default blog post image

Resiliant cities and the crash

The financial crash is developing a whole industry of responses that can tell us where we went wrong and what we must do to make our future more resilient, especially in our cities where so much of the crash is hurting. Finance and economics dominate this discussion. We believe that a better understanding of what makes cities work will help in this debate, especially how urban transport and energy are fundamental to how the urban economy works or doesn't. What caused the crash? Toxic loans are the target of most crash analysts. However although they locate the areas where these toxic loans were mostly taken up, they rarely show why these particular locations were so much more vulnerable to mortgage foreclosure. These locations were invariably in peri-urban areas which were often quite distinctly removed from the main metropolitan areas that developers assumed for the jobs and services of those living there. Whilst the post war suburbs are often called urban sprawl these areas could only be called urban scatter. These areas invariably had nothing other than houses, they had no real employment, shops or services, and transit was non existent. These were highly car dependent places where people had to travel long distances for anything. Such urban areas are highly vulnerable to the multiple problems of car dependence, particularly peak oil. In recent years their financial fragility has been pointed out through a number of studies which have shown that household budgets needed to find 40% of their income to pay for transportation. Large houses with big heating and cooling bills made it worse. Doubling and tripling of the oil price set in motion the end of so many toxic loans but they occurred mostly in areas where the land development was just as toxic. As the fall out from the toxic loans rolled across the US economy it began to pick up bad debt estimated at over $18 trillion - The Wall Street Journal estimates about 16% of Americans now own homes worth less than they owe. From there the crash spread out into the highly linked global economy, picking up similar kinds of debt in cities around the world and leading inevitably to the September 15th 2008 Wall Street crash. Peak oil over the next decade will ensure that fuel prices will rise again. The International Energy Agency are estimating oil will go into permanent decline of between 6% and 9% per year soon. Climate change will only exacerbate this trend away from highly fossil fuel-dependent urban and building design. As global governance on climate change sets in there will be increasing costs right through the housing and transport system that will further challenge the development of cities through high capacity roads, peri-urban scatter and large fossil fuel-hungry houses. Crashes in Urban History The coming of industrialism can now be seen to have occurred in a series of waves of technological innovation. These waves show the booms and busts of the economy based on technological systems that boom in the adoption phase and then bust as they reach limits. The first waves were based on water power, then coal and steam boilers, then electricity, then oil.... At each stage the city adapted to the new energy and transport system after they went through a crash based on the end of the previous system. The shift in oil prices has exposed the underlying vulnerability of highly car and oil dependent urban development from the Fourth and Fifth Waves. Once the fuel price increased, the loans which were used to form these suburbs became toxic. At the same time a more global limit was reached with climate change and the cities of the world faced a new limit whereby they must phase out all fossil fuels. Although not yet part of the main market place, the undermining of confidence in the long term future of heavily-fossil fuel dependent industry and land development, was already underway. The crash of September 2008 signals the end to the urban economy based around oil in particular but all heavily fossil fuel-dependent urban development as well. What is next? What is next for urban development? The Sixth Wave replaces oil and all fossil fuels with radical resource productivity eg 50 to 80 percent less fossil fuels by 2050 as many countries are now committed and which has been set as the goal by the International Panel on Climate Change (IPCC) through the United Nations processes. Critical to this will be fast electric rail with Transit Oriented Development as its focus for development in a poly-centric city and supplemented with electric vehicles. The new wave of industrialism also includes a new series of sustainability technologies related to renewables and distributed, small-scale water, energy, and waste systems (building on clever control systems and Smart Grids) all of which are more local and require far less fuel to distribute. We have called this the Resilient City in our new book from Island Press. At the transition point between the different waves, the crash was followed by a new boom. But the swing back was based around the new technologies (not based around propping up of the old systems). The 1890s depression was severe as the world's cities moved away from horses, wood and the first steam-based coal-fired industries into the much more extensive use of electricity, tramways and electric trains. Then the 1930's saw the transition to oil and motor vehicles with cities spreading out as though these could be used in limitless amounts. The 2008 crash signals that this era is over and the birth pangs of the new Resilient City are emerging in our cities - if we let it. ---------- Peter NewmanPeter Newman is Professor of Sustainability at Curtin University in Perth, Australia. He is the co-author of Cities as Sustainable Ecosystems, Green Urbanism Down Under, and Resilient Cities: Responding to Peak Oil and Climate Change.