Smart City Finance-A Story of Money for Creating a Comfortable City
One of the main reasons why various efforts related to smart cities have ended in the demonstration stage and do not lead to implementation is the inability to secure funds sustainably. In this booklet, we will explain the basic concept for implementing, maintaining and continuing the smart city project, the measures to be taken, and the financing method.
1.Where the problem is
Need for urban infrastructure renewal
Japan's urban infrastructure is exhausted, and large-scale repairs, reinvestment and modernization are issues. Aging urban infrastructure not only jeopardizes the lives of citizens and businesses, but also affects our quality of life (QOL) and international economic competitiveness. On the other hand, for many municipalities, financing and monetization have become the most important issues in smart city projects.
In order not to end the smart city with a boom
In recent years, smart city demonstration experiments and plans / plans have been announced and promoted in various parts of Japan, showing the appearance of the second smart city boom since around 2010. In order to sustainably improve the functioning of cities, all participants, including government, private sector, and citizens, need to seriously consider how to allocate funds for which issues and who will bear them. There will be.
Why smart city projects don't last
Today, many large companies and start-ups are trying to enter the so-called smart city business, but few have achieved great business success. We are now in a position to revisit the fundamental issue of how to establish a “sustainable =“ profitable ”business model”.
2. Categorization of smart cities and organization of participants
Arrangement of participants involved in the city and how to bear funds
In order to secure sufficient funds to promote smart city projects, it is important to obtain the benefits of improving convenience by making cities smarter and to make the cost burden transparent.
Categorization of smart cities
Depending on the area and plan, smart cities vary in location conditions (“Green Field (new development)” or “Brown Field (existing area)”), scale, and issues. In this booklet, smart cities are classified into "problem-solving type", "function improvement type", and "demand generation type" according to their purpose of introduction.
"Demand-creating" smart city project in Japan
We would like to introduce the Grand Front Osaka Project and the Kashiwanoha Project as typical examples of "demand-creating" smart city projects in Green Field that are underway in Japan.
3. basic way of thinking
Here are seven key points in a sustainable financial model for building, maintaining and sustaining smart cities.
(1) Maximize benefits and minimize costs from a medium- to long-term perspective
(2) Possibility of cost reduction due to cross-industry effect
(3) Examining new sources of income: revealing the benefits of a wide range of participants
(4) Utilization of the latest financial technology
(5) Future issues: Further possibilities for data utilization
(6) Tax system measures to encourage private funding
(7) Consensus and relationships of trust between participants are important
4. Sustainable smart city application model
Assuming a typical Japanese local city with various issues, we will consider an application model that can continue to solve urban issues by introducing the above-mentioned “idea” of the financial model.
5. Recommendation
In order to build a smart city, it is necessary to adopt a wider range of financing methods than ever before. Furthermore, in order to sustain the smart city, it is necessary to consider various funding sources (existing administrative cost efficiency / reduction, service income) in consideration of the supply and demand, income and expenditure of the services to be provided. It is effective, and it is essential to ensure medium- to long-term economic rationality.
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