Regional development

Financing Green Urban Infrastructure


4 October 2012



Cities play a critical role in planning and investing in urban infrastructure. In many cases, local governments have authority over the selection of infrastructure projects made at the municipal level. Therefore, they exercise influence over the nature of infrastructure renewal and expansion, and have the ability to promote greener and more sustainable urban centres.

Their leadership role extends to the kinds of investment mechanism selected to finance, for example, improvements in the transportation, building, waste and water and, to a lesser extent, energy sector. Because cities have revenue sources that are tied to many aspects of these sectors, their design can stimulate or dissuade the development of greener and more sustainable cities.

Read the report (pdf)


The greening of municipal financial instruments, such as congestion charges, variable parking fees, toll lanes and split-rate property taxes, is an important first step toward achieving greener urban infrastructure. Public sector financing, however, may not be sufficient to stimulate a paradigm shift. Therefore, the second critical step is to mobilise private sector investments to fill funding gaps for many urban green infrastructure projects.

There are certain conditions that need to be put in place in order to attract and capture private sector investments.


The three main conditions are:

  • markets for green urban investment projects,
  • good return on investment and
  • limited risk.


Cities and countries differ with respect to these conditions; as such, some of these instruments could be more appropriate for cities in industrialised and medium income countries than lower income developing countries, for which grants, loans and other development finance instruments could be more relevant.


Further information

For more information about OECD’s study, please contact Olaf Merk in OECD’s Public Governance and Territorial Development directorate by e-mail: or phone +