City-Level Decoupling-Full Report

City-Level Decoupling: Urban resource flows and the governance of infrastructure transitions

mistakes made by economic policy-makers during the decades leading up to the start of the crisis in 2007. Signalling the economic policy emphasis of their presidency of the G20 in 2012, the Mexican government noted the need for 'economic stabilization' and ’structural reforms'. However, these measures “have to be enclosed by a renewed political commitment to sustainable development and green growth.” 74 The subsequent Communique

designs and technologies that will make it possible to use natural resources more sustainably: “... [C]ities that ignore environmental impact will find themselves facing another collapse of infrastructure 30 or 40 years from now, and our children and grandchildren will bear a much higher price tag.” 72

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from the February 2012 meeting of Finance Ministers and Central Bank Governors recognised “the importance of 'green growth'” and called on the OECD, the World Bank and the UN to “provide options for G20 countries on inserting green growth and sustainable development policies into structural reform agendas, tailored to specific country conditions and level of development.” 75 Investments in infrastructures that reduce carbon emissions and improve resource productivity can unlock unspent investment funds because they can go to scale rapidly and they will be responsive to credible multi-year policy interventions that limit uncertainty and build confidence over time.

The fact that investments in urban infrastructure have become a key element of fiscal stimulus packages should be unsurprising. These are usually large investments with relatively low transaction costs (a few big investments cost less than a large number of small ones) that create the kinds of public goods that build the confidence needed to stimulate knock-on investments by the private sector. Less obvious is the economic rationale for the kind of investments in sustainability-oriented infrastructures that are needed to prevent infrastructure from collapsing a few decades down the road. It is necessary, in other words, to avoid what the Green Economy Report described as the 'gross misallocation of capital' which the Report cited as the real underlying cause of the global economic and ecological crisis. 73 Fortunately, the G20 is becoming more aware of the need to avoid repeating the

“It is precisely the overwhelming and growing long-term need to address numerous market failures [such as

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