Journal Issue

Megacities and the Environment

International Monetary Fund. External Relations Dept.
Published Date:
January 1993
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One of the most obvious, yet ignored features of the development landscape in 1993 is the dramatic impact that megacities have begun to have on the world’s economic, social, and political prospects for the 1990s, liven the June 1992 Earth Summit, which took place in one of the world’s largest and most troubled urban centers, barely touched the problem. Distracted by global climate change, destruction of the rain forests, and the spectacular scenery of Rio de Janeiro, delegates failed to focus on the critical “brown issues”—polluted air, dirty water, and inadequate sanitation—that make people sick today.

It is ironic that the brown issues, most evident in the megacities, should receive so little international and national political attention. Traffic congestion in Bangkok or Mexico City has given new meaning to air pollution. The rapid expansion of squatter communities on the peripheries of Jakarta or Kinshasa has led to unprecedented numbers of poor households living without sanitation services. Nearly one billion people in the developing world still lack access to clean water for drinking and bathing. And for many, the water that is delivered comes from trucks—not pipes—and at exorbitant prices (see box).

This situation is more alarming when considered within the dynamic context of change. Populations are growing, the spatial area of cities is rapidly expanding, and the number of public institutions at the metropolitan, urban, and neighborhood levels is increasing. Moreover, the significance of urban-based economic activities has grown tremendously, now reaching more than 50 percent of GDP in most developing countries. Yet serious constraints exist on the productivity of labor and investment within cities, largely caused by infrastructure deficiencies, burdensome regulation, and the weakness of local institutions.

What then are the prospects for improving the quality of life in the world’s largest cities? The short answer is not a reassuring one unless policymakers adopt a radically different approach.

Sprawling megacities

The problems plaguing urban centers, of course, are not new, but the situation has been deteriorating over the past decade. One feature that is new, however, is the sheer spatial size of these cities, coming on top of growing populations, which makes our ability to solve the problems that much more questionable. Many of the world’s megacities have reached regional proportions. Metropolitan lxmdon is almost 100 miles across; Tokyo and New York have become entire regional economies; and Jakarta has grown from beyond its city limits to the Jabotobek region and will soon be joined with Bandung, once considered a distant secondary city.

This spatial expansion, in part fueled by subsidized energy prices in most cities, has sharply raised the cost of communication, transportation, and economic exchange—besides degrading the environment. In some cities, such as Los Angeles, this process has become a vicious cycle, as increased motorization and private car ownership further encourage urban sprawl—a classic case of how the low density use of land resources is closely related to the overall deterioration of the quality of urban air, land, and water.

In industrial countries, one way to try to reduce these costs has been the emergence of new urban nodes within metropolitan areas—the so-called edge cities in the United States. The idea is to use improved communications to reduce the importance of downtown proximity and loca-tional advantages that led to the urban concentration of economic activities in earlier periods. In fact, many metropolitan areas (e.g., Barcelona) have deliberately sought to integrate the city center and periphery by strengthening transportation links and improving the “urban quality of life” in suburban areas, thereby reducing disparities between central and suburban areas.

But in developing countries, these disparities are worse. To begin with, the problem is more pervasive across countries. Since the 1970s, low-density residential settlements have developed on the periphery of almost every city and town, reflecting rational decisions by low-income households in the face of heavily regulated land markets that reduce the supply and increase the cost of urban land. The poor, in effect, are forced to find land where they will not be harassed by municipal bulldozers. Households with higher incomes occupy the more central locations, which means they have lower transport costs and thus can afford to send more than one wage-earner to the labor market. This is particularly true for people working in the informal sector where central location is often critical to being able to sell goods such as street foods or small items. In contrast, (lower-income) households living on the periphery must absorb heavy transportation costs if they are to have central employment. Moreover, these private costs add up to substantial public costs in terms of the environmental damage caused by transport-related air pollution.

The megacities of the third world must also contend with poorly developed infrastructures, particularly in communications. Businesses and new jobs have been created outside the center, straining links between central cities, peripheral settlements, new zones of economic activity, and the hinterland of small towns and the countryside. By the end of the 1980s, this process had reached a logical, if aberrant conclusion in Sáo Paulo, which had more cars than telephones—the environmental consequences were predictable

The expanding territory has also led to overextended administrations in developed and developing countries alike. During the 1970s and 1980s, many large cities established metropolitan authorities to maintain administrative coherence, resolve disputes between jurisdictions, and provide services of a cross-jurisdictional nature. The most celebrated case was in Toronto, where a broad framework was established encompassing the Toronto city government and surrounding municipalities—although by the early 1990s, even this framework was being called into question by the expansion of the metropolitan area to a regional scale. One driving force has been an appreciation of the transmunicipal and regionwide nature of pollution.

“Brown issues” prove costly

Bogota About 2,500 tons of solid waste is left uncollected every day. Some is partially recycled informally while the rest is left to rot in small dumps or in canals, sewers, or streets.

Bangkok Nearly 33 percent of the city’s potential gross product is lost because of congestion-induced travel delays. This could rise to 60 percent if no remedial measures are taken.

Accra 70 percent of health care expenditures are linked to environment-related diseases—as in all of Ghana. The expenditures include productivity losses and health resource costs such as doctors, nurses, technicians, administration, equipment, and drugs.

Jakarta The equivalent of 1 percent of the city’s gross domestic product, that is, more than $50 million, is spent each year by households to boil impure water.

Mexico City An average of 2.4 work days per person is lost, and 6,400 deaths are caused every year by abnormally high levels of suspended particulates. Annual health costs from air pollution are estimated to exceed S1.5 billion.

Source: “Toward Environmental Strategies for Cities,” The World Bank (forthcoming 1993).

After resisting metropolitan government for many years, Los Angeles recently established the South Coast Air Quality Management District to manage the region’s fight against air pollution.

For developing countries, however, there are few success cases to cite. Although many Asian and Latin American cities have reached metropolitan and regional scales (Calcutta, Bangkok, Bombay, Jakarta, Madras, Manila, Mexico City, Rio de Janeiro, and Sao Paulo, to name just a few), the high hopes of the 1970s have been frustrated by shortages of financial resources and technical skills, along with political squabbles between various levels of government over the management of urban services and the environment. Fiscal pressures on central governments have frequently resulted in responsibilities being turned over to local governments, but without the necessary financial resources. Within metropolitan areas, there has been the decentralization of responsibilities to smaller units. This has led, for example, in Abidjan and Dakar, to administrative models similar to the French metropolitan one, with decentralized communes within the metropolitan area.

Growing risks

Despite efforts to strengthen municipal management, there are few cities where the government seems to have appreciably improved environmental services. While a new rhetoric about local environmental problems has emerged, particularly after Rio, there is a readily discernible and growing gap between public sector exhortation and actual physical improvements. Shortages of clean water, uncollected garbage, and heavily polluted air have begun to have direct visible consequences on the health and productivity of urban populations, as documented in the World Bank’s World Development Report 1992. These problems are not simply cumulative in their effects, but are now reaching thresholds beyond which new problems develop:

  • In Lima, unsolved sanitation problems recently triggered an outbreak of cholera that spread quickly into neighboring countries.
  • Studies in Bangkok demonstrate that air pollution is causing irreversible brain damage and loss of I.Q. in children.
  • Blocked drainage canals in many cities, such as Buenos Aires, not only serve as breeding grounds for malaria but also result in a spate of new urban flooding—a phenomenon that some incorrectly term a “natural disaster.”

It is not surprising that these dramatic problems undermine improvements in the quality of life that resulted from major investments in infrastructure in the 1960s and

1970s. Moreover, when infrastructure breaks down, it can create hazards by concentrating risks. Recent examples include the collapse of water tunnels in Chicago and water mains in Washington and New York. The situation can even turn disastrous when dense urban areas are involved. Take, for instance, the deadly sewer explosion in Guadalajara in 1992, which killed over 212 people and injured 1,000 others. This event, following incidents in Bangkok and Dakar by less than ten months, fits a pattern of increasingly frequent industrial disasters that started in Bhopal and Mexico City in 1984.

The cumulative problems caused by infrastructure deficiencies, disasters, and environmental hazards all contribute to worsening the conditions of the urban poor. Their number in developing countries is expected to grow threefold from 1990 to the end of the century, with the absolute increase going from 330 million to one billion people. A sizable share of that rise will occur in cities with populations ranging from one to five million people. The management of large city problems, therefore, will directly affect whether the poor have the basic services needed to improve their productivity and welfare.

These problems also hurt national economies, many of which already look to their cities and towns to generate more than half of GDP. Just witness what happened on the Chicago stock market following the 1985 earthquake in Mexico City, as investors quickly made calculations about the likely slump in production resulting from collapsed infrastructure in the world’s largest city. It is testimony to the effective efforts of city authorities and communities that this infrastructure was relatively quickly restored to working order.

Indeed, many megacities now account for large shares of formal sector economic activity: 10 percent of India’s industrial jobs are generated in Bombay, which houses 1 percent of the country’s population, and Shanghai, with 1.2 percent of China’s population, accounts for 12.5 percent of China’s industrial output. This means that maintaining and improving the economic productivity of Cairo, Jakarta, Bangkok, or Manila will be essential for their national economies to develop. Simply stated, economic growth in many developing countries is unlikely if the health of their megacities does not improve.

If the social and economic stakes are high, so too are the political stakes. In many countries, national political life is heavily influenced by the mood on the streets of the biggest cities. Events in Bangkok, Beijing, Beirut, Caracas, or Nairobi at times completely preoccupy public life, resulting in a paralysis of public decisionmaking and economic uncertainty. Many observers have been shocked to discover that increasing bus fares and water tariffs in Caracas can touch off political instability and uncertainty of national proportions. At the same time, effective political management at the national and city level can contribute to the resumption of growth, as demonstrated in Mexico.

Changing dynamics

Clearly, the urban environment worldwide is deteriorating, at great cost to individuals and society at large. But before policymakers draft their agendas for action, they would do well to keep in mind some trends that are only now becoming clear.

First, it is apparent that the demographic growth of megacities—largely due to high fertility rates and not migration—is slowing down, both in terms of their rates of growth and absolute magnitudes. Mexico City had been projected to reach the 20 million level by 1990; in fact, it reached 17 million. Similarly, Rio de Janeiro and Sáo Paulo have slowed down their explosive demographic growth. While this pattern is most noticeable in Latin American megacities, reflecting the relative maturity of urbanization patterns, it also reflects the negative side effects of life in megacities. For example, during the economic adjustment programs of the 1980s, subsidies for urban services, food, and energy were sharply reduced.

Second, as a result, there is a parallel increase in the growth of secondary cities. The second tier of cities (e.g., Ankara, Guadalajara, Kano, or Surabaya) are attracting rural-urban migrants who have learned that while job opportunities may exist in the megacities, the costs of living, including housing, transportation, and general amenities, are lower in secondary cities. Private investment in secondary cities is also increasing, reflecting the efforts of the local public sector to draw investment away from the megacities to the less congested, “more friendly” business environment of secondary cities.

Third, around the megacities, there is a process of “demetropolitanization” occurring, whereby urban population concentrations or nodes, which were linked to the metropolitan core of the city, have begun to grow away from the center and toward the loci of new economic activity, within larger mega-urban regions. This has also been termed “region-based urbanization,” reflecting the emergence of extended metropolitan regions, particularly in Asia. This demographic dispersion process is closely related to the spatial form of the megacity economy itself.

Fourth, the spatial configurations of the economies of megacities are also decentralizing, no longer focused on city centers or ports. The trend is for megacity economies to be more closely aligned to the restructuring of urban economies, with new commercial and industrial activities within urban regions, whether in new zones or along transport corridors such as the highway between Rio de Janeiro and Sáo Paulo, and the new industrial zones of greater Bangkok. A major aspect of this process is the decentralization of job creation. Whereas new firms and jobs had been created in small businesses or new industries in the city centers during the 1960s and 1970s, these firms have now matured and moved to the periphery, where new jobs are being created. The role of public infrastructure in supporting and “crowding in” private investment on the urban periphery is very important in this process, not in terms of traditional approaches to industrial estates, but rather in public support of trunk power lines, roads, and water supply.

Fifth, as economic and demographic processes experience centrifugal forces, the system of metropolitan governance is also breaking down, because many municipalities no longer obtain benefits from adhering to metropolitan frameworks. Fiscal crises in most countries have reduced the capacity of large metropolitan governments to provide resources for investment and the operation of urban services. Indeed, in addition to the already serious problem of coordinating sectoral policies and investments within specific cities, there are few resources for “systemic” use at the metropolitan level to deal with regionwide issues, such as the disposal of urban wastes and the protection of natural resources.

Many of these issues require both financial resources and institutional coordination, yet the dispersion of scarce institutional capacity and resources within individual municipalities means that it will be difficult to undertake regionwide initiatives. This is heightened by growing democratization in Latin American and African cities, which has accentuated the autonomy of individual neighborhoods and municipalities from existing urban political institutions and hierarchies. The weakening and in some cases disintegration of metropolitan frameworks, along with the spontaneous, amoeba-like growth of urban regions, do not thus bode well for effective public policy and coordinated action at the mega-urban region and metropolitan level. Total institutional capacity may not have diminished in absolute terms, but further fragmentation in responsibility may well have resulted in weaker, not stronger, governance.

Sixth, as the force and energy of private economic activities dominate the demographic, spatial, and institutional patterns of megacities, the public sector may be too weak to effectively regulate private behavior. As a consequence, there may be a decline of coordinated public action in the “public interest” at the metropolitan and regional scale. This may include helping those who do not benefit from growth (i.e., the urban poor). As institutions are decentralized and financial resources reduced, there may be fewer opportunities for redistribution toward the less fortunate. Given the differences in economic welfare, infrastructure, and social services within urban areas, fewer resources will be available to maintain minimum levels of services within and across large jurisdictions. Consequently, greater disparities in income and opportunity will become evident within cities. Declining concern with the “public interest” is also particularly bad news for the environment, whose management requires some level of cross-ju-risdictional coordination in areas such as the management of water resources, solid waste, or air pollution.

Seventh, with the assistance of modern communications, the failures of these institutional processes will become more visible at the local, national, and even international level. If it is true that, as the Greeks believed, the conscience of men and women is located in the eye, we will be increasingly uncomfortable in the future.

What is to be done?

Given these trends, the following points will be critical for any agenda for action:

Metropolitan and regional governments must be strengthened around urban areas. New forms of jurisdiction must be developed that maintain the common interests among populations and the various institutional units that govern them. A failure to increase attention to shared interests will lead to dangerous centrifugal forces that will undermine the management of some of the most precious natural resources, such as river basins. It is beyond the scope of this article to spell out such a program, but a first step would be to focus on the “rules of the game” that govern central-local financial and institutional relations to assume a balance between central capacity to govern and regulate, and local autonomy to construct, operate, and maintain interests.

The political solutions that determine metropolitan outcomes depend on local political awareness. If citizens understand that their quality of life depends not simply on their neighborhood government, but on the functioning of a broader set of institutions, they may insist on strengthening institutions at a higher level citywide. Decentralization of authority is an important step toward engaging citizens, but it must be linked to this broader institutional framework.

The success of environmental policy depends fundamentally on the behavior of individuals. Everyone shapes environmental policy by making the many small decisions about what to do with their waste products, how much energy or water they use, and what prices they are prepared to pay for natural resources. This behavioral aspect of environmental policy leads to the need for intensified efforts in broad-based environmental education throughout metropolitan areas. However, this education must be accompanied by more realistic pricing of resources such as water or energy to motivate people to behave in an environmentally responsible manner.

In parallel with new efforts to strengthen the performance of metropolitan institutions, it is essential to upgrade the financial and technical management of subsectoral agencies such as water utilities, transport authorities, sanitation districts, and the many institutions managing individual natural resources within dties. This includes better cost recovery policies covering subsectoral investments.

There is a need for experimentation and innovation. There must be a broad exchange of experiences across cities to understand what works in particular places and whether it is suitable for transfer to other locales. The achievements in public transportation, solid waste management, and energy efficiency of Curitiba, Brazil, are examples of how good practice—through integrated policy, planning, and investment—can produce outcomes in the quality of life at par with or even above that found in industrial countries. Simple, yet unusual practices of giving bus tokens to slum dwellers to encourage them to bring garbage to collection points, or exchanging vegetables for recyclable materials, can suggest new ways of managing problems. A critical dimension of this process is learning, taking advantage of the myriad human interactions that are the heart of the megacity itself.

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