From oil wealth to green growth: Aberdeen’s challenge and opportunity
Where to go next?
The economy of Aberdeen has been heavily reliant on the North Sea oil and gas industry since the 1970s. Thanks to the oil wealth, for decades Aberdeen had seen rapid economic and population growth and a swell of prosperity. At the end of 2014, however, all was changed. Crude oil price plummeted from more than $100 per barrel to less than $30 within a few months. Mass job losses and pay cut become prevalent in the once prosperous city. Meanwhile, the number of people applying for unemployment benefits has surged.
Throughout history, many cities have been through severe urban decline. The former East Germany city of Leipzig, for example, has lost 38.7% of its population between 1933 and 2001 and 85% of its industrial jobs within a few years after the reunification in 1989. Similarly, Liverpool has lost 49.5% of its population between 1933 and 2011 and a third of all its employment between 1971 and 1985 due to the decline in factory and port-related jobs. Worse still, the consequences of a city’s decline often fall disproportionately on the vulnerable: the young, the rich and the educated are usually the first to leave, leaving behind the old, the poor and the uneducated.
Can Aberdeen avoid its fate of fall before it is too late? In a recent paper, we develop an empirical, multi-layered and spatially-explicit agent-based model to explore sustainable pathways for Aberdeen city and surrounding area to transition from an oil-based economy to green growth. The model takes an integrated, complex systems approach to urban systems and incorporates the interconnectedness between people, households, businesses, industries and neighbourhoods. We find that the oil price collapse could potentially lead to enduring regional decline and recession. With green growth, however, the crisis could be an opportunity to restructure the regional economy, reshape its neighbourhoods, and redefine its role and identity in a global economy.
We find that the type of the green growth and the location of the new businesses will have profound ramifications for development outcomes, not only by directly creating businesses and employment opportunities in strategic areas, but also by redirecting households and service businesses to these areas. New residential and business centres will emerge during the process.
A key issue here is time. The former oil industry employers have valuable skills, connections and know-how that could be used to establish the new green industry and help it gain a competitive edge over other regions. The re-employment, however, must happen quickly before the human resources leave or depreciate. As a result, the new green industry needs to be of relatively high value, too, to keep the skilled employees in the area. Failing to do so quickly will cause a brain drain as the skilled employees find jobs elsewhere or give up looking altogether. Unemployed workers will not simply sit and wait for the new green industry to be developed. Once a city has lost its skilled labour force, it will be much harder to recruit them from outside the city even when employment opportunities eventually become available.
Want to learn more about our research? Please check out our recent publication here: https://www.sciencedirect.com/science/article/pii/S1364815217311192
The Economist has just begun a series on ‘The tenth largest cities of countries in Europe’ to look at the exact issue of urban decline and industrial restructure. See more information here: https://www.economist.com/europe/2018/09/29/europes-capitals-are-booming-but-most-voters-dont-live-there?cid1=cust/ddnew/email/n/n/2018102n/owned/n/n/ddnew/n/n/n/nAP/Daily_Dispatch/email&etear=dailydispatch&utm_source=newsletter&utm_medium=email&utm_campaign=Daily_Dispatch&utm_term=2018102