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Explaining Key Concepts for the City of Tomorrow

Smart Regulation

Sm a rt R e g u la tio n Explaining Key Concepts for the City of Tomorrow Discussion Paper

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Smart Regulation

This work is commissioned and published by the New Cities Foundation. You can copy, download, or print this report for your own use, and you can include excerpts from New Cities Foundation publications, databases, and multimedia products in your own documents, presentations blogs, websites, and teaching materials, provided that suitable acknowledgment of New Cities Foundation as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to Request for permission to photocopy portions of this material for public or commercial use shall be addressed directly to New Cities Foundation at

Please cite this publication as: New Cities Foundation (2012), Smart Regulation, ‘Explaining Key Concepts for the City of Tomorrow’ Series, Discussion Paper #1.

This project was led and co-ordinated by Naureen Kabir (Director, Urban Lab and New Cities Foundation USA). Berengère de Contenson (Researcher) supervised the project at an early stage. Cristian Santibanez (Program Associate, Urban Lab and Communications) contributed to the final editing. Claudio Altenhain, Arslan Bissembayev, Loik-André Bourgeois and Morgan Mouton (researchers from the Governing the Large Metropolis Master of Arts program at Sciences Po in Paris, France) contributed to the drafting under the supervision of Dr. Alvaro Artigas Pereira. The New Cities Foundation would also like to thank Anil Menon, President of Globalisation and Smart+Connected Communities, Nic Villa, Managing Director, Global Public Sector and Latif Horst, Sales Business Development Manager, Smart+Connected Communities – all from Cisco Systems for their thought leadership and suggestions on this project. Cover and back-cover picture by Cristian Santibanez under Creative Commons License.


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Table of Contents

Executive Summary ....................................................................................................................... 5 Introduction .................................................................................................................................... 6 Part 1: Historical Background Genealogy of a concept ............................................................................................................................ 10 Looking for more efficient regulation models: the United Nations Development Program focus ......................... 10 From Better to Smart regulation: the European Union’s legal approach .................................................................. 12 Smart Regulation Strategy in Canada .......................................................................................................................... 17

Three key components of smart regulation: embedment, responsiveness, sustainability................... 18 Embedment ...................................................................................................................................................................... 19 Responsiveness ................................................................................................................................................................. 21 Sustainability...................................................................................................................................................................... 24 Smart Regulation and Information and Communication Technologies (ICT) .......................................................... 28

Part 2: Case Studies Towards an operational model of smart regulation ................................................................................. 30 Hospital General de Ciudad Real, Spain ...................................................................................................................... 34 Torre Titanium La Portada, Santiago, Chile ................................................................................................................... 35 Lyon Confluence, Lyon, France ..................................................................................................................................... 36 Vauban, Freiburg, Germany ........................................................................................................................................... 37 CITE City, New Mexico, USA ............................................................................................................................................ 38 Putrajaya-Cyberjaya, Selangor, Malaysia..................................................................................................................... 39

Smart regulation applied............................................................................................................................. 41

Conclusion .................................................................................................................................... 46 Literature Written Material ............................................................................................................................................ 49 Websites ........................................................................................................................................................ 54


Smart Regulation

Executive Summary The absence of a viable definition of smart regulation gives rise to multiple interpretations, which are sometimes contradictory. Taking into account its different social, institutional, and economic dimensions, this paper, the first in a series by the New Cities Foundation, retraces the concept’s evolution, encompassing first attempts of good governance and co-regulation as well as the best practice objectives of better regulation. Smart regulation draws upon a broad range of policy designs and instrument mixes as it lays claim to be context-independent and able to efficiently implement optimal practices in any context. Based on the inclusion of third parties in a multiplicity of institutional fields, the main innovations of this type of regulation are the endorsement of co-regulation, systematic cooperation, the establishment of governmental feedback loops and a particular emphasis brought upon sustainability in terms of economic, environmental and social issues. Drawing from the existing literature, we propose an accessible conceptual framework based on three key components: embedment, responsiveness, and sustainability. With the new possibilities offered by Information and Communication Technologies, this powerful framework can be used to retrospectively-analyze existing real-estate projects and better understand their failures and successes. Drawing upon these criteria, six case studies in the real estate sector are examined to evaluate whether the proposed framework is consistent with empirical reality. Through this analysis, this paper aims to determine whether smart regulation is an operational concept that can be grounded in reality, or whether it is too a broad framework encompassing scattered elements that cannot be applied to a specific sector.


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Introduction The absence of an established and consensus driven definition gives rise to multiple interpretations of the term smart regulation: it is a concept that encompasses so many different social dimensions that it loses meaning. Taking into account its different social, institutional, and economic dimensions, the aim of this short book is to shed light upon this concept so as to move from understanding to application. If the twentieth century established nation states as the fundamental scale for policy of its era, the twenty-first century is likely to shake and re-draw these lines. All forecasts and academic studies agree that the twenty-first century’s most important phenomenon will be urbanization. Cities are growing at an unprecedented pace, and we will have to build them faster and more effectively. Growing cities, however, are paradoxical spaces: while dense and relatively intense in terms of land-use, the much more diverse economic fabric and demographics of cities make them extremely complex political entities to govern. Contrary to nation states, where a city begins and where it ends is difficult to define, creating tensions between administrative boundaries and functional boundaries; decision-making processes involve multiple scale stakeholders; resources are exploited in intensive ways. While cities attract people because of supposed better living conditions than rural areas, they can often become polluted and congested with lines of grey buildings, extreme levels of poverty alongside the wealthiest neighborhoods, and high levels of distrust. Thus, as cities become the focal point of decision-making, this analysis is aimed at clarifying a new mode of governance – smart regulation – for the benefit of local authorities and regulators worldwide who play an increasingly central role in governing these ever more complex metropolitan areas. Historically, the industrial-age model of regulation – or traditional regulation – developed to a large extent on the premise of distrust between regulators and regulatees. While the origins of 6

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this distrust are complex, the basic notion is that regulators tend to believe that the entity being regulated will not deliver on its promised quantity or quality of goods and services if left unregulated. One of the core contributing factors to this distrust is the lack of accurate, real-time data that provides the visibility regulators require to ensure that all players are staying honest. Distrust, to a large degree, is a function of the lack of transparency, which in turn is related to lack of information and visibility about performance. In today’s ICT-enabled environment, however, advanced networks make it possible to address this lack of transparency and visibility directly by generating the kinds of real-time data needed to keep actors honest, and to keep regulators well-informed. In the era of open data and social networking, regulatory outcomes are more likely to be achieved, at least partially by end-users having access to more real-time information about performance as well as the ability through social media and other tools, to share that information, and if necessary, to launch campaigns of protest or concern. These advanced networks and technology thus play a central role in stimulating and facilitating innovative regulatory practices. From a strictly semantic point of view, smart regulation refers to the simple idea of ensuring that a system functions correctly and efficiently. However, from a decision-maker’s point of view, smart regulation is an attempt to involve citizens and communities in the future of their living spaces by using the vast amounts of information made available thanks to information and communication technology (ICT). Indeed, such technologies enable the stakeholders to address some of the trust issues inherent in traditional regulatory systems, which are built on information scarcity and distrust. ICT, on the other hand, may empower stakeholders to take advantage of the new conditions of increasingly open data, transparency, and capacity for quickly escalating grassroot campaigns aimed at holding companies and individuals accountable in ways that were not previously possible. Traditional regulation can and should thus be refashioned to benefit from these new conditions. If cities are to practice smart regulation, it is necessary to have a clear understanding of its meaning and consequences. So let’s begin by taking a look at the two largest attempts to use this term as a policy concept: 7

Smart Regulation

Smart regulation is about delivering effective results in the least burdensome way (…). It involves efficient mechanisms to monitor results collecting evidence, and using it to inform political decisions (…). It requires








opportunities to improve the efficiency and effectiveness of legislation throughout the policy cycle. (European Union, 2010a) 

Smart Regulation is both protecting and enabling (…). It is about making regulation as effective as possible – and making sure it is never more complicated or costly than it has to be. Smart Regulation is more responsive regulation (…). This also means giving regulatees more flexibility in terms of how results are achieved, as long as high standards are upheld and the appropriate accountability measures are in place. Smart Regulation is governing for the public interest (…). It is realizing that the regulatory system is part of a complex global system which requires governments and government departments and agencies to work together towards common goals. (External Advisory Committee on Smart Regulation, 2004)

Smart regulation draws upon a broad range of policy designs and instrument mixes as it attempts to be context-independent and able to efficiently implement optimal practices in any setting. Based on the inclusion of third parties in a multiplicity of institutional fields, the main innovations of this type of regulation are 1) the endorsement of co-regulation 1 , 2) systematic cooperation, 3) the establishment of governmental feedback loops 2 , and 4) a particular emphasis on sustainability in economic, environmental, and social terms.

“Co-regulation” is normally used as a generic term for co-operative forms of regulation that are designed to achieve public authority objectives. Source: 2 A mechanism that allows stakeholders and end-users to provide feedback to the regulating body, which can in turn adapt and adjust regulations based on this feedback continuously. 1


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To fully grasp the complexity of the concept of smart regulation, this paper will begin by focusing on the historical roots of the term, identifying why it might be understood in a particular way in certain contexts. Reviewing its genealogy will also help us distinguish smart regulation from other close relatives, such as good governance or better regulation, and also understand why it is a much more interesting and powerful policy framework. Once these elements are reviewed in the broader literature, we will classify the main components of smart regulation that scholars, businesses, and public authorities have identified around the categories of embedment, responsiveness and sustainability, three features our research proposes as key pillars of smart regulation. By focusing on these common features rather than on conceptual discrepancies of the term, our goal is to craft a useful operational definition that can be clearly distinguished from other regulation-related policy tools. The final step of our contribution to the literature on smart regulation is its application to a specific realm of urban life: the built environment. We will conduct an analysis of selected real estate projects based on the analytical lines developed in the study. Through their comparison, we will highlight the relevance of smart regulation and its importance in the implementation process.


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Part 1: Historical Background Genealogy of a concept Smart regulation combines multiple dimensions and conveys several meanings. Understanding the origins of how the term was used as well as by whom will enlighten current definitions and uses of the concept.

Looking for more efficient regulation models: the United Nations Development Program focus Before the emergence of the expression smart regulation, what concepts were mobilized to convey the idea of a more efficient form of governance? The first was the notion of good governance. Historically, this concept rose in the 1980s in discussions around economic development. According to John Graham et al. (2003), most of the United Nations Development Program (UNDP) definitions of good governance revolve around five core-principles: 1) legitimacy and voice 2) direction, 3) performance, 4) accountability, and 5) fairness. These coreprinciples are detailed in Figure 1. These principles lay the basis upon which further attempts at constructing more efficient regulatory frameworks have been developed including, by extension, the framework of smart regulation.


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The UNDP Principles and related UNDP text on which they are based

The Five Good Governance Principles

1. Legitimacy and Voice

Participation – all men and women should have a voice in decision-making, either directly or through legitimate intermediate institutions that represent their intention. Such broad participation is built on freedom of association and speech, as well as capacities to participate constructively. Consensus orientation – good governance mediates differing interests to reach a broad consensus on what is in the best interest of the group and, where possible, on policies and procedures.

2. Direction

Strategic vision – leaders and the public have a broad and long-term perspective on good governance and human development, along with a sense of what is needed for such development. There is also an understanding of the historical, cultural and social complexities in which that perspective is grounded. Responsiveness – institutions and processes try to serve all stakeholders.

3. Performance

4. Accountability

Effectiveness and efficiency – processes and institutions produce results that meet needs while making the best use of resources. Accountability – decision-makers in government, the private sector and civil society organizations are accountable to the public, as well as to institutional stakeholders. This accountability differs depending on the organizations and whether the decision is internal or external. Transparency – transparency is built on the free flow of information. Processes, institutions and information are directly accessible to those concerned with them, and enough information is provided to understand and monitor them. Equity – all men and women have opportunities to improve or maintain their wellbeing.

5. Fairness

Rule of Law – legal frameworks should be fair and enforced impartially, particularly the laws on human rights.

Figure 1 – Five Principles of Good Governance Source: Graham et al. (2003)


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Another ancestor of smart regulation is the notion of co-regulation, that is, the idea of greater participation of business actors and civil society in the regulatory process (see Scott, 2006; and also EESC, 2004). The assumption behind co-regulation is that, due to an asymmetry of information, the state may not always be the most suitable actor when it comes to steering regulatory processes. Hence, private actors, experts or corporations in a given sector could be more effective in framing regulations due to their greater knowledge of that sector. Following this logic, one potentially better way of achieving regulatory optima would be to give these entities enough freedom and independence for the creation of their own ad-hoc institutions. The state would oversee what is being achieved in the field, and set objectives in terms of regulation, but would not take part in the regulatory process itself. In other words, this regulation framework calls for a more inclusive way of regulating, with the involvement of private actors of a given sector, an idea that is often associated with the smart regulation discourse. Supported by the multiplication of private actors in governance systems – notably with the rise of public-private partnerships (PPPs) around the world – our understanding of smart regulation draws upon the literature on co-regulation to provide a concept of governance that fits today’s changing realities and relies on the innovations brought about by ICT.

From Better to Smart regulation: the European Union’s legal approach In October 2010, Dr. Marianne Klingbeil, Director of the Better Regulation Project for the Secretariat General of the European Commission, delivered a presentation titled, Smart Regulation. Herein, she presented smart regulation as the natural extension of the former Better Regulation concept that the European Commission developed in the previous decade. The website dedicated to the promotion and application of this notion defines better regulation as follows:

Better Regulation strategy is based on three key action lines:


Smart Regulation

Promoting the design and application of better regulation tools at the EU level, notably simplification, reduction of administrative burdens and impact assessment.

Working more closely with Member States to ensure that better regulation principles are applied consistently throughout the EU by all regulators.

Reinforcing the constructive dialogue between stakeholders and all regulators at the EU and national levels.

This definition focuses on two elements: cutting red tape, and engaging in deeper cooperation with different stakeholders. The European Union view of smart regulation draws on these two aspects and develops a discourse that has been widely accepted by the EU business sector. For example, the European Council for Chemical Industries (CEFIC) defined a general agenda that includes a program on Legislation and Institutional Affairs, which addresses the idea of better regulation (see CEFIC website). Similarly, Eurochambres – the Association of European Chambers of Commerce and Industry – has been a strong advocate of better regulation, calling for its “acceleration and reinforcement”. These two business organizations are key strategic partners for European policy-makers (see Eurochambres and CEFIC network presentation) and their backing of better regulation is an important factor in explaining why this concept was heavily supported by the European Commission. Better regulation also appeared within a national context. As early as 1997, the United Kingdom established a Better Regulation Commission that aimed at reducing administrative obstacles to economic growth (see the presentation page of the Commission). Today, this Commission has been dissolved, but the U.K.’s Department for Business, Innovation and Skills has kept similar objectives.


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The extension of the EU’s better regulation agenda is the smart regulation agenda. EU partners have been seeking efficient ways to effectively implement a common legal framework. According 3 to the EU (2010b), “Smart Regulation is not about more or less legislation.” This point is

important, for it is easy to find commentators that criticize the concept for being just another way of promoting deregulation and free markets that help businesses develop their activities without protecting consumers. The EU’s focus is slightly different: it is about making sure regulation is less burdensome so that results can be achieved. The ideas conveyed by the better regulation agenda and the smart regulation agenda have traveled beyond Europe, most notably to Australia. The Australian government established a Better Regulation Office in 2007, which published a Guide to Better Regulation Requirements and annual reports on the Australian government’s regulatory efforts (see their website for resources). Additionally, the Organization for Economic Co-operation and Development (OECD) joined the EU in an initiative through the EU 15 Project, a program launched in 2008 aimed at evaluating the regulatory capacities of fifteen EU countries using the framework of better regulation (see their website). The published reports were made public to all OECD members, thereby spreading the notions beyond regional boundaries. Even though better regulation was successfully promoted, the European Union now uses the expression “smart regulation”. The reason behind this semantic change was due to the European Commission’s agreement to develop a concept of good governance that would surpass the dimensions of administrative simplification and stakeholder consultation. Smart regulation, as defined by the European Union, builds upon better regulation, but includes a new dimension: impact assessment. Thus, by adding the element of evaluating policy, European and national institutions can theoretically improve their policies, take into consideration the social impacts of their actions, and more effectively identify the variety of stakeholders that should have


Note: not bold in the original text.


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a voice in regulation. By ensuring data sharing and real-time performance evaluation, ICT constitutes a key tool enabling impact assessment. Thus, by adding the element of evaluating policy, European and national institutions can theoretically improve their policies, take into consideration the social impacts of their actions, and more effectively identify the variety of stakeholders that should have a voice in regulation. The support of business associations in Europe was renewed after this initiative. CEFIC produced a Manifesto for Smarter Regulation in 2010 while Eurochambres gave recommendations to the Commission for the implementation of the project. This support allowed the President of the European Commission to set smart regulation as a priority in his second term. Joining the European Commission in this initiative, the OECD renewed a partnership with the European Union through the Sigma Project. This project aims at offering expertise and evaluation on governance to the member countries, and it is notable that the concept of smart regulation is fully integrated and promoted by the organization (see the project’s website for more information). Such signs point towards a semantic and institutional concretization of smart governance and its embedment into most European policy-making practices. The European Commission has set a deadline for the second half of 2012 to produce a report on the implementation of smart regulation, which will allow for future evaluation of the success of these endeavors.


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Figure 2 – Intellectual origins of smart regulation Source: New Cities Foundation


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Smart Regulation Strategy in Canada While the EU developed a regulation agenda to simplify legal processes and achieve results more quickly and efficiently, across the ocean, the Canadian government created an External Advisory Committee on Smart Regulation in May 2003 whose goal was to “provide an external perspective and expert advice on how federal government needs to redesign its regulatory approach for Canada in the 21st century”. Canada’s interest in smart regulation stems from the recognition of accelerating changes in the world: the increasing speed of modern society, the rapid flow of commerce and instant access to information, the shift towards a knowledge-based economy, increasingly complex policy issues, and increased expectations from citizens. As a response to these concerns, the External Advisory Committee coined the term smart regulation to clearly state that existing regulation frameworks need to:

support both social and economic achievement – providing citizens with the protection they need to feel safe, supporting the transition to sustainable development, encouraging a more dynamic economy and creating opportunities for Canadians and a model regulatory excellence in the world. (External Advisory Committee on Smart Regulation, 2004)

The Canadian government’s approach to smart regulation is based on five principles: 1) effectiveness, 2) cost-efficiency, 3) timeliness, 4) transparency, and 5) accountability and performance. In this sense, while also concerned with legal issues, the smart regulation approach undertaken by the Canadian government is a more encompassing one. Eventually, if the European and Canadian approaches are to be distinguished, while the EU seems to pay particular attention to legal issues so as to enhance decision-making processes for its institutions, the Canadian government approach seems to be driven by economic factors, that is, with establishing a more economic growth-friendly environment as a main policy goal.


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Three key components of smart regulation: embedment, responsiveness, sustainability The EU and the Canadian government are the two largest contributors to the idea of smart regulation. However, other organizations have also used the concept of smart regulation in different contexts, often in the absence of a clear definition to support the term, thereby expanding its definitional boundary while contributing to its vagueness. Upon critically examining the discourses by business and government as well as the evolution of existing definitions of smart regulation, our research identifies three key components that form the structural axes needed to decipher the various usages of the term: embedment, responsiveness, and sustainability. Additionally, these components provide the foundation upon which policy tools and strategies can be developed. This section explores each of these dimensions in turn.

Figure 3 – The Smart Regulation Triangle Source: New Cities Foundation 18

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Embedment Smart regulation is about embedded actors, sectors, policy issues, and also embedded implementation. When discussing regulation, embedment refers to the interrelation and interaction of different stakeholders in an environment that encompasses all social spheres and sectors. A key common feature of the smart regulation concepts is their claim to be comprehensive, that is, to comprise and to link up different parts of policy-making that hitherto lacked connectivity. Thus, during a regulatory policy conference held at the OECD in 2010, the Director for Better Regulation at the European Commission claimed that “smart regulation focuses on closing the policy gap” by “investing more in policy evaluation and simplification”. Similarly, a communication from the Commission to other European institutions states that “smart regulation is about the whole policy cycle – from the design of a piece of legislation, to implementation, enforcement, evaluation and revision”. The U.S. Food and Drug Administration refers to smart regulation when explaining the “enhanced systems across all […] programs” that they are putting in place “to ensure both the prompt and responsive engagement that these companies need and deserve and clearer guidance about what we expect from them and why (…). This is smart, responsive, regulation”. The preceding examples illustrate how visions of smart regulation tie together different dimensions of the decision-making process, the management, and the social spheres in complex comprehensive systems. Embedment, therefore, refers to the idea that smart regulation encompasses all policy regulation processes at the highest level of decision-making – as the EU declarations highlight – but also all dimensions of policy implementation when moving down to the sector level, including private actors, local communities, and other stakeholders. Smart regulation requires mechanisms that embed these actors deeply within the policy-making and implementation process. Concepts of smart regulation take this extended range of actors as a point of departure to improve processes of communication and coordination, thus creating a more coherent and reliable context for policy-making and outcomes. These aims require a high degree of 19

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responsiveness particularly on the part of governmental institutions, an aspect that will be further developed in the next section. The objective of embedment does not only concern the coordination of different actors, but also of policy instruments 4 and institutions, according to Gunningham and Sinclair, two prominent scholars in this field: “the best means of overcoming the deficiencies of individual instruments, while taking advantage of their strengths, is through the design of combinations of instruments” (Gunningham and Sinclair, 1998). Nevertheless, the authors caution against a kitchen sink approach to policy design; instead, a few practical guidelines for instrument combination are highlighted, of which the “instrument pyramid” is the most essential (see Figure 4). Originally introduced to illustrate different levels of law enforcement, the authors make use of the 5 pyramid as a means to demonstrate the parsimonious rationality behind smart regulation: the

bottom line is always to start with the least interventionist measure deemed necessary to attain a policy goal. This does not only hold true for the state, but also for the private sector and the third sector, NGOs and civil society. Consequently, the instrument pyramid has three faces, each with different levels of regulatory escalation; to achieve satisfactory outcomes, it may be necessary to combine different faces and different levels depending on the specific policy context. In this environment, government takes on a new role acting primarily as a facilitator of regulatory initiative and a warrantor of a free flow of information.

‘Policy Instrument’ is the term used to describe some methods used by governments to achieve a desired effect. The two basic types of policy instruments are regulatory and economic instruments. Source: 5 Parsimony: extreme unwillingness to spend money or use resources (Oxford Dictionary) 4


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Figure 4 – The Instrument Pyramid Source: New Cities Foundation

In other words, the embedment dimension of smart regulation calls for a shift in policy-making focus towards a more solution-oriented policy design process where all those who are concerned by a specific issue, whatever their sector or position, are invited to contribute to the design process.

Responsiveness The second axis, responsiveness, deals with a major question inherent in most readings of smart regulation: what configuration of actors and instruments can guarantee that regulation is dynamic enough to fulfill their intended purposes without unnecessarily complicating the 21

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regulatory process? A responsive framework is one where errors, issues, and/or failures trigger reactions, whether these reactions were explicitly asked for or not. Two key elements for a responsive framework are the actors involved – in particular, end-users – as well as the information available to all field players. In this sense, multiple feedback loops seem to provide a satisfactory answer to the constant danger of regulating too much or not sufficiently. Multiple feedback loops, that is, the possibility for stakeholders and users at many different levels to trigger reactions when regulations fail, can keep this danger at bay through a regime of perpetual monitoring and auto-observation which, ideally, allows for a custom-made combination of measures and instruments for every scenario. In the EU context, the principle of responsiveness clearly underlies an ‘end-user centered’ approach to regulation – that is to say, the possibility for end-users to participate in the regulation design process while signaling regulation failures:








organizations – in mind during policy-making is the only way to consistently create smart regulation. End-users are key to highlighting where there is a problem and judging whether an intervention will be effective. Getting them involved at every stage of the policy-making process – from choosing how the Commission should intervene, to developing a policy, to the Council









implementing it – means that interventions will be thought through more clearly and better implemented from the beginning. It is the policy makers’ responsibility to involve the end-users, just as it is the end-users’ and Member States’ responsibility to contribute to the process. (Jensen et al., 2010)

The literature breaks down the attributes of responsiveness into three major blocks: opportunities for participation, reliable governance mechanisms, and an effective information policy, as shown in Figure 5.


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Figure 5 – Proposal for an “end-user” focused EU legislation Source: Jensen et al. (2010)

Concerning the concept of responsiveness, the third aspect is the most important: if effective feedback loops are to be established, it is crucial to endow not only governmental institutions but equally all subjects of regulation with the knowledge they need to assess regulation frameworks and, if necessary, act upon them. As previously illustrated with the instrumental pyramid, regulatory design flows do not have to – though they can – be government-centered: smart regulation implies that if those who are regulated can auto-regulate to achieve positive outcomes, then they should do so. Hence, the role of the government is slightly different from the role it traditionally holds; it still, in fine, writes laws and regulations, and also should be held responsible for regulation failures. However, public authorities no longer need to be the linchpin of regulation design flows, but rather can act as referees, ensuring that regulation functions as intended and that all stakeholders have access to the design process and to the same relevant information. This shift in government’s role in the regulatory process can be linked to the role of ICT which, by enabling open data and enhancing transparency, allows the establishment of a more trustful relation between the regulator and regulatees. Smart regulation thus remodels traditional regulatory systems marked by information scarcity and distrust by fostering data sharing and real-time performance evaluation. Indeed, transparency is a frequently mentioned feature in relation to definitions of smart regulation – as in the following report written for the Canadian government:


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The accessibility and transparency of the regulatory system must be maximized to promote learning and information sharing and to build public trust at home and abroad in the quality of Canadian regulation and the integrity of the process. Policy objectives should be clearly defined. Regulators must explain their priorities and decisions, show why and how these decisions are in the public interest, and be subject to public scrutiny. Information on regulatory programs and compliance requirements should be readily available in print and electronic formats. The regulatory system should be more predictable to provide certainty to those being regulated. Citizens and business should participate through active consultation and engagement. (External Advisory Committee on Smart Regulation, 2004)

Thus, smart regulation definitions are prone to extend the concept of responsiveness beyond closed information circuits, connecting government and society towards a multiplicity of feedback loops that encompass all kinds of different actors and levels. End-users and information are key for responsive smart regulation attempts to work: while smart regulation implies involvement of all parties, as illustrated with the idea of embedment, it is also about all those involved in the regulation design process providing feedback to improve and adjust for changing realities.

Sustainability The third axis, sustainability, relates to a unique feature of smart regulation – at least at the discursive level. Embedment and responsiveness are both concepts whose features appear in other regulatory approaches. On the other hand, what makes smart regulation distinct and innovative is its association with a concern for social and environmental sustainability. Few policy papers that discuss smart regulation and/or projects that claim to be smart neglect to establish a correlation with sustainability, defined as the simultaneous observance of economic, environmental, and social benchmarks that do not compromise future resources. Whereas the necessity of cutting red tape still figures prominently, environmental and social concerns play a more central role than before. Compared to the relatively “humble� aim of better protecting the environment, contemporary uses of smart regulation and sustainability are far 24

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more ambitious insofar as they aim to foster economic growth while at the same time ensuring social equity and conservation issues. Because in practice it is difficult to balance these three often competing objectives, the inclusion of sustainability into smart regulation agendas has opened the arena for claim-makers from non-economic contexts, such as environmental groups. In practice, sustainability as a key pillar of smart regulation implies that the regulatory framework has to create incentives for pro-sustainable solutions and punishment mechanisms for nonsustainable practices. The inclusion of these issues within the regulatory framework echoes currently debated issues on how to account for externalities within the behavior-determining equations of economic actors playing in a specific field. The most efficient and widely tested solutions for factoring in externalities point towards highly complex monitoring systems that rely on ICT systems such as smart meters, or pricing mechanisms such as the carbon markets. This concern for best practices in sustainable growth and the possibilities offered by ICT solutions is underlined in a statement by EUROCITIES (2012), Europe’s largest network of major European cities, as a response to the EU’s follow-up communication on smart regulation:

City representatives were invited to participate in the advisory group of ‘ICT for Sustainable Growth’, coordinated by the Information Society and Media Directorate-General of the European Commission. Input to this work included shaping the Commission’s recommendation on mobilising ICTs to facilitate transition to an energy-efficient, low-carbon society (C2009/7604). Because of this input, recommendations to member states now include integrated actions that take full advantage of the resources and knowledge that already exists in cities in different areas such as publicprivate partnerships at local level or engaging with citizens for changes in energy consumption.

In the EU’s case, the importance of sustainability in all its policy initiatives – and in the design of a smart regulation framework in particular – stems from the desire to have “a high quality regulatory framework that helps the EU to achieve the aims of its Europe 2020 strategy: smart, 25

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sustainable and inclusive growth� (European Union, 2010a). Similarly, the Canadian External Advisory Committee on Smart Regulation (2004) also stresses the newness of sustainability as a central concern for regulatory policies, and explains:

While many reform efforts originally focused on the enhancement of productivity, competitiveness and other economic issues, their scope has recently been broadened to include sustainability and environmental impacts (‌). International regulatory practice has led to an increased emphasis on the rigour of impact analyses, leading to such innovations as peer review of relevant science (U.S.) and emphasis on small business and sustainable development (Australia, EU).

While environmental stakeholders are invited to take part in the design process based on the principle of embedment, and to provide feedback within the responsive regulatory framework established, when addressing issues of sustainability, the state plays the key role. Sustainability is both the filter through which solutions must be evaluated before being implemented, and the constraint that the overall regulatory framework should establish as a standard. The state is the responsible actor, prior to the implementation of the regulatory rules, for filtering and identifying practices or issues that might threaten environmental, social, and/or economic sustainability, and for establishing the overall limits of what is possible.


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Figure 6 – Smart Regulation: A Sustainable, Responsive, Inclusive, Regulatory Framework Source: New Cities Foundation 27

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Smart Regulation and Information and Communication Technologies (ICT) Now that the primary axes of smart regulation are defined, it is important to understand what phenomenon enables these principles to be put in practice in a real world setting. The research points to information technologies as a key driver at the core of the smart regulation framework. Why is ICT an integral part of the smart regulation discourse? When moving from conceptualization to practice, ICT is the enabler that allows for the successful implementation of smart regulatory frameworks at scale. ICT allows for the collection and dissemination of the types of information needed to allay the distrust inherent in traditional regulation. Moreover, the challenges of globalization and technological progress, in particular, call for a more flexible mode of regulation. In this sense, ICT is the oil that allows the widgets of the smart regulatory machine to move and work together effectively. At the core of smart regulation concepts and at the confluence of the three axes discussed earlier, lie the possible uses and impacts of ICT and big data analysis. Embedment-related issues can be complex and the idea of the polycentric governance6 model that accompanies them requires highly developed monitoring systems that are costly, or alternatively, the use of ICT to develop cost-effective auto-regulatory systems. Similarly, the multiplicity of feedback loops, needed for dynamic and self-adjusting regulatory systems, can draw upon ICT networks to provide easier access to multiple sources of information and create new spaces for discussion and exchange of information. In both cases, ICT can provide the conditions of transparency and information required that both regulators and regulatees need to trust that the other party is adhering to the rules of the game. Finally, as smart grid or smart meter examples around the world illustrate, ICT opens a vast window of opportunities for more eco-friendly and sustainable technologies to be applied in citizens’ everyday lives. In sum, as a result of ICT solutions, it becomes more simple and cost-effective from a regulatory point of view to aggregate the many dimensions related to a specific policy issue, while also involving multiple stakeholders. Additionally, ICT allows users to provide real-time feedback, for example, through crowd-sourcing tools. Such advances give citizens the tools to communicate with the regulator, who, in turn, can develop flexible polycentric systems that are able to respond 28

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more quickly to citizens’ concerns. The three axes of embedment, responsiveness, and sustainability are thus connected due to the opportunities offered by ICT, while the role of the regulator changes from a top-down designer and implementer to a horizontal referee and coordinator, one that is still ultimately responsible for the efficiency of the regulatory system, but that does not need to be the initiator of all regulations. Thus, as illustrated in Figure 6, our conceptual framework’s practicality lies in the power of current and available technologies around the world.


Smart Regulation

Part 2: Case Studies Towards an operational model of smart regulation To determine how smart regulation can be understood in a real world urban context, we examined its application in the built urban environment, specifically in real estate development projects. It is important to clarify that our analysis required retroactively examining whether or not projects that have been qualified as ‘smart’ presented characteristics of smart regulation in their design, implementation processes, and physical characteristics. Hence, the question posed for the purposes of this study was: do the features recognized as successes in these different projects echo the principles identified as key to smart regulation systems? To examine this question, a simple analytical model was developed encompassing the following four underlying principles, derived from the three axes of smart regulation outlined earlier:

1. Inclusive Project Design: The project includes all stakeholders that can contribute to its success. In doing so, policy-makers must take into consideration







deployment, and to adopt a long-term vision of the project. The idea behind inclusiveness is linked to the involvement of stakeholders: the embedment










neighborhood and of those interested in it. 2. Communication: The project involves infrastructure that is designed to ease communication and collaboration between different actors involved in the building work and in the regulation process, for example, 30

Smart Regulation

based on ICT networks, adaptive technologies, or collaboration schemes with neighboring buildings. The idea behind this principle is to identify the responsiveness mechanisms set up as part of the regulation of the project. 3. Spatial layout: The project is spatially designed to allow for interaction between inhabitants and businesses, and takes into consideration the notion of social sustainability. Concretely, it involves the creation of public spaces – specific venues for the entertainment and functional needs of the population – or a cap on real-estate prices so as to maintain a social mix. 4. Environmental layout: The project is sustainable and respects the principles of biodiversity preservation, energy efficiency, and limiting greenhouse gas emissions. Beyond that, it creates an environment that favors sustainable lifestyles through the encouragement of public transportation use, or, for instance, through technologies that allow a better monitoring of energy consumption, thereby factoring in the environmental sustainability axis of smart regulation.

Figure 7 – Understanding Real Estate Projects Through Smart Regulation: Four Criteria Derived from the Smart Regulation Triangle Source: New Cities Foundation


Smart Regulation

Drawing upon these criteria, we analyzed a set of case studies by applying the principles above to evaluate whether our proposed framing of smart regulation is consistent with empirical reality. Our model should be understood as an ideal-type, that is, a set of features fundamental to smart regulation. Our approach in selecting the case studies was to identify projects that either explicitly mentioned taking a smart regulation approach, or projects that have been recognized as innovative in terms of how they were regulated. Through this analysis, we aim to determine whether smart regulation is an operational concept that can be grounded in reality, or conversely, whether it is too a broad framework encompassing scattered elements that cannot be applied to a specific sector. Based on these principles, the examples of two standalone buildgins were considered first: the hospital of Ciudad Real in Spain and the Torre Titanium in Santiago de Chile. Smaller real estate projects are characterized by fewer stakeholders, a feature that can have a significant impact on the implementation process. Indeed, while smart regulation calls for the involvement of additional parties, multiplying the number of stakeholders creates more potential obstacles to project implementation. The impact of the size factor in the applicability of smart regulation principles is worth noting in this regard. Secondly, the two buildings are both branded as “smart buildings�, which provides an additional point of analysis in relation to whether the concept of smart regulation coincides with the notion of smart buildings. The question is to determine whether new technologies are, in fact, supporting broader objectives of social interaction and sustainability, or are mere branding tools designed for the attraction of investment. Stated another way, our research will examine whether ICT in our case studies is a key factor allowing complex forms of embedment, responsiveness, and/or sustainability within the regulatory framework. Next, the neighborhood projects of Lyon Confluence in France and Vauban in Germany were examined. Both were praised for their innovative forms of regulation and were designed to have mixed functions – residential, commercial, and centers for entertainment, thereby complicating the question of their regulation. Finally, to change the scale of analysis further, new urban projects were taken into consideration, namely, Putrajaya-Cyberjaya in Malaysia and CITE City in New Mexico, USA. There are 32

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several reasons for this. Firstly, new cities have to be placed in a particular context: they answer a vision, they are an experiment, and they are expected to foster innovation. In other words, new cities are good environments for experimenting and for the development of attempts to foster original forms of governance. They are, therefore, a good field for the application of smart regulation principles. In addition, they offer a double advantage: they tend to be well documented, and the fact that they were created ex-nihilo allows for better monitoring of regulatory innovations.


Smart Regulation

Hospital General de Ciudad Real, Spain

The hospital was inaugurated in 2005 and serves as a major health center for the whole region of Castilla-La Mancha. Its medical laboratories have hosted several award-winning research projects. According to the consultancy company IASIST, it ranks amongst Spain’s twenty best hospitals. Dates: 1998-2005 Costs: 26.8 Million Euros Size: 100,000 square meters Stakeholders involved: Instituto Nacional de la Salud (INSAM), Gobierno de Castilla-La Mancha, Servicio de Salud de Castilla-La Mancha (SESCAM), Consultora de Hospitales Internacional (CODEH) S. A., AFA Arquitectos, FCC Construcción Legal framework: Cooperation of public actors on the national, regional and local level with private consultancy and construction agencies.


Smart Regulation

Torre Titanium La Portada, Santiago, Chile

Titanium La Portada is a 194m high building constructed in a financial district of Santiago de Chile, “Sanhattan”. It was built following the principles of energy efficiency and includes top-level technologies to improve its environmental performance. Project: Titanium La Portada Dates: 2007 - 2010 Cost: US$120 millions Size: 129,500 m2 of space, on 55 floors Stakeholders: Inmobiliara Titanium S.A. (Deka Bank Group, Deka Immobilien Investment,








Investmentfonds Jegal Project & Construction Management, Accura Systems, Dow Corning, Sirve Seismic Protection Technologies, b2bpakistan


Smart Regulation

Lyon Confluence, Lyon, France

La Confluence is a redevelopment project located at the very center of Lyon conceived as the extension of the historic city-center. Project: Lyon Confluence Dates: 1st phase, 1999 – 2010; 2nd phase, launched in 2010. Cost: First phase of the project, €1.15 Billion. Size: 400,000 m2 (phase 1) + 420,000 m2 (phase 2) Stakeholders: This project takes the form of a public-private partnership, where the private sector finances up to 65% of the project, and the different administrative levels finance the remaining 35%. The main actors of this partnership are: SPLA Lyon Confluence (Municipality of Lyon, the metropolitan government (Grand Lyon), Conseil Général and Conseil Régional), Sytral, Vinci Construction, Nedo (Toshiba), Unibail-Rodamco.


Smart Regulation

Vauban, Freiburg, Germany

The neighborhood is frequently dubbed one of the greenest urban projects of the past decade. Built upon the remains of a former French barracks, it is now home to almost 5,000 habitants and the whole district is virtually carfree. The two major aims behind the new neighborhood were to provide urban living space for young families and to prevent urban sprawl. In 2002, Vauban received the UN Dubai Award as an outstanding example of urban best practices. Dates: 1993-2006 Costs: 90 Million Euros Size: 41 hectare Stakeholders Involved: Freiburg City Council, Forum Vauban (neighborhood association), several grass-roots building initiatives Legal Framework: Public urban development project with a strong emphasis on civic participation


Smart Regulation

CITE City, New Mexico, USA

The Center for Innovation, Testing and Evaluation (CITE) is a project planning the building of a testing and evaluation facility for new and emerging technologies, especially renewable energy technologies. Project: “The Center” – New Mexico Location: Pegasus Holdings will be building the town on 15 square miles just west of Hobbs, which has a population of around 43,000. Year: Operational in 2014 Stakeholders: Pegasus Global Holdings, the State of New Mexico (nonfinancial support including resources, open space and workforce) Expected cost: The CITE City will require an initial investment of around $400 million and considering the added value of jobs, research grants and private customers, and the possibility of selling some of the energy the facility will produce, the total investment will eventually cost around $1 billion to complete.


Smart Regulation

Putrajaya-Cyberjaya, Selangor, Malaysia

Putrajaya and Cyberjaya were developed as pioneering green technology townships








commitment to environmentally-sound and sustainable practices. Project: Putrajaya-Cyberjaya Digital Green City 2025 Year: 1995 Stakeholders:








Technology and Water), leading Malaysian research institutions and Putrajaya






organizations. Experts associated: Kyoto University, Okayama University, National Institute for Environmental Studies (NIES), Asia-Pacific Integrated Team, Universiti Teknologi Malaysia (UTM), Malaysian Green Technology Corporation and others. Firms concerned: Putrajaya Holdings, Loh & Loh Corporation Berhad, Hibikii LED, Malay-Sino Chemicals Industries Sdn. Bhd and others Current costs: $ 8.1 billion


Smart Regulation

Figure 8 – Smart Regulation and selected real estate projects: a graphic summary of the analysis Source: New Cities Foundation 40

Smart Regulation

Smart regulation applied Regarding the first criterion characterizing smart regulation of the built environment, inclusive project design, the role of the regulator is crucial to ensure the embedment of all different stakeholders in the project. In this matter, the examples of Lyon-Confluence and Vauban are instructive: because those projects had to respect and engage with an existing landscape, the public authorities showed a great willingness to embed different stakeholders into the regulatory process. Acting as a coordinator between private developers, inhabitants and several local and international NGOs, the public authorities worked on assimilating the different visions of the project into concrete realizations, thereby fostering the embedment of all actors into the project. The scale of these mid-sized projects and their leadership by public authorities constitute the key to the success of their inclusive project designs. Indeed, in larger-scaled projects led by public authorities, such as Putrajaya, the number of stakeholders and the amount of capital involved is large, making coordination between the different participants’ interests a delicate issue. Even though smart cities like Putrajaya pursue a well-defined aim (to establish a center of knowledge-based innovation, thus triggering growth within the national economy), the relationship between conceptual means and economic ends is often not well articulated, that is, many developers seem to rely upon the beneficial means of clustering high tech industries, elite universities and a well-educated workforce without considering the possibility that this concept may not be a panacea for success if the right stakeholders are not included in the planning process (i.e. the right level of embedment is not attained). Moreover, because they gather a relatively small number of stakeholders, more modest projects, such as Torre Titanium and Ciudad Real’s hospital seem to be more focused on coordinating the actors of the project rather than adopting a more global vision, and therefore seem to exclude third actors from the regulatory process that might be essential for the project’s vitality and sustainability. Indeed, by not embedding environmental experts in the construction phase, the 41

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Torre Titanium is being criticized for its high carbon emissions and other environmental disruptions. By not embedding any actor specialized in sustainable development, Ciudad Real’s hospital also does not comply with the sustainability requirements of smart regulation. Therefore, both the scale and the nature of the regulator constitute a key factor in determining successful inclusive project designs. Let us now examine the next feature of smart regulation in the context of the built environment: communication. Many of the projects reviewed draw upon elaborate ICT networks that ensure or incite communication. In principle, three different contexts can be identified. First, there are ICT networks that serve a range of objectives, which result from the daily routines of an existing institution. Such is the case with Ciudad Real’s new hospital: since the operational procedures in most hospitals are highly standardized, the margin of innovation is comparatively low in this setting; improving ICT infrastructures mostly means an incremental adaptation to the daily needs of the medical staff. Second, ICT networks serve the goal of auto-observation and regulation, mostly in the context of environmental sustainability. Examples can be found in Lyon-La Confluence and PutrajayaCyberjaya, where inhabitants can draw upon monitoring technologies to observe and evaluate the environmental impact of their daily activities – with the incentive to promote more sustainable behavior. The feedback loop thus established can be understood as an example of smart regulation as defined in the present report, particularly since it draws upon the citizens’ voluntary self-evaluation instead of governmental programs of command and control. However, these new schemes of ICT-based environmental policies have yet to prove their effectiveness. Finally, ICT networks are also being implemented to stimulate innovation, such as in PutrajayaCyberjaya. Here, the technical diversification of feedback loops does not serve previously defined goals such as a more efficient workflow or reduced carbon emissions, but rather to meet the objective of developing new ideas. Putrajaya-Cyberjaya and CITE City embrace the notion that by integrating many different actors in a common network for exchange and communication, they can foster innovation. While this idea is not baseless, the relationship between communication infrastructure and concepts such as innovation and creativity is far from clear. In 42

Smart Regulation

this context, the concept of smart regulation reaches its limits for the simple reason that the degree to which innovation can be planned is restricted. However, if ICT constitutes a fundamental tool for data sharing and real-time performance evaluation, the presented case studies allow us to distinguish two different uses that the projects’ regulators make of these technologies. Indeed, while projects such as CITE City, Torre Titanium and Ciudad Real’s hospital perceive ICT as a tool designed to significantly increase the quantity of data shared amongst the stakeholders, other projects such as Lyon Confluence and Putrajaya view ICT as a crucial support mechanism for enriching the quality of the project’s governance on a daily basis. In these cases, ICT networks facilitate closing the feedback loop between the regulator and the regulatees. Responsiveness can thus be ensured in the built environment not only by convening a project’s stakeholders in workshops, consultations and local commissions, but also by using ICT networks to increase the quality of the exchanges on a daily basis, thereby ameliorating the project’s transparency and contributing to the establishment of a trustful environment between various stakeholders. In terms of spatial layout, the third feature in smart regulation of the built environment, one may discern a similar difficulty concerning the relation between cause and effect: how, precisely, does a certain spatial layout contribute to specific modes of social interaction? There are important differences not only in the actual spatial layouts of the projects reviewed, but also in terms of the functions they were intended to fulfill. There is a clear correlation with the projects’ varying scales: in the examples of Torre Titanium and Ciudad Real’s new hospital, form (i.e. spatial layout) mostly follows function and the scope for truly innovative solutions is limited. The medium-sized projects analyzed here represent a clear contrast in this regard: since La Confluence and Vauban cannot be reduced to one particular function and because they incorporate many different stakeholders with strong elements of civic participation, their spatial layout was more open for contestation from the beginning of the planning process. Not surprisingly, in both cases, the participatory approach to planning decisions has helped generate a living environment that mostly satisfies the habitants’ needs and desires. For example, in Vauban a ban on cars was achieved through civic participation despite 43

Smart Regulation

initial resistance from the municipality; today it is counted among the major features that make the neighborhood worthwhile for living and stimulating for social exchange and civic engagement. Concerning the new cities of Putrajaya-Cyberjaya and CITE City, it is as yet unclear whether their respective spatial infrastructures will stand the test of time. In some respects, they represent amalgams of the projects discussed above insofar as they try to combine the well-defined spatial necessities of research and production with the polymorphic potentialities of sharing a social space. In doing so, both of these projects deliver some sophisticated proposals, but they still face a major challenge: social space cannot necessarily be pre-determined, but rather is organically appropriated by its inhabitants over time. It remains to be seen whether the new cities attract or generate the strong communities able to achieve this vital task. The fourth and final principle of smart regulation as it applies to the built environment, environmental layout, represents a common claim of all projects reviewed in the present study. This is due to the fact that sustainability – one of the axes of smart regulation and mostly understood as an eco-friendly project design – has become a buzzword which lends itself to multiple purposes. However, the six case studies differ widely in terms of their actual and potential degree of environmental sustainability. Starting with Torre Titanium and Ciudad Real’s new hospital, neither project paid much attention to aspects related to sustainability when it would have been crucial to do so, that is, during the planning and construction phase. While some positive details can be highlighted, neither of the two buildings can be described as landmarks of green urbanism. However, both cases make only moderate use of the sustainability rhetoric. Measured by their own standards, both projects thus perform fairly well. The medium-sized examples of La Confluence and Vauban constitute positive examples of sustainable urbanism: both neighborhoods developed original ideas to save energy, prevent emissions and to motivate sustainable behavior amongst its residents. Both projects have been certified by independent environmental agencies and are frequently cited as best practices in terms of urban sustainability. However, it is unclear to what extent these experiences can be replicated elsewhere. For instance, Vauban is accepted as an almost car-free district not least 44

Smart Regulation

because it is well served with public transport systems and bicycle lanes. The experiences of La Confluence and Vauban are evidence that the construction of participative and environmentally sustainable urban districts is possible under real-life conditions, and that they can be affordable. Finally, the new cities depict a somewhat paradoxical scenario. Putrajaya-Cyberjaya and CITE City, apply the vocabulary of green and/or sustainable urbanism with high ambitions, drawing heavily upon technological support. However, the solutions proposed still appear somewhat fragmented – for instance, neither case includes a comprehensive project for public transportation. Finally, the enterprises and research centers that will settle in these new developments are not always compatible with standards of environmental and/or social sustainability. Thus, if one applies a notion of sustainability that extends beyond the cities’ material fabric and includes the impact of their major stakeholders’ economic activities, the image of smart urbanism becomes somewhat questionable.


Smart Regulation

Conclusion One central question, which cannot be answered fully at this stage, is what distinguishes a successful case of smart regulation from a failed one. In the development of the concept, it has become increasingly difficult to establish comprehensive measures of success; as the plethora of actors, tools and institutions involved becomes ever more extensive, classical schemes of command and control give way to institutional regimes in which knowledge and power are more dispersed than was previously the case An essential point in the literature on smart regulation is that it is a public authority that sets the standards, assures the free flow of information and enacts penalties where necessary. However, as explained, the role of public actors changes as the regulatory processes become more decentralized. Moreover, ICT is a key element of smart regulation: these technologies enable efficient information sharing and real-time performance evaluation, which allows existing regulatory systems built on traditional notions of information scarcity to be retooled. As such, public authorities at the local level must fully embrace the available technologies and mechanisms by which information can be gathered and analyzed to establish effective regulatory systems, including crowd-sourced data from citizens via social networking and other big data analysis tools. As urban populations grow and cities become increasingly important centers of decision-making, local authorities should not just familiarize themselves with the implications of using advanced technology networks, but should take an active part in redesigning the regulatory process to enable the embedment, responsiveness and sustainability inherent in smart regulation. (Of course, the same notions of smart regulation apply at state and national levels – and should be encouraged – in terms of adopting the methods and technologies necessary to promote regulation adapted for the twenty-first century. However, it is at the local levels where new forms of regulation may begin to see the most impact).


Smart Regulation

The varied facets of smart regulation leave many open questions. The reasons for this ambiguity are manifold: first, smart regulation has been positioned in the context of an entire genealogy of new approaches towards public administration, one whose origins can be traced back to the 1970s. Thus, smart regulation is conceived of as the latest offspring of good governance theories, and its conceptual boundaries within this genealogy are necessarily blurred. Second, smart regulation has been used in very different contexts, which can be organized roughly along a state-market distinction: while in certain cases, smart regulation advocates demand a simplification of market access and a leveling of trade policies, in other contexts, the term is used to promote new modes of cooperation between public and private actors, which are not so easy to label. Both conceptual strands – the market- and the state-centered – are vital to develop an adequate understanding of smart regulation’s possible implications. Third, smart regulation is a concept developed to instruct political decision-makers and, therefore, implies a broad range of normative assumptions about “good” and “bad” outcomes of regulation. This study did not engage with these underpinnings, but it should be noted that the bulk of literature dealing with or articulating models of smart regulation avoids the effort to develop a sound normative foundation. Therefore, interested actors may appropriate the concept selectively. Through a systematic approach of examining the historical roots and development of the term, this book has attempted to extract the most salient and common points from the varied discussion of smart regulation to identify the key axes that form its pillars. By developing this framework, our goal has been to provide the tools necessary not just to analyze, but also to operationalize smart regulation. Finally, the idea of applying the framework to the built environment and a broad range of different real estate projects – in terms of scale and in terms of their respective objectives and stakeholders – was to expose the operational definition to a robustness check. Thus, the analysis in this study has aimed to provide the clarification and conceptual boundary that the term, smart regulation, requires – a critical element if different cases are to be analyzed and compared with each other. 47

Smart Regulation

As the twenty-first century’s urban population increases at a rate of two people per second, the staggering pace of urbanization requires a new approach to ensuring that cities are well governed and that all sectors are efficiently regulated. In a new era where partnerships across the public, private, and non-profit sectors will be essential to developing and implementing the solutions needed to address challenges of rapid urbanization, smart regulation is at the core of what will allow these partnerships to succeed. An inclusive, responsive, flexible and up-to-date regulatory framework that guides new models of collaboration among the city’s various stakeholders is paramount to achieving a shared vision and outcomes for its citizens. Thus, the importance of the term cannot be overemphasized; understanding the foundations upon which smart regulation is built and especially how it can be applied in the urban context brings us closer to this goal, firmly establishing the concept’s usefulness and importance for the city of tomorrow.


Smart Regulation

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Cisco (2011), Connected Public Spaces: Securely Connect People and Objects Throughout the City, Cisco corporation solution overview [Online: w_us0726a.pdf Last View: 10/11/2012]

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Bailey, N. (2010), “Building Sustainable Communities from the Grassroots: How Community Land Trusts Can Create Social Sustainability” in Manzi, Tony et al. (Ed.), Social Sustainability in Urban Areas: Communities, Connectivity and the Urban Fabric. London, Washington, DC: earthscan, pp. 49-64.

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Jensen, S.; Cerrato, N.;, Wolff, J.; and Smookler, J. (2010), Smart Regulation. A cleaner, fairer and more competitive Europe, Joint report by the UK, Danish, and Dutch governments [Online: Last View: 10/11/2012]

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Manzi, T.; Lucas, K.; Lloyd Jones, T. (2010), Social Sustainability in Urban Areas: Communities, Connectivity and the Urban Fabric. London, Washington, DC: earthscan, pp. 1-28.


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Mumford, P. J. (2010), Enhancing Performance-Based Regulation: Lessons From New Zealand’s Building Control System, Doctoral Thesis, Victoria University of Wellington.

Van Gossum, P.; Arts, B.; Verheyen, K. (2010), “From “smart regulation” to “regulatory arrangements”” in Policy Sci 43, pp. 245-261

Balleisen, E. J.; Eisner, M. (2009) “The Promise and Pitfalls of Co-Regulation: How Governments Can Draw on Private Governance for Public Purpose” in Moss, D.; Cisternio, J. (Ed.), New Perspectives on Regulation. Cambridge: The Tobin Project, pp. 127-149.

Barr, M.; Mullainathan, S.; Shafir, E. (2009), “The Case for Behaviorally Informed Regulation” in Moss, D.; Cisternio, J. (Ed.), New Perspectives on Regulation. Cambridge: The Tobin Project, pp. 2561.

Colantonio, A. (2009), Social Sustainability: Linking Research to Policy and Practice [Online: Last View: 10/11/2012]

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Radaelli C.M.; Anne C.M. Meuwese (2009), "Better Regulation in the European Union. The political economy of impact assessment" in K. Jacob (ed.), Evaluating Integrated Impact Assessments (EVIA) Handbook, Springer [Online: 0of%20Impact%20Assessment.pdf Last View: 10/11/2012]

Van Gossum, P.; Arts, B.; Verheyen, K. (2009), “Smart regulation”: can policy instrument design solve forest policy aims of expansion and sustainability in Flanders and the Netherlands?, Wegeningen University: Forest and Nature Conservation Policy Group.


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Lascoumes, P.; Le Galès, P. (2007), “Introduction: Understanding Public Policy through its Instruments. From the Nature of Instrumentation to the Sociology of Public Policy Instrumentation” in Governance 20 (1), pp. 1-21

Scott, C. (2006), “Privatization and Regulatory Regimes” in The Oxford Handbook of Public Policy, Oxford University Press, pp. 651 – 668

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Johnston, R.; Sarre, R. (2004), Regulation: Enforcement and Compliance, Research and Public Policy Series. Canberra: Australian Institute of Criminology.

European Economic and Social Committee (EESC) (2004), The Current State of Co-regulation and Self-regulation in the Single Market, EESC Pamphlet Series [Online: Last View 10/11/2012]

External Advisory Committee on Smart Regulation (2004), Smart Regulation: A Regulatory Strategy for Canada, Report to the Government of Canada, September 2004 [Online: Last View: 10/11/2012]

Böcher, M.; Töller, A. E. (2003), Conditions for the Emergence of Alternative Environmental Policy Instruments. Presented at the 2nd ECPR-Conference, Marburg, 18–21 September 2003.

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Parker, C. (2002), The Open Corporation: Effective Self-Regulation and Democracy, Cambridge: Cambridge University Press.

Gunningham, N.; Sinclair, D. (2001), Voluntary Approaches to Environmental Protection: Lessons from the Mining and Forestry Sectors, Canberra: Australian Centre for Environmental Law, Australian National University

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Websites Australia’s ‘Better Regulation Office’ website: [Last View 10/11/2012]

Center for Innovation, Testing and Evaluation (CITE) website: [Last View: 10/11/2012]

Eurochambres website:

European Chemical Industry Council (CEFIC) website: Last View: 10/11/2012

European Commission’s ‘Better Regulation’ website: Last View: 10/11/2012

UK’s Department for Business Innovation and Skills ‘Better Regulation Commission’ presentation (this page is a snapshot taken on 04/03/2010 by the National Archivres): wing-regulation/commission/page44086.html Last View: 10/11/2012

OECD and EU ‘Better Regulation in Europe – The EU 15’ project website: [Last View 10/11/2012]

“Putrajaya – City in the Garden” blog post by probyte2u: [Last View: 10/11/2012]

Support for Improvement in Governance and Management (SIGMA) project website:


Smart Regulation  

The absence of a viable definition of smart regulation gives rise to multiple interpretations, which are sometimes contradictory. Taking int...

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