Page 65 - A U4SSC deliverable - Guidelines on tools and mechanisms to finance Smart Sustainable Cities projects

Chapter V: How will the COVID-19 pandemic affect

investment in urban development projects?

With the recent outbreak of COVID-19 around the world, the three priority areas for every city and
government will be to respond, recover and rebuild. While it is too early to judge what will change,
this chapter provides a short outlook on the trends that may develop as a result of the pandemic and
that may influence approaches to urban planning, and therefore investment behaviour in this area.

The response to the pandemic has halted society and, as a result, the economy is suffering. Less
economic activity means lower tax revenues and, in combination with increased health and social
care costs, the result will be an extraordinary increase in debt levels. There will be a need for rapid
legislative adaptation and significant fiscal actions by governments to cope with the crisis, in time
to recover and rebuild capacity. Governments will need to prioritize the most impactful responses,
such as protecting productive capacity, increasing public spending, providing credit to small and
medium-sized enterprises, and attracting investors.

There is not enough evidence to study the impact of the pandemic on infrastructure projects. Public
expenditure will most likely revamp this sector, as a first step towards revitalizing economic activity
as quickly as possible. However, the potential implications of this period for traditional models of
urban development can already be foreseen. With the lack of traffic and the need for servicing the
less movable segments of the population, “last mile” distribution logistics in cities boomed during
the lockdown. As activities and movement return to usual levels, or close to them, member States
of the UNECE region will likely feel the effects of increasing numbers of vans, bikes and trolleys
with boxes and packages for home delivery, as well as the current lack of areas for parking that
allow the time for delivery from vehicle to door. The gap between the existing infrastructure and
what will be required by the new normal is a vital consideration for future urban planning, that
is, new spatial zones. Governments will need to adapt urban planning legislation to allow these,
and take into consideration other traffic impacts, such as those resulting from reduced use of
public transport due to fears of infection and the already-felt lack of desire for car ownership. The
immediate answer appears likely to be single person vehicles, bikes, scooters and car-sharing.
Traffic lines for these narrower, smaller units will be needed and, at the same time, will leave space
for pedestrians, most likely at the expense of cars. Parking areas in office and residential areas will
also be adapted accordingly.

Since 2014, industrial and logistics projects have shown strong growth. This will be felt even more,
given the increased demand on “cross-docking”, e-commerce and “cold-chain” (temperature
controlled) logistics. Improvements in technology, the “internet of things” and robotics will be
required due to pandemic restrictions, requiring workers to distance. However, these will increase
the value of organizations that service these activities, and will also reduce production costs. An
increase in capacity is another positive effect of the innovative solutions which the pandemic will
introduce.

U4SSC: Guidelines on tools and mechanisms to finance Smart Sustainable Cities projects 47