OECD urban-relatedwork

OECD URBAN-
RELATED WORK
Rudiger Ahrend,
Head of Urban Programme
Public Governance and Territorial Development
Brussels, DG Regio & Urban 16/11/2016

• Internationally comparable cities
• Urbanisation and its consequences
• Productive Cities
• Metropolitan Governance
• Rural-Urban linkages
• Inequality / inclusive growth
• Well-being
• Land use
• National Urban Policy
OUTLINE
2

INTERNATIONALLY
COMPARABLE CITIES
3

Administrative boundaries are not the
answer
4

• 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
A functional definition for cities
(EU/OECD)
5

6
Looking at economic agglomerations:
15 Megacities and a different “top 20”
FUAs Statutory cities
City Population (millions) City Population (millions)
Shanghai 34.0 Shanghai 22.3
Guangzhou 25.0 Beijing 18.8
Beijing 24.9 Chongqing 15.7
Shenzhen 23.3 Tianjin 11.1
Wuhan 19.0 Guangzhou 11.1
Chengdu 18.1 Shenzhen 10.4
Chongqing 17.0 Wuhan 9.8
Tianjin 15.4 Dongguan 8.2
Hangzhou 13.4 Chengdu 7.4
Xian 12.9 Foshan 7.2
Changzhou 12.4 Nanjing 7.2
Shantou 12.0 Xian 6.5
Nanjing 11.7 Shenyang 6.3
Jinan 11.0 Hangzhou 6.2
Haerbin 10.5 Haerbin 5.9
Zhengzhou 9.7 Shantou 5.3
Qingdao 9.6 Jinan 4.3
Shenyang 7.7 Zhengzhou 4.3
Wenzhou 7.6 Changchun 4.2
Nanchang 7.4 Dalian 4.1
Source: OECD Urban Policy Report China, based on clculations of NBS data, via IPLE/CASS for the FUAs; NBS data from the China Statistical Yearbook 2010.
FUAs and statutory cities, 2010 – total population

URBANISATION AND ITS
CONSEQUENCES
7

8
The 21st century is witnessing
urbanisation on an unprecedented scale

9
Urbanisation alone is not enough for
economic development

• 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.
10
Are cities good for their residents?

12
Why do we care about productivity
in cities?
• A country’s productivity is, in large part, determined by
the productivity of its cities.
• Large urban agglomerations account for over 50% of total
GDP while taking up less than 5% of total surface area.
• GDP per capita increases with city size: for a doubling of
city size by roughly 16%.
• This is in part a result of higher participation rates in
cities. Another part comes from sorting, as better educated
individuals have a tendency to live and work in larger
cities.
• However, productivity also increases even when
controlling for sorting.

13
Bigger cities are more productive

• Sources of agglomeration from Marshall (1890); reviews by Rosenthal and
Strange (2004), Puga (2010); concepts already present in Marshall (1890).
• Thicker labour markets: labour market pooling; better matching
• gain from reduced labour acquisition and training costs in thick local labour
markets with abundant specialised labour force
• Sharing facilities, inputs, gains from specialisation
• firms may face lower costs for specialised non-traded inputs that are
shared locally in a geographical cluster.
• Knowledge spillovers
• face-to-face contact can enable tacit knowledge spillovers through
increases in the intensity of the interactions with other firms or
individuals
• Probably also : Connectivity, Knowledge based capital 14
Sources of agglomeration benefits

City productivity increases with city size
even after controlling for sorting
15

Heterogeneity: bigger is better
16
Spain
United States

Heterogeneity: borders matter(ed)
17
Germany
Mexico

Heterogeneity: distance matters
18
Netherlands
United Kingdom

Netherlands
Heterogeneity: distance matters
19
excluding FUAs that border a metropolitan area (light blue)
United Kingdom

Distance matters - Productivity
differentials and distance to London
20
Scotland

• The productivity increase associated with increasing a
city’s population are in the order of 2-5.0% for a doubling
in population size.
– This implies, e.g., that moving from a city of roughly 50000
inhabitants to the Paris agglomeration – on average - increases
productivity by an order of magnitude of 20%.
• Smaller cities can “borrow” agglomeration benefits
• Human capital (spill-overs)
– 10 percentage point increase in university graduates increases
productivity by 3% through human capital externality
– Direct effects are even a lot larger
21
What makes cities rich?

• Adequate governance structures with administrative
functions carried out at the “right” level
– Low fragmentation at metropolitan level; governance bodies
• Position of hub for trade or financial flows or status as
national capital can facilitate rent extraction
– Port cities 3% more productive
• Specialization in certain types of activities
– Cities with higher share of manufacturing, finance and business
services (or high tech) have higher levels of productivity.
– Potential trade-off specialisation vs. resilience (especially for
smaller cities)
• Good (in particular) public transport infrastructure
prevents fragmented labour markets
22
What makes cities rich?

23
Percentage of Sydney jobs reached in
60 minute journey by public transport
Source: Kelly / Mares 2013

24
Percentage of Sydney jobs reached
in a 45 minute journey by car
Source: Kelly / Mares 2013

Higher productivity comes with higher prices
25
– Overall, gains from agglomeration, but local purchasing
power does (on average) not increase with city size
Agglomeration benefits and local price levels in Germany

• Local purchasing power varies widely around the
average, and amenities can explain a significant share of
the variation
• Residents are willing to pay for local amenities
– Proximity to large bodies of water (coast or lake), cultural attractions
(theatres/operas/etc.) and UNESCO World heritage sites make cities
relatively more expensive
• Disamenities require compensation
– PM10 air pollution reduces local price level relative to productivity
benefits
• More educated individuals appear to be willing to pay
more for amenities; also, the share of university educated
workers seems to be a local amenity in itself.
Differences in local purchasing power
are partly driven by amenities
26

Metro governance reforms in the OECD
have accelerated in recent decades
Number of metropolitan governance structures created or
reformed in the OECD, by decade
0
5
10
15
20
25
30
35
40
45
50
1951-1960 1961-1970 1971-1980 1981-1990 1991-2000 2001-2010

Recent country-wide metro governance
reforms across the OECD
Turkey: creation of
metropolitan provinces
Australia: regional-led
initiatives to create metro
governance bodies
France: new governance
structures for the 14 biggest
urban areas
United Kingdom: “city deals” incentivise
cities to improve metro cooperation
Italy: 10 provinces become
metropolitan cities (città
metropolitane)

• Growing recognition that administrative
boundaries are often outdated and don’t
match the functional realities in
Metropolitan areas
• Evidence that excessive municipal
fragmentation hampers metropolitan
economic performance and wellbeing
What are the drivers of metropolitan
governance reforms?
30

Why do we care about
Metropolitan governance?

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
32

Degree of administrative fragmentation
in large OECD Metropolitan areas
33

City productivity & administrative
fragmentation
34
• 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)

35
Less fragmented urban agglomerations
have experienced higher economic growth

Higher administrative fragmentation is associated with higher
segregation of people in different municipalities
36
Hypothesis: Fragmented metropolitan governance can facilitate
segregation at the level of local units.
-.05
0
.05
.1
.15
0 .2 .4 .6 .8 1
Administrative fragmentation
Controlling for
country fixed effects
and other city
characteristics (i.e.
income , population,
spatial structure),
higher administrative
fragmentation is
associated to higher
spatial segregation by
income in different
municipalities

What do we know about

• 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%

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
MGBs with regulatory powers have larger
staff and higher per capita budgets

Fields of activity of surveyed MGBs
40
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

3.9
12.0
3.4
25.4
6.4
21.2
373
Transfers -
Subnational
level
Transfers -
Government
Transfers -
Municipalities
Service
provision fees
Charge
member fees
Other
sources**
MGB can levy
taxes
Median per capita budget (USD) by source
of funding

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
Role of different levels of governments
in establishing 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
Legal basis of surveyed MGBs

What are the effects of

• 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
0
0.2
0.4
0.6
0.8
1
1.2
1.4
With Governance
Body
Without Governance
Body
Change in Urban Sprawl

Governance bodies can increase well-being
55%
60%
65%
70%
75%
80%
With Transport
Authorities
Without Transport
Authorities
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.

• 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.
47
Governance bodies positively affect
economic productivity

Space matters: proximity to cities benefits
surrounding rural & intermediate regions
49

Sources of catching-up: proximity to
cities
50
Rural remote regions present a higher variation in productivity growth rates than other types of regions
Annual average
labour productivity
growth, 2000-12
Standard deviation
Coefficient of
variation
Predominantly
urban
1.01% 1.02%
1.019
Intermediate 1.07% 1.09% 1.024
Predominantly
rural close to
cities
1.36% 1.32% 0.972
Predominantly
rural remote
0.70% 1.15%
1.641
Note: Labour productivity is defined as real GDP per employee. GDP is measured at PPP constant 2010 US Dollars, using SNA2008
classification; employment is measured at place of work. The coefficient of variation represents the ratio of the standard deviation
over the mean.
Source: OECD Regional Outlook 2016

 The variability of
growth rates is much
higher in rural areas
than for the other types
of region.
 Part of this
variability can probably
be explained by looking
at the role of the
relationships with
Urban or Intermediate
regions (urban-rural
linkages).
-.4-.2
0
.2.4.6
Urban Intermediate Rural
Population growth rates (2000-2009) in OECD TL3 regions, by typology
U.S., Canada, Chile, Mexico, Israel and Iceland are excluded from the analysis for
reasons of data availability
Rural regions show the highest variability
in population growth and positive growth
for close to a urban areas
51

Why are we interested in urban-rural
partnerships?
 Rural and urban areas are interconnected through
different linkages (commuting, provision of amenities,
transportation, economic transactions etc.)
The way these linkages are governed has an impact on the
economic development and people’s wellbeing both in urban
and rural communities
 Better understanding of interdependencies (unit of
analysis = self-contained space of relationship, functional
region)
Design governance solutions to facilitate an integrated
approach that improves the outcome of the rural-urban
partnerships 52

• Facilitates production/sharing of public goods (good for
economy & well-being)
• Helps with joint financing where adequate, as well as with
exchange of information and experience. The latter
exchange contributes to building up local capacity, in
particular in smaller communities.
• Given their complementarity, a stronger integration
between cities and their surrounding rural areas can
strengthen the position in the competition among regions
as well as globally.
Benefits of rural-urban cooperation
53

• Allows to reduce negative externalities between urban &
rural areas. In particular, in functionally (but not
administratively) integrated regions, a lack of coordination
of spatial planning can have strong negative consequences,
including sprawled out settlement patterns.
– drive up the cost of basic infrastructure provision & create
multiple other problems (e.g. congestion).
• Large variation of situations:
– Functional regions already acknowledged formally as planning
regions and endowed with planning instruments
– Functional regions acknowledged as planning regions
– Functional regions not endowed neither with management
instruments nor with planning instruments
Benefits of rural-urban cooperation
54

High heterogeneity of approaches to rural-
urban cooperation
The governance model of Rurban partnerships varies on the
basis of different issues
a) Management oriented vs. project oriented
b) Flexibility of the boundaries
c) Main objectives and domains of intervention
d) Single purpose vs. holistic approach
e) Top down vs. bottom-up processes
f) National framework (degree of formal
acknowledgment)
55

INEQUALITY AND
INCLUSIVE GROWTH
56

Productivity growth of “frontier” regions
outpaces that of most regions
Notes: Average of top 10% (“frontier”) and bottom 75%/10% (“lagging”) TL2 regions in each year. Top and bottom regions are the aggregation
of regions with the highest and lowest GDP per worker and representing 10% of national employment. 19 countries with data included.
OECD (2016) OECD Regional Outlook 2016: Productive regions for inclusive societies, http://dx.doi.org/10.1787/9789264260245-en
50 000
60 000
70 000
80 000
90 000
100 000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
USD PPP per employee
Frontier regions Lagging regions 75% of regions
1.6% per year
1.3% per year
1.3% per year
60% increase in
the gap from
1995-2013
57

Source: Bartolini, D., S. Stossberg and H. Blöchliger (2016), "Fiscal Decentralisation and Regional Disparities",
OECD Economics Department Working Papers, No. 1330, http://dx.doi.org/10.1787/5jlpq7v3j237-en.
Convergence of countries vs.
divergence of regions in the OECD
GDP per capita dispersion
is now greater within
countries than between
countries
58

Income inequalities are large within metropolitan areas and bigger
cities are on average more unequal
59
Metropolitan population and income inequality, circa 2014
(controlled for income levels and country effect)
Calera
San Fernando
Linares
Quillota
Ovalle
Melipilla
San Antonio
Punta Arenas
Calama
Curicó
Osorno
Valdivia
Copiapó
Iquique
Los Angeles
AricaChillán
Puerto Montt
Talca
AalborgOdenseRancagua
Antofagasta
Temuco
Coquimbo-La Serena
Aarhus
Toledo
Akron
Saint-Etienne
Irapuato
Venezia
Pachuca de Soto
Toulon
Bari
Gent
Durango
Harrisburg
Madison
Wichita
Celaya
Linz
Little Rock
Graz
Des Moines
Charleston
Catania
Columbia
Montpellier
Richmond
Colorado Springs
Baton Rouge
Grenoble
Malmö
Benito JuárezRennes
Rouen
Albany
Providence
Genova
Grand RapidsSaltillo
Firenze
Reynosa
Oaxaca de Juárez
XalapaLiège
Tuxtla Gutiérrez
Bologna
Strasbourg
Dayton
Tampico
VeracruzHermosillo
McAllen
Acapulco de Juárez
Chihuahua
El Paso
Nice
Morelia
Culiacán
Omaha
Nantes
Centro
Cuernavaca
Göteborg
Albuquerque
Concepción
Tulsa
Mexicali
Palermo
Birmingham
Aguascalientes
Valparaíso
Tucson
Buffalo
FresnoFort Worth
AntwerpenRaleigh
Norfolk-Portsmouth-Chesapeake-Virginia beach
Querétaro
Bordeaux
New Orleans
Clearwater/Saint Petersburg
San Luis Potosí
Luisville
Toulouse
JacksonvilleOklahoma city
Salt Lake City
Nashville
Memphis
Torreón
Mérida
Juárez
Lille
Pittsburgh
Tampa
Charlotte
Tijuana
León
Milwaukee
Indianapolis
Marseille
Austin
Cleveland
Torino
Columbus
Lyon
Toluca
Kansas City
Cincinnati
Stockholm
Las Vegas
Copenhagen
Baltimore
Sacramento/Roseville
San Antonio
Orlando
Puebla
Portland
Bruxelles / Brussel
Denver
Saint Louis
Wien
SeattleSan DiegoBoston
Minneapolis
Philadelphia
DetroitNapoli
Roma
Phoenix
Milano
Monterrey
Atlanta
Guadalajara
Dallas
Washington
Miami
Houston
Santiago
San Francisco
Chicago
Los AngelesNew York
Mexico City
.05
.1
.15
.2
.25
10 12 14 16 18
Ln of total metropolitan population

Top income households tend to segregate the most in
neighbourhoods, in Canada, France and US; while bottom income
households in the Netherlands
60
Spatial segregation by income, neighbourhood scale (entropy index)

Why look at well-being at local level?
A framework for measuring local well-being
62
- Measures well-being where
people live (the importance of the
scale e.g. functional urban areas or
city-regions)
- Focus on outcomes rather than
output
- Multidimensionality
- Focus on distributions of
outcomes
- Assess how well-being changes
over time (resilience, sustainability)
- It considers that well-being can be
manageable to change by citizens,
governance and institutions
Main features

Well-being outcomes can be very different across
cities in the same country
Income
• 33,500 USD household
income between Washington
D.C. and McAllen (around
30,000 USD among OECD
countries)
• Gini index of household
income between Celaya and
Mexico City 0.12 (around
0.24 among OECD countries)
Jobs
• 17pp in the unemployment rate
of Las Palmas and Bilbao (23pp
among OECD countries)
• 36pp in the employment rate
between Firenze and Palermo
(32pp among OECD countries)
Environment
• 23 mg/m3 in the level of air
pollution (PM2.5) between
Cuernavaca and Mérida (21
Differences between
highest and lowest
values in
metropolitan areas
Education
• 21pp in the share of workforce
with tertiary education between
The Hague and Rotterdam (26pp

Life expectancy is not homogeneous within cities
Differences across municipalities within the same city-region can go up to
more than 5 years (Copenhagen)
64

GOVERNANCE OF LAND USE
65
HTTPS://YOUTU.BE/JUV3GEVERB4

• Need to find a balance between sustainability,
liveability and affordability
• Formal planning instruments can be slow to
respond to change and foster innovation
• Policies outside of the planning system need to
be aligned with land use objectives—particularly
subnational finances and tax policies
Land use policies to foster green and
inclusive growth

0
5000
10000
15000
20000
25000
30000
35000
Property
(buildings,
infrastructure)
Land Machinery &
Equipment
Inventories Other natural
resources
Intellectual
property
Other non
financial
assests
Cultivated
biological
resources
Land and property are by far the most
important forms of capital
Disaggregated capital stock (six-country sample)U$ billion PPP
Note: Data includes Australia, Canada, Czech Republic, France, Japan and Korea.
Source: OECD National Accounts Table 9B

The amount of developed land per capita in
urban areas differs across the OECD
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Developed land per capita in urban cores (in m²) Developed land per capita in commuting zones (in m²)
Source: OECD calculations based on Corine Land Cover and National Land Cover
Database
Developed land per capita in urban areas
*All data is based on the OECD definition of Functional Urban Areas (FUAs)

Land use in urban cores and commuting
zones in Europe
Urban Cores
0
102030
0 200 600400 800 1000
0
102030
0 200 600400 800 1000
Numberofmetropolitanareas
Developed land per capita in m² Developed land per capita in m²
Commuting zones
Source: OECD calculations based on Corine Land Cover data

Developed land is growing everywhere…
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Annual % growth of developed land in commuting zone Annual % growth of developed land in core
Annual growth rates of developed land between 2000 and 2012
Database

-1.0%
-0.8%
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
Annual percentage change in developed land per capita 2000 - 2012
…but per capita land use is declining in
many countries
Per capita growth of developed land in functional urban areas (cores and
commuting zones combined)

Car use is lower in denser regions
0.025ha0.018ha
0.14ha
1ha
0 30 60 90 120
Number of vehicles per 100 inhabitants
European TL3 regions Estimated relationship
Source: OECD calculations based on Corine Land Cover and National Land Cover Database
Note: The positive relationship between land cover and car ownership is robust to controlling for per capita
GDP levels and country fixed-effects.
Regions with 10% less developed land per capita have 0.75 fewer
cars per 100 inhabitants

Housing costs have risen strongly in most
OECD countries
Inflation-adjusted property prices (1995=100)
0
50
100
150
200
250
300
350
400
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Australia Belgium Canada Switzerland Germany
Denmark Spain Finland France United Kingdom
Ireland Italy Japan Netherlands Norway
New Zealand Sweden United States Average
Sweden
Japan
Ireland
UK
Germany
Norway

Restrictive land use policies can lead to
rising housing costs
Annualchangehouseprices
(2000-2012)
Annual change in developed
land per capita (2000-2012)
• Land use regulations
should aim to
prevent sprawl…
• …but have to provide
sufficient space to
construct housing
for growing
populations
• Otherwise, housing
costs rise
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
-1.0% -0.5% 0.0% 0.5% 1.0%

Very little densification is taking place
• Very little densification of building stock on-going since 2000
• Less than 0.01% of developed land in data has changed to a
higher density class in Europe; less than 1% has changed in the
U.S.
• Caveat: existing data not ideal to measure density; only two
density classes for Europe; four density classes for the U.S.
Europe United States
Densified
land since
2000/01
Land with constant
density since 2000/01
Database

• Many cities have densities similar to when
they were much smaller
Low density neighbourhoods that were once at
the urban fringe are now within urban cores
without having densified
• Sufficiently high densities are needed to
adapt urban form, allow for efficient public
transport and build housing for greater
populations
• Public spaces need to be of high quality in
denser environments to ensure well-being
Sufficiently high density of high quality
is needed

How to make planning more flexible and
foster good land use?
How land is used
Public policies aimed at steering
land use
• Spatial planning
• Transport planning
• Land use planning
• Environmental regulations
• Building code regulations
Public policies not targeted at
land use
• Tax policies
• Transport taxes and subsidies
• Fiscal systems and inter-
governmental transfers
• Agricultural policies
• Energy policies
How land is permitted to be used How individuals and businesses
want to use land

Fiscal and tax systems incentivise:
i. local governments’ planning policies
ii. land use decisions by firms and
individuals
Incentives need to be better aligned with
land use objectives
Aligning fiscal and tax incentives to land
use objectives

Examples: How fiscal and tax systems
influence land use
In some countries, local
governments obtain a large share
of revenues from business taxes
Local governments have
incentives to allocate as much
land as possible to commercial
uses to maximise tax revenues.
In some countries, ownership of
single-family homes receives
preferential tax treatment
Residents have incentives to live
in low-density neighbourhoods in
sub-urban areas

Examples: How fiscal and tax systems
influence land use
Agriculture is heavily subsidised
across most of the OECD
Without subsidies, agricultural
land uses would change
Many countries make expenses
for commuting by car tax
deductible
Lower costs of commuting
provide incentives to live further
from the place of work (often in
peri-urban areas) and increase
car reliance

Key message: Need to pay greater attention
to incentives
• By paying greater attention to the incentives
that public policy provides for land use,
planning can become less restrictive and
more effective
• Taxes and fiscal systems matter most
• Regulatory and economic instruments need
to be combined
 Effective governance mechanisms are a
prerequisite for a successful
implementation

Incentive-based land use policies
require monitoring and evaluation
• The use of fiscal instruments to steer land use
can result in land patterns that are more
desirable but at the same time less
predictable
• Systematic evaluations of land use policies
are lacking
• Knowledge about evaluation practices is rare
– data on land use and land use regulations is
scarce

• Most people live in cities. Governments that ‘get cities right’ can
improve overall well-being.
• Cities are also complex dynamic systems, in which the actions of
households and firms, as well as the interactions among different
strands of public policy, typically have large positive or negative spill-
over effects on others.
• Cities affect national economic, environment and social outcomes.
 Cities provide opportunities for higher levels of government to
address these in a coherent, integrated way.
84
National Urban Policy Frameworks: Why
are they needed?
Density of settlement and activity implies greater
policy complexity and greater need for policy co-
ordination, particularly in periods of dynamic change.

• National policies affect urban development
 National legislation establishes the ground rules for cities.
 National governments intervene directly in a large number of
policy domains that affect cities – yet explicit national urban
policies are often narrowly conceived.
 Inter-municipal co-ordination needs support from above.
• Major domestic policy challenges require a multi-level approach:
 Neither cities nor national governments alone can address the
main competitiveness challenges.
 Environmental policies have a strong, place-based dimension,
especially in cities.
 Inclusive growth requires both economy-wide and local measures.
Policy coherence across levels of
government requires national leadership
85

Report for Habitat III evaluates state of
NUP in OECD countries.
• NUPs can be a key tool to support the
implementation of the New Urban
Agenda and other global agreements.
• OECD countries have still scope in the
development of NUP.
• Only 15 OECD countries have explicit
NUP (of which 5 in formulation stage)
but almost 90% have partial urban
policies.
• Climate change resilience and human
development receive a weaker attention
within the NUPs of OECD countries.

Out of the 35 OECD countries, only 15 have an
explicit national urban policy.
Figure 1.2. Urbanisation and economic development
2013
Notes: Urban Areas as defined by national statistical offices.
Source: World Development Indicators (World Bank, 2014)
• However, almost 90% of OECD counties have partial elements of NUPs in
their urban landscape.
Type of National Urban Policies in 35 OECD countries
15 15
5
0
2
4
6
8
10
12
14
16
Explicit Partial No NUP
Number of countries
Source: OECD survey on National Urban Policies (2016)

Majority of countries have the NUPs in the
implementation stage (40%).
Figure 1.2. Urbanisation and economic development
2013
• Within the 14 countries in implementation stage, five have an explicit NUP.
• Among the countries with explicit NUP are 33% are in formulation stage with a
similar proportion in the implementation process.
1
6
14
9
5
0
2
4
6
8
10
12
14
16
Diagnostic Formulation Implementation M&E Not applicable
Number of countries
. National Urban Policies by stage of development in 35 OECD countries

Climate resilience receives the weakest degree
of attention by NUPs in OECD.
• Economic development is the most extensively covered sector by NUP in OECD
countries. It receives strong attention by almost 55% of the countries.
19
16
15
11
5
0
5
10
15
20
Economic
Development
Spatial Structure Environmental
sustainability
Human
Development
Climate resilience
Number of countries
Areas with extensive scope in National Urban Policies

Large majority of OECD countries have a general
national planning authority to oversee NUPs.
• The majority of OECD countries chose a participatory approach to develop a
NUP, which involved a wide range of stakeholders in developing a NUP.
• In most of the OECD countries, the implementation mechanism of NUPs is
carried out through a process of national-local level coordination.
3
23
2
7
0
5
10
15
20
25
Specialised Urban
Agency
General National
Planning Authority
Sub-National Agency Not applicable
Number of countries
Type of urban agency in 35 OECD countries

The presentation draws from:
Ahrend, Farchy, Kaplanis and Lembcke (2014), “What Makes Cities More Productive?
Agglomeration economies & the role of urban governance: Evidence from 5 OECD Countries”
Ahrend and Schumann (2014) “Does regional economic growth
depend on proximity to urban centres?”
Ahrend, Gamper and Schumann (2014) “The OECD Metropolitan Governance Database: A
Quantitative Description of Governance Structures in Large Urban Areas”
OECD, OECD Regional Outlook 2016
OECD (2017), The Governance of Land Use
OECD (2016), Making Cities Work for All
OECD (2015) The Metropolitan Century: Understanding Urbanisation and its Consequences
OECD (2015) Governing the City
OECD (2012) Redefining Urban: a new way to measure metropolitan areas
Thank you
91

OECD urban-relatedwork

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