OPEC FUND QUARTERLY 4 2024 The OPEC Fund for International Development
CLEAN COOKING First project signing and new report
We have the potential to grow green from the start.
Caitlin Wale, Kinjani Climate Tech
WORLD BANK AND OPEC FUND Co-Financing Agreement seals cooperation
Squaring climate action and housing in the developing world
The OPEC Fund Quarterly is published four times a year by the OPEC Fund for International Development. The OPEC Fund works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low- and middle-income countries around the world. The organization was established by the member countries of OPEC in 1976 with a distinct purpose: to drive development, strengthen communities and empower people. The OPEC Fund Quarterly is available free. If you wish to be included on the digital distribution list, please contact us via opecfund.org . Back issues of the magazine can be found on our website. The contents of this publication do not necessarily reflect the official views of the OPEC Fund or its Member Countries. Any maps are for illustration purposes only and are not to be taken as accurate representations of borders. Editorial material may be freely reproduced, providing the OPEC Fund Quarterly is credited.
PUBLISHERS The OPEC Fund for International Development Parkring 8, A-1010 Vienna, Austria Tel: (+43-1) 51564-0 Fax: (+43-1) 51392-38 www.opecfund.org
EXECUTIVE EDITOR Nadia Benamara EDITOR Axel Reiserer EDITORIAL TEAM Angus Downie, Howard Hudson, Walid Mehalaine, Mahdi Rahimi, Axel Reiserer, Nicholas K. Smith PHOTOGRAPHS Abdullah Alipour Jeddi (unless otherwise credited) PRODUCTION Iris Vittini Encarnacion DESIGN Robin Turton, More Tea Design Ltd PRINTED IN AUSTRIA Print Alliance HAV Produktions Gmbh This publication is printed on paper produced from responsibly managed forests. Front cover illustration: Apisit Hrpp/Shutterstock; faber14/Adobe Stock; MdSadikahmedsk/Adobe Stock; solarseven/Shutterstock; Robin Turton
CONTENTS
5-31
THE HOUSING PUZZLE Special Feature: Housing and climate in the developing world – What does the future hold?
IN OTHER SECTIONS... Everything you always wanted to know about housing in the Global South (but were afraid to ask) 10-13 More than bricks and mortar: The impact of housing on the environment 14-17 Why sustainability is the future of housing 18-21 Interview Oliver Harman: The British economist and geographer on the benefits of urbanization 22-23 The OPEC Fund and housing: Leaving no one behind 24-27 No pipe dream: A history of safe water in the home – the greatest innovation of all time 28-29 Water is life: The OPEC Fund’s commitment to clean water and efficient sanitation 30-31 Expert view: Africa’s cities are growing chaotically fast, but there’s still time to get things right 6-9
Housing in the Global South
In the Field 32-33
Spotlight Interview 42-45 Deemah AlYahya, Secretary-General, Digital Cooperation Organization: How digital
Events 50-55 50-51 Launch of the first OPEC Fund Climate Finance Report 52-53 World Bank mission takes OPEC Fund to new level of cooperation 54–55 The OPEC Fund in the World: Events round-up Book Review 56-57 Six Faces of Globalization: Who wins, who loses, and why it matters by Anthea Roberts and Nicolas Lamp The Back Page 58 National Heritage Day in Vienna OPEC Fund opens its doors to the public
The OPEC Fund in Tanzania: “Life’s caravan never turns back”: Investing in roads, railways, rivers and ports Development News 34-37 New OPEC Fund projects in Armenia, Benin, Bhutan, Côte d’Ivoire, Dominican Republic, Jordan, Madagascar, Oman and Tajikistan Ipso Facto – The Legal Corner 38-41 OPEC Fund hosts International Legal Conference in Vienna: Shaping frameworks for positive change
inclusion in developing countries would boost their collective GDP and improve
employment prospects for millions The Dark Matter – The Knowledge Section 46-49 The technological revolution in agriculture: Can reality match up to the high expectations?
Photo: Courtesy of Deemah AlYahya
EDITORIAL
BRIGHT LIGHTS, BIG CITY
Dear Reader, A uthor and urban planning activist Jane Jacobs once said, “Designing a dream city is easy; rebuilding a living one takes imagination.” Watch almost any sci-fi movie and you’ll see some variation of future cities: they are either all uniformly sleek and glittering or uniformly decrepit and crumbling. Very rarely do you see cities depicted as they actually are: a mix of new and old, shiny and scruffy, efficient and dysfunctional. Here’s where Jane Jacobs comes in. In her heyday in the 1950s, North American cities were in the midst of a post-war building boom. New developments sprang up on the edges of existing metropolises, swallowing up many small towns in their orbit. Massive highways linked those previously hard- to-reach places, planting the seeds for the megacities we know today. High- rise homes, tightly-knit neighborhoods and mass transit were out, while single- family homes, residential suburbs and car culture were in. Cities on the unlucky end of growth patterns saw their urban centers gradually crumble and decay while a glittering ring of attractive new developments circled them, somewhat resembling a doughnut. In 1961, Jacobs published her best known work, The Death and Life of Great American Cities , where she took aim at the urban planning practices of the time and argued for denser, mixed- use neighborhoods that put the focus on the people who live and work there (think sidewalks and city parks), rather than so much of city planning being focused on cars and parking lots. Though it feels like a recent buzzword, the concept of a 15-minute
city is in reality a decades old reaction to the sprawl of today’s megacities all across the globe. A 15-minute city is a sustainable, livable one, with everything including home, work, food and entertainment being no farther away than a journey that takes a quarter of an hour. Across the world, people are flocking to cities at a rate never seen before in human history. According to a World Bank estimate, a third of the world’s population in 1960 lived in cities. By 2023, that number had climbed to 57 percent – and 90 percent of increases over the next few years are set to occur in developing countries. In this latest issue of the OPEC Fund Quarterly we dive deeper into what is at stake for global cities as they adapt not only to the reality of climate change but how they can build (or rebuild) to foster economic growth, human dignity and environmental sustainability that will carry them into the next decades. Zooming out, this issue also features new sections including our Legal Corner and Dark Matter, which focuses on innovation, science, research and technology. Increasing rates of urbanization create many challenges, but also many solutions – especially if the developing world can sidestep many of the problems advanced countries ran into when they dealt with the similar rush to build cities (see p.6). “Just like with the mobile phone, we don’t have to go through the landline just because the Global North did it,” says Caitlin Wale, founder of the African climate tech accelerator Kinjani. (see p.10) “We have the potential to grow green from the start.”
As many cities have learned the hard way, sprawl is not the solution, especially when trying to build adequate housing for a warming world. As a World Bank blog post puts it (see p.13): “The greenest home built in suburbia is still more polluting than a classic urban house. As we embrace innovative construction technologies, let us not forget that housing is more than bricks and mortar.” Already taking shape in the OPEC Fund’s host city of Vienna is one such example of a positive approach to housing and climate. Seestadt is a massive brownfield site currently being developed on Vienna’s old airfield, on the edge of the capital. This new neighborhood sits in an area where there is little but flat farmland, yet the all-encompassing design will house some 25,000 people and generate 20,000 jobs when completed. Unlike a typical suburb, Seestadt is designed to be a self-contained, environmentally friendly city-within- a-city. Already there are apartment buildings, office spaces, schools, parks and more, all of which are built in a circular fashion around a man-made lake that acts as a central hub for the development. Crucially, it is served by one of Vienna’s subway lines which brings you to the city center in just over 20 minutes. Living in other places a similar distance from the center may require a car or a much longer mass transit ride. As a not-so-subtle nod, a street there has even been named after Jane Jacobs. We wish you an interesting read.
Nicholas K. Smith, Editor
4
SPECIAL FEATURE
UNLOCKING THE HOUSING PUZZLE Satisfying an essential human need which is also a key economic factor has not become easier by the climate change challenge. In the following pages we examine how the housing crisis can be converted into an opportunity and take a fresh look at what urbanization will mean for the developing world
5
HOUSING
EVERYTHING YOU ALWAYS WANTED TO KNOW ABOUT HOUSING IN THE GLOBAL SOUTH* (*But were afraid to ask)
By Angus Downie, Senior Economist, OPEC Fund
H ousing is an essential human need – for rich or poor everywhere. However, it is a “need” that is blurred by differences of opinion and socioeconomic factors. What is clear is that there is a housing crisis and something must be done to alleviate it. By delving into the key issues we explain how the crisis has unfolded and provide answers to help fix the problem. Human right or market commodity? The debate around whether housing should be a guaranteed human right or governed by market forces remains central to social policy discourse. If housing is a human right, why can’t everyone claim it? Quite simply, as there is a cost embedded in providing housing, or shelter in general, there are fundamental differences over who should pay for this cost. Those from the left of center generally believe that the state should bear this cost (to be met from higher taxation and wealth re- distribution) whereas advocates of the market coalesce around the view that individual responsibility drives the need to obtain shelter.
Advocates of housing as a universal right, such as UN-Habitat, the United Nations program for human settlement and sustainable urban development, emphasize the state’s responsibility to ensure adequate living conditions for all citizens as enshrined in international frameworks like the Universal Declaration of Human Rights. UN-Habitat notes that “everyone has a fundamental human right to housing, which ensures access to a safe, secure, habitable, and affordable home.” This perspective argues that access to shelter is fundamental to dignity and social inclusion. On the other hand, proponents of market-driven approaches argue that private sector dynamics encourage efficiency, innovation and responsiveness to demand. They believe that housing is not a right in itself. In the USA for example, the 1968 Fair Housing Act banned discrimination when providing housing or making housing policy, yet it did not allocate living space of a minimum size or guarantee automatic qualification for a mortgage. In this view, housing is seen as a commodity. However, market-based
systems often lead to inequalities, especially when housing becomes a speculative asset, driving prices beyond the reach of ordinary citizens. A balanced approach may involve state intervention to correct market failures while promoting private sector involvement in a regulated environment. When is housing considered affordable (or unaffordable)? Housing affordability is typically assessed by the proportion of household income allocated to housing costs, including rent or mortgage payments, utilities and maintenance. The commonly accepted threshold is that housing should not consume more than 30 percent of a household’s gross (before tax) income. Beyond this point, families often face financial strain, compromising other essential needs such as healthcare, education and food. The tipping point varies by context: in high-cost urban areas even families with moderate income may struggle, whereas in lower- cost regions affordability thresholds may be higher. Policy-makers must consider local economic conditions and wage
6
SPECIAL FEATURE
“The underlying factors driving the affordability crisis are rooted in structural shifts spanning recent decades.” Balakrishnan Rajagopal, UN Special Rapporteur on the right to adequate housing
Photo: Gil.K/Shutterstock
What is causing the current housing crisis? The World Economic Forum has declared that we are in the midst of a global housing crisis1. Around 1.6 billion people worldwide lack adequate housing, according to a 2023 UN report presented to the UN General Assembly2; experts say this could rise to 3 billion by 2030. In order to house those 3 billion people, the world will need to build 96,000 new affordable homes every day. In that report, Balakrishnan Rajagopal3, the UN Special Rapporteur on the right to adequate housing, said “the underlying factors driving the affordability crisis are rooted in structural shifts spanning recent decades.”
Photo: Nolte Lourens/Shutterstock
levels to establish realistic affordability benchmarks. This, however, can bring regional disparities in wages and housing affordability into conflict. For example, capital cities tend to offer higher wages (because they attract the most highly skilled and able workers), but also higher housing costs (due to increased demand for limited housing resources). In neighboring regions, wages may be similar or the same as in the capital city (aided by good transport links that encourage commuting), but housing costs may be lower due to the time-effect required to commute to a well-paying job. The dilemma for policy-makers is how to enact regulations, such as rent controls or housing subsidies, to ensure fair housing costs across areas that have different income levels, housing infrastructure and transport links.
1 https://www.weforum.org/stories/2024/06/global-housing-crisis-practical-solutions/#:~:text=We%20are%20in%20the%20grip,day%2C%20UN%2DHabitat%20says 2 https://www.ohchr.org/en/documents/thematic-reports/a78192-place-live-dignity-all-make-housing-affordable-report-special 3 https://www.ohchr.org/en/special-procedures/sr-housing/mr-balakrishnan-rajagopal
7
HOUSING IN THE GLOBAL SOUTH
How is the Global South dealing with the housing crisis? The housing crisis is affecting the Global South due to rapid urbanization, limited provision of new or replacement infrastructure and socio-economic disparities. Informal settlements, often lacking basic services such as sanitation and electricity, are growing. Kibera, on the outskirts of Nairobi, for example, is the ever-expanding largest urban slum in Africa. High land prices and inadequate housing policies exacerbate the problem, leaving millions in precarious living conditions. Additionally, global economic pressures, such as inflation, trade disruptions and debt burdens limit the ability of governments in these countries to invest in social housing. The crisis not only affects living standards but also hinders economic growth by perpetuating poverty and social instability.
There are several factors that have contributed to the global housing crisis, including: • Supply-Demand Imbalances: Rapid urbanization and population growth outpace housing supply (including a decline in public housing), especially in urban areas. • Speculation and Investment: Housing often serves as an investment asset, driving up prices and reducing availability for residents, thereby stripping it of its intrinsic function
• Regulatory Barriers: Zoning laws, construction regulations and bureaucratic processes can hinder development, for example making brownfield sites too expensive to develop. • Economic Inequality: Stagnant wages and soaring living costs (reflected in rising inflation) exacerbate the affordability gap, particularly in regions with significant income disparity. • Financialization of Housing: Mortgage- backed securities and investor-driven markets prioritize profit over social needs.
to provide secure and affordable living space.
8
SPECIAL FEATURE
Though the housing crisis in the Global South clearly needs to be mitigated, there are no easy solutions and many actions have already been taken. Addressing the housing crisis requires a multifaceted approach involving various stakeholders: What are some ways out of the crisis?
6
8
1
Construction Materials Low-cost construction materials are being used in several countries around the world – replacing bricks and mortar – to bring down the price of housing and speed up the building process. The cost of constructing a home using low-cost materials can be 20-30 percent cheaper reflecting the reduced need for cement and steel, along with associated reduced labor costs. Public-Private Partnerships Public-private partnerships (PPPs) focusing on affordable housing can finance, develop and manage affordable housing projects. Typically, the government provides land, development rights and tax incentives or subsidies, while housing developers and investors contribute financing, architectural design, construction expertise and operational management. 7
Construction Methods In 3D-printed homes the primary structural components like walls and foundations are constructed using industrial-sized 3D printers. Doors, windows, plumbing and electrical wiring are added at later stages. A main benefit of 3D-printed homes is reduced construction time. Associated Costs Investments in energy-efficient housing can reduce long-term living costs. Additionally, charities, philanthropists and other socially- focused organizations can step in to provide funding (for land purchase or construction) or provide pro-bono services such as legal advice and support (for example, to complete a real estate purchase and title register). 9
Government Action Governments should play a proactive role by implementing policies that promote affordable housing development, such as investing in social housing, providing targeted subsidies and enforcing sensible rent controls. mortgage products – but this would come at a cost to them and their shareholders. 2 Mortgages Banks could develop more inclusive lending practices and offer affordable Monetary Policy Central banks can influence housing affordability through appropriate monetary policies that help stabilize mortgage interest rate repayments and prevent speculative bubbles – balanced with attaining low inflation and high employment. 3 Land Ownership Community land trusts are non- profit organizations that acquire land and remove it from the speculative real estate market, enabling home construction on that land to be rented, owner-occupied or cooperatively owned. 5 Community Action Individuals can advocate for housing rights and participate in cooperative housing initiatives. Financial literacy programs can also help households manage housing costs more effectively. 4
Conclusion Resolving the housing crisis requires a coordinated effort that balances market dynamics with social responsibility. Governments, financial institutions, individuals and communities need to collaborate to ensure housing is accessible, affordable Individuals can advocate for housing rights and participate in cooperative housing initiatives. Financial literacy programs can also help households manage housing costs more effectively. and sustainable for all. Addressing this fundamental issue not only improves living standards but also strengthens the socioeconomic fabric of societies worldwide.
9
HOUSING ENVIRONMENTAL IMPACT
MORE
THAN
BRICKS
Addressing the impact of housing on the environment is crucial for climate action in the global quest to meet the targets of the Paris Agreement By Axel Reiserer, OPEC Fund
S ince mankind has become sedentary, it has begun to build shelters for itself. Their design has always been determined by the climate, whether they were to provide protection from the cold or heat, wind or storm. The US architect Philip Johnson once said: “All architecture is shelter.” Today, humanity has reached a point where the opposite threatens to become the case: The task of how houses can protect people from the environment must now be supplemented by the task of how people can protect the environment from their houses as studies such as the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (2022) show. According to this authoritative examination, total greenhouse gas (GHG) emissions in the building sector reached 21 percent of global GHG emissions in 2019. Of this, 57 percent were indirect CO2 emissions from offsite generation of electricity and heat, followed by 24 percent of direct CO2 emissions produced on-site and 18 percent from the production of cement
and steel used for the construction and/ or refurbishment of buildings. Globally, buildings account for almost a third of CO2 emissions and just over a fifth of GHG emissions. Houses are recognized as major causes of emissions and cities are responding. Meanwhile, demand for new accommodation is rapidly, and massively, rising. According to UN- Habitat, the United Nations program for human settlements and sustainable urban development, around 1.6 billion people worldwide lack adequate housing today. By 2030 this could rise to 3 billion. To meet this demand, the world needs to build 96,000 affordable homes every day. However, in many countries the population grows faster than homes are being built. Take, for example, the USA: While the US population grew by more than 3 million people in the last 20 years, home construction decreased by 55 percent nationwide. If the largest economy in the world cannot cope, the prospects for developing countries are even more daunting. The world is witnessing a massive shift towards
urbanization (see interview Oliver Harman, page 18), with 6 out of 10 people expected to live in urban areas by 2030. Over 90 percent of this growth will take place in Africa, Asia, Latin America and the Caribbean. A survey by the Thomson Reuters Foundation, a charity promoting media freedom, inclusive economies and human rights, illustrates what this means for Africa: At current rates of population growth 70 percent of the buildings that will be needed in Africa in 2040 are yet to be constructed. Some see this as an opportunity: “Just like with the mobile phone, we don’t have to go through the landline just because the Global North did
Personalized Living Spaces IoT systems can learn from user behavior and preferences to create personalized living environments. This can enhance the quality of life for residents by providing comfort and convenience tailored to their needs.
10
SPECIAL FEATURE
Remote Monitoring and Maintenance IoT sensors can monitor the condition of home systems such as heating, ventilation, air conditioning, plumbing and electrical. They can alert homeowners to potential issues before they become major problems, reducing repair costs and improving the longevity of housin infrastructure.
The Internet of Things (IoT) can play a transformative role by enhancing the functionality and efficiency of homes. Here are some examples how IoT can contribute:
AND
Enhanced Security IoT devices like smart cameras, door locks and motion sensors provide real- time monitoring and alerts, improving the safety and security of homes.
MORTAR
Energy Efficiency Smart thermostats, lighting systems and appliances can optimize energy usage based on real-time data and user preferences. This not only reduces costs but also promotes sustainability.
“Just like with the mobile phone, we don’t have to go through the landline just because the Global North did it. We have the potential to grow green from the start.”
Improved Communication IoT can facilitate better communication between residents and housing providers. For example, residents can report issues or request services through smart home systems, leading to quicker responses and more efficient management.
Automation and Control
Caitlin Wale, climate tech accelerator Kinjani
IoT enables the automation of various home functions such as lighting, heating and security systems. This can lead to more efficient use of resources and lower utility costs, making housing more affordable.
11
ENVIRONMENTAL IMPACT
it,” says Caitlin Wale, founder of the African climate tech accelerator Kinjani. “We have the potential to grow green from the start.” Her enterprise is raising capital to “capture the massive climate opportunity” and help companies with access to much-needed funds. One starting point are construction materials: Cutting-edge technologies and processes needed to green the building sector, such as the production of lower-carbon cement, have often been developed in advanced economies. As imports are expensive and not necessarily the best option for local markets, architects in Nigeria “rediscovered” local materials like red clay bricks which are more suited to the country’s climate as well as being more weather resilient. In other cases, as a substitute for cement in concrete, scientists developed ways to use mining waste and biochar, which is produced from heating biomass. The OPEC Fund is supporting a project to provide affordable and sustainable housing in the Sahel region in Africa which is based on ancient techniques and traditional expertise. The so-called Nubian vault, named after the region’s ethnic group from the Nile Valley, is an environmentally friendly and sustainable way of using pure earth to build roofs and ceilings without the need for timber (see page 22). Another example comes from India where low-cost materials are used instead of bricks and mortar to bring down the price of housing and speed up the building process. The Indian government is constructing thousands of homes using glass fiber reinforced gypsum to create a strong yet lightweight panel which can be used for walls, floors and roofs. The reduced need for cement and steel not only makes such homes up to 30 percent cheaper, it also significantly lowers their carbon footprint. India, according to the World Economic Forum, has a shortage of 34 million housing units. The situation is even more pressing in Africa: “The housing deficit in Africa is estimated at over 97 million units and this is expected to increase as the continent’s population grows, and urbanization continues,” reports the International Finance Corporation (IFC), the World Bank’s private sector arm. New technology is playing an
a fraction of the time a traditionally-built school would take. Co-financed by IFC “the project will demonstrate the viability of the sector to local developers,” the World Bank subsidiary said. But building new homes alone will not be enough. Estimates show that two- thirds of the buildings that exist today will still be around in 2050 – “presenting both structural and environmental problems,” as the World Bank says in a recent paper. The good news is that technology is already available to address these issues: 3D scans are mapping informal settlements, while machine learning software is being used to efficiently and cheaply identify buildings at risk of collapse. Newer technologies such as light- reflecting paint and low-cost structural retrofit techniques can go a long way toward making homes safer and greener. Augmenting these technologies, many experts believe digitalization will be the big gamechanger. Across all project stages, digitalization could increase materials’ efficiency by integrating life-cycle emissions, using 3D building information modeling, enhancing collaboration in the construction process through management apps on mobile devices and monitoring sites with drones for scanning. Paper-based work practices, cost increases and technological illiteracy are, however, likely to represent key barriers in developing countries, especially in low-income and fragile countries as well as middle-income economies with construction sectors featuring a large presence of informal and small construction companies. Internet-connected appliances can help reduce energy consumption by enabling the use of dynamic electric pricing and time-of-use tariffs. These smart appliances, along with energy efficient management retrofit systems, can reduce energy consumption by 20 to 30 percent. The Super-Efficient Equipment and Appliance Deployment Initiative, led by the International Energy Agency, for instance, provides support to more than 20 governments to implement energy efficient policies for appliances and equipment and identify and promote the adoption of innovative smart devices and systems.
A family home built by 14Trees
increased role in addressing this gap: In 3D-printed homes, the primary structural components like walls and foundations are constructed using industrial-sized 3D printers which follow a digital template to “print” the property layer-by-layer using cement, concrete and other building materials. After the 3D printing of the core structure, builders add other parts like the windows, plumbing and electrical wiring through traditional construction methods. The main benefits of 3D-printed homes are reduced construction time – “printing” the foundations and walls can take a day or two instead of several weeks – and lower costs as the properties are estimated to be at least 20 percent cheaper than traditionally built homes. In Africa, a joint venture involving the UK development finance institution CDC Group and the multinational building materials manufacturer Holcim is 3D-printing houses and schools in a fraction of the time it would normally take to construct them. Called 14Trees, it has operations in Malawi and Kenya and is able to build a 3D-printed house in just 12 hours at a cost of under US$10,000. Its building process reduces CO2 emissions by as much as 70 percent when compared with a typical house-building project. The company’s first-ever affordable, 3D-printed home was built in Lilongwe, the capital city of Malawi. 14Trees has also recently completed its first 3D-printed school, also in Malawi, built in
12
SPECIAL FEATURE
Housing accounts for a large share of CO 2 emissions and energy use
CO2 emissions (tons)
Energy use (MJ)
Residential direct
9%
11%
Residential indirect
14%
12%
Building construction
74%
71%
Other sectors
3%
6%
Source: Energy Efficiency Indicators (IER, 2021 [7]), Emission Factors database (IER, 2021 [8]), and OECD calculations
Could digitalization provide solutions to the housing crisis?
Digitalization has the potential to significantly alleviate the housing crisis in the developing world through several key mechanisms:
Cost Reduction: Technologies like 3D printing and prefabrication can drastically reduce construction costs and time. For example, 3D-printed homes can be built quickly and affordably, making housing more accessible. Improved Planning and Management: Digital tools such as Building Information Modeling and Geographic Information Systems can enhance urban planning and infrastructure management. These tools help in efficiently designing and managing housing projects, ensuring better use of resources and space. Enhanced Financing Options: Digital platforms can streamline the process of obtaining housing finance. Automated underwriting and digital mortgage platforms can make it easier for people in developing countries to access loans, reducing barriers to homeownership. Data-Driven Decision Making: The use of big data and artificial intelligence can help governments and organizations identify housing needs more accurately and allocate resources more effectively. This can lead to more targeted and efficient housing policies. Smart Homes and Energy Efficiency: Digital technologies can also improve the quality of housing by integrating smart home systems that enhance energy efficiency and reduce utility costs. This not only makes housing more affordable but also more sustainable.
A green revolution?
New technologies hold so much promise that everybody from Eurocrats to estate agents are speaking of a “green revolution in building.” But technology alone is not a silver bullet: A recent World Bank paper asks for innovative financing (see pages 6-9), long-term policy changes and new approaches from planning to implementation, arguing: “The greenest home built in suburbia is still more polluting than a classic urban house. As we embrace innovative construction technologies, let us not forget that housing is more than bricks and mortar.”
Photo: Swimsol
13
HOUSING THE CITY OF TOMORROW
WHY SUSTAINABILITY IS THE FUTURE
OF HOUSING For the Global South, housing that will stand the test of time must first stand the test of climate change By Nicholas K. Smith, OPEC Fund
Medellin, Colombia: The city’s green corridors have been lauded for their environmental benefits
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SPECIAL FEATURE
T here’s a lot you can learn from the future, or at least, how different eras pictured the future. Take the future of housing, for example. The House of Tomorrow at the 1933 Chicago World’s Fair, inspired by a hexagonal building, featured broad windows on all sides and even its own airplane hangar. The house was fitted with technologies new to the Depression-era like central air conditioning and an electric dishwasher. Starting in the late 1950s, Disneyland featured the Monsanto House of the Future as an attraction, where guests could see microwaves, dimming ceiling lights and an intercom system that everyone in the then-distant 1980s would surely be using. In the 1980s, a House of the Future opened in a suburb of Phoenix, Arizona that was run by Motorola microprocessors and resembled a
a
futuristic copper bunker, half- subterranean to avoid the desert heat. In the year 2000, a House of the Future in Wales opened that featured locally- sourced green building materials and net-zero carbon emissions. Though these model homes were more science fiction than science fact when they were built, they can tell us something important about the actual trend of houses in the future. It isn’t so much the fancy gadgets that would make everyday life seemingly easier, but how a house could stand the test of time. Yet sustainable materials are only one part of the equation. Houses of futures past and present may function as interesting thought experiments, but they do not address a key question: how a house will exist in the cities of the future.
The 1933 World’s Fair’s House of Tomorrow (top), the Monsanto House of the Future (above) and the House of the Future at St Fagans National History Museum Cardiff, Wales (right)
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The Rochina favela in Rio de Janeiro
THE CITY OF TOMORROW
Bruno Nabagné Koné, Minister of Construction, Housing and Urban Planning, Côte d’Ivoire; Abidjan in Côte d’Ivoire circa 1900 (inset)
Photo: Mikko Miettinen/ Shutterstock
When it comes to the many flavors of sustainable development, renewable energy, decarbonization technologies and advanced agricultural methods probably spring to mind ahead of sustainable cities. Yet ensuring our metropolitan areas contribute to a global net good is one of the biggest challenges of sustainable development. We built this city As the world becomes more and more urbanized, some cities will see growth rates in a matter of decades that other cities took centuries to realize. For example, in the 1940s, the city of Kinshasa (then called Léopoldville) boasted a population of just over 50,000. Eighty years later, 17 million people call it home, making it Africa’s most populous city. This explosive population trend is hardly unique to the Democratic Republic of the Congo. “In the 1960s, when Côte d’Ivoire became independent, some 15 percent of the population lived in urban areas,” said the country’s Minister of Construction, Housing and Urban Planning, Bruno Nabagné Koné. “Now 53 percent of the population is urbanized. By 2050, between 75-80 percent of the population is expected to be living in urban areas. So you can see over the span of some 60 years, where many European countries took centuries.” Minister Koné made this point at the UNIDO “Bridge for Cities” conference in Vienna in October 2024. Under the
theme “Innovative Solutions for the Cities of Tomorrow,” the conference looked at the impact of urbanization on global development, especially in terms of housing. The pace of urbanization is staggering. In 1960, according to the World Development Indicators from the World Bank, a third of the global population lived in cities. By 2023, that number had reached 57 percent – with no sign of slowing down. Such growth is not even, however. Sub-Saharan African countries have seen waves of people moving to cities over the past 60 years. Botswana, for example, has witnessed one of the most dramatic increases, up from just 3 percent urbanized in 1960 to 73 percent in 2023. The East Asia & Pacific region has experienced similar spikes and jumped from 17 percent urbanization in 1960 to 60 percent in 2023. Slum like it hot All those people moving into urban areas need a place to stay. More often than not the low-cost and affordable housing supply cannot keep up with housing demand, resulting in both higher prices and more and more precarious living arrangements. These slums are not always haphazard settlements on the outskirts of cities. The Rochina favela in Rio de Janeiro, the country’s largest, is very close to skyscrapers and more affluent areas, providing close access to jobs. After all,
economic opportunities have long been one of the main reasons for migration. For most of the world, the challenge to offer a suitable space for their growing urban populations is key not just to ensure economic growth but to curb negative environmental impacts. The issue is addressed within the UN’s Sustainable Development Goals. Target 11.1 aims to “ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums” by 2030. Success is measured in the reduction of the proportion of the urban population living in “slums, informal settlements or inadequate housing.” With only a few years until the 2030 deadline, the outlook is not good. Sub-Saharan Africa has the highest percentage of its urban population living in slums at just over 53 percent, according to the UN. What’s more, the region is expected to have 360 million more people living in precarious conditions by 2030. If you build it, they will come Back at the “Bridge for Cities” event, several solutions were floated. Côte d’Ivoire’s Minister Koné said that cities should be seen as part of the solution, not the problem: “We are systematically promoting a favorable environment in our cities,” he said. “That means building cities that contribute economically. Cities that are a conducive environment to quality of life or human development and at the same time
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SPECIAL FEATURE
Urban population (% of total population), 1960–2023
companies, taking into account the specific and very diverse features of the territory.” That focus on how climate change affects urban housing is particularly important. According to UN-Habitat, the United Nations program for human settlements and sustainable development, cities need up to US$5.4 trillion annually for climate resilient infrastructure. To put this into perspective: “In 2021-2022, cities only secured US$831 billion per year for climate action,” a UN-Habitat report noted. Richard Bellingham, Director of the University of Strathclyde’s Institute for Future Cities in Scotland, said that urban sustainability needs to be socially and economically acceptable. In addition to sustainable housing, ensuring adequate healthcare, jobs and safety is critical, he argued. “How are they going to deliver? By doing what citizens care about,” he said. A century of progress It has been nearly 100 years since the 1933 Chicago World’s Fair where the House of Tomorrow was presented. UNIDO’s “Bridge for Cities” conference presented a video of what the urban landscape might look like in the future: Glittering, impossibly high high-rises, skyscrapers overflowing with greenery, technology blending with everyday life and e-mobile transportation offering greater connection. One hundred years from now, that vision may be as quaintly anachronistic as the House of Tomorrow’s octagonal glass walls and “iceless” refrigerators. Yet one thing is unlikely to change: The homes and cities of the next century will need to be sustainably built, climate friendly and safe and enjoyable places for the people who live there.
80
70
60
50
40
30
20
10
Source: United Nations Population Division
0
Western Africa
World
Botswana
cities that are able to tackle today’s challenges, in particular climate change.” He outlined his country’s three-point plan, which includes implementing an overarching urban planning scheme across dozens of regional capitals, while creating building and construction rules to ensure compliance. “The third component is facilitating access to housing and accommodation which is essential, above all, in countries where you have some 30-40 percent of the population living below the poverty threshold,” Koné said. In countries around the world, the price of housing compared to income has been steadily increasing. For large cities housing affordability is often the main policy challenge, with zoning changes, rent control, housing vouchers and tax credits being some of the tools leaders can use to address the issue. Needless to say, there are many side benefits that come from getting people into better places to live. According to a 2017 study in the journal Lancet Planet Health , an innovative new home design using modern building materials reduced the number of mosquitoes indoors, which reduced the instances (and spread) of malaria. Built to last Cities need to contend with many problems and climate change has only added to the complexities. “Our country is particularly vulnerable to extreme climate events, which is why
we need to take urgent measures in order to protect our population and our environment,” said Panama’s Deputy Minister of Territorial Planning Frank Osorio Abadía at the conference. “We are grappling with pressing challenges such as rising housing costs, water scarcity, growing urban inequality, the effects of climate change and inadequate transport infrastructure.” Like Côte d’Ivoire, Panama is implementing policies promoting land use planning and access to housing. Minister Abadía added that a holistic approach to urban planning and sustainable infrastructure can stimulate private investment. “We have set up contacts with a number of private sector
“We need to take urgent measures to protect our population and our environment.” Frank Osorio Abadía, Deputy Minister of Territorial Planning, Panama
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Photo: MIVIOT, Panama
HOUSING URBANIZATION
“IF THE FUNDAMENTALS AREN’T FIXED, THEN SLAPPING TECHNOLOGY ON THE FRONT WILL NOT SOLVE IT”
The British economist and geographer Oliver Harman urges us to embrace – rather than fear – urbanization. Here he explains why By Axel Reiserer, OPEC Fund
OPEC Fund Quarterly : Housing plays a big role in climate change as a major emitter of greenhouse gases. How is housing impacting the climate in developing countries? Oliver Harman: Buildings are responsible for 35 to 40 percent of global energy-
OFQ : How is this possible? OH: It is the density of urban spaces that enables a much larger reduction in per capita emissions. Because pollution is generated in a concentrated way by many people in a comparatively small place, it can be targeted much more precisely and effectively than when it is caused by many small units scattered over a large territory. Urban density makes mitigation more effective, but there is also an adaptation side of things with access to local public goods and services. A study by the London School of Economics titled Weather, Climate and Death in India found that hot days lead to substantial increases in mortality in rural but not in urban India, where people have networks around them that allow them to mitigate this shock better. In contrast, in rural areas the consequences are larger since they cannot manage the shocks to their consumption, income and health as well as people can in urban areas. OFQ : Does this mean we need to rethink urbanization? Should we see it not as a problem, but rather as an opportunity? OH: We always also need to think the counterfactual and ask ourselves, what’s the alternative? It is a fact that urbanization is happening and attempting to inhibit this is both regressive and difficult. The question
is then, how to make urbanization sustainable and how to house people in a way that limits the impact on the environment and ecological systems. And if we look at this in that way we see for a fact that density is a much more effective way of addressing the issue. OFQ : Does that not assume that these cities can at least provide basic services in terms of housing and water supply? Do cities in developing countries meet these kinds of minimum criteria? OH: I am not going to say that all cities in developing countries are green and wonderfully sustainable. But the evidence, for instance data from the Intergovernmental Panel on Climate Change (IPCC), shows that the energy use per capita in almost every world region is much lower in urban areas than it is in rural areas. The same is true of carbon emissions per capita, which are also much lower in urban areas than in rural areas. I think what’s often missed out of this argument is that cities are simply a much more effective way of bringing people together that allows people to use their limited funds in a much more effective way. There’s lower greenhouse gas emissions thanks to the ability for people to use public transit to get around more effectively. There’s less materials on a per capita basis needed because everyone’s
related carbon emissions. What is interesting is that roughly three-
quarters of those come from operational emissions. That’s why heating, cooling, powering etc. are so important when we think about reducing emissions. For many developing countries this is an added challenge because they often are already at the kind of a spiky end of climate change: These emissions will likely only increase as the average temperature increases. The ambient temperature is one thing, but when your country or city is hit with 40°C or more then you see these huge energy spikes. OFQ : How big are the differences between cities in the developing world? OH: We must differentiate between the impact of housing with sustainable
urbanization versus the impact of housing without sustainable urbanization. Our research at the
International Growth Centre (IGC) shows that cities in developing countries are the most vulnerable to climate change, but also the most viable solution to its impact.
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SPECIAL FEATURE
“It is the density of urban spaces that enables a much larger reduction in per capita emissions.” Oliver Harman, Senior Policy Economist, International Growth Centre, London School of Economics
Oliver Harman
Oliver Harman is a spatial economist and economic geographer looking at
sharing the same infrastructure. You can pipe water to a hundred people using one kilometer of pipe, whilst in rural areas that one kilometer is not going to reach that many. In this quite resource- constrained world that we live in cities allow us to provide people with local public goods and services that give them the resilience to withstand sharp climate changes. Otherwise, it’s going to be a lot more costly. OFQ : In your article Climate change: won or lost in cities or by cities? you argue that cities could do more to combat climate change but are held back by higher forces. Is that a fair summary? OH: My point is that there needs to be better consideration on where the kind of power to make climate decisions lies with respect to how these issues affect the environment. It was former UN Secretary-General Ban Ki-moon who said that climate change will be urbanization, decentralization and internationalization. He is a Senior Policy Economist at the International Growth Centre based at the London School of Economics and Political Science (LSE), a Research Associate at the Blavatnik School of Government, University of Oxford and Visiting Researcher at the LSE’s Department of Geography and Environment. He researches Sustainable Urban Development at the University of Oxford, teaches “Using Economics in Government” at King’s College London and even finds time to publish numerous articles and advise governments.
won or lost in cities. But no one was saying whether it was going to be won or lost by city or national governments. I think there needs to be a discussion on climate issues and where they are being dealt with, be it at city level or at national level. National governments are always reluctant to cede power to cities, but with some of the environmental challenges the urban level would be the best to deal with them. One example is air pollution, which is quite an urban problem and city leaders have an incentive to deal with this as a local public issue, while it is much less an emergency in rural areas. OFQ : Isn’t air pollution what most people associate with megacities? OH: This is true, but I think that a lot of the focus on megacities like Delhi, Dhaka or Cairo is actually a distortion. Instead, research should focus much more on intermediate and secondary cities to find solutions. Giving them more
power is only one part of the equation. To use this power wisely, they also need fact-based evidence. Research by Arnulf Grubler and David Fisk in their book Energizing Sustainable Cities shows that every time a small-sized city doubles, its energy increases by a factor of six. But then if you go from a medium to a large city, if you double that in size, energy use increases by a much lower factor. So there is this returns to scale as cities grow. It is in the process of urbanization where we need to make sure that intermediate cities, where a lot of the gains can be made, are being properly supported. OFQ : You are calling for more emphasis on intermediary cities. Who should lead this effort? OH: I think it needs to be interdisciplinary. I work as an economist with the International Growth Centre, for instance, and I strongly feel that economists need to stop talking to their own tribes
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