The Municipal Revenue Problem Behind China's Smoggy Cities
As China continues its rapid urbanization, the government has set a goal of sharply reducing the carbon intensity of its economy. By 2020, China wants to cut its carbon emissions by 40 to 45 percent, compared to 2005 levels. Its cities represent 70 percent of greenhouse gas emissions, and are in the sights of officials as they try to update policies and regulations to reduce the carbon impact of an industrializing and urbanizing economy. A more environmentally sustainable future depends on more environmentally conscious cities. A new report from the World Bank hopes to help China's cities get there.
In Sustainable Low-Carbon City Development in China, the authors note that, like in the U.S., city-level programs and policies are leading Chinese efforts to reduce emissions. They're hopeful that these city-led efforts are simultaneously ushering in an urban form that connects livability with environmental and sustainability concerns. That means building new cities and operating existing cities in ways that both limit impact on the environment and accommodate the massive urbanization underway.
China's cities are now home to the majority of its population, more than 665 million people. That's nearly a threefold increase from just 30 years ago when the urban population was 191 million, itself an incredibly large number. Over the next 20 years, 350 million more urban dwellers are expected. The central government recognizes this shift underway, and has included new plans for reducing carbon emissions in its "12th Five-Year Plan for National Economic and Social Development." The World Bank report commends these efforts, but argues that more work is needed.
Of the five main recommendations in the report, the authors specifically call on Chinese officials to put more effort into planning and developing the urban form of their cities to reduce the need for high energy use in buildings, transportation, and resource management. "There is almost no asset in the local economy as long lived as the urban form—with an asset life of more than 100 years," the report notes. "Cities that have spread over large areas and with fragmented land use are locked into high-carbon development paths."
One way to quickly address some of the sprawling tendencies of urban development in China is to reform municipal financing. The report notes that most city revenue in China is derived from land sales and development, which tends to translate into cities being very accepting of carbon-intensive forms of rural land conversion. The report argues that Chinese cities need a new form of finance, one that enables more financing to flow from higher levels of government down to cities to help pay for urban services. By reducing reliance on land sales and conversion, Chinese cities could better align with broader goals of creating more sustainable urban forms and having more money to spend on other efforts to reduce carbon emissions – like better public transit, increased reliance on non-coal-based energy, and modernized waste and water infrastructure.
Top image: David Gray/Reuters