This fall marked the 15th anniversary of the Peking University–Lincoln Institute Center for Urban Development and Land Policy (PLC). Established in 2007, the center has become a leading authority on land policy issues in China, including the property tax, municipal finance, land and housing policies, and land conservation. To celebrate this milestone, the PLC held an event on November 4 that included commemorative remarks, a formal recommitment to the partnership between the two institutions, and several academic presentations on urban development and climate change. 

“The Lincoln Institute works globally on topics largely relating to land policy, and the joint center is an exceptional platform for our China program,” said Katie Lincoln, chief investment officer and board chair of the Lincoln Institute, who delivered congratulatory remarks by video. “During the past 15 years, the center has held numerous conferences, undertaken research and demonstration projects, shared in scholarly exchanges, and happily gained recognition both in and out of China.” 

In addition to Lincoln, several current and former leaders from the two institutions joined the celebration virtually or in person, including Jin Zhang, vice president of Peking University; Jianhua Lin, former president of Peking University; Yansong Li, former vice president of Peking University; George W. McCarthy, president of the Lincoln Institute; Gregory Ingram, former president of the Lincoln Institute; and Joyce Man, former director of the PLC. 

“We are now at a difficult time of Sino-U.S. relations,” said former PKU President Lin. “But I believe that the mutual trust between our two institutions and the confidence about the value of what we do will continue to be a foundation for us to cooperate and move forward.” 

During the event, Zhang and McCarthy signed an agreement for continued collaboration between the two organizations. “In the next few years, the PLC will add a new focus on land use and climate change, in support of China’s ambitious goal of achieving net-zero carbon goals by 2060,” noted McCarthy. “The PLC also will help the Lincoln Institute in its global efforts to address the climate crisis. The unique cooperation between the Lincoln Institute and PKU over the last 15 years has been fruitful for China, the United States, and the world in [finding land-based solutions to] economic, social, and environmental challenges. We are excited to embark on another five-year journey together.” 

The center, which conducts research, training, policy analysis, academic exchanges, advisory services, and demonstration projects throughout China, also invited several scholars, fellowship recipients, and others who have been involved with its work over the years to share reflections.  

“I worked with PLC for more than ten years, from winning the Peking University–Lincoln Center scholarship, to guiding students to participate in the center’s fund application, to becoming a partner of the center’s work and research,” said De Tong, associate professor at Peking University Shenzhen Graduate School. “Scholars at the center have become my inspiring mentors and friends, and colleagues at the center have also become comrades-in-arms at work and friends in life.” 

The center has launched an essay contest open to those who have been involved with the PLC over the years, from scholarship recipients to business collaborators to conference participants. Five winning essays, selected in January, will receive a small monetary prize; a copy of the Lincoln Institute book Infrastructure Economics and Policy: International Perspectives, coedited by José A. Gómez-Ibáñez and Zhi Liu, who leads the PLC as director of the Lincoln Institute’s China program; a copy of Advanced Economic Geography by Canfei He, dean of the College of Urban and Environmental Sciences at PKU and associate director of the PLC; and publication on the PLC website. 

The second half of the day’s events was structured as an online forum on climate change and urbanization in the context of China’s dual-carbon goal, which seeks to reach peak carbon by 2030 and achieve carbon neutrality by 2060. Leading policy makers and scholars from China, Hong Kong, and the United States shared their latest thoughts and studies on topics including green building, urban equity, and urban-rural integration, drawing an audience of more than 600 researchers, planners, and others.  

“The dual-carbon goal is a major challenge for China, but also presents new opportunities for China’s continuing urbanization,” said PLC Director Liu. “Urbanization and carbon net-zero has been a hot topic in China’s policy debates, which have been getting more substantive and concrete over the last two years. I found myself learning a lot from these presentations, which deepened my understanding about the challenges and opportunities that the goal of carbon net-zero will bring to our urbanization for the next few decades.” 

Forum topics and presenters included: 

• the evolution and future of green building, by Dr. Baoxing Qiu, former Deputy Minister of the Ministry of Housing and Urban-Rural Development; 
• carbon reduction models for commercial real estate, by Professor Siqi Zheng of the Department of Urban Studies and Planning of MIT; 
• equity and governance under China’s dual-carbon goal, by Professor Shenjing He from the Department of Urban Planning and Design of the University of Hong Kong; 
• carbon reduction through urban agglomeration, by Professor Ming Lu from Antai School of Economics and Management, Shanghai Jiao Tong University; and  
• urban-rural integration and rural revitalization, by Professor Shouying Liu from the School of Economics of Renmin University. 

Visit the “Our Work” section of our website to learn more about the PLC and to find information about how to connect with the center on WeChat. 

Lead image: Lincoln Institute President and CEO George W. McCarthy and Peking University Vice President Jin Zhang celebrate the renewal of the collaborative agreement that established the Peking University-Lincoln Institute Center for Urban Development and Land Policy. Credit: Courtesy of PKU.

Researchers and policy makers have long sought to understand how infrastructure development can stimulate economic growth, reduce poverty, and promote regional integration. Two chapters of the Lincoln Institute book we edited, Infrastructure Economics and Policy: International Perspectives, seek to advance such an understanding in ways that can inform national or regional infrastructure plans. Three other chapters examine the effectiveness of alternative approaches to promoting economic growth through regional integration. 

Infrastructure and Economic Growth 

Chapter 2, written by former Lincoln Institute President Gregory K. Ingram and Zhi Liu, senior fellow and director of the China program at the Lincoln Institute, reviews empirical studies of the relationship between infrastructure and economic growth. They report that the estimated effects of infrastructure investment on economic growth vary significantly among countries and sectors, but are generally positive. These positive effects are larger in developing countries than developed countries, and larger in electricity and telecommunications than in transportation. Studies suggest that the performance or efficiency of infrastructure is a very important determinant of its economic impacts.  

Ingram and Liu also review the empirical analyses of the short-run multiplier effects of infrastructure investment. These analyses find little to no short-term economic impact, even when the long-term economic impacts are clearly positive. The small multipliers are due in part to the substantial time required to undertake and complete construction and in part to the crowding out of private investment by government investment. While the increased public spending for infrastructure investment can help reduce unemployment by creating jobs for low-skilled workers, many of today’s construction workers are in fact highly skilled. These findings suggest that the chance for such spending to boost the economy is very limited, especially in the short run. 

Infrastructure and Poverty Reduction 

In chapter 4, authors Sameh Wahba, Somik Lall, and Hyunji Lee of the World Bank analyze the global evidence and literature on the relationship between infrastructure and poverty. They argue that the poor suffer most from a lack of access to infrastructure networks, since they must spend a disproportionately higher share of their income to secure basic services such as water or electricity from costly tankers, bottles, and batteries. While access is typically higher in urban areas than rural areas, many of the urban areas in developing countries are struggling to keep up with the infrastructure demands of rapid urbanization.  

The global evidence and literature reviewed by the authors also shows that investments and policies that promote equality in access to physical infrastructure tend to reduce income and spatial inequalities. Moreover, the effectiveness of programs targeted on the infrastructure problems of the poor depends greatly on the details of their design. It helps if an improvement to physical infrastructure is coupled with complementary social policies, such as combining slum upgrading with reforms to dysfunctional land markets, pairing isolated rural electricity systems with the expansion of local educational or business opportunities, or matching basic sanitation facilities with public health or basic water programs. Similarly, when a new infrastructure facility or service is established, it is important to include a realistic plan for funding ongoing operations and maintenance. 

Infrastructure and Regional Integration 

In chapter 15, Professor Jose Manuel Vassallo of the Polytechnic University of Madrid examines the effectiveness of European Union infrastructure programs in fostering regional integration. In theory, EU members should have a strong interest in promoting integration, since many have relatively small populations and thus would benefit from the opportunities that integration offers to develop their competitive advantages or exploit economies of scale. Toward that end, in 1992 the EU members agreed to designate a trans-European network of priority transportation projects (TEN-T), which was subsequently divided into a “core” TEN-T network and a larger “comprehensive” TEN-T network. Similar trans-European networks for energy (TEN-E) and communications (eTEN) were also established. 

However, the outcomes of the TEN-T plans are mixed. There is some evidence of increased integration, but progress is disappointingly slow, in part because the EU is essentially a federal system in which the targeted facilities are owned by member states, and their priorities for improvements are not always the same as those of the EU. The EU has had to motivate the states to improve TEN-T facilities by offering special matching grants and other financial support. The need for such financial support has effectively increased the cost of the TEN-T to the EU and made it less likely to complete the core network by the 2030 deadline. 

Japan has been more successful in using infrastructure to promote regional integration. It is the first country to use high-speed passenger rail as a tool to shape regional development. Its rail services are widely admired for their scope, reliability, and safety. In chapter 16, Professor Fumitoshi Mizutani and Professor Miwa Matsuo, both of Kobe University, analyze the factors that have contributed to the railroads’ success. Japan is almost unique in the world in relying on railroad companies that are both privately owned and vertically integrated (meaning the railroad that owns the track also operates almost all the trains that run over it). Their success is also attributed to travelers seeking alternatives to congested airports and heavy volumes of automobile traffic concentrated in a few linear corridors, in addition to their excellence in service and development of innovative business models that exploit economies of scope and internalize externalities. The railroad companies, for example, are permitted to develop ancillary activities, like shopping malls in stations, that reduce their dependence on passenger revenues but also attract more passengers. Unlike the EU, the Japanese government builds and owns its high-speed lines and leases them to operators, with the lease fees based on the expected operating profits from each line. So far, the resources gained by innovation and vertical integration seem to have helped finance the cost of extending high-speed service to less dense corridors and more remote regions. 

China is similar to Japan in its reliance on high-speed rail as an important tool for shaping national development. The two countries differ, however, in that 92 percent of Japan’s population lives in urban areas, compared to 65 percent in China. As urbanization continues, the Chinese government has adopted a strategy to promote the formation and development of 19 enormous city clusters or megalopolises, each comprising several major cities linked with high-speed rail. This strategy can be seen as an effort to create a variety of opportunities to absorb rural migrants and improve urban worker productivity by encouraging various forms of agglomeration economies. If the rail service is sufficiently fast and convenient to encourage commuting among the cluster’s cities, then it will increase the effective size of the labor pool and help workers match their skills with employers. If each major city in the cluster is large enough to support a high degree of specialization, say, in trade, high-tech manufacturing, tourism, or finance, then it can support specialized suppliers as well. 

In chapter 17, Zheng Chang, a researcher with ETH Zurich, uses a case study of the Guangdong–Hong Kong–Macau Greater Bay Area (GBA) to demonstrate how high-speed rail contributes to city cluster formation by strengthening agglomeration economies. His empirical analysis of the GBA suggests that high-speed rail enhances agglomeration effects at the cluster level, but the gain in employment for the larger cities seems to come at the expense of the small ones. It is unclear, however, whether the agglomeration benefits of the city cluster strategy actually outweigh the costs in additional rail services. Gaining a more complete understanding of the effectiveness of the strategy will require further studies using a cost-benefit analysis framework.  

Three Lessons from the Case Studies 

The three case studies from the EU, Japan, and China demonstrate different approaches to and lessons about the use of infrastructure to promote regional integration. First, the EU case suggests that it is hard to achieve central infrastructure goals under a federal system of infrastructure provision, because the priorities of the member states are often different from those of the central government. Second, although Japan is unusual in its reliance on private and vertically integrated railroads, its experience demonstrates that regional plans can be implemented successfully by private providers overseen by the central government. Japanese private passenger railroads were the source of critical innovations that helped keep down the cost of providing an extensive and expanding rail system. Third, agglomeration economies can be harnessed by using infrastructure investments to promote the formation of city clusters, as in the case of China. But this bold strategy can be risky due to the heavy investments needed. The risks can be reduced if the strategy is subject to a rigorous cost-benefit analysis. 

José A. Gómez-Ibáñez is the Derek C. Bok Professor Emeritus of Urban Planning and Public Policy at Harvard University. Zhi Liu is senior fellow and director of China Program at the Lincoln Institute of Land Policy. They are the editors of Infrastructure Economics and Policy: International Perspectives. 

Image: Shinkansen high-speed rail line, Japan. Credit: gérard via Flickr. 

Decisions about infrastructure investments often have strong and long-lasting implications for the built environment, and vice versa. Should governments subsidize highway construction or public transit? Is it better to invest in the durability of rail lines or the flexibility of bus lines? How will these and other decisions about infrastructure affect residents and workers? The relationship between infrastructure policies and the physical form and productivity of cities is the subject of two chapters in Infrastructure Economics and Policy: International Perspectives, a recently published Lincoln Institute book. 

In chapter 4, economist Edward Glaeser of Harvard University focuses on how infrastructure technology shapes the economic role and physical form of cities. Glaeser observes that the density and form of a city reflect the transportation technology prevailing at the time when the city was growing most rapidly. Boston is denser than Las Vegas, for example, largely because it grew in the era of the streetcar rather than that of the automobile. The full effects of technological change develop in three steps, however, and that development can take many decades. The first step is the invention and refinement of new mobility types, such as the wheeled wagon, the horse-drawn (and then electric) streetcar, the subway, the automobile, and even the elevator. The second step is the construction of the urban network over which those vehicles operate, while the third is the building of the cities around that network. 

Glaeser takes as his example the automobile, which was invented in the late 19th century but neither comfortable, reliable, nor affordable until the first decades of the 20th century, when its popularity exploded. The United States responded by building extensive high-performance, limited-access expressway systems in many cities. Those systems, in turn, stimulated the restructuring of urban areas in the United States in the second half of the 20th century, moving housing and workplaces from the central cities to the suburbs and enabling a migration from northern cities to the newer Sunbelt cities.  

Our ability to shape cities around their important highway, subway, and other transportation networks is limited, however, by the value and durability of the existing stock of houses and workplaces. For example, a big increase in the travel time or other costs of commuting to the center of a metropolitan area would be needed to make it worthwhile for real estate developers to tear down the existing suburban housing stock and rebuild it to a higher density commensurate with the higher commuting time and costs. Land use regulations can also help slow the land use response to transportation technology, especially where they favor the status quo.

Glaeser also illustrates several common policy choices about infrastructure and urban form. The first is whether the government should subsidize highway construction or public transit.   Subsidizing highway construction and uses often encourages urban sprawl. Subsidizing public transit may induce people to live near—and real estate developers to build homes near—public transit stops, but evidence shows that the impact is much smaller in scale than that of subsidizing highways. In addition, in the United States, strict local land use controls often constrain the ability of housing developers to respond to infrastructure investments, thus limiting the benefits of such investments.  

A second policy choice is between rail and buses to provide urban public transit service. The choice is basically between durability and flexibility. The flexibility of bus services is an advantage in an uncertain world, but the durability of rail infrastructure makes real estate developers feel more confident about developing around rail stations. Public transport is now facing a major challenge: it is an important part of any carbon emissions reduction strategy, but ridership has fallen since the onset of the pandemic. 

In chapter 5, Daniel Graham, Daniel Hörcher, and Roger Vickerman, all professors and researchers at Imperial College in London, explore the relationship between infrastructure and the competitiveness of cities. Urban concentration provides more employment opportunities to workers and helps raise productivity for firms. These agglomeration benefits are accompanied by congestion and pollution which are also caused by urban concentration. However, it is methodologically difficult to measure the agglomeration benefits. 

To do so and for analytical simplicity, the authors assume a city where residential and workplace locations are fixed, and infrastructure affects only the productivity of city workers and the levels of congestion and pollution. Their main propositions are that urban agglomerations generate both positive and negative externalities and that the failure to consider them together may lead to poor investment and pricing decisions. The positive externalities stem primarily from increases in worker productivity as the agglomeration grows, but also from the realization of economies of scale in provision of public transit services; the negative externalities stem from increases in traffic congestion, pollution, and accidents. 

The authors describe the considerable challenges of empirically estimating the agglomeration benefits. They report their own estimates of the effects of agglomeration size on productivity, which have been endorsed by the U.K. government for use in required cost-benefit analyses. It is conceivable, but unlikely, that the agglomeration benefits and public transit scale economies are large enough and the congestion externalities small enough to greatly reduce the net benefit of the conventional recommendation of charging motorists a fee to travel into congested locations during rush hour. These are the kinds of factors cities must consider as they make decisions about infrastructure investment and pricing and subsidies. 

José A. Gómez-Ibáñez is the Derek C. Bok Professor Emeritus of Urban Planning and Public Policy at Harvard University. Zhi Liu is senior fellow and director of China Program at the Lincoln Institute of Land Policy. They are the editors of Infrastructure Economics and Policy: International Perspectives. 

The Peking University–Lincoln Institute Center for Urban Development and Land Policy (PLC) recently co-organized a daylong discussion about climate and energy as part of the Beijing Forum, an annual international academic event co-sponsored by Peking University, the Beijing Municipal Commission of Education, and the Korea Foundation for Advanced Studies.  

The “Pathways to Decarbonizing the Planet of Cities” subforum featured scholars and policy makers from China and other countries, including Professor A. Michael Spence of New York University, recipient of the 2001 Nobel Memorial Prize in Economic Sciences, and Dr. Jun Ma, cochair of the G20 Sustainable Finance Working Group. Jointly organized with Peking University’s School of Urban and Environmental Sciences and Energy Research Institute, the conference was livestreamed in both Chinese and English, attracting nearly 8,000 viewers.  

Spence delivered a keynote speech on carbon, energy, and urbanization, exploring the relationship between carbon reduction and economic growth and assessing current opportunities in the realms of energy and global collaboration. “While the challenges are enormous, there is an increasing array of low-cost, widely available, powerful tools and technologies available now, and there will be more to come,” he said. “That give us some hope that we can actually achieve” climate objectives. 

Spence also analyzed potential challenges related to implementing climate regulations and commitments. At the international level, he used China and India as examples to argue that the appropriate paths and timelines of emissions goals should vary according to the pace of each country’s growth and development. He stressed the importance of transferable, cross-border technologies and finance for global climate success.  

“We’ve got huge challenges, we’ve got mechanisms in the form of carbon trading, we’ve got commitment from people, and we’ve got powerful tools,” Spence concluded. “I think the big question mark is the level of international cooperation that’s going to accompany this, and it’s starting to look like it’s moving in the right direction.” 

Dr. Zhi Liu, director of the PLC, moderated a roundtable discussion with panelists including climatologist Jean-Pascal van Ypersele, professor of Environmental Science at the University of Leuven, Belgium, and former vice chair of the UN Intergovernmental Panel on Climate Change; Prof. Jun Fu, academic Dean of the Institute of South-South Cooperation and Development of Peking University; Ma, who is also codirector of the Macro and Green Finance Lab of the National School of  Development at Peking University; and Spence. 

During the discussion, Spence analyzed the effects of past energy policy implementations and proposed that climate change and economic development should be considered as a whole. Ypersele described the positive outcomes of the COP26 meeting in Glasgow, including awareness of the urgent need to take action, the formulation of carbon trading market standards, international compensation mechanisms, and the responsibilities and willingness of developed countries to invest in climate change adaptation. Director Jun Ma discussed the development of green finance on a global scale, pointing out that China’s green investment scope includes decarbonization projects, environmental protection projects, and various biodiversity-related projects. Professor Jun Fu discussed the unique challenges that China faces in decarbonization, including the respective structures of its energy sector, which relies heavily on coal, and its government. The guest speakers agreed that they were cautiously optimistic that the world could meet the goal of limiting the rise in global temperatures to 1.5 degrees. Jun Fu recommended an approach swiftly endorsed by the other panelists: “Hope for the best, prepare for the worst.” 

At the conclusion of the subforum, Liu noted that he believed the world is paying more attention to climate change and carbon neutrality, but the road ahead is still difficult. The day’s discussions shed more light on the path toward urban carbon neutrality, he added. “I feel a bit more optimistic and hopeful,” he noted at the end of the roundtable, “and I hope that our audience comes away with a bit more optimism and more hope about our future planet of cities.”  

Shenmin Liu is a Research Analyst with the Land and Water Conservation Program and China Program at the Lincoln Institute of Land Policy.

Image: Participants in the Beijing Subforum roundtable included, clockwise from top left, Dr. Zhi Liu, director of the Peking University-Lincoln Institute Center for Urban Development and Land Policy; Professor Jun Fu, dean of the Institute of South-South Cooperation and Development of Peking University; Nobel-winning economist A. Michael Spence of New York University; Professor Jun Ma of Peking University, cochair of the G20 Sustainable Finance Working Group; and climatologist Jean-Pascal van Ypersele of the University of Leuven, Belgium, a former vice chair of the UN Intergovernmental Panel on Climate Change. Credit: PLC.