Funding Smart City Projects has been recently set at the centre of the interest of many urban analysts. IBM’s executive Rick Robinson, in his two sequential posts, lists ten ways to pay for Smart City initiatives.
Up to now, a great many Smarter City initiatives have been funded at least in part by research grants. By their nature,
these will only fund the first projects to explore Smarter City concepts – they will not scale to support the mass adoption of proven ideas. So we need to consider how they are used alongside other sources of funding.
The solutions proposed (some are more direct and some indirect) are the following:
- Apply for research grants to support new Smarter City ideas: This option mostly applies for new and not already proven ideas. There are various sources of such funds, such as the EU’s Innovation Partnership for Smart Cities and Communities with a budget of €365 million.
- Exploit the information-sharing potential of shared service platforms: IT platforms, which host co-located, multi agency data, are increasingly in place in cities and regions to support shared services creating significant benefits.
- Find and support hidden local innovations: exploiting the collective creative energies of the city and its communities is likely to gather many more ideas than from the central agencies alone.
- Explore the cost-saving potential of Smarter technologies: the benefits may not be directly financial but rather environmental, social or they might be just related to the reduction of costs.
- Could Smarter Cities be sponsored?: with cities increasingly conscious of the value of their brands in attracting investment and business, the possibilities for sponsorship to support some form of investment in appropriate Smarter City systems or facilities could be worth considering
- Approach ethical investment funds, values-led banks and national lotteries: Such organisations will often demand a financial return in addition to social and environmental outcomes; but well-formed investment proposals for Smarter initiatives should be capable of meeting those objectives
- Make procurement Smarter: procurements specify requirements for outcomes and innovation in line with a Smart City Strategy so that suppliers will offer more creative approaches
- Use legitimate state aid: for example, tax increment financing which allows government bodies to use projected future increases in tax and business rates returns to justify investment in redevelopment and infrastructures.
- Encourage Open Data and Hacktivism, as communities can bring great passion and resources to bear in finding new ways for their cities to work.
- Create new markets with specific relevance to the city systems. Applications such as Streetline and Carbon Voyage are winning backing from investors because they have the potential to generate revenue.