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Green Neighbourhoods as a Service

Green Neighbourhoods as a Service

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Green Neighbourhoods as a Service

A Bankers without Boundaries made a proposed mechanism to address the challenge of scaling energy efficiency measures in the urban built environment. It is suggested in this article as a Green Neighbourhoods as a Service for all concerned a welcome step in the right direction.

The above image is for illustration and is of Climate-KIC.

Reducing net energy consumption in the built environment is one of the most significant and hardest problems for cities to solve to meet net zero carbon timelines. In our experience, typically, these emissions contribute 30-40% to a city’s total CO2 emissions. In this article we look at why it is so challenging and propose a mechanism to kickstart retrofit at scale.

A Challenging Problem

Reducing emissions in the built environment is an extremely complex problem with multiple components. Many of these complexities arise from an underlying assumption, in nearly all jurisdictions, that solving the problem is the responsibility of individual property owners. Multiple individual actors must make independent decisions leading to a fragmented response to the challenge.

Even ignoring this fragmentation, targeting individual property owners with economic incentives alone is failing anyway due to two interlinked problems

  1. The value of returns (energy savings) is not connected to the capital spend. Returns occur over many decades and a building owner must be confident that they will enjoy those benefits for at least 30 years to have a hope of creating a positive economic case. Most building owners cannot commit to owning the property over that period; therefore, the net present value of energy savings is undervalued by the capital spender relative to its true worth.
  2. Even assuming the building owner can commit to 30 years of ownership, the economics of delivering deep decarbonisation in a way that is attractive to citizens (Deep, Community Retrofit) has poor economic returns (negative IRR) even assuming a 30-year investment period.

Figure 1: Not all retrofit is created equal

If economic rationale alone is not enough, decision making and financing must balance competing goals – economics, decarbonisation, community benefits and social & health impact, which requires a broader viewpoint than an individual building owner.

As a result, current solutions, which are frequently designed to be adopted by property owners, are failing. This has led to the paralysis we see in the market with negligible levels of building level improvements which improve energy efficiency (“retrofit”) occurring, despite various subsidy schemes being offered and financing costs being at historically low levels for some time.

Most existing solutions start with a premise that since it is down to individual property owners to commission work on their own properties, it is also therefore assumed that the energy and maintenance savings benefit accrues to them too and that this should form the economic rationale to carry out the project.

Even after discounting other barriers to entry (complexity of deciding what work to commission, project managing multiple trades, applying for subsidies, the misalignment of landlord and tenant incentives in the rental sector) the economic returns are not high for ambitious retrofit and require the property owner to remain in the property for decades to realise them. Therefore, the net present value of these savings is not being leveraged to solve the problem in the most effective way.

The sheer scale of retrofit that is required to improve inefficient buildings is also often touted as a problem. The costs of an ambitious retrofit programme are huge and go well beyond the public purse. To compound the problem the energy savings that can be achieved are not high enough for traditional financing on its own. To achieve this scale public finance will need to be blended with private capital in some way to provide the level of finance needed to achieve the scale required. In addition, retail investment and citizen engagement need to play their part in the equation to increase visibility and feasibility.

An interlinking issue for many countries is that of regional inequalities. Governments, such as the UK, have made levelling up regional differences a key policy initiative. Existing retrofit plans stand to exacerbate this issue. In the UK for example average house prices in London are £661k, but only £200k in the North East and North West. Average loan to value ratio is 82%. Retrofit costs are broadly uniform across the country, so a deep retrofit at £40k would equate to 6% of property value or one third of average equity in London, but 20% of property value or 110% of equity in the North. Clearly a policy led strategy that forces retrofit debt onto house owners would be deeply regressive for the North.

Any scalable solution must address the fragmentation of the problem which arises from individual decision making, allowing more systemic decision making to happen, economies of scale to materialise and progress to finally be made. This requires a fundamentally different approach.

Significant Opportunity

There is also real opportunity in this space.

Figure 2: Opportunities

Green Neighbourhoods as a Service – A Proposed Solution

To address the mismatch between ownership of the capital spend and of the value of benefits, tackle the fragmentation issue, overcome barriers to entry, allow aggregation of projects and matching of different types of finance that will be needed, we propose a new more centralised model which we call Green Neighbourhoods as a Service (GNaaS).

GNaaS envisages the establishment of a central entity in a city or region which designs, commissions, manages and funds deep energy retrofit on a street-by-street scale with incremental community investments at no cost to the property owners, regardless of ownership and usage typology.

  • By centralising the design process, more systemic energy decisions are made, for example around local energy systems and integration with district heating.
  • By centralising procurement, greater economies of scale are realised, improving economics and providing a lead market to the supply chain creating an environment for investment.
  • By operating at a community scale, additional projects such as resilience building, co-working spaces and green infrastructure in the shared spaces can be implemented at lower marginal cost. This drives greater impact and citizen engagement, changing the process from a “retrofit programme” to a “neighbourhood greening and investment programme”.
  • By centralising funding, projects can be aggregated on a neighbourhood scale allowing access to completely different types of funding and crucially removing the requirement of indebtedness for individual property owners, which is a key barrier.

To fund the work, a mechanism is needed to attach the long-term energy and maintenance savings to the centralised funding source. The proposal is that this takes the form of a long term (30 year+) comfort and maintenance contract with the resident. The contract would be embedded into the property deeds so that it automatically novates to whoever lives in the property and does not follow the individual when they move away. Alternatively, the resident would be offered the option to contribute the funding for their property directly in which case they would receive the full benefits of reduced energy requirement going forward without any need to engage in the design, procurement and delivery process.

Figure 3: Operating Mechanism

This is not an ESCO model (1). The resident would retain their relationship with existing utility providers for any grid power that they require post retrofit. The significant reduction of energy use achieved through demand mitigation measures and maximising localised heat and electricity generation would create the financial space for the payment of the comfort and maintenance fee at no aggregate increase in cost to the resident.

Contracting all the energy and maintenance savings to the GNaaS organisation would maximise the potential for return-based finance in the funding model. Implementing governance structures that align the decision-making processes with the overall goals of the city could create a mechanism for social outcome goals to be included in contractual terms.

This mechanism could provide a theoretical lever to the public authority to leave part of the savings with the resident enabling the mechanism to become a powerful tool in tackling fuel poverty.

Figure 4: Funding Flow Through the OpCo / FinCo model

The Capital Stack That Will Be Needed

From the modelling work we have done with several cities, the internal rate of return (IRR) provided by the energy savings from this blended set of neighbourhood interventions is consistently negative, even assuming a 30-year payback period. But by considering a large enough layer of various non-repayable funding sources, or impact finance, we can move the IRR for the remaining funding requirement into positive territory. Furthermore, adding returns from other sources, e.g. health improvement, can further improve the pay-out profile.

The resulting model creates a potentially multi-billion, stable and low returning financial investment opportunity for sources of patient capital that also value a robust set of impact metrics such as decarbonisation, healthcare improvement, fuel poverty abatement, educational outcomes, air quality improvements or biodiversity gains. We would argue this could be a good fit for sources of capital such as pension funds and insurance companies, which are increasingly demanding products which offer impact related benefits in addition to a financial return, under pressure from underlying asset owners and regulators.

Further, it is a structure that can take in repayable, but zero or ultra-low coupon, finance from multilateral or development finance institutions seeking climate change impact and/or post-COVID recovery funding.

In addition, there is an opportunity to offer participation for local communities to invest through a community bond type structure allowing direct participation in the returns.

For the non-repayable layer of finance, various components will need to be combined.

  • Funnelling existing municipal budgets earmarked for improving energy efficiency of public owned properties into the mechanism
  • Repurposing existing subsidy schemes into the mechanism
  • Additional national/supranational grant funding schemes aimed at decarbonisation and/or post-covid recovery; the work is labour-intensive and community wealth building activities relating to asset maintenance and green infrastructure can be incorporated.
  • The potential to incorporate other outcome seeking pools of funding, for example allocation of healthcare budgets into what would become a preventative programme reducing future burden on the health care system, biodiversity improvement funding etc.
  • An option for building owners to fund the work themselves and have the occupant benefit from the energy savings. They still benefit from the centralised orchestration, better economics and broader impact.
  • Exploration of the potential to accredit such centralised and scaled retrofit programmes as sources of carbon credits for voluntary carbon offset schemes allowing corporates to achieve their own net zero targets by buying credits that directly improve the communities they operate in and their employees live in.

Figure 5: The proposed Capital Stack with illustrative figures

There are significant governance issues to solve in designing how this entity would operate and to align its actions with those of the public sector. We propose it would be a not-for-profit organisation using a standard return-based fund management fee structure to cover its own operating costs, with involvement from public sector officials in supervisory committees etc to ensure alignment.

We are not claiming that this proposal is yet a finalised solution; there are many complexities to work through (several which are being tackled in pilot projects planned in Milan and Zagreb). However, we are convinced that this concept has the potential to unlock the scaling of improved energy efficiency in the built environment in a meaningful way.

Next Steps

  • Integration with a mechanism to help scale beyond pilot phase, taking learnings from models like LABEEF in Latvia to enable an ecosystem of private sector contracting firms to take over the heavy lifting work of much of the OpCo envisaged above, thereby creating competition leaving the OpCo part of the retrofit company as a commissioning and refinancing engine for implementation firms.
  • Technical assistance funding is required to further develop this work, on the finance side, but also to develop the engagement process with citizens, scope out the legal challenges around contracting as well as integration with the supply chain
  • Pilots will need to be run in multiple cities to prove out the concept. We would envisage these covering 2-300 residential units at a total funding cost of €10-15m each. Pilots are in advanced stage of design in Milan and Zagreb) though engagement has begun in multiple cities across Europe including Copenhagen, Leuven, Vienna, Krakow and Edinburgh.
  • Funding providers, including private sector impact finance firms, development finance institutions and philanthropic outcome purchasers will need to engage who are willing to partner with cities to develop these structures so that they can grow to commercial scale.

1 ESCO – Energy Service Company – is a company that provides energy to customers and services to improve efficiency. An ESCO typically sits between the consumer and the utility providers.

Global Sand and Gravel Extraction Conflicts with the UN’s SDGs

Global Sand and Gravel Extraction Conflicts with the UN’s SDGs

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Global Sand and Gravel Extraction Conflicts with Half of UN Sustainable Development Goals by Eurasia Review of , is an eye-opener at this conjecture of these ingredients that we take for granted in all our developments.
Sand and aggregates together with water form the backbone of the modern world but increasing urbanisation due to a growing global population has led to a spiralling rise in their extraction, with serious environmental, political and social consequences.

The above image is for illustrative purposes and is of EcoWatch.

Global Sand and Gravel Extraction Conflicts with the UN's SDGs
 Image_2_MiBTBWN.jpg.1600x900_q85_crop_upscale.jpg
A view of ‘The World Island’ development seen from the air in Dubai, United Arab Emirates. Credit: Chris Jackson/Getty Images.

Global Sand And Gravel Extraction Conflicts With Half Of UN Sustainable Development Goals

Sand and gravel are the most mined materials in the world, with between 32 and 50 billion tonnes extracted globally each year. They are being extracted faster than they can be replaced. But according to a new study led by researchers at McGill University and the University of Copenhagen, the human and environmental costs of this extraction on lower and middle-income countries have been largely overlooked.

“With this work we’re able to show that in low- and middle-income countries, sand industry is in direct conflict with almost half of the 17 Sustainable Development Goals,” said Mette Bendixen an assistant professor in the department of Geography at McGill University and one of the lead authors of the work, which was published recently in One Earth. “The impact that sand and gravel mining have on the environment, conflicts with goals linked to the natural dynamics of ecosystems. Furthermore, pollution, health-related issues and the informal nature of many mining activities creates societal inequalities negatively affecting small scale miners and their families.”

Increasing demand and market prices are leading to unsustainable exploitation, planning and trade. Removal of sand from rivers and beaches has far-reaching impacts on ecology, infrastructure, national economies, and the livelihoods of the 3 billion people who live along the worlds’ river corridors. Unregulated sand mining has been documented in 70 countries across the globe, with associated conflicts related to ecological destruction, livelihood disruption and labour rights violations. Battles over sand have reportedly killed hundreds in recent years, including local citizens, police officers and government officials.

Opportunity as well as destruction

But the researchers also suggest that, if it is well managed, the mining of these resources also potentially offers certain opportunities to meet some of the UN’s 17 Sustainable Development Goals (SDGs). They also point out that these resources have the potential to help drive socio-economic development to advance some of the UN’s SDGs, such as eliminating poverty. For example, sand and gravel provide labour for millions of people, they supply material for the renewable energy sector and for roads and infrastructure in general.

“Sand resources, when managed appropriately, can create jobs, develop skills usable in other sectors of the economy and spur innovation and investment, whilst continuing to underpin the infrastructure upon which modern society is founded.” argues Lars L. Iversen, an assistant professor at the University of Copenhagen’s Center for Macroecology, Evolution and Climate research who was a lead author in the study. “Therefore, the solution is not to simply ban all mining activities. Finding the balance between the pros and cons of sand and gravel extraction is becoming one of the great resource challenges of our century.”

We need to build effective management plans and policies for sand resources that support the global sustainable development goals,” says Mette Bendixen “In order to do so a more complete understanding of the impact of sand and gravel mining is required. This need is especially acute for many countries in low- and middle- income regions that currently possess no overview of the extent of local mining activities, or how such activities are impacting ecosystems and local communities.”

Quick facts

  • A large proportion of the increase in aggregate (a collective term for sand, gravel, and crushed stone) consumption has occurred in BRICS (Brazil, Russia, India, China, and South Africa) countries.
     
  • For cement alone, a proxy for aggregate usage, China’s demand has increased exponentially by 438% over the past 20 years, compared with an increase of 60% in the rest of the world.
     
  • While current global aggregate consumption of 32-50 billion tonnes per year is dominated by consumption from high (per capita) production sources in North America and China, the greatest relative increase in production is projected to occur in LMICs (lower and middle-income countries).
     
  • Aggregate mining in LMICs is often executed informally by artisanal small-scale miners providing an essential source of livelihood for many people worldwide.
     
  • Violence can also increase alongside mining. In India, the mining of sand, in particular, has been associated with local conflict linked to water access and pollution.
ESG back on the agenda in post-pandemic world

ESG back on the agenda in post-pandemic world

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Environmental, Social, and Governance (ESG) are criteria that are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. These ESG are apparently back on the agenda in the post-pandemic world all per Dr. Mohamed Ramady. Let us see what he says in his Arab News article.

ESG back on the agenda in post-pandemic world

The topic of ESG (environmental, social and governance) principles is back on the agenda as the world witnesses catastrophic flooding and fires not seen in decades, with “climate change” due to environmental mismanagement the seeming culprit.

While sustainability is now a hot topic due to the increasing awareness of climate change and global inequality, at the same time there is a debate that an application of ethical-based investment decisions by society at large can lead to a more sustainable economic and social basis, leading to questions about whether ethical investment and sustainability derived from ESG application are interlinked or separate issues.

There is still no universal definition of sustainability, but many note the seminal UN 1987 Brundtland Report that calls for sustainable development, which, in principle, meets our needs today without compromising the needs of those in the future. Others argue that religion has advocated similar principles, with Islam specifically stating that humans are mere guardians of nature’s wealth and not its owners and should act accordingly in this guardianship role to pass it on to future generations. Thus, the idea of meeting our needs without sacrificing the needs of our future generations is the basis of what the majority of mankind can agree as meeting a definition of “sustainability.”

The definition by default focuses on our planet’s capacity to meet our economic needs, as without a healthy planet, society will be unable to meet sustainable needs for food, shelter, clean air, water and other basic necessities of life. This, however, assumes that all societies accept the same “sustainability” definitions and goals, but in reality there are different opinions as these touch on politics and the degree of economic growth and resource consumption by different countries.

The debate is stark and will not easily go away with simple slogans as it involves those “who have” versus those that “have not,” a “North” vs. “South” debate, or more crudely, stopping a poorer “South” from “having their place in the sun” and in turn asking the “North” to sacrifice more for the sake of global sustainability and equality.

There is growing evidence that companies that take their environmental and social responsibilities more seriously perform better financially, making their shareholders happy and feeling righteous too.

Dr. Mohamed Ramady

The poorer “South” will argue that the “North’s” high-income earners are far more likely to be contributing disproportionately to climate change, while those who live in less affluent parts of the world are more likely to suffer the consequences. They watch in awe and disbelief as multibillionaires spend a few minutes joyriding in outer space at a cost enough to provide whole villages with proper sanitation, health, education and safer transportation, let alone feed hungry mouths.

In practice ESG today refers to the environmental, social and governance information about a firm and there is growing evidence that companies that take their environmental and social responsibilities more seriously perform better financially, making their shareholders happy and feeling righteous too. The bottom line for all is that ESG is good for business. The UN-Global Compact value driver model uses key business matrices common to all industries to determine the return on investments of corporate sustainability activities. These can be best summarized under: Growth (revenue growth from sustainable products); productivity (cost savings from sustainability related innovation); and risk management, all leading to a higher return on equity.

Have these matrices made an impact on corporate performance in reality? In essence companies that follow enhanced ethical and economic sustainability management characteristics have the potential to perform better over time, but the question is where? It would seem that improvements in environmental performance achieved with better technology, leading to cost savings and process efficiency, is one way, resulting in high sustainability companies outperforming their counterparts over the long term, through stock market and accounting performance. Analysis of some ESG-related stock market indices such as the MSCI KLD 400 Social Index, and MSCI Emerging Market ESG Index, seems to support this argument. So, what is missing to implement ESG?

In forthcoming articles, we shall examine the role of sustainability accounting, corporate stakeholders interaction and the need to educate both capital market borrowers and lenders on ESG policies, and on how international ESG regulators have faced this.

• Dr. Mohamed Ramady is a former senior banker and Professor of Finance and Economics, King Fahd University of Petroleum and Minerals, Dhahran.

https://arab.news/j6y5j

Equipping cities with actionable insights to combat climate change

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There is a need to take the climate crisis more effectively to build a sustainable future. For that, local governments need to provide for equipping cities with actionable insights to combat climate change.

Environment Journal elaborates on all inherent aspect of how to go about it. In the meantime, more extensive and more significant areas in the MENA region, of which only two cities are affiliated to the referred to C40, gradually impacted by the now apparent climate alteration, still lack some comprehensive and coordinated moves to restore degraded ecosystems.

Anyway, here is a view of how to integrate the notion of environmental protection through the extensive and practical usage of the available data management infrastructure.

Equipping cities with actionable insights to combat climate change

In order to tackle the climate crisis and build a sustainable future, cities need data, writes Julia Moreno Rosino, inclusive climate action senior manager policy, data & analysis at C40, a network of the worlds megacities that are committed to addressing climate change.

As overall temperatures rise, the world is facing an increase in the frequency and intensity of forest fires, droughts, severe storms, flooding and other extreme weather events.

World leaders are trying to address these problems with regulations and initiatives concerning greenhouse gas emissions, air pollution, energy transition, and adaptation to climate hazards; and municipalities around the world are taking ever bolder action in these areas.

Cities, where 56% of the global population live, are already experiencing the impacts of climate change, and are working to build a healthier and more sustainable future.

In order to do this, cities need data.

As data collection systems mature and expand around the world, they are providing an invaluable way for city officials to track their progress on a number of indicators and inform new strategies to tackle the most significant climate challenges. Tracking data alone is not enough cities must be able to use that information to produce actionable insights to foster decision-making and introduce meaningful changes as part of their climate action plans.

Data-driven knowledge sharing: benchmark results and inspire success

Climate action planning needs to include monitoring and evaluation.

Policymakers can especially benefit from continuous, real-time data to develop action plans that are fine-tuned to local considerations. For this, cities are collecting data and tracking key performance indicators (KPIs) to evaluate city performance on emissions, air quality, energy, climate adaptation and other key elements.

At C40 Cities, a network of 97 cities taking ambitious climate action, we have built multiple dashboards, both internal and public-facing, using the data analytics software Qlik Sense to analyse these metrics and indicators.

This allows us, and cities, to analyse specific regions or sectors, in a faster and more intuitive way than having to assess multiple, complex datasets. It allows benchmarking city performance and rapid identification of which cities are on track to meet particular targets and which might need more support.

For example, our Greenhouse Gas Emissions Dashboard hosted on C40s Knowledge Hub presents complex emissions data in an easy-to-analyse format. This dashboard can be used by cities, research organisations, or members of the general public to uncover which sectors and sub-sectors are contributing to higher emissions, such as aviation or buildings. City officials can also compare current emissions to previous years to better understand their emissions trajectory.

The Clean Construction Policy Explorer is a more niche dashboard that examines the policies cities have implemented to tackle emissions from a segment of their built environment and highlights which cities have committed to achieving low carbon and clean construction. By aggregating and surfacing this information, we hope to inspire all cities to raise their ambitions on clean construction policies while learning from the policies and progress of those who have gone first.

Our Adaptation Data Explorer allows cities to find other peers around the world that are experiencing similar climate hazards or extreme weather events. Here, city officials can obtain insights on how others are addressing a particular issue and the actions they are taking, either globally or within the same region. For example, there are many cities experiencing heat waves. Leaders from Buenos Aires, Melbourne, Barcelona, and others can learn from one another and through C40 connect to discuss what they are doing to deal with these extreme heat events. Similar groupings are forming in response to rising sea levels, wildfires, and floods.

Given that transportation accounts for an important percentage of greenhouse gas emissions, it is also important to look at how mobility is evolving both in the face of infrastructure changes and the pandemic. We are using new forms of mobility data to see how public transportation dropped sharply during the first few months of the pandemic, and at the same time than cycling increased.

This has made an impact and changed the traditional mode share of transportation of many cities. What effect is this having on city emissions? Will this steep increase in cycling stay in most cities? These are all important questions that cities should be asking, and they need data to unearth the answers.

Advance to the next phase with automated insights

C40 not only aims to give our cities the data analysis and exploration options that I have explained above, but to also provide them with useful information on where to go next, so they can advance their respective climate goals in different sectors, often in highly local ways. To achieve this, we have dashboards that we share privately with our member cities, where we provide them tailored article recommendations depending on how they are performing against specific metrics.

For example, on their private page, a city can see its current rate of waste that is being diverted from landfill and incineration and compare this to peers and targets. The dashboard on the private Knowledge Hub page will also automatically recommend specific resources depending on the data for that city. If it is not on track on this indicator, it might be offered specific articles to support landfill reduction strategies. If a city is already progressing quickly, it will be recommended insights to further raise their ambition and work towards zero waste.

Every city has different needs and is in different phases of progression within multiple sectors; there is no one-size-fits-all solution. Instead, the goal is to provide cities with the information that is most relevant to them depending on their data and queries, and ambitions.

Draw upon the expertise of others to achieve climate change goals

Data analytics and dashboards can help with this effort, providing a way for city officials to quickly explore their progress in various sectors, share knowledge and peruse proven insights. Such offerings will strengthen the network in which city officials and policymakers can draw upon the expertise of each other to achieve climate change goals. Although cities are taking big steps, we still need faster action to reduce the impact of climate change, and we hope that by helping cities to track results and performance, they will be better positioned to make meaningful changes.

Urban Growth underpinned by Livability and Sustainable Growth

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The World Bank in an introduction to its recently published paper on the world urban development as it presently stands and where it could potentially be going. It covers 10,000 cities by showing how the shape of urban growth is underpinned by livability and sustainable growth. Here are some excerpts that best resume the report titled Pancakes to Pyramids : City Form to Promote Sustainable Growth.

Here is:

Urban Growth underpinned by Livability and Sustainable Growth

What drives the shape of cities, and what actions can policymakers take to guide their growth? The authors of Pancakes to Pyramids set out to find out. I am pleased to say that they have succeeded in increasing our understanding of the economic variables that drive urban expansion while challenging conventional wisdom about sprawl. Most importantly, they have opened up a field of inquiry that will be central to the World Bank’s mission of poverty reduction and sustainable and inclusive development in the years ahead as leaders strive to create green, resilient, and inclusive cities that attract people and businesses. As low- and middle-income countries urbanize in the decades ahead, this report provides new evidence for city leaders interested in managing spatial growth. It also provides a theoretical model to test assumptions about compactness and public transport that will be crucial to rein in commuting time, fuel use, and greenhouse gas emissions.


What city leaders need to know Pyramids are generally better than pancakes at meeting three key urban planning objectives: driving prosperity, ensuring livability, and respecting planetary boundaries.

Compared with a pancake city, a pyramid city will drive more growth in urban productivity and incomes because it is more economically dense and efficient—its inward and vertical expansion reduce the distances between firms, jobs, and workers.

A pyramid is also better at achieving livable urban population densities, accompanied not by crawling traffic and crowded slums but by efficient transport connections and decent formal housing.

And while a sprawling pancake is likely to impose steep burdens on the climate through unmanaged vehicle emissions, a pyramid allows leaders to plan for the city’s future population growth and spatial expansion in ways that will limit or reduce its carbon footprint. But not every pancake can become a pyramid.

When a city with low productivity and low incomes adds to its population, it cannot accommodate this growth through a costly vertical layering of built-up area. Instead, such an inadequate and economically inefficient city can absorb newcomers only by crowding them into low-built quarters and by spreading outward where land is cheapest.

Such a city will remain a pancake—and it will continue to expand in two dimensions, rather than three, as long as its economy remains sluggish and its average resident household remains poor.

As chapters 1, 2, and 3 have shown, pyramidal expansion flows from economic transformation. Based on specialization and tradables production, only agglomeration economies can be counted on to set a city’s productivity and incomes on an upward path.

And only a city that is economically on the rise will generate increasing economic demand for floor space— the prerequisite for land developers to invest in multistory construction around business districts and elevate the urban skyline. How can city leaders and decision-makers act to shift urban expansion to a pyramidal trajectory?

Read more in the full report, download it here.