Habitat III: What Needs to be Done on Financing Urban Development

The Mexico City Habitat III meeting on financing urban development is underway.

The meeting is meant to provide input to the consultations on the New Urban Agenda concept, to be adopted at the 3rd UN Conference on Housing and Sustainable Urban Development (Habitat III) in Quito later this year.

Local governments have an enormous potential for global transformation towards sustainability. The vision, experience, technologies and commitments are all there. What is still missing are effective governance and financing models.

In order to ensure a rapid global transformation, discussions around financing urban development should focus on two primary areas: Innovation and Scale-up.

Innovation

• Global financing models should serve urban development with a holistic approach, respecting the demand-driven priorities of local and subnational governments. The necessary background and framework is now available through a) the adoption of SDG Goal 11 on making cities and human settlements inclusive, safe, resilient and sustainable, b) the Paris Agreement recognizing engagement of all levels of government in global climate efforts c) para. 34 of Addis Ababa Action Agenda on financing development, and d) para. 19.e and 19.f of Sendai Framework and the vision to develop local disaster plans in additional to national ones.
• From climate mitigation to procurement, from renewable energy to ecosystem-based adaptation, from mobility to land use planning, the commitments and innovative experiences of local and subnational governments for transformative actions must be considered as priority areas for investments at all levels.
• Local and subnational governments should be capacitated to develop and deliver transparent and inclusive high quality investments for sustainable development that are attractive for public and private investors at all levels.

Scale-Up

• Resources for sustainable development must increase rapidly. The ICLEI Declaration to Ministers at COP21 underlines the need to develop a global framework to mobilize additional financial resources for climate change mitigation, adaptation and loss-and-damage through public as well as private finance. Financial tools can include carbon pricing, the phasing out of fossil-fuel subsidies, divestment from carbon intensive infrastructure and other assets, and revenues to be generated from regulations on international finance markets or transactions.
• Access of local and subnational governments to these resources must be enhanced significantly. The launch of the GEF Integrated Action Program on Sustainable Cities and subnational implementing entities at the Green Climate Fund are good practices that must be scaled up and rendered operational. Commitments under the Compact of Mayors or proposals developed under the Transformative Actions Program (TAP) should be considered as priority actions for cities and regions to help them access these global climate funds. The growing contributions of local and subnational governments such as Brussels, Paris, and Quebec should be praised and acknowledged, and other cities and regions in a position to do so should be encouraged to increase such contributions. The Global Environment Facility and the Green Climate Fund should be invited to match these contributions with other resources, and these should be earmarked to finance ambitious and transformative actions presented by local and subnational governments in developing countries.
• Direct investment to local and subnational governments, through laws, incentives, taxes, procurement or commitments, as well as growing contributions to global climate funds, should be considered as a significant source of investment in sustainability.

ICLEI promotes or is involved in several initiatives on financing urban development.

At the 2015 UN Climate Conference (COP21), we launched the Transformative Actions Program (TAP), a global partnership that mobilized 125 applications from 80+ local and subnational governments and partners worth $9bn of investments, aiming for ambitious, crosscutting and inclusive climate action.

ICLEI is also engaged in partnerships with CCFLA, Climate KIC and LoCal, CDIA, and GIB. ICLEI also supports GEF and is an observer to the Green Climate Fund.

We facilitate the Global Lead City Network on Sustainable Public Procurement and city-business collaborations.

Several ICLEI Members are global leaders in innovative financing models: Johannesburg on green bonds, Seoul on investments in renewable energy and energy efficiency, Helsinki on public procurement, and Tokyo on Cap and Trade, as well as Brussels and Paris on mobilizing financial resources to the Green Climate Fund.

Finance has been one of the core topics of the Resilient Cities congress series that has been held in Bonn, Germany since 2010, including discussions around ICLEI’s White Paper released in 2011.

Related reading

• Webcast of Speech at the HABITATIII Mexico City Conference  (Session 2B – between 01:29:00 – 01:49:15)
• From Paris Agreement to HABITATIII – ICLEI´s highlights of 2016 Advocacy Agenda
• ICLEI Gears up to HABITATIII – February 2016 Update
• Financing urban development: ICLEI mobilizes at HabitatIII Thematic Meeting in Mexico City
• How to close the gap between finance and urban climate action?