Every month, around five million people migrate to a city somewhere in a developing country in hope of improving their lives and the lives of their children. Cities offer opportunities but also concentrate risk, and climate change promises to exacerbate risk and put those opportunities in jeopardy. By 2050 flood damage in coastal cities is expected to reach $1 trillion a year, and cities in developing countries will suffer the highest losses relative to GDP.
On 10 June the Technical Expert Meeting of the UNFCCC negotiations in Bonn discussed specific ways of enhancing climate action in the urban environment.
To avoid devastating consequences, we must invest in resilience and promote aggressive mitigation efforts. Cities offer a unique opportunity to tackle climate change. Today cities account for two thirds of the world’s overall energy consumption and about 70% of global greenhouse gas emissions.
As cities in the developing world grow at record pace there is a unique window of opportunity to apply a climate lens to urban development and support cities as they set themselves on a sustainable and resilient growth path.
Building resilient and livable cities is key to avoiding a 4-degree world and securing prosperity. If the world’s cities embark on a low-carbon development path, global greenhouse gas emissions could decrease by 30% (or 10 giga-tonnes) – equal to twice the carbon footprint of the entire European Union.
The Low-carbon Livable Cities Initiative
The Low-Carbon Livable Cities Initiative (see the infographic here) supports the cities of the developing world in their efforts to set themselves on a low-carbon and resilient development path. Leveraging the expertise of its many partners, the World Bank Group has designed a series of planning and financing tools that can be tailored to cities’ needs and help them tap their full emissions reduction potential.
Applying a climate lens to cities’ development plans means that, energy savings resulting in lower carbon emissions will free up budget for other sustainable investments, resilient infrastructure will withstand the forces of nature, and citizens will have cleaner air to breathe.
By reaching 300 of the largest developing country cities, the Initiative has the potential to improve the lives of over 700 million people in the cities it will help, and billions globally as emissions are reduced.
When it comes to planning, the first step is to understand the problem at hand.
A recent analysis found that only about 20 percent of the world’s 150 largest cities have even the basic analytics needed for low-carbon planning. Through the City Climate Planner Certification Program the Initiative seeks to address this gap by building a talent pool that will contribute to expanding the quality and capacity of urban climate planning.
The transformational potential of the Certification Program lies in its promise to generate and embed within cities the human resource base to drive evidence-based climate action. City-level greenhouse gas inventories will provide municipal governments with a snapshot of their emissions profile and enable them to identify the mix of policies and investments that will help them achieve their full emissions reduction potential.
Smart planning is only one part of the solution. Many of the world’s municipalities are struggling to keep up with the infrastructure and service needs of their growing cities. On top of that, many cities in the developing world cannot access capital markets to source the necessary financing for sustainable infrastructure.
As cities grow, municipal governments need to broaden and deepen sources of financing, moving beyond traditional public funding to access much larger private pools of savings, particularly in domestic capital markets. An analysis of the 500 largest cities in developing countries shows that only a small percentage are deemed creditworthy – about 4 percent in international markets and less than 20 percent in local markets.
The first step to get finance flowing is to make municipalities more attractive to private investors and help them access markets. The Initiative offers a unique City Creditworthiness Academy to help municipal governments set themselves on the path to access local capital markets directly. It took Lima about five years and $700,000 in technical assistance to achieve investment grade.
Its first sub-sovereign debt financing transactions dates back to 2010, when the municipal government was able to raise $90 million from a local commercial bank, which was invested to finance the city’s bus-rapid transit (BRT) system called the "Metropolitano". After first obtaining a domestic rating, Lima then went on to obtain an international credit rating a few years later.
Cities as Solutions
Considering the important role the urban environment plays in climate change, a “new urban world will define development success towards a low-carbon world,” according to James Close, Director of Climate Change at the World Bank Group. He elaborated at the Technical Expert Meeting on Urban Environment at the UNFCCC Bonn meetings on 10 June that low-carbon livable development plans for cities was the most sensible way forward.
He emphasized three major action points that need to be supported. First, we need to “change the tone of the conversation and get public-private-partnerships going to leverage finance”. Then we need to “think in a transformative manner about city development plans to get the adaptation strategy right,” and finally cities should start “thinking about a carbon price for all their investment planning.”