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.
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.
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Originally published at oecdinsights.org on October 20, 2016.