The economics and attractiveness of Smarter Cities

(Photo of building work in Wembley from Mick Baker)

After a relaxing break over the festive season, I’m finally back up to speed with working life. It looks like an exciting year ahead; we’ve expanded our “Smarter Cities” team in the UK, and are working with some interesting clients and partners.

I met this week with the Bartlett Institute for the Built Environment at University College, London. We discussed how cities can make themselves “more attractive” places to live and work – a common priority of cities in the process of regeneration. A mixture of factors are involved such as lighting, education, the vitality of business and retail environments, transport, public safety and architecture. Technology isn’t central – but it’s going to be interesting to me as a technologist to see how it can play a role.

I’ve also been looking at how investment cases for Smarter Cities projects and transformations are constructed. A business partner commented recently that a good number – perhaps a majority – of Smarter Cities initiatives have been pilot projects rather than full-scale implementations; or have been part-funded by Government or EU Research programmes; or both.

There are exceptions, such as the London Congestion Charge scheme; that has an interesting mix of short-term return (it generates revenues that cover both investment and operating costs); longer-term economic benefits (by reducing congestion it lowers barriers to productivity, economic growth and job creation); and improvements to the city environment – it was an enabler for pedestrianisation in some areas.

A colleague of mine told me about the healthcare trust in Durham and Darlington that helped its local council pay for pavements to be gritted. It was “common sense” that by doing so they prevented people from slipping and thereby improved wellbeing and lowered treatment costs. Not everyone agreed with the practise – and one trust governor resigned in protest, particularly as there was no model to quantify and prove the benefits. Perhaps for the same reason, the practise has now stopped, a victim of public sector spending cuts.

It’s clear that we need new models and tools to calculate the financial, social and environmental costs and impacts of “Smarter” projects, so that we can build business cases and commercial vehicles for investing sustainably in them. Some of my colleagues were involved in a project to create such a model in Manchester – you can download a report on that project here after registering; and I spoke this week to another business partner who has been developing financial models in a similar space.

The UK Smarter Cities community is eagerly awaiting a decision by the Technology Strategy Board as to whether it will approve funding for a “Future Cities” Catapult centre; I have argued that a capability to construct such financial models should be a focus for such a centre if and when it is approved. I have my fingers crossed, and am hoping to hear news soon.

Building these models will bring challenges. For example, the pollution created by traffic congestion in cities has a measurable effect reducing life expectancy (see the reports here  and here ). So congestion charge schemes such as London or Stockholm should increase life expectancy. That’s clearly a wellbeing benefit – but financially speaking, it increases the costs of supporting the city’s population as it lives longer.

If we can get the models right, though, and evolve them to be usable by different cities for different Smarter City initiatives, then we may finally see the explosion in full-scale projects that we’ve been expecting – and that we’ll need to face the financial, demographic and environmental challenges facing us.