The Solarium

A rendering of James Law's Cybertecture Egg, office building to open in Mubai in 2010. Via Gizmodo.

I just received a copy of the McKinsey Global Institute's latest report, India's Urban Awakening: Building inclusive cities, sustaining economic growth. You can download a copy for yourself, here.

The report reprises MGI's excellent survey of China's urbanization challenge, Preparing for China's Urban Billion, and comes to similar conclusions: both countries will be moving very large populations out of the countryside and into the cities between now and 2030, neither country is yet ready for the influx, but with a combination of smart governance and smart growth these two historic migrations can drive a new era of economic expansion in Asia. Historic is certainly accurate: 700 million Chinese and 250 million Indians will relocate, according to the management consultancy.

That's good news for America, but only if China and India succeed, and that is not a given. Under current policy, this urbanization trend will not end well. Without major land use planning innovations, investments in passenger rail and affordable housing, Asian cities will be gridlocked with automobiles, chronically short of water, electricity and sewage treatment, and difficult to feed. Instead of becoming vibrant dynamic centers of culture and commerce, the rich-poor divide will only get worse. In a context of increased ecosystem disruptions--whether in the form of already-altered monsoon seasons, higher-intensity hurricanes (typhoons), droughts and floods--growth has to be efficient, sustainable and resilient. 

MGI does its usual fine job in econometric analysis and macroeconomic forecasting with these studies. What I would add is simply the observation that India and China will not be facing these challenges in a vacuum. Both countries will add nearly a billion people to their cities, increasing the world's urban population by one-third. Supplying those new city dwellers with the energy, food, water, and building materials they need to thrive will implicate supply chains around the world. First, the impact will be in prices. If we are lucky, consistently high price signals will spur innovation efficiency gains. Odds are, however that high prices will also inspire new rounds of non-economic competition among the great economic blocs. Just think about the world's competition for oil and gas reserves and it is clear we are already here in some sectors. 

America's response must be long-sighted and it must start now. After three successive asset bubble implosions, America needs an aggressively sustainable foundation for domestic economic expansion that relies on real demand not the Fed's manipulation of interest rates. To get there, however, we need to look beyond climate change as the driver of sustainability. The world needs to shift the entire industrial economy towards a sustainable footing, not just reduce our carbon emissions. 

I try to make this case in my latest op-ed, published today in CNN.com. The answer is to use Federal incentives to make sustainability as profitable as Washington made sprawl. Once we get the American economy building and rebuilding sustainable, healthy communities, the engine of prosperity will be primed. As America becomes more efficient, our products and services will be increasingly compatible with the rest of the world, increasing demand for made-in-America.

Along the way, the United States will have to partner with countries and economic blocs around the world to help them make similar commitments to sustainable smart growth rather of export-led growth. And among those countries, India and China must be our priority.