Cities are the hearts of nations, and their pulse can be felt upon touchdown. Does it take too long to make your way out of the terminal? Can you easily find a trolley for your luggage? Are taxis waiting to take you to convenient hotels? Do bad roads turn a ten-mile ride into a two-hour nightmare? How readable is the signage along the way? Do the streets look clean, or are garbage cans overflowing? Those and many other successful elements of urban infrastructure and services create a world-class city.
World-class cities do not result from public efforts alone. Cities are limited in resources and must engage the private sector to meet infrastructure and service provision needs. Urban public-private partnerships (PPPs) are one answer. They help deliver city services and infrastructure by introducing private sector innovation, efficiency, and financing. We see long-term, positive effects of PPPs across the globe, from a toll ring road in Tamil Nadu to the reinvention of Barcelona for the 1992 Olympics.
The role of PPPs in urban settings is particularly relevant now, as the world experiences a massive upsurge in the population of cities. By 2030, many cities will have doubled in population. The impact will be strongest in many African and Asian cities with rudimentary infrastructure –metropolitan areas that are already bursting at the seams. PPPs will allow these constrained cities to meet the needs of their burgeoning populations, supplying the resources that make a city livable and attractive, in the midst of this unprecedented demographic shift.
Thinking ahead guarantees the sustainability of rapidly urbanizing areas around the globe.
The success of these PPPs will be measured by how they contribute to urban growth: making opportunities for businesses to innovate, assuring services reach the right people, and keeping citizens mobile, employed, and safe. After all, as pioneering urban economist Edward Glaeser (Triumph of the City) says in Handshake’s feature interview, cities are ultimately about human capital, not physical capital. This basic understanding underpins the diversity of urban PPPs profiled here, including those that:
Handshake showcases urban PPPs that make a difference at the local level, such as community water supply schemes and popular bikeshare programs. These projects show that it’s not always necessary to attract big players to improve citizens’ quality of life. Small-scale projects in transportation can include modest bus terminals (a steady revenue stream is assured because you capture value around the land, attracting shops and other renters), a sole cable car, or a parking garage (the direct revenue stream makes this one of the most straightforward urban PPPs around).
Handshake’s feature on innovative transportation PPPs includes links to Bogota’s successful, cost-effective TransMilenio, which operates like a rail-based system, and São Paulo’s Yellow Line, which boosts the reach of that city’s urban rail network to 420 km. Mass Rapid Transit (MRT) projects like these are tools for urban expansion, as experts explain in an article about balancing MRTs’ complexity and risks with the benefits.
Treat waste and deliver water
In wastewater treatment, the private sector builds and operates the treatment facility, and absorbs the up-front capital investment while the public sector provides residential connections and bears the risk of collecting user charges. Water delivery projects in Morocco, Colombia, and Bucharest present several different options for city governments to fulfill the basic obligation to deliver water 24/7. Manila Water deserves singling out in our pages because the city was infamous throughout Asia for its outdated, inefficient water system. The privatization of Manila’s Metropolitan Waterworks and Sewerage System, on which IFC was lead advisor, fundamentally changed the sector.
PPPs can also be the key to brownfield development, when old industries have disappeared and the land left behind, often in prime areas, is too polluted to build on. A forward-looking government will clean up that land and bid it out for redevelopment. The same is true for waterfronts – prime spots for squatters in cities with little or no provision for low-income housing. Mixed-use PPPs provide a way to compensate the squatters fairly, clean up the land, and put amenities and real estate in a central location.
Supply low-income housing and develop slums
Many cities see the benefits of mixed-use and low-income housing, offering incentives to developers. Handshake gives readers insight into Latin American countries that have instituted sweeping structural reforms in the urban housing sector during the last two decades. These countries, including Brazil, Chile, Colombia, and Mexico, have built sound regulatory environments conducive to the growth of primary mortgage markets. In the same section, we address the PPP potential of slum development, noting that the poor’s purchasing power can represent a significant market for the private sector if organized and leveraged effectively.
If you build it, they will come
Cities must plan ahead and build infrastructure before it’s needed, being proactive rather than reactive. The investments may not break even quickly, but they attract people and firms that are vital for vibrant world-class cities. Chinese cities, for example, invested billions in infrastructure in anticipation of growth, and many of their cities are already up to capacity. A forthcoming World Bank publication excerpted in this issue explains how China’s rapid urbanization could ultimately create 45 million jobs in urban areas. In Barcelona, innovation and foresight also pay off for generations that follow, explains Mateu Hernández, CEO of Barcelona Global, in Handshake’s first video interview.
Thinking ahead guarantees the sustainability of rapidly urbanizing areas around the globe, and our treatment of cities and climate change reinforces why cities must be compact and energy-efficient, green and sustainable. Sustainable cities are also inclusive, former U.K. Secretary of State for International Development Clare Short reminds us in Handshake’s second feature interview. These cities integrate all of their citizens into the socioeconomic fabric, engaging them in developing the practical systems that comprise “real democracy.”
Ultimately, as with most things in life, the key to success for cities is in doing all of this well, as Cities Alliance Manager William Cobbett tells Handshake readers. “Getting cities right…will become the most important developmental challenge of this and the next generation,” he concludes, explaining what’s at stake in rapid urbanization. “Cities are the places where we
will fail, or succeed, in dealing with most of our global challenges.”