Thirty years ago, only 10 cities had populations large enough to qualify as megacities. In the next decade, the number of urban areas with more than 10 million inhabitants is projected to reach 43, an increase of 10 in only 11 years. With cities worldwide already struggling to fund current infrastructure needs, how can they bridge the additional gap in financing that is needed to address the infrastructure challenges of tomorrow?
More than half of the people on Earth today already live in cities, with a full two-thirds of us expected to be inhabiting urban areas by 2050. The United Nations estimates a staggering 90 percent of that growth will be occurring in the developing world, where some 2.6 billion people still don’t have access to reliable infrastructure, including energy.
What will that future look like – and how can cities find the financing and investment resources they need to meet the challenges of a future that’s not yet here? I’m contributing to that discussion this week at the UN World Urban Forum (WUF10) in Abu Dhabi, where Wood are contributing on a number of sessions on advancing a more solutions-based understanding of the interests and needs of all stakeholders involved.
It’s already been estimated that, in the next two decades, the worldwide funding gap for infrastructure could reach well over US $10 trillion. What this means for cities is they need to change their strategies. It’s critical that they define their infrastructure need not by what it is – a roadway, water treatment plant or flood protection asset – but by what it does: provides access to more affordable housing; creates water security for communities; or creates new economic opportunities for vulnerable neighborhoods.
To be successful at scale, cities require resources and investment, but one of the major obstacles today is a gap in financial supply and demand at the local level. While there’s a robust and growing market of innovative financial tools that aim to provide a sustainable resource of funding, the perspective of investors is largely missing. This leads to a divergence in priorities that can be summed up quite simply – there aren’t enough bankable projects.
The presentation of a new “City SDG Investment Prospectus” is among the key highlights of the World Urban Forum. This document – which is being developed with input from the ‘Expert Group on Investing’ launched earlier this year by OECD, the Brookings Institution, UNGC and others – will enable cities to present their policy commitments in the language that investors understand.
Availability of financing is identified as a key uncertainty in Wood’s scenario planning on sustainable urban infrastructure and we are already partnering with many organisations to provide technical guidance. Our initiatives with the likes of Citi, the Global Resilient Cities Network and the UN Global Compact involves working together with the financial sector to accelerate the uptake of sustainable and resilient infrastructure in the market. We are also engaged with the Rockefeller Foundation and Meridiam on development of an investment screen framework to help shape and identify infrastructure projects that can provide communities with resilient solutions and added co-benefits.
At Wood, our collaborative teams are providing integrated solutions to future-proof projects that help our customers and benefit society, while also supporting the UN’s Sustainable Development Goals.
We are leveraging living shorelines into coastal infrastructure projects with our partner SCAPE. Our flood risk management and weather forecasting solutions are helping communities design and build sustainable infrastructure. Cities are improving asset efficiency and reliability through Wood’s cutting-edge digital innovations. And in Washington D.C., we’re supporting a consortium that’s developing resilience design guidelines for the US capital.
The results achieved in Abu Dhabi will help shape the direction of the next key gathering – the 26th session of the Conference of the Parties (COP26) of the UN Framework Convention on Climate Change, which is set for November 2020 in Glasgow, Scotland. Wood will be there. In the meantime, our teams remain focused on getting cities ready for tomorrow.