Reuters | August 6, 2013
By Parag Khanna and Greg Lindsay
Upon retiring in April after more than four decades as a NASA climate scientist, Dr. James Hansen told Columbia University students he feared “climate chaos” if we do not act immediately to curb greenhouse gas emissions. There are now more than 800 natural disasters worldwide annually, according to the reinsurance giant Munich Re, double the number 20 years ago. That may just be the beginning. The number could skyrocket to 15,000 disasters per year by 2030, said General Electric’s global strategy director Peter Evans, meaning mile-wide tornados like the one that devastated Moore, Oklahoma in May would be the norm.
Cities will bear the brunt of these catastrophes. Even as they become the world’s demographic centers, economic drivers, and political powers, cities face unprecedented risks from cyclones, earthquakes and tsunamis. Hurricanes Sandy and Katrina each caused more than $100 billion in damage, leading catastrophe bond pioneer John Seo to predict that a trillion-dollar storm could hit New York head-on or the Big One could devastate Tokyo sometime in the next decade. Then, there are man-made crises stemming from geopolitical tensions or economic inequality, not to mention pandemics.
Which cities will have the luck, the foresight and the resilience to cope with the convergence of these 21st century risks? Where would you choose to settle with the world of 2050 in mind, given that location, location, location will matter more than ever in a hotter, drier, more volatile world?
Some of the world’s most densely populated and economically significant cities already fall within the United Nations World Urbanization Prospects’ category of exposure to “3+” (meaning three or more) major risks — ranging from droughts to earthquakes to volcanic eruptions. The list includes New York, Tokyo, Los Angeles, Rio de Janeiro, Shanghai and San Francisco.
The most frequent natural disaster, flooding, regularly devastates the urban poor in such Asian megacities as Bangkok, Manila and Dhaka. The population exposed to flooding could triple by 2070, according to a recent Organization for Economic Cooperation and Development study of 136 rapidly expanding coastal cities. The portion of the U.S. prone to floods is expected to increase by as much as 45 percent by 2100, according to a first-of-its-kind report published in June by the Federal Emergency Management Agency.
London’s Thames River Barrier and Rotterdam’s Delta Works were designed to protect both cities from rising sea levels, and flood barriers are just a piece of New York City Mayor Michael Bloomberg’s $20 billion plan to waterproof the city while building new high-rises on the harbor.
There are risks for interior populations as well – the world already has more “climate refugees” than political ones. The Earth Policy Institute’s Lester Brown published a report last month arguing that 18 nations — with half the world’s population – already face “peak water” as they pump their underground aquifers dry. This threatens the urban populations of Saudi Arabia, Syria, Iraq and Yemen, for starters.
In China, excessive diversion of rivers for agriculture and industry has led to the disappearance of as many as 28,000 rivers, which may soon require more internal forced migrations. The scene of America’s biggest housing bubbles before the 2008 economic collapse – Phoenix and Las Vegas – are located in deserts where water tables are quickly depleting, as is the High Plains aquifer underlying much of the Midwest.
Ironically, cities lying within the Arctic Circle will be some of the biggest winners in a hotter world. New shipping hubs are emerging across Scandinavia to capitalize on the opening of the Northwest Passage due to climate change, geographer Laurence Smith, of the University of California, Los Angeles, notes in his book, The World in 2050: Four Forces Shaping Civilization’s Northern Future.
Russia and Canada, the world’s largest countries by area, are not only oil and mineral powers, but also hydro-superpowers. Both are well-positioned to sell massive quantities of fresh water from their broad rivers and melting permafrost to thirsty neighbors to the south: China and the United States.
Seen in this light, the capitals of the “New North” could include Toronto, Vancouver, Oslo, Helsinki and Moscow – all growing fast, attracting immigrants, and resource-rich. Speculators should also keep an eye on ports such as Murmansk, Russia; Churchill, Canada; and Nuuk, Greenland. Further south, Rust Belt cities lining the Great Lakes may be the most affordable places to ride out climate change – at least Buffalo, Cleveland, and Detroit can look forward to warmer winters and will never lack for fresh water.
A second category of risks is economic. The financial crisis continues to expose the dependence of entire economies on the banking sector, which ties London’s health to Cyprus’ and Slovenia’s. Failure to diversify beyond exports has left the cities of China’s Pearl River Delta littered with empty factories and the world’s largest (vacant) shopping mall. A similar fate befell Detroit, which was crushed and shrunken by the combination of outsourcing and automation.
There’s also a domestic component to cities’ economic risk — inequality. Urbanization has been celebrated as a driver of growth and opportunity, but it is also a principal cause of why domestic inequality is now greater than international inequality. In other words, a resident of Jakarta has a standard of living closer to someone in London than to a countryman hailing from the Indonesian island of West Papua. This helps to explain why last decade’s anti-globalization protests at summits such as the World Trade Organization have been replaced by this decade’s more locally-focused Occupy Wall Street. After all, cities are where the 1 percent and 99 percent live side-by-side.
Nimble planning is the only way for urban economies to develop the economic resilience necessary to cope with such turbulence. Consider Dubai, which was widely written off after the financial crisis, but quickly renegotiated its debts to capitalize on its geographic centrality and openness to replace panicked Western investors with those from the East and South. Its airport is the world’s crossroads for African, Arab and Asian traders.
Meanwhile, New York City rebounded from the financial crisis thanks to a strategy of diversifying beyond finance into technology and tourism. It is now America’s second-leading IT hub after Silicon Valley.
When it comes to managing such diverse risks with varying time horizons, national and municipal leaders must be proactive in deciding how to allocate resources and investments. Erwann Michel-Kerjan, director of the Wharton Risk Management and Decision Processes Center at the University of Pennsylvania and author of At War With the Weather, has developed a risk management framework emphasizing proactive investments in infrastructure and recovery mechanisms. The World Bank’s new department devoted to promoting “urban resilience” focuses on urban water, energy and transportation systems as critical infrastructures that deserve maximum focus.
In this realm, picking winners is much harder. With its impeccable governance, safe distance from the region’s geopolitical hotspots, and land reclamation strategy, Singapore is Asia’s safest bet to displace an increasingly polluted, crowded and corrupt Hong Kong. Across the Pacific, with its newfound political stability, substantial infrastructure investment, and unique access to both the Atlantic and Pacific Oceans, Bogota is becoming the leading non-Brazilian center of economic gravity in South America.
Even as its economic fortunes rise, Africa has no guaranteed winners in the new urban world order. Johannesburg’s economic inequality and Lagos’s violence make them as dangerous as they are dynamic. Rwanda’s president Paul Kagame has made Kigali a model for infrastructure investment and also a regional hub for East Africa. Yet while strong leadership and resources committed to building a solid future might assure a higher quality of life, places like Rwanda and Singapore must now prove they can be politically resilient as they go through difficult democratic transitions.
While we can’t future-proof cities against pandemics, terrorism and market disruptions, successful urban leaders pursue a strategy of interdependence and autonomy. They participate in functional networks that, for example, share criminal and terrorist intelligence, health data related to pathogens and best practices in green building retrofitting. They also pursue diversification of economic sectors and building redundancy into their electricity, water and other infrastructures.
This concentration of demographics, wealth and resource consumption in the world’s major cities is a fact of life in the 21st century. It could either drive a renaissance of innovation and well-being, or a cataclysmic chain reaction that threatens the world’s major population centers.
Where will you want to live in the uncertain decades ahead?
PHOTO: Vehicles drive down Shore Boulevard as wind and rain from Tropical Storm Andrea hit the Florida coast near Gulfport, Florida June 6, 2013. REUTERS/Steve Nesius