In October, representatives from nearly 200 nations will convene in Quito, Ecuador, with the ambitious goal to steer urban development onto a sustainable path. They will adopt the New Urban Agenda, a global framework for urbanization over the next 20 years. As soon as the ink is dry, attention must turn to the key question: How can anyone tell if cities are on the right track?
Unlike the Paris agreement on climate change, the New Urban Agenda adopted at the Habitat III summit in Quito can’t rely on straightforward metrics, such as tons of carbon. But by building on the Sustainable Development Goals adopted last year, the New Urban Agenda offers the opportunity to look at the common characteristics that make cities work.
Among the aspects of cities that require monitoring, two are especially critical: fiscal systems and spatial planning. The world will need to invest about 3.8 percent of gross domestic product through 2030 — more than $3 trillion per year — in energy, transportation, telecommunications, water and other infrastructure just to support expected rates of growth, according to McKinsey and Co.
Meanwhile, the rate of urban sprawl is unsustainable, both financially and environmentally. Between 1990 and 2015, the population of cities in the developing world doubled, but their footprints increased by a factor of 3.5 — mostly through unplanned growth that lacks adequate services and infrastructure, according to the new data collected for the Atlas of Urban Expansion, a project to monitor urban growth.
Financing the New Urban Agenda
A Habitat III policy paper on local government finance, drafted by a team convened by the Lincoln Institute and the World Bank, offers the beginnings of a framework for implementation. It breaks down local finance and fiscal systems into four key components: expenditures, revenues, financial management, and borrowing — all of which are inseparable from the “rules of the game,” or the policies, constitutions, laws, and legislative frameworks within which cities operate.
A framework for implementation: 5 key takeaways
Rules of the game: Countries need to provide cities with greater autonomy to raise revenue and manage spending, improve coordination across multiple levels of government, and support strong systems of intergovernmental transfers.
Expenditures: In many countries there is a large “fiscal gap” between the expenditure responsibilities of local governments and the resources needed to finance them. National and state or provincial governments need to minimize unfunded mandates and expand transfers to local governments when they devolve responsibilities, and local governments need to improve expenditure efficiency by coordinating planning and spending regionally to exploit economies of scale.
Revenues: Local fiscal health depends on a strong and diverse set of own-source revenues such as user charges and fees, property taxes, value capture and other land-value based revenues, and income and consumption taxes. Local governments need the authority and technical assistance to cultivate these revenue streams.
Financial management: Cities need a strong core of management systems and processes including planning, budgeting, accounting, procurement, reporting, auditing, and oversight. Transparency and accountability are critical.
Borrowing: Municipal debt markets vary widely from country to country. In developing countries, greater access to sustainable debt will depend on laying the regulatory and institutional groundwork to create the right environment.
There are many possibilities for monitoring the fiscal condition of cities, but one promising tool is a global municipal fiscal database currently under development. Beginning as a pilot project in select cities in Asia, Latin America, and Africa, the database will link planning, municipal finance, and legal frameworks, and will become a resource for academics, city officials and private sector stakeholders who are helping to implement the New Urban Agenda.
The database will build on the work of the Lincoln Institute’s Municipal Fiscal Health Dashboard, a tool that will provide data visualizations for more than 120 categories of revenues, expenditures, debt, and assets for 150 U.S. cities.
The need to monitor urbanization is critical for sustainable growth as some cities expand at an explosive pace. For example, in 2000, the built-up area of Zhengzhou, China, was 286 square kilometers. According to a 2009 master plan, the city’s urbanized area was expected to grow to 400 square kilometers by 2020, but the city reached 612 square kilometers by 2015.
The Atlas of Urban Expansion combines satellite imagery with the results of on-the-ground surveys to track the pattern and quality of growth as well as characteristics such as housing affordability and the impact of regulations. A partnership of UN-Habitat, the New York University Urban Expansion Program, and the Lincoln Institute of Land Policy, the atlas will be an open-source website with maps, images, and data on spatial changes from 1990 to 2015, and will include a global sample of 200 cities, with information on air and water quality, commute patterns, and access to open space. The project has already yielded some results, finding a lack of lack of sufficient arterial road grids, unwieldy block sizes, and inadequate open space in many growing cities.
Why it matters
The final language of the New Urban Agenda will be settled in Quito, but the big goals laid out in the latest draft are unlikely to change:
“By readdressing the way cities and human settlements are planned, financed, developed, governed, and managed, the New Urban Agenda will help to end poverty and hunger in all its forms and dimensions, reduce inequalities, promote sustained, inclusive, and sustainable economic growth, achieve gender equality and the empowerment of all women and girls, improve human health and well-being, as well as foster resilience and protect the environment.”
“Ambitious” is an understatement in describing these goals. But the scope of the New Urban Agenda reflects the enormity of the challenge: a good quality of life for billions of new urbanites, who will comprise 70 percent of the world’s population by 2050. That’s why what happens after Habitat III is even more important than what happens in Quito.
George W. McCarthy is president and CEO of the Lincoln Institute of Land Policy. His areas of expertise include housing and housing finance, global urbanization, economic forecasting, program evaluation, and regional planning.
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