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Cities report

Green policies can contribute to growth

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More than half the people in the world live in or near cities today. By the middle of the century, urban areas will be home to over two-thirds of the global population and a large share of economic activity.

The OECD’s city-level case studies provide urban leaders with new insights on how environmental policies can contribute to different types of growth.

Job creation: the right urban sustainability policies can include retrofitting the existing building stock for improved energy efficiency. For example, the Chicago Tri-State metro-region has built a regional specialty in green building design and retrofitting. In 2010 it gave 45 000 people green jobs, 36% of which were in the green building sector.

Attracting firms and workers: efficient transport systems, in particular, good public transport networks, help cities to lure investors. The private sector in the Paris/Ile-de-France region has long recognised this, and firms that benefit from proximity to the transportation system contribute to its financing.

Innovation and entrepreneurship: cities can foster the growth of the green technology sector by creating green regional clusters that build on existing industries, services, research and innovation. Kitakyushu has built an impressive recycling cluster, the Eco-Town, which recycles hundreds of tons of industrial waste every day, while producing energy for residential and commercial neighbourhoods.

Increasing the value of urban land: redevelopment, infill, and eco-districts can enhance land values while increasing density and reducing residents’ environmental impact. Following the success of its Hammarby Sjöstad eco-district, Stockholm is now working with the private sector to develop the Stockholm Royal Seaport eco-district. Buildings there will use less than the energy of others in Stockholm and the new district will have an advanced smart grid and district heating.

There is an urgent need to find better ways to “green” urban finance and to mobilise private finance for green infrastructure. Introducing green incentives into municipal revenue streams would be a big step towards a more sustainable growth path. Property taxes could help prevent sprawl by eliminating the preferential tax treatment of single-family homes that exists in many places. Congestion charges and parking fees can help reduce traffic and pollution, while fees for water and waste services should be more responsive to actual resources used. For example, the City of Stockholm is greening its income with revenues from the congestion charges system. Implemented in 2006, this system has led to lower CO2 emission and traffic congestion and is also becoming a substantial source of income. National governments also have an important role to play in setting the pricing signals and standards that will provide coherence, attractive environment for green financing.


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