Megacosts keep megacities unhealthy

By Johanna Son

MANILA (IPS): Developing Asia needs to invest up to US$ 40 billion a year in its megacities in the next decade, if these bustling hubs are to keep their economic edge and improve quality of life, the Asian Development Bank (ADB) said in a new report.

At their best, the region's megacities are gleaming centers for commerce, innovation, the arts and sciences. But as cities grew along with Asia's economic boom in the last three decades, they have tended to be marked by diminishing quality of life, with growing pollution, crime, congestion and visible income gaps.

"Without better interventions to address these major problems, megacities will become even more congested, polluted, unhealthy, expensive and socially divided," the Bank said in its annual report for 1996.

Alongside Asia's rapid growth, its urban population has expanded from 400 million in 1965 to 1.1 billion today. And though population growth rates should taper off in the future, the number of urban dwellers is expected to more than double to 2.5 billion by 2025. By that time, Asia's level of urbanization will rise from 33 per cent to nearly 53 per cent - and the region will be home to half the world's urban population.

By 2025, Asia will have 20 megacities - cities with more than 10 million people - and 10 of them will be in South Asia. Most Asian city dwellers will be in Bangladesh, China, India, Indonesia, Japan and Pakistan. By 2025, Asia's most populous cities will be Bombay, followed by Tokyo, Shanghai, Karachi and Dhaka.

Infrastructure, social and health services, however, have not always kept up with the growth of cities, spurred by population growth and migration from rural areas. Already some 30 percent of city dwellers live in slums and shantytowns, home to many residents who toil in the informal economy and help give many cities their competitive edge.

Without adequate investments to arrest the decline of megacities, the report says a "downward spiral" will follow, leading to a decline in cities' comparative advantage and thus in precious resources with which to keep them going.

So far, the Manila-based ADB said, infrastructure funding needed by megacities to sustain productivity and "moderately improve" quality of life now costs some 20 billion dollars a year. The price tag of managing megacities, however, is expected to increase to 40 billion dollars a year over the next decade.

This includes the capital costs of renewing existing infrastructure, investing in transport and communications, energy, water supply and sanitation - sectors that the ADB says will need the heaviest infusion of funds. But ensuring that megacities remain livable involves not just raising more money, but novel ways of raising funds for projects and running local governments that become sprawling metropolitan areas responsible for 30 per cent or more of a country's output.

The Bank says the old ways of financing urban projects will have to be changed. "Traditional methods of financing the capital costs and recovering recurrent cost will have to be increasingly phased out, as they increasingly are," it said.

Government can no longer be the main, or sole, source of funding. Financial needs are too large, and certain sectors too crucial, to be left entirely to the private sector and the forces of the market. Local governments are turning to raising money themselves, even in international markets.

More than relying on rules whose implementation may be spotty, governments are turning to using "market-based mechanisms" or pricing strategies to achieve goals like better environmental compliance.

Economic instruments are not yet widely used in Asia, but countries like Malaysia have imposed effluent charges and Thailand is using differential taxes on fuel. The Philippines is also experimenting with pollution charges in a bid to clean up Laguna Lake. Likewise, the private sector is going into services previously provided only by the state, such as the delivery of urban services such as water supply, sewerage, toll roads and public transportation. Often private companies run these services in partnership with governments, which retain ownership.

In other words, Asian governments should anticipate the needs of infrastructure and service provision now, the Bank says.

New ways of coping with urban growth will be needed, especially because "given the clear links between urbanization and economic growth, it is inevitable that megacities will continue to grow", added the Bank.

"While megacities can be expected to dominate the economic transformation of Asia, the quality of life for their residents will be very much related to the quality of their management", said the ADB's annual report.