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Housing shortages in big cities are bad for Canada's productivity growth. Ricardo Hausmann and Eric Protzer , Special to Financial Post Published Apr 02, 2026 A concise explanation by Ricardo Hausmann and Eric Protzer. Financial Post On April 9, Ricardo Hausmann, the founder and director of Harvard’s Growth Lab, will deliver the first talk of The Canadian Standard of Living, Productivity and Innovation lectures — a series of events focused on strengthening Canada’s standard of living hosted by the Centre for International Governance Innovation and sponsored by Savvas Chamberlain. Here, he and Growth Lab senior research fellow Eric Protzer explore how Canada’s housing crisis is holding the economy back. Canada’s lacklustre productivity growth is generally presented as an economic problem and its housing crisis is usually treated as a social problem. Those things are true, but there is also a deeper connection between the two. Much of the debate over Canada’s weak economic performance asks why the country has not generated more innovation, more scale and more world-class firms. But there is another question, just as important: When positive productivity shocks do occur, why does Canada so often fail to turn them into broader national prosperity? The answer lies in the interaction between two facts. First, growth in advanced economies has become increasingly biased toward knowledge-intensive activities that prefer large cities. Second, Canada’s urban regulations make it unusually hard for those cities to grow.
Over the past half century, cities in high-income economies have shifted away from manufacturing and toward skilled services, technology, finance, life sciences and other knowledge-intensive sectors. This is not just industrial change. It is also a geographic change. Older sectors often needed land, proximity to raw materials or room for large physical plants. Many modern sectors depend more on dense interaction among specialists. A major hospital works because many different kinds of expertise are available in one place. The same is true of software, finance, engineering, media and biotechnology. Production increasingly depends on bringing together many heads that know different things. Large cities have an advantage because they offer deeper pools of those specialized varieties of talent. That is why growth has become more metropolitan. Canada’s population growth has become increasingly concentrated in the country’s 10 largest cities. In the 1970s and 1980s, they accounted for only a bit more than half of total population growth. In the most recent period, they absorbed more than 80 per cent. That is the spatial footprint of a changing economy. So far, this is familiar territory......modern growth likes big cities.
The deeper issue is what happens next.The key concept is spatial equilibrium. People are free to move across cities within a country. They choose among job opportunities, wages, housing costs, commute times, schools and amenities. That means what happens in one city affects the whole economy. Imagine that a city receives a positive productivity shock. Perhaps a cluster of firms becomes more innovative. Perhaps a university or hospital system reaches critical mass. At current wages, employers there want to hire more people and expand. If housing supply is elastic, the result is straightforward. More homes get built. More workers move in. Employment rises. Output expands. Migrants gain access to better opportunities. Workers elsewhere may also benefit as labour becomes scarcer where they live and as the booming city buys more from the rest of the country. In this world, a productivity shock in one city raises prosperity more broadly.
But now consider the opposite case. Suppose housing supply is completely inelastic because zoning is restrictive, approvals are discretionary, minimum lot sizes and parking rules suppress density and incumbent neighbourhoods resist change. Firms in the productive city still want more workers, but workers cannot move in at scale. Instead, they bid against one another for a largely fixed stock of homes. Prices rise. Rents rise. Population growth is stunted. But now consider the opposite case. Suppose housing supply is completely inelastic because zoning is restrictive, approvals are discretionary, minimum lot sizes and parking rules suppress density and incumbent neighbourhoods resist change. Firms in the productive city still want more workers, but workers cannot move in at scale. Instead, they bid against one another for a largely fixed stock of homes. Prices rise. Rents rise. Population growth is stunted.This is the central point often missing from Canada’s housing debate. The problem is not only that expensive housing hurts families. It is that low housing elasticity prevents the country’s most productive cities from scaling up. It blocks the mechanism through which local productivity gains spread into national income gains.
In that world, the productivity shock still exists, but it is transmitted differently. Instead of showing up mainly as more people doing more productive work, much of it is capitalized into land values. The gain is transformed into real-estate rents, not higher living standards. This is the central point often missing from Canada’s housing debate. The problem is not only that expensive housing hurts families. It is that low housing elasticity prevents the country’s most productive cities from scaling up. It blocks the mechanism through which local productivity gains spread into national income gains. Silicon Valley is the classic illustration. It enjoyed one of the most extraordinary productivity booms in modern history. Yet because housing supply was so constrained, much of that success appeared as astronomical land values, punishing commutes and exclusion rather than as the population growth that would have allowed more people to participate directly in the boom. Instead of spilling over into broad-based national growth, too much of the gain was absorbed into the price of artificially scarce urban land. This is the central point often missing from Canada’s housing debate. The problem is not only that expensive housing hurts families. It is that low housing elasticity prevents the country’s most productive cities from scaling up. It blocks the mechanism through which local productivity gains spread into national income gains......... https://
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- CURITIBA IS AT THE FOREFRONT OF BECOMING AN EVEN MORE INNOVATIVE, SMART, AND SUSTAINABLE CITY.
Curitiba, Brazil- the most Intelligent City in the World......In November 2023, Curitiba clinched the prestigious title of ‘Most Intelligent City in the World’ at the World Smart City Awards for the Curitiba Sustainable City’ an initiative for fostering innovation, sustainability, technology, and socio-economic growth. Already recognized as Brazil’s leading smart city and a three-time finalist at the Intelligent Community of the Year (ICFCanada). The Agache Plan......When Curitiba transitioned into the 20th century, it experienced a significant population surging from a modest 20,000 residents to over 150,000 by the mid 20th century. Recognizing the need for forward-thinking urban planning, Mayor Rozaldo de Mello Leitão, in the 1940s, enlisted the expertise of French architect and urban planner Alfredo Agache. Agache, renowned for his work in Rio de Janeiro two decades earlier, was tasked with envisioning Curitiba’s future. The 1943 Agache Plan proposed comprehensive changes, structuring the city into distinct sectors for industrial, commercial, administrative, educational, sports, and residential purposes. This huge comprehansive plan to streamlines the city’s layout and accommodate its growing population effectively.....the article encompasses all urban issues- urban, infrastructure and transportation https://innovationsoftheworld.com/curitiba-the-most-intelligent-city-in-the-world/
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How ‘Daylighting’ Buried Waterways Is Revitalizing Cities Across America. Urban centers are exhuming creeks and streams once covered up to control floodwater—and bringing life back in the process. Smithsonian Jim Morrison - For a century, Jordan Creek cut across downtown Springfield, Missouri. As in so many other 19th-century cities, the waterway was a founding centerpiece of the town. But over the decades, the creek regularly unleashed a tantrum of flooding into the city’s commercial heart. By 1927, residents had tired of rebounding from one watery attack after another. They created tall concrete banks to cage the creek. When that wasn’t enough and the area flooded again five years later, the city entombed the waterway, adding a lid and encasing it in tunnels hidden under city streets. “It was man’s attempt to confine and control this floodwater,” says Kirkland Preston, an engineer in Springfield’s Public Works Department. “That was the old way of thinking.”
For a while, that controlled the floods. But the creek festered in its concrete coffin, a stagnant dumping ground for junk that filled with polluted runoff in seconds during storms and overflowed into other streams. Eventually, the water won. It always does. The neighborhood flooded in 2000, 2008 and 2016. Property damages ranged from $1 million to $15 million. For two decades, the city discussed freeing the creek and allowing water to disperse over the floodplain. Finally, after a process that involved public input, a design phase and securing funding, a $25 million plan to uncover 1,100 feet of Jordan Creek and build three bridges is moving forward.
“The new way of thinking is to give the water some room, allocate the riparian area to floodings and just let nature be nature,” says Preston, the project manager for Renew Jordan Creek.
Exhuming buried waterways to bring them back to life is a process known as “daylighting.” Concrete culverts and other coverings are removed and an attempt is made to restore the natural flow and the surrounding ecosystem. Prodded partly by increased flooding resulting from more intense and more frequent rainstorms, cities across the country are shining the light on once-dark creeks, streams, brooks and rivers. Boston; Providence, Rhode Island; New York; Berkeley, California; Dubuque, Iowa; Norfolk, Virginia; Detroit; St. Louis; and Charlotte, North Carolina, have all either completed daylighting projects or have them in the works. The primary goal of the Springfield project is flood control. But, like other daylighting projects across the country, the work has a variety of benefits. Native plantings will help improve the water quality by filtering storm runoff. The stream will replace what has become an unsightly, graffitied landscape that is an unsafe sheltering spot for the city’s homeless. As the design report notes, the green space will become jewelry in a “string of pearls” connecting parks and green areas in the city’s “Quality of Place” initiative. “Words like ‘transformational’ get used a lot to describe the project,” Preston says, “because it is an underutilized part of downtown and it’s right near Missouri State University. It has the potential to be really impactful.”
The benefits go beyond mitigating flooding and creating soothing green spaces, too. Ann Riley, the author of Restoring Neighborhood Streams and one of the first proponents of daylighting, likes to say that “stream restoration is neighborhood restoration.” Proponents in the early days decades ago, she says, often were business owners who wanted to make urban areas attractive again. The Springfield project may spur economic development and increase property values and tax revenue, something that’s happened in other cities. Returning the Napa River as the centerpiece of Napa, California, removed a requirement for flood insurance and is credited as a catalyst for $1 billion of investment in hotels, shops, restaurants and office space. In other cities, daylighting helps relieve the pressure on overburdened stormwater and sewer systems. It diverts clean water from wastewater plants, saving cities money to pay for treatment. While the projects can be expensive, they end costly maintenance. In a few cities, cost-benefit analyses showed returning to nature was cheaper than maintaining concrete culverts. And they may right a wrong. In some cities, public housing was built atop buried rivers, causing flooding and health problems for residents. Norfolk, Virginia, tore down public housing and daylighted a creek that is the core of a park that also provides flood protection. “Daylighting reveals another layer of these hidden worlds of streams, right under our feet in the cities,” says Gary Belan, senior director of clean water supply at American Rivers, which has promoted the practice and published a white paper on it. “It’s exciting to be able to re-explore and rediscover those assets.”
Those waters initially were the heart of cities. But as cities grew, flooding became a problem. So did the lack of space. Burying streams created room for housing and industry. The combination of development and streams channeled into underground pipes became a solution that was a problem. Roads and other hard surfaces prevented water from soaking into the ground and funneled more rainwater into the enclosed streams than they could handle. That cycle repeated in city after city. Stream after stream disappeared, lurking below. Researchers at the University of Maryland reported that 66 percent of Baltimore streams are buried. One study found that Philadelphia had covered 73 percent of its streams. Detroit has lost 85 percentof its stream channels since 1902. An interactive map created by the District of Columbia shows the dramatic transformation: a squiggly maze of historical streams, and a smaller, sterile portrayal of what remains. Only 30 percent of the streams that flowed through the district at the start of the 19th century remain today. Washington, D.C. is among cities including Oakland, California; Baltimore; and Portland, Oregon, that have created buried stream maps.......read on https://www.smithsonianmag.com/innovation/how-daylighting-buried-waterways-is-revitalizing-cities-across-america-180981793/
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City living: an urban species is still adapting to our new environment. UN figures show that four-fifths of the global population now live in major settlements. We’re still figuring out how to cope. Guardian Opinion 27 Nov.2025 Cities have existed for millennia, but their triumph is remarkably recent. As recently as 1950, only 30% of the world’s population were urban dwellers. This week, a United Nations report suggested that more than 80% of people are now urbanites, with most of those living in cities. London became the first city to reach a million inhabitants in the early 19th century. Now, almost 500 have done so.
Jakarta, with 42 million residents, has just overtaken Tokyo as the most populous of the lot; nine of the 10 largest megacities are in Asia. The UN report revealed the scale of the recent population shift to towns and cities thanks to a new, standardised measure in place of the widely varying national criteria previously used. The urbanisation rate in its 2018 report was just 55%. Jakarta’s explosive growth – its population has grown almost 30-fold since 1950 – demonstrates both the costs of rapid urbanisation and the difficulties of addressing them. It ischoked by traffic and pollution, regularly floods and is sinking fast due to the over extraction of groundwater. The government is now building a new administrative capital more than 1,000km away, in Borneo. But such projects have an uninspiring record. The new city of Nusantra is behind schedule and short on funding and would-be inhabitants.
Most thriving cities are more spontaneous affairs. The typical image of urbanisation is of young people lured by the promise of prosperity. But the late urbanist Mike Davis also pointed to waves of migration driven by growing rural desperation thanks to agricultural deregulation and punishing fiscal policies enforced by the International Monetary Fund and World Bank. In other cases, he wrote in his book Planet of Slums, “rural people no longer migrate to the city; it migrates to them” as urban sprawl encroaches on their land. The benefits of cities are obvious. They are hubs of productivity, creativity and diversity that boost social and economic development. New York City’s gross product – $1.8tn last year – easily exceeds the GDP of Turkey or Saudi Arabia. That helps to explain why some cities are growing stronger as political – even diplomatic – entities. Yet as in 19th century London, opportunities and services exist alongside monstrous inequality, overcrowded housing and substandard infrastructure. Diseases spread more rapidly in crowded conditions with highly mobile populations. The rational decisions of individuals – to find educational opportunities for their children, escape rural desperation or seek excitement – play out on a grand scale, demanding intervention.....read on https://www.theguardian.com/commentisfree/2025/nov/27/the-guardian-view-on-city-living-an-urban-species-is-still-adapting-to-our-new-environment
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- the proportion of the world’s population living in urban areas grew from 30% in 1950 to 55% in 2018 and is projected to reach 68% in 2050, with almost 90% of the projected increase to take place in Asia and Africa (UNDESA, 2019)
- in 2018, 24% of the global urban population lived in slums, often with limited access to basic services and with the proportion being as high as 56% in Sub-Saharan Africa (UNDESA, 2021)
- urban areas have more than doubled between 1992 and 2018, contributing to biodiversity loss (IPBES, 2019)
- cities are powerhouses of economic growth—contributing about 60% of global gross domestic product (GDP), but also account for a high percentage of global carbon emissions and natural resource use (UN, 2019)
- urbanization has exacerbated the impacts of global warming, with urban centres being warmer than their surrounding areas due to the urban heat island effect (IPCC, 2021)
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