Urban Development

Today, some 55% of the world’s population – 4.2 billion inhabitants – live in cities. This trend is expected to continue. By 2050, with the urban population more than doubling its current size, nearly 7 of 10 people in the world will live in cities.

With more than 80% of global GDP generated in cities, urbanization can contribute to sustainable growth if managed well by increasing productivity, allowing innovation and new ideas to emerge.

However, the speed and scale of urbanization brings challenges, including meeting accelerated demand for affordable housing, well-connected transport systems, and other infrastructure, basic services, as well as jobs, particularly for the nearly 1 billion urban poor who live in informal settlements to be near opportunities. Conflicts are on the rise, resulting in 60% of forcibly displaced people living in urban areas.

Once a city is built, its physical form and land use patterns can be locked in for generations, leading to unsustainable sprawl. The expansion of urban land consumption outpaces population growth by as much as 50%, which is expected to add 1.2 million km² of new urban built up area to the world in the three decades. Such sprawl puts pressure on land and natural resources, resulting in undesirable outcomes; cities consume two thirds of global energy consumption and account for more than 70% of greenhouse gas emissions

Cities play an increasingly important role in tackling climate change, because their exposure to climate and disaster risk increases as they grow. Almost half a billion urban residents live in coastal areas, increasing their vulnerability to storm surges and sea level rise. In the 136 biggest coastal cities, there are 100 million people – or 20% of their population – and $4.7 trillion in assets exposed to coastal floods. Around 90% of urban expansion in developing countries is near hazard-prone areas and built through informal and unplanned settlements.

Cities are also in the frontline of combating epidemics. Cities across the globe are currently being tested to the extreme with the COVID-19 pandemic.  It is impacting not only public health but also the economy and social fabric. Simultaneously a health crisis, social crisis, and economic crisis, COVID-19 is laying bare how well cities are planned and managed and the impact this is having on the extent to which each city is able to function – or not – especially during times of crisis. 

COVID-19 is a massive challenge for cities on the frontline, rich and poor alike. The measures taken to control the spread of the virus are having massive implications on cities due to their economic structure, their preparedness for such a crisis – especially the state of their public health and service delivery systems – and the extent to which their population’s health and livelihoods are vulnerable, all of which are a function of the effectiveness of their urban governance systems.

In normal times, there might be many attributes that cities strive to compete on and excel at the global level, including livability, competitiveness, and sustainability, but in any given day and especially in a time of crisis, a city must function well for its citizens. 

Building cities that “work” – inclusive, healthy, resilient, and sustainable – requires intensive policy coordination and investment choices. National and local governments have an important role to play to take action now, to shape the future of their development, to create opportunities for all.

Last Updated: Apr 20,2020

The World Bank’s work in urban development aims to build sustainable cities and communities through an urbanization process that is green, inclusive, competitive, and resilient, contributing to the Sustainable Development Goal (SDG) No.11, implementation of the New Urban Agenda, as well as the World Bank’s goals to end extreme poverty and boost shared prosperity.

The World Bank invests an average of $5 billion in planning and implementing lending projects on sustainable cities and communities every year to help cities meet the critical demands of urbanization. The active portfolio stands at 225 projects amounting to $29.74 billion, through a combination of instruments, including investment project financing, policy development loans, and Program-for-Results funding.

Specifically, the Bank adopt integrated approaches to transform the fundamental systems of cities, focusing on four priorities as follows:

1. Enhance Planning System and Local Capacity

The first key strategy is to help cities strengthen their planning systems and local capacities to better design, plan, and manage city assets and urban environments. Many cities lack adequate planning and technical capacities to manage challenges associated with rapid urbanization, such as drastically increasing global waste, inefficient commuting, lower access to job opportunities, and air pollution.

In this context, the Bank provide cities with various diagnostic tools that would enable informed planning decisions, as well as investments in urban infrastructure and service delivery. This will also include public health social awareness programs, labor-intensive public work programs and slum upgrading as early recovery measures to COVID-19, as well as leveraging technology for effective health emergency response and recovery in cities.

2. Strengthen Fiscal and Financing Systems 

The second strategy aims to maximize multiple financial resources for cities through enhancing fiscal and financial systems. The global investment needed for urban infrastructure is $4.5-5.4 trillion per year, including a 9-27% premium to make this infrastructure low-emission and climate-resilient. While most of this need lies in the developing world, only a small fraction of this urban infrastructure can be supplied by aid and many cities face critical financial constraints to address their own infrastructure challenges.

The Bank is well-positioned not only to help cities expand access to finance from multiple sources, including private finance, but also to strengthen their fiscal capacities and systems that can be sustained in the long run. To combat epidemics effectively, the Bank will also ensure cities’ fiscal and financial sustainability during a health crisis.  

3. Promote Territorial and Spatial Development

The third key element is to promote territorial development in developing countries and cities. Economic activities are concentrated in only a few places – only 1.5% of the world’s land is home to half of its production. This concentration is inevitable, and it is also desirable. The evidence suggests that prosperous and peaceful countries have been successful by bringing people and businesses closer to each other in cities, harnessing agglomeration economies to boost productivity, job creation, and economic growth.

The Bank’s work on territorial development looks at cities not only as individual entities, but also at the coordination between them at different scales: identifying priorities of lagging regions; connecting urban and rural spaces, and addressing spatial inequalities within cities, aiming to allow faster economic growth and links people to better jobs.

4. Build Climate Smart and Urban resilience

The last key strategy is to build resilience to disasters and climate change. With increasingly concentrated people and assets in cities, a complex range of growing shocks and stress imposes tremendous costs on the globe. Global average annual losses from weather-related and other disasters in cities were estimated at about US$314 billion in 2015 and are expected to increase to US$415 billion by 2030, which significantly drain public investment especially in poorer countries.

Poorer segments of the population are particularly vulnerable, since they tend to live in more hazardous settlements and lack the necessary safety nets to recover from economic or environmental shocks. Without inclusive and climate-informed urban development, climate change can push an additional 100 million urban residents fall back into poverty by 2030.  

The Bank focuses on improving cities’ capacity to adapt to a greater variety of changing conditions and to mitigate the impact of climate change through building infrastructure resilience, mobilizing capital, and financing at upstream climate strategy and analysis.

ENGAGEMENT SUMMARY

The four priorities are translated into six business lines:

• Cities and economic growth
• Urban poverty and inclusion
• Municipal infrastructure and services
• Affordable housing and land
• Urban management, finance, and governance
• Cities and urban environment

Last Updated: Apr 20,2020

Research and analytical services

Understanding urbanization at different scales: The World Bank is conducting a rich set of research on sustainable urban development. At the regional and country scales, the Urbanization Reviews offer a framework for city leaders to identify policy distortions and analyze investment priorities. A series of prototypes have been piloted to build a body of knowledge on urbanization challenges and public policy implications in a variety of country settings, including Colombia, India, Indonesia, and Vietnam. At the city level, City Diagnostics is an informative tool to pursue a shared vision of the city. This includes Transforming Karachi into a Livable and Competitive Megacity, which informed US$876 million of the cross-sectoral investment projects in Karachi.

Other recent analytical work and tools to help cities manage urbanization and support sustainable, inclusive growth include: 

• Africa’s Cities: Opening Doors to the World and Greening Africa’s Cities
• Cities in Eastern Europe and Central Asia: A Story of Urban Growth and Decline
• Cities of Refuge in the Middle East: Bringing an Urban Lens to the Forced Displacement Challenge
• Competitive Cities for Jobs and Growth: What, Who, and How
• East Asia and Pacific Cities: Expanding Opportunities for the Urban Poor
• East Asia's Changing Urban Landscape: Measuring a Decade of Spatial Growth
• Investing in Urban Resilience: Protecting and Promoting Development in a Changing World
• Leveraging Urbanization in South Asia: Managing Spatial Transformation for Prosperity and Livability
• Raising the Bar for Productive Cities in Latin America and the Caribbean
• Rethinking Lagging Regions: Using Cohesion Policy to Deliver on the Potential of Europe’s Regions
• Urban Regeneration: Decision Tool for City Planners
• What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050
• The Hidden Wealth of Cities: Creating, Financing, and Managing Public Spaces
• Handbook for Gender-Inclusive Urban Planning and Design

Addressing COVID-19

• Disasters triggered by natural hazards can strike at a moment’s notice, with devastating consequences on people, infrastructure, assets, and entire economies.  And the coronavirus pandemic (COVID-19) fits into this category.
• Beyond its huge health impacts, there are significant economic losses to households, firms, and governments as well as large-scale disruptions to lives and livelihoods as a result of lockdowns, disruption of supply chains, and a steep drop-off in commercial activity as a result of COVID-19.
• For decades, the World Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR) have been helping national and local governments to prepare for and mitigate the impacts of naturally occurring events – floods, droughts, cyclones, earthquakes, tsunamis, and more – investing $5 billion in disaster risk management and urban resilience projects, on average, every year.
• This is because prevention and preparedness make economic sense, from strengthening infrastructure and other risk reduction efforts to developing policies and programs that help safeguard the poorest and most vulnerable against disaster impacts.  
• Innovative instruments such as our Development Policy Financing with Catastrophic Draw Down Option (Cat DDO) where, if a disaster due to a pandemic or extreme weather event strikes, countries that had previously prepared and approved a Cat-DDO would have quick access – less than 48 hours – to financing for emergency response.  
• The CAT-DDO is a financing instrument that acts a little like a parametric catastrophe bond, in that they provide a source of capital contingent on a disaster being declared in the beneficiary country.
• They are similar to an insurance or reinsurance policy, or a catastrophe bond, except that once triggered the contingent financing facility opens up a loan, or line of credit, to the World Bank.
• Currently 17 countries have the Cat DDO option with a combined value of $2.4 billion (8 Cat DDOs have to date disbursed $1.2 billion and the rest are on the way); 13 more countries are preparing Cat-DDOs.

Financing the New Urban Agenda

The World Bank helps cities and national governments put in place the financial framework to attract investment and grow in a sustainable manner. The Bank is helping countries establish and strengthen urban institutions to deliver improved infrastructure and services, for example:

• In Sub-Saharan Africa, the World Bank has an operational portfolio of almost $1.1 billion in urban projects focusing on improving financial and institutional performance and strengthening decentralization in Ethiopia, Kenya, Senegal, Tanzania, and Uganda.
• In Morocco, a $200 million World Bank loan aims to improve the city of Casablanca’s investment capacity by improving its revenue management systems and attracting private investment to municipal infrastructure and services through public-private partnerships.

Innovative ways of leveraging investment are also needed, including from private and non-traditional sources, such as land value capture, sometimes in combination with multilateral development banks (MDBs) and other agencies; by reforming intergovernmental fiscal transfers; and strengthening municipal finances.

• Through the capital raising strategy of its City Resilience Program (CRP), the World Bank is pushing the boundaries in this area with its Capital Mobilization Strategy, which works with city leaders to consider the Bank a catalyst to development financial solutions beyond World Bank loans. To do so, the program connects cities to co-financing by donors and other international financial institutions (IFIs). The program also supports cities in combining public investment with private opportunities through private sector engagement, where feasible.
• The Resilient City Development Program (RECIDE), a partnership of the Spanish Agency for International Development Cooperation (AECID) and the World Bank, is empowering cities in Sub-Saharan Africa to strengthen resilience, and to access a broader range of financing options. RECIDE has been granted approval to access resources from the EU External Investment Plan of up to EUR 100 million in guarantees and EUR 14 million in technical assistance to source, originate, and execute transactions.
• The City Creditworthiness Initiative (CCI) aims to strengthen the financial performance of local governments and prepare them to tap domestic / regional capital markets without a sovereign guarantee. The initiative has trained over 630 municipal officials from 250 cities in 26 countries.

Promoting territorial development

• The World Bank’s report, East Asia and Pacific Cities: Expanding Opportunities for the Urban Poor, encourages cities in the region to ensure inclusive, equitable urban growth through a multi-dimensional approach to planning, incorporating aspects of economic, spatial, and social inclusion to foster economic growth and reduce poverty.
• Another report, Raising the Bar for Productive Cities in Latin America and the Caribbean, provides a rigorous analysis of the key factors constraining the productivity performance of cities in the region and provides evidence to show how planning, investments and policy reforms to promote a more connected, and, therefore, integrated, urban system can foster economic growth and inclusion.
• A new report, Which Way to Livable and Productive Cities? A Road Map for Sub-Saharan Africa, brings together a large body of analytic work to show that urban livability and prosperity cannot be pursued effectively without distinguishing priorities for larger cities from smaller towns. Lack of institutional capacity in the smaller towns across Africa may require a slower transition of responsibilities for planning and investment management, as well as enhanced technical assistance so that institutions can perform their tasks.
• In Kenya, northern areas of the country have mostly been excluded from the benefits of rising living standards. The World Bank is launching the North & Northeastern Development Initiative (NEDI), a multi-sectoral program with projects in transport, water, energy, agriculture, livelihoods, and social protection to help connect the region to national and global markets.

Enhancing urban resilience to climate change and disaster risks

In recent years, the World Bank has worked in cities and towns across over 140 countries, investing $4.5 billion during FY19 in disaster risk management.

• In Mozambique, the Mozambique Cities and Climate Change Project, funded by $120 million IDA credit, includes a stormwater drainage system whose 11 kilometers of canals and flood control systems to prevent the city from flooding, strengthening the city’s resilience to weather-related hazards. Soon after the Idai and Kenneth cyclones hit that affected millions of people, the port of Beira was back in operation and the city cleaned up, partly thanks to this project. The project also includes solar-powered street lighting, which at one point was the only source of light in the city.  To help the cyclone recovery, the World Bank announced nearly $700 million in support for Mozambique, along with Malawi and Zimbabwe. Mozambique received a commitment of $350 million from the IDA Crisis Response Window to re-establish the water supply and rebuild damaged public infrastructure and crops. The financing supports disease prevention, food security, social protection, and early-warning systems in the impacted communities.

The World Bank has also facilitated global partnerships, including with the Agence Française de Développement (AFD) and the Asian Infrastructure Investment Bank (AIIB), to support countries in their urban resilience work.

• Through the CRP, supported by the Global Facility for Disaster Reduction and Recovery (GFDRR), the Swiss Economic Secretariat, and other partners, the World Bank is helping cities around the world raise the finance they need to build resilience to climate change and disaster risks, connect investors with bankable projects, and keep millions of people safer and stronger. The objective of the CRP is to support cities in embedding resilience into investment projects and mobilizing capital beyond World Bank loans. To do so, the program offers support in the planning process and capital mobilization. To support planning, the program engages with the tech community delivering digital tech solutions to better understand the built and natural environment. To support finance, the program engages with an ecosystem of donors, IFIs, and financial advisors to crowd in the necessary market to deliver finance to cities.
• Urban resilience goes hand-in-hand with environmental sustainability. The World Bank’s Global Platform for Sustainable Cities (GPSC) is a partnership and knowledge platform that includes 28 cities across 11 countries that have received $151 million from the Global Environment Facility.

o   This support has leveraged $2.4 billion in project co-financing. The platform promotes integrated solutions and cutting-edge knowledge for cities seeking to improve their resilience and overall urban sustainability in the areas of indicators and tools, integrated urban planning and management, and municipal finance.

o   One example of GPSC providing solutions and knowledge to cities is the Urban Sustainability Framework. This guidance document developed by GPSC includes the Measuring Frame work that incorporates 177 indicators into a clearly laid out process for cities to track their urban sustainability. The most important 14 “core” indicators are associated with SDG 11.

o   By using these core indicators, GPSC helps establish comprehensive multicity data sets tied to each indicator and this in turn helps: track international progress toward SDG 11, allows cities to compare their performance with their peers, and overall enhances knowledge sharing between cities. GPSC is currently utilizing the SDG 11 core indicators to roll-out a benchmarking assessment for more than 30 cities worldwide.

More project results

In Belize, the Bank supported the national government in developing and implementing the National Climate Resilient Investment Plan (NCRIP) through the Climate Resilient Infrastructure Project, which helped position the country to leverage additional climate financing from international financing institutions. In the Eastern Caribbean countries, the Bank has mobilized over $200 million for enhancing climate resilience and strategically reducing their vulnerability to climate change and disasters caused by natural hazards, including $83 million from the Strategic Climate Fund, and immediately following disasters (e.g., Saint Lucia Disaster Vulnerability Reduction Project).

In Colombia, the national government has put forward a series of institutional and policy changes to promote the peace building process. With the support of the World Bank, these efforts focus on strengthening institutions for land management and territorial planning, as well as improving subnational financial management and investment prioritization.

In Georgia, the Regional Development Project assists the country’s regions in improving their infrastructure in order to capitalize on a growing tourism market; thus assisting in improving their local competitiveness and economic development. In Azerbaijan, World Bank loans supported the rehabilitation of the main landfill site and establishment of a state-owned waste management company, increasing the population served by the formal solid waste management to 74% in 2012. Support also led to further sustainable waste management practices, helping achieve a 25% recycling and reuse rate.

In Indonesia, the Indonesia National Slum Upgrading Program, which includes substantial additional finance through co-financing from the Asian Infrastructure Investment Bank (AIIB), is improving access to urban infrastructure and services in targeted slums. In Argentina, the Metropolitan Buenos Aires Urban Transformation Project is supporting the improvement of living conditions for around 48,000 residents in disadvantaged neighborhoods in the Buenos Aires Metropolitan Area.

In Jordan and Lebanon, two related projects are supporting local authorities and communities hosting Syrian refugees, and include strong consultation and feedback mechanisms. The Jordan project to address the urgently needed rehabilitation of municipal infrastructure has benefitted about two million people, including 250,000 Syrian refugees. In Lebanon, interventions to release tensions reached 250,000 people within a year – three times the initial target – particularly those in the host communities close to refugee camps, and also improved service delivery to more than one million Lebanese people. 

In Pakistan, the World Bank is helping the five largest cities in the province of Punjab improve their systems for planning, resource management, and accountability through a $150 million results-based financing. The city governments are developing and implementing medium-term, integrated development and asset management plans with evidence-based prioritization for municipal infrastructure and services, resulting in increased revenue collection and reduced expenditures, providing financial headroom. Automated systems for public access to information and grievance redressal, as well as updated websites with information on budgets and procurements, are ensuring greater accountability.

In rapidly urbanizing Vietnam, the Vietnam Urban Upgrading Project – with $382 million financing from the World Bank – improved the lives of 7.5 million urban poor with better water and sewage connections, as well as improved roads, sewers, lakes, canals, and bridges.

Last Updated: Apr 20,2020