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Budget-strapped cities are creating financing—out of thin air

Luis Triveno's picture

Photo: Jonathan O'Reilly / Shutterstock

The world is urbanizing fast200,000 people are moving to cities every day in search of homes, jobs, as well as education and healthcare services for their families. Supporting this influx with proper infrastructure and services for water, sanitation, transport, and green spaces will require an estimated $1 trillion each year.
 
Given the difficulties of further increasing the tax burden or the level of public debt, it’s time for cities to think more creatively about alternative sources of funding.

Not willing to wait for their national governments to bless them with scarce infrastructure funds, innovative mayors have figured out how to squeeze a new source of urgently needed capital out of thin air, literally.

To build resilient cities, we must treat substandard housing as a life-or-death emergency

Luis Triveno's picture
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Resilient housing policies. © World Bank
Why resilient cities need resilient housing.  Download the full version of the slideshow here

The scene is as familiar as it is tragic: A devastating hurricane or earthquake strikes a populated area in a poor country, inflicting a high number of casualties, overwhelming the resources and capacity of rescue teams and hospital emergency rooms. First responders must resort to “triage” – the medical strategy of maximizing the efficient use of existing resources to save lives, while minimizing the number of deaths. 

But if governments could apply triage to substandard housing, medical triage would be a much less frequent occurrence – because in the developing world, it is mainly housing that kills people, not disasters.
 
From the 2017 Global Platform for Disaster Risk Reduction to the 2017 Urban Resilience Summit, practitioners and policymakers have increasingly focused their discussions on how we can boost the resilience of urban areas.

But this is a problem with a well-known solution: Resilient cities require resilient housing.

To make housing more resilient, cities need to focus on two different but complementary angles: upgrading the existing housing stock, where most the poor live, while making sure that new construction is built safe, particularly for natural disasters. After all, if floods or earthquakes do not distinguish between old and new homes, why should policymakers? It is time for resilience to become part of the definition of “decent, affordable, and safe housing.”

 

To achieve #Housing4All, don't throw the baby out with the bathwater

Luis Triveno's picture
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Mexico City. Photo by VV Ninci via Flickr CC

In a world divided over how to deal with such serious problems as terrorism, immigration, free trade, and climate change, governments agree on the urgency of solving what is arguably the biggest problem of all: supplying safe, well-located, and affordable housing for the billions of people who need it.

There is even agreement on the basic steps to that goal:  improving land management and adopting more tenure-neutral policies.

There is also consensus on the fact that government alone cannot afford to pay the bill.  According to McKinsey & Co., the annual price tag for filling the “global housing gap” ($1.6 trillion) is twice the cost of the global investments needed in public infrastructure to keep pace with GDP growth.
 
As we approach the 70th anniversary in 2018 of the declaration of housing as a “universal human right,” it’s time for governments to turn to an obvious solution for closing the housing gap that they continue to ignore only at their peril: long-term market finance. Without a substantial increase in private capital, the housing gap will continue to increase, and so will the odds of social discontent.

A housing policy that could almost pay for itself? Think retrofitting

Luis Triveno's picture

Photo by Laura Avellaneda-Cruz via Flickr CC

The demand for decent, affordable – and safe – housing for growing urban populations is a nagging problem for financially strapped governments throughout the developing world. According to McKinsey & Co., a third of the world’s urban population – 1.6 billion people – will be hard pressed to obtain decent housing by 2025.
 
Housing policymakers, however, have undermined their capacity to increase the supply of good housing, quickly, by strapping themselves inside the myth that it is always better to build new homes rather than strengthening existing ones.
 
In Colombia, for example, 98% of all housing subsidies fund the acquisition of a new house or apartment; almost nothing goes to retrofitting existing homes to withstand the forces of nature and the tests of time.
 
While new construction may be a more attractive way to create schools, hospitals, and other public infrastructure, housing is a bigger, more pressing and complicated problem that may have a simpler solution: Bringing existing housing up to a decent standard of safety through retrofitting.
 
It’s not only a more efficient way to deploy limited government subsidies, but also a strategy to leverage these public funds with another private source in reach of governments: homeowners.

Building more affordable and disaster-resilient housing in Latin America and the Caribbean: a few policy ideas

Julian Palma's picture
Photo by C64-92 via Flicker Creative Commons

Between 2010 and 2017, Chile was struck by 10 major natural hazard events. These disasters affected as many as 340,583 houses and cost $3.6 billion in reconstruction (Ministry of Housing and Urbanism of Chile). Post-disaster assessments point to housing as one of the most affected sectors in the wake of climate-related and other natural hazards—most commonly floods, earthquakes, landslides, and fires. In a 22-year period between 1990 and 2011, minimum losses in the housing sector for 16 countries in Latin America and the Caribbean (LAC) amounted to $53 billion.

In the LAC region, one quarter of the population lives in slums, characterized by the prevalence of substandard housing quality as well as incremental and self-construction of homes. Families living in these informal settlements are at greatest risk to natural hazard impacts. Programs providing new housing do not always reach families in the lowest quintiles; and without access to affordable and well-located housing alternatives, households have no other option than to build informally, and in areas most prone to natural disasters.

Urban jungles in jeopardy

Ivo Germann's picture
Why the world’s cities are at risk – and what we can do to make them more resilient



We may not know exactly what the world will look like in two decades, but we know this: it is going to be a world of cities.
 
The global population is becoming increasingly urban, and at an astonishing rate. Each year, urban areas are growing by an average of more than 75 million people – more than the population of the world’s 85 smallest countries combined.
 
For the world’s economy, this is great news, since cities produce 80 percent of global GDP, despite currently being home to only 55 percent of the population. But it is a problem for urban infrastructure, which can’t keep up with such fast-paced growth. As a result, cities, already vulnerable, are becoming increasingly susceptible to natural disasters – from flooding and landslides that can decimate informal housing settlements, to earthquakes that can devastate power grids and water systems.
 
These risks could be disastrous for the urban poor, 881 million of whom currently live in slums (up 28 percent since 2000). And climate change – which is increasing the intensity and frequency of natural disasters – will only exacerbate the problem. For this reason, multilateral and government institutions now see resilience and climate adaptation as integral pillars of development.
 
The Swiss State Secretariat for Economic Affairs (SECO), for example, considers low-emission and climate-resilient economies to be key to global competitiveness. A recent report by the World Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR) found that climate change may force up to 77 million urban residents into poverty by 2030 – unless we take action to improve the resilience of cities around the world.

Ahead of the next Habitat conference, the urban world we want

Sameh Wahba's picture


There is no better way to mark this year’s World Cities Day than reflecting on the adoption of the New Urban Agenda at the recent Habitat III conference in Quito. The agenda reaffirms the political commitment to sustainable urbanization and provides a framework to guide global urban development over the next 20 years, based on a shared vision of cities that are inclusive, safe, resilient and sustainable.

In an era of rapid urbanization and climate change, managing urban growth sustainably and building cities that work is indeed one of our most pressing development challenges.

Already, more than half of the global population — nearly 4 billion people — live in urban areas. Two decades from now, that number will grow to 5.5 billion — more than 60 percent of the world’s population. At the same time, the total built-up area of the world’s cities is expected to be double by 2030 what it is today, if not more.

Because urban-planning decisions lock cities in for generations, what policymakers decide in these two decades will make or break cities’ sustainable future for the rest of this century. With that in mind, one may ask: What will the world look like when Habitat IV takes place in 20 years?

I can imagine two opposite ends of the spectrum.

Safer buildings are the key to a disaster resilient future

Ede Ijjasz-Vasquez's picture
A few months ago, a 7.8 magnitude earthquake in Ecuador claimed hundreds of lives, left almost 28,000 people injured, and caused $1 to 3 billion worth of damage. Most human and economic losses were directly linked to the collapse of buildings: the tremor caused the destruction of an estimated 10,000 structures, many of which were located in unsafe areas or did not meet minimum safety standards.
 
The tragedy in Ecuador serves as a stark reminder that, in many cases, it is not earthquakes or other disasters that kill people, but failing building structures. Therefore, improving building safety will be key in protecting communities against rising disaster and climate risk.
 
With over a billion dwelling units expected to be built between now and 2050, focusing on new construction will be particularly important, and will help mitigate the impact of natural disasters for generations to come.
 
The good news is that we have the knowledge and technology to build safe, resilient structures. But, more often than not, this knowledge is not put into practice due to insufficient or poorly-enforced regulation, as well as a lack of incentives.
 
In this video, Ede Ijjasz and Thomas Moullier explain why building safety will play a critical role in enhancing disaster resilience, and discuss concrete recommendations on how to get there.
 
If you want to learn more about this topic, we invite you to discover our latest Sustainable Communities podcast.
 
Related:

Can other cities be as competitive as Singapore?

Sameh Wahba's picture
 Joyfull/Shutterstock
Photo: Joyfull/Shutterstock
Singapore is an example of one of the most competitive cities in Asia and in the world. Many, many other cities want to be the next Singapore. In fact, Singapore has been so successful that some believe that its success cannot be emulated. They forget that in the 1960s, Singapore faced several challenges – high unemployment, a small domestic market, limited natural resources, not to mention that most of the population lived in overcrowded unsanitary conditions in slums. Challenges that would sound very familiar to a large number of cities in the developing world.

And so, what better place than Singapore for the Asia Launch of the Competitive Cities for Jobs and Growth: What, Who & How report. The World Bank Group, along with the Centre for Liveable Cities and International Enterprise Singapore co-sponsored the launch as part of Urban Week held in Singapore from 8-11 March, 2016. The roundtable was attended by over 100 delegates representing cities from 23 countries.

The competitiveness potential for cities is enormous. Almost 19 million extra jobs, annually, could be created globally if cities performed at the level of the top quartile of competitive cities. Of this potential, more than 1/3, i.e. equivalent to an additional 7 million jobs, comes from cities in East Asia. Between 2000 and 2010, nearly 200 million people moved to East Asia's urban centers – these people will need jobs. Where will these jobs come from? How will they be generated?

How Latin America’s housing policies are changing the lives of urban families

Luis Triveno's picture
Photo: Pierre-Yves Babelon/Shutterstock
In an effort to harness the benefits of urbanization and improve the living conditions of the urban poor, Latin American countries have experimented with housing subsidies. Now that the region has several decades of experience under its belt, it is time to look back and ask: Have subsidies worked? What kind of impact have they had on the lives of lower-income residents? Moving forward, how can cities pay for ongoing urban renewal?

To address those questions and share their experiences, officials in charge of designing and implementing national housing policies in eight countries (Argentina, Bolivia, Brazil, Chile, Colombia, Mexico, Paraguay, and Peru) recently met in Washington DC, along with representatives from the World Bank, Cities Alliance, the Urban Institute, and Wharton's International Housing Finance Program.

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