It is increasingly clear that the battle for environmental sustainability will be won or lost in cities. Over half of the world’s population now live in urban areas, a figure which will reach almost 60% by 2025. Already, cities account for a disproportionate share of greenhouse gas emissions. Issues of water and waste management in cities are inter-related with carbon ones, as well as having their own important impact on the environment and quality of life. As highlighted in this report’s predecessor, Megacity Challenges, the large cities of the world recognise these challenges andplace a high importance on environmental issues. However, if a choice needs to be made between the environment and economic growth, it is still the latter that often wins out.

This report describes a series of technological levers of varying effectiveness, and with different cost implications, which can all contribute to greater environmental sustainability in cities, focusing in particularon the example of London. In so doing, it aims to provide necessary clarity about these levers to policy makers, planners, businesses, consumers and concerned individuals—in short society as a whole. The encouraging message is that many of the levers to reduce energy and water consumption and improve waste management in urban agglomerations not only help protect the environment, but also pay back from an economic point of view.

City governments have recognised the challenge. Many are not only committed to change, but are working together. The C40 initiative and the Local Governments for Sustainability association (ICLEI), for example,aim to share best practice and exert joint influence. Cities do have certain natural advantages in their efforts. For example, the population density, which is the defining feature of urban life, provides efficiency opportunities in a host of environmental areas. Cities also have the flexibility to devise new ways to promote sustainable technological or behavioural change through a range of planning, policy and procurement instruments. Urban areas, particularly national or regional capitals, often house academic and industrial centres that shape technology and policy. Finally, their actions and strategies can attract the attention of, and affect the sustainability debate in, other cities andcountries, as well as among their own residents. In other words, they can be a laboratory of environmental sustainability. However, cities also face specific challenges. The very density that provides opportunities also causes problems, such as congested traffic, the trapping of heat by buildings, and a high share of the ground surface covered by man made materials, which makes sophisticated drainage essential. Moreover, as at any level of government,cities must balance environmental concerns and other development goals such as economic competitiveness, employment,and social services like public health and education. This need not alwaysinvolve trade-offs between these butit does at the very least involve resource allocationissues.

This report seeks, through a detailed analytical approach to available technologies, to help decision makers, both public and private, take informed decisions when navigating the opportunities and challenges they face. To do so, it introduces a methodology to:

• Quantify the current and likely future carbon, water and waste challenges of acity, using London in this instance as an extended case study;
• Put the challenges in perspective through comparison with the performance of other cities;
• Analyse the costs and improvement opportunitiesof different technological options;
• Finally, better understand the financial and other implementation barriers to these technologies, as well as highlight selected strategies to overcome them.

The report’s holistic perspective, rigorous quantification, common methodology applied to different areas of sustainability, and consideration of a comprehensive set of potential technological options for improvement– including their economic dimensions– make it unique. Its focus on some key determinants of urban environmental performance also provides insights for other mature cities. It does not pretend to simplistically “solve” climate change or other environmental challenges, issues replete with uncertainties as well as ethical, social and economic ramifications. We hope, however, that it will provide a useful tool to address some of the most urgent questions of today in a better way.

The Economist Intelligence Unit conducted a programme of interviews and wrote this report, based primarily on research conducted by McKinsey & Company.