Article

City Scenarios for a Post-COVID Future

September 17, 2021 by Lindsay Durkalec

One thing is clear: More than ever, people and firms are re-evaluating where they live and work. The choices they make will have a major impact on the future shape of our communities. The policies we choose will shape the location decisions that are made.

Even before the pandemic, digital technologies supporting online retail, virtual meetings, delivery logistics, ridesharing, and car-sharing were available, well-developed, and changing the economic landscape. With the notable exceptions of ridesharing and car-sharing, the pandemic dramatically accelerated the acceptance of these technologies and expanded the industries they supported. Health risks, uncertainty, and government restrictions resulted in a boom in online retail product delivery and development of telemedicine. Business survival and the need to earn a living led to widespread use of virtual meetings. These changes have had serious impacts on many sectors of the economy

Future of Cities

Although it is virtually impossible to forecast the future that flows from the unprecedented effects of the pandemic in the context of rapidly changing uses of digital technology, it is instructive to examine the characteristics, consequences ,and early evidence of three alternative plausible scenarios: declining urban density; return to a new normal; and smart and connected city expansion. All three of these scenarios have significant implications for the future of cities.

Scenario 1: Declining Urban Density

The scenario of declining density is one that many people seem to expect, primarily as a result of permanent adoption of practices and changes necessitated during the pandemic. The basic economic forces that drive this scenario are:

Face-to-face interaction is perceived as less valuable than it was pre-pandemic
Cities are perceived as more risky from a health perspective
Agglomeration benefits of cities are eroded by better communication technology
Lower-cost and more decentralized locations are better able to successfully compete for people and firms

Declining urban density would have negative aggregate economic impacts for cities if the lower agglomeration economies are not fully offset by virtual meeting technologies. Because agglomeration benefits will be further reduced as density declines, there is a potential of a negative vicious cycle. Several adverse outcomes would be associated with this scenario:

Diminished value of existing public infrastructure in less dense cities
Substantial need for new infrastructure investment in expanding locations
Diminished urban land value and built asset-value including stranded assets
Increased congestion for a given level of economic activity as transit is underutilized
Competition for remote work becomes global for many, and US residents may find themselves in direct competition with low-wage labor across the globe

Scenario 2: Return to “Normal”

The expression of the “new normal” is common in discussions of post-pandemic America. First note that cities are constantly evolving —there is no “normal” per se, but for the purposes

of this scenario, the “new normal” is one with substantial adjustments enabled by new digital technologies. The virtual technologies increase flexibility of in-the-workplace and at-home arrangements, but these gains are offset by the declining agglomeration economies resulting from declining density and new infrastructure costs. Further this scenario does not envision the possibility of greater global competition in the labor market.

Based on limited and early evidence several patterns have emerged:

Cities have lost population, but not dramatically
Economic activity is recovering as vaccination reduces risk and fear
Auto travel is increasingly dominant as Vehicle Miles Traveled are increasing and transit use remains depressed
The competitiveness of dense cities is somewhat eroded by the decline of transit

The return to the “new normal” is a middle-of-the-road scenario that likely will have middle-of-the-road consequences. Market adjustments that will probably occur will increase the likelihood that this prediction will best represent the future outcome. Some challenges arise in this case that will require deft and insightful public policy to prevent potential downsides from occurring, specifically in preserving high quality-of-life in urban areas, investing in new infrastructure to support moderate changes in physical location, and supporting innovations in the transit industry to accommodate the needs of households with more flexible travel patterns. Overall this scenario implies:

Less dense areas do a little better
Declining values of existing public and private urban assets
More congestion and greater infrastructure need
More climate-related challenges
Economic growth is a little worse or a little better, depending on the extent of agglomeration loss, infrastructure and congestion costs, and climate issues

Scenario 3: Smart and Connected City Expansion

In this scenario, Cities have evolved into knowledge and innovation hubs that benefit from face-to-face interaction. As long as those interactions generate significant positive economic and social benefits, technologies that allow remote work simply expand the reach of innovative businesses in accessing labor for non-innovative tasks. This could give rise to increasing dominance of smart and connecter cities that provide high quality of life for the innovative class. These successful cities will have businesses with a global reach in the talent market, as well as citizens with work options all over the world.

For all cities, technology advances provide flexibility that alleviates expensive infrastructure constraints. It lowers peak demand on roads, transit, and sidewalks for any given level of economic activity. This allows full utilization of existing built infrastructure, leading to higher levels of economic output with lower physical infrastructure costs. The ability to access lower labor costs while at the same time generating large agglomeration economies with lower

Infrastructure costs may result in winner-take-all growth of policy- and tech- savvy cities.

Not enough time has elapsed to see whether the new technologies will further feed the growth of large cities as they have in the past, or whether this time it really will be different. If it is not different, there are potential large gains that may be made but also significant challenges ahead in ensuring that those gains are equitably shared

There is little threat of declining urban value or stranded assets, at least in large cities
Increasing agglomeration economies generates the greatest productivity income and wealth
Environmental and climate challenges are more easily managed since dense cities are less resource-intensive on a per capita basis

There will be three major challenges that need to be addressed:

Housing affordability is a problem in virtually for every successful city as competition for space in dense areas drives up prices
The potential for mega winners at the expense of others poses challenges in equitably distributing the income and wealth of macro economies
Successful, dense, diverse communities may find themselves in conflict with virtual homogeneous communities

Implications for City Leaders

As we have seen for the past 18 months, making predictions about “post-Covid” life is fraught with uncertainty. Yet looking at the future through a scenario lens like posed here allows city leaders to understand the potential range of outcomes that could lie ahead, and prepare policies and strategies that position a community for success no matter which direction is realized. Modeling the potential impacts of each scenario can help a city understand what it may need to do to either seize an opportunity or avoid a potential problem.

If you are interested in exploring these ideas further or have your own thoughts on potential scenarios or implications of our new realities, connect with us to see how we can work together. The ESI Center for the Future of Cities is actively exploring all of these ideas, and is available to help you understand how your city or organization will be impacted by these transformational changes. Contact Steve Wray or Dick Voith for more information on how we can work together.

Richard Voith, Co-Chair | voith@econsultsolutions.com

As Co-Chair of the Econsult Solutions (ESI) Board of Directors, Dr. Richard Voith provides expertise to clients in real estate economics, transportation, and applied microeconomics. Dr. Voith served as President since the firm’s inception and is now guiding strategic planning and development of the company. As a Principal of ESI he continues to provide insight and analysis in the firm’s transportation, real estate, litigation, and international business activities. In addition to his roles at ESI, Dr. Voith is Research Fellow at the University of Pennsylvania’s Institute for Urban Research.

Steve Wray, Senior Vice President & Principal | wray@econsultsolutions.com

Steve Wray is a Senior Vice President and Principal at Econsult Solutions, Inc. (ESI). In this role, Steve focuses on the development and implementation of programs and projects that support ESI’s vision and short- and long-term plans. He leads the work of the firm’s principals and senior staff in developing new partnerships, expanding and building on existing practice areas, and integrating the firm’s strengths in economic analysis and thought leadership. Mr. Wray joined ESI in 2017 as a Director and was promoted to Vice President, Strategic Initiatives in 2019.

Five Ways Cities Can Foster the Arts and Catalyze Equitable Economic Recovery

September 10, 2021 by Lindsay Durkalec

As we navigate the recovery from the COVID-19 pandemic, cities are especially economically challenged. Tax revenues can barely keep up with the need to improve infrastructure, maintain public safety, encourage business, educate the young, care for aging residents, and provide basic and essential services to residents. Arts and culture are way down the list of priorities, but civic and business leaders should not under-estimate the power of the arts to effect change, to create social cohesion and to unite diverse people around a common vision of the future. As a part of our communities’ economic recovery, relatively modest investments in the arts and arts-friendly policy can make a world of difference, expanding creativity, equitable growth, and resilience.

Arts and culture should be a crucial part of any city’s economy recovery plan. Here are five ways that cities can use the arts strategically to improve life for all residents and support recovery of local economies.

Make Arts a Part of Every Child’s Education. Children sing the alphabet song to learn their ABCs. Students who struggle with math or who are not native English speakers can excel in drawing and music or express themselves in spoken word. Theatre programs teach skills in collaboration and teamwork. Numerous studies prove that students who participate in the arts outperform their peers on virtually every measure, and students from lower socioeconomic backgrounds see the greatest benefits. If we want a creative future workforce with excellent problem-solving skills, making arts a part of PreK-12 education is cost-effective and essential.
Encourage Arts in Health Care. Hospitals with art on the walls, music programs and other arts find that patients need less pain medication and heal faster. The arts give seniors physical and mental stimulation and avenues for social interaction and connection that keeps them healthy, including reducing dementia. Arts improve mental health and help people who struggle with addiction to recover their lives. People are healthier when they engage their whole selves in the healing process, using movement, visualization, and the calming effects of the arts.
Incorporating the Arts in City Planning in the Early Stages. All too often, city planners present their ideas to community stakeholders and residents late in the process, rather than engaging the community early on to more fully understand local issues and concerns. This is particularly difficult for communities that traditionally feel excluded and find it difficult to express what they so deeply feel at a microphone in a community meeting. Using theatre techniques or visual arts to engage residents early in the process makes a world of difference. It communicates respect, generates healthy civic dialogue, and brings people together with a sense of community ownership. The arts inspire creative solutions and bridge differences to make community growth possible.
Marketing. As a sector, arts organizations earn almost half of their revenue through tickets, program fees, rentals and other means. Marketing both promotes the image of a city as vibrant, diverse, and fun and helps nonprofit arts organizations to generate their own revenue. More people attend arts and culture each year than attend professional sports. In addition, the majority of arts audiences attend a performance or event only occasionally, making it difficult for arts organizations to target advertising effectively. Cities can help to spread the word about the arts in community calendars, by including the arts in image campaigns, or simply by having civic leaders frequently mention the arts with enthusiasm.
Funding for Arts & Culture. Yes, money matters. Government provides far less than private sector philanthropy or earned revenue, but public support is essential for a healthy arts sector and helps to ensure equity and access to the arts for all residents. Small grants of unrestricted operating support make a world of difference to community-based, grassroots arts organizations. Government funding is much more equitable than individual donors or private foundations, both of which give more to large, established arts institutions that have well-staffed development departments. Government support also targets arts programs for the under-served, increasing access to the arts for young and old and even the incarcerated. Almost all major performing arts centers receive government support, which is returned many times over in tax revenues from audience spending in restaurants, parking, shopping and hotels. When cities can subsidize venues to make space affordable to smaller arts organizations, it extends those benefits to neighborhoods and business corridors. Using public support strategically returns big benefits in increasing equity and inclusion and creating social cohesion amongst residents – and it also generates economic activity.

It is not the product of the arts that makes cities vibrant – though we all appreciate murals, festivals, performing arts productions and museums. It is the process of creating art that matters. Understanding how arts and culture improves education, health, business activity, social cohesion is far more powerful. And when done right, arts can help catalyze our cities’ steps towards equitable economic recovery. Cities that underestimate arts and culture also underestimate their own citizens, because the arts is how we share ideas, express creativity, and find new ways to appreciate our differences – and find productive ways to live together.

Maud Lyon, Senior Advisor | maudlyon15@gmail.com

Maud Lyon has guided the development of nonprofits, helping them to improve service to the community while adapting to changing circumstances that alter their business models. She also deeply understands the role of arts and culture in civic life: how it brings people together, creates a sense of possibility and opportunity for individuals and communities, and establishes connections that are essential to vibrant civic engagement. As President of the Greater Philadelphia Cultural Alliance 2015-2020, she spearheaded exploration of the economic, cultural and political forces re-shaping arts and culture that would affect the future of museums, performing arts, arts education and community arts nonprofits. From April to July 2020, she led COVID-19 Arts Aid PHL, collaborating with foundations, individual donors, the Philadelphia Cultural Fund and the Office of Arts, Culture and the Creative Economy.

Delaware Life Post Covid

August 31, 2021 by ESI

ESI Principal and Co-Chair of the firm’s Board of Directors Dr. Richard Voith articulates how cities, towns, and rural areas should brace for lasting changes due to the COVID-19 pandemic. Using three scenarios, Dr. Voith explicates the future of cities by drawing a tangent parallel to Declining Urban Density, Return to “Normal”, and how Policy- and Tech-Savvy Cities Expand Their Reach. Dr. Voith also provides examples of how agglomeration of economies may lead to a significant rise in urbanized economies and may play a quintessential role in increasing income and economic well-being. He uses this theory to show how Delaware and Wilmington may fare in the long run and what other states and cities within the United State should do to ensure equitable sharing of economic output.

To read Dr. Voith’s full article published in Delaware Lawyer, click the link: https://digital-editions.todaymediacustom.com/delaware-lawyer/summer-2021/#p=16

Future Cities Need Forward-Looking Universities

August 20, 2021 by Lindsay Durkalec

The late Senator Daniel Patrick Moynihan of New York is purported to have said that the way to build a great city is simple: “Create a great university and wait 200 years.” There is no doubt a profound truth in this statement. All great cities contain at least one great university. And all great universities aspire in part to make the city they’re located in a great city.

But, in 2021 and beyond, what does it mean for a city to be great? And what does it mean for a university to contribute to a great city? For anyone who cares about cities or universities, these are questions worth exploring.

To begin with, there is a sad irony in Senator Moynihan’s statement. Through the years, many universities have had ambivalent or worse feelings about the cities in which they’re located. Some erected walls to demarcate “their” space or constructed other barriers to keep outsiders out. Others cultivated an intellectual separation from the community around them, as if interacting with “the real world” would taint their lofty academic explorations. Hence the imagery of “the ivory tower,” hardly a welcoming posture from universities to their surrounding communities. There has got to be a connection between great cities and great universities, right? And yet all too often that connection has been cold and distant.

Thankfully, this is changing. Universities are pivoting hard from “ivory tower” to “engaged campus,” because they understand that fulfilling their core institutional mission requires two-way engagement, for campus to feel accessible to the local community and for students and staff to see the whole region as classroom and laboratory.

What makes cities great – commercial vibrancy, cultural expression, and diverse perspectives – demands the participation of universities. Universities that contribute in these ways have a long and bright future ahead of them, because this is responsive to what the marketplace is demanding of them now:

Communities need universities to act like the anchor institutions they are, which is to say that their futures are inextricably tied together, so universities must serve, engage, and invest in ways that are mutually beneficial and sustainable.
Students and employers alike need universities to synchronize their academic offerings to future workforce needs. This means topics, content, instructional formats, and credentialing pathways that prepare participants for the real world by mirroring the real world.
Regions need universities to connect on-campus human capital and research infrastructure to the local business community, for this is what produces innovations that forge new ventures, birth entirely new industries, and strengthen economic competitiveness.
Society needs universities to cultivate culturally diverse and inter-disciplinary communities on campus, which interact with real people and real problems in real time, for this is what advances human knowledge and yields solutions to the world’s thorniest challenges.
Regions that feature affordable universities and colleges have a local economy consisting of individuals that tend to have a relatively more stable financial situation, which benefits society as a whole. More expensive higher education institutions leave graduates strapped with immense debt, leaving less opportunities for a successful financial future.

The higher education sector displayed evidence of tumult even before COVID. And after a year and a half of unprecedented disruption and uncertainty, future directions and basic survival are even more up in the air. But the universities of the future that behave in these ways – whether they are big or small, STEM or liberal arts, well-endowed or financially lean – will thrive, and will in turn help make the great cities of the future. And the universities that do not meet the moment in these ways risk not making it to the future.

Lee Huang, President & Principal | huang@econsultsolutions.com

Lee Huang brings over 20 years of experience in economic development experience to Econsult Solutions’ (ESI) public, private, institutional, and not-for-profit clients. He leads consulting engagements in a wide range of fields, including higher education, economic inclusion, environmental sustainability, historic preservation, real estate, and neighborhood economic development. His higher education clients have included Carnegie Mellon University, Emory University, University of Chicago, University of Notre Dame, University of Pennsylvania, and the Council for Christian Colleges & Universities.

Ardy Wurtzel, Associate Director | wurtzel@econsultsolutions.com

Ardy Lynn Wurtzel is an Associate Director at Econsult Solutions, Inc. At ESI, Ms. Wurtzel leads projects in the areas of economic development, higher education, public policy, transportation and real estate. Prior to joining ESI, Ms. Wurtzel worked as an adjunct professor of Economics at several universities, including Temple University, Arcadia University, and Rutgers University.

3 Ways to Make Cities More Inclusive

August 13, 2021 by ESI

Globalization has helped interconnect different regions of the world but has also exacerbated global inequality. People now migrate from one place to another in search of better living conditions. This diaspora of people leads to a growth in the economic base of the place they move to. How can cities better accommodate their citizens economically, socially, and spatially?

In 2015, The United Nations, released a blue print with 17 Sustainable Development Goals (SDGs) to help achieve a better and more sustainable future for all. These goals are guidelines for cities to follow to help reduce poverty, tackle climate change, bolster innovation, and more. Sustainable Development Goal 11 (SDG 11), sheds light on making cities inclusive, safe, resilient, and sustainable. According to the World Bank, more than 50% of the world’s population lives in urban cities and this percentage is projected to rise to 70% by 2050. Additionally, metropolitan regions contribute to 60% of world GDP, but also account for 60% of resources use and 70% of global carbon emissions. This gap between the haves and have-nots must be bridged before it’s too late.

So who are the “have-nots”? People who are thought of as “have-nots” typically work in the informal sector, working at activities which are not taxed and could add value to a country’s GDP. The have-nots work as street vendors, casual laborers in construction, landless laborers in agriculture, etc. The informal economy in developing nations accounts for about a third of its economic activity. People who work within this sector tend to be poor as they have less formal education, don’t have social protection or formal contracts. Workers in the informal sector have been encountering challenges since the dawn of time and assistance from local governments can help increase household savings, which can reduce inequality and wealth gaps.

Cities can overcome hurdles related to SDG 11 by innovating responses and appropriately executing them. For example, in New Zealand, there are several multi-cultural playgroups in which refugee parents can learn English and information about child-care as they integrate into a new community.

So, how can governments, with the help of the private sector, make their cities more inclusive for people who do not have equal and convenient access to basic education, public transportation, or even clean sanitation due to their social or economic conditions? Three steps below can help cities be more inclusive:

1. Building and Maintaining Partnerships: A local government cannot do everything by itself. It must collaborate with the private sector to execute certain plans. Non-profit organizations and the academic community can help raise awareness, and help shine a light on the demands of residents and identify areas that need help the most. This can help harness a community’s potential while scaling up investment.

Let’s take India as an example. SHG’s (Self Help Groups) have helped in the alleviation of poverty for women. The mission is simple: to provide financial support to women in rural India. The government works with non-governmental organizations (NGOs) to distribute around Rs 15,000 ($200) among these groups and participants can borrow money from the group for several purposes. Members of SHG’s can take loans from banks up to a certain amount without any collateral. There are also hidden advantages to these groups, social ties are strengthened as members of the group get together to exchange news and inform each other about technology (i.e. use of smart phones, etc.).

2. Informal sector employees must be included in budgets and need proper representation: Lack of representatives has always been a problem for minorities. If citizens have the right representation, governments can successfully identify which groups need assistance. Additionally, making the process of budget allocation more transparent can help raise concerns with elected officials and help them further understand how diverse the informal economy really is.

In Argentina, it is estimated that 18% of the residents live in informal settlements known as “Villas” and this number can reach as high as 55%. The Metropolitan Buenos Aires Urban Transformation Project supports the improvement of living conditions for around 48,000 residents in disadvantaged neighborhoods in the Buenos Aires Metropolitan Area, providing them with proximity to the urban parts of the city. The project helps finance the improvement of housing and basic urban services and infrastructure. The main goal of this project is to urbanize Villa 31 which is one of the largest informal settlements in the country. Transforming this area and connecting it to the heart of the city will lead the way for a resilient and sustainable environment for the citizens of Buenos Aires.

3. Develop participatory platforms so everyone has a seat at the table: The decision makers should ensure that everyone has an equal access to information and can voice their opinions about their culture, tradition, etc. No person should be socially excluded and every problem must be acknowledged. Policies that support inclusion are vital to ensure that everyone is included.

For example, the city council in Barcelona wanted to hear and include every citizen’s voice in the city’s decision-making process. Hence, it created a system that collaborates with 600 civil associations. Each is focused on a different subject such as housing, education, and transportation. By cooperating and sharing knowledge and resources with the citizens, the government can make more robust decisions.

Shaum Arora is a Drexel University Co-Op and Marketing Assistant with ESI. Shaum is currently majoring in Economics and minoring in Philosophy.

How Can Broadband Connectivity Benefit Rural Areas?

July 30, 2021 by ESI

Imagine an urban city as a box. When one thinks outside this compartment, one is able to conceptualise that rural areas exist beyond this well-structured box. However, the inside isn’t well connected to the outside and vice-versa. One has smart street lights while the other encounters black outs. One relies on good roads and highways to be connected with the outside world, while the other is the ‘outside world’. How can governments around the globe bridge the digital gap between these two regions?

Along with robust public policy, broadband connectivity is the glue. It is a useful piece of technology that can help multiple industries within various sectors of an economy thrive, especially in rural areas. From smart agriculture to supply chain management and education to tele-health, people all over the world who reside in rural areas can use it as a connection to help access global information and cultural resources. Broadband connectivity has numerous advantages. It enables high power embedded LEDs to inform travellers about traffic conundrums and provide them with updates about the weather, it helps people take part in e-commerce and connects workers from a disconnected region to their company’s headquarters. The figure below highlights the gap between rural and urban users of broadband technology.

There are several firms which help set up a broadband connection in remote areas and even help provide educational programming and training on how to utilize this connection. NTCA (The Rural Broadband Association) is one such organization which helps its members build and deliver broadband connectivity. According to the NTCA’s guidelines, a company that serves a smart rural community is one that can:

Provide broadband to at least 50% of its service area – meeting or exceeding the FCC broadband speed definition of 25 Mbps down/3 Mbps up.
Demonstrate that 50% of its customers subscribe to and use the broadband service.
Exhibit a stated commitment to collaborate actively with other local leaders, including school districts, health care providers, public safety officials, and businesses who work together to incorporate broadband-enabled applications into those facets of rural life.

According to NTCA, one in five Americans live in rural communities. So, what does the digital divide in the United States looks like? Figure 1 below illustrates the difference in internet subscription rates between rural and non-rural counties. Metropolitan counties, concentrated on the coasts, have much higher broadband subscription rates than non-metropolitan counties, with a significant gap in the southern part of the country. For example, the subscription rate for metropolitan counties in New Hampshire was about 82 percent compared to 48 percent in rural counties in Mississippi. Local businesses in rural communities that do not have access to the internet cannot compete with urban businesses which can sell on a global scale through the use of e-commerce. Additionally, local businesses in rural communities face a disadvantage due to their geography. There can be latency delays because of the distance between users and satellites.

Broadband connectivity depends on solid infrastructure which can only be utilized if people are educated and know how to use it to maximize productivity. Hence, investment in education, as well as infrastructure, is fundamental for the foundation of broadband connectivity. An example of this can be found in Logan County, Colorado. The Logan County Economic Development Corporation (LCEDC) works to expand the county’s economic base. The officials of LCEDC developed infrastructure to support high speed internet. This provided the workers of the rural community with an opportunity to connect with people from different areas. LCEDC’s proved that by providing citizens with a strong internet connection it could create a practical workforce strategy of creating more jobs. Hence, Sterling, located in Logan County, was able to attract 25 new businesses. This included boutiques, restaurants, a microbrewery, and an arts co-op. This led residents back into town and attracted tourists. As part of its commitment to support teleworkers, Sterling opened a co-working facility in the town square, providing a shared workspace and community hub for rural teleworking residents and visitors.

So, what can elected officials really do to help their citizens be connected with the ever-changing dynamic world? One way is to simplify the process to apply for funds. Rural areas typically do not have large teams to conduct research nor do they have agencies that offer help in applying for these funds which can act as significant barriers to funding. Secondly, improving the accuracy of coverage maps can help bridge the gap, too. These maps need to be updated to see which areas really require help and funding. These two measures together can help unserved and underserved rural communities. Lastly, by connecting the private and public sector, communities can take advantage of emerging business needs and grow the economic base of their community. By connecting rural communities to cities and large metropolitan areas with basic broadband service, the country as a whole can grow economically and realize a greater standard of living.