Cities that work. Issue 18

Number 18MakingItIndustry for Development

Cities that work

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A quarterly magazine.Stimulating, critical andconstructive. A forum fordiscussion and exchangeabout the i ntersection ofindustry and development.

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EditorialThe conventional view holds that villages and towns first formed after theNeolithic revolution, some 12,000 years ago. If so, then we must acknowledgethat urban settlements have not only endured but have spread and grown overthousands of years because their advantages have far outweighed thedisadvantages, so far, at least. Today, with half of the population of the worldliving in cities and the rate of urbanization ever-increasing, cities occupy aspecial position in the global development agenda.

Cities can provide significant socio-economic benefits. By concentratingpeople, investment and resources, cities heighten possibilities for economicdevelopment, innovation and social interaction. As the United NationsSecretary-General, Ban Ki-moon, said, “The road to sustainability runs throughthe world’s towns and cities. By building sustainable towns and cities, you willbuild global sustainability.”

Yet, rapid urbanization poses some of the greatest challenges of the 21stcentury. For cities in developing countries, the main challenge is how to provideadequate public services and job opportunities to residents, includingmarginalized populations. In high-income countries, cities that already providebasic public services now have to pay particular attention to issues such asenergy-efficiency, water and waste management, and smart governance.

Cities all over the world face the urgent requirement that they transition toways of living and of working that no longer pollute the air and that result in asharp reduction in the production of greenhouse gases. Many cities will alsoexperience the impacts of climate change which are likely to compound thepressure on the use of natural resources and the environment already linked torapid urbanization.

An expanding population with higher expectations will require innovativesolutions to the questions of how industry can be greened, public infrastructureimproved, and social services made available to all. Clearly, cities face a range ofchallenges to which they will respond with diverse priorities, objectives andsolutions. There is no ‘one-size fits all’ approach towards urban sustainability,but all our urban areas must re-invent themselves and quickly adapt.

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Cover illustrator,MIKHAIL EVSTAFIEV,is a Russian artist,photographer, andwriter. His paintings andphotographs have beenexhibited in differentcountries, and are in thecollections of galleries, aswell as in privatecollections. His work hasappeared in leadinginternational magazinesand newspapers and hasbeen published innumerous books.www.evstafiev.com

GLOBAL FORUM6Letters8 Scaling up business actionon human rightsFilippoVeglio on forward-thinkingcompanies promotingrespect for human rights10Hot topic: Paper orpaperless? The Two Sidesinitiative on print and paperas an attractive, practical andsustainable medium, plusKuang Chen on why goingpaperless won’t work

14Business matters – newsand trends

MakingItIndustryforDevelopment

The designations employed and thepresentation of the material in this magazinedo not imply the expression of any opinionwhatsoever on the part of the Secretariat ofthe United Nations Industrial DevelopmentOrganization (UNIDO) concerning the legalstatus of any country, territory, city or area orof its authorities, or concerning thedelimitation of its frontiers or boundaries, orits economic system or degree ofdevelopment. Designations such as“developed”, “industrialized” and“developing” are intended for statisticalconvenience and do not necessarily express ajudgment about the stage reached by aparticular country or area in the developmentprocess. Mention of firm names orcommercial products does not constitute anendorsement by UNIDO.The opinions, statistical data and estimatescontained in signed articles are theresponsibility of the author(s), includingthose who are UNIDO members of staff, andshould not be considered as reflecting theviews or bearing the endorsement of UNIDO.This document has been produced withoutformal United Nations editing.

Contents

Editor: Charles [email protected] committee:Thouraya Benmokrane, Jean Haas-Makumbi, Sarwar Hobohm (chair),Kazuki Kitaoka and RavindraWickremasingheDesign: Smith+Bell, UK –www.smithplusbell.comThanks for assistance to ZHONG Xingfei and Laura Gil MartinezPrinted by ImprimerieCentrale, Luxembourg, on PEFC-certified paper –http://www.ic.lu To view this publication online and toparticipate in discussions aboutindustry for development, please visitwww.makingitmagazine.netTo subscribe and receive future issuesof Making It, please send an emailwith your name and address [email protected] It: Industry for Developmentis published by the United NationsIndustrial Development Organization(UNIDO),Vienna International Centre, P.O. Box 300, 1400 Vienna, AustriaTelephone: (+43-1) 26026-0, Fax: (+43-1) 26926-69E-mail: [email protected] 18, 1st quarter 2015Copyright © The United NationsIndustrial Development Organization No part of this publication can beused or reproduced without priorpermission from the editorISSN 2076-8508

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FEATURES16Can cities feed theirinhabitants?David Thorpelooks at the options20Eco-cities: creating acommon languageJan Dictus considers thequalities that define an eco-city

KEYNOTE FEATURE22 In the century of citiesParag Khanna surveys theopportunities andchallenges for the world’smetropolises in the 21stcentury

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36Country feature: ChileTowards a knowledge-basedeconomy, plus interviewwith Luis Felipe Céspedes,Minister of Economy,Development and Tourism 40Good business – Profileof Oribags Innovations

30Sustainable consumptionand lifestyle initiatives inAsian cities PatrickSchroeder and Uwe Webershare some experiencesfrom the EuropeanCommission’s SWITCH-Asia programme32Getting the new urbanagenda right FernandoCasado Cañeque on theimplications for innovationin growing cities34Why we need morewomen engineers Interviewwith structural engineerRoma Agrawal

POLICY BRIEF42 Green industrial policy: atransition of values44 Networks for prosperity:advancing sustainabilitythrough partnerships46 Endpiece Water: catalyst forconflict or for cooperation?

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LETTERS

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Banking ongrowthIn “BRICS bank – new bottle.How’s the wine?” (Making lt,number 16), Sameer Dossaniadmitted, “Even in a best-casescenario, initiatives like the[new BRICS developmentbank) are likely to take a GDP-centred, Northerndevelopment-modelapproach” but added “despiteits many potential flaws, theproposal to establish the bankshould be viewed withcautious optimism.”

Well, we certainly need somenew initiative for industrialdevelopment.

Global growth is slowing andwell below the rate before therecession of 2008-09. Clearly,the US economy will be stuckin its current low growthtrajectory, at best, unlessbusinesses start to invest innew equipment, plant andtechnology.

As Dossani points out, “Theperiod from 1980-2010 was inpart defined by extremely slowgrowth globally. Where growthdid occur in the North, it oftenturned out to be the result ofspeculative bubbles. This wasbecause of what companiesargued were relatively low ratesof profitability on newproductive investment,especially compared to returnson financial speculation. Thiscoupled with low rates ofinterest allows companies to

stack up cash and take outmore debt to finance sharebuybacks and financial assetpurchases.”

So, the stock market isbooming while investment isat a standstill.

The cash that is stacked up isimmense. I read recently thatthe top 2,000 capitalinvestment spenders in 2013had a staggering pot ofUS$4.5tn. Yes, four and a halftrillion dollars! Yet globalcapital expenditure fell by atleast 0.5% in real terms in 2014,having fallen by 1% in 2013.

Dossani also pointed out: “Inthe South, the only countriesto grow were those thatignored WashingtonConsensus policies – China,Malaysia, Singapore and a fewothers – and used state-backedborrowing and investment todrive an industrial policy.”

The International MonetaryFund’s managing director,

Sameer Dossani’s feature inMaking lt number 16 about thenew BRICS development bank.

Christine Lagarde, said that theIMF has reduced its forecastagain for global economicgrowth for 2015. Interestingly,Lagarde’s answer to improvinggrowth was “more publicinvestment”, which is ironic asmost governments are cuttingpublic investment in order tomeet fiscal austerity targets.Now the IMF says thatcountries should boost growthby governments investing ininfrastructure, education andhealth. “Without action,” saysLagarde, “we could see theglobal economic supertankercontinuing to be stuck in theshallow waters of subpargrowth and meagre jobcreation.”● Nicole Claes, websitecomment

‘Fragile middle’Interesting issue on “Middle-income countries” (Making It,number 14), in particularSumner and Vázquez’s critiqueof how we classify what are“low and middle-incomecountries” and how thelocation of global poverty ischanging. For example, only aquarter of the world’s extremepoor live in countriesclassified as “low-income”.

Can I direct readers to afascinating report on theFinancial Times website, byShawn Donnan, Ben Blandand John Burn-Murdoch – ‘Aslippery ladder: 2.8bn peopleon the brink’. They point out,“In 2010, 40% of the world’spopulation – 2.8bn people –

lived on US$2-10 a day. In thedeveloping countries, therewere 2.4bn people surviving onless than US$2 a day and just662m earning more thanUS$10 a day. In 1981, 58% ofthe world’s population lived onless than US$2 a day. Just 20%of the world – 930m people –earned US$2-10 a day.”

This reflects a remarkableshift.

But, as they go on to say,“extending the gains isbecoming harder now that thegreat emerging-market growthspurt of the past 30 yearsappears to many to be comingto an end. As growth slows, therise of an emerging-marketmiddle class may look lessinevitable.”

“As poverty has fallen, thenumber of people clustered ina narrow band above thepoverty line has grown. Butonly a relatively small numberof people tend to make itbeyond that. The result is thatfour in 10 of the world’s peoplenow live in its fragile middle.”

It’s a major worry that theslowing growth in ‘emerging’economies like China maypush many people back belowthe extreme poverty line. ● Peter Baker, by email

Inspiring andremarkableTop marks for your series on“Good Business”. Each issueyou highlight a small companymaking waves in trulysustainable industrial

The Global Forum section of Making It is a space for interaction anddiscussion, and we welcome reactions and responses from readers aboutany of the issues raised in the magazine. Letters for publication in Making Itshould be marked ‘For publication’, and sent either by email to:[email protected] or by post to: The Editor,Making It, Room D2142, UNIDO, PO Box 300, 1400 Vienna, Austria. (Letters/emails may be edited for reasons of space).

GLOBAL FORUM

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development. And they arefantastic stories:

• The Sri Lankan businesswhich turns discarded coconuthusks into useful materialsuch as coir and husk chips.

• The Chinese companywhich manufactures water-efficient toilets. As the (female)owner says: “Shanghai has apopulation of 23 millionpeople. Imagine if all of themused our water-saving toilets.Clean water wastage could bereduced by nearly 270 milliontonnes in the whole city.”Imagine that spread across theworld.

• And my favourite, the guy inHaiti who, despite the 2010earthquake destroying hisnewly-built factory, was drivenon by the energy of his

employees to start again. Theymanufacture cookstoves thatrequire just half the amount ofcharcoal needed by traditionalones. Haiti’s population hasabout two million households,most of which use thesecharcoal stoves. Theproduction of charcoal hascontributed significantly tothe deforestation of Haiti, soEcoRecho stoves have a far-reaching environmentalimpact as well as a practicalsolution.

Power to the likes of NimaliChips & Fibre Mill, the YiyuanEnvironmental Group andD&E Green Enterprises. Andthank you for bringing themto our attention. Trulyinspiring.● Eva Thorstvedt, by email

Spelling it outI noticed a letter in Making It(issue number 16) which said itwas pointless to create groupingslike ‘BRICS’ and ‘MINTs’ to linkcountries which are “emerging”markets. I agree, they are tooheterogeneous to be reduced to asimple acronym. However, I’vejust read about another one thatmakes sense. Some economiesare “Without InternationalMonetary Power” – they are‘WIMPs’. This is the reality mostcountries face because they arenot able to use their nationalcurrencies freely in internationalfinancial transactions. They haveto use “key currencies”, such asthe dollar or the euro. Such aconstraint means these ‘WIMPs’often have to subordinate

national policy objectives tosome external anchor and is whymany policymakers complainabout the effect that an increasein the Federal Reserve’s policyrate can have on economiesacross the world, whetheremerging or not. ● Ricardo Real, by email

Off the shelfOn your website it makesreference to “print editions” ofMaking It magazine – where canwe buy them?● Teri Dyson, by emailEditor’s reply – A subscription to theprint version of Making It isavailable free of charge. Just sendyour name and address [email protected] can also request back issues.

For further discussion of theissues raised in Making It, pleasevisit the magazine website atwww.makingitmagazine.net andour Twitter page, @makingitmag.Readers are encouraged to surfon over to these sites to join inthe online discussion and debateabout industry for development.

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GLOBAL FORUM

The global conversation on business andhuman rights has shifted and evolved sincethe endorsement of the UN GuidingPrinciples on Business and Human Rights(UNGPs) in 2011. We are no longer askingwhether businesses have a responsibility torespect human rights, or even what thatresponsibility is. Together with theInternational Bill of Rights and theInternational Labour Organization’sDeclaration on Fundamental Principlesand Rights at Work, the UNGPs clearlyoutline where businesses’ responsibilitylies. Now, the business community isasking what that responsibility means inpractice – in which specific geographiclocations, for what specific industries andin which specific contexts – and howbusinesses can most effectively meet thatresponsibility in their day-to-dayoperations. Businesses are now expected tobe able to know and show what steps theyare taking to meet this responsibility.

Over the last several years, leadingbusinesses have been working to meet thecorporate responsibility to respect humanrights as defined within the UNGPs: toavoid infringing on the human rights ofothers, and to address adverse impactswhen they occur. Why are businesses doingthis? Many are responding to the growingexpectations of investors, business partnersand governments, who are increasinglyasking hard questions of global businesses

and incorporating respect for human rightsinto relevant policies, standards andregulations. Other businesses areresponding to the growing risk ofreputational harm which occurs when corebusiness activities are linked to humantragedies, such as the collapse of apparelfactories in Bangladesh.

In some sectors, there is a growingrecognition of the commercial costsassociated with failing to manage theseissues, such as operational inefficiencies insupply chains and the operational costs ofconflict with local communities in theextractives sector. For other businesses, it issimply about ‘doing the right thing’ andensuring that their social footprint isaligned with core corporate values, as well as

the values of individual employees. Andfinally, for some, the expectations of theUNGPs reflect leading practices, and theUNGPs, alongside a number of othersustainability themes, represent anopportunity to differentiate themselvesfrom their industry competitors.

The barriers However, global experience hasdemonstrated that this can be a lot morechallenging in practice than it sounds.Despite extensive guidance material,companies and those responsible forhuman rights issues within thosecompanies face a number of barriers tooperationalizing respect for human rightsacross their businesses.

Working with over 20 member companiesof the World Business Council forSustainable Development (WBCSD) andShift, an independent, non-profit centre forbusiness and human rights practice, weanalyzed the key barriers. They range fromawareness and understanding of therelevance and meaning of human rights forthe business, to the internal leadership andcommitment necessary within theorganization, to translating that

Scaling up businessaction on human rights

FilippoVeglioon how forward-thinking companies are opera -tionalizing respect for human rights across their businesses


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commitment into the policies andpractices of the company’s daily operations,amidst a diverse set of competing, andsometimes overlapping, businesspriorities. All of this takes place within acontext marked by the complexity oftoday’s global business models and valuechains, and the uncertainty that necessarilyaccompanies the relatively new paradigmof business and human rights.

However, if we want to encourage morecompanies to take action, it is not enoughto describe barriers. On the contrary, thefocus must lie on distilling actual solutionsdevised and put in place within companiesto overcome those barriers. In the sameissue brief, we therefore set out to sharesolutions tried and tested by WBCSDmembers. Overall, we boiled it down to 15sets of solutions, clustered around five setsof barriers. While some of the examplesfeatured are success stories, the majorityare ongoing sets of ideas and practicalstrategies.

Actual solutionsThe solutions are wide-ranging: fromproperly framing the ‘business case’ forrespecting human rights, to assigningresponsibility internally for taking thehuman rights agenda forward anddeveloping a ‘roadmap’ to ensure that thebusiness is respecting human rights. Theyinclude linking a policy commitment torespect human rights to existing internalstrategic priorities, and leveraging the buy-in that those initiatives already enjoy. Othersolutions are mapping human rights risksand looking at the actual impacts, asidentified through company grievancemechanisms, from the findings of socialperformance compliance audit, fromcomplaints from civil society or directly

affected stakeholders or from mediareports. Yet another solution is to transformhuman rights policy into practice by havingeach business function take up its part ofresponsibility.

Peer-to-peer insights are useful forcompanies at all stages of their humanrights journey. Companies that are kick-starting their human rights activities – andtrying to determine how best to ‘dive in’ –are looking for a menu of practical stepsthat might help them get started, steps thattheir peers have found to be mostimportant and effective. For companieswith greater experience, it is more aboutidentifying additional strategies that mayhelp them to overcome persistentchallenges.

Looking ahead, it is safe to say that themanagement of human rights issues willbecome more important to companies inthe coming years. Our ambition as a CEO-led organization of forward-thinkingcompanies is to ever more strongly linkhuman rights to the wider sustainabilityagenda. This in turn will enable us to laythe groundwork for moving beyondcompliance and audit-based thinking. We will continue to enable “learning bysharing” by featuring both good practicesand difficulties faced by companies,articulating how they can put the GuidingPrinciples into practice, and outlining themost effective actions they can take toprevent, mitigate and address humanrights impacts. We will also work withpartners to continue to advocate aprogressive business perspective in view ofcreating the conditions where moresustainable companies will succeed and berecognized, including in terms of how theyembed respect for human rights acrosstheir operations.

● FILIPPO VEGLIO is Director, Social Impact,World Business Council for SustainableDevelopment (WBCSD).

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“If we want to encourage morecompanies to take action,it isnot enough to describebarriers. On the contrary, thefocus must lie on distillingactual solutions devised andput in place within companiesto overcome those barriers.”


HOT TOPIC

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GLOBAL FORUM

Paper has been around for almost 2,000years, and during this time it hasundoubtedly established itself as the mosteffective and versatile means ofcommunication. Even in today’s digitalage with the vast range of alternativemedia to choose from, the unique array ofpractical and aesthetic qualities of papersimply can’t be matched by usingelectronic alternatives.

Environmental concerns have moved tothe top of almost every agenda in recentyears, and have an increasing influenceover the decisions we make every day. As the environmental debate has gatheredmomentum, so have the myths andmisconceptions suggesting that the paperindustry is responsible for massdeforestation and has an adverse impacton the environment. It doesn’t.

As always, there are two sides to everydebate, and paper has a greatenvironmental story to tell. This is anindustry that depends on a renewablesource for its principal raw material, andone that leads the world in recycling.

Paper isn’t the enemy of the environment

and it doesn’t have to cost the Earth. Paperdoes use trees, its production doesconsume energy and, too often, wastepaper ends up in landfill sites. But ifmanaged in a different way, paper is alsoone of the few truly renewable andrecyclable raw materials we have. The paperindustry is facing up to its responsibilitiesand investing heavily in all areas ofproduction and sourcing of raw materialsto minimize its environmental impact.

Myth: Making paper always destroys forestsEuropean forests have grown by over 30%since 1950 and are increasing by 1.5million football pitches every year – anarea four times the size of London.

In some countries, particularly in thetropics, issues over land rights and naturalforest conversion to industrial plantationsare cause for concern to the paper industry,NGOs and consumers alike. The Two Sidesinitiative supports solutions to theseproblems and recognizes the need tosupport products which can clearly betraced to sustainable sources.

In northern Europe, where almost allancient forests are protected, paper comesfrom managed semi-natural forests wherethe cycle of planting, growing and loggingis carefully controlled. Historical concernsin northern Europe and Canada have nowbeen largely resolved through co-operation between legislators,campaigners and forest industries toprotect ancient forests.

Well-managed forests provide a naturalhabitat for wildlife. There is always roomfor improvement and the EuropeanEnvironment Agency (EEA) has stated that‘Forestry practice in Europe is developingin a way that can be considered good forbiodiversity.’

The other side of the page

Paper orpaperless?

The Two Sides initiative wants to dispel common environmentalmisconceptions and promote print and paper as an attractive,practical and sustainable communications medium.


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and the Programme for the Endorsementof Forest Certification (PEFC). At themoment, too few of the world’s forests areformally certified but Two Sides activelysupports certification programmes andbelieves these provide consumers withreassurance.

Myth: Making paper uses a lot of non-renewable energy and has a highcarbon footprint According to the World ResourcesInstitute, with 1% of the world’sgreenhouse gas emissions, the pulp, paperand print industry is one of the lowestindustrial emitters.

On average it takes 500 kilowatt hours

(Kwh) to produce 200kg of paper; theaverage consumption per head inEurope. This is comparable to driving anaverage family car 600 miles. The paperindustry is the biggest user of renewable,low-carbon energy and 54% of the energyused in European paper-making isbiomass-based – more than in any othersector.

Myth: Electronic communication is more environmentally friendly than printand paper“Go paperless”, “go green” and “savetrees” are common themes these days asmany corporations and governmentsencourage their customers andemployees to switch to electronictransactions or communications. But arethese appeals to help the environmentmade regardless of the facts?

Campaigns that seek to eliminate paperare often focused on a singlecharacteristic and do not take intoaccount every stage in the life cycle ofboth paper and online methods.Organizations that truly want to makeresponsible environmental choicesshould do so based on factual, verifiableinformation.

Customers’ preferences and onlineaccess are also important. Rather thanasking which is better – paper orelectronic communication – we shoulduse life cycle thinking to figure out whichcombination of the two has the leastimpact on the environment, while bestmeeting social and economic needs.

When considering that print and paperare based on wood, a natural andrenewable resource, and that over 70% ofprint and paper is recycled in Europe forreuse, it can be concluded that, in a multi-media world, print and paper may be thesustainable way to communicate.

The amount of electronic productsdiscarded globally has sky-rocketed

Myth: Paper is bad for the environmentPaper is based on wood, a natural andrenewable material, and as young treesgrow they absorb CO2 from theatmosphere. Furthermore, as a woodproduct, paper also continues to storecarbon throughout its lifetime. A well-managed forest, used and replanted,absorbs more carbon dioxide than amature forest consisting of older trees.

The paper industry has a number ofrespected certification schemes ensuringthe paper you use has come from asustainable forest source. There are some30 schemes in existence, but the two mainauditable certifications that have emergedare the Forest Stewardship Council (FSC) ➤

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recently with 20-50 million tonnesgenerated every year. In Europe, e-wasteis increasing at 3-5% a year, almost threetimes faster than the total waste stream.

Myth: Packaging is wasteful and unnecessaryThe primary function of packaging in allits forms – plastics, tins, glass andpaperboard – is to protect goods whilst intransit, storage and distribution. Itprevents waste through breakage,spoilage and contamination, and extendsproduct shelf-life. A secondary, butimportant, purpose is to provideconsumer information about the productand help with brand identity anddifferentiation.

Minimizing waste, particularly food, isa vital global challenge. As a result ofefficient packaging, product damage intransit remains below 5% in thedeveloped world, whereas, in thedeveloping world, wastage rates can be ashigh as 30%.

Paper-based packaging has an excellentenvironmental record. On average, UKmanufactured corrugated boxes contain76% recycled fibre. Once used, paperbased packaging is easy to recycle. InEurope, the collection of packaging ishugely successful with over 80% collectedfor recycling. This superb recycling rateprevents an area of board the size ofGreater London from going to landfillevery four months.

● TWO SIDES was established in 2008 bymembers from the graphic communicationsindustry, creating a forum for the industry towork together and share experiences;improving standards and practices; andmaximizing customer confidence in itsproducts.

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➤

Technologists have been striving to gopaperless for at least 30 years, but it stillhasn’t happened. (The idea sounded goodon paper!) The reality is that, for mostorganizations, there are multiple places intheir workflow where the analog meets thedigital, and where technology still hasn'tbeen able to replace important legacyprocesses. (Editor’s note: a legacy process is anold method, technology or process.)

Instead of throwing out legacy processesthat are working, however, organizationswould be wise to look to new solutions thatinclude paper as an option in their digitalworkflows, embracing the old whileushering in the new. Here's why:

Paper is often still the best tool for the jobAlthough a lot of our tools and systems arenow digital, many of the touch-points thatbusinesses have with their customers andconstituents remain analog. In manysettings, paper will long remain the mostpractical choice for capturing information.In some situations, it is the only choice:paper does not break, run out of batteries,risk security breaches, or need upgrading.

New systems are not designed for allpossible usersA recent survey of health insuranceenrollees in the United States shows that aweb-only self-service experience is notsufficient, and many still have to spend

time in person or on the phone topurchase insurance. Systems that aremeant for everyone must be designed foreveryone, not just folks with iPads or latest-model computers with high-speedInternet access. The goal should be to meetcustomers where they are, not ask them tochange behaviour that has beeningrained – and trusted – for decades.

Paperless is not a smart goalSmart IT decision makers know thatevolution, not revolution, is the sensiblepath forward. But when it comes to paper,there has not been a reasonableevolutionary path available. The choice hasfelt black or white – paper or no paper. Infact, the best solution is both/and. Newtechnologies now make this possible,enabling a gentle, evolutionary pathforward.

Throwing out legacy processes oftenresults in project failureThe US Department of Veteran Affairscreated the Veterans Benefits ManagementSystem (VBMS) to replace paper processes.When the system fails, which is regularly,patients turn back to paper, and the legacypaper processes are burdened more thanever. Systems that incorporate both paperand digital workflows, and integrate theresulting data in one backend store, cangreatly increase both organizational

Reasons goingpaperless won’t work

Kuang Chen thinks that paperless processes have their virtues,but warns against confusing the means with the ends.


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efficiency and customer satisfaction. Rip and replace systems, like the VBMS,often force too much change, too quickly,throughout the organization. The failurerate is high.

Lots of valuable data remains on paperThe paperless mindset often overlooks acritical fact: vast stores of valuableinformation are still housed on paper.When we think of big data as onlyincluding the information we can easilyaccess – like web logs and click streams –we are missing a huge opportunity. Both commercial and public sectororganizations need solutions that helpthem analyze paper-based data with bigdata tools. This view embraces data in all its forms.

The idea of “paper vs. paperless” is a falsedichotomy. Data comes in both forms, andwe need to think more about how to get thedata we need rather than about the form itcomes in. As the digital and analog worldsincreasingly meld together, we need tocentre our thinking around “goingpaperless” as a means to use digital data,not an end.

●KUANG CHEN is co-founder and CEO ofCaptricity, a California-based technology start-upthat transforms multi-channel data – including datagenerated by complex handwritten paper forms –into ready-to-process business information.

“Instead of throwing outlegacy processes that areworking, organizations wouldbe wise to look to newsolutions that include paper as an option in their digitalworkflows, embracing the oldwhile ushering in the new.”


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■ Today, there is no debate:resource productivity must beamong the top priorities – if notthe top priority – of industrialmanufacturers around the world.Recent shifts in both supply anddemand are squeezing thesecompanies from both sides. Onthe supply side, raw materials areincreasingly scarce, making themmore difficult and moreexpensive to procure. At the sametime, demographic changes –

■ China’s environment ministryis to consider whether theperformance of provincialofficials should take account of‘green GDP’ – which measuresthe environmental damagecaused by economic growth. Thecountry’s environmental crisishas been blamed in part onperformance targets that havemeasured success in terms of thepace of economic growth,meaning that officials have racedto build new roads, factories,power plants and housing,without considering theenvironmental consequences.

President Xi Jinping has toldofficials: “We can no longer

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BUSINESS MATTERS

primarily in emerging markets –are increasing the demand forfinished goods. These trendshave been building over the pastseveral years, and they willcontinue to gain momentum. Asa result, industrialmanufacturers will need to domore with less.

Compounding this problem isthe fact that the easy gains havealready been captured. Mostorganizations have already taken

the obvious steps – for example,upgrading their lighting andautomating their heating,ventilation, and air-conditioningcontrols. Yet they are nowbumping up against the limits ofwhat they can accomplish using atraditional approach. Why? Thefundamental premise of thatapproach – in which resourceproductivity is subordinate toother operational priorities – isno longer valid. (McKinsey)

Fifteen years ago, Huda Janahistarted her business, GlobalCargo and Traveller Services,with start-up capital of 1,000Bahraini Dinars (aroundUS$2,600 at today’s exchangerate). She ran the business single-handedly from an office in asmall rented space in Muharraq,Bahrain’s third largest city.

For the first year, all progresswas blocked because herapplication for a commercialregistration was rejected by theMinistry of Commerce. She wastold that women could notreceive a commercial registrationto operate in the cargo industry.Undaunted, Janahi refused toaccept no for an answer and sheturned to the Manama office ofthe United Nations IndustrialDevelopment Organization(UNIDO) for help. In 2001, aftergraduating from the UNIDOentrepreneurship developmentprogramme, she applied againfor registration and, withUNIDO’s support, herapplication was finally accepted.

Within a few years, Janahi builtup her company into a hugely

Closing the gapsuccessful enterprise and, in2008, she signed a merger worthUS$3m. with the Kuwaiti cargocompany, Global LogisticCompany, which serves the wholeGulf region and much of the restof the Middle East. Today, Janahiis an award-winningbusinesswoman, one of the mostinfluential women in the Arabworld according to Forbesmagazine, and is hailed as a rolemodel for budding femaleentrepreneurs across the Gulfregion.

For UNIDO, the economicempowerment of women is keyto building healthier, bettereducated, more peaceful andmore prosperous societies, andthe organization is working hardto ensure that women both helpcreate, and benefit from,inclusive and sustainableindustrial development.

Letting women participatemore fully in economic life canyield enormous economicbenefits but this is an area wherethe Middle East and North Africa(MENA) region as a whole lagsbehind. In the MENA region, the

gap between men and women’sparticipation in the labour forceover the past decade was almosttriple the average gap in theemerging market and developingeconomies. If this gap hadsimply been double instead oftriple, the gains for the entireregion would have beenenormous – almost US$1trn inoutput, amounting to annual

Above: Huda Janahi,award-winningbusinesswoman.

Right: Palestinianschoolgirls at theirgraduation ceremony.

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decide who is succeeding basedon nothing but GDP figures.”

The government startedresearching the feasibility ofimplementing ‘green GDP’measures 11 years ago. But theidea withered on the vine as thecentral government devolvedmore decisions onenvironmental planning to theprovinces, which, in a rush tomeet ambitious targets, gave tothe nod to hugely-pollutingprojects. Now, heavily-industrialized provinces arecoming under increasingpressure to shutter power plants,cement factories and steel works,particularly if these are inefficient

or generate surplus capacity. The closure of highly energy-

intensive installations couldmean big job losses and slasheconomic growth in manyprovinces – at least in the shortterm – which partly explains whythe government has beenreluctant to implement ‘greenGDP’ so far. However, somestudies make the case that theshutdown of polluting, wastefulindustries will give greaterencouragement to low carbonand green technologies, which intime would create many morejobs than those lost in mines,power plants and steel works.(ChinaDialogue)

■ There is a widespread,contagious conversation takingplace today about AdditiveManufacturing (AM), also knownas industrial 3D printing. For amanufacturing process togenerate this much excitement ispretty rare in contemporarytimes.

The enthusiasm is spreadingso broadly because “additive”technologies that “grow” partsand products, rather than“subtract” material (viamachining), are being embracedby young entrepreneurs andindustry giants alike.

From the wings of a Victoria’sSecret Angel to patient-specific

cranial-plate implants for skullinjuries to high-tech nozzlesfor aircraft jet turbines, thereach and attraction of AM isindisputable. Those who applythemselves can learn to makesomething unique, be theyengineers or artists. And theycan do it very quickly andrelatively inexpensively at alocal service bureau – if notfrom their home, lab or office.This is why additivemanufacturing, industrial 3Dprinting and all the variationsof growing parts by laser,electronic beam and othermeans, will dramaticallychange business! (Forbes)

The projected growth of citiescoupled with higher energydemand spells trouble for boththe urban poor and theenvironment if industry doesn’timprove its energy efficiency,according to a new report bythe Institute for IndustrialProductivity. The report, TheRole of Industry in Forging GreenCities, shows that sustainablecities that have cleaner localindustries will be better poisedto meet the environmental andsocial challenges associatedwith burgeoning populations.

To mitigate pollution, citieshave typically sought to moveheavy industry away from theurban core. This migration ofindustry to peri-urban areashas had positive effects but hasalso come at a social cost. Inmany developing country cities,stringent limits on density andan inelastic supply of housinghave boosted housing prices incity centres and have pushedthe working class out to thesuburbs.

As the cities continue toexpand outward and sprawl

ensues, more and more peoplesettle in close proximity toindustrial energy users andemissions sources. In therapidly urbanizing provincesof eastern China, studies haveshown that suburbantownships inhabited by largenumbers of migrant workerssuffer disproportionately highexposure to industrial sourcesof pollution such as factories,waste treatment facilities, andpower plants. The impact ofindustrial pollution on theurban poor is not unique to

developing countries and hasbeen well-documented in UScities, where industrial facilitiesreleasing toxics into the air,soil, and water tend to beconcentrated in areas withhigher numbers of low-incomeand minority residents.

Co-author Jigar V. Shah,Executive Director of theInstitute for IndustrialProductivity, said creatingsustainable cities will be the keyto reversing this trend. “We willneed to develop moresustainable cities – that arecompact, connected and well-managed – and manage theirhunger for energy throughindustrial energy efficiencyprocesses and technology, andthe smart reuse of waste andenergy,” he said.

Industry’s role in forging green cities

gains of about 6% of GDP.In the countries of the Gulf

Cooperation Council, theregional intergovernmentalunion consisting of Bahrain,Kuwait, Oman, Qatar, SaudiArabia and the United ArabEmirates, UNIDO isspearheading an array ofinitiatives to help economicallyempower women.

makingit_18_pp14-15_business-matters_print 06/05/2015 10:18 Page 15

A greenhousedeveloped by Priva,an internationalcompany thatprovides innovativesolutions for themore efficientcontrol of energy andwater within indoorenvironments.

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There are three dominant trends to whichcities and national governments mustrespond in order to secure food supplies fortheir people. First, between 1980 and 2011the global population not dependent onagriculture doubled to 4.4 billion, and,according to the Food and AgricultureOrganization this population is growing at a rate about five times that of theagriculturally dependent population.

David Thorpe looks atsome of the options.

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Second, the amount of agricultural landavailable for growing food is declining andwill soon start to be adversely affected byclimate change. Third, in 2011 agriculturalsubsidies in the world’s top 21 food-producing countries totalled an estimatedUS$486bn. At the same time, agriculture andlivestock remain a major source ofgreenhouse gas emissions – 4.7 billiontonnes of carbon dioxide-equivalent in 2010(the most recent year for which data isavailable), an increase of 13% over 1990.While efforts are ongoing to reduceemissions from energy production andtransport, food consumption is beingignored. The obvious point is thatagricultural subsidies need to be redirectedfrom unsustainable practices to sustainableones.

The growing of food in cities won’t meanthat conventional agriculture will disappear.We might be able to keep chickens andproduce eggs in urban environments but, atpresent, we cannot grow staple foods, such asgrain, indoors or at a small scale. It seems

more of these giant sheds (with or withoutglazing) in every city, owned by the likes ofAmazon, or perhaps in the form of franchiseslike McDonald’s, Starbucks or Costa. Theymay include in their portfolios high streetcafés, hotels and restaurants where you canpick your tomatoes and greens and eat themfresh because they are grown in the samebuilding.

In these warehouses there will be tiers ofrack after rack of vegetables being grown inprecisely controlled conditions. Amazonalready has the technology to monitor what ishappening in remote, upper corners of itsclimate-controlled warehouses and to bringproducts down on demand for shipping.From a consumer point of view, you will beable to order your vegetables using an app,and they will be harvested and delivered toyour door within hours: fresh, local andorganic.

These warehouses will be fine-tuned tominimize energy use, to produce themaximum amount of nutrition and toproduce for the minimum amount of inputs.They will be far more efficient than whathappens in an open field. Some might findthis a horrifying prospect, but the choice isstark: either this or starvation for many of the10 billion people who will walk the earth in2050 and beyond.

The technology to produce and operatethese warehouses is already here. They are onthe cusp of being commercially viable. Amarketing push will be required to persuadepeople to buy the products – or perhaps theywon’t care where their food comes from.

that in any case our consumption of meatprotein is going to have to declineconsiderably both because of the greenhousegas emissions associated with meatproduction and because it is an inefficientuse of land. Or perhaps we will find a way togrow meat-like protein in factories withoutthe need for animals, as in the case of theQuorn mycoprotein.

For the remainder of our diet we aregoing to choose from a range of options:allotments, rooftop growing, growing on the

vertical walls of buildings, and growingindoors with hydroponics, aquaponicsand/or aquaculture. All of these are beingpractised now, and if supported by aswitch of agricultural subsidies canproduce perhaps as much as 30% of thecity-dwellers’ nutritional requirements.

In many cases, they do not even needsupport. Add to mix the use of hinterlands

around cities, as used to be the case (forexample, Paris was able to feed itself in the19th century from its hinterlands), andurban food production could providemultiple benefits, including: a drasticreduction in the carbon footprint associatedwith food miles; a reduction in food lost dueto crop failure; an improvement in healthand fitness when people participate ingrowing and have a better diet; a bigreduction in water pollution due to nutrientrecycling; and much greater water efficiencydue to water recycling.

The corporate optionI am convinced that the vast majority oflocal food will come from giantwarehouse-type buildings becausegrowing crops outdoors, whether in vacantlots or on rooftops, without the use ofpolytunnels or greenhouses, leaves thegrowers vulnerable to the vagaries of theweather and the strictures of the seasons.On the other hand, in a controlledenvironment you can have several growingcycles during a year, and root vegetablescan be continually harvested if grown in asoil-less environment where there is noneed to dig up and kill the plant.

So, I foresee that there will be one or

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in Chicago, Paul Hardej had to construct anundercover test farm as a pilot to develop histechnology before he could persuade thecity’s mayor that his idea worked.

Research and developmentIn the United Kingdom, three entities areworking together to validate work on plantresponses, measuring the number ofgrams per mole of nutrients and workingout how they can scale up. The three are:CambridgeHOK, a leading producer of

retail structures, commercial glasshousesand associated equipment; Stockbridge

Technology Centre, a centre of excellencesupported by both the production and supplysectors of the horticultural industry; and themultinational Phillips Lighting company.Tim Haworth of CambridgeHOK says thatthe economic models “need to be worked out,factoring in how the model is affected by localsituations, outside climate and expectedprices. Automated processes also need to berefined to cut labour costs further and usespace to maximize the productivity per cubicmetre”.

The Netherlands already boasts manyexperts in the required technology. Jan Westra,a strategic business developer for Priva, amultinational that manufactures controltechnology for indoor growing, travels theworld looking for business opportunities. “We can completely control indoor climates.In Holland, we use underground heat storageto moderate internal temperatures, storingsolar heat in the summer and releasing it inthe winter. It’s very efficient. We also controllight levels and humidity.”

A rooftop growing experiment in Paris istesting the results of using differentsubstrates made from urban organicwaste. Given a choice of compost,vermiculture, coffee grounds withmycelium and compost or crushed wood,different root and leaf vegetables willthrive on different substrates. The sameresearchers from France’s Institut nationalde la recherche agronomique have testedleaves of plants grown in cities for leadconcentration and fortunately found them tobe well below the danger threshold.

Community initiativesCommunity growing brings communitiestogether, generates links and makes peoplehappy, but not everybody wants to do it. Formany people, growing their own food is adrag, but when people actively participate insourcing their own food, it galvanizesindividuals, creates new respect for nature,and reconnects urbanized humanity to thesoil with which it was once intimatelyfamiliar. For these reasons communitygrowing initiatives are vital in whateverform they take.

Cities that adopt these practices willthrive and achieve greater food security. Thepioneering cities may even be able to exporttheir expertise. Every area will find theirown patchwork of solutions.

●David Thorpe is the author of The ‘One Planet’Life: A Blueprint for Low Impact Development;Energy Management in Industry: The EarthscanExpert Guide; and the ‘climate fiction’ novel,Stormteller. His personal website is:www.davidthorpe.info

Small-scale optionsFarmed Here and Green Spirit, based in thestate of Michigan in the United States ofAmerica, are two examples of pioneeringurban-growing enterprises that support thelocal community, source everything locallyand train unemployed teenagers. In Detroit,Farmed Here runs a profitable indoorvertical farm, the first and only USDepartment of Agriculture Organic Certifiedand HACCP-certified and audited aquaponicvertical farm in the US. Farmed Here’s headof development, Paul Hardej, says that it has agreater than 95% success rate with plants,compared with 70% on traditional farms.

Green Spirit Farms near New Buffalo,targets under-used urban space to create itsvertical farms and has designed a system thatis simple to operate and harvest. It has astacked indoor growing area that yields 12harvests per year, compared to around sevenharvests per year in California where many ofthe country’s fresh vegetables are grown.

City administrationCity administrations will need to change. Atpresent, there are no widely used standards,no building codes and no proper regulationsthat allow city authorities to issue permits todevelopers who want to grow food or raisechickens or fish in cities. Right now, it’sproblematic to get permission. For example,

farmers will need to produce

By 2050

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MakingIt20

Since the world woke up to the fact that themajority of the world’s population alreadylives in cities, it has been proclaimed that allcities should be built as eco-cities in orderto improve the well-being and health of thewhole world. In the past, cities have beenplanned, if at all, for all kinds of reasons: formilitary use, as marketplaces, for the gloryof the rulers, or for the well-being ofcitizens. Now, with the concept of the eco-city, planners give priority to citizens’quality of life, and that of futuregenerations.

Cities are held responsible for a majorpart of climate change, and they are alsoregarded as the main problem-solvers.That’s a big responsibility, especially whenyou realize that most cities have alreadybeen built. Most of the time, when cityplanners try to transform a city into an eco-city, they can only rearrange, restore and/orsteer developments.

Jan Dictusconsiders thequalities that definean eco-city

Eco-cities: creating a common

language

Image: Zenata New City

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Cities are permanently evolving anddeveloping. If not, they are standing stilland cannot survive. An eco-city is oftendescribed as a city that develops in asustainable way, and therefore planning aneco-city is like aiming at a moving target.

An eco-city is a city that you cannotknow how it will look in 50 or 100 years’time. Because it is so difficult to plan whatyou cannot see, city governments tend tomake their plans for the shorter term, forthe next five or ten years. Or theyconcentrate on a few aspects, like citiesthat strive for ‘zero-waste’, or aim tobecome ‘carbon neutral’, or ‘smart’, or ‘car-free’. As a result, a long-term vision of aneco-city is being approached with short-term, limited compromises.

A way around this problem is toapproach it from another angle. I play agame with my grand-daughter where oneof us describes an animal by giving itsmain characteristics, and the other has toguess what the animal is. Hardly ever aremore than four characteristics needed tofind the answer. In the same way, one coulddefine an eco-city by summing up themain qualities, qualities that definitelywould change a city into an eco-city.● Naturalness: Cities, in principle, needresources from outside. The more ‘natural’a city is, the less support it requires fromoutside, and the more robust it is. Twoexamples: passive houses use sun, shadeand natural ventilation to regulatetemperature; Vienna’s drinking water flowsby force of gravity from the Alps and arrivesin the city without being pumped.● Diversity: In a biological system,diversity has clear advantages overmonoculture. The advantage of diversity isalso clear in relation to the local economiesof cities. Reliance on one energy source, onone big company as an employer, or on onetransport system creates dependency. Ineco-cities, diversity is everywhere. ● Flexibility: Cities are exposed to a vastnumber of different influences. Eco-citiesare in a state of constant evolution whichrequires research and openness to newsolutions and innovations. Eco-cities areable to adapt to changing circumstances.● Proximity: The ‘walkable city’, ‘compactcity’, ‘dense city’ and ‘five-minutes city’ are

The local interpretation and meaning ofthe qualities and their consequencesshould be discussed within a team ofplanners and decision-makers. In such away, the sustainability qualities can beadapted to cultural backgrounds or tospecific needs. Once agreed, they canbecome ‘common values’, which serve as abroad guideline in all planning anddevelopment situations.

For example, for the new city of Zenata,in Morocco, the sustainability qualitiesserve as design principles. Zenata, which iscurrently under construction betweenCasablanca and Rabat, will be a new city for300,000 inhabitants, with employment for100,000 workers. The developers wantZenata to become an eco-city, and they haveagreed on ‘Six Principles for SustainableZenata’. (Optimization – the process ormethodology of making something asfunctional or effective as possible – was asixth quality added by the planning team.)

The sustainability qualities have alsoserved as a reference for peer-reviews offive eco-cities in South-East Asia. Cebu inthe Philippines, Danang in Vietnam,Iskandar in Malaysia, Map Ta Phut inThailand and Pingtan in China werebrought together by the United NationsIndustrial Development Organization toform a network to promote the exchange ofknowledge and sharing of best practices.Although each eco-city had a completelydifferent background and level of progressin sustainability policy, the sustainabilityqualities created a common language asthey were assessed by peer-review.

Starting with the above set ofsustainability qualities, decision-makersand city experts should agree and adapt itto their own circumstances and needs.The sustainability qualities should begeneral enough that different disciplinesand sectors – be they economic, social orecological – can use them. City planners,energy suppliers, agriculture experts,industrialists, architects – each sector candefine how it can best contribute to thesustainability of the city. Once there is anagreement on the sustainability qualities,discussions on sustainable developmentare much easier. They create a commonlanguage.

all terms used to refer to a city wheredistances are short and where differentfunctions are close to one another, reducingthe need for motorized transport.Accessibility may also be thought of insocial terms, referring to the capacity ofindividuals to obtain jobs, education orhealth care. In terms of governance,proximity means subsidiarity – theorganizing principle that matters ought tobe handled by the smallest, lowest or least-centralized competent authority. ● Co-elaboration: Co-elaboration andparticipation are signs of jointresponsibility. They are also a basis forsolidarity. Communication, cooperationand coordination among all relevantplayers are imperative if joint responsibilityis to become a reality. If more individualsfeel responsible for the whole system, thenthe system becomes more sustainable.

A system with these qualities is asustainable system. Looking at eco-cityprojects worldwide, one learns that manydo indeed answer to these qualities:renewable energy is natural; compact citiesaspire to proximity; smart cities prioritizeflexibility; and so on. Using all thesustainability qualities as a set of leadingprinciples for urban development is a wayto create an eco-city.

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Artist’s impressionof a part of ZenataNew City, an eco-cityunder constructionin Morocco.

JAN DICTUS, GOJA Consultingfor Environment andSustainable Development,provides services to a widerange of clients at international,European, regional and locallevels on environmental andsustainable developmentissues. He is member of theexpert panel for the EuropeanCommission’s European GreenCapital, the lead expert forURBACT – the Europeanexchange and learningprogramme promotingsustainable urban development,and an advisor for Eco-CityZenata. As a UNIDO consultant,he has been involved in thecreation of the world’s first eco-state in Roraima, Brazil, and inthe promotion of eco-businessprojects in India and Cambodia.Recently, he established a peerreview methodology for anetwork of eco-cities in South-East Asia.

makingit_18_pp20-21_ecocities_3-column 06/05/2015 10:27 Page 21

PARAG KHANNAsurveys some of the opportunitiesand challengesfacing the world’smetropolises in the 21st century. ➤

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IN THECENTURYOF CITIES

KEYNOTE

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This is going to be a century of cities. Already50% of world’s population is urban and this rateis increasing by 10% per year, meaning that by2035, 70% of world’s population will be urban.The number of mega-cities, that is, cities withover 10 million people, is also increasingannually. By 2025, out of the top 600 cities in theworld in economic terms, more than onehundred will be in China. They represent themajority of the world’s gross domestic product(GDP). In terms of the pace of urbanization, ifwe combine China and India, the numbersbecome even more staggering. In the comingyears, a population the size of the United Statesis moving into cities in China, and half ofIndia’s population will live in cities of morethan one million people. The two largestcountries in the world demographically arebecoming collections of cities.

The rapid pace of global urbanization bringsenormous challenges to cities. How are theygoing to re-invent and transform themselves? In particular, how are they going to build thecapacity to absorb a larger population, tointegrate new technologies, and to becomemore economically and culturally dynamic?

The world as city clustersThere are cities like Dubai, Shanghai andSingapore that are becoming magnets forinvestment, and magnets for hard-workingpeople from around the globe. But as notable asthey are for growing in a vertical dimension,there is also the horizontal dimension. Asatellite view shows that cities are not just dotson the map, rather they are patches that areexpanding. In other words, the world iseffectively becoming city clusters or citycorridors.

Think of the world as these city clusters thatincreasingly bond together as condensedinfrastructure corridors. There are many ofthem around the world. “Abu-Dubai” is one ofthem. Back in the 1970s or 80s, Abu-Dhabi andDubai were about 100 miles apart, separated bydeserts. Today, if you travel between them youwill see they are increasingly connected by

built up urban corridors, and hence peoplenow call it “Abu-Dubai”. India has a couple ofthese as well – the Greater Delhi area, andMumbai-Pune, two very important financialand technological centres connected by anexpressway. And there is of course theoriginal megalopolis, the Tokyo-Nagoya-Osaka corridor, which has over 80 millionpeople.

If we zoom in on China, there are threemajor mega-city clusters: the Bohai Sea ringaround Beijing; the Yangtze Delta aroundShanghai; and the Pearl River Delta. Thepopulation of just those three is larger thanthe total of the top ten non-Chinese cities inthe world today.

When one thinks of the Pearl River Deltaregion, we tend to think of Hong Kong,historically a place that embodies the model of“one country, two systems”. But if you travelthere today, you can see that terminology nolonger works. You can start in Hong Kong, andvery easily take the metro into Shenzhen,which is more state-run. So, you go from anopen and liberal Hong Kong towards a morestate-directed Shenzhen, up to the heavilyindustrialized Dongguan area, towardsGuangzhou, the regional capital, which hasreally transformed itself from an industrialcentre to a financial centre. Then over to theother side, to the more industrialized areas,the Shantou and Zhuhai special developmentareas, and down to the open, free-wheelinggambling haven of Macau. These belong tototally different political geographies, and yetmayors and local authorities have beencollaborating to build the transportation thatworks, and the customs agreements that allowpeople and goods and trade to move so muchmore freely around the region. So, it’s nolonger “one country, two systems”. It isbecoming just one mega-region. And, in fact,in terms of its economy, per capital income ofthe Pearl River Delta is larger than ofShanghai, and its combined GDP would makethis mega-city a member of the G20 group ofcountries. And this is just one part of China.

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PARAG KHANNA is aleading globalstrategist, worldtraveller and best-selling author. He is amanaging partner ofHybrid Reality, ageostrategic advisoryfirm, and CEO ofFactotum, a boutiquecontent strategyagency. He is a SeniorFellow at the NewAmerica Foundation,Adjunct Professor inthe Lee Kuan YewSchool of Public Policyat the NationalUniversity of Singapore,and Senior Fellow at theSingapore Institute ofInternational Affairs. Hecurrently serves on theWorld EconomicForum’s Global AgendaCouncil on Geo-economics. He is amember of the Councilon Foreign Relationsand of the InternationalInstitute for StrategicStudies, and is a Fellowof the RoyalGeographical Society.


MakingIt 25

communication across societies. Now this ishappening on a whole different scale. There aremore mayors serving as the heads of states todaythan ever in history, and that number is growingover time. We see from Mexico to Nigeria toTurkey to Indonesia, mayors are increasinglybecoming leading candidates for nation-statesor already are. They can demonstrate amunicipal track-record and the ability to governthat they can take to a larger scale, and thoseaccomplishments make them well-suited to benational and international leaders.

What does it take to be a leader of a global citytoday? There are certain challenges they have

‘Diplomacity’Cities are not just based on their sovereignty,but also on their capacity to make their owndecisions and set their own policies. Around theworld, we can see that a diplomatic powerhousedoesn’t have to be a capital city of a country. NewYork City, Dubai, Istanbul, Mumbai andFrankfurt, for example, are drivers ofcommercial diplomacy and environmentaldiplomacy in their respective countries.

And this is nothing new. In the history ofdiplomacy, from ancient Mesopotamia to theRenaissance in Italy, it has always been cities thatare actually the driver of exchange and of ➤

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to be prepared for, and one of them is theability to manage diverse and multi-ethnicsocieties. Today, cities like Dubai, Singapore andToronto are really as much foreign as they arenational. They are melting pots because theygive new meaning to the term “cultural capital”.Their leaders don’t have the luxury of treatingimmigration as a temporary condition. It’s apermanent reality. Their mayors cannot offercitizenship to foreigners but they have to find away to make everyone feel like a stakeholder andbe a stakeholder in that society.

Around the world, we see some countries are

tearing themselves apart over ethnic, religiousand sectarian differences, but successful citiescannot afford to do that, nor can they afford to beso stratified that the city feels like two, three orfour cities at the same time, with walls dividingpeople based on their background or theirincome. This kind of inequality hasconsequences. We cannot separate the images ofOccupy Wall Street, the London riots, Gezi Park inIstanbul and Tahrir Square in Cairo, the imagesthat are defining our news today, from thinkingabout the context of young populations that areunable to access the promise of urban life.

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New urban strategies We are rapidly urbanizing our planet. We arebuilding an urban civilization that ispredominantly coastal. Most of the major citiesin the world today, and most of the new citiesthat we are building today, are on the coast. Thismeans the rising sea levels are going to affect atleast four to five million people in the UnitedStates and upwards of 200 million people inAsia. For the first time, the IntergovernmentalPanel on Climate Change is talking about theneed for relocation, about relocation strategiesfor populations in the event of the kinds ofmajor natural disasters that we are seeing withincreasing frequency in Asia, in the Middle Eastand Latin America. This is going to require notjust trillion of dollars of new investment, butentirely new urban concepts and strategies.

A quick scan across the world reveals that inthe places where growth and innovation havebeen most successful, a hybrid public-private,domestic-foreign nexus lies behind the‘miracle’. These aren’t states; they’re ‘parastates’-or, in one common parlance, ‘special economiczones’ (SEZs). Across Africa, the Middle East andAsia, hundreds of such zones have sprung up inrecent decades. In 1980, Shenzhen becameChina’s first; now they blanket China, which hasbecome the world’s second largest economy.The Arab world has more than 300 of them,though more than half are concentrated in onecity, Dubai. These SEZs offer clues as to howunrelenting urbanization and sustainableproduction can co-exist but, when planning forfuture cities that work, we need to be aware ofthe challenges and benefits presented by SEZs.

SustainabilityCities are designed to generate productiveeconomic activities, but they also need to bedesigned in a way that is sustainable. Forexample, when it comes to economicsustainability, we have learnt that the economiczones that were designed for a single industrycan be very vulnerable to changes in globalsupply chains. These ‘demand shocks’ have beendevastating for some southern Chinese citiesthat were built on one industry and also forplaces like Detroit in the United States. So,

building in some amount of diversification isimportant for economic sustainability.

When it comes to the environmentalsustainability, again it is the choice of theparastatal entities. Government officials andinvestors can work together to ensureenvironmental sustainability. Or there can beprojects that are very unsustainable and veryexploitative. We have many decades ofexperience in both regards, particularly in theunsustainable dimension. For example, thereis Guangzhou in China. If we look at theperiphery of Guangzhou, and the new specialeconomic administrative technology park thathas been developed there, we find a lot of theperiphery of Guangzhou has been built onprime agricultural land that was usedespecially for soybean cultivation. Now, peoplerealize that they don’t want to give up so mucharable land in the context of China’s rising fooddemand, so they have halted somedevelopment and decided to relocate it to otherareas. That is an example of realizing that theseSEZs should be more environmentallysustainable.

And, of course, one should add the issue ofhuman sustainability. The garment factoriescollapsing in Bangladesh was an example ofnot having sustainable workplace practicesfrom a human rights and labour rights point ofview. However, we are starting to see that thingsare now improving in Bangladesh, in Viet Nam,and in some other countries due to domesticpressure, supply-chain pressure, and thescrutiny that comes when companies sufferreputational damages.

Build inclusive citiesNew economic cities, such as Songdo in theRepublic of Korea have been built ‘fromscratch’ and don’t have poor people livingthere. But in the established mega-cities, likeLagos, Nairobi, Mumbai, Karachi, Jakarta,Manila and Rio de Janeiro, we find teemingslums. While these are often called ‘shadoweconomies’, they are in fact self-organizingecosystems with their own geographicpatterns, political hierarchies, economicmodels and social structures. ➤


MakingIt28

Mike Davis and Robert Neuwirth are two ofthe greatest travellers and journalists who haveobserved life in the world’s cities. They havewritten extensively about the so-called shadoweconomy but there is not a complete overlapbetween slums and shadow economies. Forexample, consider the recycling of plastics,aluminum and cardboard that takes place in theslums of Mumbai. People are taking legitimateassets – these wastes are assets – they arerecycling and they are paid for doing it, so theterm ‘shadow economy’ is unfortunate. It hasmultiple meanings and can mean anunregulated economy or a ‘black’ market or anuntaxed economy. But the Mumbai recyclersare taxed and regulated. Therefore ‘grey market’is a more appropriate term, and is one thatcannot be considered as negative. A hugepercentage of the world’s population survivesprecisely in the grey market. It represents themeans of survival for several billion people.

These slums are self-organizing ecosystems.To use again the example of recycling in mega-cities like Mumbai, this is an activity that wouldnot otherwise take place. It is filling in for amarket failure, and it is filling it as a veryspontaneous activity that has developed thesesupply-chains that were not created orregulated by the State. In that sense, it is a self-organizing activity. It is a means to meet supplyand demand that has occurred by virtue ofentrepreneurial instincts.

Governments and industryI strongly believe that governments shoulddevote most of their attention to the issue ofinequality between the slums and theglamorous side of a city. The fact that they don’tdevote as much attention as they should isprecisely why it is important to continue toallow self-starting entrepreneurial activities totake place and to support them whereverpossible. We see examples of it happening: Riode Janeiro and Medellín are places where therehave been government efforts to extendtransportation and public services likesanitation and so forth into the slums. The new

President of Indonesia, Joko Widodo, who waspreviously the mayor of Surakarta, is famousfor having emphasized the importance ofbusiness firms engaging in communityactivities in that city. He is an example of themayors who, with growing frequency, arebecoming heads of state because they have agood track-record of focusing on the poorestpart of the population.

And it is not only the government, but alsothe corporations which have an important roleto play. I believe the private sector has and willhave a dominant role in today’s cities and inthe cities of the future. Most of the peopleliving in the mega-cities are not public sectorworkers. The public sector’s responsibility isbringing in more public services anddelivering better housing and transportation,and hopefully proving some kinds of cashtransfer programmes to help micro-economicactivities. However most of the delivery ofthese kinds of services is essentially done bythe private sector. The most important thing isthe division of labour and sharedresponsibility – what I call “hybrid governance”or multi-stakeholder collaboration. In thiscontext, industry still plays an essential role inbuilding sustainable and inclusive cities. It istrue that some places in the world are post-industrial, but most countries in the world arenot. While we should probably learn to preparefor a world that is not driven by human-centricindustrial production, industry will still mattera lot – even if robots are doing the work. At leastfor now, most of the jobs created in the worldare not going to be automated. For example,building construction is still done by humans.

Education, hospitality, construction, healthcare – none of these activities, which are thelargest employers in the world economy, arebeing hurt by automation technology. This iswhere governments should spend their money.These are very essential factors in cities. Theyare in dire need all over the world, and they allneed industry to support their functions. Thetechnological revolution is on the way, but weshould focus on the areas that are still verynecessary and that are still creating a lot of jobs.These jobs are closely related to industry.

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Huangpu River, Shanghai. Using apioneering method ofaerial photography, alocation can be seen at afull 360 degree angle. After some skilfulmanipulation onPhotoshop, knowntechnically asstereographic projection,each sweeping panoramais then turned into acircular shaped image.


Already in 2010, the Asia-Pacific region’surban inhabitants amounted to more than750 million people, about 40% of theregion’s population. Today, seven of theworld’s ten most populous cities are locatedin the Asia-Pacific region: Beijing, Delhi,Dhaka, Kolkata, Mumbai, Shanghai andTokyo. These mega-cities are generators ofwealth and hubs for innovation and culturalactivities. On the downside, these citiescontinue to harbour poverty andenvironmental disasters. Nevertheless,urbanization enhances productivity,increases gross domestic product per headand has turned into a major source ofeconomic strength, illustrated by the factthat Asian cities contribute about 80% of theregion’s gross domestic product.

Small and medium-sized enterprises(SMEs) account for about 99% of allbusinesses in Asia and these companies areoften concentrated in and around cities.

Lacking awareness, finance and oftenoperating with out-dated equipment, theyare responsible for a significant share ofurban pollution, which poses hazards to thehealth of citizens. This currentconcentration of economic activities inAsian cities can only be sustained if industrystakeholders implement essential cleanerproduction principles.

The SWITCH-Asia programme, theEuropean Union’s largest cooperationprogramme with Asia promotingsustainable consumption and production,supports more than 80 projects to developinnovations that help SMEs reduce theirwaste, improve their energy intensity orbecome more resource efficient. Oneexample is the circular economy approachdeveloped by an industrial symbiosisproject implemented in the industrialdevelopment zone of Binhai New Area inTianjin, China.

Middle class consumersIn addition to factory-level “end-of-pipe”solutions for SMEs, SWITCH-Asia projectsalso look downstream the value chain – toretailers and consumers. Asian citiesresemble consumption hubs, linked toglobal supply chains and consumption inthese cities is responsible for a significantshare of the environmental footprintcreated elsewhere. They are home to newAsian middle class consumers, who followglobal consumption patterns, with ever-larger shopping malls and supermarkets. Inthis respect, and considering theirfrequently deficient infrastructure, Asiancities are facing severe challenges. Thepotential solutions are hence similar tothose needed in industrialized countries.

One such solution lies with retailers.Reducing the millions of plastic bagsdispensed at the cash counters of retail storesevery day would be a relevant first step.

A fortune tellerserving hiscustomers in thestreet market atSai Yeung ChoiStreet in MongKok, Kowloon,Hong Kong.

MakingIt30

Sustainableconsumptionand lifestyleinitiatives inAsian cities

Patrick Schroeder and Uwe Weber share some experiences fromtheEuropeanCommission’sSWITCH-Asiaprogramme.

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of both cities. Consumer surveys carried outindicate that the main obstacles to greeningconsumption are that many consumers donot understand what green products are andthat available information about greenproducts is considered unreliable. Inaddition, the price of green products isperceived to be too high. Less than 10% ofconsumers would be willing to pay 10% morefor energy-efficient appliances. For organicvegetables, the case is different, as more thanthree quarters of consumers are willing topay up to one third more, reflecting concernsabout contaminated food in China. Some ofthe challenges include Chinese consumers’lack of understanding and lack of trust inproduct labels. Third-party certificationpractices and independent product testing,which in other countries have provensuccessful in providing reliable productinformation, are still in the early stages.

Consumption habitsIn Indonesia, the SWITCH-Asia programmecooperated with the Surabaya and Yogyakartacity governments to develop sustainablelifestyle initiative pilot programmes. Thespecific approach used to change actualbehaviour and habits was to motivate ratherthan educate the people involved through aco-design process, based on the belief that aself-enhancing movement would gain itsown momentum. The goal is that by 2020sustainable consumption habits will be well-established. In Surabaya, schools competewith each other as part of a campaign onenergy and water-saving and othersustainable consumption patterns. Throughthe schools, these activities reach out tohundreds of households and families. Theprogramme also includes trainingjournalists on sustainable consumption andproduction, working with bloggers andphotographers with competitions, andconvening editor roundtables to discussmedia policy and strategy on environmentalissues. These pilot campaigns provideinformation and experiences that can beused for further replication and scaling-up.

These examples show that sustainableurbanization requires a comprehensive andintegrated approach, looking at whole valuechains. Improvements in urbaninfrastructure, such as transport and wastemanagement systems, renewable energyinstallations, energy-efficient buildings andcleaner production by SMEs, need to becomplemented by sustainable consumptionand lifestyle initiatives.

establish 30 pilot stores from four majorIndian retail chains. A first baseline studyestimates a 40% reduction in energyconsumption in these pilot retail stores ispossible through energy efficiency measures,which can often be as simple as putting doorson fridges and freezers and improving air-conditioning systems. An estimated reductionin solid waste by 30% in pilot retail stores bythe end of the project is considered possible.The project not only looks at retail stores assuch, but also works upstream with suppliersto initiate green supply chain measures. Basedon the experiences from pilot stores, aroadmap for sustainability for the Indianretail sector is currently being developed.

Another example from China is a projectaiming to increase consumer awarenessabout sustainable lifestyles and greenproducts in the cities of Beijing and Tianjin,which is being implemented in closecooperation with the consumer associations

Beyond this, retailers play a key role asintermediaries between suppliers andconsumers. Retailers can influence bothupstream and downstream value chains. Forinstance, through choice editing they canpromote greener products or even removehigh-impact products from their shelves. They can provide consumers with informationabout the environmental and health impactsof products in their shops through awareness-raising campaigns. Product labels areimportant information tools for theseinitiatives. Close cooperation with suppliers iscrucial to make such labels work.

Greening retail and supplyOne initiative implemented under theSWITCH-Asia programme in India is theGreen Retail India project. Working withretailers in major cities, such as Bangalore,Chennai, Delhi and Mumbai, the project hasused ambitious sustainability criteria to

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Why do you think that it is important thatmore girls have the option to follow careersin science and engineering?I studied physics at university, went on tobecome a structural engineer and workedon the design of The Shard in London.Being a scientist or an engineer means thatyou are working on real-life problems andhelping people and, besides, you can haveany career with a science degree. As theworld becomes more technologically driven,science qualifications will become more andmore essential to our way of life. We have toshow young people, especially girls, that farfrom closing down options, studying mathsand science actually expands them.

Apart from having a very rewardingcareer, you will be rewarded financially.Maths students can earn high salaries and inthe UK, for example, careers in science andtechnology pay up to 20% more thanaverage. We talk about the gender pay gapand are very aware that women earn less thanmen in full-time employment. One way wecan try and improve this is by making suregirls aren’t ruling themselves out of well-paid careers in science and engineering.

Then there’s the skills shortage. In theWest, we simply don’t have enough engineersto meet the demands of employers. Careersin science, technology, engineering andmathematics (STEM) allow you to travel, tolive in different countries and hopefully keepyou employed for life, and we don’t want girlsto miss out on all this.What can be done to encourage andsupport women in male-dominatedindustries such as science andengineering?I believe there are a number of obstacleswhich people – especially women – facewhen it comes to careers in engineering.There are perception issues – science andmaths are seen as being only for a ‘brainy’

MakingIt32

Why we need more women

engineersInterview with Roma Agrawala structural engineer at WSP | Parsons Brinckerhoff,one of the world’s leadingengineering professionalservices consulting firms.

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industry and also collaboration skills.Sometimes I go to site and am able todiffuse tense situations just by bringing adifferent perspective.How do you think scientists and engineerscan create greener, more energy-efficientcities in the future? As more and more people move to the citiesto live, we need to find a way toaccommodate these people in increasinglytighter spaces. I believe there are two waysthis can happen: either we as humansshrink our living space, reduce the amountof travel, the things we use and throw away,or, we continue to live the way we do todayor in a more extravagant way, but forcescience, engineering and technology tomake our impact smaller. They are twoextreme possibilities, with reality no doubtsomewhere in the middle.

From a structural engineeringperspective, we’re looking at new materialsand how we can build in a modular way,quickly and efficiently. We as engineers haveto come up with new techniques ofconstruction. It is challenging to build indensely populated cities and it comes downto efficiency. Computers haverevolutionized design. By using themathematical powers of these machines, wecan use less material, build taller and moreintricate structures and open uppossibilities that manual design simplycouldn’t. For example, we are using half asmuch material in high-rise structures todaycompared to the early 20th century.Can you say more about how you thinkcities in the developing world will be in thefuture?It has been estimated that 70% of the globalpopulation will live in urban settings by2050. This is a complete U-turn from howwe’ve lived previously, when only theminority of people lived in cities. Clearly, alarge amount of pressure will be applied toexisting transport, emergency services andthe utilities that may already be stretched inthese cities.

In developing countries where cities arebeing built from scratch, I can imagine thatthey will be very dense in order to try andrestrict the ecological impact on thecountryside. Skyscrapers will be a commonsight and I like the idea of having a ‘stacked’city with transport on one levelunderground, walking and cycling aboveground and shops and homes above thatwith very few cars running on petrol ordiesel in view.

few and there are outdated assumptions thatwomen are not as good at STEM subjects asmen. The OCED’s 2011 Report on the GenderInitiative: Gender Equality in Education,Employment and Entrepreneurship showed thatthere is no intrinsic difference in the abilityof men and women in science and maths.Any difference that appears can beattributed to cultural issues. We need tomake sure that no one in the work-placebelieves that one gender is better than theother, and that women are well-respectedfor their abilities.

We should keep an open mind aboutdifferent educational backgrounds as theindustry is comprised mainly of those withan engineering degree and that is limiting.Many women study science with a view tobecoming doctors. We should tap into theirmotivation to help people and encouragethose who don’t go on to do medicine toconsider engineering.

We need to keep a close eye on how wemarket our industry and the opportunitieswithin it. There isn’t just one right way to bea successful engineer – we can be technicalspecialists, managers of teams, businessdevelopment leaders and many others. Weshould highlight these opportunities inorder to attract and retain a diverseworkforce. It is also important to mentorengineers throughout their careers. Whererole models for minorities are scarce, it iseven more important that this support ismaintained. In what ways do you think that engineeringand the construction industry in generalwould be different if more women wereemployed?In the ten years I’ve been in the industry, I’veseen a change in the number of women,both in design offices and on site. At WSP |Parsons Brinckerhoff around 20% of thetechnical staff is female, which is muchhigher than the industry average of 8-10%.The site I am working on at present has twofull-time female engineers, alongside threemale engineers, but we still have a way to go.

I think that, in any industry, having adiverse workforce is important for ideas. Asscientists and engineers we are working forpeople, and if our teams do not reflectsociety, then how can we come up with thebest solution? It’s important that the peopledesigning or researching things aren’tmaking assumptions about the way saywomen use a product. Why not involvewomen and get the right answer. I thinkwomen can bring a lot of creativity to the

ROMA AGRAWAL has designed bridges,skyscrapers and sculptures, and spent sixyears working on The Shard, the tallestbuilding in Western Europe. Agrawal wasawarded ‘Young Structural Engineer of theYear 2011′ by the Institution of StructuralEngineers and was a finalist for the ‘YoungWoman Engineer of the Year’ run by theInstitution of Engineering and Technology.She is a member of the UK’s ConstructionIndustry Council’s Diversity Panel, whichbrings together key built environmentstakeholders to attract, retain and promote adiverse group of professionals at every levelacross the construction industry. Outsidework, she promotes engineering, scientificand technical careers to young people andparticularly to young women. Ph

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It is well known that over 50% of the world’spopulation now lives in cities and it isestimated that we will reach 70% by 2050.With a modest projection of reaching apopulation of 9.6 billion by then, this implieshaving 6.72 billion citizens living in urbanareas in around just 30 years’ time.

We also know that this population growthwill actually take place in middle and low-income countries, where 93% of new birthsare now taking place. Projections suggest thatIndia will surpass China as the world’s mostpopulous country, while Africa’s populationwill increase the most and by 2050 will makeup the greater share of the global population(Europe and Asia’s populations are expectedto decrease, while that of the Americas willhold steady).

So, cities are growing andthe urban population isincreasing, especially inemerging economies buthere we find some countrieswith significant institutionalweaknesses and economicconstraints that hinder theirability to meet citizens’needs.

In terms of the increase in opportunities,the world has become a single market withbroader possibilities for all. Technology hasallowed a drastic reduction in the costs ofinnovation; start-up incubators andaccelerators are popping up everywhere; andsocial media is enabling entrepreneurs andstart-ups to build brands and grow theirbusinesses at very low cost.

Around three-quarters of globaleconomic activity is urban and, as the urbanpopulation grows, the fruits of urbanizationwill accelerate innovation and boost theopportunities that are enhanced by humaninteractions. The urban share of globalproduction and investments will also grow.Cities are currently responsible for the bulkof production and consumption, and are theprimary engines of economic growth anddevelopment.

All this has generated a lot of enthusiasmamong smart cities advocates, as well as bighi-tech corporations. But the question ofwhether urbanization and populationgrowth can also positively impact small andmedium-sized enterprises, slum dwellers,and community and neighbourhoodassociations in low-income countriesis more pertinent than ever.

With cities growing andopportunities increasing,Fernando CasadoCañeque considers theimplications forinnovation.

Getting the newurban agenda right

The working populationThe world is also getting older. The numberof people aged 65 and over is projected totriple by mid-century, from 531 million todayto 1.5 billion in 2050. Many countries,especially industrialized economies, will seetheir share of population aged 65 and oldersurpass the share of people aged youngerthan 15.

What does this tell us about working-agepeople? While white hair increases, theworking population of many advancedeconomies will have to support moredependants (workers in countries such asJapan, South Korea and Spain will see theirnumber of dependants double in thisperiod). But countries like India, Nigeria andSouth Africa will have younger populations,thus bigger working-age populations andfewer dependants per worker. Interestingly,though, those countries with the biggeryouth populations are not the onesgenerating jobs for young people.

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A new agenda in the makingThe coming two years will be crucial toanswer these questions and address themajor challenges that urbanization willgenerate.

On the one hand, the transition from theMillennium Development Goals (MDGs) tothe Sustainable Development Goals (SDGs)provides a unique opportunity to place citiesexplicitly in the conceptual framework ofdevelopment plans for the first time. Thepossibility of having SDG Goal 11 – ‘Makecities and human settlements inclusive, safe,resilient and sustainable’ – is the firstattempt to build a framework of targets andindicators for sustainable cities and humansettlements. These bring the possibility ofenhanced and effective local, national andregional implementation from aquantitative perspective.

On the other hand, we have Habitat III,the United Nations Conference on Housingand Sustainable Urban Development, takingplace in Quito, Ecuador, in October 2016. Itspurpose is to reinvigorate the globalcommitment to sustainable urbanization,focusing on the implementation of a “NewUrban Agenda” that will renovate the HabitatAgenda designed in Istanbul in 1996. This

will be the first United Nations globalsummit held after the adoption of

the Post-2015 SustainableDevelopment Agenda and,

Large corporations seem, to a largeextent, to have lost their ability to innovate.Most of them are framing their strategies bybuying start-ups for new technology andproducts. As a result, ensuring bottom-upinnovation and decentralized localproductive capacity is more relevant thanever.

Cities have also become innovation hubsfor public policy, becoming responsible forproviding enabling environments forinnovation and entrepreneurship.Attracting innovative industries, especiallysmall industries and start-ups, requiressupportive infrastructure, which the marketdoes not necessarily always offer. Animportant challenge, therefore, is tocombine creative policy design with urbanplanning, in order to attract companies thatgenerate new businesses for youth.Incentives should focus on getting theprivate sector to hire youth, on engagingwith civil society organizations on strategiesthat address urban youth unemployment,and on enabling linkages between civilsociety and the private sector in commercialventures. Most importantly, cities will needto encourage youth entrepreneurship, andthis implies building marketable skillsderived from the natural creativity andinnovation of young people.

hopefully, a new climate change agreement.Such an event offers another uniqueopportunity to discuss the challenges ofplanning and managing cities, towns andvillages.

Getting the new urban agenda right andensuring there is an SDG 11 on urban andhuman settlements can provide theincentives needed to encourage the role ofcities as drivers of inclusive economic growthand sustainable development. However, wemust ensure there are good governancesystems in place, as well as robust publicfinance systems and effective institutions atthe local level to make this happen.

Innovation as a driver of local productivecapacitiesCities, located on the frontline of the battlefor sustainable development, are not only thefirst entities facing direct challenges, but arealso the best-placed to identify opportunitiesand deliver solutions. One of the issues mostcities will have to address is how to becomecompetitive and ensure employment foryoung people so they won’t have to migrate toother cities to find opportunities. Givenpopulation trends, we could say that citiesthat are able to attract young people and offerthem the possibility to develop have abrighter future.

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FERNANDO CASADO CAÑEQUE is the director andfounder of GlobalCAD – www.globalcad.org – astrategic development consulting firm that focuseson promoting cross-sector partnerships to achievethe SDGs. Currently, he also co-directs the Towardsthe Human City Project, for which he is travellingaround the world to document the 101 mostinnovative initiatives promoting a transition towardsthe concept of ‘Human Cities’.

Singaporeskyline.

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Chile has been one of the world’s fastestgrowing economies over the past decadesand is today an economic leader in LatinAmerica, with a nominal GDP per capita ofUS$15,732. In May 2010, it became the firstSouth American country to join theOrganization for Economic Co-operationand Development (OECD). It is also memberof the Asia-Pacific Economic Cooperationorganization, and has signed free tradeagreements with over 60 countries, includingChina, Mexico, India and South Korea, andwith the European Union and Mercosur.

Traditionally the Chilean economy hasheavily relied on mining. Exploitation ofChile’s gold, silver and copper mines goesback to colonial times, but copper, aboveall, is the country’s main resource.It became the top supplier inthe 1980s, when the countrywas not only rich in copper,but could produce it quicklyand at low cost. Today, themain buyer of Chile’scopper is China, where themetal is used forindustrialization – mainlyfor construction andinfrastructure – and as

collateral for financing loans. As of 2013,mining represented more than half ofChile’s total exports.

Nonetheless, copper production hasslowly started to decline. Even Codelco, thestate-owned copper mining company andthe world’s largest seller of refined copper,is finding it difficult to expand. Accordingto the National Institute of Statistics, from2013 to 2014 copper production dropped by7.3% as a consequence of more costlyextraction, deeper mines, the use ofsubstitute materials, and a drop in copperprices due to slower growth in China.

Manufacturing industry in Chile accountsfor 11% of Gross Domestic Product (WorldBank 2013). According to SOFOFA, theFederation of Chilean Industry, the countryproduces wood products, food, beverages,tobacco, plastics, rubber and chemicals, aswell as paper and printing items, machineryand textiles. While it is mainly an export-oriented economy, some items are suppliedto the domestic market too, including paperand printing products, chemicals, tobaccoand food.

After copper, agriculture is Chile’ssecond-largest source of exports. Exports ofgoods and services, including advancedretail, shipping and transport, account foran estimated one-third of the country’sGDP. Among the top export products arewood and wine, with companies like

Towards aknowledge-basedeconomy

ChileCOUNTRYFEATURE

President: Michelle Bachelet, former ExecutiveDirector of UN Women and previouslyPresident from 2006–2010Government: Nueva Mayoría (New Majority),a coalition of centre-left political parties, tookoffice on March 2014 for a four-year termPopulation: 17.77M (2014)Unemployment: 5.9% of labour force (2013,OECD estimate)Self-employment (per cent of employment):26.6 (2011, OECD)Human Development Index ranking : 41 out of 187 countries and territories

(2013, UNDP)Internet users (per cent of all

households): 60.5 (2012,OECD)World Economic ForumGlobal Competitiveness

Index ranking: 33 out of144 countries (2014)

Copper providesapproximately 20% of

government revenue

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Celulosa Arauco y Constitución and Conchay Toro leading the respective markets.

Inclusive growth Chile’s economic growth is impressive, butthe gap between rich and poor remainspronounced. In terms of incomedistribution, Chile scored a 0.5 Ginicoefficient in 2011, placing it at the very topof the inequality list among all OECDcountries. According to World Bankindicators, in 2011 the income share held bythe richest 10% was 41.7%, whilst thepoorest 10% only held 1.7%.

In an effort to address the challenge ofachieving more inclusive growth, since thelate 1990s, Chile – in common with anumber of other Latin American countries –has been attempting to restructure theeconomy and to make knowledge and ideasmore central to its national economicstrategy. The political discourse in Chile hasstarted to reflect the intention to undergo atransition: away from a reliance on finite

natural resources towards valuing ideas andknowledge fueled by scientific andtechnological innovation.

One of the basic building blocks for aknowledge-based economy – and a way toreduce inequality – is education. However,while in 2012 Chile showed a more than 70%enrolment rate in tertiary education, tuitionfees at Chilean universities are the highestamong OECD countries. On top of this, bothpublic and private universities had selectionprocesses that automatically favoured thebetter-educated elite coming from privateschools. This led some commentators tosuggest that, only by investing in educationholistically, would Chile be able to offer fairopportunities for all. In other words, publicspending should not only go to publictertiary education, but aim at ensuringhigher-quality primary and secondaryschools too.

During months of massive protests thatbegan in May 2011, students demandedmajor changes to an education system that

had privatized during the dictatorship (1973-90) of General Augusto Pinochet. Theprotests helped shape the 2013 electoralcampaign and propel Michelle Bachelet intopower for a second stint as president. In2014, the first part of a multi-prongededucation reform, which includes an end toprofits at state-subsidized schools andeliminates their selective entrance policies,was approved by the legislature. Thegovernment is now looking to bolster teacherpay and conditions, bring public schools,now managed and financed by townships,under national jurisdiction, and makeuniversity education free.

Start-Up Chile Another key element of a knowledge-basedeconomy is innovation. It is innovation inboth products and processes that leads toreal technological development, added value,productivity and competitiveness.

Over recent years, the government haslaunched a raft of public-private ➤

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Jorge Rosario at workdeveloping a way ofproducing organimplants through 3Dbioprinting at Cells forCells, the first Chileanstem cell therapyresearch company.


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What are the main characteristics of thenew government’s industrial policy? Selective strategic policies aim to fosterstructural transformation of the economythrough the promotion of new economicareas, as well as by enhancingcompetitiveness. A Strategic InvestmentFund of US$1bn will fund relevant strategicinvestments and the elimination ofbottlenecks in strategic sectors.

We are building public-private strategiccooperation tables, where roadmaps arebeing constructed and where gaps in, forexample, human capital, technology andregulation, are being identified for support.

The sectors that we are supportingare:mining, logistics, tourism, aquaculture,solar energy, healthy foods, sustainableconstruction and creative industries. We areopen to new proposals of public-privatesupport, as long as they have growthpotential and the technology that thecountry can learn and benefit from andhave sustainability as an essential part ofsector development, and as long ascoordination or market failures exist thatjustify government action. Why is enhancing the industrial sectorgood for social well-being and inclusion? Supporting sectors that incorporate newand more advanced knowledge is a way to

initiatives intended to increase thelevels of new businesses launched byhigh-impact entrepreneurs whofrequently innovate and then create alarge number of jobs. The best-knownis Start-Up Chile, an innovationexperiment that began in 2010. Foreignentrepreneurs were invited to come toChile for six months where theyreceived US$40,000 seed capital, plusfree office space, Internet access,mentoring and networking. In return,the foreigners were expected to interactwith local entrepreneurs and toconsider making the country theirpermanent home.

The policymakers hoped that theforeign entrepreneurs would transformChile’s entrepreneurial culture byteaching the locals how to take risks,help each other and form globalconnections. As of early 2014, 810 start-ups from 65 countries had beenadmitted into the programme. Out ofthat total, 132 companies have chosento stay in Chile, reporting that they hadraised an impressive US$26m infunding.

The government has also madeseveral less well-known structuralchanges. A national on-line platformenables entrepreneurs to start a newbusiness in one day with zero cost, and a“re-entrepreneur law” makesbankruptcy proceedingsstraightforward and low-cost. Thegovernment has also worked toestablish institutions that supportscientific and technological work, andresearch and development.

Chile managed to jump into the ‘high-income’ country category in only a shortspan of time, making it one of the mostimpressive economic growth cases inthe world. Today, national efforts todevelop a knowledge-based economy –mainly by investing in education andinnovation – are putting the country onthe path to inclusive growth.

foster the structural transformation anddemocratization of market developmentand growth We are moving away from rentscoming from the ownership andexploitation of natural resources towardsaccording more value to ideas andknowledge which are much moredemocratic. For this reason, good quality ofeducation, particularly public education, isan essential component. The new government is significantlyfostering education in the country. Howwill this impact on industry and on theeconomy in general?It will have a positive effect on both equityand efficiency. Better public education willincrease inter-generational equity,decreasing the probability that one’soutcome in life is highly correlated to thatof one’s parents. It will also increaseefficiency and productivity since it willallow the best minds in the country toactually achieve all their potential,something that a bad education systemsignificantly curtails.

For us this is very important because ithas been observed through numerousstudies that the problem of the skills of theChilean workforce is limiting our country’sgrowth economy. Indeed, the EnterpriseSurvey of Chile of 2010 conducted by the

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Interview with LUIS FELIPE CÉSPEDES, Minister of Economy, Development and Tourism

“We are accordingmore value to ideasand knowledge”

ChileCOUNTRYFEATURE


Organization for Economic Cooperationand Development, notes that theinadequately educated workforce is thesecond biggest obstacle to doing business.Moreover, the share of unskilled labour incompanies stands at 47%, while in LatinAmerica it is only 38% and just 29%worldwide. This is confirmed by the GlobalCompetitiveness Index of the WorldEconomic Forum, which states in its 2014-2015 edition that the second mostproblematic factor for doing business isindeed an inadequately educatedworkforce.

A better educated workforce willimprove the productivity of manufacturing,also allowing for higher value products tobe manufactured in the country. Accordingto the Annual National Industrial Survey2012 (ENIA) of the National Institute ofStatistics (INE) only 26% of the workforce ofChile’s manufacturing firms is skilledlabour, so there is still room to grow andreach the level of developed countries.

How will Chile reconcile industrial andeconomic growth with environmentalprotection? The industries in which we are competitiveand the new ones that will follow will havesustainability at the centre of theirdevelopment. Export development andsustainability necessarily require that wehave high environmental and socialstandards. This is particularly relevant for a

country that still bases its competitivenesson natural resource-intensive industries,which we are trying to slowly change.

There are many options on how UNIDOcould help, for example, by providingtechnical and financial collaboration.Currently, the Ministry of Environmentreceives technical and financialcollaboration from various internationalagencies, such as Germany’s Ministry ofEnvironment, consisting mainly oftechnical assistance and financing ofprojects related to sustainableconsumption and production.How do you think Chile will be 20 yearsfrom now? I think Chile will have an economy that ismuch more technology and knowledge-based, and that we will have evolvedtowards high-value services and products,which will have evolved from our currentcompetitive sectors. It will be a countrywhere much more knowledge is producedand used in our industry in a synergic way.

LUIS FELIPE CÉSPEDES is the ministerof Economy, Development, andTourism of Chile. Before his currentappointment, he was a professor at theSchool of Business at the UniversidadAdolfo Ibáñez. Previously, he has taughtMacroeconomics and InternationalEconomics at the Universidad de Chileand the Universidad Católica de Chile.In the public sector, Céspedes served asthe coordinator of economic policiesand chief economic advisor to theChilean Finance Ministry from 2006 to2009. He was also manager ofEconomic Research at the Central Bank of Chile.

“A better educatedworkforce will improvethe productivity ofmanufacturing, alsoallowing for higher valueproducts to bemanufactured in thecountry. ”

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MakingIt40

In 2007, the government of Uganda banned the import,sale and manufacture of plastic bags, leaving manyUgandans striving to find appropriate alternatives. In thiscontext, in early 2009 Rusia Orikiriza Bariho, at that timefreshly graduated from university, set up a business totransform agricultural waste such as straw, elephant grass,banana fibre and cotton waste into environmentallyfriendly bags.

The company, Oribags Innovation, quickly won plauditsand in 2010 it won the SEED Award for sustainableconsumption and production recycling. (The SEEDInitiative, funded by the United Nations EnvironmentalProgramme, the United Nations DevelopmentProgramme and the International Union for Conservationof Nature, promotes innovative and locally led social andenvironmental start-ups in developing countries.)

Handing over the award to Orikiriza, the British HighCommissioner to Uganda, Martin Shearman, stated, “Thisaward is recognition of your particular achievements ininnovation and entrepreneurship so far, of yourpromising efforts to promote economic growth, social

Oribags Innovations

In the latest of a series about remarkablecompanies, Making It talks to a young femaleUgandan whose business transformsagricultural waste into fashionable bags.

development and environmental protection and, not least,of the potential of your project to inspire others.”

More than making bags out of waste Oribags Innovation has its head office at the industrial parkin the capital, Kampala. Oribags workers collect and/orpurchase agricultural waste from local farmers and the rawmaterial is then taken to be processed at the incubationcentre at the Uganda Industrial Research Institute (UIRI).The paper-making area is also located at UIRI’s Kampalaindustrial incubation centre, which provides facilities toOribags and 29 other Ugandan industrial entrepreneurs.

Orikiriza explains how the paper pulp is made into abag, “If we are making a paper bag, after drying the paper,we have to smooth it because if it just dries under the sun,the paper will be very hard and inflexible. So, we use rollersto smooth it out. After that we do the measurementaccording to the size required by a client. After we’ve donethat, we do the printing because the bags must bepersonalized according to the client’s address and logo, orto have a specific trendy word that they need on the bag.”

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While the world’s paper bag industry heavily relies onwood, Oribags is saving Uganda’s plunging woodresources. Besides being environmentally friendly,Oribags also takes pride in empowering women andyoung people from the local community. Employing 19 people, 13 women and six men, Oribags represents amodel of social entrepreneurship that not only generatesjobs and income, but also provides training onentrepreneurship skills.

Today, Oribags Innovations is getting increasing numbersof orders from gift buyers, corporate companies, schools,universities and so on. The cost of its products range from 25US cents to five US dollars, depending on the size of the bag.

With business looking up, Orikiriza’s vision for Oribagsis “to become the leading producer of environmentally-friendly products and services in East Africa by 2020”. In order to diversify and scale-up the existing range ofproducts, she also envisions a paper-processing pilot plantthat will process 40 tons of paper pulp per day for Oribags.

A humble startOrikiriza was born and raised in the remote village ofKabale in south-western Uganda. The first child born to a humble family – her mother worked as a craftswomanweaving baskets and making beads and ornaments, andher father worked as a pineapple farmer, Orikirizaunderstood the importance of fighting poverty with herown hands from a very young age.

As a girl, she worked with her mother to produce a localalcoholic brew called ‘tonto’ which she sold to local bars.The money earned helped pay the school fees and otherfamily necessities. But the family soon couldn’t afford hersecondary education, and it was only through a relative’shelp she managed to continue her studies.

“Throughout my education, I knew that the only way tostop the vicious cycle of poverty was to work hard, andstart earning money as early as possible,” said Orikiriza.

After starting Makerere University, Orikiriza used theskills she learnt as a child to make ear rings andbroaches from waste paper. She earned some money tosupport herself and her siblings, but the business didn’tprosper and she was on the verge of giving up. Whenthe government banned plastic bags in 2007, Orikirizasaw new hope. She realized that she could transformwaste paper into bags instead! So, in 2009, with aboutUS$300 generated from her first business, she foundedOribags Innovations.

In a blog, Orikiriza revealed that making Oribags grow had been difficult. “It has been a result of strongcommitment and sacrifice. For over two years, Ioperated with no profits and I had to struggle tomaintain the business.”

Her business got a break when she was recommendedfor training at the Uganda Industrial Research Institute.The Institute contributed around US$1,000 as start-upcapital and offered her work space. The researchers alsohelped her find the best methods to process locallycollected agricultural waste into paper pulp.

Role model for young entrepreneurs Orikiriza’s endeavour has been widely acknowledged inher country and internationally. In 2011, she won theInternational Alliance for Women’s World of DifferenceAward for her efforts to promote women’s economicempowerment, and in 2012, she was made a fellow of theUS President’s Young African Leaders Initiative.

Orikiriza is also actively involved in many socialprogrammes. For instance, she is the leader and initiatorfor Youth Works! Uganda, a television programmesupporting youth creativity and innovation in Uganda;the Young Entrepreneurs Director to the Board of theUganda Women Entrepreneurs Association; and theSecretary-General of Women International Maternity Aid (WIMA) – to name just a few.

As a young, successful social entrepreneur, Orikirizahelps other young people in her country to empowerthemselves through entrepreneurship. She is now workingto educate them about entrepreneurship and to help thembuild the skills necessary to start their own businesses.

Now 28 years old and a mother of two, Orikiriza thinksthe biggest challenge for women’s entrepreneurship inUganda is that some women still look down on smallbusinesses. “They forget that most of the successful globalbusinesses started small. If we change our attitudes, theneach woman will be empowered globally. There areenormous indigenous opportunities around us and inour communities that can change our lives,” she said.

Orikiriza admits the cost of her bags is high, especiallydue to high taxes. “Oribags is a small enterprise, but weare treated as a big investor and we face the challenge ofhigh taxes”. In her opinion, governmental support, suchas a more favourable taxation policy for start-ups, ispivotal to encourage youth entrepreneurship in Uganda.

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MakingIt42

POLICY BRIEF

By ANNA PEGELS, Senior Researcher, GermanDevelopment Institute/Deutsches Institut fürEntwicklungspolitik (DIE)

Western society has traditionally beencharacterized as a market economy, asystem in which the market is meant tocorrect itself. It stands for liberalization,not regulation. Yet the market is not anend in itself, but rather an instrument.As such, it should subordinate itself tosocietal goals such as fairness andprosperity for all. In light of climatechange and environmental damage,environmental protection has become apart of our societal norms.

And yet this is precisely where themarket fails in its current form. Sinceenvironmental costs are not usuallyincluded in the market, they do notappear in company balance sheets. The conventional market does not workaccording to the ‘polluter pays’ principle, and whether a particularcompany makes an effort to nurture agreen image or not, the incentive to abideby new environmental standards is simply too low.

Thus, it is down to policy, andspecifically industrial policy, to ensurethat the market serves societal goals again.Green industrial policy is not just a minoramendment to traditional industrialpolicy – it goes far beyond. It is expandingits list of objectives, from economicsuccess alone to creating an economicallysuccessful as well as an ecologically

sustainable society.We have been well aware of the

ecological challenges for several electoralterms now, and environmentalconsciousness is rising. So why is thetransformation so difficult?

Because the market fails in so many ways.There is a whole range of costs that arestill not yet part of the market. Policyneeds to change this situation, forexample through the introduction ofemissions trading schemes withsufficiently tight caps. At the same time,there is a great deal of insecurityregarding exactly how the market can andshould change. Individual companiesstruggle to decide if they should invest inone technology or another, because theydo not know what tomorrow’s marketswill look like. Policy can help here byshaping the direction to take. Andultimately the focus is on public goods:climate, air, biodiversity and so forth.Policy plays a key role in ensuring that allof us take responsibility.

Because great uncertainty meets timepressure.Policy operates in uncertain terrain. Itneeds to cater for societal demands oftoday and reach the correct conclusionsfor tomorrow – without knowing whattomorrow will even look like. Policytherefore has to cover an extremely broadperiod. Meanwhile, time pressure is high.We know that we have to lay thegroundwork now if we are to stay withinsafe environmental operating space.

Because new paths have to be explored.The current path is familiar and has beentested, but we now need to activelyexplore the unknown. Green industrialpolicies must create new industries andnew patterns of demand. Take renewableenergies: German policy stipulated thatproducers of electricity from renewablesources will receive guaranteedcompensation for 20 years. Left to themarket alone, the renewable energyrevolution – with its rapidly decreasingcosts and global investments in thebillions – would never have occurred. Atthe same time, we cannot simply startover from scratch. We are heavilyinvested in conventional sources ofenergy, and we must take active steps tophase them out.

The transformation is also about power.And this is why we are facing a criticalpolitical challenge. Markettransformation implies highly potentinterests; the energy sector in particularis central to any economy. Greenindustrial policy is about shifting profitopportunities, risking that companiesseek to influence policy rather thanlooking towards the customer.Experience shows that policy is notalways able to resist. But we can dosomething to limit this risk:● Transformational policy requiresbroad support and a mandate for the

Green industrial policy:a transition of values

“Left to the market alone, therenewable energy revolution –with its rapidly decreasingcosts and global investmentsin the billions – would neverhave occurred”

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POLICY BRIEF

direction to take. In other words, we needa social contract for sustainability. Civilsociety must hold policy responsible forits part of the contract.● A strategic coalition of key stakeholdersis required. This includes newstakeholders, such as renewable energybusinesses. But support can come fromunexpected places, too. For instance whenenergy-intensive companies realize that

renewables can quickly ease supplyconstraints.● Policy must invest in systematiclearning. Green industrial policyevolution means testing and adjustingpolicies, and learning from experiencesof other countries. It also means thatmistakes are allowed – so long as we learnfrom them.● The market should remain the key

instrument for policy. Once the directionand rules are clear, it must be fully used asan efficient tool.

This article was originally published atwww.kreutz-partner.de and is based on thediscussion paper, Green Industrial Policy by W.Lütkenhorst, T. Altenburg, A. Pegels and G.Vidican, published by the German DevelopmentInstitute.

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MakingIt44

POLICY BRIEF

By JOAQUÍN FUENTES, Strategic PlanningExpert, United Nations IndustrialDevelopment Organization

Any strategic partnership should beunderpinned by a solid institutionalframework. This concept will beparticularly relevant in theimplementation phase of the post-2015development agenda and its 17 proposedgoals. In this connection, strengthenedglobal partnerships will be a catalyst forthe international community to advancetowards an ambitious andtransformative sustainable developmentagenda beyond the MillenniumDevelopment Goals. Needless to say,international organizations, andparticularly United Nations specializedagencies, will play a critical role infurther leveraging the knowledge andresources of all relevant actors in orderto maximize the impact of anydevelopment strategy at global, regionaland national levels.

Middle-income countries in particularneed models of cooperation that bettersuit their development priorities andenhance their productive capacities,including through knowledgeexchanges, better access to financing fordevelopment, environmentally friendlytechnology and capacity building.

Partnerships and networks are thereforea major pillar for catalyzing andmobilizing action, and are the criticalmass necessary for a tangibletransformation towards inclusive andsustainable industrial development.

In view of the centrality ofpartnerships and networks as key meansof implementation of the post-2015development agenda, the new Networksfor Prosperity report, entitled AdvancingSustainability through Partnerships,attempts to advance the understandingof these new and flexible forms of globalgovernance.

This report also contains a newupdated version of the GlobalConnectedness Index, which shows that themore connected a country is at all levels,the more developed that country willprobably be at social, environmental andeconomic levels.

Building on the conclusions ofprevious Networks for Prosperityreports, as well as the experts’ findings inthe present edition, the report makes thefollowing recommendations:● The international community shouldencourage and prioritize initiatives andpartnerships that promote innovationand knowledge networking amongcountries and industries as integralelements of any global and national

Networks for prosperity:advancing sustainabilitythrough partnerships

strategy toward inclusive and sustainablegrowth and development. Networkgovernance should be at the centre of thefuture international developmentframework, as a crucial means oftackling the complexities and challengesof today’s globalization and developmentlandscape.● Countries should consider investingin institutional infrastructure, and in

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POLICY BRIEF

and developing countries. Technologynetworks for global sustainability havethe potential to support decision aboutand the implementation of theSustainable Development Goals.● Multi-stakeholder partnerships andnetworks should contribute to enhancedpolicy cooperation and coordination fora more coherent international financialarchitecture in support of sustainabledevelopment. Innovative financingmodalities and cross-sector partnershipsshould embrace new actors and newdonors in order to improve themobilization and allocation of resourcesfor sustainability across all relevant areasand processes of the post-2015development agenda. Developmentfinance can be a catalyst for change,especially when spurred by increasedtransparency and accountability.

Addressing global challenges such asclimate change, poverty or loss ofecosystems is clearly beyond theindividual capabilities of any singleactor. Stakeholders and other involvedparties must cooperate jointly in order totackle these challenges by exploring adiversity of alternatives in acomprehensive manner with theultimate goal of creating shared value.

networks and partnerships that allowindustries and public institutions alike todiffuse and transfer knowledge,technology and investments with theobjective of providing new knowledgeand opportunities. Networks andpartnerships are meant to complement,not replace, national governments. Statesmust be willing to invest substantialresources in these new forms of

governance. In return, networks can helpthem and their partners achieve globaland national development aspirations,while maintaining their competence andserving their citizens.● Technology innovation should be apriority for the international communityto inform equitable, sustainablesolutions to the most pressing issuescurrently confronting both developed

“Addressing globalchallenges such as climatechange, poverty or loss ofecosystems is clearly beyondthe individual capabilities ofany single actor.”


MakingIt46

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As a taster for the next issue of Making It,ROBERT C. BREARS looks at how water can bea catalyst for conflict or for cooperation

By 2030, global demand for water isprojected to outstrip supply by 40% as aresult of numerous mega-trendsincluding climate change, rapid economicand population growth, and urbanization.As such there is potential for water tobecome a catalyst for conflict betweenmultiple users and uses. Conflict couldoccur inside nations with local waterusers competing for limited resources orit could occur at the nation-state levelwith nations competing over trans-boundary water resources.

Rather than being a source for conflict,water can be a catalyst for cooperationwith all sections of society across politicalboundaries involved in the decision-making process of managing preciouswater resources. However, before we canreduce the potential for conflict overscarce water resources and promotecooperation we first need to understandhow water scarcity can lead to economicloss, political instability andenvironmental degradation, which in turncan trigger conflict.

Water is a vital resource in theproduction of economic goods andservices. Many industrial sectors,including the food, pharmaceutical andtextile manufacturers, rely on largevolumes of water for production of food,medicines and clothing, and therefore areexposed to the risk of drought. However, itis not only scarcity of water that can

impact production of goods and services,too much water can as well. For instance,floods damage critical infrastructure andthe excessive amounts of chemicals andsediments that get into water duringfloods make it unsuitable for industrialuse. As such, both floods and droughtshave the ability to impact businesses’revenue generation. At the aggregate level,floods and droughts can impact exports ofgoods and services, which in turn canaffect overall employment and incomelevels leading to social unrest. Water isessential in the production of energy andso a lack of water from droughts canimpact electricity production, while floodsand extreme-weather events can damageenergy infrastructure, further reducingeconomic output.

As the majority of the world’s riverbasins cross political boundaries, political

Half full orhalf empty?

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instability from floods and droughts canoccur at both the intra- and inter-statelevel. At the intra-state level, conflict canoccur when scarce water crosses localpolitical boundaries. With numerouscountries having internal ethnic disputes,these tensions have the potential to sparkcivil conflict between sections of society.Meanwhile, there is the potential fortension and even conflict over scarcewater resources between nation-statessharing trans-boundary water resources.This can occur when upstream statesdivert water resources for hydropower,agricultural or industrial production.Even floods can cause tensions betweenstates when upstream states fail to provideearly warning of floods to downstreamstates.

At the local level, human activities, suchas rapid urbanization and industrial

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MakingIt 47

www.blogs.worldbank.org/sustainablecities – A spacefor urban development professionals to exchangeideas and engage some of the central questions ofsustainable cities

www.c40.org – The C40 Cities Climate LeadershipGroup (C40) is a network of the world’s megacitiescommitted to addressing climate change

www.citiscope.org – Citiscope spurs innovations to helpcities work better for all of their people through thepower of independent journalism

www.masdar.ae – Masdar City is pioneering a“greenprint” for how cities can accommodate rapidurbanization and dramatically reduce energy, waterand waste

www.newclimateeconomy.report – Better Growth,Better Climate: The New Climate Economy is areport by the Global Commission on the Economyand Climate

www.scp-centre.org – The Collaborating Centre onSustainable Consumption and Production

www.sustainablecitiescollective.com – The SustainableCities Collective is an editorially independent,moderated community for leaders of majormetropolitan areas, urban planning andsustainability professionals

www.unesco.org/new/en/culture/themes/creativity/creative-cities-network – The Creative Cities Network hasa common mission for cultural diversity andsustainable urban development

www.unhabitat.org – UN-Habitat is the United Nationsprogramme working towards a better urban future.Its mission is to promote socially andenvironmentally sustainable human settlementsdevelopment and the achievement of adequateshelter for all

MakingItIndustry for Development

FURTHER READING

FURTHER SURFING

include: water assessments withhydrological, demographic and socio-economic data collected for informeddecision-making; demandmanagement, including pricing ofwater, subsidies and rebates toencourage efficiency, and awarenesscampaigns on the need to conservewater; conflict resolution mechanismsto set water allocation rights, water-uselimits and dispute resolution tools;regulations to cover pollution controland land-use; technology that increasesthe efficient use of water resources indomestic and non-domestic use; andfinance with investments made bygovernments, private partners inimplementing IWRM.

With demand for water likely tooutstrip supply within the next decadeand a half as a result of numerous mega-trends, including climate change, rapideconomic and population growth, andurbanization, there is the potential forwater scarcity to become a catalyst forconflict. This conflict can occur at thelocal level all the way up to the nation-state level. However, water has thepower to be a catalyst for cooperationbetween all users, both inter- and intra-state. By implementing IWRM, scarcewater resources can be managed in asustainable way that maximizeseconomic and social welfare in anequitable manner, while ensuring thehealth of ecosystems.

● ROBERT C. BREARS is the founder ofMitidaption and an Associate Fellow of theNFG, Free University of Berlin. He is anexpert on the impacts of climate change andenvironmental risks to business, governanceand society and adaption strategies tomitigate these risks. He is a contributingauthor for the Johns Hopkins University’sWater magazine, China Water Risk andRepRisk.

production, impact the health ofwaterways, which in turn impacts theavailability of clean water for all users.For example, the impact of urbanizationis increased surface runoff which causesnon-point source pollution. Unlikepollution from industrial and sewagetreatment plants, non-point sourcepollution comes from many diffusesources and occurs when surface runoffpicks up and carries away natural andhuman-made pollutants, finallydepositing them into lakes, rivers,wetlands, coastal waters andgroundwater. In addition, the health ofaquatic ecosystems, which provide vitalecosystem services to both humans andnature, is also degraded. This, in turn,impacts nature’s ability to providehealthy water for human use. At theinternational level, contamination ofwater resources can lead to conflictbetween water users as polluted groundand surface water crosses internationalboundaries.

However, while water has the ability tospark conflict, it can also promotecooperation in and between nation-states. The Integrated Water ResourcesManagement (IWRM) framework hasbeen developed to promote thecoordinated development andmanagement of water, land and relatedresources at the river basin level inorder to maximize economic and socialwelfare in an equitable manner. IWRMalso promotes the sustainable use ofwater resources to ensure healthyecosystems. IWRM promotes theparticipation of individuals,communities and water users in allaspects of water management policyand decision-making.

To ensure water is used sustainably,IWRM promotes managementinstruments to balance demand withsupply. Management instruments

Bloomberg, Michael R. – Advancing climate ambition:cities as partners in global climate action

Chang, Leslie T. – Factory Girls: From Village to City in aChanging China

Daniels, Steve – Making Do: Innovation in Kenya’sInformal Economy

Davis, Mike – Planet of Slums Fischer, Brodwyn, McCann, Bryan, Auyero, Javier (eds) –

Cities From Scratch: Poverty and Informality inUrban Latin America

Gouldson, Andy, Colenbrander, Sarah, Sudmant,Andrew and Papargyropoulou, Effie – TheEconomics of Low Carbon Cities: Palembang,Indonesia

Harvey, David – Rebel Cities: From the Right to the Cityto the Urban Revolution

Hutchison, Elizabeth Quay, Klubock, Thomas Miller,Milanich, Nara B. and Winn, Peter (eds) – The ChileReader: History, Culture, Politics

Jha, Saumitra, Rao, Vijayendra, Woolcock, Michael –Governance in the gullies: Democraticresponsiveness and leadership in Delhi’s slums

Khanna, Parag and Ayesha – Hybrid Reality: Thriving inthe Emerging Human-Technology CivilizationNeuwirth, Robert – Shadow Cities: A BillionSquatters, a New Urban World

Neuwirth, Robert – Stealth of Nations: The Global Riseof the Informal Economy

Perlman, Janice – Favela: Four Decades of Living on theEdge in Rio de Janeiro

Shark, Alan R. and Toporkoff, Sylviane – Smart Cities fora Bright Sustainable Future: A Global Perspective

UN-Habitat – Islamabad, Pakistan: Climate ChangeVulnerability Assessment

A quarterly magazine tostimulate debate about globalindustrial development issues

MakingItIndustry for Development

Documents

Cities that work. Issue 18