HBS 1487: Building Sustainable Cities and Infrastructure
The world faces challenges stemming from rapid urbanization, increasing pressure on the environment and on basic resources, and the growing difficulty governments face in managing the confluence of these trends. This class will appeal to students who would like to explore the frameworks, models, and examples that help private sector investors, entrepreneurs, NGOs, multinationals, and policy makers address the issues. Students interested in private equity, real estate, business and the environment, social enterprise, and transportation also will find the course to be interesting and useful.
This course is designed for students who would like explore business approaches to addressing three very large challenges of our times: 1) rapid and massive urbanization as hundreds of millions of people around the world move to cities; 2) existing global scarcity of basics like clean water, clean air, food and land as well as excesses of traffic and waste, each of which gets exacerbated by rapid urbanization; and 3) the apparent inability of federal governments to invest in advance of these phenomena to anticipate and address these problems.
The course takes the point of view that cities are often the political unit that can act. Further, investments at the scale of buildings, districts, and cities are well understood by the private sector. This means that in many situations private finance of the public infrastructure that makes up cities leads to faster economic development, richer opportunities for individual growth, and better environmental performance as basic resources like energy and water are used more efficiently.
Cases are drawn from both emerging economies and developed economies, and from both new cities and existing cities ranging from New York and London to Ho Chi Minh City, Mumbai, Lagos, and San Paolo. Real estate, project finance, infrastructure finance, and the delivery and operation of these elements of cities play prominent roles in each module. Economic development, resilience, and smart cities are important themes.
Course Content and Organization
The course develops skills in five modules. Skills build in each module, and the frameworks and points of view are set out to shape a comprehensive ability to engage in investing, policy development, entrepreneurship, and large company leadership in an increasingly urban world.
Infrastructure Finance and Public Private Partnerships. Physical infrastructure is the foundation of building cities. This module looks at the financial, engineering, and political aspects of large project finance. Points of view include private funders and promoters, governments sponsoring public private partnerships, and a variety of investors including multilateral lenders like the World Bank. Sectors include water, transit, and power distribution. Frameworks include cash flow waterfalls, a range of subsidies and guarantees, and the categorization and allocation of risk.
Economic Development: Cluster Theory, Economic Zones, New Cities. Infrastructure alone does not lead to growth of economies or to opportunities for individuals. This module incorporates several popular frameworks to guide private investment and coordination as cities and regions compete with each other. The emphasis is on the activation of infrastructure to accomplish other goals.
Green Buildings and Cities: Architecture and Urban Planning. Individual buildings and groups of buildings have a large influence on the efficiency of infrastructure like transit and energy, on the setting for economic development, and on how people work and live. This module provides basic insights into typologies of buildings and core ideas in urban planning, with emphasis on green buildings and cities.
Resilience: Investments in Adaptation. Cities and their residents are increasingly vulnerable to shocks from climate, geology, and public health as urban areas get denser, as infrastructure gets more stressed, and as weather plays more of a part in disrupting lives and businesses. This module looks at civil engineering, disaster and risk preparation and recovery, and financial products like reinsurance and climate derivatives to lead to best practices in analyzing investments in resilient infrastructure.
New Tools: Smart and Sustainable Cities. The final and most important module builds on the analytical tools, financial frameworks, and situational analyses of the earlier modules. Big data and analytics, sensors, composites, bio-materials, the collaborative economy, and new machines and incentives have the power to make a tremendous difference in moving the people, things, and information that builds sustainable cities and infrastructure. This module helps to winnow the core scalable ideas from the hype and buzz.
Note: Cross-registrants are welcome, with advance permission of the instructor. HBS Finance 1 or Real Property, or equivalent, are required prerequisites for cross registrants.