cities, for Mature cities stakeholders under- Mature cities where it would doubtless appear operations are lesser problems because there demand growth of 12.4% over the last four demand of 5,000 MW. Worse still, poor main- investment is the second most frequently draconian. Mumbai does not have the luxury. is relatively little of it anyway. This is a particu- years*. Meanwhile the power system in its tenance means actual output averages 3,000 cited concern. The local utility has resorted to “load shed- lar issue in India and China where half the state, Maharashtra, suffered its highest MW. All this before 45% of power is lost in the ding” — stopping provision to certain areas stakeholders cited difficulties arising from demand peak in January 2006 which exceed- poorly maintained and frequently vandalized Pricing power: Electricity stakeholders ex- and restricting the use of neon signs and even lack of capacity. Shanghai, for example, has ed supply by 4,500 MW** more than one- transmission system*. pect to address the energy needs of their cable TV transmission — to help maintain a frequent brown-outs in summer. Businesses third over the average requirement for all of The problems of Mature cities seems a cities mainly by putting money into power service that already experiences power loss of have had to shut down completely or shift Mumbai. As the next most important prob- world away: the chief culprit is monopoly reg- generation. When asked the single thing that one to two hours per day in urban areas and production to night time when more electrici- lem, Emerging city stakeholders point to late ulation — such as a ten-year price freeze on they could do to solve problems in this area, more in rural ones**. ty is available. maintenance and lack of planning. Those in Chicago’s domestic electricity prices that the most frequent response was to improve This does not mean efforts to affect Stakeholders in each type of city also ana- Transitional cities blame lack of investment. sometimes leaves the private utility there on existing infrastructure or build new (cited demand will have no role. When asked how lyze the underlying causes of their problems Lagos is an excellent example of how all these forced to pay more on the open market for by 29%) followed by general investment in much their cities would emphasize the cre- differently. For Emerging, and even more for problems work together. There, because of lit- electricity than it can charge. Such a structure the system (23%). ation of new capacity compared with demand Transitional cities, unexpected load on the tle investment since 1990, the 6,000 MW allowed unscrupulous power producers to The regulation of energy use — a heavy- management, responses were split fairly

The most serious problem of electricity Factors influencing the city’s decision The best solution to electricity problems infrastructure making on electricity supply

100%

Energy sources 83%

Environmental impacts 81%

29% Lack of system 30% Up-front capital cost 81% Improve on existing infrastructure capacity 23% Obsolete 27% User affordability 79% Additional investment infrastructure Promote alternative energy 13% Inefficient operations 20% Regulations 76% sources Regulate energy use 11% Combination of 20% % of respondents Appropriateness 75% problems selecting Improve governance and 9% % of respondents Life cycle costs 73% administration mentioning

Impacts on economy and 73% employment

% saying important impact

34 Megacity Challenges * BEST data filed with regulator: MERC/22-26, 38, 39-45, 61 of 2003/1326 dt. June 7/22, 2006, *Nigerian Electric Power Supply Nigerian Electric Power Supply Industry, http://www.bpeng.org/CGI-BIN/news/reform%20 electricity.pdf, Megacity Challenges 35 **The Financial Express, 16 January 2006 “You're going to feel a jolt, Chicago Tribune, 19 June 2006, ** Prayas submission on CII proposal for Pune Load Shedding, Dec 5, 2005, Electricity

evenly (53% versus 47%). If this played out in fuels. The biggest outliers in the survey are sus 27%). Environmental issues also figure therefore unlikely that renewables will pro- serving their needs. Places as diverse as practice, and nearly half of cities placed as India and China, where the combined equiva- prominently as key factors driving decision vide a major contribution to megacity power Shanghai, Mumbai, and São Paulo have sig- much emphasis on demand management as lent figures are 36% at market prices and 64% making in the survey, along side financial needs in the near future. Nuclear power — a nificant private activity in a mixed system. The on new capacity, this would be a significant subsidized. concerns. long proven technology — is another option first of these in particular has private partici- trend. The aspiration to move toward renewables that has been advanced as the best short- pation in power generation, while in São The potential value of demand manage- Energy and the city environment: If ener- is clear, but there is a long way to go in prac- term solution to global warming by people as Paulo nine separate companies compete in ment initiatives is certainly great. Studies in gy stakeholders aspire to modify demand, tice. London, for example, uses 39% gas, 35% diverse as British Prime Minister Tony Blair and power distribution. India indicate that they could eliminate 20% they also show a marked concern for environ- coal, and 20% nuclear to power its genera- the environmentalist Professor James Love- Meanwhile, Turkey, Russia, and Nigeria to 30% of demand growth*. To reach the mental issues. On average, they thought that tors, but only 4% comes from renewable lock**. Despite its low CO2 footprint, howev- have reached different stages of restructuring effectiveness foreseen this sort of demand over the next five to ten years their cities sources. Moscow uses Russia’s relatively er, nuclear power’s other drawbacks keep it their state power sectors as a precursor to management will require a dramatic ramping would emphasize fossil fuels and renewable cheap gas for 95% of its fuel mix; China and far less popular among all energy stakehold- privatization of, and the introduction of com- up. Probably the most effective way to affect technologies to nearly the same degree (52% India both use readily available local coal sup- ers than even traditional power sources (40% petition in, various functions. In the latter demand quickly will be market pricing of elec- to 48%), an understandable result as the plies for 75% of theirs despite the detrimental versus 60%). cases, the need for investment and greater tricity. Electricity specialists expect the broader survey lists air pollution as the single effect on the already bad air pollution. Even efficiency is driving the process. emphasis to be on selling power in their cities largest environmental problem cities face, after several decades of probably the most The public and private sectors: If, as noted at market prices rather than be subsidized and global warming as the sixth (third among active state measures in the world to promote above, those responding to the larger survey Regional differences: Given their varying (57% versus 43%). Denmark took this one Mature city respondents). Only North Ameri- use of renewables, by 2004 Denmark pro- put the importance of investment in electrici- levels of economic development, the differ- step further by heavily taxing use of fossil ca still seems wedded to fossil fuels (73% ver- duced only 25% of its power this way*. It is ty behind many other infrastructure areas, ent city archetypes have understandably dif- one reason may be that cities are looking ferent needs and responses in the field of more to the private sector in this field than in electricity supply. others discussed in this study. When asked The responses from continental Europe are about the relative emphasis of reliance on pri- particularly interesting. This region seems to vate firms versus public bodies, electricity combine a much more traditional view of the Predicted approach of stakeholders expected to look 54% to the for- role of the state in power generation and pro- electricity experts mer and 46% to the latter. Figures for private vision with a far greater concern for environ- or public operation of generation and distrib- mental issues. Contrary to overall opinion, ution facilities, as well as private or public electricity stakeholders in Europe expect a Fossil fuels Renewable financing, were nearly identical. slightly greater emphasis on subsidized pric- technologies The vast level of new generating capacity ing than the free market (53% versus 47%), and money needed in the coming years is and by far the greatest focus on public over leading governments worldwide to consider private ownership of any region (62% versus 52% 48% how best to use the private sector and com- 38%). In making decisions about electricity petitive market forces. Those surveyed who supply issues, they put far more emphasis on advocate private ownership or operation, environmental impact. This may be the rea- indicate that greater efficiency is the major son why European stakeholders are the only advantage, with access to funding mentioned group in the survey that expects to look more less frequently. The disadvantages are primar- to demand management than new capacity ily seen as higher user costs, which suggests (60% versus 40%). that if privatization is to work there needs to These figures should serve as a reminder % = predicted emphasis be strong competition to keep prices down. that even though megacities worldwide face A number of Mature cities, including Lon- similar difficulties across diverse fields, their don and New York, already have largely pri- responses will be profoundly affected by their vate, if highly regulated, power industries political and cultural contexts.

36 Megacity Challenges * Demand-Side Management (DSM) in the Electricity Sector, Prayas Energy Group (Pune) for Climate Change & Energy Programme World Wide * IEA, Energy Policies of IEA Countries – Denmark, 2006, **PM 'convinced' on nuclear future, 29 November 2005, Megacity Challenges 37 Fund for Nature, February 2005 'Only nuclear power can now halt global warming', The Independent, 24 May 2004 Water and waste water Water and Waste Water

07 ne of the Tokyo-based respondents told proper infrastructure in place – the problem is million residents of Nairobi’s notorious Kibera Key findings Othis survey, “Recently there are often certainly not nature. For Transitional, and slum rely on putting human waste in plastic rainfalls of more than 100mm. Rain water is especially for Emerging cities, the situation is bags and throwing it into the street*. ■ Water and sanitation is seen as an important issue stored in underground rivers to avoid flooding. profoundly different. The UNDP estimates that by specialists in this sector, but comes lower down the Most people do not know. Real infrastructure in 2004 some 1.1 billion people lived more A growing challenge for the emerging list of priorities in the survey overall should be working in the background without than 1km from the nearest safe water source. world: Our overall survey data reflects the being noticed.” For Mature cities, “working and Worse still, 2.6 billion people, roughly 40% of different experience of respondents across the ■ Even in Emerging cities, the importance of water issues unnoticed” is usually a good description of the the world’s population, had no access to archetype cities. When survey respondents for their economic development is not widely recognized water infrastructure: the presence of good improved sanitation. These figures, UNDP were asked about the most serious infra- drinking water, sanitation, and drainage are suspects, probably underestimate the scale of structure challenges facing their cities, water ■ Solutions that focus on water reuse emerge as a simply assumed. Any problems, such as the the problem. Official data for Jakarta and related issues were split into separate catego- significant trend for the future recent drought restrictions imposed in London, Nairobi, for example, both indicate 90% ries: water supply and wastewater manage- provoke annoyance. Catastrophic failures, such coverage for clean water and sanitation. These ment. If added together, the combination con- ■ There is some movement towards private sector as in the wake of hurricane Katrina, provoke figures apparently leave out huge slum areas, stitutes the third most frequently cited issue management of publicly-owned water provision as a way outrage. As in both these cases, the public in the former accounting for some 7.6 million (8%), a figure that nevertheless puts it far to improve efficiency insists that those responsible should have had people without such facilities. The roughly 1 behind transport as a perceived challenge

38 Megacity Challenges * UNDP, Human Development Report, 2006 Megacity Challenges 39 Water and waste water

(35%). In Emerging cities, water issues come serious drinking water problems in the 21st century ago coincided with the largest drops in billion per year, or 2.6% of their GDP**. Sub- even after substantial upgrading efforts, still second (13%), but in Mature ones they appear century*. infant mortality and increases in life expec- Saharan Africa loses about 5% of GDP, or some loses one-third of water to leaky pipes, 90% of well down the list (3%). Similarly, overall water Investment priorities also reflect a higher tancy those locations have ever seen. Cholera, US$28.4 billion annually, a figure that which occurs in London’s Victorian-era pollution/water quality is listed as the fourth focus on water issues in Emerging cities. Ove- of only historic interest there, is a frequent exceeded total aid flows and debt relief to the system***. New York, meanwhile, which has largest environmental challenge (13%), but rall, 70% of respondents believe that there is a visitor to Lagos where water treatment is region in 2003. Conversely, investment in always had a clean water source so clean as not comes second in Transitional cities (22%). high need for investment in water and waste effectively nonexistent*. Nevertheless, health- water can generate a high return. The UNDP to require filtration, now may have to spend Shanghai is one Transitional city facing water infrastructure, placing it sixth out of 13 care stakeholders make no mention of the role estimates that every US$1 spent in the sector US$8 billion to filter suspended particles****. huge challenges in this area. Its main water infrastructure areas. In Emerging cities, how- of water infrastructure in improving healthcare creates on average US$8 in costs averted and Transitional and Emerging cities also face source — the River Huangpu — is so con- ever, the figure was much greater (81%). outcomes, which may reveal a lack of holistic productivity gained. obsolete infrastructure: Moscow’s water sys- taminated by industrial and agricultural thinking. According to water stakeholders, the tem rivals that of London and New York in age pollutants that it has been devoid of aquatic Hidden costs: The link between public health In the same way, when all survey res- primary difficulty this under-appreciated area and urgently needs modernization. life for over 20 years. The River Yangtze, the and clean water and sanitation is clear: the pondents were asked about factors enhancing faces overall is older, obsolete infrastructure alternative water source, faces increased UNDP estimates that a lack of these services economic competitiveness, only 3% placed (cited by 47% of respondents). This figure is A bigger role for water reuse: Despite the salination in its lower reaches resulting from results in about half the developing world water supply and sanitation first, even in even higher in Mature cities (59%), and varying intensity of challenges to water infra- lower water levels brought about by the Three suffering from a health problem at any given Emerging cities where water is such a big issue. especially Europe (63%) and North America structure in the different city archetypes, Gorges Dam. Meanwhile, ground water is time, and accounts for 1.8 million annual child Noticed or not, water and sanitation are in (66%). These cities, having benefited from safe stakeholders overall had a similar approach to facing increasing contamination from sea- deaths from diarrhea alone. Conversely, intro- reality crucial for economic development. The water for over one 100 years, face the solving these problems. Asked which strategy water. Little wonder that the UN named duction of safe water supplies and sanitation in WHO estimates roughly that lack of access to difficulties of maintaining or upgrading cen- would have the biggest impact, the most Shanghai one of six major cities likely to face London and various American cities about a them costs developing countries US$170 tury-old facilities. London’s water company, commonly cited choice was renovation/impro- vement of the infrastructure (42%), followed by the more general one of increased investment (29%). Respondents did not see much value in raising the low political profile of The most serious problem of water Factors influencing the city’s water — 5% suggested making it a priority — supply and wastewater management decision making on water supply and which is interesting in light of the UNDP’s recent call to do so in its 2006 Human waste water management Development Report. 100% Any renovation and investment is unlikely Water quality 92% to revolutionize how cities address water needs. Water stakeholders expect that the Old or obsolete 47% Environmental impacts 91% infrastructure emphasis in their cities in the next five to ten years will be slightly more on improved Lack of system 14% Up-front capital cost 90% capacity efficiency than new plants and facilities (52% Inefficient operations 12% Appropriateness 85% versus 48%). This is even more likely to be the case in Mature cities (62% versus 38%). Such Combination of 20% % of respondents User affordability 81% an approach makes sense in a city like Paris, problems selecting where ongoing investment and judicious Impacts on economy and 79% employment expansion over a century and a half have left a sound basis for future water provision. The still % saying important impact relatively low emphasis on new plants in Emerging cities (52% versus 48%) may arise from widespread denial about the extent of the problem. Mumbai, for example, claims its

40 Megacity Challenges * http://www.chs.ubc.ca/china/shanghai.pdf, http://www.ehponline.org/docs/1994/102-2/focus.html * UNDP 2006, ProMED-mail 6 January 2006, **WHO (World Health Organization), “Economic and Health Effects of Increasing Coverage of Megacity Challenges 41 Low Cost Water and Sanitation Interventions”; UNHDR Occasional Paper, http://hdr.undp.org/hdr2006/pdfs/background-docs/Thematic_Papers/WHO.pdf), ***”Drought in London”, London Assembly Committee, July 2006, ****"New York’s Water Supply May Need Filtering”. New York Times, 20 July 2006. Water and waste water

water provision covers 95-100% of its 15% cited it as the best strategy to address their The public and private sectors: Although World Bank encouraged greater private par- is the customer – and are less politically population: the UNDP suspects the number is problems. Simple expedients in this area can market mechanisms will apply in water pro- ticipation in water provision. A number of sensitive. A typical example is a new water close to half of that*. have a great impact. Shanghai’s recent require- vision, water stakeholders still expect the high-profile grants of concessions to plant set to open in Moscow in 2007 con- One surprising finding is the emphasis in ment that families replace 13-litre toilets with emphasis on the public sector to predominate companies to provide municipal water failed structed by a German company under the the future on water reuse rather than the 9-litre ones will save the city US$189 million over the private in operating facilities (57% dramatically, for reasons ranging from the BOOT model (Build, Operate, Own, Transfer). tapping of new sources (55% versus 45%). annually in water treatment costs**. Rather versus 43%). North Americans seem par- political difficulty of raising prices to cover The company will operate and receive Such an approach need not solely involve than focusing on education programs, how- ticularly attached to public operation (78% ver- costs through to currency exchange-rate revenues from the facility for ten years before water for industrial use. Beijing’s Bei Xiaohe ever, water stakeholders expect to manage sus 22%), this being one of the few areas fluctuations. Although there have been it slowly transfers it to the municipality*****. Wastewater Treatment Plant currently provides demand and encourage conservation through where Europeans are happier to contemplate success stories in this field – notably in Chile Private contracts also now tend to be drinking water for 400,000 people and is market forces. Overall, they foresee the em- private sector participation (52% versus 48%). and parts of Manila – this history and the high smaller than the huge concessions of the undergoing an expansion — the largest such phasis for water revenue to be more on user Such an emphasis could involve a remark- upfront investment costs involved with water 1990s, although there are more of them, with project in the world — to more than double fees than on taxes (67% versus 33%). In Mature able increase in private participation. Current- have increased corporate reluctance to take on 54 countries having opened the door to, and capacity. It will provide drinking water at the cities the former figure rises to 80%. The con- ly, the UNDP estimates that public utilities pro- such concessions***. continued on with, private participation in coming Olympic Games. Singapore, mean- straint in Emerging and Transitional cities is vide 90% of the developing world’s water; Instead, a variety of World Bank and OECD water infrastructure in the last 15 years. As while, hopes to get 20% of its water requi- more likely to be the technological one of Veolia Environment, the world’s biggest pro- publications**** indicate that the private time goes on, smaller domestic companies are rements from a recycling plant: the Prime installing metering equipment than anything vider of water and waste recycling services, sector is moving more into the management of taking a larger share of the market from the Minister proudly serves its output at state din- ideological. puts the world figure at 95%**. publicly owned water provision to improve handful of transnational operators, increasing ners. Lagos, for example, is happy to privatize its Recent trends suggest, however, that al- efficiency, and especially the building and competition. Market forces and conservation: Focused bankrupt Lagos State Water Corporation but though private-sector involvement in water operation of waste treatment plants. Private In areas with reasonable levels of risk and on investment, water stakeholders see a has no idea where 90% of the company’s water will increase, it will do so in specific areas and operation in particular involves lower risk – as return, private-sector participation will likely smaller role for demand management: only goes*. take on very specific forms. In the 1990s, the the state or the public utility, not the end user, grow as the survey results indicate. It will, however, have only limited ability to help Emerging cities, as companies are avoiding not only politically sensitive business models but also locations unlikely to be profitable, how- The best solution to water problems Predicted approach of water experts ever welcoming. The vast majority of new private investment Water reuse New sources in water projects is currently going into China systems (56% of the world total) and Algeria (34%). If Lagos finds a purchaser, it will be an exception Improve existing water 42% to the trend. Emerging city water stakeholders infrastructure 55% 45% expect the split of public and private emphasis Increase investment 29% funding in the operation of new facilities to be 57% ver- sus 43%. Most will likely need the state to Manage demand with 15% education/awareness contribute far more than this. Better information and 12% The biggest advantages cited by the advo- technology cates of privatization are increased efficiency, Improve management 10% % of respondents better funding, better quality management mentioning and a higher-quality service. % = predicted emphasis Those who are more skeptical about pri- vate-sector involvement cite high costs to users, profit seeking and inadequate supply as major impediments.

42 Megacity Challenges * Urban Water Sector in South East Asia, Benchmarking Performance, Water and Sanitation Program (WSP) May 2006, UNDP, Human Develop- * "Lagos residents thirst for better water supply", Planet Ark, 10 June 2003, ** UNDP, Human Development Report, 2006, p. 10, "Water supply bogs down in complexity", International Megacity Challenges 43 ment Report. **"City Launches Toilet Reform", Xinhua News Agency, 13 May 2002, ‘Shanghai Flash’, Consulate General of Switzerland in Shang- Herald Tribune, 20 August 2005, ***UNDP, Human Development Report, ****For example, see http://www.ppiaf.org/Gridlines/14ppiwater.pdf and papers listed on http://www. hai Commercial Section, Issue 4, July 2003. oecd.org/document/22/0,2340,en_2649_37425_37456726_1_1_1_37425,00.html#Background, *****http://www.degremont.com/uk/files/actualites/presse/files/2004/juin/contrats.htm Healthcare Healthcare

08 round the world, healthcare systems are of medical science, but it comes at con- health expenditure as a percentage of pro- Key findings Acoming under increasing pressure. The siderable financial cost. People over the age duction has increased from 13.1% to 15.2% in rising cost of prescription drugs and private of 75 incur per capita health expenditures six years*. In contrast, developing countries ■ City healthcare systems around the world will struggle health insurance is one challenge. Huge that are five times higher than people aged 25 cannot afford to spend anywhere near as to cope with the effect of an ageing population inefficiency in the delivery of healthcare is to 34. Ageing is currently estimated to much on healthcare, and access to treatments another. But it is arguably the phenomenon of account for 6%-7% of the increase in health- is often non-existent or inadequate. Accord- ■ There is a high emphasis on increasing the efficiency population ageing that creates the biggest care costs per year. ing to the World Bank, developing countries of the system to contain costs while improving quality long-term problem for many countries, par- have 90% of the world’s disease load but only ticularly in Europe and East Asia. Costs rising fastest in developed world: 12% of its health spending. More drama- ■ Stakeholders predict an emphasis on preventative Increased life expectancy means that Spiraling healthcare costs are particularly tically, the poorest countries have 56% of that solutions and integrated healthcare healthcare systems face an increase in the marked in the developed countries with their load but only 2% of spending**. proportion of older patients. Ageing also extended health systems. Between 1990 and Healthcare in megacities reflects their ■ Healthcare is mainly seen as a public task, but plays a role in the occurrence of chronic 2004, health spending has been growing broader national environments. Emerging significant proportions are open to private sector diseases, which in turn leads to greater faster than total output in all OECD countries cities have basic infrastructures and, except involvement — with quality of service and efficiency demand for long-term care. That people live except Finland. In the US, which has the most for privately funded care for the elite, can cited as key advantages longer has much to do with the achievements expensive healthcare system in the world, often provide only rudimentary service.

44 Megacity Challenges * Source: OECD, ** OECD Health Data 2006, October 2006, World Bank, Health Financing Revisited: A Practitioner’s Guide, 2006 Megacity Challenges 45 Healthcare

Lagos’s health system cannot even provide troubled by healthcare inflation and diseases survey. Concerns about inefficiency were par- Stakeholders in Transitional cities have a basic needs in the face of serious AIDS, of affluence, such as obesity-induced dia- ticularly marked among stakeholders from different order of priorities, in that they tuberculosis, and malaria problems*. Mum- betes and cardiovascular problems. the Emerging cities. Overall, it appears that expect to emphasize new capacity over bai, although India’s richest municipality and Given the scale of these challenges, it is health stakeholders think that it is not enough increased efficiency. Their preferred strategy spending 25% of its budget on health, can still surprising that healthcare is not more of a simply to pump money into current systems. is more money, so greater investment (41%) care for only 20% of the population, leaving priority for respondents in the overall survey. Far more important is the need to put city comes well ahead of the need for an large slum areas poorly served**. Transitional It comes well down the list of social health infrastructures in order so that they integrated system (17%) in their view. cities are doing better, with places like challenges (mentioned by only 4%) and infra- can use what they have more efficiently. The desire to control costs and increase Istanbul and São Paulo seeing good impro- structure challenges (1%). Of the 4% who efficiency also informs two other trends in the vements in recent years***. This city arche- think it the leading area for determining a Improving healthcare efficiency: When survey: towards preventative and away from type is now beginning to face medical pro- city’s competitiveness, most are in the health asked about solutions to these problems, acute medical care (67% versus 33%) and – blems associated with more developed field. The combination of underinvestment most stakeholders again offer a combination particularly in Transitional and Mature cities – societies: whether the effects of pollution and lack of focus can prove dangerous. As one of greater efficiency and increased capacity. toward common healthcare infrastructures arising from industrialization in Shanghai, or survey participant from Beijing noted, the Those in Mature cities expect to emphasize with shared services as against independent the need for specialized facilities for Seoul’s outbreak of SARS had a pronounced effect on efficiency gains by a wide margin (61% versus individual institutions (63% versus 37%). ageing population as Korea undergoes the the Chinese Government’s attention to 39%). Emerging cities also had a greater focus One universal point worth noting across all demographic transition typical of mature healthcare. on measures to improve efficiency, with city archetypes is that stakeholders focused so economic development. Mature cities such as The biggest problem facing city healthcare stakeholders prioritizing the need for better much more on their systems as the providers New York, which boasts one of the world’s systems is lack of capacity followed closely by governance of healthcare, a more integrated of health, rather than on patient behavior and highest concentrations of hospitals, are inefficient operations, according to the healthcare system, and only then more staff. living conditions. When naming the most

The most serious problem in the healthcare sector

Lack of system capacity 32%

Inefficient operations 29%

Obsolete infrastructure 19%

Combination of problems 14%

% of respondents selecting

46 Megacity Challenges * www.vanguardngr.com/articles/2002/features/health/gh105092006.html; USAID Nigeria: ** T.R. Dilip and Ravi Duggal, “Unmet Needs for Public-Health Care Services in Mumbai, India”, Asia-Pacific Population Journal, 2004 Megacity Challenges 47 http://www.usaid.gov/ng/index.htmFinancialNigeria.com (2006); Economic Report: New Polio Report Challenges Nigeria's Commitment to Health- *** OECD, Health Data 2006: How does Turkey compare?, “Sumario de Dados, 2004”; Secretaria Municipal de Governo Municipal care Delivery 05/09/2006 Healthcare

effective single strategy to address the wallet sized pieces of plastic. IT can also save In terms of public or private ownership or Emerging cities stakeholders predict challenges outlined above, health promotion money: for example, a new system linking operation of facilities, they expected the greater emphasis on public ownership (56%) and education came well down the list, cited hospitals in Copenhagen is expected to bring emphasis to be for the former (58% versus and operation (59%) in the future. This must by only 5% of respondents. Getting the savings of approximately US$46 million 42%). They also believe that there will be a be viewed in the context of low public spen- patient to avoid anything from unsafe annually. These are attractive benefits, but greater emphasis on free-to-user medical ser- ding on healthcare in these countries (only practices that spread HIV/AIDS to the implementing IT systems is not just a matter vices as opposed to healthcare models where 29% of health spending comes from the pub- excessive drinking devastating Russian health of finding suitable technology. Specialists patients pay for treatment (59% versus 41%). lic purse, and in India the figure is just 19%, would have a profound effect. So too would argue that the problems experienced by the Attitudes do vary by city archetype, how- according to the World Bank). Where the addressing significant air or water pollution UK’s National Health Service in implementing ever. Transitional cities are especially likely to money will come from to move this beyond issues, such as those in Transitional cities like electronic patient systems are more to do emphasize public ownership (63%), operation aspiration is unclear. Shanghai and Mexico City, with even Mature with the difficulty of achieving cooperation (63%) and free health care (70%). However, The one certainty is that Emerging cities, cities like Tokyo, London and New York excee- on a huge project between a multitude of Mature city stakeholders expect fee-paying faced with pressing health problems, will ding WHO-recommended nitrogen dioxide stakeholders than the technology itself. These services to be emphasized slightly more than need to use whatever resources they can levels. challenges indicate that organizational inno- free ones in the coming years, and split muster, public or private, in as efficient a way vation will be just as important as technolo- roughly evenly on public or private ownership as possible. IT in healthcare: IT has a major role to play gical advances when it comes to improving and operation. Currently the public sector is In this context it is worth noting that, as in in healthcare, supporting both treatment and the performance of megacity healthcare systems. dominant in healthcare in the developed other infrastructure sectors in the survey, administration. The shift towards electronic world, with the state covering 70% of health quality of service and efficiency are cited as patient records is one example. São Paulo has The public and private sectors: Stakehol- spending in OECD countries, so this may con- major benefits of privatization. High user a medical smartcard that lets patients take ders in the survey believe that public health stitute a relatively high degree of openness to costs and profit-seeking are perceived as the their medical record between hospitals on infrastructures will be the path for the future. private-sector involvement. main disadvantages.

Predicted approach of health care experts

Increased efficiency New capacity

51% 49%

% = predicted emphasis

48 Megacity Challenges Megacity Challenges 49 Safety and security Safety and Security

09 ecurity has one important qualitative structure element. The complete survey terrorism (18%), a particular concern in Key findings Sdifference from other infrastructure areas population ranked public safety and security Emerging and Mature cities. in this study: whereas water or transport pro- as the second most important infrastructure Although distinct threats, the two overlap ■ Safety and security comes second only to transport as a factor vide something tangible, the ultimate goal of area in determining competitiveness with 9% in important ways. Terrorists use organized contributing to city competitiveness safety efforts is to create a subjective state of of respondents. It is also the sixth-biggest violence to weaken the state: criminal gangs mind. Statistical success is not enough. In social challenge, while crime/corruption do so to gain wealth. This frequently becomes ■ Organized crime emerges as the biggest problem, followed some 2005, the FBI reported that violent crime has comes in tenth. a distinction without a difference: to further distance behind by terrorism been decreasing in America for a decade, but their ends, the IRA robbed banks and the Cali a Gallup poll showed that two thirds of the Threats against the city: The more detailed cartel undermined the Colombian state. In ■ Cities are attempting to shift to a more proactive approach to security population believed the complete opposite. survey answers by security stakeholders practice, the main problem facing security Worries have real world implications: flying fleshes out their more informed concerns. professionals is organized groups that ■ Although open communities are the favored as the route forward after September 11, 2001 was objectively Organized crime, including by armed gangs, challenge the rule of law, and that increasing- for most, gated communities will also be emphasized by many — safer because of enhanced security, but is their biggest challenge — named by 36% of ly cooperate with each other whatever their especially in Emerging cities passenger numbers suffered nonetheless. those questioned and by even higher num- final goals. A recent study, Illicit by Moses Whatever the difficulties, urban specialists bers in the Emerging and Transitional cities. Naim, shows that globalization has allowed ■ Public surveillance is deemed more important than protecting privacy understand that security is a crucial infra- Next, a surprising distance behind, comes organized crime and terrorism to cooperate

50 Megacity Challenges Megacity Challenges 51 Safety and security

and thrive. For example, from 1990 to 2005 Towards proactive protection: How can capacity (28%), while the third is better hotspots, allowing frequent tactical resource viction strongest in Transitional and Mature money-laundering expanded five times more the city protect itself against these threats? preparedness and planning (17%). Emerging reallocation, was important in that city’s drop cities — where risk-based policing is most quickly than global trade. The survey indicates a greater focus on the cities emphasize the former and Mature ones in crime figures in the late 1990s. A similar advanced. The next most pressing safety concern, threats themselves, rather than underlying — which can already afford larger police initiative in Bogotá, and related efforts to In pursuing their campaign against potential natural disasters, shows the causes. The leading ones they named were: forces — the latter, but the common message reclaim crime-blighted public spaces iden- criminals and terrorists, however, security importance of context in risk perception. Ove- crime itself (put first by 24%), corrupt or is more capacity, better used. tified by technology, were instrumental in stakeholders fully understand the need to rall, 13% name this as their city’s leading incompetent law enforcement (15%), poor Over recent decades numerous police reducing its murder rate by 48% between maintain perspective. The most important security challenge. Mature city respondents, planning/city management (10%), terrorism departments have shifted from a reactive 1994 and 2005. A slightly different, but factors influencing their decisions are impact however, rank it almost as high as anything (9%), and natural disasters (9%). In other approach to take the fight to the enemy. The related approach, which has spread from the on the economy and employment, appro- else, while Emerging city respondents do not words, the causes of crime, terrorism and survey results show this occurring worldwide. UK through Europe and Australasia is dubbed priateness, public satisfaction and community mention it. The latter are not exempt from natural disasters are criminals, terrorists, and Respondents indicate that, given a two-way “intelligence-led policing”. In addition to impact. These all come well ahead of cost. potential disasters. Lagos will lose significant natural disasters, or incompetence in fighting choice, the emphasis of security efforts would crime data analysis, this involves the sys- The city's protection cannot unduly constrain territory if global warming raises sea levels. them. Social issues such as unemployment be towards preventing problems over pro- tematic collection of informant information people's lives and businesses — indeed the With a barely functioning security apparatus, and poverty are well down the list. The lack of tection from them (60% versus 40%). In describing the criminal environment and par- focus of decisions is to enhance the city’s however, it cannot even properly address a holistic approach to these threats is evident, another question they emphasize protecting ticularly the behavior of repeat offenders. economic competitiveness and quality of life. current annual floods. Shanghai, though, possibly because security specialists in the the city from threats over responding to them Technology is essential for risk-based with a low crime rate and greater resources, survey feel that the underlying social causes (57% versus 43%). Safety over privacy: A strategy based on policing, and a vital tool for general surveil- can invest in preparation for potential earth- of crime are outside their remit. The success of so-called “risk-based po- predicting crime has its controversial ele- lance in cities wishing to increase police quakes and flooding. Security stakeholders Asked how best the city could address licing” has been dramatic. New York City’s ments. Survey respondents thought that the capacity. Crime mapping is just one example. are perhaps focusing on where they have the security issues, the most popular response is ongoing, widely copied COMPSTAT program, emphasis on the need for public surveillance Another ubiquitous and sometimes very capacity to make a difference. additional officers and law enforcement which analyzes police data to indicate crime would far outstrip privacy concerns, a con- useful one is CCTV. Introduction of such a

The most serious safety and security Predicted approach of safety Predicted approach of safety problem and security experts and security experts

Protection from Protecting Privacy Public surveillance Organized crime 36% Prevention of problems problems Terrorism 18%

Natural disasters 13% 40% 60% 41% 59%

Ethnic conflicts 8%

Mass events 8%

Crime and violence of all types 6%

Combination of problems 7% % = predicted emphasis % = predicted emphasis % of respondents selecting

52 Megacity Challenges Megacity Challenges 53 Safety and security

system, for example, in central Johannesburg community in efforts to promote its own increase community cohesion were crucial in The public and private sectors: The cant in what is currently a state-dominated brought an 80% drop in crime in 2002 and security. After more enforcement capacity, reducing the murder rate there between 1999 growth of a private-sector role in such a tradi- field. was instrumental in the revival of a previously respondents thought the best option for cities and 2004 by over 73%. tionally public field sparks some anxiety Force of circumstance is driving this devastated downtown*. was increasing awareness/education/sense of Harnessing community strength, however, among those surveyed. Those most opposed growth, in two areas. The first involves The security stakeholders see technology's community (18%). Combining these respon- alters the relationship between the security are moved by more ideological arguments: companies hired to perform specific, often importance, expecting the emphasis on its ses with those advocating the same measures forces and society. Safety is no longer simply a this field is the role of the state (39%); the pri- not front-line, tasks by government agencies purchase to be greater than investment in specifically directed at youth raises the figure state-provided public good, but becomes vate sector is unaccountable (23%); and pri- with a security role. This arouses relatively litt- human resources (54% to 46%). This figure, to just under one quarter. partly the responsibility of individual citizens. vate security companies are elitist (16%). The le controversy. Britain, for example, out- though, also indicates that technology with- Community involvement can make a huge Now, measures like Neighbourhood Watch or much smaller number favoring greater private sources part of its passport application pro- out having enough people to use it is insuf- difference. A core part of Chicago’s Alter- countless volunteer citizen patrols in North participation instead point to utilitarian justi- cess to Siemens Business Systems and many ficient. More strikingly, while 28% of res- native Policing Strategy has been mobilizing America — from New York’s Guardian Angels fications: such arrangements are credible and airports use private security firms to some pondents see more officers as the best way to the public. From 1992-2002, robbery in the to the South Cariboo Citizens on Patrol in rural reliable, they attract investment, and are degree. promote security, only 4% wish to rely on city declined by 58% — more than anywhere British Columbia — are no longer branded as highly efficient. The second category results from private more CCTV alone. Technology is seen as a else in America — and more importantly fear vigilantism but are often assisted by the Given such views, the surprise is that in individuals or companies exercising their crucial tool, not a complete solution. of crime fell by 20% among the most police. Once people in a community feel that developing solutions to the security problems responsibility for their own safety because vulnerable. Still more dramatic were efforts in they have responsibility for their own safety of their cities over the next five to ten years, their fears are insufficiently allayed by the Mobilizing citizens: The survey also indi- São Paulo’s Jardim Ângela, which the UN once and security, the incentive exists to turn to on average these respondents expect efforts state’s efforts. An increasingly common form cates the international strength of another labelled the world’s most violent neigh- private security solutions if they consider to emphasize private versus public efforts by of this practice around the world is the gated important shift in policing: enlisting the borhood. Efforts by the city and 26 NGOs to public efforts insufficient. 33% to 67% — a finding that could be signifi- community — protected by walls and, usually, its own private guards. Although most studies indicate that such neighborhoods enjoy about the same level of safety as their surroundings, the feeling of security within is invariably Factors influencing city’s decision Predicted approach of safety much higher. making on safety and security and security experts Such private security procurement arouses some controversy. In our survey, respondents think that their cities will strongly emphasize Develop open Develop gated developing open communities over gated communities communities communities (61% versus 39%). In Emerging 100% cities, however, with higher crime rates and Impacts on economy 88% and employment fewer public resources, respondents are more 61% 39% inclined to predict an emphasis on gated over Public satisfaction 83% open communities (52% versus 48%). As Appropriateness 82% crime rates drop and resources rise through Transitional and Mature cities, support for Community impacts 82% gated communities lessens. Thus, where cities can provide for the Regulations 78% security of their residents, or more impor- tantly make them feel safe, the public sector % saying important impact % = predicted emphasis will outsource some highly controlled tasks for reasons of efficiency and finance. Where they cannot, the private sector will of ne- cessity do so for those who can afford it.

54 Megacity Challenges * (http://www.joburg.org.za/metro_police/police_projects.stm, http://www.joburg.org.za/july_2002/cctv.stm) Megacity Challenges 55 City governance and finance

Beijing City Governance and Finance

10 etropolitan governance has become Key findings Mincreasingly complex as cities have mor- phed into agglomerations combining multiple ■ Economic growth and employment are the primary drivers in decision-making for administrative organizations and jurisdictions. specialists in city management This has led to calls for a complete reassess- ment of urban governance. Megacities also ■ Environmental issues are also important but are sometimes sacrificed in the race for growth need innovative funding strategies to release much-needed investment to address the infra- ■ Attempts to deliver holistic solutions are often undermined by a lack of strategic structure challenges outlined in previous sec- planning and poor coordination between different levels of government tions. These requirements are widely acknowl- ■ Many cities focus on increasing supply to cope with growth; demand management edged, but there is considerable debate about strategies have yet to be widely adopted how to address them. As usual, a one-size fits all strategy is inappropriate: governance and ■ Infrastructure will usually remain under public control, but the private sector has finance structures must be adapted to meet the an important role to play in managing services for increased efficiency unique circumstances and needs of each city.

56 Megacity Challenges Megacity Challenges 57 City governance and finance

However, some strong themes and challenges 6% of respondents to this survey saw educa- statistics drive home the scale of urban pover- Finance is of course a major issue, and is City management must become more emerge in the survey that provide an insight tion as the most important area determining ty. Worldwide, 18% of all urban housing units cited as such when we asked the different transparent and accountable. Many stake- into how governance and finance strategies city competitiveness. Similarly, cities need a are non-permanent structures and at least 25% infrastructure specialists about their chal- holders in the survey are aware of the need to might evolve in megacities globally and at the healthy workforce to achieve their economic of all housing does not meet urban construc- lenges. What is clear, however, is that city man- improve transparency in municipal govern- three archetypal stages of development. potential, yet in the survey only 3% cited tion codes. Problems are especially acute in the agement stakeholders see that good gover- ment. Only 44% of city management stake- healthcare as the single biggest factor in city Emerging cities and particularly in Sub-Saha- nance is a prerequisite for raising funds and holders agree that their city has transparent Growth and competitiveness are the pri- competitiveness. It is therefore worth stressing ran Africa, which has the highest slum growth achieving value for money. In this respect, and consistent decision-making processes mary drivers in decision-making. The clear that the health, education and welfare of the rate. good governance is the cornerstone of com- when it comes to investing in infrastructure, priority for those stakeholders in the survey city’s inhabitants may be at least as big a factor In the UN-HABITAT report, Kofi Annan com- petitiveness. Poor governance also acts as a while 38% disagree, and the remainder are involved in city management is to grow the in attracting investment and delivering growth ments that efforts to improve the lives of the barrier to achieving the goals of sustainable neutral on the subject. One-half of respon- economy and create or protect jobs. When as physical transport infrastructure. urban poor have not kept up with the rate of development. Even in the more developed dents believe that their city’s bidding and ten- asked to rate the importance of ten factors in urbanization. Many in the survey seem to countries, recent OECD research* on metropol- dering processes are major obstacles to the terms of their impact on the city’s decision Environmental concerns are important agree: only 37% of stakeholders say that their itan governance discusses how the current timely implementation of infrastructure pro- making today, 81% acknowledge the impor- but are sometimes sacrificed for growth. city makes adequate infrastructure invest- structures are not well-suited to balancing the jects. Once again, improvements in these areas tance of the economy and employment, Respondents also have a high awareness of ments into the poorer areas. Respondents in needs of economic competitiveness and ‘live- are vital steps towards improving access to whereas smaller proportions cite the impor- ecological factors: six in ten city managers in Emerging cities are most likely to think that ability’. The three main obstacles identified are funding. Investment and lending is increasing- tance of responding to citizens (73%) or of con- the survey think that their city’s leadership rec- investment into poorer areas is inadequate. a fragmentation of administrative jurisdiction; ly tied to clear measures of how money is being sidering community impacts (68%). ognizes the vital role that infrastructure deci- It is not that stakeholders in the survey do strain of the financial and fiscal abilities of local spent, and assurances that projects will be effi- Competitiveness also emerges as an impor- sions can play in protecting the environment. not appreciate these problems. Education and municipalities in metropolitan areas; and a lack ciently managed. When the World Bank signed tant consideration in decisions relating to spe- This echoes a wider sensitivity to environmen- housing are two areas where stakeholders say of transparent, accountable, decision-making a deal with Nigeria in 2006 to lend US$200 mil- cific infrastructures. Six in ten stakeholders tal issues in the survey overall — for example, there is a high need for investment. However, processes. The report goes on to identify cer- lion to improve drainage and solid waste man- think that their city places a high importance the desire to make transport greener by Emerging cities often lack the resources to tain features that can contribute to the dual agement in Lagos, the agreement included on making themselves competitive to attract emphasizing mass transit solutions, or to place address these issues effectively. goals of enhancing competitiveness and live- clauses on transparency and financial report- private investment when deciding on infra- an increased emphasis on renewable energy ability of large metropolitan regions. These ing. Political reform at the metropolitan level structure issues, a proportion that rises among sources to provide a greater proportion of Better performance begins with better include stronger area-wide metropolitan gov- has been a key factor in delivering improved elected officials and municipal employees. power to the city. governance. Stakeholders are aware that get- ernment, improved coordination and integra- infrastructure in Bogotá, Colombia. A recent A multitude of different factors combine to Even so, when push comes to shove the ting money to invest in improved services, tion of policies in metropolitan areas, and gov- case study** emphasized the importance of make a city competitive. Some are related to search for economic competitiveness often though important, is not the only issue. Long- ernance and strategic planning to support city-level leadership and an enabling political physical assets, others to the contribution wins out over environmental considerations. term strategic planning emerges as the single more sustainable urban development. context, especially in a developing country. made by the city’s inhabitants*. As noted in For example, 45% of respondents overall pre- biggest problem facing city managers in the previous sections, stakeholders are highly dict that their cities will increase infrastructure survey. When asked what the best solution is to aware of the more tangible and direct factors capacity at the expense of the environment. the challenges they face, one-half of respon- — namely that a good transport infrastructure Stakeholders in the developing world are par- dents in this area call for better planning, ver- is vital for commerce. By contrast, other infra- ticularly likely to put capacity growth first: sus only 12% that cite the need for more fund- The best solution to city management structure areas covered by this report are seen about 55% of respondents in Emerging and ing. The call for better city governance is as social or environmental problems in need of Transitional cities believe their cities will sacri- echoed in a related issue, the need for more investment, but are rarely linked with city com- fice environmental considerations for the sake efficiency in the management and implemen- petitiveness. This may be an oversight. For of increased capacity, whereas only 14% of tation of infrastructure. Only half of all respon- Improve management / 51% example, a number of surveys of international respondents in Mature cities believe that this dents to the survey say that the implementa- planning executives by the Economist Intelligence will happen. tion of infrastructure decisions is currently Additional funding 12% Unit** indicate that the availability of skills is a done well, although that proportion rises to Better education 5% % of respondents decisive factor in attracting overseas invest- More resources need to be made available approximately two-thirds for public-sector mentioning ment from global businesses. Despite this, only for the urban poor. A wealth of depressing employees and elected officials.

58 Megacity Challenges *In its recent report on city competitiveness, the OECD notes that factors such as infrastructure and accessibility, industry and eco- *OECD Policy Brief, The reform of Metropolitan Governance, October 2000; OECD Policy Brief, Competitive Cities in the Global Economy, 2006 Megacity Challenges 59 nomic scale and structure, human capital and the labor force act as major determinants of city competitiveness. **The Mobilization of Private Finance in Bogotá, **For example, World Investment Prospects 2004, CEO Briefing 2005 City governance and finance

Important measures included reforms that recognize the need for cooperation at the met- solutions at a local level. This would need to be services. As a measure of transparency, the staff by a ratio of 2:1. Interestingly, Emerging gave more authority to local officials and made ropolitan level, as evidenced through the large combined with a central planning and delivery World Bank report on city governance and glob- city respondents predict almost as much them accountable to their constituents. Fiscal number of coordinating bodies that have been team with responsibility for delivering holistic alization looked at whether cities have a web- emphasis on e-government and digitalization decentralization provided funding sources for created to manage specific issues, but the over- solutions across the metropolitan region. site that includes information on the city bud- as those in Transitional and Mature cities, sug- local programs and initiatives. The combi- all impact of these has been minimal. The over- get, and advice on how to start a business. gesting that the benefits of IT are not restricted nation of these factors and an enabling legal all impression is that these plans are poorly Cities emphasize supply over demand Those that met these criteria tended to perform to the rich cities alone. framework provided a window so that local linked to the political channels through which management. Faced by huge pressures on better across a range of public services. Of officials could be more responsive to local investment decisions and budgetary allocation public services, cities tend to emphasize supply- course, as well as increasing transparency, IT The private sector has a role to play in issues, as well as needs of the poor in particular. are determined. These problems resonate else- side solutions. This does not necessarily mean can improve cost-efficiency. In Denmark, the increasing efficiency. The survey provides a where. The city of São Paulo is one of 39 cities building more roads, railways, hospitals and so country that topped the Economist Intelligence mixed picture on privatization. Generally, most Silos and short-term thinking are holding within the greater Metropolitan area, and the on. On the contrary, there is often a preference Unit’s e-readiness rankings in 2006, e-procure- respondents predict public ownership of infra- megacities back. The underlying reason for city government has major challenges in coor- to increase efficiency of existing infrastructure ment is saving the country’s taxpayers as much structure sectors and services. However, the poor planning, according to city managers in dinating its activities with surrounding com- as opposed to building new capacity. For exam- as US$188m per year. Politicians elsewhere majority of stakeholders also say that they are the survey, is poor coordination and a lack of munities. The municipal government went ple, healthcare stakeholders make the case for have also cottoned on to the benefits of e-gov- open to public-private partnerships (PPPs). Not leadership. While the influencers and private- through a process of decentralization in the integrated healthcare systems, those in trans- ernment strategies. EU ministers have now surprisingly, private-sector respondents are the sector respondents are especially critical, even 1960s that was necessary to address the prob- port emphasize the need for incremental decreed that by 2010, at least 50% of public most likely to predict privatization. However, one-third of the public-sector employees are lems of rapid growth but, as stated in a recent improvements to existing systems, and city procurement in member countries should be more than 70% of publics and electeds view not satisfied with their own performance in report from the Woodrow Wilson International management stakeholders look to the efficien- carried out electronically. The value of technol- PPP’s as a viable means to implement infrastruc- this regard. Poor coordination between depart- Center for Scholars, better municipal coordina- cies offered by IT. Where cities invest in new ogy is well recognized by city management ture solutions and more than 60% believe that mental silos makes it hard for cities to provide a tion will now be vital for improving the effec- capacity, this tends to be combined with the stakeholders in the survey. Eight in ten respon- privatizing infrastructure would increase its strategic response to complex infrastructure tiveness of metropolitan governance. Coordi- desire for more efficient management of pro- dents think that their cities will increasingly efficiency. Surprisingly, respondents cite the challenges across multiple jurisdictions. The nation is also a major issue in Mumbai, where jects to achieve a better outcome. Demand integrate advanced IT into their administration main advantages of privatization as increased interdependencies between different infra- there are multiple administrative agencies management does get mentioned by a minority and operations over the next five years. More- efficiency, rather than money. Given that PPP structures are seemingly overlooked, judging often with overlapping authority. It is estimat- of respondents, but never emerges as a priority. over, respondents predict an emphasis on digi- was traditionally perceived primarily as a way to by the survey — the fact that improved water ed that, compared with other large cities, it This is true even of responses from specialists in talization or e-government over recruiting more tap the private sector for increased funding, this and sanitation is rarely cited as a key step to takes more time in Mumbai to process typical particular infrastructure sectors — a finding preventative healthcare being a classic example. municipal tasks such as building plans or con- that is perhaps surprising given that demand There is a clear stakeholder emphasis on struction regulation**. A government task- management has been a hot topic for several holistic urban management over separated force identified improved governance as a key years. Despite the success of several road pric- Predicted approach responsibilities in the survey (61% versus step towards Mumbai becoming a World Class ing schemes in cities such as London and Singa- on city management 39%). But it appears that current structures for City***. This challenge of delivering holistic pore, only a fraction of respondents cited municipal governance often prevent this from solutions that balance the needs of the city and demand management as a priority for solving More staff Digitalization/ happening. For example, another recent OECD the wider metropolitan region are acknowl- their city’s challenges. Demand management is e-Government report* analyzed the challenges posed by frag- edged by some, but by no means all, of the even less likely to be cited as a key solution by mented governance in Mexico City. The city’s stakeholders in the survey. stakeholders in the Water and Waste Water sec- overall metropolitan area consists of four One implication of the research is that the tor, despite the fact that many (including the 36% 64% major governmental units: the Federal District traditional model of municipal government UNDP) have argued for the benefits of metering (itself consisting of 16 sub-units); the state may need to be reconsidered. As opposed to and pricing water. governments of Mexico and Hidalgo (with 59 having many departments based around a sin- municipal governments); and the federal gov- gle discipline (for example, planning, transport Information technology will help to drive ernment (which maintains substantial day-to- and environment departments), cities might transparency and performance. IT can play day responsibilities). The different governmen- adopt “local area teams” that offer the multi- an important role in improving transparency, % = predicted emphasis tal entities within the metropolitan area clearly disciplinary skills required to deliver integrated accountability and the efficiency of municipal

60 Megacity Challenges *OECD Territorial Review, Mexico City, 2004, **Mumbai City Development Plan, Appraisal Report, 2006, Megacity Challenges 61 ***Transforming Mumbai into a World Class City, First report of the Chief Minister’s Task Force, 2004 City governance and finance

“By raising the price [the seller of scarce corn] discourages the consumption, and puts Pricing and everybody more or less, ... upon thrift and good management. ... If by not raising the price high enough he discourages the consumption so little that the supply of the season is likely to fall short Sustainability of the consumption ..., he exposes the people to suffer ... the dreadful horrors of a famine.”

Adam Smith, Wealth of Nations, (1776) Book 4, Chapter 5

may represent a significant shift in attitudes. By emphasis on public ownership. The need for The link between supply, pricing and demand 30% in non-exempt vehicles entering the char- to other cities in Britain. Doesn’t market pri- contrast, the main disadvantages of privatiza- strategic solutions at a city-wide level is also dri- management has long been at the heart of ging zone, most of the occupants of which cing further disadvantage the poor? Some tion are seen as potential higher user costs and ving a shift towards greater central control and economics. It has moved toward the heart of had switched to more sustainable means of form of subsidized service for those who are inadequate supply for the broad population. A autonomy within municipal government. There sustainable development strategy as well. travel, such as public transport. simply destitute will be essential, but in prac- report from the World Bank acknowledges that, is a clear emphasis on greater regulation rather Kyoto’s carbon emission trading provisions are Success in this type of demand management, tice the main beneficiaries of infrastructure while there is growing empirical evidence of pri- than deregulation in the future (58% versus just one example. however, requires more than simply taking charges are, when properly constructed, the vatization’s benefits, this often coincides with 42%), and a bias towards centralization rather For megacities encountering water, fuel, or people’s money. First, new fees must be correctly least well off themselves. According to the dissatisfaction and opposition among citizens than decentralization in city management (62% transport constraints, correct pricing can play targeted. Price increases work better in some UNDP, in megacities the people least likely to and policymakers. It argues that rather than versus 38%). Thus it seems that government an important role in building a sustainable in- places than others. For example, the market for be connected to the water system are the po- abandoning privatization, there should be a and the public sector will seek to provide strong frastructure, by unleashing entrepreneurial in- indoor residential water use is relatively inela- orest residents, especially those in slums who redoubling of efforts to privatize correctly. This leadership, but will bring in the private sector to genuity in support of the environmental trinity: stic. For water, industrial and (often heavily sub- must pay exorbitant prices for bottled water of entails tailoring privatization to local condi- manage and increase the efficiency of services. reduce, reuse, recycle. sidized) agricultural users — including garden- dubious quality. Meanwhile, subsidies often tions. The report also warns against focusing Beijing, for example, a city that faces serious ers — are much more responsive: higher prices go to those connected to the municipal sy- solely on privatization transactions, arguing water shortages and where low prices led to led to a roughly 25% improvement in Chilean stems and able to afford water. In Bangalore that instead cities need to create a framework in rampant waste, has seen nine price increases irrigation efficiency between 1975 and 1992, and Kathmandu, 30% or more of these bene- which public-private partnerships can succeed. for water customers in the last 15 years, rai- and numerous companies in water-poor Chen- fits go to the richest 20% of the population. This involves developing and protecting com- Role of public private partnerships sing the price by some 3,000% – although still nai (India), rather than pay for expensive pri- Using water charges to fund expansion of the petitive forces, creating proper regulatory and the private sector costing the average household only 1.8% of its vate supplies, are treating their own wastewater. network to poor parts of cities, as the private frameworks before privatization, introducing total outlay. Between 2001 and 2005, the city’s Even more importantly, such charges require water utility does in Abidjan, does far more to and enforcing transparency in the sales process, PPP’s are viable means of Privatization of city overall use dropped by 15%. The EU has adop- groundwork to garner political support. Despi- reduce costs to those less well off than would developing social safety nets for the adversely implementing infra- infrastructure would ted this strategy too: its Water Framework te using market mechanisms, charges to pro- offering free water. Similarly, those in London structure solutions increase efficiency affected, and introducing innovative pricing Directive requires pricing by 2010 that encou- mote sustainability are not market driven: a who cannot afford its Congestion Charge pro- 100% and subsidy mechanisms that ensure access to rages resource efficiency. cyclical fall in crude oil prices is more likely to bably cannot afford a car to begin with. Funds 90% affordable basic services. Get these admittedly Prices can also affect electricity use and the ty- exacerbate global warming than reduce it, for raised to improve the public transport that 80% complex issues right, and the efficiency gains pes of fuel used for power. Denmark’s policies example. Price setting, and its acceptance by they use and improved air quality with redu- 70% 75% 77% 77% from privatization can be compelling. 73% 70% of selective taxation of fossil fuels throughout consumers, is a process both deeply political ced noise in their urban environment costs 60% 64% 63% 63% the 1990s were central to bringing about its and expensive when misjudged. The large them nothing. 50% Megacities are calling for public leader- vastly increased energy efficiency — its energy Cochabamba water concession in Bolivia Thus, properly structured and targeted char- 40% ship. It is clear that many stakeholders are open intensity, or energy used per unit of GDP — is collapsed in 1999 over protests at charges for ges can lead to more sustainable infrastructu- 30% to the benefits of public-private partnership, 35% below the average of International Ener- previously free water, putting an acrimonious re and thereby help with all three goals of ur- 20% but they are also reluctant to relinquish public gy Association Member States, and its renewa- end to plans for a new dam and purification ban leaders: a more competitive city, a better 10% control of services. If anything, our city man- bles sector now provides 25% of all its energy. plant; and in early 2005 the residents of Edin- environment, and an improved quality of life 0% agement specialists call for stronger municipal Electeds Privates Influ- Electeds Privates Influ- Road pricing can have even more rapid results burgh voted three to one against a congestion for all residents. Adam Smith was right: get- government. As noted in the infrastructure sec- Employees encers Employees encers in transport. In its first six months, Central charge modeled on London’s successful sche- ting the price right is as much a moral duty as % Agree tions of this report, stakeholders predict an London’s Congestion Charge brought a drop of me, slowing the spread of such arrangements an economic operation.

62 Megacity Challenges Megacity Challenges 63 Conclusions Conclusions

11 ense, vast and complex, megacities pose the financial resources needed to address the ticular in Emerging cities, economy and enue. A key factor in this will be the correct require megacities to contract out the man- “context-sensitive” approach to privatization, Dchallenges on an unprecedented scale huge challenges that they face. However, ecology are still often viewed as contradic- pricing of services to support sustainable agement of more services to the private-sec- with overall control (and responsibility) rest- for urban planners, city managers and those while areas like transport infrastructure are tions. goals. tor. ing with the public sector. responsible for delivering basic services and recognized as being vital to competitiveness, Can stakeholders’ desire to deliver greener Delivering in each of these areas will One of the more surprising findings in the Overall, the research indicates that megac- infrastructure. It is clear that each city has its stakeholders often overlook the economic im- solutions be reconciled with the need to deliv- require new governance structures and more survey is the fact that the main perceived ities are moving from passive administration own unique issues and circumstances to portance of other areas – in particular educa- er growth? This is the question at the heart of efficient management. Stakeholders are high- advantage of private-sector operation is of services to active management of their address. However, this research has highlight- tion, healthcare and basic services such as the debate on sustainable development, and ly aware of this, but delivery is tricky. Gover- improved efficiency, more than access to infrastructures. ed a number of common themes and trends water. one that cannot be fully addressed in a paper nance structures need to deliver holistic solu- funding. This entails a desire for strong public con- that will shape the evolution of megacities City stakeholders do place significant of this size. However, a greater focus on tions across infrastructure sectors, which Where cities do increase private sector trol of services and the ability to deliver a over the coming years. importance on environmental considerations, demand management – a concept that the balance the needs of the city with the wider involvement, they will need to create the right strategic, city-wide response to the chal- The majority of stakeholders see economic and there is a clear aspiration to focus on survey indicates has yet to gain global accep- metropolitan area and take into account the framework for success. There is a variety of lenges that they face. If comprehensive gov- competitiveness as a priority. This is under- more sustainable solutions in many of the tance — would be one way that cities could interdependencies between the various infra- models available, where ownership and oper- ernance models and efficient management standable: unless megacities can create infrastructure sectors. However, the survey develop more sustainable infrastructures. structures. This may mean a new non-de- ation of services can be shared. But when structures are put in place, economic attrac- wealth and attract investment, they will not also suggests that, when push comes to Failure to monitor and manage the use of partmental approach to the management of entering into partnerships with the private tiveness, environmental protection and quali- create the number of jobs needed for their shove, ecological considerations can be sacri- many services (for example, road usage or cities. sector, the consequences must be well ty of life for all citizens need not be contradic- burgeoning populations, nor will they attract ficed in the race for economic growth. In par- water) also creates problems in raising rev- The search for improved efficiency may thought through, and success will require a tory goals.

64 Megacity Challenges Megacity Challenges 65 Appendix 12 Methodology and a proxy for the level of social and physical Stakeholder survey development along the horizontal axis. GMP ranged from approximately 1,500 euros/capi- ta for Emerging cities, to 5,000 euros/capita Influencers: Electeds: 130 (25%) 100 (19%) for Transitional cities, and 30,000 euros/capi- ta for Mature cities. The proxy for social and physical develop- ment was a composite measure that used national scores from the United Nations Unweighted total: Human Development Index, city scores from 522 (100%) Mercer Human Resource Consulting's 2006 Quality of Living Survey, and national scores from Transparency International's Corruption Perception Index. Each index was brought to a common scale Privates: Public Employees: 108 (21%) 184 (35%) for the purpose of developing the composite measure. The composite index ranged from a typical value of 0.40 for Emerging Cities, 0.60 for Transitional cities, and 0.98 for Mature cities. Sensitivity testing, by varying the weightings of these three indices, revealed lit- his report studies infrastructure chal- based on the following research initiatives took an analysis of critical infrastructure sec- City archetypes: It is recognized that cities tle change in the city groupings. Tlenges and governance trends in the and methodology. tors in eight of the 25 cities covered by this are unique, as each city today is a reflection of The UN Human Development Index is a world’s largest megacities. The research report. its own unique mix of social, political and eco- standard comparative measure of well-being focuses on five critical infrastructure sectors – Stakeholder survey: The report is based on The megacities studied were: Istanbul, nomic history. Nonetheless, as an organizing for countries. It employs measures of life transportation, water, electricity, healthcare a survey of 522 stakeholders spread across 25 Turkey; Lagos, Nigeria; London, England; principle for the study of megacities, a sec- expectancy, literacy, education, and stan- and safety & security. It also looks at how city cities, with approximately 20 interviews per Moscow, Russia; Mumbai, India; New York, ond, and related, element of the MRC McLean dards of living for countries worldwide, and is management is evolving to address these city**. The survey was conducted by Globe USA; Shanghai, China; and São Paulo, Brazil. Hazel study has been to undertake an analysis used to assess a country’s level of develop- challenges, based on the views of a range of Scan*** between September 28 and Novem- The project relied exclusively on secondary of whether there are logical, simplifying, ment and to measure the impact of economic municipal stakeholders. ber 17, 2006, either face-to-face or by tele- data sources (ie. existing studies and data groupings of megacities in order to facilitate policies on quality of life. The UN defines a metropolis as a “megaci- phone. Respondents include four stakeholder sets). an understanding of the processes and Mercer’s city-level Quality of Life index is ty” if it has a population of 10 million or more. groups: elected political leaders (Electeds); A primary goal of the project was to devel- dynamics of urbanization on a global basis. based on detailed assessments and evalua- This report focuses on 25 megacities and met- employees of the municipality (Employees); op an understanding of the key functional These groupings should be powerful enough tions of 39 key quality of living determinants, ropolitan areas, most of which were selected private-sector infrastructure providers, con- characteristics of the megacities on a sector- to undertake a first order generalization in grouped into categories that include: political on the basis that they are the most populous struction company managers, and financiers by-sector basis, the level of service provided, order to simplify further analysis and provide and social environment; economic environ- cities in the world*. (Privates); and people who are in roles that critical challenges faced, solutions employed a common understanding of key issues. ment; socio-cultural environment; medical Choices include some large metropolitan influence infrastructure decision makers and to overcome these challenges, and important Our analysis is based on three major arche- and health considerations; schools and edu- agglomerations like the German Ruhr (with a implementers such as thought leaders, acade- barriers remaining to be overcome. Where types: Emerging Cities, Transitional Cities, cation; and public services and transporta- large number of independent municipalities). mics, NGOs, and media (Influencers). Sixty- possible, MRC McLean Hazel’s research and Mature Cities, using a simple two-axis tion. London, which has fewer than 10 million nine percent of respondents have at least ten focused on the entire metropolitan region; grid based on readily available data. The Corruption Perceptions Index ranks inhabitants, was chosen for its economic years of experience in city infrastructure. where data availability issues preclude this The methodology employed uses a combi- more than 150 countries by their perceived importance. full metropolitan perspective, focus is given nation of absolute Gross Metropolitan Product levels of corruption, as determined by expert The findings in this report are primarily City diagnostics: MRC McLean Hazel under- to the core cities within the region. (GMP) to position cities along a vertical axis assessments and opinion surveys.

66 Megacity Challenges *Based on methodology used in Megacities – Megarisks: Trends and challenges for insurance and risk management, Munich Re, 2004 Megacity Challenges 67 **The graphs in this report only display the most frequently mentioned factors and thus do not always add up to 100% ***and various local partner companies