When senior leaders at a large, global financial institution were choosing between cities in India for the location of their next operations center, they certainly considered the factors you might expect: an educated workforce, transportation links and cost. The bank chose Pune, and the competitiveness advantage that Pune had was one that may seem surprising, but is becoming a much bigger factor in such decisions: resilience. In attracting the bank Pune's leaders had realized the resilience dividend, and it's a vital calculus for any city in this age of uncertainty.
Resilience is the ability of people, communities and institutions to prepare for, withstand, and bounce back more rapidly from acute shocks and chronic stresses. Catastrophe is not always preventable, but the degree of destruction and devastation can be mitigated, and as the leaders of Pune, and other cities, are recognizing, building resilience is also a key economic development strategy. The benefits can be seen in the city's budget lines, its economy and in greater opportunity for the residents.
How can a city realize the resilience dividend? It requires upfront investment both in terms of financing and resources. It requires innovation to solve for known vulnerabilities but also for variables unknown. And it takes partnerships with the private sector, both to uncover weaknesses within systems, but to also unleash the full range of financing for resilience projects and infrastructure.
In turn, cities will see direct economic benefits. No doubt, new or upgraded infrastructure does require upfront investment (and city government leaders should be engaging the private sector to get it done). But that investment creates jobs today and in the long run it's a money saver -- it costs 50 percent more to rebuild in the wake of a disaster than to build the infrastructure to withstand the shock.
It's not just infrastructure construction that creates jobs. As Pune saw, resilience is becoming part of the criteria companies take into consideration when determining where to invest or locate operations. And in today's global economy, cities are competing for people as well as companies. Resilience should be a positive selling point that cities volunteer to attract the best and the brightest, just as they might promote their livability scores, vibrant arts scene or new transportation investments.
A resilience framework also creates a more diverse economy. This is particularly important in a place like El Paso, Texas, where government and military jobs dominate the local economy. The city took a huge hit during the recent government shutdown, an important reminder that shocks don't always come in the form of high winds or high heat: economic shocks are equally in the forecast. El Paso has realized that by diversifying -- and taking advantage of their border location - they can enjoy the type of economy that not only hums along on an average Tuesday, but can weather shocks and allow people to bounce back more quickly.
Another approach cities can take to realize the resilience dividend is to catalyze the marketplace for resilient innovations and technologies. Due to rising sea levels and other climate change impacts, hundreds of cities globally will be clamoring for resilience products, innovations and technologies. For proof, look no further than design and construction firms in the Netherlands, which after centuries of floods are growing their business based on their expertise. The same success is waiting for those who can develop more resilient operating systems, big data capture technologies, and resilient urban design innovations.
Resilience innovations are not just in technology. Just look at new approaches to risk transfer. In New York, the Metropolitan Transit Authority (MTA) has issued a $125 million "catastrophe" bond through its reinsurance broker that could cover some costs from a rainstorm or hurricane -- a first in the nation innovation. The bonds only pay out if certain predetermined conditions are met -- if winds reach a certain speed or storm surge meets a certain level. For example, the MTA bond would only pay out if a storm creates a surge of at least 8.5 feet at the Battery, just south of Wall Street.
Given the amount of uncertainty cities face, and the budgetary constraints to boot, it's no surprise that cities are looking for the multiple wins that the resilience dividend offers. This was evidenced by the nearly 1,000 expressions of interest and nearly 400 full applications from across six continents in response to the 100 Resilient Cities Challenge, funded through a $100 million commitment by The Rockefeller Foundation. The first 33 cities were announced in December and they will receive support to hire or fund a Chief Resilience Officer, technical support and access to resilience services to develop and implement a resilience plan, and innovative models to leverage billions in additional financing for the resilience projects they need.
By pursuing the resilience dividend, cities can get an economic leg up and better prepare for what's next. Because no matter if the next shock hits tomorrow or 10 years from now, resilience is something a city can realize the benefits of each and every day.