City-Level Decoupling-Full Report

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

and legislative autonomy to create investment climates that build up the confidence that investors require. While infrastructure is a significant investment opportunity, much will depend on whether a balance can be achieved between the institutional arrangements that will satisfy investors, the fiscal capacity of the city governments and the willingness to regulate the kind of privatisation of assets that frequently results in rising costs that have a negative impact on the urban poor. Public-private partnerships that are attractive to investors in infrastructures that deliver affordable services in resource efficient ways are the kind of economic approach that is envisaged in this report. A greater understanding of material flows and infrastructures from a sustainable and equitable development perspective will assist in this endeavour. 5.3 Pursuing decoupling and the restoration of eco- system services through urban infrastructure While some evidence indicates that relative decoupling is taking place (mainly in developed country cities), absolute resource reduction is unlikely to happen without deliberate intervention to stimulate broad, systemic changes, including behavioural changes. The decoupling argument may be perceived to focus on reducing environmental degradation and the consumption of limited resources such as fossil fuels, fresh water, rare metals, but the human needs for food, shelter and mobility are still not fully met by a significant percentage of the world’s population. Efficiency and resource productivity improvements can at best prolong the lifespan of limited resources, but without a complementary commitment sufficiency existing inequalities could persist. A combination of resource productivity improvements, increased use of local renewable resources and re-use of waste products can allow cities to better manage the flows passing through them in pursuit of decoupling.

production sphere to the infrastructure sphere, but social behaviours will also need to change if the intended outcomes are to be realised in practice. 5.2 Economic Implications The recessionary conditions that currently afflict most OECD countries and many (but by no means all) developing countries result from a combination of low levels of consumer demand, too much household debt, fiscally weak governments and a massive surplus of unspent corporate savings. Rising resource prices push up inflation and reduce consumer demand even further. While economists debate the merits of austerity, the consensus is that global economic growth is required. For some this will come from low interest rates, low inflation and debt reduction, while for others Keynesian fiscal stimulus is needed, together with higher interest rates and higher inflation. The large bulk of the most significant economic activities are concentrated in cities (large, medium and small ones), which are configured and operated in many different ways. In other words, the geography of economic space matters when it comes to implementation. Material flows, the infrastructures that conduct these flows, and (in Section 2) the governance dynamics of infrastructure transitions, provide the practical context for implementing economic policy. Most cities lack access to the funds needed to address the infrastructure challenges they face. At the same time public policy has failed to create the kind of investment climate that can unlock the massive unspent corporate savings. The result is growing recessionary conditions broken by occasional growth spurts that, in turn, are undermined by rising resource prices (in particular oil prices). Recent work by Stern and Zhengelis 77 and McKinsey 78 suggests that the answer is to create incentives for this unspent capital to be directed into resource efficiency and low carbon economic activities. Cities are in a unique position to do just this because they usually have sufficient executive

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