Competitive Cities and Climate Change Lamia Kamal-Chaoui and Alexis Robert (eds.) JEL Classification: Q54, Q55, Q58, Q42, Q48, R00 Please cite this paper as: Kamal-Chaoui, Lamia and Alexis Robert (eds.) (2009), “Competitive Cities and Climate Change”, OECD Regional Development Working Papers N° 2, 2009, OECD publishing, © OECD. OECD REGIONAL DEVELOPMENT WORKING PAPERS This series is designed to make available to a wider readership selected studies on regional development issues prepared for use within the OECD. Authorship is usually collective, but principal authors are named. The papers are generally available only in their original language English or French with a summary in the other if available. The opinions expressed in these papers are the sole responsibility of the author(s) and do not necessarily reflect those of the OECD or the governments of its member countries. Comment on the series is welcome, and should be sent to either [email protected] or the Public Governance and Territorial Development Directorate, 2, rue André Pascal, 75775 PARIS CEDEX 16, France. --------------------------------------------------------------------------- OECD Regional Development Working Papers are published on www.oecd.org/gov/regional/workingpapers --------------------------------------------------------------------------- Applications for permission to reproduce or translate all or part of this material should be made to: OECD Publishing, [email protected] or by fax 33 1 45 24 99 30. © OECD 2009 2 ABSTRACT Cities are part of the climate change problem, but they are also a key part of the solution. This report offers a comprehensive analysis of how cities and metropolitan regions can change the way we think about responding to climate change. Cities consume the vast majority of global energy and are therefore major contributors of greenhouse gas emissions. At the same time, the exposed infrastructure and prevalent coastal location of many cities makes them common targets for climate change impacts such as sea level rise and fiercer storms. This report illustrates how local involvement through “climate-conscious” urban planning and management can help achieve national climate goals and minimise tradeoffs between environmental and economic priorities. Six main chapters analyse the link between urbanisation, energy use and CO2 emissions; assess the potential contribution of local policies in reducing global energy demand and the trade-offs between economic and environmental objectives at the local scale; discuss complementary and mutually reinforcing policies such as the combination of compact growth policies with those that improve mass transit linkages; and evaluate a number of tools, including the “greening” of existing fiscal policies, financing arrangements to combat climate change at the local level, and green innovation and jobs programmes. One of the main messages of this report is that urban policies (e.g. densification or congestion charges) can complement global climate policies (e.g. a carbon tax) by reducing global energy demand, CO2 emissions and the overall abatement costs of reducing carbon emissions. To inform the groundswell of local climate change action planning, the report highlights best practices principally from OECD member countries but also from certain non-member countries. JEL classification: Q54, Q55, Q58, Q42, Q48, R00 Keywords: Climate; Global Warming; Sustainable Development; Government Policy; Planning; Regional, Urban, Cities, Territorial, Regional Economics, Urban Sustainability 3 FOREWORD This working paper is one in a series of OECD Working Papers on Regional Development of the OECD Public Governance and Territorial Development Directorate. This report has been produced and coordinated by Lamia Kamal-Chaoui (Head of the Urban Development Unit) and Alexis Robert (Policy Analyst) under the supervision of Joaquim Oliveira Martins (Head of the Regional Competitiveness and Governance Division). It draws on a number of internal contributions, including from Tadashi Matsumuto, Olaf Merk, Javier Sanchez-Reaza, Daniel Sanchez- Serra and Mario Piacentini. Marcos Bonturi (Deputy Chief of Staff of the Secretary-General, former Head of the Regional Competitiveness and Governance Division) provided valuable support in the report’s early stages. The report has also benefitted from contributions outside the OECD Secretariat, including from Mathias Ruth and Rebecca Gasper (Center for Integrative Environmental Research, University of Maryland, College Park), Benoit Lefevre and Vincent Renard (IDDRI), and Fredrich Kahrl (Energy and Resources Group, University of California, Berkeley). Special thanks are given to Fabio Grazi and Henri Waisman (CIRED) for modelling work with IMACLIM-R and the urban module that incorporates the OECD metropolitan database. We would also like to acknowledge those who have provided valuable comments on the report and relevant background material. In the OECD, they are Jan Corfee-Morlot, Shardul Agrawala, Jean-Marc Burniaux and Jean Chateau (Environment Directorate), Nigel Jollands and Sara Pasquier (International Energy Agency), Mary Crass and Phlippe Crist (International Transport Forum), Arthur Mickoleit and Tomoo Machiba (Directorate for Science, Technology and Industry), and Hiroshi Kobayashi, Aziza Akhmouch, Michael Donovan and Xiao Wang (Public Governance and Territorial Development Directorate). We are also grateful to Dale Medearis (Northern Virginia Regional Commission), Keith Thorpe (Communities and Local Government, Government of the United Kingdom), and Vincent Fouchier (Institut d’Aménagement et d’Urbanisme de la région d’Île-De-France). The paper can be downloaded on the OECD website: www.oecd.org/gov/cities Further enquiries about this work in this area should be addressed to: • Lamia Kamal-Chaoui ([email protected]) and Alexis Robert ([email protected]) of the OECD Public Governance and Territorial Development Directorate. Mario Pezzini, Deputy Director, Directorate for Public Governance and Territorial Development 4 TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................................................. 9 1. Cities and climate change: a two-way relationship .................................................................................. 9 2. Cities are not to be blamed – Urban form, lifestyles and energy sources are what count ....................... 9 3. Urban policies can contribute to a global climate agenda ..................................................................... 10 4. Urban climate actions need a smart mix of policy instruments ............................................................. 11 5. Finance is an issue – greening local revenues and financing local green activities ............................... 13 6. Cities have a key role in fostering a green growth agenda .................................................................... 15 INTRODUCTION ......................................................................................................................................... 17 REFERENCES .............................................................................................................................................. 20 1. URBANISATION, ECONOMIC GROWTH AND CLIMATE CHANGE ............................................. 21 1.1. The worldwide urbanisation process .................................................................................................. 21 1.2. Cities and economic concentration ..................................................................................................... 30 1.3. Economic growth, energy use and greenhouse gas emissions ............................................................ 34 1.4. The urban form matters – the impact of sprawl .................................................................................. 39 REFERENCES .............................................................................................................................................. 50 2. CLIMATE CHANGE IMPACTS SPECIFIC TO URBAN REGIONS .................................................... 51 2.1 Complex and fixed nature of urban infrastructure ............................................................................... 51 2.2 Coastal flooding risks .......................................................................................................................... 52 2.3 Precipitation and storm impacts ........................................................................................................... 55 2.4 Heat impacts and heat-island effects .................................................................................................... 56 2.5 Effects of increased drought and water scarcity .................................................................................. 58 2.6 More acute impacts on health and the poor ......................................................................................... 60 2.7 The costs of urban inaction .................................................................................................................. 61 REFERENCES .............................................................................................................................................. 63 3. ECONOMIC BENEFITS OF CLIMATE ACTION: THE URBAN DIMENSION ................................. 65 3.1. Impact of urban policies on global energy demand and carbon emissions ........................................