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 / Summer 2008 / Issue 51(originally published by Booz & Company)


Building the Sustainable City

Some officials in Asia have be­gun to recognize that they must act differently than the West has or they will pay a huge price in en­vi­ron­mental catastrophes and rising en­er­gy costs. In a December 2006 speech, Indian Prime Minister Manmohan Singh wondered rhe­torically whether growth is “sustainable if development in the devel­oping world merely mirrors the experience of the developed” world. The Chinese Communist Party–controlled newspaper China Daily proclaimed in February 2008 a “farewell to the GDP growth cult,” noting that “GDP must be based on environmental sustainability.” 

A number of initiatives in China focused on promoting sustainable development have come to the fore in recent years. For exam­ple, Huangbaiyu, a poor village in Liaoning province, was chosen in 2003 as the site of China’s first model “eco-village,” and the massive eco-town of Dongtan near Shanghai is set to open in 2010 at the start of the Shanghai World Expo. Other towns have taken more mundane approaches. Rizhao, a city of 3 million in Shandong province, is focusing on maximizing the use of solar power. Today, 99 percent of households in Rizhao’s city center and 30 percent in the suburbs are reported to have solar panels for lighting and water heating. Although some envi­ronmental experts have been skeptical of these statistics as well as of China’s overall commitment to sustainability, these projects appear to be a step in the right direction. 

For all its long-term benefits, sustainable urban planning will not become commonplace without significant support from many of the more powerful elements in­volved in major building projects. For example, governments can set tougher environmental standards for construction efforts, provide incentives for building in a sustainable way, and educate the development community about sustainable techniques. Among the financial benefits that governments can offer to subsidize environmentally friendly projects are tax breaks, fast-track permits, or lower prices on land that is under their control. (See “The Critical Enabler,” by Gary M. Rahl, s+b, Summer 2008.) 

More farsighted governments should be encouraged to take these steps because of the potential positive spillover from sustainable, healthy buildings: lower health-care costs; increased employment in advanced engineering, construction, and facility management; additional investment from global companies; and improved public relations for cities, regions, or countries. Such bragging rights, as well as bottom-line economic gains, were a prime motivator behind Abu Dhabi’s Masdar City, another UAE project, touted by its developers as the “world’s first zero-carbon, zero-waste, car-free” urban community. Initiated by a government-owned development company, which in­vested US$4 billion in Masdar City out of a total yearly budget of $22 billion, the 1,500-acre site is likely to begin construction this year. It will include a special economic zone housing companies involved in alternative energies and sustainabil­ity research, and it is forecasted to attract more than 1,500 businesses and generate billions in macroeconomic benefits for Abu Dhabi.

Governments in Europe have also taken tentative steps to corral some of the benefits of sustainable development. Switzerland and Denmark have adopted stringent construction regulations with strict, specific guidelines for energy consumption, depending on the size and type of building. The European Commission calculated that if Denmark’s rules were applied throughout the E.U., projected energy consumption could be re­duced by up to two-thirds. Germany, for its part, has offered tax incentives to homeowners who build new homes or retrofit existing homes according to energy-friendly guidelines. 

Investors, developers, and property owners must also wake up to the economic opportunities that sustainable buildings present. This means looking at costs from the perspective of the building’s total life cycle, including planning, construction, operations, and even demolition. Moreover, innovative developers should look at the revenue side. A variety of studies have quantified the impact of clean air and a pleasant environment and found that they lead to higher productivity and lower tenant turnover in office buildings, longer visits by shoppers and increased purchases in retail environments, and improved sleep and higher levels of concentration in residential properties. 

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