Climate change and its relationship to water management are having a profound impact on cities, compounded by the global trend toward urbanization. Harvard University recently hosted a wide-ranging discussion titled, “The Future of Cities: Water,” which assembled an international panel of experts to provide insights into the challenges of water-related climate change as well as potential solutions for a broad range of city environments.

Moderated by ULI member John Macomber, senior lecturer in finance at Harvard’s business school, the panel included Loreta Castro Reguera, visiting scholar in landscape architecture at the Harvard Graduate School of Design as well as design director for Taller Capital, Mexico; John Fernandez, director of the MIT Environmental Solutions Initiative; Joyce Coffee, founder and president of Climate Resilience Consulting; Efosa Ojomo, global prosperity lead at the Clayton Christensen Institute for Disruptive Innovation; and Jim Matheson, chairman and CEO of Oasys Water and senior lecturer in entrepreneurship at HBS.

In addition to the issues associated with having too much water (flooding and sea-level rise), there are consequences of not having enough water (drought, extreme heat, and wildfires), all of which are having a devastating effect on the built environment and the populations of cities around the world. As Macomber noted in his introduction, many of the issues surrounding water are paradoxical. “The future of cities is that they’ll obviously be impacted by water, and it’s often two sides of the same coin,” he said. “While there is heavy rain flooding, there is also drought; and while there is sea-level rise, there is often extreme heat; and while there is excessive rain, there are also wildfires—such as in California last year.”

A prime example of the contrasting effects of climate change on water is Houston, the fourth-largest city in the United States with a population of 2.3 million. Located 50 miles (80 km) inland, the city averages approximately 50 inches (127 cm) of rain per year, but in 2011, the region averaged less than 15 inches (38 cm). Combined with extreme heat (2011 was the hottest summer on record in Texas at the time), the city experienced a drought that killed 66 million trees, greatly reducing the natural cooling effects for this hot city. Six years later, in late August 2017, Hurricane Harvey dumped nearly 40 inches (101 cm) of rain on Houston in less than a week, causing one-third of the city to be underwater during the peak of the storm and inflicting tens of billions of dollars in property damage.

The response to extreme weather events and ongoing water issues across the globe ranges from an array of support services from national governmental agencies (like Federal Emergency Management Agency), the private sector, and nonprofit organizations in developed nations to none at all in emerging economies. And those areas lacking access to capital and information are likely to suffer more dire consequences. But access to information and resources does not always translate into action.

For example, California’s largest power utility, Pacific Gas & Electric, which filed for bankruptcy after admitting that its equipment may have caused the devastating fires that burned down 240 square miles (622 sq km) of Northern California communities last year, cut power to over 700,000 homes and businesses in early October as a preventative measure, causing a major disruption to residents and businesses. “You could argue that PG&E should have spent more money on resilience,” said Macomber. “And that that failure to invest in resilience at PG&E led to wildfires, death, and destruction of those communities by fire.”

During the panel discussion, Ojomo, Matheson, and MIT’s Fernandez focused on the broader picture of addressing the effects of climate change and water through innovation and systemic change. Reguera and Coffee took a more localized approach, sharing best practices of projects that exemplified how two communities are introducing climate resilience measures that are paying dividends. “While water and climate change are two of the most significant global challenges, global warming is truly a global problem that needs to be solved globally,” said Matheson. “But water is a series of hyperlocal challenges than can be solved.”

Reguera was the design director and technical coordinator of the Hydropuncture project in Mexico City, which earned the Universidad Nacional Autónoma de México the Global LafargeHolcim Awards Gold 2018 and LafargeHolcim Awards Gold 2017 for the region of Latin America. The project was implemented in the most populous (and lowest income) of Mexico City’s 16 boroughs, Iztapalapa, which has a population of approximately 2 million. Like many locales affected by climate change, the water issues are double-edged. While tap water is of poor quality and in short supply (half of the residents do not have daily access to water), the region is also plagued by flooding caused by heavy downpours six months of the year.

Using “acupunctural interventions” that have been successful in projects across the globe, the Hydropuncture project diverts rainwater from the Sierra de Santa Catarina area to prevent urban flooding that would normally inundate city streets. It also improves the quality of water that infiltrates the subsoil and increases the volume of water that replenishes the water table by 35 percent. The water management infrastructure was designed to capture rainwater runoff, which is treated through a combined system of biological anaerobic ponds and wetlands. The design of Hydropuncture also includes a public recreational landscape space.

More important, the project serves the needs of 28,000 of Iztapalapa‘s residents without relying on major investment from the central government. “It’s starting to make a difference,” said Reguera. “We’re not saying that we shouldn’t rely on traditional systems, but what we shouldn’t do is [use them solely], because we can come up with creative ideas that we can pair with traditional systems, using newer technologies and ideas that are design-based.”

Coffee discussed the resilience work that is being done in Miami Beach, based on the findings of a 2018 ULI Advisory Services panel, of which she was chair. A city of 100,000 that attracts millions of visitors every year, Miami Beach is greatly at risk of sea-level rise and experiences severe flooding from king tides, rainfall, and groundwater. Using nearly $700 million in funding financed independently of federal and state funds, the city has taken a number of measures to address the flooding with a stormwater management program, including improving drainage systems; elevating roads and public seawalls; installing pumps to replace aging gravity stormwater pipes; replacing water, wastewater, and other utilities; increasing seawall height; and other measures.

But despite the efforts, the advisory panel concluded, it may not be enough. “The major complication, which I think is also getting in the way of the ultimate resolution of the future of Miami Beach, is that the populace is not yet aware of the crisis that they face,” said Coffee. “So, it’s that lack of awareness and a lack of a willingness to embrace the science. And the fact is that there is a potential need for retreat, even for the 1 percent, from these glorious places.” Underscoring concern for the fairness of a process of managed relocation and the possible resistance of destination cities, Coffee added, “There’s one thing about retreat that we need to be clear about. It needs to have agency. When people leave, they need to go to a place that’s receiving them with grace.”  

While retreat, or abandonment of cities due to sea-level rise or flooding may seem like a far-off prospect, it is no less real. According to a study published in the Proceedings of the National Academy of Sciences, at least 414 towns, villages, and cities across the United States would face relocation—even if humanity were to stop all carbon emissions today. The immediate effects of climate change may be less extreme, but not without consequence. From a real estate perspective, there will be a profound change in investment behavior in terms of location, as investors will direct capital toward communities taking a proactive approach to climate resilience, while disinvesting in communities that are clearly threatened and not able to proactively deal with the threat, said Macomber (who has served on multiple climate resilience panels for ULI). “Investors should now price in the fact that there are going to be more and more threats to their properties, and they’re going to have to spend more money defending the property, either with physical infrastructure or with financial tools, including more expensive insurance and greater replacement reserves.”

Segmenting by problem (flood or drought), geography (developed economy or emerging economy), and nature of solution (public sector–led or private sector–led) will allow real estate professionals to better anticipate and invest, as they acknowledge the future impacts of water in cities.