Smart cities improve quality of life, says McKinsey

7th June 2018 Jonathan Andrews

A snapshot of smart city initiatives deployed in 50 cities has found that they can improve multiple urban quality-of-life indicators by between 10 and 30 percent.

Produced by the McKinsey Global Institute, the report analysed how dozens of smart city applications can perform in different types of urban settings, providing a gauge of how each application can help cities address their priority issues.

It covers applications such as predictive policing, real-time public transit information, e-hailing, intelligent traffic signals, smart parking, telemedicine, and data-driven public health interventions, among others.

“We were surprised at the sheer size of the potential impact on some quality-of-life indicators–and not only in mobility, public safety, and environmental quality,” Jaana Remes, Partner, McKinsey Global Institute and  lead author of the report, told Cities Today. “But we also found striking potential for impact in areas like health.”

Remes said that she was surprised to find relatively modest potential impact on jobs and GDP, advising local governments not to pursue smart city strategies as an economic development strategy. She said financial constraints still remain a big barrier for the development of smart cities.

“The good news we found was that while the public sector would be the natural owner of 70 percent of the currently deployed applications, the majority (60 percent) of investment could come from private actors,” explained Remes. “And just over half of the applications that typically require public investment have a positive financial return.”

Key findings include:

  • Public safety: Smart applications could reduce urban fatalities by 8 to 10 percent.
  • Time and convenience: Cities can use smart technologies to cut commuting times by 15 to 20 percent giving workers back two to four full days every year.
  • Health: Cities could use smart technologies to reduce their health burden by 8 to 15 percent, and in the developing world could make significant strides through data-driven public health interventions.
  • Environment: Cities can use a range of smart applications to cut emissions by 10 to 15 percent, save 25 to 80 litres of water per person each day, reduce un-recycled solid waste by 30 to 130 kg per person annually, and reduce the negative health effects from air pollution by 8 to 15 percent.

However, Remes added that the report indicates even the most advanced cities have only achieved two-thirds of their potential.

“Some cities still haven’t implemented the applications with the greatest potential to address some of their priority issues,” she said. “All cities have more upside potential. Once cities have the fundamentals in place and start to develop more sophisticated capabilities, they can think bigger.”

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