Five lessons on counting the costs of sustainable cities

We share lessons learned from our work with UN-Habitat to understand the financing needed to achieve SDG 11 at the city level.

February 7, 2020
Mihir Prakash, John Custer
The densely crowded, colorful apartment blocks of Hong Kong’s so-called “Monster Building,” built in the 1960s, contrast with a more modern high-rise apartment building on the left. Photo by Denis Ng on Unsplash.

The densely crowded, colorful apartment blocks of Hong Kong’s so-called “Monster Building,” built in the 1960s, contrast with a more modern high-rise apartment building on the left. Photo by Denis Ng on Unsplash.

Although progress has been made, we are still not on track to achieve the Sustainable Development Goals (SDGs) by 2030, according to the United Nations itself. Sustainability challenges are particularly visible in cities where issues of housing, transportation, and infrastructure show limited signs of improvement.  

As over 2,000 delegates gather this week at the 10th World Urban Forum in Abu Dhabi, we’d like to share five lessons we learned through our Counting the Costs project with UN-Habitat to understand the financing needed to achieve SDG 11 (sustainable cities and communities) at the city level. Our report, pilot methodology, and data is available here.

World Urban Forum participants: Join our event in Abu Dhabi, The Innovation-Data-Finance Nexus, on Tuesday, February 11th, from 16:15-17:30 GST.  

With more than half of the world’s population now living in urban areas, the SDGs’ greatest impacts will be felt—or not felt—at the city level. Unfortunately, resource mobilization looks to be especially difficult for cities. The absence of city-level data makes it particularly challenging for local leaders to assess financing gaps for their specific contexts.

While global estimates of shortfalls in annual resourcing of infrastructure and basic services exist, such as McKinsey’s estimate of USD $1 trillion annually, they do not do justice to the ‘soft investments’ in institutional infrastructure and human development required to make SDG 11, Sustainable Cities, a reality.  

As the smallest units of self-governance with the density to improve qualities of life at scale, city expenditures are a comprehensive approach to public spending that includes ‘hard investments,’ or capital investments in infrastructure, as well as the ‘soft investments’ that current methods fail to capture. To overcome this limitation, AidData partnered with UN-Habitat on the Counting the Costs project to develop a pilot methodology that better estimates the total resources required to achieve SDG-11 at the city level.

Since a bottom-up approach to costing sustainable development does not yet exist, we took a consultative approach to establish a baseline for achieving SDG 11. Given time and resource constraints, we focused on five thematic areas: housing, transportation, green public spaces, solid waste management, and governance and planning. Our methodology was then tested on 149 small, medium, and large cities in five countries: Malaysia, Colombia, Bolivia, India, and Sweden.

(We intended to include cities in Cote d’Ivoire as well to test our methodology in a low-income country, but severe data limitations did not permit this. More information on our overall methodology, country-specific adjustments, and the data we collected can be found on the project page.)  

Five lessons learned:

1. Small- and medium-sized cities need sensible investments in order to grow not just in size, but sustainably.

The total cost of providing adequate and affordable housing in small- and medium-sized cities is cheaper by an order of magnitude when compared to costs for a large city. Although these numbers are likely a function of large populations residing in big cities, as well as the prices of land today, it is also an indicator of how severe the costs can become if inaction persists over time. However, this does not mean that investments should not be made in large cities. Rather, due attention needs to be paid to small- and medium-sized cities, and sufficient investments that adhere to the principles of sustainability need to be made now, before these cities grow in size and the economies of scale that sustainable urbanization offers are diminished.

2. Pathways to sustainability must start with measuring the status quo at the urban level.

Urban data is hard to come by. National statistical systems do not gather sufficient information that can be used at the local level for land management and planning. Information on the length and condition of roads, the areas under green public space use, and the capacity of current solid waste management plants and landfills was extremely difficult to capture. In cases where cities recently developed a master plan, this information was relatively easier to source. But plans are rarely available for small- and medium-sized cities. For example, we could only find one planning document for Malaysia’s capital city of Kuala Lumpur.
Medium- and long-term plans, driven by data, are the backbone of local sustainable development. Governments need to invest in measuring the status quo, so that evidence-based pathways to sustainability can be established. Alternative approaches to bridging these data gaps should also be pursued; for example, earth observation methods could help provide more and better data than ever before for cities, as we explore in a forthcoming paper (to be published Monday) with the Group on Earth Observations (GEO).

3.  Rapidly growing medium-sized cities need investments in governance and planning.

In our research, we found that cities with the least available information were also cities that did not have strong local planning and governance institutions. In some cases, we saw development plans that were commissioned by higher level governments but had limited connections to local agencies. Creating specialized agencies (such as planning departments) in rapidly growing medium-sized cities that can develop locally relevant plans and regularly monitor progress towards those plans is imperative to achieving urban sustainability. For example, in Sweden, all cities have relevant governing authorities responsible for local planning who closely monitor statistics on housing, transportation, and report them into a national database. For this reason, Sweden had good data available at the local level.

4. There are no “one size fits all” plans; standardized costing methodologies still require highly localized inputs.

Creating a standard methodology to determine urban sustainability costs has its challenges, as no two cities are alike, even within the same country. Establishing a baseline took much deliberation, and we observed a fair amount of disagreement among experts on what constitutes a baseline. For example, we decided that cities should, at the very least, have a functioning bus system to achieve ‘public transportation access for all,’ a target within SDG 11. Others may disagree with this assumption, and rightly so—for larger cities, the new baseline may be a Mass Rapid Transit System. For cities that face terrain challenges due to their mountainous or riverside location, the baseline may be alternate modes of transportation. Ultimately, any financial exercise (whether costing or budgeting) will require significant local inputs to make it contextually relevant and accurate.

5. Funding will need to be mobilized from new sources to close the public sector financing gap.

The amount of resources that will be required to achieve the SDGs in cities by 2030, no matter what the assumptions or context, is far greater than what governments are able to publicly fund currently. To bridge the financing gap, cities should explore policies and partnerships that (1) enable  to more effectively capture tax revenues and grow their tax bases and (2) mobilize privately-held resources towards common goals while safeguarding the public interest.

Mihir Prakash served as a Senior Research Analyst at AidData from 2018-2020.

John Custer is AidData's Communications Manager.