But investing in smart growth policies now can have huge economic returns, a new working paper says.
Indian cities, like several others around the world, are growing in a concerning manner: They’re expanding outward at a rate that outpaces their population growth, and they’re doing so haphazardly—without heed to principles of urban planning, without adequate water, electrical, waste management, or transportation infrastructure and services, and without a regard for the environment.
The price that the country stands to pay for this pattern of urbanization, if it continues, is enormous: $330 billion to $1.8 trillion every year by 2050, according to new working paper from the New Climate Economy. This is the flagship research project of the Global Commission on the Economy and Climate, an international initiative looking into the pathways to sustainable economic growth. For India’s GDP, that translates into a loss of 1.2 to 6.3 percent shaved off annually.
On the other hand, the country stands to add 6 percent of its GDP to its bottom line if it adopted smart growth policies.
As the authors put it:
Getting urbanisation wrong—through an unplanned, sprawled urban growth model—could be very costly for India.
How sprawl manifests in Indian cities like Delhi and Mumbai is different than, say, Houston or Phoenix. Ani Dasgupta, global director of the Ross Center for Sustainable Cities at the World Resources Institute (a managing parter of New Climate Economy) explains in CityFix:
India isn’t “sprawled” in the traditional way—Indian cities are among the densest in the world. But the problem is that it is not productive density. Instead of multi-level buildings organized into accessible neighborhoods, many Indian cities are filled with short, overcrowded buildings, and lack public transit and pedestrian spaces. So for each square mile of space, there’s a lot less room to live.
But just like American-style sprawl, Indian urban dispersion has negative economic consequences. The NCE report analyzes 479 Indian cities using information from satellite images, as well as demographic, environmental, and economic data. They find that even after accounting for size and level of development, Indian cities that were more compact in 2002 saw greater economic growth in the following decade. A 10 percent increase in compact urban growth (defined as development in existing urban area relative to newly urbanized area) was associated with a 0.5 percent point increase in economic activity in the following decade. Whereas a 10 percent point increase in the “dispersion index,” a measure of sprawl, resulted in up to 0.9 percent decrease in economic output.
So why are these cities, which had dense cores to begin with, now spreading out? Current land use and urban planning regulations are partly to blame. For one, Indian cities have encouraged low-density development by restricting the total floor area that can be built on each unit of land through something called the Floor Space Index (FSI). (In Mumbai, exceptions have recently been proposed to the otherwise low FSI for retail structures and affordable housing.) Real estate costs are high, in part because registering land for development is difficult and permits are expensive. Plus, incentives to build outside the city core have led to “leapfrog development”—when disconnected urban clusters sprout up outside city borders.
The second part of the story is that investment in urban infrastructure is abysmally low on the national priority list—not unlike in the U.S. Most of the current money is aimed at creating more, wider roads and subsidized parking, instead of multi-modal, interconnected public transit within the city, the paper’s authors argue. Apart from being a bad idea, economically speaking, prioritizing car-centric infrastructure in a nation where only around 20 people out of every 1,000 owned cars in 2016 raises questions of equity. Via the paper:
The city’s poorest, who are left to fend for themselves to access even the most fundamental of services—but who lack economic resources—tend to end up bearing the highest burden of service deficits in terms of social, health, time, and monetary costs.
The effects of this kind of unregulated urbanization are already clear. Delhi, India’s capital city, is experiencing the worst smog it’s ever seen, which has disrupted flights, trains, and interstate traffic. Inside the city, traffic congestion is appalling—a 20-minute drive can take several two hours at certain times of the day. India’s financial capital of Mumbai, on the other hand, is hollowing out, with prohibitively expensive high-rises mushrooming in the city’s core and shoddily built residential housing for the poor at the periphery.
As these conditions worsen, they’ll get more expensive. Sprawl will consume land needed for agricultural activity and environmental preservation, and as communities live further and further apart, the costs of providing them with infrastructure and services will likewise inch up. Car-centric development also brings more traffic casualties, more congestion, and more public health problems—all of which can cripple the workforce to an extent.
The poor, as usual, will bear the brunt of this, but every Indian—rich or poor, rural or urban—stands to lose if reshaping the urban future of the country isn’t seen as a moral and economic imperative.