Steering urban sprawl

Gabriella Elanbeck and Rory Clarke, OECD Observer



© Keith Meyers/The New York Times/REA

New York City has one of the highest average population densities in the world, and few other US cities share its concentrated hustle and bustle. In fact, most of them face an entirely different challenge: urban sprawl.

The average number of inhabitants per km2 of populated urban space is actually very low in the US, as our chart shows. So while New Yorkers must grapple with the difficulties that accompany larger numbers of people in limited urban space, such as congestion and high rents, people in low density cities face long commutes and costly public service provision.

The US is not alone. While average population density in the urban areas of OECD countries is high in Korea and Japan, it is low in countries such as Austria and Canada.  But even in those countries and cities with high average densities, urban sprawl must be confronted.

People’s lives may suffer, as this scattered and decentralised city growth can lead to environmental damage, social exclusion, and pressures on transportation and public services, as well as high public and private costs. What can policymakers do?

Finding sustainable solutions to reduce sprawl demands rethinking urban space and weighing the private benefits of low density living–my house and garden–against social, environmental and infrastructure costs. Compact cities, which balance dense development patterns, strong public transport linkages, accessibility to local services and jobs, affordable houses and healthy open spaces, can provide an answer.

Links and references

OECD (2018), Rethinking Urban Sprawl: Moving Towards Sustainable Cities, OECD Publishing, Paris,

OECD (2018), Average population density in urban areas of 29 OECD countries, 2014,

©OECD Insights July 2018

A tale of two cities?

world-cities-dayJulia Stockdale-Otárola, OECD Public Affairs and Communications Directorate

At times we describe cities with the most hopeful and  endearing terms. Think of “The City of Light”, “The City of Lilies”, “Pearl of the Danube”, “The Holy City”, and so on and so forth. There are other times when only the unique stench, pollution and squalor found in city streets seem to warrant attention. Even in the pages of Plato’s The Republic this dichotomy of wealth and despair is found: “Any city, however small, is in fact divided into two, one the city of the poor, the other of the rich; these are at war with one another”. And yet the attraction to the hustle and bustle of urban centres has not wavered. The allure of cities seems to be as enticing as ever.

Of course, the speed and intensity of urbanisation has varied both over time and across nations. Throughout history many cities have boasted the title of the “most populous city” – though it must be noted that the requirement for such a title has changed drastically. For example, Jericho was a bustling metropolis in 7 000 AD with only one thousand people. By 2014, Tokyo, Delhi, Shanghai, Mexico City and São Paolo all reached “megacity” status with more than 20 million people.

Though rapid, these population spikes didn’t happen overnight. Many cities started to grow and mature into the metropolises many of us call home in the 18th century. From 1750 to 1950 the urban population increased by about 400 million, primarily in Europe and with London at its core. This 200-year period is known as the first wave of urbanisation.

It would seem that the second wave of urbanisation is already proving to be much greater than the first in both magnitude and speed. Growth was particularly concentrated in Latin America and making it one of the most urbanised regions in the world with an urbanisation rate of about 80%.

Looking forward, the urban population is expected to increase to about 6 billion by 2050 – quite the jump from less than 1 billion in 1950! By 2100, the number of urbanites is projected to swell to an impressive 9 billion people, or 85% of the world’s population. This time, the majority of this growth will be concentrated in Asian and African cities.

It’s not only the number of cities that is growing but also the size of cities. Some 41 megacities will likely be scattered across the globe by 2030 (compared to only two in the 1950s) – with Asia boasting 7 of the top 10. Meanwhile, with some exceptions, urban growth will likely slow down or go into decline (if it hasn’t already) in much of Europe and North America.

This major demographic shift comes with its consequences. Policy makers across the globe are tackling myriad challenges for the 50% of the world’s population already living in cities. Population growth, increased pollution, and ageing or inadequate infrastructure all threaten the environment, the efficiency and productivity of cities, and the health and well-being of their citizens. Poor planning can lead to the exacerbation of place-based inequalities. Poverty in the city is also distinct from that in the countryside. Climate change only increases the risk of natural disasters causing potentially devastating damage to urban centres and threatening public safety.

It can be difficult to cope with change. Even more so when that change moves quickly – but cities are trying to adapt. Some cities are being retrofitted to improve the lives of their citizens in a sustainable way by reinventing themselves as eco-cities or ‘green cities’ while fighting inequalities. The city of Malmö, Sweden, claims to be home to Europe’s first carbon neutral neighbourhood. This was achieved following significant planning changes in infrastructure, waste management and energy supply to a former industrial wasteland. To improve the health of its citizens, Mexico City launched the El Médico en tu casa programme bringing medical professionals directly to the homes of those in need. These are examples of sustainable and inclusive policy decisions made at the municipal level.

Where do you fit in?

Everyone can play key role in either pressuring for the adoption and implementation of urban sustainability policies at the local and national level. For example, more cities are offering alternative transportation services including bike and car sharing schemes. These alternatives help curb individual carbon footprints (and even kick-start a healthy daily habit!). New technologies are also opening innovative ways for people to make micro-interventions. The application FixMyStreet helps people communicate local issues in real time, e.g. broken street lamps and pot holes. Large and small businesses can also play a role. For example, the OECD recently launched a campaign involving staff in offsetting commuting-related carbon emissions by offering to plant one tree for every staff member in the Paris area. Staff could then go a step beyond by choosing to plant a few more trees at a subsidised cost.

Useful links

Get involved:

How does your city fare? Check out the Sustainable Cities Index or the EU’s Green Capital Awards

African Economic Outlook 2016: Sustainable Cities and Structural Transformation AfDB/OECD/UNDP

Governing the City OECD

The Metropolitan Century: Understanding Urbanisation and its Consequences OECD

Habitat III and the challenge of urbanisation in five charts

oecd-h3-coverBill Below, OECD Directorate for Public Governance and Territorial Development (GOV)

At the end of the first millennium, the only city that came close to reaching one million inhabitants was Baghdad—an incredible feat considering the total world population was estimated to be about 230 million. Fast-forward one thousand years to 1950. With the world population at 2.5 billion, the planet witnessed the rise of its first megacities—urban conglomerations of more than ten million inhabitants. The first of these colossi were Tokyo and the New York/Newark urban region. Today, there are 29 megacities, the majority in the developing world. By 2030, this number is expected to rise to 41. But, urbanisation isn’t just producing megacities. More than 50% of the world’s population now lives in cities of all sizes, with the figure projected to reach 85% by 2100. Within 150 years, the urban population will have increased from less than 1 billion in 1950 to 9 billion by 2100.


Ready or not

Few cities are well-equipped to handle the tens of millions of inhabitants of today’s largest urban centres. As urban populations rise, physical and administrative infrastructures struggle to keep up. Cities expand, swallowing up once-distinct neighbours, often leaving a hodgepodge of local administrations with varying degrees of cooperation and sometimes diverse political priorities. Coping alone, as a kind of minimal solution, isn’t an adequate response for reasons we will see below. Steps need to be taken to ensure that our cities are liveable, sustainable and inclusive going forward. For this, an adequate roadmap must exist along with the political and economic means to implement it.

A New Urban Agenda

What would such a roadmap resemble? The Habitat III Conference, presently underway in Quito, Ecuador, under the auspices of the United Nations, has an answer. It’s called the New Urban Agenda, a document that sets global standards of achievement in sustainable urban development for the next 20 years. As many urban populations continue to grow at a breathtaking rate, the next years are going to be critical in achieving Sustainable Development Goal 11–making cities inclusive, safe, resilient and sustainable. The OECD co-chaired the policy group devoted to producing the National Urban Policies document, one of the key building blocks of the New Urban Agenda.

How cities see themselves vs. how they really are

Urban areas are socio-economic and environmental entities that go beyond historically defined administrative borders. In spite of this, often, administrative boundaries between municipalities are based on centuries-old borders that do not correspond to contemporary patters of human settlement and economic activity. In the images of Paris and Rome below (high-density areas are red), population densities and administrative borders seem mis-matched. The OECD, in collaboration with the EU, has developed a harmonised definition of urban areas as functional economic units or Functional Urban Areas (FUAs), consisting of densely populated municipalities (urban cores) as well as any adjacent municipalities with high degrees of economic integration with urban cores, measured by travel-to-work flows. This helps to better understand the dynamics of the urban area and provides urban data at the right spatial scale for monitoring performance and providing comparable data between cities around the world.


Metropolitan areas are a boon for wages and per capita GDP

Throughout the OECD, productivity and wages increase with city size. Human capital levels in a city are a strong determinant of its productivity and cities attract and retain more educated workers. Productivity is also higher because firms in urban areas tend to be more specialised and innovative, and the high number of firms allow better matches between employers and employees. OECD estimates suggest that productivity increases by 2-5% for a doubling of population size. This implies that, on average, productivity increases by more than 20% when comparing urban agglomerations of 50,000 inhabitants within a metropolitan area such as Paris. Given high productivity levels and their sheer size, large cities have been making sizeable contributions to national growth, reaching a maximum of above 70% in certain countries. Related to productivity, higher household incomes, as seen in the graph below, represent an important agglomeration benefit.


But cities are often inequality machines

Agglomeration benefits include higher wages, more jobs, public transportation, amenities and markets. But the downside to agglomerations includes elevated housing prices, congestion, pollution, crime and inequality. For many, these negative effects constitute the inescapable reality of urban life. Using the Gini coefficient that measures inequality on a scale of zero to one, 63% of the cities examined had higher levels of inequality than the national average. And inequality is growing. One measure of inequality is spatial segregation, the degree to which rich and poor concentrate separately in metropolitan areas. In many cities, spatial segregation is on the rise. Growth in spatial segregation can indicate poverty traps including diminished access to health and educational services and entrenched differences in well-being.


Cooperation works

Managing urbanisation requires successful cooperation across all levels of government to design, implement, monitor and evaluate policies for sustainable urbanisation. No city can go it alone. National Urban Policies, as defined by the NUP policy group at Habitat III, must strengthen alignment of national and local policies affecting urban development. But, even at intercity or regional levels of cooperation we can see tangible benefits when local governments  can pull back and look at the big picture, as in the cases of regional governance of public transportation and metropolitan governance of urbanisation. It suggests that cities that can get out ahead of the problem through cooperation have a decent chance of making urbanisation compatible with sustainability.


Useful links

OECD, Habitat III and a New Urban Agenda

National Urban Policies

The Metropolitan Century

Making Cities Work for All

Governing the City

OECD & Regional Development

Big Data, Complexity Theory and Urban Development

NAECRicardo Herranz, Managing Director, Nommon Solutions and Technologies, Madrid

We are living in the era of cities: more than 50% of the world population is already living in urban areas, and most forecasts indicate that, by the end of this century, the world’s population will be almost entirely urban. In this context, there is an emerging view that the global challenges of poverty eradication, environmental sustainability, climate change, and sustainable and secure energy are all intimately linked to cities, which are simultaneously places where these global problems emerge and solutions can be found. In the short term, cities are facing the major challenge of overcoming the financial and economic crisis and emerging stronger from it. In the long term, they need to deal with structural challenges related to globalisation, climate change, pressure on resources, demographic change, migration, and social segregation and polarisation. Many of these challenges are shared by cities from developed and developing countries, while others depend on geographical, institutional, socioeconomic and cultural differences.

When addressing these problems, policy makers and society at large face a number of fundamental problems. The many components of the urban system are strongly interwoven, giving rise to complex dynamics and making it difficult to anticipate the impact and unintended consequences of public action. Cities are not closed systems, but they are part of systems of cities. Urban development policies are subject to highly distributed, multi-level decision processes and have a profound impact on a wide variety of stakeholders, often with conflicting or contradictory objectives.

In the past few years we have seen the emergence of concepts such as the smart city, urban informatics, urban analytics and citizen science, which are seen to hold great promise for improving the functioning of cities. However, arguably most of this potential still remains to be realised. The concept of the smart city has been coined as a fusion of ideas about how information and communication technologies can help address critical issues relating to cities. Essential to this concept is the notion of an integrated approach to the synergies and trade-offs between different policy domains that are closely interrelated, but have traditionally been addressed separately, such as land use, transport and energy. This integrated approach would be facilitated by the ability to analyse the increasingly large data streams generated by the ubiquitous sensorisation of the built environment and the pervasive use of personal mobile devices. In parallel, smart devices and social media are also producing new forms of public participation in urban planning. The opportunities are vast, but so are the challenges.

Much hope has been placed in the explosion of big data for establishing the foundations of a new science of cities. During the last 20 years, the dominant trend in urban modelling has changed from aggregate, equilibrium models to bottom-up dynamic models (activity-based and agent-based models) that seek to represent cities in more disaggregated and heterogeneous terms. This increasing model sophistication comes with the need for abundant, fine-grained data for model calibration and validation, hindering the operational use of state-of-the-art modelling approaches. The emergence of new sources of big data is enabling the collection of spatio-temporal data about urban activity with an unprecedented level of detail, providing us with information that was not available from surveys or census data. This has already yielded important practical advances in fields like transportation planning, but it is more questionable, at least for the moment, that big data has produced substantial advances in our understanding of cities. In principle, the potential is there: while research on cities has historically relied on cross-sectional demographic and economic datasets, often consisting of relatively small samples, we have now large-scale, detailed longitudinal data that can allow us to test new hypotheses about urban structure and dynamics. On the other hand, there is a risk that big data leads to a shift in focus towards short-term, predictive, non-explanatory models, abandoning theory. Connecting the smart city and big data movements with the knowledge developed in the last decades in fields like regional science, urban economics and transportation modelling appears as an essential condition to overcome this problem and take advantage of the opportunities offered by big data for the formulation of better theories and policy approaches.

Both empirical work and theoretical advances are needed to cope with the new challenges raised by energy scarcity and climate change, emerging technologies like self-driving cars, and the changes in social relationships, the new activities and the new forms of sharing economy enabled by social media and electronic communications, among other factors that are leading to profound changes in urban structure and dynamics. Equally challenging is to integrate data and models into governance processes: policy assessment and participatory planning are still largely based on qualitative considerations, and there is a sense that state-of-the-art urban models are immature with respect to institutional integration and operational use. New forms of data sharing and visualisation, digital participation and citizens’ engagement are promising tools to tackle this question, but here again, we still have to figure out how to share data and specialised knowledge in a form that fluidly intersects participatory decision making process and bridges the gap between implicit and explicit knowledge. Recent advances in areas such as network theory, agent-based computational modelling and group decision theory, and more generally the intrinsically holistic and eclectic approach advocated by complexity science, appear as a suitable framework for the development of a new science of cities which can in turn lead to new advances in the way cities are planned and managed, allowing us to address the enormous challenges related to urban development in the 21st century.

Useful links

OECD work on urban development

The OECD is organising a Workshop on Complexity and Policy, 29-30 September, OECD HQ, Paris, along with the European Commission and INET. Watch the webcast: 29/09 morning29/09 afternoon30/09 morning

Urbanisation and Complex Systems

NAECColin Harrison, IBM Distinguished Engineer Emeritus (retired), formerly lead the development of technical strategy for IBM’s Smarter Cities initiative.

The city is humanity’s greatest invention.  An artificial ecosystem that enables millions of people to live in close proximity and to collaborate in the creation of new forms of value.  While cities were invented many millennia ago, their economic importance has increased dramatically since the Industrial Revolution until they now account for the major fraction of the global economy.  All human life is there and so the study of cities crosses boundaries among economics, finance, engineering, ecology, sociology, anthropology, and, well, almost all forms of knowledge.  Yet, while we have great knowledge in each of these domains individually, we have little scientific knowledge of how they come together in the overall system of systems that is a city.  In brief:  How does a city work?

Such knowledge would be helpful in the coming decades.  In the last sixty to seventy years, globalisation has spread the Industrial Revolution ever more widely, creating in cities new opportunities that attract hundreds of millions of internal and international migrants.  This process is lifting many of these migrants out of deep poverty, while causing cities from London to Nairobi to struggle in differing ways with the unending influx.

Further, cities are responsible for large fractions of greenhouse gas emissions, for the consumption of natural resources such as water and air, and the resulting discharges of pollution into the environment.  If the battle against climate change is to be won, it will be won in cities.  Cities are also the principal centres for innovation and economic development, both of which are needed to continue lifting migrants out of poverty.

While the roots of urban planning can be traced back more than three thousand years in terms of the master plans of cities, it was the tremendous growth of cities in the late 19th century that transformed that field into considering the many services and affordances that are required for urban dwellers.  But urban planning emerged mainly from the humanities and works primarily through extensive case studies, although it has adopted many digital tools.  The notion of the city as an object of scientific study is more recent and still in its infancy, triggered in part by developments in complexity theory such as network theory, scaling laws, and systems science, and the growing availability of urban data.

Urban scaling laws have been explored at least since the early 20th century, when cities were found seen to be an example of Zipf’s law. In this case Zipf’s Law states that “for most countries, the number of cities with population greater than S is proportional to 1/S”.  The understanding of scaling was greatly expanded in recent years by the works of West and Bettencourt and Batty.  Their work showed that many properties of cities such as the number or lengths of roadways, the numbers of amenities such as restaurants, and so forth follow scaling laws over population ranges from ten thousand to tens of millions.  Moreover these scaling laws have exponents in the ranges 0.85 to 1.15 that show large cities to be more productive, innovative, efficient in energy consumption, expensive, but also better paying than small cities.  Likewise negative attributes such as crime, disease, and pollution also scale superlinearly, that is they don’t rise in strict proportion to the increase in city size. For example, GDP is proportional to the Size (S) of a city raised to a power that is slightly greater than 1, thus S1.15, while other attributes like energy consumption per capita scale sublinearly, at S0.85. Network laws also describe well the evolution over long time scales of roadways and railways in cities.

While scaling laws and network laws have great descriptive power, opinions vary on whether they apply across different countries or have predictive power.  That is, the scaling of attributes is a snapshot of frequency versus size at a given time.  If a city grows and “moves up the scale”, it may not achieve, in the short term, all of the positive benefits and negative impacts described.  Nor do the laws provide explanations for the observed behaviours.  Nonetheless, this is an important area for planners and developers seeing their cities growing or shrinking.

As urban data has become more pervasive, it is now possible to study cities as complex systems of interactions.  We may view the city as a myriad of interactions among its inhabitants, its infrastructures and affordances, its natural environment, and its public, private, and civic organisations.  Some of these interactions involve the exchange of goods or services for money, but many of them involve the exchange or transmission of information, enabling inhabitants and organisations to make choices.  Public transportation is often studied in this way, revealing for example that small and medium sized cities evolve networks enabling commuting between small numbers of residential and business districts, while very large cities, such as London, have much richer networks that permit greater flexibility in where people live and work.

The operation of cities is also modelled using synthetic populations of software agents that represent the distribution of behaviours or preferences of much larger, real populations.  Such agent-based models, with agents representing patterns of origin, destination, travel times, and modality preferences, are used to examine the overall impact of new services such as London’s Crossrail.

As the Internet of Things provides greater visibility into how inhabitants choose to exploit the opportunities offered by a given city, we may hope to discover abstract principles about how cities work.  We may envision being able to construct agent-based models representing the complete spectrum of choices a city’s inhabitants make at timescales from minutes to years and spatial scales from meters to kilometers.  Equally, given the increasing availability of real-time information, we might hope one day to understand the effective use of a city’s services in terms of a Nash Equilibrium, a game theory concept (often used to describe poker games), where no player can gain anything by changing their chosen strategy if other players don’t change theirs – all the players’ strategies are optimal.  These are far in the future, but the EC’s Global Systems Science programme is the beginning of that journey.

Useful links

OECD work on urban development

The OECD is organising a Workshop on Complexity and Policy, 29-30 September, OECD HQ, Paris, along with the European Commission and INET. Watch the webcast: 29/09 morning29/09 afternoon30/09 morning

Playing the Long Game: Urban Green Growth, Spatial Planning and Land Use

GGSD 2016 Save the Date A4_Darker-150x213Ryan Parmentier, OECD Environment Directorate

Imagine you have an important decision to make. Do you carefully consider the long-term implications of each possible option or do you act impulsively? Would you approach the decision-making process differently if the consequences stretched out to 30 or even 50 years?

Urban, spatial and land use planning professionals repeatedly find themselves in this predicament. There are significant and long-lasting economic as well as environmental impacts of the decisions that are made with respect to transportation, energy, waste, water, buildings and infrastructure. Yet, many land-use interventions do not properly account for environmental consequences. The decisions made regarding where and when roads are built, and the density, type and location of buildings all have long-term impacts on air pollution, greenhouse gas emissions, biodiversity and water use. Even seemingly indirect or unrelated decisions on the taxation of property can have a significant impact on environmental outcomes. As a result, the innumerable decisions related to land use – both big and small – need to be made so that growth is green.

This is an easy thing to say, but an increasingly challenging thing to do in a world that is changing incredibly fast. As a recent article on urban planning in the Economist pointed out, the city of London took 2000 years to grow from 30,000 to almost 10 million people. Cities in China are achieving the same growth rate in just 30 years! The pressures to deliver the services required by an expanding global population are challenging and the long-term environmental consequences are becoming impossible to ignore.

The 2016 OECD Green Growth and Sustainable Development Forum will tackle these very issues under the theme of “Urban green growth, spatial planning and land use”. An engaging agenda is being developed that will explore, through examples, whether existing land-use policies support green growth. The Forum will discuss the challenge of urban sprawl and the associated social and environmental consequences. It will examine the green growth challenges at the city level, giving consideration to innovative approaches and best practices. Issues related to resilient infrastructure, tracking and measuring progress on green growth as well as the role that finance and tax policies can have on land use outcomes will also be discussed. One session will focus on the OECD’s Inclusive Growth in Cities Campaign and discuss how to build cities that are both inclusive and environmentally sustainable.

The Forum will consider green growth at all relevant levels, i.e. from both the national and sub-national perspectives and part of the broader international agenda. The latter includes the Sendai Framework for Disaster Risk Reduction 2015-2030, the United Nations Sustainable Development Goals, the Paris Agreement on climate change, Habitat III (the United Nations Conference on Housing and Sustainable Urban Development – Quito, Ecuador 17-20 October, 2016) and the 2017 Annual Green Growth Knowledge Platform Conference on resilient infrastructure that will be hosted by the World Bank.

The wide-ranging issues related to land use and the broader international agenda clearly demonstrate that to be successful, co-operation is crucial. This includes co-operation across local, regional and national levels to effectively green urban and spatial planning as well as land-use policies and decisions. Enhanced international co-operation is becoming urgent. This is particularly relevant in a world that is facing increasing uncertainty. There will be growing pressure and a natural instinct to continue to make decisions that benefit the short term when the future is uncertain. But now more than ever, we need to work together to make sure that does not happen.

Useful links

The 2016 OECD Green Growth and Sustainable Development (GGSD) Forum: Urban Green Growth, Spatial Planning and Land Use Paris, 9-10 November

Cities and Green Growth: A Conceptual Framework”, OECD Regional Development Working Papers 2011/08

New Approaches to Economic Challenges in a Century of Cities

NAECRolf Alter, Director of the OECD Public Governance and Territorial Development Directorate @raltergov

We live in the century of cities. In OECD countries, two out of three people live in cities with 50 000 or more inhabitants. Outside the OECD, the share of urban residents is currently slightly lower, but urbanisation is progressing rapidly. While today over half of the world’s population lives in urban areas, the United Nations estimate that the global urbanisation rate will reach 60% by 2030 and 70% by 2050.

Cities are important drivers of economic performance, and their contribution can be expected to increase. Metropolitan areas with more than 500 000 inhabitants generate 55% of OECD countries’ GDP and more than 60% of their economic growth. Due to agglomeration economies and high levels of human capital, most cities have higher productivity levels than their countries as a whole. As many OECD countries have seen declining rates of productivity growth in recent years, utilising the full potential of productivity-increasing agglomeration effects can create new sources of growth.

Cities matter not only for the economic performance of a country; they also play a crucial role in determining the well-being of their residents. This is recognised prominently in Sustainable Development Goal 11, which calls for cities to be inclusive, safe, resilient and sustainable. It is also at the heart of the “New Urban Agenda”, to be launched at the UN-Habitat III Conference in October 2016 and an opportunity to reinvigorate our collective commitment to address urban policies at all levels of government.

Already today, many cities are desirable places to live and continue to attract new residents. Cities often provide better and more specialised services than rural areas. They generally have better transport connections and more diverse consumption opportunities. Most cities also offer greater cultural diversity and other amenities than rural areas.

But cities also face challenges in the form of agglomeration costs. Some are directly measurable economic costs, such as higher price levels; others primarily affect the well-being of residents and are more difficult to quantify in monetary terms. Air pollution and noise levels, for example, tend to be worse in large cities and have negative effects on the health of residents. Most commonly, agglomeration costs affect both economic performance of cities and well-being. A shortage of affordable housing, increasing congestion, long commutes and high crime rates have clear economic costs and also direct adverse effects on well-being.

Cities within the same country often have very different productivity levels and face varying degrees of agglomeration costs. This indicates that policies play an important role in influencing the performance of cities. In particular, the degree to which agglomeration costs can be avoided determines a city’s success. Cities in developing countries face some challenges that developed countries have already tackled, such as the provision of water and access to sanitation for all residents. But reducing agglomeration costs is important everywhere and can improve productivity and well-being even in the most advanced cities.

Agglomeration costs and policies to alleviate them frequently concern the same fields across developing and developed countries, albeit at very different starting points. The provision of affordable housing is a necessary condition to upgrade slums in developing countries and it is also required to make the most successful cities in developed countries more inclusive. Similarly, reducing congestion will increase productivity levels in cities in advanced countries, just as it will increase productivity levels in the least developed countries.

City governance needs to be re-evaluated

Most of the challenges that cities face are complex and multi-dimensional. The policy response requires therefore governance mechanisms which facilitate the development and implementation of complex and multi-dimensional public policies in urban areas. Running a big city requires more than just concentrating on a few specific problem areas in a piecemeal approach to policy. It requires a package of coordinated policies that produces synergies and complementarities.

Effective urban and regional policy calls for co-ordination between many different actors, an area in which until recently many countries have fallen short. In the past, national-level urban policies in OECD countries were often narrowly defined and limited to one or two issues, such as infrastructure provision or the revitalization of distressed neighbourhoods.

Yet a wide range of national policies can have a profound impact on urban development, even if national policy-makers do not view them through an “urban lens”. Better co-ordination of national policies affecting cities can eliminate tensions between various sectorally oriented policies and give clearer signals to city leaders, empowering them to work more effectively with each other, with higher levels of government, with citizens and with the private sector.

Empowering cities will in many cases require more efficient city and metropolitan governance. As administrative boundaries are typically based on historical settlement patterns that do not reflect the increasingly inter-connected socio-economic realities in large urban agglomerations, municipal fragmentation makes it difficult to coordinate policies on the local level and puts a brake on growth. OECD metropolitan areas with appropriate governance systems have not only higher productivity, but also experienced less sprawl and greater citizen satisfaction, particularly with transport systems.

Preparing cities for the future

According to the United Nations, urban populations in high-income countries are expected to increase only modestly over the next two decades, from 920 million people to just over 1 billion. Consequently, changes to cities and their urban form will be incremental.

In developing countries, by contrast, the stakes are much higher. Existing cities will need to be modified and expanded, and new cities will need to be built. The importance of actions taken today goes far beyond the 15 years’ time horizon of the SDGs. Housing and infrastructure that will be built to accommodate billions new urban residents will determine urban form for many more decades to come. This is a task that neither city authorities nor national governments can take on alone. It is therefore crucial that the mechanisms chosen to implement the SDGs and the New Urban Agenda take into consideration how choices made in cities today will affect the extent and impact of global challenges such as climate change, the ability to achieve emission reductions and the capacity to adapt to changing circumstances, such as ageing population.

Achieving inclusive growth requires co-ordination of economy-wide and local policy measures to build cities that are both environmentally sustainable and offer the opportunities for personal fulfillment that education, skills and jobs can bring. At stake are our hopes and aspirations for a fairer, more prosperous world. Let’s make sure we ‘get cities right’.

Useful links

OECD work on cities

OECD Directorate for Public Governance and Territorial Development

OECD work on Regional Development

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