Kolk, A.

Ocelík, V.

Pisani, N.

Wu, G.

English

International Migration, Integration and Social Cohesion online publications

UvA-DARE is a service provided by the library of the University of Amsterdam (https://dare.uva.nl)UvA-DARE (Digital Academic Repository)Does it pay for cities to be green?Pisani, N.; Kolk, A.; Ocelík, V.; Wu, G.Publication date2019Document VersionFinal published versionLink to publicationCitation for published version (APA):Pisani, N. (Author), Kolk, A. (Author), Ocelík, V. (Author), & Wu, G. (Author). (2019). Does itpay for cities to be green?. Web publication or website, World Economic Forum.https://www.weforum.org/agenda/2019/03/does-it-pay-for-cities-to-be-greenGeneral rightsIt is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s)and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an opencontent license (like Creative Commons).Disclaimer/Complaints regulationsIf you believe that digital publication of certain material infringes any of your rights or (privacy) interests, pleaselet the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the materialinaccessible and/or remove it from the website. Please Ask the Library: https://uba.uva.nl/en/contact, or a letterto: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. Youwill be contacted as soon as possible.Download date:10 Mar 2023Does it pay for cities to be green? | World Economic ForumImproving Shanghai’s air quality could boost investment by $1 billion. Image: REUTERS/Aly SongIndustry Agenda  Cities and Urbanization  Sustainable DevelopmentDoes it pay for cities to be green?26 Mar 2019Niccolò PisaniAssistant Professor of InternationalManagement, University ofAmsterdam, The NetherlandsAns KolkProfessor, University ofAmsterdam, The NetherlandsVáclav OcelíkUniversity of Amsterdam, TheNetherlandsGanling WuUniversity of Amsterdam, TheNetherlandsThere has been growing interest in recent years in cities taking aleading role in addressing major sustainability challenges such asair pollution and water scarcity.More than half of the world’s population lives in urban areas, ashare that is expected to grow even further in the years to come. Asa result, the importance of cities has been widely recognized,particularly in the context of policy.With air pollution considered to be the greatest human health riskand around two-thirds of the world’s population facing waterscarcity, city governments are increasingly expected to take the leadin tackling these major issues.While the broader environmental and societal benefits of cities’Does it pay for cities to be green? | World Economic Forumefforts to lower air pollution levels and improve waste watertreatment are self-evident, the question remains whether it is alsoeconomically advantageous for them to do so.Air pollution in cities has generally been linked to their level ofindustrialization, thus suggesting that more polluted air may be theprice that cities, especially those in emerging economies, have topay in exchange for enhanced economic activity.In our recent study, we examined cities’ sustainability in relation toforeign direct investment (FDI) inflows, to assess whether it does“pay” for cities to be green. Using a comprehensive sample of 185Chinese cities of different sizes over a seven-year period, weinvestigated whether air and water pollution reductions pay off interms of increasing FDI inflows.Both for air quality and waste water treatment, we find that it doesindeed pay for cities to be green for attracting FDI inflows. The sizeDoes it pay for cities to be green? | World Economic Forumof the impact also point at substantial economic relevance. Forinstance, a significant improvement of air quality in a city likeShanghai may lead to up to a $1 billion increase in FDI inflowsyearly. Likewise, a substantial increase in the percentage of wastewater that is treated in a city like Beijing may turn into higher FDIinflows of up to $750 million per year.As we explain in our study, there are two reasons why it may pay forcities to be green. First, international firms prefer to invest in greenercities because of their increasing commitment to employees’wellbeing. Living in industrial areas has a negative effect onpeople’s (psychological) health; air quality is also explicitlymentioned in relation to low(er) rankings for expat quality of life invarious cities.Second, by choosing greener cities, international firms aim tobolster their reputation and show their corporate responsibility intimes of increasing environmental awareness and stakeholderpressure.Our work thus demonstrates the specific impact of a city’ssustainability on its capacity to attract foreign investment, and howthis may set in motion a virtuous cycle of sustainability-related FDIgrowth.This has important policy implications for urban governance andmore broadly for society at large, as we show that it is economicallybeneficial for cities to expand their environmental protection, withsubstantial effects for both air and water pollution control.Cities appear to compete on the basis of a “race to the top” logic:being greener leads to more private investments from abroad. Thisstands in stark contrast to the “race to the bottom” noticed at thecountry and supranational levels, according to which theenvironment is sacrificed, with lax regulation attracting pollutingindustries and firms from countries with higher standards, forexample in Europe, Canada or the US.The findings we obtained are very important for policymakers whoDoes it pay for cities to be green? | World Economic Forumseek to attract more investments to their city. Specific urban policiesshould direct citizens and firms inside city boundaries to abide bymaximum thresholds of the range of emissions in their respectiveactivities, and ensure that significant portions of energyconsumption and production originate from clean sources.Moreover, cities could themselves invest in reducing air and waterpollution and consider subsidizing firms and citizens thatsubstantially exceed environmental norms. Promoting andfacilitating the reuse of waste water seems to be a good strategy aswell.A recent article documents that 22 of the worst 30 cities in the worldin terms of air pollution are located in India. As a consequence, itsgovernment has recently launched a new programme with specificmeasures tailored to individual cities, that Environment MinisterHarsh Vardhan describes as a “war on pollution”. If this succeeds,the benefits will not only be associated to the lifespan of cities’residents, but also to their economic prosperity. It is obvious that thethree pillars of sustainability – environmental, social and economic –are interrelated, as also shown in our study.Does it pay for cities to be green? | World Economic ForumFor achieving a future that is cleaner, healthier, and moreprosperous, we should embrace the central role of cities. Thisapplies not just to China, with its strong role for different levels ofgovernment, but also to other countries where cities have similarroom for manoeuvre in the environmental realm.Given the severity and urgency of environmental issues, greater andmore direct policy interventions at city level are increasingly calledfor, in market economies as well. It pays for us, private citizens, tolive in clean and prosperous areas. Our research shows that it alsopays for cities to be green.Does it pay for cities to be green? | World Economic ForumWritten byNiccolò Pisani, Assistant Professor of International Management, University ofAmsterdam, The NetherlandsAns Kolk, Professor, University of Amsterdam, The NetherlandsVáclav Ocelík, University of Amsterdam, The NetherlandsGanling Wu, University of Amsterdam, The NetherlandsThe views expressed in this article are those of the author alone and not theWorld Economic Forum.

Does it pay for cities to be green?

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Does it pay for cities to be green?

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