New Report: Cities Are Crucial to Economic Growth and Climate Action

A major new report from the Global Commission on the Economy and Climate argues that countries at all levels of income now have the opportunity to build lasting economic growth at the same time as reducing the immense risks of climate change, but they must act now.

The Global Commission on the Economy and Climate comprises 24 leaders from government, business, finance and economics in 19 countries. A year-long study has been conducted by leading research institutes from Brazil, China, Ethiopia, India, South Korea, the United Kingdom and United States, advised by a panel of world-leading economists chaired by Lord Nicholas Stern.

Better Growth, Better Climate: The New Climate Economy Report was presented to governments and business and finance leaders at a global launch event at the UN headquarters in New York City 16 September 2014, attended by United Nations Secretary General Ban Ki-moon. The report arrives just one week before the UN Climate Summit.

The report finds that over the next 15 years, about US $90 trillion will be invested in infrastructure in the world’s cities, agriculture and energy systems. The world has an unprecedented opportunity to drive investment in low-carbon growth, bringing multiple benefits including jobs, health, business productivity and quality of life.

“The messages from this landmark report are clear and unambiguous: there are real and available alternatives to the bad policies that are destroying our future. The report makes a compelling case that decisive but urgent shifts in policies and behaviour can deliver (equitable) economic growth while grappling climate change. This must imply real changes, not only in national and international policies, but ultimately in the patterns of daily life, at the level where people live,” said Cities Alliance Director William Cobbett in the report's press release.

The crucial role of cities 

• Building better, more productive cities can boost economic prosperity and help tackle climate change. On current trends, fewer than 500 cities in three key groups – Emerging Cities, Global Megacities, and Mature Cities – will account for over 60% of global income growth and half of energy-related greenhouse gas emissions growth between now and 2030. Action in these cities, particularly Emerging Cities, will have disproportionate benefits for the global economy and climate.

• Growth today typically involves poorly managed, unstructured urbanisation whose economic, social and environmental costs outweigh the benefits. Urban sprawl costs the US economy alone an estimated $400 billion per year.

• A shift to more compact urban growth, connected infrastructure, and coordinated governance could boost long-term urban productivity and yield environmental and social benefits. Such an approach has the potential to reduce urban infrastructure capital requirements by more than US$3 trillion over the next 15 years. New analysis suggests that the world’s 724 largest cities could reduce greenhouse gas emissions by up to 1.5 billion tonnes of carbon dioxide equivalent (CO2e) annually by 2030, primarily through transformative change in transport systems.

• All cities can improve resource productivity in the short term through cost-effective investments in building energy efficiency, waste management, transit and other measures. However, these benefits will typically be overtaken by economic and population growth within seven years without a broader, structural shift in the model of urban development.

• We are already seeing many cities shifting towards better-managed urban growth, particularly in transport. Over 160 cities have implemented bus rapid transit systems. China’s urban rail networks will total 3,000 km in length in 2015. Nearly 700 cities have implemented bike-sharing schemes, and a range of smarter transport systems, such as car-sharing, have taken off in numerous cities.

• Scaling and accelerating the shift to compact, connected, coordinated growth will require countries to put urban areas at the heart of their economic development strategies, and consider greater fiscal autonomy for cities. Only 4% of the 500 largest cities in developing countries are deemed creditworthy in international financial markets. The international community should redirect and scale up multilateral development bank financing for smarter urban infrastructure, and help cities build creditworthiness.

A global action plan

Better Growth, Better Climate sets out a detailed 10-point Global Action Plan of practical recommendations that can achieve greater prosperity and a safer climate at the same time. These measures will all lead to net benefits to the economy, even before their climate benefits are considered.

The Commission calculates that if fully implemented its recommendations could potentially achieve up to 90% of the emissions reductions needed by 2030 to avoid dangerous climate change. This would require decisive and early action by economic decision makers.

Over the next six months the Commission will discuss the report with economic decision makers across the world. It aims to stimulate stronger action by governments and businesses to drive growth and emissions reductions together.

As Commission Chair Felipe Calderon said in the press release: “The message to leaders is clear. We don’t have to choose between economic growth and a safe climate. We can have both. We can choose better growth and a better climate.”