What must cities do to attract continued investment?
1 Jun 2015
Source: Eco Business
By: Designing City Resilience
Cities must consider global resilience and the impacts of climate change, if they are to continue to attract private investors, says Julia Brickell, Head of the International Finance Corporation’s Hong Kong office.
Private investors have always considered natural disasters in the risk management process but as climate change increases the frequency of severe weather events, it is increasingly difficult to predict the future by looking to the past.
The reoccurrence of hurricanes, tropical storms and severe flood events can now be measured in decades, rather than centuries. Certainly they are happening within the lifetime of a project, a building or piece of infrastructure and, in some parts of the world, an occupant’s tenure.
Of course, investors understand that the risk of natural disasters can never be entirely removed, particularly when considering city geography, as more often than not, cities have grown organically from small settlements in vulnerable areas. The issue is that with urban growth, the potential for loss of income and reduced return on investment has also grown.
Cities remain the most exciting and vibrant places for private sector development, but increasingly, resilience will become a crucial aspect of the risk management process. In fact, resilience is expressed as the cost of finance: the more resilient the investment, the easier it is to finance.
This focus on resilience is already changing investment patterns. Increasingly, the private sector is choosing those cities demonstrating they have the political, social, economic and physical resilience that makes them adaptable to future shocks.
This raises a big issue. Developing cities, which have rapidly growing populations at the greatest risk from natural disasters, often do not have the financial resources or the political will to plan for resilience – even if there is an acceptance of the need to do so. Their short term challenges, such as food shortages, social unrest and resource scarcity, are far more pressing than developing a long term plan to make them more attractive to investors.
This is a global problem. Cities are no longer self-contained, so even if a resilience plan is in place, a city’s reliance on global supply chains for food and other resources means that any weakness in that supply chain could have significant effects.
It is therefore in the best interests of national and city governments to encourage and, if necessary impose, resilience throughout their supply chain. This will help to ensure they remain competitive and attractive to investment.
Investors are having to make increasingly difficult choices when it comes to investing in cities. Inevitably they will pick those cities that can prove their resilience – not only within their city walls but around the world.
Designing City Resilience will be held on 16 and 17 June 2015, 66 Portland Place, London. For more information and to book a place at the event, visit www.designingcityresilience.com. Visit the Facebook page and follow the summit on Twitter: @rescities; connect via LinkedIn; or see the Youtube channel.
Participating cities include:
Barcelona has a history of energy and transport-related infrastructure failure, as well significant pollution. More recently, Spain’s financial problems have meant the city has experienced high levels of unemployment which have sparked a break-down in traditional family structures, affecting social cohesion. Manuel Valdes Lopez, Manager of Infrastructures and Urban Coordination, will discuss the city’s plans to address these challenges.
Bristol is experiencing rapid growth and is investing significantly in renewing its infrastructure to meet the needs of its expanding population. Plans for more decentralised governance structures are being put in place, with the aim of empowering citizens to minimise risk and becoming increasingly resource efficient in the long-term. Sarah Toy, Bristol’s Chief Resilience Officer (CRO), will share what the city is investing in, how it is doing it and the value that it aims to unlock. She will be joined by Bristol’s Mayor, George Ferguson, who will outline the city’s plans for a more decentralised governance structure, with the aim of empowering citizens.
South India’s coastal city of Chennai is currently the fourth most populous metropolitan area in the world. The city suffered damage from a Tsunami in 2004, is prone to flooding and lacks the infrastructure to meet the needs of its growing population. Chennai will present its plans to minimise future risk and how the city is using public private partnerships (PPPs) to achieve these aims.
Glasgow has come a long way in building resilience since its days of heavy industry but continues to grapple with high levels of unemployment and a severe lack of social cohesion. The city’s CRO Alastair Brown will talk about the plans being put in place to tackle these challenges and create future opportunities.
Melbourne is affected by severe weather events and its future is likely to be impacted significantly by climate change. Complex governance structures and fragmented infrastructure management present barriers to building resilience. Toby Kent, Melbourne’s CRO, will discuss how the city is adapting and adopting a more coordinated approach to city management and resilience.
New York City, USA
New York City (NYC) constantly battles resilience on two fronts: fighting the stresses that large successful cities face daily and ensuring it is prepared for shocks that, as Hurricane Sandy proved in 2012, are all too prevalent.
NYC published its plan for implementing sustainability and resilience initiatives in April 2015. One New York: The plan for a strong and just city, includes plans to have the cleanest air in 50 years; to plant 950,000 trees and install 6 million square feet of reflective rooftops; to upgrade building codes to prepare for floods, wind and extreme weather; and to reduce carbon emissions by 80% by 2050, compared with 2005.
The aim is to ensure policies are in place to promote a better quality of life for New York’s citizens, support economic success and tackle social inequality, while also mitigating the risks of climate change.