United Nations Asia-Pacific Leadership Forum: Welcome Address by Mr. José Antonio Ocampo, Under-Secretary-General for Economic and Social Affairs
25 February 2004

It gives me great pleasure to welcome you to the United Nations Asia-Pacific Leadership Forum: Sustainable Development for Cities, which is co-organized by the United Nations Department of Economic and Social Affairs and the Government of China and hosted by the Government of the Hong Kong Special Administrative Region.

Before I begin, please allow me to express my profound appreciation and thanks to our generous hosts and professional partners who have made outstanding contributions to make this event possible. I am greatly impressed and thankful for the excellent cooperation and the cordial hospitality extended to my colleagues and myself.

We are greatly honored by the presence of Mr. Tung Chee-hwa and Prof. Jiang Zhenghua, who both have taken time off in spite of their busy schedules to be with us here this morning. Their participation reaffirms the commitment on the part of the Governments of China and of the Hong Kong Special Administrative Region to the objectives and principles of sustainable development. We are also delighted to be able to visit this monumental metropolis of 7 million people, seemingly forever on the go, and to learn first-hand what is involved in running one of the most dynamic and economically important cities in the world.

Sustainable development of cities depends on a complex interplay between the forces of spontaneity and those of planning. Cities are communities writ large. Even when they assume the massive scale of megalopolises, they are comprised of intersecting and overlapping communities that self-organize and delegate to their elected representatives the authority to maintain order and provide basic public services. As Jane Jacobs observed in her 1961 classic, The Life and Death of Great American Cities, healthy cities are organic and messy. As organic entities, cities can thrive and grow, but they can also age and decline. Even then, they can experience renaissances, reinventing themselves. Indeed, the most successful cities of the world – those that have endured and remained vibrant, attractive places to live –have reinvented themselves several times over their lifetimes. Arguably, such resilience and vibrancy are defining features of sustainability in cities.

It has been noted, for example, that the city of Boston has reinvented itself three times since its founding: once in the early 19th century as the provider of seafaring human capital for a far flung maritime trading and fishing empire, a second time in the late 19th century as a factory town built on immigrant labor and the capital of the city’s power elite, and a third time in the late 20th century as a center of the information economy. In all three instances, human capital –that is, knowledge and skills embodied in individuals and their communities and institutions—provided the secret to Boston's rebirth.

Hong Kong too has reinvented itself a number of times, and in all cases human capital has been critical to the transformation: from entrepôt to labor-intensive manufacturing center to financial center and, most recently, to headquarters and logistical hub for the many companies invested in manufacturing in southern China. Sustainable cities are adaptable cities. Arguably, they are also cities rich in the social capital that binds communities together. Social networks can be especially important to new migrants, who face the multiple challenges of adapting to a new, radically different way of life.

In general, people do not flock to cities to enjoy a pristine environment. They come for economic and cultural opportunities. In cities, they can expect to have improved access to education and health care. As cities develop and their populations become more prosperous, they tend to provide cleaner and healthier environments. By lowering transaction costs and facilitating knowledge sharing, cities raise productivity, but they can also boost consumption by making readily available a wide variety of goods and services. Even as new information technologies –notably the internet– have enabled long-distance home workers to live a country life, there is little evidence of a declining demand for city living. Cities are growth poles of economic activity, innovation and progress.

Business activities play the crucial role in these processes. Getting that engine turning over –encouraging local entrepreneurship as well as outside investment– is a key preoccupation of urban policy makers throughout the world. Experience suggests that, to the extent that they succeed in attracting a critical mass of human capital with diverse skills, building adequate infrastructure, and creating a policy framework and network of institutions, industries and services to support efficient business, cities can draw in new capital and support new entrepreneurs. Human capital is by far the most important factors in this regard. By facilitating adaptation, an educated and skilled population is indeed critical in navigating periods of rapid technical change such as the present one.

Many cities of Asia have been highly successful in attracting investment, in growing into thriving clusters of commerce. Success has come at a cost, however, in the form of serious problems of urban congestion and pollution. Most of Asia’s megacities are built around the automobile (with a heavy sprinkling of motorbikes and three-wheelers) and that fact, combined with heavy reliance of countries like China and India on dirty fossil fuels –mostly coal– for energy has left air quality in many cities among the worst in the world. According to the Asian Development Bank, of the 15 cities with the highest airborne particulate levels, 12 are located in Asia. Six of the top 15 cities in terms of sulfur dioxide pollution are also Asian. Dealing with transport issues and developing affordable mass transit systems is among the major challenges facing the region. In this, there may be valuable lessons to learn from certain experiences in Latin America, notably the bus-based mass transit systems developed in Bogotá, Colombia, and Curitiba, Brazil, both of which have effectively integrated land-use planning with transport system development.

Attracting investments can also cause a considerable financial burden on cities or municipalities through tax concessions or exemptions, land development costs or other financial incentives. Excessive competition for foreign investment should thus be avoided. Careful political, economic and financial projections need to be made before binding agreements are signed. Foreign investments in developing countries need to support local sustainable development, not just global capital gains.

Urbanization is set to continue at a fast pace in the coming decades. Much of the developed world, however, has already completed its urban transition as well as its demographic transition, with Europe’s urban population projected to remain flat from now to 2030 and to grow at around 1% per year in North America. Given its high current urbanization rate, Latin America’s urban population is expected to grow by only 1.5%, while Asia will see urban population grow by more than 2% per annum and Africa by more than 3%. By 2030, an additional 1.3 billion people are expected to be living in Asia’s cities and an additional half billion in Africa’s cities.

Clearly the cities of Asia and Africa face especially large challenges in absorbing such large numbers of new inhabitants, providing them with decent, affordable housing, infrastructure and services, and remunerative jobs. In the former case, at least the urbanization process is occurring in the context of extraordinary economic dynamism. As incomes rise, people are increasingly able to afford improved housing, as evidenced by the buoyant Chinese urban housing market. Also, with rising real estate values, local governments are able to raise tax revenues to finance public service expansion. Better services and improved infrastructure in turn attract more economic activity and population. This virtuous circle is at work in China at present, as it has been in a number of Asian cities in recent decades. India could well be next, if it succeeds in sustaining its high recent growth rates.

Even so, not everyone benefits equally from this process, and there may be outright losers. For instance, as real estate values rise, pressures also rise to claim land that may be occupied by informal settlements. Evictions may follow, or schemes to relocate slum dwellers to the urban periphery, far from places of employment and without affordable, efficient means of transport to reach them. Often, this merely displaces the urban poor from one slum settlement to another.

On a rough estimate by UN-HABITAT, almost one-third of the urban population worldwide –that is, some 900 million people, the majority in Asia– are slum dwellers, as defined by insecurity of tenure, poor quality housing, inadequate access to safe drinking water and sanitation, and overcrowding. Simply addressing their needs is itself a monumental task, quite apart from the challenge of accommodating the projected growth in urban population over the coming decades. Recently, governments have made efforts to regularize land titles and provide security of tenure to slum dwellers in a number of cities as part of slum upgrading programs. In Asia, the sprawling Tondo slum settlement, with over 180,000 people living along Manila’s waterfront, has undergone a major upgrading after several small-scale resettlement plans failed. Per household serviced, the program has cost only one quarter the price of a “low-cost” home in a resettlement area. The physical and social transformation of Tondo within a decade would appear to confirm the effectiveness of granting security of tenure and basic services in motivating families to build their own quality housing. For poor households in similar slum communities across the developing world, who lack access to formal mortgage loan markets, what is needed are micro credits disbursed in small tranches to finance incremental home improvements. Many micro credit institutions have diversified into home improvement loans, often with considerable success in terms of high repayment rates.

Even as governments pursue upgrading projects to alleviate the plight of existing slum dwellers, there is some reason to believe that, in the long term, a more pro-active policy of promoting low-cost housing development ahead of, or in step with, growing demand would be more cost-effective than continuing to upgrade future informal settlements after they grow up. This requires, however, that governments utilize funds to acquire land for housing development before an urban real estate boom has advanced too far. Otherwise, land acquisition can prove too costly to serve more than a tiny portion of the population in need of low-cost housing. Given a proper regulatory framework, private or public land development corporations can serve that function. Where they exist, municipal bond markets can assist in raising the long-term financing needed for this purpose. A few countries in Latin America (Chile and Costa Rica, among others) have had some success –through subsidy schemes– in encouraging an expansion of affordable housing commensurate with demand growth, thereby slowing if not halting the expansion of slums. In future, intensive experience sharing will be crucial as more and more cities face and struggle to cope with the challenge of housing their rapidly growing populations..

The biggest urbanization challenge by far in the coming decades will be in those countries and cities where rapidly growing urban populations are being pushed out of a desperately poor, often conflict-ridden countryside. For such cities, there are no easy lessons in effective urban planning and sustainable city development. Only generating an economy-wide growth momentum through far-sighted and at times politically difficult policy measures is likely to free them from poverty traps and transform cities from seas of desperation into havens of opportunity.

Partnerships between cities have proven to be important avenues for peace and international understanding. Networks and partnerships between city administrations provide an enabling framework for practical direct technical cooperation with mutual benefits. Beyond sharing experiences and ideas, this Conference also provides an opportunity to renew and strengthen existing partnerships and to forge new forms of cooperation towards building sustainable cities. The United Nations seeks to encourage and facilitate greater international cooperation at all levels.

In a few weeks time, the United Nations Commission on Sustainable Development will convene its 12th session in New York, scheduled to focus on three interrelated sustainable development challenges: human settlements, water and sanitation. The international community has set targets for 2015 to gauge progress in each of these areas, but only strong political commitment at all levels, commitment of substantial financial resources, widespread participation of civil society, including through public-private partnerships, and the application of the best knowledge and ideas available are likely to make these targets achievable.

Once again, I would like to thank our hosts and partners, the Government of China and the Government of Hong Kong Special Administrative Region for co-organizing and hosting this event. I thank all invited speakers and everyone else involved in the preparations for their valuable contributions and look forward to stimulating discussions and debates over the next two days.