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Urbanisation in Asia boosts prospect of sustainable growth

Victor Fung, founding chairman of the Fung Global Institute, chairs a high-level discussion session at the Asia-Global Dialogue in Hong Kong early this month.

Victor Fung, founding chairman of the Fung Global Institute, chairs a high-level discussion session at the Asia-Global Dialogue in Hong Kong early this month.

Andrew Sheng, president of the Fung Global Institute, makes the opening remarks at the Asia-Global Dialogue in Hong Kong early this month.

Andrew Sheng, president of the Fung Global Institute, makes the opening remarks at the Asia-Global Dialogue in Hong Kong early this month.

Balance between urban and rural issues crucial for eradication of poverty and development

The nature of industrialised societies - urbanisation - is the major driving force behind increasing demand for materials and energy.

Cities concentrate and integrate investment and employment opportunities, supporting rapid economic growth and access to electricity, goods, services and public facilities. Economies are now being driven by the urban services sector, and not just by industrialisation.

The sole focus on population numbers in rural areas has kept the attention on their poverty and production patterns. It has diverted attention away from consumption patterns, trends and drivers of natural-resource use in cities where the population has shifted, or is in the process of doing so.

Already cities produce three-quarters of global greenhouse-gas emissions. These are directly related to household consumption - shelter, mobility and food.

Urbanisation involves two transitions: the establishment of infrastructure, and later changes in consumption patterns based on specific lifestyles. Both are direct inputs to human well-being, and each is responsible for roughly a doubling of the rate at which resources are used.

While most of the first is essential, some of the second is discretionary and can vary by a factor of three for countries at similar levels of income and well-being.

Attention has focused on consumption patterns in cities as the driver of global change. However, the intellectually challenging question is why it is generally assumed that all countries aspire to adopt the lifestyle of the United States.

A new dimension to that 40-year-old debate, triggered by the Stockholm Conference in 1972, is emerging as China plans to shift 250 million from rural areas to urban clusters along the same lines as New York City, where emissions are one-third of the average in the US.

China has already built 40,000 kilometres of high-speed rail equal to the entire length of the interstate highways in the US, impacting earlier global trends in resource use. Carbon-dioxide emissions per capita from transportation in the US are 12 times higher than in China, constituting one-third and one-tenth of total emissions, respectively.

China has also begun to limit vehicle ownership in major cities.

Similarly, while global livestock production has been responsible for 14.5 per cent of greenhouse-gas emissions, carbon intensity is highest for beef, which contributes to roughly half of those emissions, half of which the US wastes and which Indians do not eat at all, and is not a key part of the diet in China.

Resource use in China, India and other developing countries is likely to remain between one-third and half that of the US.

The fundamental issue in the design of the new global framework is whether by 2050 developing countries will remain agrarian societies or urban ones. Between a half and three-fourths of developing populations would have shifted to urban areas; this shift had already taken place in North America, Europe and Japan by 1970.

Divided opinion

Expert opinion is divided between those who hold that the Millennium Development Goals should be continued, with new goals limited to eradication of extreme poverty, and those who say that urbanisation will eradicate poverty.

Urbanisation is the product of a major long-term, worldwide, socio-economic process; no country has moved to even middle-income status while remaining agrarian.

Second, despite the Rio+20 outcome documents recognising the critical role that energy plays in the development process, there is still no consensus on energy as the primary sustainable development goal.

Energy, along with urbanisation, encompasses and enables the other Millennium Development Goals in terms of both 'basic needs' and 'productive uses' for employment and well-being.

Currently, the poorest three-quarters of the global population use 10 per cent of global energy. 'Scientific' models using the traditional baseline or incremental growth approach assume that only 'extreme' poverty will be eradicated by 2030, and that there will be a maximum demand of 750kWh per year per capita for new connections.

The global average in 2010 was just under 3,000kWh per capita per year, while the average for the US is 13,400kWh. In Europe, Germany consumes about 7,200kWh and Greece about 5,200kWh per person per year.

Historical patterns show that countries with a large population have in the past experienced fast growth in energy access, and rapid economic growth, in a period of 30 years - the US, China, Thailand, Vietnam and South Africa.

The trade-offs related to energy and climate need to be discussed in terms of the transformations the global goals will require because access to adequate and affordable energy is the basis for economic and social development.

Third, the global vision will have to go much beyond eradication of extreme poverty. Urbanisation itself accounts for half of the decline in poverty and the removal of economic inequality is an essential condition for good governance.

Currently, the richest 1 per cent of the world's population, largely in industrialised countries, owns 40 per cent of global assets. By contrast, the bottom half, largely in developing countries, holds just 1 per cent. From 1998 to 2008, their income increased by 60 per cent, while the bottom 5 per cent had no change.

The top 8 per cent also take home 50 per cent of the global income (United Nations, 2013). The primary cause of this disparity is the dependence of developing-country populations on uncertain incomes from agricultural cropping patterns.

The new global goals require an approach to social mobility for achieving middle-class status; one that stresses education, housing and transport, and steady income which only industry and cities can provide.

High unemployment, widening inequality and climate change have remained key challenges.

At Stockholm in 1972, and in Agenda 21 released at Rio in 1992, the environment was not considered only in terms of industrial pollution and conservation of rural natural resources. Instead, a broad view was adopted to include social considerations, such as water and health, with an emphasis on 'rights'.

This makes the developmental and environmental agendas quite similar only if the focus remains agrarian. Energy, transport, infrastructure and related urban-consumption needs that require trade-offs with global environmental concerns were left out of the global development and environmental agenda because of the global implications, and will be the subject of considerable debate.

The new global goals will have to go back to the Brundtland view of 'needs' and debate the related limits to arrive at a consensus.

An assessment of patterns, trends and drivers of the activities over the previous 200 years shows that the most important trend to be modified worldwide is urban design and the resulting consumption shaped by urban lifestyles. Real change will only occur in the long term, and could well take as long as 50 years.

For example, lower consumption can immediately stabilise the rate of environmental degradation by 2030. Meanwhile, high-density cities and a modal shift to rail transport will modify longer-term trends in terms of energy use, food and transportation by 2050.

The shift in global power, and the national interests of those who need to ensure the well-being of nearly 6 billion, will drive a new multilateralism, or vision, for "sharing responsibility and prosperity".

Acting collectively in the face of long-term and uncertain threats is an essential element in solving global problems in a manner that is both equitable and sustainable.








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