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Economic activity, technology, population dynamics, globalisation and urbanisation: understanding the drivers affecting the world’s environment and how they interact is important for identifying policy responses that might work. Cities and buildings are a good starting point.

Today there are nearly 7 billion people living on the planet. UN projections point to some 8-10 billion by 2030. This raises a key question for the environment of how our production and consumption patterns, indeed entire economic structures, will evolve and be shaped by the forces of this continued population growth, in particular when combined with increasing urbanisation, globalisation and climate change?Take globalisation for instance. The source of unprecedented growth for many countries in recent years, globalisation has also brought its strains, not least on the environment. Some people even put some of the blame for climate change on the rapid globalisation of the economy, with its drive for scale, market share and resources.Yet globalisation also holds the solution to many environmental challenges: it can spread knowledge and better practices, and bring in innovation and new technology. It can improve global governance too: as the OECD Environmental Outlook reports, many regional trade agreements increasingly contain environmental measures. As important, globalisation can create the wealth needed to invest back into the environment.But the pace and extent of future globalisation is hard to anticipate. There have been many phases of globalisation before–economic historian Emma Rothschild has written about an episode from the 18th century in these very pages (see references). All have been characterised by closer interaction of lands and people as faster, better communications–ships in 1770, the Internet today–unlock more regions, integrating them into a more unified, interactive, entity.With the closer interaction of Europe and North America 250 years ago there was even talk about creating a North Atlantic parliament! The emergence of China, India and Brazil as major players on the world stage poses new co-operation challenges for managing the global economy and environment. New players will surely emerge in the years ahead, and the dizzying speed of globalisation today may well pale compared with future phases, with more intense environmental and economic pressures ahead. This makes it all the more urgent to act now and shift our consumption and production patterns towards a lower carbon economy.How can it be done? A good place to start is by looking at the cities and buildings we live in.Building global citiesCities nowadays are linked to each other as nodes in a networked world: they are dynamos driving globalisation. Consider the weight of cities in economic and demographic terms. Already three quarters of the OECD population lives in urban areas, ranging from 97% in Belgium to 58% in Slovakia. About a fifth of France’s population lives in greater Paris, which also produces a quarter of the country’s GDP; a quarter of Korea’s population lives in Seoul, producing half of the nation’s GDP.But while communications technology may have turned the world into a global village, what we see unfolding today is an explosion of megacities, each with several million inhabitants, dense centres and sprawling outskirts. In 1950, there were 83 cities with over a million people; by 2000, there were over 400. Today “megacities” of over 10 million are legion–Tokyo, Seoul, Mexico City, Mumbai, Sao Paulo, New York, Lagos, etc.About half the world’s population lives in urban areas and the proportion will grow, perhaps by 2.1% per year to 2030. Except for cities in the US, Mexico and Turkey, the OECD Environmental Outlook projects slow overall OECD urban growth at 0.75% per year, increasing the share of urban population from 76% today to 82% in 2030.Most urban growth will be in developing countries. Rapid urbanisation means more traffic, pollution, infrastructure and possible land-use changes affecting biodiversity, etc. A billion city dwellers already live in slum conditions; more are expected. Little wonder the OECD gives this policy issue a red light for urgent action.Environmentally, there is no ideal urban model to aim for. Policies often have to be tailor-made to suit different circumstances. But there are similar pressures to watch for. Concentrated cities may deliver benefits such as lower energy consumption and water savings as activities and people are grouped together. But they also bring congestion, pollution, discomfort and ill-health. Sprawl, on the other hand, lengthens journey times, increases petrol consumption and also eats into the countryside, damaging biodiversity.The trouble with megacities is that they often combine the inconveniences of sprawl and congestion at once. Nevertheless, the right active policy responses harnessing regulation, planning tools, technology and markets can affordably address both.For inspiration, one could also look at the many programmes in operation in OECD urban areas to improve transport as part of a drive to make urban living healthier and more environmentally friendly. There is London’s road congestion charge (which New York is thinking of adopting) and Paris’s bicycle-for-all service called Vélib’, for instance, as well as various “clean car” initiatives in Los Angeles and Tokyo. Fuel costs and public health demands mean such initiatives will surely multiply. They create new markets and boost land values, and inner city living is likely to become more popular as a result. Living machinesThe Franco-Swiss architect Le Corbusier once described buildings as machines for living in. The trouble is these machines are resource-intensive. They suck in wood, gravel, water and chemicals, and account for up to 40% of final energy consumption in OECD countries. Construction devours space too: if China’s residential building goes on growing at its present rate, a floor space equivalent to today’s entire building stock of the EU15 will be added in the next two decades. Demolition also affects the environment, by releasing chemical waste for instance.Buildings offer a window of opportunity for policymakers to make a real difference. Already fiscal incentives and building standards to promote energy efficiency are changing the industry in many countries, spurring new markets (and behaviour) in renewable energy, insulation, lighting and building materials (see ministers’ roundtable). In Europe, houses are now being rated for their energy efficiency, while Germany leads the way in building “passive” houses which by virtue of their materials, design and orientation, can reduce heating and cooling loads by up to 50%.It is early days, and more needs to be done to set up the background infrastructure that makes energy systems tick–the trained engineers, the solar panel repair workers, the billing systems, etc. But with the right technology, competition and regulatory frameworks, new approaches will emerge. Small scale energy solutions, particularly for homes, will become more feasible, for instance. Already in California, people can buy solar panelled houses for less than ones connected to the grid.In some respects, our generation is at an experimental stage, testing new (sometimes risky) ideas for the benefit of our heirs. Take for instance the BedZED project near London. Short for Beddington Zero Energy Development, this “carbon-neutral” housing project, launched in 1993 with its solar panels, south-facing terraces, air chimneys and bioenergy, has been lived in since 2002. As a pioneer, it has shown pluses–heating energy consumption 88% lower than for an equivalent development, an ecological footprint cut by half–as well as a few minuses, notably a polluting solid-fuel boiler and an energy-thirsty filter for the rain-fed toilets.Learning is by doing, and just as the Garden City movement of the 19th century paved the way to healthier housing in the early 20th century Europe, so projects like BedZED (which was financed by an anti-poverty trust) may lead the way towards the sustainable cities of the future. As the global market for new technologies improves and expands, cities from Asia to America will be able to reduce their ecological footprint.How quickly cities adapt depends largely on their policymakers’ ability to stay open to new ideas, practices and markets. In the global village, most of them probably will.ReferencesOECD (2008), OECD Environmental Outlook to 2030, Paris.Rothschild, Emma (2001), “The politics of globalisation circa 1773”, in OECD Observer No 228, September.OECD (2006), “Making city sense” in OECD Observer No 255, May.Le Monde 2 (2008), “Bilan pour BedZED, quartier pionnier”, 5 April.©OECD Observer No 266 March 2008

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
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Unemployment: 5.2% July 2019
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