Introduction to Smart Cities: Page 5 of 14

The drivers of smart cities

Powerful forces are converging to make smart cities a growing trend all around the world. It is valuable for city leaders to understand what’s behind this momentum and how it will play out in their region. Chances are some of the pain points described below will hit close to home.

Growing urbanization. Cities deliver many benefits – greater employment opportunities, greater access to healthcare and education, and greater access to entertainment, culture and the arts. As a result, people are moving to cities at an unprecedented rate. Over 700 million people will be added to urban populations over the next 10 years. The United Nations projects that the world’s cities will need to accommodate an additional 3 billion residents by the middle of the century. A recent UN report suggests that 40,000 new cities will be needed worldwide.

Growing stress. Today’s cities face significant challenges – increasing populations, environmental and regulatory requirements, declining tax bases and budgets and increased costs – at the same time many are experiencing difficult growing pains ranging from pollution, crowding and sprawl to inadequate housing, high unemployment and rising crime rates.

Inadequate infrastructure. Urbanization is putting significant strain on city infrastructures that were, in most cases, built for populations a fraction of their current size. Much of the developed world has infrastructure that is near or past its design life, requiring massive upgrades. For instance, in 2013 the American Society of Civil Engineers gave the United States an overall grade of D+ for its infrastructure. Meanwhile, much of the developing world has missing or inadequate infrastructure, requiring massive build-outs. The 2012 blackout in India that left more than 600 million people without electricity is a prime example; the country has inadequate power generation to meet ever-increasing demand. The bottom line? McKinsey & Company estimates that cities will need to double their capital investment by 2025, to $20 trillion from today’s $10 trillion per year.