Megacity Challenges - Siemens by wuzhenguang


									                                                                                         A stakeholder research project conducted by GlobeScan and MRC McLean Hazel
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                                                                                                                                                                      Megacity Challenges
                                                                                         Megacity Challenges

                                                                                                                                                                      A stakeholder perspective

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

                                                                       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.


                        Megacity Challenges                                                                                            Content
                                                                                                                                  Chapter                                              Page
                        A    t some point in 2007, humanity will
                             reach a significant demographic mi-
                        lestone: for the first time in history more
                                                                       contributes to economic prosperity, further
                                                                       improving quality of life. Unfortunately,
                                                                       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

Key findings
■   Megacities prioritize economic competitiveness and employment
                                                                               2007              will be the year that, for the first
                                                                                                 time in history, more people will
                                                                               live in cities than in the country. For many, it is
                                                                                                                                        edge and industry, but on an unprecedented
                                                                                                                                        scale. In varying forms, they all face hugely
                                                                                                                                        complex social and environmental challenges.
                                                                                                                                                                                         trends that will shape urban development in 25
                                                                                                                                                                                         global cities over the coming years. The find-
                                                                                                                                                                                         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

        Key findings of the research   Megacities prioritize economic competi-
                                       tiveness and employment. When asked
                                                                                          the top megacity infrastructure challenge by a
                                                                                          large margin. It is the one infrastructure area
                                                                                                                                               the different levels of municipal government,
                                                                                                                                               together with a lack of strong leadership,
                                                                                                                                                                                                  this context, the proper pricing of services
                                                                                                                                                                                                  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
                                       cite the importance of the economy and
                                                                                          impact on city competitiveness. They are also
                                                                                          highly aware of its environmental impact (for
                                                                                                                                               a clear desire for a more holistic approach to
                                                                                                                                               city management, but this is rarely the reality
                                                                                                                                                                                                  Technology will help to deliver trans-
                                                                                                                                                                                                  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


                                                                                                                            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
                                                                                                                            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

                                                                                                                                                                                                                                                                   Source: Munich Re, 2005
                        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
                        failure to address this problem are significant.   Page 50                                          environmental sustainability.                        London           Great Britain        7.6          7.6    1600            15

8 Megacity Challenges                                                                                                                                                                                                                      Megacity Challenges 9
 Megacity challenges: an overview


                                                                    Megacity Challenges

Key findings
■ The number of megacities has multiplied over the past 50 years,
                                                                                T    he rise of the megacity often divides
                                                                                     observers between wonder and conster-
                                                                                nation. On one level, these super-sized cities
                                                                                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


in the developing world also struggle to cope
with the rapid growth of informal settle-
                                                   namely economic competitiveness; quality of
                                                   life; and the environment.                                    Mega-growth, mega-complexity                                                                                                           increasingly competing with, and dependent
                                                                                                                                                                                                                                                        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,
according to UN-HABITAT’s 2006 State of the
World’s Cities report.
                                                   development. We reveal the overall priorities
                                                   for stakeholders in a world where resources
                                                   are all too finite. The research also sheds light
                                                                                                                 T    he megacity is a relatively new form of
                                                                                                                      urban development. In 1950, there were
                                                                                                                 only two cities with populations of over 10
                                                                                                                                                                                    Africa), placing huge pressure on infrastruc-
                                                                                                                                                                                    ture in those locations. By 2020 Mumbai,
                                                                                                                                                                                    Delhi, Mexico City, São Paulo, Dhaka, Jakarta
                                                                                                                                                                                                                                                        sprawling conurbations that extend far
                                                                                                                                                                                                                                                        beyond the boundaries of a single city. Exam-
                                                                                                                                                                                                                                                        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)





                                                                                                                                                                                                                    Source: Demographia, from various



                                                                                                                                   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

Striking                                                                                   Competitiveness                                                         Environment   I  t would be wrong to assume that megacity
                                                                                                                                                                                    growth is automatically bad for the environ-
                                                                                                                                                                                 ment. It is obvious that a city with 20 million
                                                                                                                                                                                                                                                          example, air quality has improved over the
                                                                                                                                                                                                                                                          last 50 years. In Shanghai and Kuala Lumpur,
                                                                                                                                                                                                                                                          it has gone down.
a balance                                                                                                                                                                        people will have a large environmental
                                                                                                                                                                                 impact, but it is less clear whether that impact
                                                                                                                                                                                                                                                              Historically, cities tend to get rich first,
                                                                                                                                                                                                                                                          then clean up later. Unfortunately that

I  n megacities, the complexity of building
   and maintaining infrastructures, and of
meeting the needs of a huge and often grow-
                                                                                                                                                                                 is bigger than if the same number of people
                                                                                                                                                                                 lived rurally. Certainly there are those who
                                                                                                                                                                                 argue that clean, modern cities, where dense
                                                                                                                                                                                                                                                          approach could be disastrous in the context of
                                                                                                                                                                                                                                                          climate change: this is one reason for the
                                                                                                                                                                                                                                                          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
                                                                                                                                                                                 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
Competitiveness                                                                                                                                                                                0
                                                                                                                                                                                                   Particle matter in 2002 (micrograms per cubic metre)
                                                                                                                                                                                                                     50                 100                  150                200
                                                                                                                                                                                           Delhi                                                                    1st

M      egacities are the gateways of globaliza-
       tion, driving the flow of people, goods,
knowledge, and money around the world.
                                                  metropolitan regions have a higher GDP per
                                                  capita than their national average, higher
                                                  labor productivity levels, and many of them
                                                                                                     are also hugely important, as evidenced by the
                                                                                                     offshoring trend that has itself fuelled the
                                                                                                     growth of cities like Bangalore in India. Anoth-


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
ated in the ten economically most important       countries.                                         factor is the quality of basic services: people
cities. Megacities also make a disproportion-        Given their weight in their respective natio-   with access to quality housing, education and                                   Mexico City                  41st
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)

                                                                                                                                                                                                                                                                                  Source: The World Bank
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
but is responsible for 30% of its GDP. In the     are eager to improve often overloaded road         indicates that clear, business-friendly policies
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

Quality of Life                     M      egacities may be engines of economic
                                           growth, but they feature huge inequali-
                                    ties in the distribution of wealth and econom-
                                                                                                               affect their productivity”.* Poverty may be
                                                                                                               less extreme in the more developed cities, but
                                                                                                               social problems still abound. The OECD’s
                                                                                                                                                                               Three City Archetypes                                                                                 organizationally. Increasing affluence in these
                                                                                                                                                                                                                                                                                     cities places additional new demands on infra-
                                                                                                                                                                                                                                                                                     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
                                    “the new locus of poverty”. World Bank esti-
                                    mates predict that while rural areas are cur-
                                                                                                               socio-economic inequalities even in some of
                                                                                                               its most dynamic metropolitan regions. It
                                                                                                               points to large and persistent pockets of
                                                                                                                                                                               A    s is clear from the research, each megaci-
                                                                                                                                                                                    ty has its own unique issues that require
                                                                                                                                                                               specific, local solutions. Nevertheless, cities
                                                                                                                                                                                                                                 Populations tend to be younger and more
                                                                                                                                                                                                                                 male, with a high proportion of poorly edu-
                                                                                                                                                                                                                                 cated rural migrants. Social polarity, and the
                                                                                                                                                                                                                                                                                     outpaces population growth.

                                                                                                                                                                                                                                                                                     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
                                                                                                               resources to invest in high-quality infrastruc-
  living in slums
                                                                                                               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
                                                        Source: UN Millennium Project 2005 (UN-Habitat 2003)

                                                                                                               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
                                                                                                               to the detriment of the others will be a recipe
                                                                                                               for failure.

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



Key findings
■ Unemployment is the top economic
                                                               H    uge cities create huge challenges, yet
                                                                    the money and resources to address
                                                               them are distinctly finite. How will the city
                                                               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


                                                                           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
                                                20%                                                            26%          Gap between rich and poor                   11%
           Unemployment                                         Air pollution
                                                                                                                                                                                                                Transportation              17                    43                   45
                                      14%                                                           15%                                        Poverty                 9%
              Cost of living                                  Transportation
                                                                                                                                                                                                         Inadequate /inefficient
                                                                                                                                                                  7%                                             Infrastructure         9               10                      14
    Economic development              14%                   General pollution                      14%                                      Education
                                                                                                                                                                                                                       Planning         9               9                   8
                                8%                                                                13%                               Population growth             7%
  Inadequate infrastructure                                  Water pollution
                                                                                                                                                                                                                Lack of funding     3               4                       11
                               7%    % of respondents                                       9%    % of respondents                        Public safety           7%
                 Financing                                       Solid waste
                                     mentioning                                                   mentioning                                                                                                      Environment/
                                                                                                                                                                  7%         % of respondents                         pollution         9          2                    4

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


                                                                                             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%

             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
                                % saying high need for investment

22 Megacity Challenges                                                                                                                                                                                                                                                          Megacity Challenges 23
 Five infrastructures


                                  Five Infrastructures

                         A    ll cities need high-quality infrastructure
                              to facilitate the movement of people and
                         goods, and the delivery of basic services to
                                                                           increasingly unfit for purpose. It is also true of
                                                                           the Transitional cities, which are struggling to
                                                                           cope with demographic change, and Emerg-
                                                                                                                                ture solutions that are environmentally sus-
                                                                                                                                   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


Key findings
■ Transportation is seen as the single biggest infrastruc-
                                                              T   ransport preoccupies the stakeholders
                                                                  like no other infrastructure issue. As
                                                              noted above, the general survey marks trans-
                                                              port out as the single biggest infrastructure
                                                                                                                                         tant area for investment. Transportation is top
                                                                                                                                         of the pile for a number of reasons. Whereas
                                                                                                                                         some infrastructure problems, such as lack of
                                                                                                                                         water, primarily affect the poorer areas of the
                                                                                                                                                                                                                     (CBI) estimates that the cost of congestion is
                                                                                                                                                                                                                     £20 billion (US$38 billion) a year**. Stake-
                                                                                                                                                                                                                     holders in the overall survey are acutely aware
                                                                                                                                                                                                                     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

                                             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
                  Limited resources                   30%

                     Poor planning             21%                                             29%                   71%

         Insufficient infrastructure          19%

        No transportation network           16%

         Poor infrastructure quality   9%   % of respondents

                                                                                               % = predicted emphasis

28 Megacity Challenges                                                                                                                              * Briginshaw, International Railway Journal, June 2005, ** Evren & Caliskan, Fundamental Problems of Istanbul Transportation,                          Megacity Challenges 29

                                                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
          Allow private investment /
                                                                                                                                                                                                                                 now being discussed). One would have to               operations. Ports are almost entirely publicly
                                                17%                                                                                                                                                                              conclude that, globally, demand manage-               controlled and typically take the form of state-
                increase investment
                     Build new roads                                                                                                                                                                                             ment as a solution to congestion remains an           controlled companies that operate in a quasi-
                        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
                                                                                                                                                                                                                                                                                       few cities.
                    New equipment         11%                                                                                                                                                                                    The public and private sectors: For trans-                For those that predict a greater role for pri-
   Better use of mass transit systems
                                                                                                                                                                                                                                 port and other infrastructure sectors, the sur-       vate-sector operation, surprisingly the major
                                         10%                                                                                                                                                                                     vey also explored survey respondents’ views           advantages of this approach are not financial,
             instead of personal cars
                                               % of respondents                                                                                                                                                                  on the involvement of the private sector in           according to the survey, but rather improved
                   Manage demand         9%
                                               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


Key findings
■ Cities at all levels of development face a
                                                   A    ny discussion of electricity infrastructure
                                                        has to take place against the backdrop of
                                                   rapidly escalating world demand. Simply put,
                                                   expanding cities need additional electricity to
                                                                                                                           generation, transmission and distribution
                                                                                                                           during those years, while developing coun-
                                                                                                                           tries will require some US$5.2 trillion*.
                                                                                                                               Only 2% of those questioned described
                                                                                                                                                                              electricity stakeholders in Transitional and
                                                                                                                                                                              Mature cities, old or obsolete infrastructure is
                                                                                                                                                                              the main problem. Then comes efficiency, fol-
                                                                                                                                                                              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

                                     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

                                                                                           Energy sources                                          83%

                                                                                Environmental impacts                                          81%

             Lack of system                                                         Up-front capital cost                                      81%                Improve on existing infrastructure                                                29%
                   Obsolete                                                             User affordability                                    79%                                 Additional investment                                       23%
                                                                                                                                                                           Promote alternative energy                             13%
      Inefficient operations   20%                                                             Regulations                                   76%                                              sources

            Combination of                                                                                                                                                           Regulate energy use                       11%
                               20% % of respondents                                      Appropriateness                                     75%
                problems           selecting
                                                                                                                                                                              Improve governance and                         9%      % of respondents
                                                                                            Life cycle costs                                 73%                                       administration                                mentioning
                                                                             Impacts on economy and                                          73%

                                                                                                                 % 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, 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,

                                                    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

                                                            and Waste Water

Key findings
■ Water and sanitation is seen as an important issue
                                                            O     ne of the Tokyo-based respondents told
                                                                  this survey, “Recently there are often
                                                            rainfalls of more than 100mm. Rain water is
                                                            stored in underground rivers to avoid flooding.
                                                                                                              proper infrastructure in place – the problem is
                                                                                                              certainly not nature. For Transitional, and
                                                                                                              especially for Emerging cities, the situation is
                                                                                                              profoundly different. The UNDP estimates that
                                                                                                                                                                 million residents of Nairobi’s notorious Kibera
                                                                                                                                                                 slum rely on putting human waste in plastic
                                                                                                                                                                 bags and throwing it into the street*.

  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.
                                                                                                                                                                                                                                                                                                                    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
            Lack of system                                                                                                                                                                                                                                                                                      years will be slightly more on improved
                                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                     *,                          * 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,,
                                                                                                                                                                    ***”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
                                                                                                                   55%                            45%                                                                                                                                                                                           expect the split of public and private emphasis
              Increase investment                         29%
                            funding                                                                                                                                                                                                                                                                                                             in the operation of new facilities to be 57% ver-
             Manage demand with                                                                                                                                                                                                                                                                                                                 sus 43%. Most will likely need the state to
             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
                                                                                                                                                                                                                                                                                                                                                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 and papers listed on http://www.
                                              hai Commercial Section, Issue 4, July 2003.                                                                                         ,2340,en_2649_37425_37456726_1_1_1_37425,00.html#Background, *****


Key findings
■ City healthcare systems around the world will struggle
                                                           A     round the world, healthcare systems are
                                                                 coming under increasing pressure. The
                                                           rising cost of prescription drugs and private
                                                           health insurance is one challenge. Huge
                                                                                                                                  of medical science, but it comes at con-
                                                                                                                                  siderable financial cost. People over the age
                                                                                                                                  of 75 incur per capita health expenditures
                                                                                                                                  that are five times higher than people aged 25
                                                                                                                                                                                          health expenditure as a percentage of pro-
                                                                                                                                                                                          duction has increased from 13.1% to 15.2% in
                                                                                                                                                                                          six years*. In contrast, developing countries
                                                                                                                                                                                          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

                                                                                                                          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                              *; 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
                                           (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

                                                                  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

Key findings
■ Safety and security comes second only to transport as a factor
                                                                            S   ecurity has one important qualitative
                                                                                difference from other infrastructure areas
                                                                            in this study: whereas water or transport pro-
                                                                            vide something tangible, the ultimate goal of
                                                                                                                                structure element. The complete survey
                                                                                                                                population ranked public safety and security
                                                                                                                                as the second most important infrastructure
                                                                                                                                area in determining competitiveness with 9%
                                                                                                                                                                                terrorism (18%), a particular concern in
                                                                                                                                                                                Emerging and Mature cities.
                                                                                                                                                                                   Although distinct threats, the two overlap
                                                                                                                                                                                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                               Prevention of                                                                                          Protecting Privacy                              Public surveillance
                   Organized crime                                  36%
                                                                                           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
                                                                                                                                                                                                                                                                                          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                             * (,                                                                                                                                                      Megacity Challenges 55
 City governance and finance


                                                                                                City Governance
                                                                                                and Finance

Key findings
■ Economic growth and employment are the primary drivers in decision-making for
                                                                                                            M      etropolitan governance has become
                                                                                                                   increasingly complex as cities have mor-
                                                                                                            phed into agglomerations combining multiple
                                                                                                            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-
                               structure areas covered by this report are seen                       about 55% of respondents in Emerging and                           ing. The call for better city governance is
                                                                                                                                                                                                                                                                               The best solution to city management
                               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-
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
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
complex issues right, and the efficiency gains                                                           77%                             77%             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%      73%
from privatization can be compelling.                                                                            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.
Megacities are calling for public leader-                                                                                                                vastly increased energy efficiency — its energy      Cochabamba water concession in Bolivia                Thus, properly structured and targeted char-
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-
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-
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
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
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


D    ense, vast and complex, megacities pose
     challenges on an unprecedented scale
for urban planners, city managers and those
responsible for delivering basic services and
                                                     the financial resources needed to address the
                                                     huge challenges that they face. However,
                                                     while areas like transport infrastructure are
                                                     recognized as being vital to competitiveness,
                                                                                                      ticular in Emerging cities, economy and
                                                                                                      ecology are still often viewed as contradic-
                                                                                                         Can stakeholders’ desire to deliver greener
                                                                                                                                                        enue. A key factor in this will be the correct
                                                                                                                                                        pricing of services to support sustainable
                                                                                                                                                            Delivering in each of these areas will
                                                                                                                                                                                                           require megacities to contract out the man-
                                                                                                                                                                                                           agement of more services to the private-sec-
                                                                                                                                                                                                              One of the more surprising findings in the
                                                                                                                                                                                                                                                             “context-sensitive” approach to privatization,
                                                                                                                                                                                                                                                             with overall control (and responsibility) rest-
                                                                                                                                                                                                                                                             ing with the public sector.
                                                                                                                                                                                                                                                                 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

12                                                                                                                                                          Stakeholder survey

                                                                                                                                                                    Influencers:                              Electeds:
                                                                                                                                                                                                                                                                 and a proxy for the level of social and physical
                                                                                                                                                                                                                                                                 development along the horizontal axis. GMP
                                                                                                                                                                                                                                                                 ranged from approximately 1,500 euros/capi-
                                                                                                                                                                                                                                                                 ta for Emerging cities, to 5,000 euros/capita
                                                                                                                                                                      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                                                               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.
                                                                                                                                                                       Privates:                              Public Employees:                                      Each index was brought to a common scale
                                                                                                                                                                     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-

                         T    his report studies infrastructure chal-
                              lenges and governance trends in the
                         world’s largest megacities. The research
                                                                                          based on the following research initiatives
                                                                                          and methodology.
                                                                                                                                                          took an analysis of critical infrastructure sec-
                                                                                                                                                          tors in eight of the 25 cities covered by this
                                                                                                                                                                                                             City archetypes: It is recognized that cities
                                                                                                                                                                                                             are unique, as each city today is a reflection of
                                                                                                                                                                                                             its own unique mix of social, political and eco-
                                                                                                                                                                                                                                                                 tle change in the city groupings.
                                                                                                                                                                                                                                                                     The UN Human Development Index is a
                                                                                                                                                                                                                                                                 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

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