How Do Private Cities Stack Up to the New Urban Agenda and SDG11?

Published: Wednesday, February 15th, 2017 by Lenora

New Urban Agenda - Together in ActionIn a recent interview on McKinsey’s website, Abhishek Lodha of Lodha Developers, owner and sponsor of Palava City, speaks about a broader vision of “smart cities.” Palava City is a privately developed city-to-be about 25 miles from Mumbai. Echoing DevelopingSmartCities.org’s philosophy, he sees a focus on residents more than technology as the key to long-term success for this budding smart city. Palava City shows clearly how private investors can grow new urban hubs. An important question for Indian society is whether Palava City can be profitable for Lodha and other investors (including homeowners), as well as inclusive and sustainable? Does it need to be? Do private cities like Palava move sustainable cities forward? It’s too early to tell, but the New Urban Agenda (NUA) and Sustainable Development Goal 11 (SDG11) offer benchmarks for reflection.

Sustainable Development Goal 11 - Sustainable Cities and CommunitiesExpect more than just inputs from the private sector. Need a quick update on the New Urban Agenda and SDG11? Both aim to “make cities and human settlements inclusive, safe, resilient and sustainable.” SDG11 aims at the human development necessities with a focus on poverty reduction. This means improving informal and inadequate housing, addressing the worst slum conditions, ensuring basic services, making transportation safe and widely available, recognizing and minimizing the effects of sprawl, safeguarding cultural heritage, managing solid waste and reducing pollution. The New Urban Agenda dives deeply – sometimes, unreadably and repetitiously – into all the ways that various actors should act together to develop more dynamic, innovative cities that generate opportunities, keep residents safe, protect from discimination, safeguard biodiversity and much more.

The NUA sounds a lot like all the SDGs wrapped into an urban package, so it addresses everything from energy to education, industry to innovation, climate to clean water, institutions to inequality. One reason why it has little to say about a Palava City is that the NUA does not seem to envisage strong private sector partnerships. The text mostly refers to the private and financial sector as a pipeline of jobs, capital, financing, technology and innovation. While that does enumerate the private sector’s capabilities, Palava City shows how some private investors aim to do more than serve up inputs for our future cities.

Lining up with the NUA and SDG11. In the McKinsey interview, Lodha points to planning, engaged residents, community space, cultural life and walkability as some of the values that Palava City live and grow by. It’s not planned as sprawl, it’s going to be a self-contained city. These are values embraced by the NUA/SDG. Lodha recognizes: “A smart city is not just about technology” and points out the need “to govern with citizen engagement, transparency, and cost efficiency.” In a cute quip, he emphasizes: “you need CCTV to work – citizens, community, technology, and vision.”

Palava is framed as an example of environmental sustainability to boot. Marketing points to open, green space on more than 60% of the total project area, public transit that runs on clean energy, smart meters in homes, rainwater harvesting and reuse, recycling and organic waste-to-energy. Tree planting is already a community effort. Solar has been in pilot, apparently, but will only be deployed for public areas – unfortunate given the growing emissions footprint of buildings and appliances. Still, the emphasis on resource efficiency, the use of technology, and sustainable consumption and land use all echo the NUA and SDG11.

Services, governance and the private city. Leading design, engineering and infrastructure partners have been brought into the project to ensure top-notch infrastructure and effective service delivery. Advanced technology and extensive private security keep residents safe. These services are not just for residents but also aim to attract businesses to move to Palava to drive local economic growth. Lodha acknowledges that the project needs more social infrastructure and services. On governance, Lodha sees Palava residents, his customers, wanting a voice, as much as good services. His theory is that people flee dysfunctional existing cities to have voice and agency as well as to live somewhere that works. So, a private governance body, the Palava City Management Association (PCMA), manages with resident representatives.

Does this get the world closer to achieving the NUA and SDGs? One big determinant is who private cities are planned for. The broad middle class in The NUA and SDGs are relevant for all regardless of wealth to be sure, but their core intent is to eliminate poverty and inequality and ensure a resilient, sustainable and inclusive urban future for all urban residents.

Ultimately, the massive, complex up-front investments of a project like Palava carry substantial risk and need to earn returns over the long term. This will likely keep the target population relatively rich.

Lodha says families who live at Palava will be middle class, earning in the $18,000-$30,000 range. This Pew Research Center study shows that this puts Palava’s target residents way out the right tail of the income scale in the upper middle income range. Even if at a small percentage of the population, it’s still a big potential market.

In the future, Palava will have to be more inclusive if it’s to thrive as a city rather than as an enclave of privilege. More starter homes and rental housing will have to be built eventually. These may promise lower rates of return to the developer’s capital but would make the city more well-rounded and offer new employment opportunities.

One final question is whether Palava might improve institutions and governance. As a private city, Palava’s management has a great opportunity to develop new governance frameworks and generate a positive demonstration effect. Jamshedpur is often lauded as a private company town that has delivered on its promise. Lavasa, more recently, isn’t yet a success. For a good discussion on private cities and governance, see economist Paul Romer’s Charter Cities, this New York Times editorial and this post.

Palava City and other private cities show that private investors and developers already play – and will continue to – an ever greater role in our urban future, acting within the law but independently of governments. Governments and urban policy and development practitioners should take note: A developer is marrying technical expertise and track record with vision and capital at the city scale with apparently no government funding. The technology, the sustainability innovation and the investment scale are impressive.

Fleshing out the city, making it live and breathe, will ultimately need more soft resources than hard capital and know-how. Only the long term will tell if the city can grow community as well as buildings. One thing is clear: Cities need both capital and know-how; better for other urban stakeholders to collaborate closely with the private sector than to act alone.

New Urban Agenda and Sustainable Development Goals Infographic by Developing Smart Cities

This summary is derived from this one on the Sustainable Development Goals website.