Although history is not usually taught this way, one could argue that cities have played a more important role in shaping the world than empires. From Athens and Rome to Paris and Venice to Baghdad and Beijing, urban ideas and innovators have left indelible marks on human life. By concentrating the brainpower of humanity in relatively small geographic areas, cities have promoted the kinds of interactions that nurture creativity and technological advances. They have been the drivers of progress throughout history, and now—as the knowledge economy takes full flight—they are poised to play a leading role in addressing the challenges of the twenty-first century.

One hundred years ago, some two out of every ten people on the planet lived in urban areas. By 1990, some four in ten did. Today, more than half of the world’s population dwells in urban areas, and by the time a child now entering primary school turns 40, nearly 70 percent will. That means that in the next few decades, about 2.5 billion more people will become metropolitan residents.

The world’s first Metropolitan Generation is coming of age, and as a result, the world will be shaped increasingly by metropolitan values: industriousness, creativity, entrepreneurialism, and, most important, liberty and diversity. That is a hopeful development for humanity, and an overpowering counterweight to the forces of repression and intolerance that arise out of religious fanaticism and that now pose a grave threat to the security of democratic nations.

As those in the Metropolitan Generation assume leadership positions, cities will become not just more culturally significant but also more politically powerful. Influence will shift gradually away from national governments and toward cities, especially in countries that suffer from bureaucratic paralysis and political gridlock.

This trend has already emerged, and it is most pronounced in the United States. Congress began reducing funding for infrastructure in the late 1960s, a mistake that, coupled with the loss of manufacturing jobs, dealt a devastating blow to cities. Nevertheless, federal divestment also produced an important benefit: cities eventually recognized that the best replacement for lost federal funding was local policy innovation.

Cities across the globe have come to the same conclusion. As a result, many of the most important new initiatives of this century—from the smoking ban adopted in New York City to the bus rapid transit system pioneered in Bogotá—have emerged from cities. Mayors are turning their city halls into policy labs, conducting experiments on a grand scale and implementing large-scale ideas to address problems, such as climate change, that often divide and paralyze national governments.

The same qualities that make cities dynamic catalysts for policy change also, paradoxically, make them sources of political stability. As Nassim Taleb and Gregory Treverton wrote in these pages earlier this year, fragility in nations stems from “a centralized governing system, an undiversified economy, excessive debt and leverage, a lack of political variability, and no history of surviving past shocks.” Cities can counterbalance each of these weaknesses. They are, by definition, a decentralizing force, and the strongest of them have diversified economies, healthy balance sheets, a tradition of pragmatic problem solving free from excessive partisanship, and the resilience to survive external shocks, whether in the form of a financial crisis, an environmental disaster, or a terrorist attack.

Cities have played a more important role in shaping the world than empires. Cities are also collaborating across national borders more than ever before: sharing ideas; forming coalitions; and challenging their national governments to adopt policies, such as the experiments in urban waste management and education in Curitiba, Brazil, that are proving effective at the local level. The new urban age will see more steps taken to reduce poverty, improve health, raise living standards, and promote peace. But with it also come serious challenges that cities must begin to confront, including climate change.

A COMPETITIVE ADVANTAGE

Cities account for at least 70 percent of total worldwide greenhouse gas emissions. They also face the worst risks from the ultimate consequences of those emissions, as 90 percent of cities were built on coastal lands. It is fitting, then, that cities, the primary drivers and likeliest victims of climate change, hold the antidote as well.

Climate change calls on societies to act quickly, and cities tend to be more nimble than national governments, which are more likely to be captured or neutralized by special interest groups and which tend to view problems through an ideological, rather than a pragmatic, lens.

The challenge facing the Metropolitan Generation—to build modern cities for a new urban civilization—is as monumental as it is essential.

The need for swift action and the risks associated with climate change are well documented. The rise in sea levels is indisputable, as is the warming of the oceans. Both can multiply the intensity of storms and the damage done to coastal cities, as New York City experienced in 2012 with Hurricane Sandy. In addition, the scientific consensus holds that hotter temperatures are likely to produce major disruptions in agriculture and increase disease, displacing communities and threatening the survival of species that play integral roles in both the ecosystem and the food chain.

Ignoring these threats would merely pass the true costs of today’s economic progress onto the next generation. Throughout U.S. history, successive generations have made sacrifices so that their children might enjoy a higher standard of living. Today, the whole world is confronted with the need to put future generations first, but this time, no sacrifice is necessary. In fact, the most effective methods of fighting climate change are also the best means of improving public health and raising standards of living.

Traditionally, urban economic development has focused on retaining industries and luring new businesses with incentive packages. But in the new century, a different and far more effective model has emerged: focusing first and foremost on creating the conditions that attract people. As cities are increasingly demonstrating, talent attracts capital more effectively than capital attracts talent. People want to live in communities that offer healthy and family-friendly lifestyles: not only good schools and safe streets but also clean air, beautiful parks, and extensive mass transit systems. And where people want to live, businesses want to invest.

For mayors, reducing carbon pollution is not an economic cost; it is a competitive necessity. Earlier this year, Beijing announced that it would close its coal-fired power plants because any marginal financial benefit they offered was swamped by their net costs, including those of health care and forgone economic investment. Dirty air is a major liability for a city’s business environment.

A woman walks through an underground passage on a hazy night in central Beijing, October 2014. JASON LEE / REUTERS

Beijing is just the latest city to reduce its carbon footprint for economic reasons. In fact, one of the biggest changes in urban governance in this century has been mayors’ recognition that promoting private investment requires protecting public health. The congruence between health and economic goals is also the biggest development in the fight against climate change.

No longer do mayors see the economy and the environment primarily as conflicting priorities. Instead, they view them as two sides of the same coin. That is why mayors have so enthusiastically embraced the challenge of tackling climate change as a means to economic growth, and they have many tools at their disposal for doing so. For instance, the simple act of planting trees can help cool neighborhoods and clean the air. In New York City, in 2007, we created a public-private partnership with nonprofit organizations and businesses to plant one million trees across the city.

Modernizing transportation networks offers the clearest—and, in many cases, biggest—environmental and economic benefits to cities. From the introduction of steam engines in New York City to cable cars in San Francisco, cities have always been innovators when it comes to transportation. In recent years, bike-sharing programs have given cities entirely new mass transit networks, and more cities are investing in electric buses, fuel-efficient taxi fleets, and electronic vehicle charging stations.

Buildings offer another important opportunity for progress. From London to Seoul, major cities have begun wide-scale retrofits of their existing buildings, installing everything from LED lighting to heating and cooling systems that draw their energy from the earth beneath the buildings. In New York, we encouraged building owners to paint their roofs white to save on cooling costs, which, together with many other steps, helped the city reduce its carbon footprint by 19 percent in just eight years.

Cities are also playing a leading role in adapting to climate change. For example, the Lower Ninth Ward in New Orleans, the area hardest hit by Hurricane Katrina, has become a national leader in rooftop solar power adoption. Mumbai, recognizing the storm surge protection provided by mangroves, has moved effectively to protect and nurture them. And in New York City, after Hurricane Sandy, we developed and began implementing a comprehensive long-term plan for mitigating the effects of major storms.

No longer do mayors see the economy and the environment primarily as conflicting priorities.

Urban leadership on climate change has also led to an unprecedented level of cooperation among cities. The C40 Cities Climate Leadership Group, for which I serve as president of the board, has brought together more than 75 cities committed to sharing best practices and spreading proven solutions. The evidence is clear that this networking strategy is working, as many carbon-reduction projects have spread to cities across the globe. For instance, only six C40 cities had bike-sharing programs in 2011. By 2013, 36 had them. As London’s mayor, Boris Johnson, said in 2013, “By sharing best practice through C40—and shamelessly appropriating other cities’ best ideas—we can take action on climate change and improve the quality of life for our residents.”

Cities are also working together through the Compact of Mayors, an initiative developed by C40 and other city networks to help cities demonstrate measurable progress toward reducing greenhouse gases and hold themselves accountable for their results. It also gives national governments more reason to set ambitious environmental goals and to empower cities to lead the way in reaching them.

CLIMATE-PROOFING

2014 study by Bloomberg Philanthropies and the C40 Cities Climate Leadership Group, in conjunction with the Stockholm Environment Institute, found that if cities act aggressively, they could reduce their annual carbon emissions by roughly four billion tons beyond what national governments are currently on track to do, in just 15 years. That would be equivalent to eliminating around a quarter of today’s carbon emissions from coal.

In fact, climate change may be the first global problem where success will depend on how municipal services such as energy, water, and transportation are delivered to citizens. Cities have only just begun to seize the opportunities they have to make changes that can produce both local and global benefits. The amount of infrastructure that will be built by midcentury is about four times as much as the total available today.

Modernizing infrastructure networks is costly, but it need not be cost prohibitive. City governments are increasingly turning to private investors to help finance such projects, and it is a natural partnership. After all, most businesses are in cities, and most cities are on coastal waters. Both mayors and CEOs have an incentive to mitigate the worst effects of climate change. The incremental costs of making infrastructure low carbon and resilient are modest relative to the economic benefits, as more countries and companies are recognizing.

Companies are becoming more eager to provide capital for infrastructure projects for a share of the resulting revenue. Public-private partnerships make this possible, and they are helping finance major projects around the world, from the construction of a new tunnel in Miami that allows port traffic to bypass downtown streets to the construction of virtually a new city by the municipal government in Shantou, China.

Lower Manhattan during a preventive power outage caused by Hurricane Sandy, October 2012. EDWARD MUNOZ / REUTERS

In other cases, companies are asking only that governments clear away the regulatory hurdles that block them from investing and profiting. In the United States, for instance, a number of states, including Florida, have laws that prevent solar power companies from leasing solar panels to homeowners, even though that model has proved successful in California and elsewhere. Many other states, such as New Hampshire, prevent their utilities from entering the market for distributed renewable energy. These artificial market barriers hurt consumers and hinder climate change efforts, and cities can help lead the way in pushing for their removal.

Just like companies, city governments can also face barriers that prevent sustainable investments. To borrow money in the capital markets, for instance, cities need a credit rating; outside the United States and Europe, however, many lack them. The World Bank estimates that only four percent of the developing world’s 500 largest cities have internationally recognized credit ratings, and only 20 percent have a domestic rating. Yet these cities have about $700 billion in annual demand for infrastructure projects in transportation, energy, waste treatment, and water supply. Providing them with access to credit could become one of the most effective ways to fight climate change, drive economic growth, and improve public health.

Fixing the problem should be relatively easy. In Peru, for instance, the World Bank helped the city of Lima secure a credit rating so that it could raise $130 million to upgrade its bus rapid transit system. The new bus system will dramatically cut carbon pollution, and it will help reduce traffic congestion, saving companies money and improving productivity. The project represents yet another example of the natural alignment of economic, environmental, and health goals.

A public bus in Lima, Peru, March 2014. Enrique Castro-Mendivil / REUTERS

Countries can also empower their cities to achieve such goals by freeing them to regulate their own power supplies. Mayors in some cities, including Chicago, Seattle, Helsinki, and Toronto, enjoy various forms of leverage over their energy supplies. Some own their own power, others own the distribution system, and still others have the authority to sign contracts with any independent power generator they select. The Chinese government has given major cities, such as Shenzhen, expanded powers to swap out coal for cleaner forms of energy. In Denmark, the national government decided to grant independent regulatory powers to Copenhagen. The city is now on the path to full carbon neutrality, aiming to reach zero net emissions within a decade.

Central governments are not quick to devolve power, but they are doing so with greater frequency as they recognize the national benefits that can come with local control. That trend will only accelerate as the world becomes increasingly urbanized and cities become increasingly connected to one another, promoting the spread of best practices across national borders.

It will be no small challenge for nations to accommodate the swell of urban dwellers. In most cases, urban populations are expanding atop antiquated infrastructure or no infrastructure at all. Yet advances in technology are making transformational advances in infrastructure possible, and that will allow cities in the developing world to catch up to—and even leapfrog—established cities in constructing modern metropolises.

Climate change may be the first global problem where success will depend on how municipal services such as energy, water, and transportation are delivered to citizens.

There is no better example of this than solar energy, which can save governments the expense of building costly new energy transmission networks. The traditional model of a centralized energy plant feeding power to a region entails enormous costs. Solar-powered microgrids and other distributed renewable energy can deliver energy far more efficiently.

Nations and cities that fail to prepare for the urban population explosion risk creating, or worsening, slum conditions that frighten investors, perpetuate a permanent underclass, and impede national progress. The best way to prepare is not by implementing top-down, one-size-fits-all centralized programs but by empowering cities themselves to solve problems, invest in their futures, and harness the potential of their residents.

The challenge facing the Metropolitan Generation—to build modern cities for a new urban civilization—is as monumental as it is essential. Success will spread prosperity globally, and innovation in cities will help break down the differences between the developed and the developing world. City leaders must be strong enough to welcome—and treat as equals, not second-class citizens—all those who come seeking opportunity and farsighted enough to invest in infrastructure that generates maximum economic, environmental, and health benefits.

The city cannot replace the nation-state in pursuing climate solutions or policies to reduce poverty, improve security, fight disease, and expand trade. City leaders seek not to displace their national counterparts but rather to be full partners in their work—an arrangement that national leaders increasingly view as not just beneficial but also necessary.