Why Metropolitan Governance Matters - Turin School of ... · WHY METROPOLITAN GOVERNANCE MATTERS...
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WHY METROPOLITAN GOVERNANCE MATTERS
Daniela Glocker – Regional Development Policies Division (CFE), OECD
• Urbanisation trends in a global perspective
• The economics of urbanisation
• Why do we care about metropolitan governance
• What do we know about metropolitan governance
• How to build effective metropolitan authorities
Today’s Agenda
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URBANISATION TRENDS
2010
1990
IN A GLOBAL PERSPECTIVE
3
Urbanisation is proceeding at an
unprecedented scale
4 Source: UNDESA Population Division (2012), World Urbanization Prospects: the 2011 Revision
The world’s urban population is growing
at the fastest speed
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0
0.1
0.2
0.3
0.4
0.5
0.6
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0.8
0.9
1950-1970 1971-1990 1991-2010 2011-2030 2031-2050
Bill
ion
s
Number of new urban dwellers (1950-2050)
Developed countries
Developing &emerging countries inAsia
Developing &emerging countries inother regions
Source: UNDESA Population Division (2012), World Urbanization Prospects: the 2011 Revision
The speed of Asian urbanisation is
unprecedented
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1750 1775 1800 1825 1850 1875 1900 1925 1950 1975 2000 2025 2050
China, People's Rep. of
Bhutan
Lao PDR
Indonesia
Viet Nam
Asia and the Pacific
Europe
North America
Latin America andCaribbean
Number of Years from about 10% to 50% of Urbanization Rate
10% 49%210 years
9% 51%105 years
12% 51%150 years
11% 51%95 years
12% 50%90 years
12% 54%65 years
10% 52%60 years
10% 51%55 years
11% 51%61 years
Source: ADB estimates using Bairoch (2008) and UN(2012).
Urbanisation is accompanied by an
increase in the number of mega-cities…
Source: Montgomery, Mark (2015), presentation at the 1st JRC urbanization workshop 7
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97 102
33
238
431
3 6 12 2 22
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2 5 5 0 12 21
0
50
100
150
200
250
300
350
400
450
500
1950 2000 2025 1950 2000 2025
Number of cities by population size
Cities 1-5 million
Cities 5-10 million
Cities 10 million or more
More developed regions Less developed regions
…but mid-sized cities are still home to
the majority of the urban population
Source: Montgomery, Mark (2015), presentation at the 1st JRC urbanization workshop 8
50.2%
10.4%
21.2%
8.6%
9.6%
Urban population by city size
Fewer than 500,000
500,000 to 1 million
1 million to 5 million
5 million to 10 million
10 million or more
• What counts as urban?
– Denmark: Towns with more than 200 inhabitants
– Japan: Cities with more than 50,000 inhabitants
– Togo: 21 prefecture capitals defined in 1981
• The U.N. has data for 1779 cities that is based on
– 642 cities proper
– 974 urban agglomerations
– 163 metropolitan areas
Data can show us general trends, but needs to be used cautiously
A note about urbanisation data
Source: UNDESA Population Division, World Urbanization Prospects, 2014 9
THE ECONOMICS OF URBANISATION
10
Urbanisation alone is no guarantee for
economic success
Source: OECD calculations based on World Bank World Development Indicators (2014) 11
Economic performance and urbanisation from 1970-2005
Urbanisation and per capita GDP
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0%
10%
20%
30%
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50%
60%
70%
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90%
100%
% 20% 40% 60% 80% 100%
GD
P p
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ca
pit
a r
ela
tiv
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o t
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U
nit
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Sta
tes
Share of urban population
Mexico
Note: Data points by country and year (1980-2013). Vertical axis: Per capita income as share of U.S. value; Horizontal axis: Share of urban population. Source: OECD calculations based on World Bank World Development Indicators (2014)
Asia Latin America
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10%
20%
30%
40%
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60%
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% 20% 40% 60% 80% 100%
GD
P p
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pit
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nit
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Sta
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Share of urban population
Korea
Normalised variation in labour
productivity between metro areas
13 Note: Standard deviation of labour productivity across metro areas divided by mean labour productivity Source: OECD Metropolitan Database
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
Share of GDP growth from metro areas
Source: OECD Metropolitan Database 14
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Urbanisation can benefit economic
growth…
Productivity in cities increases with its population size
Source: OECD (2015), The Metropolitan Century 15
Larger cities have higher GDP per capita levels:
• They benefit from agglomeration effects – Larger local labour markets, faster spread of
ideas, more competition, more efficient use of infrastructure, …
– For a doubling in city size, productivity increases by 2% - 5%
• They have higher human capital levels
• They are often trade and transport hubs
• They offer opportunities for rent extraction
The economics of urbanisation
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Connectedness to cities also benefits surrounding regions
The economics of urbanisation
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• Large cities have benefits and costs…
• Overall, individuals generally benefit from living in well-functioning cities, and millions even choose to live in poorly functioning ones.
The economics of urbanisation
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Income inequality has increased most strongly in large cities
The economics of urbanisation
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WHY ARE WE INTERESTED IN METROPOLITAN
GOVERNANCE?
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What is a city?
Administrative boundaries are not the answer
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• Definition of Functional Urban Areas based on population density in 1km2 cells that are matched to municipal boundaries and connected via commuting patterns.
• Urban centres are identified by aggregating densely populated 1km2 cells. Urban centres with at least 50,000 inhabitants are kept.
• They are matched with the boundaries of the lowest administrative level for which statistical data is typically available (NUTS5/LAU2)
• Urban centres and the less densely populated municipalities in the commuting zone are combined into Functional Urban Areas based on commuting flows (>15%).
More info: OECD (2012) Redefining Urban http://measuringurban.oecd.org
Definition of functional urban areas
(FUAs)
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Horizontal administrative fragmentation is common as cities outgrow their historic boundaries (more than 10 local governments in 75% of OECD Metropolitan Areas; more than 100 in 22%).
This may lead to undesirable outcomes due to lack of cooperation and negative externalities.
Evidence from case studies points to administrative fragmentation indeed having negative effects.
This is confirmed by more systematic econometric evidence:
Ahrend, Farchy, Kaplanis and Lembcke (2014), “What Makes Cities More Productive? Agglomeration Economies & the Role of Urban Governance: Evidence from 5 OECD Countries”, forthcoming in Journal of Regional Science
Urban areas are highly fragmented
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What determines productivity in cities?
• Focus on cities’ size and their governance structures
• Evidence for 5 (+2) OECD countries: Germany, Mexico, Spain, UK and US; Netherlands and Japan
Empirical strategy: Two-step microdata based approach (Combes, Duranton and Gobillon, 2011) :
i. individual (Mincerian) wage regressions to estimate the differential productivity levels of cities, controlling for sorting (on observables)
ii. explain the differential city productivity levels found in the first step by regressing them on a number of city explanatory variables
What determines productivity in
urban areas?
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City productivity & administrative
fragmentation
Productivity increases by 2-5% for a doubling in population size
Productivity falls by 6% for a doubling in number of municipalities
(for given population size)
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WHAT DO WE KNOW ABOUT METROPOLITAN GOVERNANCE?
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• Data focuses on permanent structures of cooperation: – Do Governance Bodies exist?
– What are their powers, fields of work, budgets, staff numbers, etc.?
– Who is represented on them?
• Governance Bodies can be classified in four categories a) Organisations based on informal/soft-coordination
b) Inter-municipal authorities i. (Single-purpose)
ii. Multi-purpose
c) Supra-municipal authorities
d) Metropolitan Cities
OECD Metropolitan Governance Survey
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• Approximately 280 metropolitan areas with more than 500,000 inhabitants exist in OECD countries
• Two-thirds of them have some form of metropolitan authority
• Great variety in tasks and competencies
Metropolitan authorities
No metropolitan authority
31%
Metropolitan authority without
regulatory powers
51%
Metropolitan authority with
regulatory powers
18%
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• Established by state law • Covers 2.2 million inhabitants in 75 municipalities • Controlled by an assembly of municipal representatives • Budget 15 million Euro • 123 staff members • Municipalities pay 5.66 Euros per inhabitant
Facts and figures
• Creation and enactment of regional land-use plan that forms the basis for local land use plans
• Support of municipal administrations in technical issues • Regional economic development • European affairs • …
Tasks
Example for an effective inter-municipal
authority –
Regional association Frankfurt Rhine-Main
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Metropolitan Authorities: Fields of work
Three fields of work dominate 30
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
• Urban sprawl creates negative externalities in Metropolitan areas (MAs)
• Cooperation is a way to internalize the externalities when making policy decisions
Sprawl decreased in MAs with governance body, but increased in those without!
Governance bodies can reduce sprawl
Difference significant at the 99%-level after controlling for log-population levels and country specific trends.
-0.8
-0.6
-0.4
-0.2
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0.6
0.8
1
1.2
1.4
With GovernanceBody
Without GovernanceBody
Change in Urban Sprawl
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Governance bodies can increase
well-being
55%
60%
65%
70%
75%
80%
With TransportAuthorities
Without TransportAuthorities
Share of Citizens Satisfied with Public Transport
Citizens are more satisfied in MAs that have sectoral authorities for public transport
Those MAs have also lower pollution levels (PM)
Based on European Urban Audit perception survey. Difference significant at 95% level. 32
As previously mentioned, within countries, cities with fragmented governance structures have lower levels of productivity:
• For a given population size, a metropolitan area with twice the number of municipalities is associated with 5-6% lower productivity.
• Effect mitigated by almost half when a governance body at the metropolitan level exists.
Ahrend, Farchy, Kaplanis and Lembcke (2014), “What Makes Cities More Productive? Agglomeration Economies & the Role of Urban Governance: Evidence from 5 OECD Countries”, forthcoming in Journal of Regional Science
Governance bodies positively affect
economic productivity
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• Attempt to increase evidence about metropolitan governance bodies
• Survey sent to Metropolitan Governance bodies in selected countries
– Austria, Canada, France, Germany, Mexico, Netherlands, New Zealand, Sweden, Switzerland, United Kingdom, and United States; main criteria language
• Managed to get reply from 56 Metropolitan Governance Bodies (response rate 40%) – roughly a quarter of existing MGBs in OECD countries
2nd wave of OECD Metropolitan
Governance Survey
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Respondents by population size
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0%
5%
10%
15%
20%
25%
Frequency (%)
Higher population
0
Source: 2nd Metropolitan Governance Survey, n = 56
Is there a positive selection bias?
36 Source: 1st and 2nd OECD Metropolitan Governance Surveys
28.9%
54%
0%
10%
20%
30%
40%
50%
60%
1st Survey (Based onWebsites, n = 142)
2nd Survey (n = 56)
Share of MGBs with legislative or regulatory authority is higher…
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30.5
0
10
20
30
40
50
60
Median MGB Staff (Basedon Websites, n = 95)
2nd Survey (n = 56)
… but Median MGB staff is lower than the first survey
NB. Figures based on the same 11 countries (Austria, Canada, France, Germany, Mexico, Netherlands, New Zealand, Sweden, Switzerland, United Kingdom, and the United States)
Are better organised MGBs more likely to respond?
Los Angeles
London
Chicago
Dallas
Philadelphia
Munich
Dortmund
Hamburg
Miami Atlanta
Seattle
Stuttgart
Nuremberg
Cologne Leipzig
Orlando
Vienna
St. Louis
Frankfurt
Stockholm
Kansas City
Charlotte
Austin
Raleigh
Portland
Auckland*
Amsterdam
Basel
Cuernavaca
Cleveland
Edmonton
Ottawa-Gatineau
Edinburgh
San Luis Potosí
Mérida
Karlsruhe
Zurich & Louisville**
Gothenburg
Geneva
Dayton
Augsburg
Tuxtla Gutiérrez
Baton Rouge Grand Rapids
Utrecht
Charleston Oaxaca de Juárez Wichita
Madison
Wellington
Strasbourg
Saint-Étienne Peoria
Saarbrücken
1
10
100
1000
200,000 2,000,000 20,000,000
Number of municipalities
covered by MGB
MGB Population
Log 10 scale
Log 10 scale
Source: 2nd Metropolitan Governance Survey, n = 56 *Auckland Council is a single municipality ** These 2 cities have almost the same population size and number of municipalities.
linear regression line
Population and municipalities covered by
MGBs
MGBs with regulatory powers have larger
staff and higher per capita budgets
21.2
78
1.5
15.5
0
10
20
30
40
50
60
70
80
90
Median Budget, USD per capita Median Staff
Legislative/Regulatory Powers No Legislative/Regulatory Powers
Source: 2nd Metropolitan Governance Survey, n = 56
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Fields of activity of surveyed MGBs
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78.6%
66.1%
46.4%
25.0%
23.2% 23.2% 14.3% 12.5% 12.5% 8.9%
12.5% 17.9%
39.3%
21.4%
35.71%
12.50%
32.1%
1.8% 1.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Fields of activity of
surveyed MGBs
Primary Field Secondary Field
Functions of MGBs in Fields of Activity
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79% 64% 80%
36% 38% 38%
18%
80% 75% 77%
43% 43%
34%
34%
80% 70%
73%
34% 45%
46% 40%
0%
20%
40%
60%
80%
100%
PolicyFacilitation
Provision ofTechnicalExpertise
Monitoring &Data Collection
OperationalManagement
StrategicManagement
Allocation ofFunding
Legislative &Regulatory
Regional Economic Development Spatial planning Transport
43% 34%
45%
20% 18% 25% 21%
30% 23% 30% 21% 23% 18% 13%
52% 50% 52%
29% 34%
30%
10%
0%
20%
40%
60%
80%
100%
PolicyFacilitation
Provision ofTechnicalExpertise
Monitoring &Data Collection
OperationalManagement
StrategicManagement
Allocation ofFunding
Legislative &Regulatory
Water and Sewage Waste Culture
Source: 2nd Metropolitan Governance Survey, n = 56
Share of MGBs in a field with influence
on service provision and pricing
41
55% 52% 50% 49% 48%
43% 40%
17% 18% 16%
23% 20%
10% 13%
30%
0%
10%
20%
30%
40%
50%
60%
Characteristics of service provision Pricing of services
Source: 2nd Metropolitan Governance Survey, n = 56
MGBs' annual per capita budget and
staff for certain main fields of activity
42
4.5
26.4
33.6 30.5
103
126
0
20
40
60
80
100
120
140
Median (n = 56) Water & and Sewage Waste
Median Budget (USD per capita) Median number of Employees
Source: 2nd Metropolitan Governance Survey, n = 56
64.3% 60.7%
41.1%
33.9%
26.8%
17.9%
12.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Transfers -Interm. level
Transfers -Government
Transfers -Municipalities
Serviceprovision fees
Chargemember fees
Othersources**
MGB can levytaxes
Source: 2nd Metropolitan Governance Survey, n = 56; ** - EU funds, foundations, …
Sources of Funding of Surveyed MGBs
Median per capita budget (USD) by
source of funding
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3.9
12.0
3.4
25.4
6.4
21.2
373
0
5
10
15
20
25
30
35
40
45
50
Source: 2nd Metropolitan Governance Survey, n = 56
Role of different levels of governments
in establishing MGBs
62.5% 64.3% 42.9%
30.4% 16.1%
25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Local Governments(Municipalities)
Subnational Governments National Governments
A leading role A minor role
Source: 2nd Metropolitan Governance Survey, n = 56 45
Legal basis of surveyed MGBs
44.6%
23.2%
23.2%
7.1%
1.8%
Mandated by national/state law
National or State law, non mandatory
Voluntary but enforceable agreement
Entirely informal agreement
Home rule charter
Source: 2nd Metropolitan Governance Survey, n = 56 46
Year of establishment of MGBs
Share of each decade
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1.9%
5.6%
18.5%
14.8%
1.9%
18.5%
25.9%
13.0%
0%
5%
10%
15%
20%
25%
30%
1920s 1950s 1960s 1970s 1980s 1990s 2000s 2010s
Source: 2nd Metropolitan Governance Survey, n = 56
Policy coordination in metropolitan
areas
Coordination necessary between:
Great variety in approaches No one-size fits all solutions Appropriate tasks depend on local circumstances Different models within the same country can be
appropriate
between local governments
across different policy areas
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Metropolitan authorities
• Often controlled by national/intermediate levels of government
Transport planning
Land-use planning
Coordinated approaches • Non-binding coordination (e.g. Gauteng Spatial Framework,
South Africa, many MPOs, United States) • Joint modelling and data (e.g. ITLUP, United States) • Integrated authority (e.g. metropolitan cities in Korea, Stuttgart,
Germany) • National-government led planning (e.g. Copenhagen, Demark)
• Often controlled by the lowest level of government
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• Policies not only need to be coordinated across jurisdictions
• Coordination across policy fields is equally important
• In particular, land use and transport policies need to be coordinated in metro areas
– Both policy fields highly complimentary
– Good outcomes in one field only possible with good outcomes in the other field
Good governance for metro areas
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When considering metro governance reform, pay attention to the reform process
• Focus on the outcomes that are supposed to be achieved
• Encourage long-term cooperation between involved actors
• Compensate actors that lose from the reform
• Monitor outcomes of the reform to judge if it is effective
Good governance for metro areas
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HOW TO BUILD EFFECTIVE METROPOLITAN AUTHORITIES?
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Identify metropolitan projects to motivate collaboration
Build ownership among key stakeholders
Create reliable sources of metropolitan financing
Provide incentives and compensation for compromises
Implement a long-term process for metropolitan monitoring and evaluation
5 Steps for effective metropolitan
governance reform
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Identify projects to motivate
collaboration
• Creation of the Rhein-Main Transport Authority (Frankfurt 1995)
Integrated Public Transport System
• Creation of the Organisation for Planning and Environmental Protection (Athens 1985)
Olympic Games
• Creation of the Chicago Metropolitan Agency for Planning (2005)
GO TO 2040 Plan
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National government leadership!
Engagement of the civil society
Private sector backing
Support from intermediate levels
of government
Involvement of universities to
develop metropolitan strategies
Create ownership among key
stakeholders
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Own sources
Property tax
Income tax
Sales tax
Business tax
Congestion charges
Public transport fees
Parking fees
Transfers
Equalisation grants
Unconditional grants
Conditional grants
Capital finance
Development charges
Land-value capture
Concession
Bond issues
Ensure reliable sources of funding
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Every reform creates losers
Compensate them!
Provide incentives and compensation
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Examples Fiscal incentives
Greater flexibility in deciding how to cooperate
Greater political powers
It is never guaranteed that a reform succeeds
Specify objectives that are supposed to be achieved in advance
Monitor if progress towards the objectives is made
Adjust, if the reform is not effective in achieving desired outcomes
Metropolitan monitoring and evaluation
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THANK YOU CONTACT: [email protected]
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