The way to sustainable cities is through transport and housing – this is how we get there

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Shin-pei Tsay, Director, Global Policy for Cities and Sustainability, Uber Technologies, Sameh Wahba, Regional Director for Sustainable Development, Europe and Central Asia, World Bank

• Integration of transit and housing plans is key to addressing the affordability crisis and is vital for inclusive and sustainable cities.
• Innovative financing, such as value capture – allowing the financier to retain a percentage of the transaction’s value – can offset needed infrastructure investments.
• Technology can bridge service delivery and information gaps while infrastructure is in development.

Where to live and how to get around are the two most important decisions for any household. When considering their options, access to jobs and economic opportunities weigh heavily but there’s usually a trade-off between quality and cost.

Remote locations can add transportation costs in the form of increased expenses for road infrastructure operation and maintenance, increased commute time and lost productivity. Housing and transportation costs are thus critical determinants of affordability; policymakers and planners increasingly look at the combined housing and transportation cost as a more accurate metric for affordability within the city.

Location is an equally important variable, especially for low-income households facing a problematic trade-off between living near job opportunities or at the periphery of cities. Near areas with many jobs, there is marginal land in at-risk areas, such as the slopes on which favelas grew near Rio de Janeiro’s centre. At the periphery of cities, there is more affordable land and housing but more significant transportation costs, such as the large-scale housing programmes on the peri-urban fringe of Johannesburg and Mexico City. Such choices are incredibly challenging, especially for people who migrate to cities to improve their economic situation.

Thus, cities that seek to be sustainable and inclusive should not impose such a difficult choice on their residents, requiring them to choose between a high-quality daily life: one with affordable, secure housing, more time with friends and family and access to economic opportunities. Instead, they should offer viable mobility and housing options created through integrated land use, transport planning and performance-driven policies to enhance affordability for poorer residents.

Principles for city leaders

Lessons learned from decades of project experience working with governments point to several principles that allow cities to be more inclusive, connected and sustainable through housing and transportation investment choices.

1. Planning for future financing

First, it is critical to plan, sequence and integrate the implementation of housing and mobility investments even if the infrastructure cannot be financed at that time. As cities grow in population and income levels, their public transit systems evolve from informal (e.g. minibuses) to formal (bus rapid transit and metro) and from fragmented and unregulated services to integrated and regulated services.

At higher income levels, cities also devote more attention to sustainability and livability considerations, leading them to invest in upgrading urban spaces that include walkability and bicycle lane networks to accompany mixed-use development and urban regeneration. Because retrofitting such quality spaces and infrastructure has higher costs when it occurs at a later stage, early recognition of their utility is essential so that space and rights-of-way are identified and set aside for later investments.

2. Deploy innovative tools to address financing gaps

Cities often delay investment in public transportation, given their lumpy nature – sizeable investments like a metro line cannot be built in increments. By the time they pursue these investments, it is costly to retrofit dedicated bus lanes or invest in underground mass transit infrastructure. By then, roads are congested, land acquisition costs are high, rights-of-way must be reclaimed, and the neighbourhoods are already densified, as cities like Sao Paulo discovered when introducing later metro lines.

Land value capture – a financing tool that allows local governments to charge fees and taxes to developers and property owners and raise revenue to reinvest into community and city services – offers an effective tool to mobilize financing for large infrastructure programmes before construction starts or even recoup costs after completion. One example of land value capture in practice is the sale of additional development rights resulting from the increase in land values due to the impact of infrastructure (as the cities of Sao Paulo and Rio de Janeiro did).

Betterment levies can recoup a share of infrastructure costs commensurate with the benefit that neighbouring landowners receive from providing infrastructure (as Colombian cities, including Bogota, did to finance much of their recent road network expansion). Cross-subsidy for funding capital expenditures is another under-utilized tool with much potential. Such is the case of the rail and property model used by transport authorities in Singapore and Hong Kong, which leverages commercial property development to cover capital expenditure costs of rail systems.

Similarly, investing in low-cost, evergreen infrastructure such as wide sidewalks and protected bicycle lanes provides significant benefits long into the future, especially in rapidly growing cities.

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No technological solution can solve problems for cities that don’t approach inclusion, livability, connectivity and sustainability holistically when making planning, infrastructure and service delivery decisions.”— Shin-pei Tsay, Head of Global Policy for Cities and Transportation, Uber | Sameh Wahba, Global Director, Urban, Disaster Risk Management, Resilience and Land Global Practice, World Bank

3. Bridge service delivery gaps and share information via technology

Technology and mobility platforms fill gaps in infrastructure and service networks while cities implement new transit modes. In large cities in India, many people rely on the two-wheel moto service to reach the last station in the transit system while the transit agency finishes developing the transit line. Uber Moto and Uber Auto in Hyderabad, respectively, link riders to moto and three-wheeled rickshaw rides that take them to the new metro blue line that serves 200,000 passengers per day. Similarly, moto-taxis in Brazilian cities such as Rio de Janeiro and rickshaws in Egyptian, Bangladeshi and Indian cities connect people to main transit routes.

Technology can also facilitate collecting and distributing information about transportation and housing options in cities so that commuters and urban residents can identify viable, affordable options. The mapping of informal transport systems in cities, such as the Digital Matatus Project in Nairobi, has made the routes visible and accessible to the 30% of the city’s population that relies on such transport. The use of technology to make driver, passenger and destinations legible before and during the ride makes transportation more accessible and safer, especially for women, which is critical to remove one of the key obstacles suppressing female labour force participation in many parts of the world.

Mapping housing availability and prices could facilitate people’s search for adequate housing options. Streamlining property registration, the development of e-conveyancing and publicly accessible property cadasters expand transparency and property right security, which is critical to greatly reduce uncertainty in property transactions. Similarly, mapping transport and municipal infrastructure and creating updated asset registries is beneficial for operations and maintenance.

Sustainable cities

Integrating land use, housing and transport planning facilitated by innovation and technology is critical to making cities more inclusive, connected and sustainable. Early planning and sequencing of implementation is key to success by preserving infrastructure rights-of-way, even if major infrastructure networks are not readily available from the onset due to high cost.

Innovative financing, such as land value capture, can recover part of the capital cost. Lastly, technology offers a unique opportunity to bridge infrastructure and service delivery gaps and to reduce uncertainty and costs facing urban residents in their search for housing and mobility plans.

However, no technological solution can solve problems for cities that don’t approach inclusion, livability, connectivity and sustainability holistically when making planning, infrastructure and service delivery decisions.