URBANIZATION
“I think we need to refocus on doing urbanization well and make it into something positive for the environment and the climate.” Oliver Harman, Senior Policy Economist, International Growth Centre, LSE
Photo: Kevin The Ooi Keat/Shutterstock
all the time and that we need to reach out to other disciplines. For instance, if you just throw the economics toolkit at these problems, you will miss out how to politically implement things that need to be done. This is a large part of the climate issue.
lead to the uptakes or changes that you might expect because there are issues with the fundamentals. For example, in Malawi the digitalization of tax collection was met with resistance because it was not accompanied with the creation of appropriate incentives which compensated the people for losses they incurred through a clampdown on various practices. OFQ : Digitalization often goes hand in hand with commercialization. This can bring heavy social costs. On the other hand no one can absorb losses forever. How do you design the process so that it serves sustainable development? OH: Form follows finance. If you are funding your infrastructure or local public goods and services with private finance, then there has to be some way in which the revenues from that can satisfy investors’ expectations. Private finance wants private returns. Similarly, if you are funding with public finance or some kind of blended finance, the expectations on return might be different.
So I think it’s important to consider the financial flows very well and make sure that it is adequate to the type of project it is attached to. For example, parking meters are the perfect kind of private goods, where you can capture the revenues well and get the individual in the car to internalize the full cost of parking in a certain area, thus there is merit in financing them with private capital. This is very different from something like, for instance, drainage. This is more of a pure public good as you can’t tell citizens who can and cannot use drainage, and instead everyone benefits. That’s the kind of thing that requires public financing from the local or national government. I think it is crucial to have that distinction as to the sort of goods and services and the type of financing streams that work best. OFQ : Because eventually you have to pay back your investors? OH: Of course. There’s some stuff where the benefits are so localized that the way they’re paid back should also be
OFQ : What role do you see for technology in climate action? Is digitalization going to solve the climate crisis for us?
OH: I agree that there is interesting and promising technology, but it will not by itself save us. If the fundamentals aren’t fixed, then slapping technology on the front will not solve it. I think we need to understand what are the systematic problems, before we add technology to the mix. If you just put smart meters on leaky pipes you’re only going to have a better understanding of how much they’re leaking. We have done research on the use of technology in improving the efficiency of taxation systems and what we found is that often digitalization does not
20
Powered by FlippingBook