September 27, 2019
As published on Forbes.com
The “smart city” has captured the world’s imagination, but policymakers and innovators have not yet built cities that are “smart” enough to survive the challenges of the 21st century. Our cities are unprepared for the future because three megatrends are poised to change the nature and purpose of urban life in the next 30 years. They are mass urbanization, aging populations and the climate crisis. All three are accelerating.
The city as we know it is ill-equipped to cope with changing demographics and rapid population growth. Nor is it prepared to protect residents from extreme heat, rising seas and erratic weather.
Many North American cities with their urban sprawl and lack of public transportation are at the biggest disadvantage. Yet cities have limited financial means and few ways to increase taxes. If they cannot battle all these issues at once, where should they put your limited tax dollars to work first? What type of “smart city” should we aspire to create?
A Smart City Strategy
Cities worldwide need to develop strategies for what they aspire to be in 2050. Those choices will shape the secondary choice of which smart systems to rely on and how to operate them.
At a minimum, future cities will have to become:
(1) Smart bulwarks against an ever-more hostile climate
(2) Attractive communities for aging populations, and
(3) Safe havens for environmental refugees seeking shelter and protection.
These challenges require more and different housing and public infrastructure combined with mass transportation, shared mobility services and electric bikes and scooters. Let’s consider how each megatrend bears on these strategic requirements.
Urbanization and Aging
In 2008, for the first time in human history, more people lived in cities than not. The world’s urban population swelled to 3.3 billion. The resulting congestion, pollution and rises in housing costs did not slow the trend. The employment, education, investment and recreational opportunities were too great to resist, and the family farm was no longer a match for industrialized agriculture.
In my country, Canada, more than 80% of the population already lives in cities, and globally, 55% of human beings have chosen urban living as well. By 2050 that number for Canada will be 90%, while the United Nations estimates that the global urban proportion will increase to almost 70%, adding approximately 2.5 billion people to cities.
A stunning 35 percent of global urban growth will occur in just three countries: India, China and Nigeria. They may set the tone for urban life in the latter half of this century, and that will have an impact on everyone else in the world.
Most cities will need to cope not just with growth, but with aging populations as well. By 2050, more than 25% of the population in East Asia will be over 65 (double what it is today), 27% of Europe will be elderly and so will 22% of the U.S. The outlier, Japan, will have a population that is 40% elderly by 2050!
Many aging urbanites will live on limited pensions or none at all. In many countries, the old will outnumber children and teenagers. This will require massive changes in infrastructure and services that need to be developed now, before it is too late.
Adaptation to Climate Change is No Longer a Choice
Concurrent with the past century’s exponential population growth, the global economy became dependent on fossil fuels. These lifted billions out of poverty, globalized trade, fueled liberalism and created prosperity that prior generations never could have imagined. They also allowed for urban sprawl with all its carbon effects.
Long before Al Gore premiered An Inconvenient Truth in 2006, the climate science community reached a consensus that burning fossil fuels causes climate change by releasing carbon dioxide, methane and other greenhouse gases.
We’re living through the consequences. Record-breaking temperatures, wildfires and storms have devastated communities and created waves of climate refugees from Syria (because of drought), Africa and most recently the Bahamas, where 70,000 people lost everything. Shrinking polar ice and rising sea levels threaten coastal populations and increase their vulnerability to tropical storms.
The Intergovernmental Panel on Climate Change (IPCC) has calculated that humanity has until 2030 to reduce carbon emissions by 45%, otherwise warming will cause irreversible damage to life-sustaining ecosystems, like coral reefs. The likelihood that we succeed is virtually nil. All the while, we’ve continued to build cities that are not only dependent on fossil fuels but dangerously vulnerable to climate change.
As a cleantech and AI investor, I’m hopeful that solar, wind, energy storage, carbon capture, green hydrogen, fusion energy and other new technologies will spare us the worst of the looming climate crisis. Nevertheless, we are likely to pass critical thresholds before these next-gen technologies can decarbonize the global economy at scale.
Like it or not, we’re entering a phase where adaptation to climate change is no less important than curbing emissions. As an investor, I think critically about the cities of the future because they may render obsolete technologies that we all (venture capitalists included) support today—and they may create massive new opportunities that require some imagination to recognize.
How do urbanization, aging populations and the climate crisis intersect? Of all the examples to pick from, the threat of rising sea levels belongs in its own league of terrifying.
The most recent, authoritative study predicts that sea levels will rise two meters by 2100 if emissions continue unchecked. More than 187 million people living on coastlines will likely become environmental refugees by 2050. Asian metropolitan areas, including Shanghai (26 million people), Mumbai (20 million) and Osaka (19 million), are disproportionately at risk. Of course, the seas don’t discriminate. Venice and Miami already flood regularly, while New York, Rio de Janeiro, London, Dubai, Vancouver, Melbourne and others are in danger too.
Jakarta, a city of 10 million people, is already a scary example. It is currently sinking by 20 cm per year because residents are pumping too much groundwater. Indonesian President Joko Widodo approved building an $42 billion emergency seawall around the city. However, if groundwater pumping continues unabated, the sea wall could sink with the city, leaving it even more vulnerable to rising sea levels.
Models predict that by 2050, a third of Jakarta could be submerged. At the same time, if groundwater pumping is banned, 40 percent of the population will lose its source of fresh water. About 9% of Indonesians were older than 60 years in 2017, and the proportion is expected to climb. So, estimate that about 1 million people in Jakarta—a tenth of its population—would be unable to relocate without physical and financial assistance. It’s an urban existential crisis the likes of which the modern world has never seen. No wonder it was decided in late August that Indonesia’s capital will move to a site in sparsely populated East Kalimantan province on Borneo island.
It’s not as if Jakarta’s wealthiest residents could afford to build dykes around their individual homes or desalinate sea water on their own. In the country where I was born, the Netherlands, people understand that better than anyone. About 1/3 of the country is below sea level, and Amsterdam’s airport is a stunning 13 meters below. It requires dykes and canals and a delicate system of continuous pumping to ensure that most of the country can exist.
Many inland cities will be confronted with different environmental crises. In equatorial zones, summer heat waves will become nonsurvivable without neighborhood or even citywide climate controls. In forested areas, increasingly aggressive wildfires may force cities to abandon their surrounding suburbs and protect the core. Where violent tornadoes and hurricanes place millions at risk, cities will have to decide what’s protectable.
The threat of climate change to cities is always collective, and so is the required course of action. It requires that policymakers make very strategic choices. The free market cannot replace a freshwater source for millions of people, nor can it orchestrate collective defense for 10 million people. We will need to adapt our city structures, governmental systems and cultures to battle these challenges. Perhaps countries like Japan, the Netherlands and Singapore can offer a road map of how to do this.
Environmentally Safe Cities Will Challenge Existing Political Structures
The problem cities face in the coming decades is exceptionally wicked. Increased urbanization is driving people to cities that offer opportunity, protection and excitement. Meanwhile, climate change is threatening those very cities and demanding collective action that will curb individual freedoms in exchange for a safe and sustainable environment.
Take a quaint example that already vexes an iconic city. In New York, ridesharing has caused severe congestion, as Uber and Lyft drivers in need of flexible employment lure people away from public transit.
A 2018 report found that for-hire vehicles account for 29% of traffic in New York, and they spend 41% of their working hours empty. In response, New York has frozen new registrations of for-hire vehicles—which includes Uber and Lyft—and has introduced congestion pricing in parts of the city. Uber has challenged the registration freeze in court. There’s no end in sight to this conflict.
The Uber and Lyft dilemma illustrates how the individuality of today’s city life, where personal ambition and choice have no bounds, may clash with collective needs. Drivers seeking income have built businesses on the discontents with and limits of New York’s public transit system. Yet these drivers have proliferated to an extent where they jam up streets, infuriating other car owners and disrupting vital public services such as first responders and waste disposal.
What does this mean? The fortified castle towns of yore may have more in common with future cities than the sprawling metropolitan areas of the present. The discontents of ridesharing are quaint compared to the conflicts that climate-impacted cities will have to negotiate.
How to handle the combined threats of accelerating urbanization, aging populations and environmental catastrophe? The free market on its own is not equipped to make such decisions.
Future cities will demand new designs based on shared protection and sustainability, supported by all the smarts available. And these cities may not be able to accommodate all the free-market ideologies and individualism that predominate in North America and have a growing fanbase elsewhere.
Opportunity in Despair
The picture I’ve painted may look grim to some, but it could offer opportunity and a path forward for humanity. Think of how Paris achieved its present grandeur by building upon the vision of city leaders who constructed the grand boulevards a few hundred years ago. They let go of the past in favor of the future.
Cities today have a similar opportunity to build new infrastructure from their core into surrounding municipalities. These intentional megacities will form bigger legal entities that can provide transportation, housing, work and services more efficiently and cheaply. City leaders must think big, not small.
As a cleantech and AI investor, I have the privilege to support entrepreneurs who pioneer innovative sustainable and smart technologies for future urban life. They’re developing new forms of public transportation, urban agriculture, construction, housing, and smart building technologies that can create jobs and stand up to a changing climate.
The outlook may not be all that grim if we start developing and implementing the right solutions soon. But please realize that time is not on our side.
I hope that by illuminating important issues for cities in the next 30 years, I can inspire cities to focus on strategic decisions and motivate entrepreneurs to pursue breakthrough innovations that will enable human prosperity on a fast-changing planet. Forget incrementalism. Our goal should be to adapt our cities as soon as possible to the challenges of urbanization, aging populations and climate change. Let’s think big for the future. That would be smart.