Three ways in which cities can spur development and climate change adaptation

Climate change is the defining challenge of our time. To avoid a climate collapse, countries must aim to not just grow, but to grow sustainably. In the first edition of the LSE Environment Week, academics and policymakers came together to discuss how to achieve a better balance between human activity and the natural environment, without sacrificing economic growth.

Addressing this challenge will require both new and old ideas. High-income countries, which have historically been the largest contributors to greenhouse gas emissions, have a vital role to play in driving, directing, and financing innovation. By expanding the technological frontier and accelerating the global adoption of cleaner technologies, they can help lay the groundwork for a more sustainable future. At the same time, resource-constrained low-income countries –  currently experiencing rapid urbanisation – can make significant progress in development and climate change adaptation by prioritising the fundamentals of well-functioning cities. 

During the LSE Environment Week, discussions centred around three priority areas: (1) raising the incomes of the urban poor to strengthen resilience against climate shocks, (2) integrating rural migrants into urban labour markets to maximise the economic benefits of urbanisation, and (3) equipping cities with the necessary resources and governance structures to unlock their full potential.

1. Raising incomes of the urban poor 

Cities, at their best, serve as engines of national economic growth, providing the clearest path from poverty to prosperity. When clustered in urban centres, firms and workers can unlock the 'miracle of productivity' through economies of scale and specialisation, raising living standards and driving economic progress.

A crucial ingredient for urban productivity growth is good connectivity between firms and households, enabled by denser environments and efficient transport links. This connectivity not only boosts economic activity, but also makes cities more energy-efficient and less carbon-intensive compared to sprawling urban expansion. Urbanisation can thus align with sustainable growth objectives, provided the downsides of density – such as congestion and air pollution – are effectively managed.

In sub-Saharan Africa and South Asia, however, urbanisation is occurring at lower income levels than those at which it unfolded in other parts of the world. This suggests that urban growth – driven by both rural-to-urban migration and natural population increase – has not been accompanied by the productivity growth needed for sustained improvements in living standards.

From a climate change perspective, this is particularly concerning, as lower-income households are disproportionately vulnerable to climate shocks. For example, they are more likely to live in risk-prone areas such as floodplains and rely on informal housing constructed with substandard materials. Furthermore, their ability to cope and recover is severely constrained by a lack of savings, as well as limited access to finance and insurance.

In this context, raising urban incomes emerges as one of the most effective adaptation strategies, offering a pathway to enhance resilience and reduce vulnerability among the most at-risk populations.

2. Integrating rural migrants into urban labour markets

An often-overlooked aspect of climate change adaptation involves the movement of people across space. This includes movements from rural to urban areas, which is likely to intensify existing urbanisation trends. Rising temperatures are already reducing agricultural productivity worldwide, threatening the livelihoods of millions of households that depend on farming for food security and small trade income. Floods and droughts are also prolonging lean or famine seasons. This makes migration to cities (either seasonal or permanent) a powerful adaptation mechanism, as urban centres offer a more diverse pool of opportunities and resilience-promoting infrastructure and services.

How can cities best prepare to accommodate these population flows?

A key opportunity lies in helping rural migrants effectively integrate into urban labour markets. This requires government support across various stages, including migrant ‘pre-departure’ and ‘arrival’. 

• Before departure, different strategies may encourage migration as a way to escape poverty in the first place. For instance, an experiment in Bangladesh provided a USD 8.50 subsidy to rural households to support out-migration during the lean season. This led 22% of households to send a seasonal migrant to urban centres, significantly increasing consumption at origin. Even after the incentive was withdrawn, households were 8-10 percentage points more likely to re-migrate. Other measures, such as lowering transport costs and improving road infrastructure, can also facilitate the journey to cities. Additionally, tailored job training programmes can help rural workers align their skills with urban labour market demands.
• Upon arrival, local authorities can facilitate integration through job-matching schemes, helping migrants to appropriately signal their skills to employers, manage expectations during the job search, and overcome potential labour market discrimination. At the same time, governments can invest in core urban infrastructure and services to accommodate the influx, including measures to ensure the availability of affordable housing options.

Working with the politics of migration and forced displacement

The political economy of migration is not to be ignored. While migrating to cities is positive for development in the long run, rapid rural exodus can destabilise existing political systems in the short run, in both recipient and left-behind communities, generating opposition from incumbent local leaders.

Climate change is also exacerbating conflicts in developing countries, leading to forced displacement that occurs not only internally, but across borders. Estimates suggest that around 40% of forcibly displaced individuals are fleeing to neighbouring countries, often residing in refugee camps and informal settlements.

3. Equipping cities with the necessary resources and governance structures 

Development and climate change adaptation objectives often reinforce each other, and, in the context of constrained public budgets, can be pursued through an integrated approach. As exemplified above, growth strategies that raise urban incomes can foster overall economic development while enhancing households’ ability to adapt to climate shocks when they occur. Similarly, rural-to-urban migration – often driven by climate-related reasons – can facilitate a shift away from subsistence agriculture towards more productive urban employment in manufacturing and services.

Although often a lower priority in lower-income countries, cities in developing nations can still contribute to climate change mitigation through initiatives focused on development and adaptation. For example, investments in wastewater management and treatment not only enhance public health, but also help reduce methane and nitrous oxide emissions from untreated wastewater. Additionally, such investments can generate employment opportunities across various skill levels and bolster communities' resilience to natural disasters.

Crucially, foundational elements must be in place to support government action. Among the most significant constraints for developing countries is the lack of adequate climate financing. Addressing this will require increasing financial flows from wealthier nations and major aid organisations, ensuring that these resources effectively reach those who need them most. At the city level, local governments can significantly improve their financial standing by implementing reforms that enhance their ability to generate own-source revenues, such as through property taxes.

Climate change has also heightened the urgency of improving urban governance. Cities will need clearer mandates and effective multi-level governance structures to address climate impacts, as these often extend beyond administrative boundaries. Moreover, governments require robust data infrastructure to predict and communicate risks, enabling timely and effective action by both authorities and residents.

The way forward: Focusing on sustainable urbanisation 

Development and adaptation to climate change can be achieved not only within cities, but also through cities. By focusing on sustainable urbanisation, developing countries can drive cleaner economic growth while enhancing their resilience to a changing climate.

Editor’s note: To learn more about the climate priorities in developing countries discussed during the LSE Environment Week, view the policy memos tabled and recording of the webinar on addressing the urbanisation challenge in developing countries, and read IGC’s latest growth brief on sustainable growth for a changing climate and sustainable urbanisation for cities as places to live.