Land Use, Energy Prices and Sustainability
Keynote Address by Richard M. Rosan
President, Urban Land Institute Worldwide
American Chamber of Commerce in Hong Kong
July 8, 2008
Good afternoon! It is a pleasure to be with you today. I’d like to start with a little background on the Urban Land Institute for those of you who may not be familiar with the expanse of our global reach. The mission of ULI is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide.
ULI was founded in the United States in 1936 as a non-profit research and education institute. We began with about 200 members in the U.S., and we now have more than 40,000 members worldwide, with offices in Washington, DC, London, Hong Kong and Los Angeles.
We have decentralized our operations into three main regions—The Americas; North Asia; and Europe and the Middle East, Africa and India (which we call EMEA). This is greatly enhancing our ability to be effective globally by being relevant locally.
Our Institute continues to attract professionals from increasingly varied aspects of the land use. In addition to developers, ULI members are financiers, investors, urban planners, architects, landscape architects, urban designers, traffic engineers, academics, industry analysts and a growing number of public officials. Given this cross-section of disciplines, and our ongoing geographic expansion, ULI reflects the diversity and inter-disciplinary nature of the land use industry.
We are constantly striving to position ULI as a global source of best practices in land use, expanding opportunities for our members to learn from all parts of the world. To maintain the momentum of ULI’s global expansion, we are sponsoring more meetings such as this one to offer opportunities for all of us to learn from other countries on what works and what doesn’t. It’s our way of continuing the dialog on improving the economic, social and environmental well-being of cities worldwide.
I would like to take a few minutes to discuss an issue I believe will have a permanent impact on the land use industry. That is the pursuit or more sustainable cities. Of course, in the United States and Western Europe, of immediate concern is the wide-ranging impact of the capital market crisis, housing price decline, and a large number of home foreclosures. Most industry observers expect this to continue through 2009 before any improvement is seen. But, while the ramifications of the credit tightening are great, I do not believe the capital market situation will create lasting change in development patterns.
In my view, the factors that will cause lasting change are the irreversible rise in energy costs, demographic shifts that are resulting in smaller households, the overall aging of the population, and concerns over climate change. All of these factors are contributing to a greater focus on sustainable design and development. I am convinced that the pursuit of cities that are greener, healthier—and which have a lower carbon footprint—will forever change the way we plan, design and develop.
In the United States, gas prices are already causing a shift in consumer attitudes. More people are realizing the high costs of a car-dependent lifestyle. Consumers in the U.S. spend an average of 60 percent of their annual incomes on housing and transportation combined, and in many areas, transportation costs are higher than housing costs.
As a result, we are already seeing an increase in mass transit use and other alternatives to cars, such as more biking. People are rethinking how much and where they drive, and they are consolidating more trips to save gas. Sales of compact cars and hybrids are up, and sales of large gas-guzzling SUVs and trucks are down.
This response to gas prices is occurring at the same time as concern is growing over global warming. And certainly, the steps people are taking to save money on fuel are the type of steps that are needed to help reduce carbon emissions.
But, it’s not enough. To really make a dent in climate change, transportation and land use strategies must be combined in a way to produce development that saves both land and energy. ULI recently published a book, Growing Cooler: The Evidence on Urban Development and Climate Change. This book is one of the first to document how development that reduces the need to drive can result in lower carbon emissions. The lesson it shares is that climate change can only be addressed through a combination of more fuel-efficient vehicles and efficient land use that mitigates traffic congestion by minimizing driving. It shows how land use can be part of the solution to climate change, rather than part of the problem—and that is a message that we at ULI are reinforcing worldwide.
Currently, there is some debate in the U.S. about whether gas prices will trigger a movement away from far-flung suburbs and closer to downtowns. Personally, I believe the notion that people will rethink where they live does have some merit. Certainly, some of the greatest home price drops we are seeing now have occurred in the outlying areas. But, I am not sure that a massive relocation away from those areas will ever occur. I believe that the majority of growth in our urban regions will continue to be in the suburbs.
The current U.S. population is a little more than 300 million, and it’s projected to rise nearly 50 percent by 2050. Most of that growth will be in the South, Southwest and on the West Coast. It will be nearly impossible to accommodate that level of growth just in close-in neighborhoods and downtowns. However, what is very likely is a greater demand for development that is less spread out and better connected, regardless of where it is located.
Sustainable development is not a downtown versus exurb issue. It’s about pursuing more sustainable land use models on a region-wide basis…models that reduce auto dependency and enhance quality of life. It’s about combining employment, retail and housing, and combining land use planning and transportation planning so that entire regions function more efficiently. Demand will grow—in both inner and outer suburbs—for development that offers a variety of options in housing choices and for getting around.
Changing household composition will be a major factor in this. ULI recently released a Global Demographics report, which tells us that aging is the world’s most dramatic demographic trend. It says that by 2030, one in eight of the earth’s population will be over 65 years of age. This certainly raises opportunities for senior communities in markets worldwide.
And in the U.S., the report says that housing choices will be dramatically influenced by both the aging of baby boomers and the “coming of age” of Generation Y, the children of baby boomers who are starting to enter the housing and jobs market. These two major market sectors are contributing to a significant increase in the number of childless households. As a result, the report predicts higher demand for denser, more compact development in both the retirement and workforce housing categories.
I should make one more point about this younger generation. Gen Y places a high priority on convenience, access, and on being green. As a result, they don’t need to be convinced of the benefits of development that combines uses and has transit connections. They like living in close proximity to friends, entertainment and work. They think in terms of mixed-use. They think in terms of transit. They think in terms of shared common space. They think in terms of reducing carbon footprint. And, how they think is indicative of the future for the built environment.
The confluence of all these factors—rising energy prices, demographic changes, market demand and climate change are all elevating the dialog on sustainability. At ULI, we take a broad approach to sustainability as it applies to community building. This means we believe true sustainability can only achieved if it takes into account economic, social, and environmental aspects. Our program of work includes a wide variety of publications, forums, advisory panels, educational workshops and recognition programs that focus on various aspects of sustainability.
Most recently, ULI and the Financial Times jointly sponsored a Sustainable Cities Awards program. What distinguished this recognition program from others is that it highlights sustainable land use programs that exhibit new ideas and perspectives for future practice, rather than simply celebrating past achievements.
In this first year of the awards, we had nine global winners. I am very pleased to tell you that the New Songdo City Master Plan in South Korea was one of those winners. It is an extraordinary scheme that applies state-of-the-art green practices in urban design, engineering, construction, infrastructure and energy systems. Outside of New Songdo, the other Sustainable Cities winners were all from the United States. Frankly, we were surprised, because the United States is not generally considered a world innovator in sustainable design and development.
But, what we found in all the winners was a commitment to quality and sustainability that is very encouraging. They are at the forefront of design and development techniques that are land efficient and energy efficient. Their work in this area illustrates that sustainability has become a top priority for individuals, companies, cities and countries around the world.
Of course, the ability of our urban areas to grow in a sustainable manner will be challenged by population growth and urbanization. For the first time in human history, more people now live in cities than in rural areas, towns or small villages. This urban aggregation will continue throughout the 21st century.
By 2025, the United Nations projects that 90 percent of the world’s population—which by then will be nearly 8 billion people—will be living in urban areas. Even sooner—by 2015—seven of the world’s ten largest urban agglomerations will be on the Asian continent and will be home to more than 15 million people each: Tokyo, Mumbai, Delhi, Shanghai, Kolkata, Dhaka, and Jakarta. By 2030, Indonesia’s urbanization will approach that of Japan.
Asia will incur half of the world’s population growth during this time, particularly due to an extraordinary increase in the populations of India, Pakistan, Bangladesh, and other countries in Southeast Asia. While population increases in the U.S. will be steady, they will still rank a distant third compared to India and China. In contrast, Europe’s share of the world’s population will drop during this time, as its population shrinks by 40 million. One of a few exceptions is the United Kingdom, which will see an increase due to immigration.
It is clear that this trend of urbanization and population changes will continue to place enormous pressure on cities worldwide. How our cities are developed, how they welcome new residents, how they accommodate all income groups, and how they use energy and natural resources are becoming more and more crucial to urban sustainability.
In closing, I would like to emphasize that we keep moving forward with the discussion on sustainability. I see the current focus on green and sustainable building as just the beginning of a revolution in the design and development of the built environment. These are very promising times for our organization and the industry in general. Clearly, we have entered an exciting new era for our built environment.
Thank you.