G20-OECD Policy Toolkit to Mobilise Funding and Financing for Inclusive and Quality Infrastructure Investment in Regions and Cities

Abstract

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Financing Cities of Tomorrow

“…At the first G20 Finance Ministers and Central Bank Governors (FMCBG) under the G20 India Presidency, in Bengaluru, there was recognition of the potential of cities as centres of economic growth and the need to make cities inclusive, resilient, and sustainable. The FMCBG agreed to develop a set of voluntary and non-binding principles that reflect a shared understanding for financing cities of tomorrow (G20 FMCBG, 2023 [5]). They also agreed to share examples on innovative financing models to scale up private sector investment to address the infrastructure financing gap for creating future cities.…”

“…Before the NUPF, Master Plans in India were too detailed to accommodate the externalities emerging from rapid urbanisation of cities in the country. The plans were often 'unconnected to investment planning' 5 and missed linkages between the spatial and functional aspects required for expanding cities (Government of India, 2018, p. 12 [18]) Outlining recommendations in policy areas, such as urban planning, physical infrastructure development and municipal finance, the NUPF aimed at creating conducive mechanisms at national level to improve urban planning in cities by increasing the city's financial and operational capacity to attract private investments.…”

How can smart cities boost the net-zero transition?

“…Creating local cool islands can help reduce demand for air conditioning and therefore energy consumption in cities. It has been estimated that a 20% increase in green space can provide heat island reduction benefits by reducing local surface temperature peaks by 2°C (Emmanuel and Loconsole, 2015 [30]). Another example is the analysis of renewable energy generation potential such as solar power.…”

Multi-level governance and subnational finance in Asia and the Pacific

“…Subnational governments are often at the forefront of climate adaptation and mitigation, meaning that they need to have the fiscal space and institutional capacity to take climate adaptation and mitigation actions. In OECD countries, for example, they are responsible for 63% of climate-significant public expenditure and 69% of climate significant public investment (OECD, 2022 [15]). Many countries in Asia and the Pacific are particularly prone to climate risks (OECD, 2016 [2]).…”

“…The bulk of subnational government expenditure goes to education, general public services and economic affairs Subnational expenditure is highest for education, economic affairs and general public services 15 in terms of GDP (Figure 12). Subnational expenditure in education represents 2.4% of GDP on, followed by economic affairs (2.1%) and general public services (1.7%).…”