Urbanization in Asia and the Pacific

Curt GarriganChief, Sustainable Urban Development, Environment & Development Division

2

Make cities inclusive, safe, resilient and sustainable

Source: Otto, UN Environment, Cities Unit

2030 Agenda and Cities

3

Source: Otto, UN Environment, Cities Unit

2030 Agenda and Cities

City-level action

is critical to

deliver against

most SDGs

Renew

ables

(decentralized);

W

aste to E

nergy;

District E

nergy

System

s; Energy

Efficiency in

Buildin

gs a

nd

Transport

Access to clean

water; R

esource

efficiency

Monitoring and

reporting on

water use

Green O

pen

Space;

Ecosystem

-

based solu

tio

ns;

Rural –

Urban;

Resource

effic

iency to stay

in pla

netary

boundarie

s

Particip

ato

ry

governance;

Open d

ata

Circular

Econom

y and

waste

managem

ent

Resource

efficiency;

Sustainable

Lifestyles

Environm

ent and

health lin

kages

Reduced

em

issio

ns and

pollu

tio

n in

citie

s

Accid

ent

preventio

n and

preparedness

Em

issio

n

red

uctio

n

Lo

w-carb

on

tech

no

lo

gy

Seco

nd

ary

im

pacts

Green financial

instruments

Green

technology

Waste collection

in coastal cities

to reduce m

arine

litter

Vu

ln

erab

le

gro

up

s an

d

hu

man

rig

hts

Resilient,

resource

efficient , low

emission city

infrastructure –

waste, water,

transport, IT

Safe, inclusive cities; Reduced

vulnerability from increased

resilience; Access to basic

services

Consum

er

inform

ation and

education for

sustainable

lifestyles

Urb

an

Agric

ultu

re;

Food W

aste

;

Rura

l Urb

an

Connectio

n

; in

frastr

uctu

re

to a

llow

movem

ent of

goods a

nd

work

ers

Gre

en

jobs in c

itie

s

Inclu

siv

e c

ities

4

Asia-Pacific SDG snapshot: baseline status

Regional snapshot and SDG dashboard

-10.0 -5.0 0 5 10

1 No poverty (5)

2 Zero hunger (5)

3 Good health and well-being (9)

4 Quality education (3)

5 Gender equality (3)

6 Clean water and sanitation (3)

7 Affordable and clean energy (4)

8 Decent work and economic growth (4)

9 Industry, innovation and infrastructure (4)

10 Reduced inequalities (1)

11 Sustainable cities and communities (2)

12 Responsible consumption and production (2)

13 Climate action (0)

14 Life below water (1)

15 Life on land (1)

16 Peace, justice and strong institutions (3)

2000 2015 2030

Progress made since 2000

Progress needed to achieve target in 2030

Regressed since 2000

The number in parenthesis is the number of indicators used to calculate the index

Each bar or arrow indicates :(a) green/ red– average progress made/regression since 2000 (b) blue – additional progress required to achieve the 2030 targets from now. The average progress for each goal is normalized to a scale of 0 to 10. In principle, because by 2015 half the time had elapsed, the region should already have progressed up to the midpoints. The distance from the farthest left point on each bar/arrow to the midpoint can therefore be considered “unfinished” work. For some goals, there were

Target

midpointexpected value

unfinishedwork

few (or no) indicators with data available. The results could change significantly if more dimensions (indicators) were covered. Therefore, results should be interpreted with caution.

GOAL

2000 2015 status2030

Target

4

Asia-Pacific SDG snapshot: baseline status

Regional snapshot and SDG dashboard

-10.0 -5.0 0 5 10

1 No poverty (5)

2 Zero hunger (5)

3 Good health and well-being (9)

4 Quality education (3)

5 Gender equality (3)

6 Clean water and sanitation (3)

7 Affordable and clean energy (4)

8 Decent work and economic growth (4)

9 Industry, innovation and infrastructure (4)

10 Reduced inequalities (1)

11 Sustainable cities and communities (2)

12 Responsible consumption and production (2)

13 Climate action (0)

14 Life below water (1)

15 Life on land (1)

16 Peace, justice and strong institutions (3)

2000 2015 2030

Progress made since 2000

Progress needed to achieve target in 2030

Regressed since 2000

The number in parenthesis is the number of indicators used to calculate the index

Each bar or arrow indicates :(a) green/ red– average progress made/regression since 2000 (b) blue – additional progress required to achieve the 2030 targets from now. The average progress for each goal is normalized to a scale of 0 to 10. In principle, because by 2015 half the time had elapsed, the region should already have progressed up to the midpoints. The distance from the farthest left point on each bar/arrow to the midpoint can therefore be considered “unfinished” work. For some goals, there were

Target

midpointexpected value

unfinishedwork

few (or no) indicators with data available. The results could change significantly if more dimensions (indicators) were covered. Therefore, results should be interpreted with caution.

GOAL

2000 2015 status2030

Target

Progress made on SDGs in Asia Pacific – SDG11 regression

Urbanization Challenges in the Asia-Pacific Region

• Rapid urbanization: half of the region‘s population is urban, representing 60 percent of global urban population; Half of the urban population in low-lying coastal areas

• Population growth in urban areas outpacing infrastructure improvements, housing units and capacities; unplanned urban sprawl and increase in absolute number of slum-dwellers are consequences

• 60-80% of global energy consumption• 75% of region‘s GHG emissions (mostly from energy supply and tranportation); Transport

emissions have doubled since 1970

• 19 of top 20 most polluted cities in Asia and Pacific• Urban areas generate more than 1.2 million tonnes of municipal solid waste/day; estimated

to double by 2025• Weak urban planning and lagging in basic needs for housing, sanitation• Large unmet infrastructure needs; strained resources and environment impact

Urbanization Trend in Asia Pacific (2018-2030)

2018 United Nations, DESA, Population Division

• From 2018 on, more people living in urban areas than rural areas

• By 2050, two 2/3 of the population will live in cities

Urban population at midyear (Thousands)ESCAP, 2017

Projected growth in Asia Pacific Cities

49%44%

40%

35%33%

31%27%

376408

428 438 437 437 440

0

50

100

150

200

250

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450

500

0%

10%

20%

30%

40%

50%

60%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

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2003

2004

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2011

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2013

2014

Num

ber

of p

eopl

e (m

illio

ns)

Sha

re o

f urb

an p

opul

atio

n (%

)

Slum Population in A-P, 1990-2014

Urbanization Trend in Asia Pacific (Secondary Cities)

Urban Expansion in Asia-Pacific Cities

Source: Rockefeller 100 Resilient Cities Initiative https://www.100resilientcities.org/planning-urban-growth-resilient-future/ 100 RC & Marron Institute

Source: https://data.opendevelopmentmekong.net

• Rapid and unplanned urbanization can potentially lead to environmental degradation, increased pressure on natural resources, generation of waste, exposure to pollution and disasters, and vulnerability to climate change.

Urban Expansion in Asia-Pacific Cities

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Primary Energy Demand by Source• Growth rate of region’s primary energy demand:

2.1% per year (World average: 1.5%)• AP’s share of global energy consumption rises to

47% by 2035• AP energy production rises by 52%/ consumption

grows by 60%• CO2 emissions from energy consumption increase

44%• Share of renewable energy in the region’s total final

energy consumption declined from 23 per cent in 1990 to 18.3 per cent in 2014.

• It is estimated that renewables will need to supply 35 per of the region’s total final energy consumption by 2030 to help achieve energy sector emissions reduction targets in the region.

• Most actions will need to be delivered in cities

Energy Outlook for AP (ADB, 2013), BP Energy Outlook 2035 (BP, 2014)

Impacts of urbanization (Energy Demand)

§ 1990- 2015, safe drinking access percentage grew from 74 to 94%; Access to sanitation increased from 44 to 65% (most in urban areas);

§ Almost 94 % with access to improved drinking water – 20 % increase in S&SWA since 1990, but Wastewater treatment as low as 4%;

§ Increasing groundwater stress with unsustainable withdrawals of freshwater; 29/48 countries were “water insecure” in Asia in 2016;

§ Freshwater sources in Asia has been already over-extracted and this situation will be worsened by climate change;

§ Increase in demand for urban water resources by 55 per cent, including in cities that already face water stress and scarcity;

§ Insufficient infrastructure to meet demand for domestic water, manufacturing, and thermal electricity generation. By 2050, 3.4 billion Asians could suffer from water stress;

§ Overall demand for water, food and energy is expected to rise by 30-50 per cent by 2030 (ESCAP, 2017). South and South-East Asia are heavily dependent on irrigation for agriculture which uses more than 80 per cent of freshwater resources. Shifting urban-rural water ratios.

Impacts of urbanization (Water Resources)

68.2 73.794 91.4

33.6 490

50

100

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

pro

por

tion

of p

opul

atio

n (%

)

Figure 1 Proportion of population with access to safely managed

drinking water in three Asia regions

North and Central Asia, total

East and North-East Asia, urban

South and South-West Asia, rural

Data Source: ESCAP data portal.

36.96

30.5 4

26

72.9

0

20

40

60

80

2000

2001

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2007

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2012

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2015

Pro

por

tion

of p

opul

atio

n (%

)

Figure 2 Proportion of population with access to safely managed

sanitation in East and North-West Asia

total population rural population urban population

67.1 67.1 67.1 67.1 67.167.8

68.469.1

69.870.4

71.171.7

72.473.1

73.874.4

2000200120022003200420052006200720082009201020112012201320142015

Pro

po

rtio

n o

f to

tal p

op

ula

tio

n (

%)

Figure 3 Proportion of total population with access to safely managed sanitation in Pacific

27.8

15.9

0

7.52.9

38.1

26.9

0

5

10

15

20

25

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35

40

45

2000

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2015

Pro

por

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of p

opul

atio

n (%

)

Figure 4 Proportion of population with open defecation practice in

ESCAP

total population urban population rural population

Impacts of urbanization (WASH)

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UN Environment, 2016

Domestic material consumption (DMC) by seven subregions

Impacts of urbanization (Material Consumption)

Climate and EnergyProjections and established

pathways to zero energy/zero carbon

Promote policy actions(Graph from Architecture 2030)

Resource EfficiencyResource use and Materials extraction increases with

population growth and infrastructure demand(materials consumption)

Construction mineral extraction from 1992 to 2005 increased by 80%

Impacts of urbanization (Material Consumption)

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• Urban solutions that balance environmental, economic and social considerations

• SDG frameworks to identify inter-linkages and multiple benefits from urbanization

• Integrated Resource Management and planning

Urban Solutions

• Nature-based solutions protect, sustainably manage, and restore natural or modified ecosystems that aim to address societal challenges effectively and adaptively, while providing human well-being and biodiversity benefits

• Increase urban resilience and reduce the frequency or intensity of hazards such as floods, drought, heatwaves, forest fires and tsunamis

• Ecosystem services can support urban living, e.g. expanding urban green spaces such as public gardens and parks can address the urban heat island effect and artificial wetlands can store large volumes of rainfall runoff and reduce flooding

• Reduce resource consumption associated with traditional hard or ‘grey’ infrastructure solutions, e.g. reliance on extracted materials and (often scarce) water resources, carbon-intensive cement used in concrete, loss of biodiversity through over-engineering infrastructure

Urban Solutions

• Weak and unpredictable financing framework for municipalities• Lack of clarity in national policy frameworks to acknowledge,

anticipate and proactively address the challenges and capitalise on opportunities offered by urbanisation (Planned vs. Unplanned growth)

• Siloed institutional arrangements and implementation capacities of cities

• Secondary cities lack capacity in urban planning and financing• Inclusive urban governance is lacking

Urbanization Challenges (Institutional Governance)

Total infrastructure investment needs for the region will reach US$22.6 trillion over the next 15

years (from 2016 to 2030)

Public sector reforms on both tax revenues and expenditures can meet around 46% of this gap (US$121 billion out of

US$262 billion) between current and needed

investments based on baseline estimates

The result is a 54% gap (or US$141 billion) specifically

for private sector infrastructure finance

Urbanization Challenges (Infrastructure Needs)

Infrastructure Needs and Gaps: Asia Pacific, USD Billion 2015 pricesEstimated Current

Investment (2015)

Baseline Estimates

Annual Needs Gap Gap (% of GDP)Total (25) 881 [5.5] 1,211 330 1.7Total without China (24) 195 [3.8] 457 262 4.3

Selected Low to Lower Middle Income

Countries (18) 178 [4.2] 422 244 4.7without India (17) 60 [2.9] 192 132 5.4

Selected Upper Middle Income Countries (7) 703 [6.0] 789 86 0.6without China (6) 17 [2.0] 35 18 1.8

Selected Central Asia Countries (3) 6 [2.9] 11 5 2.3

Selected South Asia Countries (8) 134 [4.8] 294 160 4.7

Selected Southeast Asia Countries (7) 55 [2.6] 147 92 3.8Selected Pacific Countries (5) 1 [2.7] 2 1 6.2India 118 [5.4] 230 112 4.1Indonesia 23 [2.6] 70 47 4.7China 686 [6.3] 753 68 0.5

Estimates within parentheses are number of countries and those in brackets are percentages of GDPSource: based on ADB, 2017

Urbanization Challenges (Infrastructure Needs)

Water and sanitation. Asia-

Pacific’s projected

investment needs in water

and sanitation for 2016-

2030 based on 2015 prices

stands at approximately

US$787 billion, with climate

adjusted estimates at over

800 billion.

Transport. Asia-Pacific’s

investment needs in

transport for 2016-2030

based on 2015 prices stands

at approximately US$ 7,796

billion, with climate

adjusted estimates at over

8,300 billion.

Energy. This sector has the

largest infrastructure-

financing gap. Asia-Pacific’s

investment needs in power

for 2016-2030 based on

2015 prices stands at

approximately US$ 11,689

billion, with climate

adjusted estimates at over

14,700 billion.

Urbanization Challenges (Infrastructure Needs)

The financing challenge would appear to be higher in the second category, named as the "missing middle” where private capital

needs to be supported by public funds.

• first, investments that are more in the nature of public goods – parks, city roads etc., and hence would need recourse to taxes to service debt,

• second, investments that are more privatized in nature (in the sense the consumption is not necessarily joint) but still need capital subsidies - for example, water and waste water, solid waste – where user charges and taxes can be used to service debt, and

• third, pure revenue projects like toll roads where the recourse is directly to user charges to service debt and equity.

From a financing perspective,

urban infrastructure

investments can be divided into three categories

Urbanization Challenges (Financing)

Debt financing depends on the rationality of the intergovernmental

fiscal rules

For cities to have the legal authority to borrow, create, and pay for the use of

the assets over time, and de-risk investments by potential lenders

Policies that empower local governments through rationalizing

intergovernmental flows (Philippines), strengthening own revenues

(Indonesia, Sri Lanka) and financial intermediaries for small and medium

city financing (Thailand)

Smaller and medium cities - invest in in structures to pool these demands and

lower risks through efficient intermediation

As of 2016, global pooled finance mechanisms have raised over USD 2.6

billion for small and medium city infrastructure (FMDV)

Urbanization Challenges (Financing)

Financing instruments which assist in leveraging capital – Fiscal decentralisation

Benefits to developing countries Risks to developing countries Fiscal decentralisation

The design and management of intergovernmental transfers, spending responsibilities and governance mechanisms at different levels of decentralization or devolution have a major role to play.

Can increase the efficiency of public finances and provide municipalities with greater sources of revenue over which they retain control.

Even when cities and regions have built the capacity necessary to generate local revenues, transfers may continue to play an important role in order to supplement local taxation which may not be sufficient to meet spending requirements.

Regardless of the levels of decentralisation in a country, measures are required to ensure appropriate accountability and to balance own-source revenue-raising, intergovernmental transfers and spending obligations among levels of government to reduce risk.

Intergovernmental fiscal transfer rules would need to be rational and predictable, without which planning at local levels would become impossible, especially in cities, where the size of assigned revenues is large.

When fiscal transfers are used, the effectiveness, efficiency, and equity of transfers will depend greatly on design, and be greater when coordination between national, regional, and local governments is strong.

Financing instruments which assist in leveraging capital – debt financing

Benefits to developing countries Risks to developing countries Debt financing

Governments – both national and subnational – can raise private debt capital to finance infrastructure projects.

Creditworthy national governments can collaborate with cities to identify investment priorities and the preconditions to issue national bonds to support them.

Where national debt markets are constrained by a lack of liquidity, national governments should work with capital market authorities and IFIs on creating secondary markets and instruments to reduce the cost of longer-term local currency finance.

As a prerequisite, cities need sufficient own-source revenues for making debt repayments, along with capacity for budgetary, accounting, and financial management.

Risk mitigants such as loan loss reserves, loan guarantees, liquidity facilities, currency hedges, and other credit enhancements are additional elements that can be brought in whole or in part from public agents.

Financing instruments which assist in leveraging capital – PPPs

Benefits to developing countries Risks to developing countries Public–private partnerships

Public–private partnerships (PPPs) can play a role in delivering urban infrastructure projects where governments face technical and financial constraints, particularly in middle- and high-income countries with mature financial systems.

PPPs allocate risks between public and private entities and aim to provide more sustainable financing options and better value for money.

Private sector participation is likely to increase where projects involve commercial returns on revenue-generating assets.

To meet the higher return expectations from private investors than is needed for public finance, the universe of suitable projects for PPPs is limited principally to those that can generate sufficient income-backed returns.

The effectiveness of PPPs has been mixed, and risk of failure depends heavily on appropriate project identification, structuring, contractual arrangements, and government capacity (particularly to monitor liabilities).

Financing instruments which assist in leveraging capital – LVC

Benefits to developing countries Risks to developing countries Land based financing

Land based financing or land value capture (LVC) can help to finance large urban transport and development projects. National governments can provide strong regulatory frameworks and guarantees that enable municipalities to use land value capture for shaping compact urban development.

National governments can also incentivise municipalities to assess and implement LVC under best practice guidance as a condition of allocating national funds to part-finance infrastructure projects. Furthermore, they can be active participants in urban infrastructure and property development in cases where land is controlled by national entities.

While revenue for LVC is locally derived, national legislation and frameworks are critical enablers for creating the revenue stream. Constitutional, statutory, and policy frameworks created by national governments can incentivise LVC financing of sustainable infrastructure by regional and municipal governments. Where urban infrastructure is part-financed by the national finance ministry, the release of national public funds can be linked to effective LVC plans.

Even when local governments are empowered to collect property taxes, higher levels of government often retain the power to set assessment parameters or tax rates which represents a significant risk to the effectiveness of this instrument. Furthermore, in a number of countries where urban finance and decision-making is largely centralised, national bodies use LVC mechanisms to finance local urban investments.

LVC is most risky when combined with an ineffective tax system and opaque property market.

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