Urban Transformation

Extreme weather events: Why cities can't afford 'business as usual'

Cities have been increasingly impacted by extreme events such as flooding.

Cities have been increasingly impacted by extreme events such as flooding. Image: Getty Images.

Jerome Frost
Chair, Arup Group
This article is part of: World Economic Forum Annual Meeting
  • Traditional metrics no longer provide a complete picture of a city’s performance and competitiveness.
  • Cities that focus on planning for climate shocks and stresses are best placed to attract investment in the future.
  • Advanced AI and digital technologies are making a difference in understanding how to invest effectively in long-term resilience for cities.

As governments and cities across the globe increasingly seek private finance for infrastructure, technology and economic development, the way we assess city performance needs to change.

Since I began my career as an urban planner over 20 years ago, the criteria for assessing city success – or their appeal to investors and global businesses – have remained largely unchanged. Traditionally, metrics like economic performance, employment and transport infrastructure have been the primary indicators of competitiveness.

However, over the last decade, cities have been increasingly impacted by extreme events. What were once considered rare shocks are now becoming disturbingly common. In 2024 alone, we’ve seen Hurricane Milton wreaking havoc across Florida and deadly heatwaves sweeping through South-East Asia. It’s now evident that the traditional metrics no longer provide a complete picture of a city’s performance and competitiveness.

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According to the World Bank, 1.8 billion people are now at risk of flooding, and the number of cities experiencing extreme temperatures (35°C and above) is expected to triple by 2050. Cities are also grappling with how to deal with global health shocks, shifts in global supply chains, and how best to leverage the rise of AI and digital technology for social and environmental good.

At Arup, we recently updated our City Resilience Framework, 10 years after it was first released, to reflect the wide range of challenges that cities are dealing with. It’s clear that mayors, city governments and businesses need new strategies and metrics to effectively build for long-term success and resilience.

The new criteria for city competitiveness

The future of urban competitiveness hinges on a city’s ability to adapt to and mitigate the impacts of climate change, integrate advanced technologies and transition to sustainable energy sources. As cities face unprecedented complexity, those that prioritize planning for climate shocks and stresses will be the most attractive to future investors.

Arup’s recent Competitive Cities Redefined tracker demonstrates that cities that proactively plan and manage climate challenges and bounce back quicker can significantly enhance their attractiveness for investment.

Miami serves as a compelling example. The city has taken significant steps to manage its climate risks, such as launching a $400 million “forever bond” to finance resilience projects and appointing the world’s first chief heat officer. This approach not only enhances the city's resilience, but also safeguards its long-term economic viability; in 2023, Miami actually increased its S&P rating from “AA-“ to “AA”.

How AI and advanced digital technologies can help us act

The good news is that while the challenges cities face are growing in number and complexity, the tools at our disposal are becoming increasingly powerful. AI and advanced digital technologies are transforming how cities plan and invest in long-term resilience. These innovations allow cities to derive new insights from vast amounts of data. This enables them to tackle major problems more effectively – from predicting and managing climate risks to dealing with intermittent energy supply and reacting faster to events as they occur.

While there is understandable concern about the disruptive potential of AI, it has a vital role in tackling the major global crises of climate change and biodiversity loss. And although we are right to bear down on the energy use of AI, we must remember the major part it has to play in decarbonizing massively polluting industries like the built environment – responsible for 37% of global emissions – and the world’s energy supply. We have set ourselves the dual goal of making maximum use of AI tools in our design and advice, while also designing the most carbon and water efficient data centres possible.

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How is the World Economic Forum supporting the development of cities and communities globally?

AI-driven tools can help the shift away from polluting materials such as concrete, reduce the carbon impact of transport systems, and help seamlessly integrate decentralized energy resources like solar PV parks, wind farms and battery storage systems into our energy supply.

AI is also adding new potential for urban planning and management. We have developed tools like Uheat and Terrain, which can identify how to lower temperatures for vulnerable communities in heatwaves and protect against flooding.

In Hong Kong and other cities, we have worked closely with city authorities to develop real-world digital twins that support the wholescale redevelopment of city districts to promote low carbon and nature-positive prosperity.

By leveraging these technologies, cities can make more informed decisions that enhance their resilience and attractiveness to investors.

Unlocking climate resilience with insurance and private finance

Building climate resilience often requires significant investment, which can be challenging for cities with stretched budgets. However, insurance and private finance can play a crucial role in unlocking the necessary funds. Innovative insurance products can provide cities with the financial resources to recover quickly from climate-related disasters. Additionally, private finance can be mobilized through public-private partnerships, green bonds and other financial instruments designed to support sustainable urban development.

The power of collaboration

No city can tackle the challenges of climate change and sustainability in isolation. Collaboration and collective effort are essential. By forming partnerships with other cities, communities, businesses and independent agencies, cities can share invaluable knowledge, resources and best practices.

One practical example is our collaboration with the New York City Economic Development Corporation to improve local flood protection. More than a decade after Hurricane Sandy, its effects are still felt. At Hunter’s Point South in Long Island City, we developed coastal resilience strategies using nature-based solutions to manage flood risks. This project involved bringing together numerous organizations – from New York City’s Department of Parks and Recreation and Department of Environmental Protection to community groups like the Hunters Point Parks Conservancy. It was only through this pooling of resources, expertise and local knowledge that the former industrial area was transformed into a community parkland that adds resilience to flooding to the city.

As the world changes, so too must the criteria by which we judge the competitiveness of cities. Traditional factors like economic performance and infrastructure remain important, but they must now be complemented by new indicators. These indicators should reflect a city's ability to adapt to climate change (their insurability), integrate advanced technologies (their predictability) and transition to sustainable energy (their sustainability). By embracing these new criteria, cities enhance their resilience to protect the people who live there. And they can also secure their place as attractive destinations for the global investment that creates opportunities for their population.

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World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

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