Urban Development: Sector Results Profile

Challenge

The world’s urban population is expected to double in 30 years (2000-2030), adding 2 billion more people. Built-up urban areas will increase by 1.2 million square kilometers, nearly tripling the global urban land area in 2000. Most of this growth is happening in developing country cities, which are challenged by the need to meet increasing demand for basic services, infrastructure, jobs, land, and affordable housing, particularly for the nearly one billion urban poor who often live in informal settlements, to enable more inclusive development while preventing some of the negative impacts of rapid expansion.

More than 80 % of global GDP is generated in cities. If managed well, urbanization can promote sustainable growth by increasing productivity, allowing innovation and new ideas to emerge, saving energy, land and natural resources.

Cities consume about 2/3 of the world’s energy, and account for about 70% of global greenhouse gas emissions. Cities are both direct contributors to our growing climate challenge and a necessary part of any solution.  As cities develop, their exposure to disaster risk also increases. Almost half a billion urban residents live in coastal areas, increasing their vulnerability to storm surges and sea level rise. Other shocks and stresses to urban systems, including economic downturns, crime, public health epidemics or social upheaval can impact a city’s ability to meet the most basic needs of its citizens, and reverse decades of economic development gains especially in small, fragile states.

Building cities that “work” – green, inclusive, resilient and competitive, supported by strong city systems and governance – requires intensive policy coordination and investment choices, and lies at the core of the World Bank’s work. To improve understanding of the challenges and opportunities of rapid urbanization in developing countries, the Bank has led efforts to consolidate a programmatic approach.

Infrastructure and policy decisions made today will lock cities into urban development patterns for decades to come. The Bank  aims to utilize this “window of opportunity” to make sure urbanization spurs sustainable growth, delivering affordable and reliable basic services, housing, transportation and jobs, and improving quality of life for all, especially the poor and vulnerable.

Solution.

The World Bank’s urban strategy focuses on equipping city leaders with strong systems to enable urban growth to contribute to poverty reduction and shared prosperity. The Bank completed “Planning, connecting, and financing cities-now : priorities for city leaders” in January 2013 to provide mechanisms to plan, connect and finance cities, supporting the Bank’s urban agenda which is structured around five key business lines:   

• Green cities: providing technical and financial expertise to help cities plan for low-carbon, climate resilient growth and access the necessary financing, improve solid waste management systems, and address pollution and livability challenges.
• Inclusive cities: improving access to land, affordable housing, jobs and basic services, economic opportunities and scaling up efforts to upgrade slums, enhance community participation, and tackle urban poverty and social exclusion.
• Resilient cities: strengthening cities’ multi-dimensional resilience and ability to cope with shocks and better manage climate risk, disaster risk, economic shocks and social conflict.
• Competitive cities + urbanization and growth: helping cities attract investment and jobs by improving land markets, connectivity and regulation at the sub-national level, create an enabling environment for business, and better leverage land and real estate assets.
• Strong city systems and urban governance: supporting the urban agenda through strengthening land and housing markets, enhancing municipal finances and service delivery, and increasing the capacity to carry out integrated territorial development policies and land use planning.

Results

Projects achieved with International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) support green, inclusive, resilient and competitive cities across the world, reflecting needs in cities at various stages of urban development.

Green Cities:  In Morocco, the Solid Waste Development Policy Loan Program (a series of loans in 2009, 2011 and 2003 for US$133 million, US$139 million and US$130 million respectively) helped transform the country’s solid waste sector by emphasizing broader social, environmental and economic sustainability in addition to cleanliness in cities. A novel project which aims to improve municipal solid waste management through development policy operations, the project incentivizes municipalities to establish modern and integrated systems. As a result, more than 75 % of the urban population has access to upgraded waste collection services provided by private operators, compared to 40 percent in 2006; and more than 30 % of collected waste is now disposed of in sanitary landfills compared to less than 5 % in 2006. The DPL also improved the accountability of service providers in the solid waste sector through progressive introduction of rigorous social accountability tools such as Citizens Report Cards;  ensuring that public service contracts are posted online; and institutionalizing the right of citizens to access environmental information including those related to municipal solid waste services.

Inclusive Cities: In Honduras, the Barrio Ciudad Project (2005-2103, US$15 million, IDA) helped to improve the quality of life for 56,000 direct and 925,000 indirect beneficiaries, in 21 poor urban neighborhoods in eight rapidly growing cities. Crime and violence prevention activities were mainstreamed into urban upgrading interventions at the community level using a highly participatory and demand-driven process. Improvements include:  (i) increasing households' access to sanitary sewage system from 25% in 2005 to over 81% in 2013, incorporating 2,291 new households into the sanitation system; (ii) reaching universal access to potable water in 2013 (up from 90% in 2005); (iii) increasing the percentage of households with public lighting nearby from 61% in 2005 to more than 96% in 2013; (iv) increasing households' access to paved and improved roads from 38% in 2006 to 72% in 2013; (v) building retention walls as land slide and flood mitigation measures. In terms of security, the share of households perceiving themselves as safe increased from 49% in 2005 to 54% in 2013.

Resilient Cities: In Vietnam, the Ho Chi Minh City Environmental Sanitation Project (Nhieu Loc-Thi Nghe Basin) Project (2001-2012, US$248 million, IDA) supported the transformation of a once-polluted Nhieu Loc-Thi Nghe canal running through the city’s central business district into an attractive place for people and businesses, while controlling wastewater and floods. 1.2 million people now benefit from a modern sanitation and flood control system that is a model for other waterway clean-up projects. The project supported the government’s plan to run a sewer interceptor pipe for 8 km under the canal, overcoming technical and other difficulties. The project’s success has also added to the city’s emerging reputation as an economic hub offering a high quality of life.

Competitive Cities: In Russia, the St. Petersburg Economic Development Project (2003-2014, US$ 101.0 million, IBRD)  contributed to the city's local economic development through a combination of policy measures (for developing SMEs, land/real estate markets, and city financial management) with investments to the rehabilitation of nine major cultural heritage sites. The project also introduced a successful Cultural Investment Facility mechanism replicated in other Bank-lending operations that provided competitive, demand-driven grants to cultural institutions in support of their small-scale priority investments.  These efforts combined with initiatives by the city and robust economic growth have translated into positive local impacts.  From 2002 to 2007 the number of SMEs more than doubled from 96,900 in 2002 to 228,000 and the number of private transactions for land and real estate also more than doubled from 90,400 in 2002 to 212,300 in 2007.  During the life of the project the city has maintained an investment grade credit rating. 

Strong city systems: In Tanzania, the Strategic Cities Project (2010-2015, US $163 million, IDA, with a US$ 50 million additional financing under preparation) is the Bank’s first support for the government’s decentralization policy. All urban infrastructure are being procured, managed, implemented and maintained by local governments in a decentralized manner. Tanzania’s first integrated GIS-based computerized urban management and revenue system was introduced, including tax reporting, revenue collection and urban planning. Infrastructure realized so far includes 123km of roads, 15.10km of drainage, 3 landfills and 6 bus/lorry terminals, with an estimated 620,837 direct beneficiaries to date.

Strengthening urban governance: In Pakistan, the Punjab Municipal Services Improvement Project (2006-2013, US$ 50.0 million, IBRD) introduced a culture of performance management across 105 local governments (LGs) in Punjab, Pakistan. It has helped operationalize systems and business processes, which in turn have led to improved governance, transparency, and accountability in partner LGs. Sub-projects implemented in 29 urban centers have benefitted over 1.66 million citizens, with services prioritized through a demand-driven planning process. Under the Cultural Heritage component, careful social mobilization ensured citizen engagement in heritage restoration; achievements include: (a) provision of new electrical, communication, water supply, storm drainage, sewerage, and gas supply networks; and (b) rehabilitation of the urban fabric through facade and street improvements. 

Bank Group Contribution

The World Bank’s urban portfolio has grown to meet the challenges of rapid urbanization.  IDA commitments under the Urban Development theme more than doubled, from an average of US $664 million a year in FY2004-2008 to US $1.668 billion in FY 2009-2013. IBRD commitments for the same time period rose from an annual average of US $1.487 billion to US$2.439 billion. Such lending aimed specifically at urban development has also grown as a percentage of total IDA new commitments, from 6.4 % in FY2004-08 to 11.0 % in FY2009-13.

Investment financing is provided for basic services, housing, infrastructure, urban upgrading, municipal governance, environmental improvements and adaptation, and local economic development including cultural heritage. Technical assistance and analytical work have also grown, including through the World Bank Institute, where the urban program helps build client capacity for urban development.

Partners

Many urban development projects are funded and implemented in collaboration with partner organizations, including Agence Française de Développement (AFD), Australian Agency for International Development (AusAID), Austria-World Bank Urban Partnership Program on Strengthening Local Governments in South-East-European Countries, Bank-Netherlands Partnership Program (BNPP), Cities Alliance, Climate Investment Fund, German technical cooperation (Gesellschaft fuer Internationale Zusammenarbeit, GIZ), Global Facility for Disaster Reduction and Recovery (GFDRR), Haiti Fund, Japan Policy and Human Resources Development Fund (PHRD), German Development Bank (KfW), Korean Green Growth Trust Fund (KGGTF), Multi-Donor Trust Fund (MDTF) for Sustainable Urban Development, and Spanish Trust Fund for Latin America and the Caribbean (SFLAC).

The joint work program between the Cities Alliance, the World Bank, the United Nations Human Settlements Programme (UN-HABITAT) and the United Nations Environment Programme (UNEP) aims to help cities address challenges to climate change by capturing current knowledge on the issue and help local and national decision-makers incorporate climate change adaptation and mitigation into their urban planning.

Partnerships have been formed and support received for global analytics and operationalization of the urbanization and green growth agenda from the Government of Korea, Singapore, Switzerland, and the UK, with strong partnerships/MOUs with C40 and Rockefeller Foundation.

Moving Forward

The World Bank has launched several initiatives to address development challenges associated with urbanization:

• Urbanization Reviews are country diagnostics to help better understand how different actors coordinate their investment decisions in urban settings across different regions and stages of development – have built the evidence base on the patterns of urbanization and urban growth. Partners such as DfID and SECO, among others, are supporting this work through the Global Urban Data program which will strengthen the evidence and analytic methodologies to examine patterns of urbanization and help related policy and investment decisions.
• Low Carbon Livable Cities (LC2) Initiative provides planning and technical support for cities interested in developing low carbon action plans and projects and financing strategies to get the necessary investment capital flowing.
• City Creditworthiness Academy provides city governments with targeted technical assistance and capacity building activities, helping a city transition to creditworthiness in order to self-finance new investments.
• Inclusive cities program works to reconceptualize inclusive cities, moving beyond traditional urban upgrading to multi-sectoral approaches, bringing social and economic inclusion fully into the approach and moving upgrading from the current after-the-fact "curative" approach to prevention.
• Resilient cities initiative, jointly with GFDRR, is designed to help cities adapt to a changing climate and understand the challenges they face. Multiple partners are being consulted to assess the possibility of developing common tools and methods for all to use going forward.
• Competitive cities knowledge base, initiated jointly with the Bank’s Finance and Private Sector Development teams, analyzes the determinants of competitiveness of cities, helping city leaders prioritize public investments to promote competitiveness, attract  investment and jobs, and support financing and implementation strategies.

 Plans are being explored to engage in:

• Global Urban Extent project, which will develop a standard definition of urban extents to be applied globally, to create a publicly available database for monitoring and analyzing changes in urban extents and population locations and densities
• Urban land and housing program, which will develop diagnostics and practical policy advice that draws from new information sources, such as earth observation, and from improved tools and frameworks for urban land use and transport integration in order to will help policy makers find evidence-based solutions to providing urban land and affordable housing.

The Bank is also partnering with external institutions to engage in knowledge exchange and capacity building activities in areas including metropolitan strategic planning, municipal finance and governance, urban service delivery, safe and resilient cities, and new tools such as earth observation.

Beneficiaries

“This [the Barrio Ciudad Project] is the best thing that has happened to us.  [Barrio La Roca in Puerto Cortes] is one of the most violent and difficult neighborhoods, people have access to electricity, water, sewerage, roads and a kindergarten for the first time in their lives…we now have public lightning 24/7, people feel safer, they go out, people socialize and the community is more united”. In the Colonia Miguel Yanez Rios in Villa Nueva, a resident stated that “The Mara 18 [local gang group] was here, now they are gone thanks to the Project”.  “Now the children will not have to play in the streets, they can do it in a safer area. Now they will not be in such danger. We will be at ease knowing that our little ones are not exposed to all kinds of harm, and when our children are safe, we are happier” says Juana Márquez, a mother in Puerto Cortés.