Funding the Design of Livable Cities
As a burgeoning global population migrates to the world's urban centers, it's crucial to design livable cities that function with scarce natural resources. John Macomber discusses the critical connection between real estate financing and innovative design in the built environment.
Editor's note: This article originally appeared on Harvard University's Real Estate Academic Initiative website.
If Harvard Business School and the Graduate School of Design seem miles apart both literally and culturally, John Macomber is determined to bridge the divide through his work in urban sustainability.
"Private investors will need to fund not only real estate development, but also the supporting urban infrastructure systems"
In his multiple roles as a member of the HBS faculty teaching courses in Real Estate Development and Executive Education courses on campus and in India, his active engagement with the Real Estate Academic Initiative (REAI) at the GSD, and his appointment at the GSD teaching the jointly listed course "Sustainable Cities: Urbanization, Infrastructure, and Finance," Macomber is keenly focused on the critical connection between real estate financing and innovative design in the built environment.
To create an environmentally sustainable built environment, design that focuses on maximizing natural resource efficiency, planning that fosters public health, business models that attract the capital to fund it, and public policy that enables the adoption of all three, are crucial elements. For a burgeoning global population that is increasingly migrating to the world's urban centers, designing livable cities that can effectively function with scarce natural resources is critical.
In talking about the future of the global built environment, Macomber cites four primary trends driving the development of innovative solutions:
- The first is the world's population growth, forecast by the United Nations to reach roughly 9 billion by 2050, and the mass migration from the countryside and agrarian communities to cities across the globe. This rapidly expanding urban population, expected to reach 3 billion over the next four decades, will require housing, places to work, and transportation systems.
- Second, the natural resources necessary to support this growing population, including freshwater and land for food production, are increasingly scarce.
- Compounding the challenge of supporting this population shift, governments from developing to industrialized countries are limited in their capacity and political will to devise solutions to accommodate expanding urban populations.
- Finally, securing capital is paramount for real estate developers to design and build cities to meet the needs of this growing urban populace. Private investors will need to fund not only real estate development, but also the supporting urban infrastructure systems.
In this challenging landscape, Macomber believes Harvard has a unique opportunity to shape a sustainable global urban landscape.
Rethinking urban areas
Both environmentally and socially, the world's cities present one of the best opportunities for directly addressing global climate change. With half of the world's population residing in urban areas and contributing to as much as 70 percent of global carbon emissions, restructuring the urban environment can have an enormous positive impact on the global climate.
Within a relatively contained geographic space, a city's "inputs" of water, transportation infrastructure, energy and breathable air and "outputs" of waste, air and water pollution can be planned and managed in a much more efficient and sustainable fashion than in a dispersed population.
Mayors of the world's largest cities agree, with New York City mayor Michael Bloomberg leading a global coalition to craft urban centers that maximize energy and water use efficiency, build and renovate buildings to be more livable and environmentally sustainable, and incorporate low- or no-carbon emitting public transportation systems. Yet while mayors often have greater legislative freedom to shape local energy use and building regulations, private sector engagement is critical, both to fund urban sustainability initiatives and to create highly efficient and livable spaces.
"The challenges of global urban redevelopment are an ideal opportunity for collaboration between the fields of design, finance, public health and government policy"
After all, while renewable energy technologies can reduce greenhouse gas emissions, sophisticated design and engineering that cuts energy use by maximizing natural light and reducing the need for heating and air conditioning services is far more effective. Building designs that incorporate factors of sun and wind, and intelligently designed public transit, can maximize the return on investment by optimizing natural resource use. For cash-strapped cities the private sector can fill the gap in providing critical funds and designing structures, including public housing and municipal spaces, that are both attractive for businesses and residents, and less expensive for cities to maintain in the long-term.
Macomber is putting his commitment to joining the fields of finance and design into practice through his research and HBS case studies, including exploring redevelopment options for the sprawling Mumbai slum of Dharavi, the infamous setting for the movie Slumdog Millionaire. In Mumbai the $3 billion public-private Dharavi Redevelopment Project (DRP) proposes free housing and services for Dharavi's longtime residents to relocate from their ad-hoc dwellings. To fund the relocation, the DRP would develop the previously inhabited land with commercial and residential real estate, considered highly desirable and valuable because of its proximity to Mumbai's city center.
While the project presents numerous financial, cultural, legal and social challenges, the case also explores the multiple intersecting opportunities inherent in urban redevelopment of this scale. In addition to the complementary interests of finance and urban design, the DRP project highlights the multiple humanitarian and environmental implications of large-scale urban transformation.
While addressing the environmental effects of water and land use, waste and pollution, the redevelopment promises enormous health and social welfare improvements by providing sanitation, safe drinking water, and basic services to Dharavi's residents. Realizing these benefits will depend on first rate design that maximizes energy and resource efficiency, but that also makes the compact, vertically oriented scheme desirable and livable for more than one million people.
Macomber sees the challenges of global urban redevelopment as an ideal opportunity for collaboration between the fields of design, finance, public health and government policy. At Harvard, this presents almost unlimited potential for the university's schools, including HBS and the GSD, to work together researching and devising practical, replicable solutions for an environmentally and economically sustainable global built environment.
"I believe Harvard can address the major problems of the world by using the combined skills and reach of its schools, working across disciplines," Macomber says. "Focusing on sustainability and the built environment is one great way to do this. Our overarching mutual task should be to help citizens, investors, businesses, planners, NGOs and governments to fund, design, and accomplish new cities all over the world that are economically competitive, that use water and energy effectively, and which are healthy for their citizens."
With the support of REAI's recently launched Sustainability and the Built Environment initiative, Macomber has taken the first steps in leading the charge toward crafting collaborative and innovative solutions for the global urban landscape.