The world is rushing headlong toward urbanization. By 2050, according to the United Nations, there will be almost 10 billion people living on the planet and 68% of us are expected to live in urban areas. But what happens when a city gears up for urbanization and gets — the reverse? What happens when rising cost of living, lost industries, political crises or climate shocks push people out of cities? According to the World Economic Forum , the result is deteriorating infrastructure and unsustainable financial models that leave taxpayers footing the bill — for a long time. How can mayors and city planners ensure that the infrastructure they put in the ground today will be resilient to demographic shocks and stresses tomorrow[1]? Flexible, efficient, and adaptable service delivery models are the only way for city planners to address the needs of citizens today and in the future.
In many cities “deurbanization” is already the norm. Three of the largest US cities — New York, Chicago and Los Angeles — are losing citizens on a daily basis. Los Angeles and Chicago respectively lost 201 and 161 residents a day on average in 2018.
Could similar trends happen in emerging markets? At the International Finance Corporation, we are working with cities to address these challenges. We have found that it’s imperative we assess the unique characteristics of each city, anticipate their vulnerabilities, and seek to build their resilience to shocks and stresses. Cities in emerging markets are often vulnerable to political unrest and climate impacts that impact migration patterns. But even without such shocks, we need to take heed that global trends are not consistent across markets.
According to the UN, just nine countries will make up more than half the projected population growth between now and 2050 — eight of them in emerging markets (the Democratic Republic of the Congo, Egypt, Ethiopia, India, Indonesia, Nigeria, Tanzania and Pakistan). The United States is the ninth. However, 55 countries are projected to experience population declines of 1% or more during the same time period, and 26 may see a reduction of at least 10%. China, for example, is expected to see a decrease of 31.4 million people, or 2.2% of its population, between 2019 and 2050. Such declines, no doubt, will impact cities.
But urbanization is not the only trend affecting demand for urban service delivery. With falling fertility rates and rising life expectancy, the world’s population is growing older and putting more pressure on social protection systems. The UN predicts that in a mere 30 years, 48 countries will have fewer working-age people (25–64) than older people (65+), a trend that is sure to impact city demographics. Older urban populations will require more age-friendly approaches to service delivery, especially in healthcare and mobility.
And what about technology? A 2019 study led by Gregory Erhardt from the University of Kentucky found the introduction of ride-hailing services like Uber and Lyft have had a drastic impact on several American cities. The study noted that ride-hailing effects are so substantial that if the current trend continues, demand for bus service in the 22 largest cities studied could decline by nearly 13% over the next eight years.
Cities need to focus on flexible solutions that can address the evolving needs of citizens over time
Given the long life of infrastructure assets (the London Underground became the world’s first metro system in 1890 and Hungary’s Budapest Metro became operational in 1896), the decisions made today will have lasting impacts on city budgets and service delivery. Demographic shocks and stresses can create stranded urban assets and leave tax payers footing the bill for obsolete or under-used infrastructure.
Cities must build flexibility into urban service delivery solutions. Flexible and efficient transport systems that couple conservatively-sized large infrastructure assets like metros should be coupled with more flexible public assets like busses, bicycle lanes, and pedestrian walkways that can be rerouted and rezoned if necessary.
Data analytics and citizen feedback can help cities make better decisions
As a starting point, data analytics can provide cities with important real-time information about the unique circumstances of their city and avoid relying on dated or generalized information when making scale and design decisions about infrastructure projects. Data analytics also provide the opportunity for cities to conduct scenario analysis which can help city planners make better decisions for the future; for example, should a metro line be extended from its initial plan or be truncated and complemented with flexible bus routes?
Cities must also engage their citizens when designing infrastructure and service delivery solutions to ensure scarce public resources are not invested in suboptimal infrastructure that doesn’t address citizen needs. McKinsey has noted that asking citizens for their input on the development of India’s smart city plans from the very beginning not only elicited citizen support throughout the process but also improved the quality of execution and provided new ideas.
How IFC is helping
IFC is here to help cities think through complex urban challenges and to help design, implement and finance resilient and inclusive solutions. IFC works in partnership with mayors and city officials and offers investment and advisory solutions for key urban sectors such as urban transportation, water, solid waste management, affordable housing, energy efficiency, and climate resilience. Under the Cities Initiative, IFC has invested and mobilized over $8 billion in more than 250 projects globally during the past decade.
IFC also provides advice to industry and governments on how to better manage community interests and expectations. Our Sustainable Infrastructure Advisory works on strategic stakeholder engagement to ensure that citizen needs and concerns are heard from the start of a project onwards, ultimately leading to better project outcomes for all. As part of this, IFC works with municipalities to help them have constructive dialogue with the affected population and build capacity so they can invest smarter.
For more on IFC’s work in infrastructure, check out ww.ifc.org/infrastructure and on Cities, check out www.ifc.org/cities
[1] Drastic or prolonged changes to the size, structure, and distribution of populations, as well as spatial or temporal changes in response to birth, migration, aging, and death.
