Resilient infrastructure could return $4.2 trillion – report

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March 2020

A new report finds that the extra cost of building resilience into infrastructure systems is only 3% of overall investment needs, and yet would provide an enormous $4.2 trillion in net benefits over the lifetime of new infrastructure.

The World Bank’s Lifelines: The Resilient Infrastructure Opportunity report provides a framework for understanding infrastructure resilience by examining four essential infrastructure systems: power, water and sanitation, transport, and telecommunications.

If countries continue to build infrastructure that is not resilient to climate change, the additional cost will be $1 billion over the next decade, the report says. Climate change makes action on resilience even more important as, on average, climate change doubles the net benefits from taking resilience measures. In Bangladesh, for example, $1.6 billion has been avoided in damages to power systems thanks to $560 million in flood protection spending.

Reliable infrastructure such as water and sanitation, energy, transport, and telecommunications are essential for raising people's quality of life. It is therefore critical that infrastructure can withstand the impacts of climate change. When powerlines fail, water pipes are damaged, and transport links are wiped out, people’s lives can be put in danger.

AUTHOR

UCCRTF Secretariat

Analysis in the report shows that one in three Kampalans would not reach a hospital in time because of road disruptions during just moderate floods. In the Democratic Republic of Congo, after one day of water disruption, incidence rates of suspected cholera increased by 155%, compared to the incident rate when there was optimal water provision.[1]

 

Disruption to infrastructure costs households and firms in low- and middle-income countries at least $390 billion a year, and indirect costs increase the burden too. 

 

In Tanzania, for example, the cost to firms from outages and disruptions in power, water, and transport due to rainfall and flood is $250 million per year. Therefore, ensuring that essential infrastructure systems are resilient to the physical risks climate change presents not only avoids costly repairs, but also minimizes the effect and extent of the consequences of natural disasters on people’s livelihoods and well-being.

The trick is to spend better—not necessarily to spend more. By investing in regulations and planning in the early stages of project design, and in maintenance, the costs of repairs or reconstruction after a disaster strikes can be significantly reduced.

Unwarranted expenses can be minimized by planning based on providing services rather than assets and helping these service users to manage disruptions. Good infrastructure management is key—a one-off resilience intervention will not suffice. Instead, a range of coordinated actions will be required, collaborating across sectors and governance. As such, the report outlines five recommendations on how to unlock the $4.2 trillion opportunity.

The trick is to spend better—not necessarily to spend more. By investing in regulations and planning in the early stages of project design, and in maintenance, the costs of repairs or reconstruction after a disaster strikes can be significantly reduced .

  1. Get the basics right: Poor management and governance largely explain why infrastructure systems underperform. While more money may be spent on infrastructure systems, improvement will be hampered by (i) a lack of enforcement of regulations, construction codes, and procurement rules; (ii) not having a system for appropriate infrastructure operation, maintenance, and post incident response; and (iii) not providing appropriate funding and financing for infrastructure planning, construction, and maintenance.

  2. Build institutions for resilience: Governments need to play a coordination role and provide a certain way forward in order to overcome political economy challenges. They should prioritize actions that will (i) implement a whole-of-government approach, facilitating information exchange, and build on existing regulatory systems; (ii) identify critical infrastructure and define intolerable and  acceptable risk levels; and (iii) ensure equitable access to resilient infrastructure, by using approaches that also assess well-being loss and socioeconomic resilience for both poor and rich households.

  3. Include resilience in regulations and incentives: Too often, decision-makers only consider lower repair costs when deciding on investments in resilience, and rarely take into account other impact costs. Governments can help by including resilience in regulations and financial incentives to align parties’ interests. This includes (i) considering resilience objectives in master plans, standards, and regulations, and adjusting them regularly to account for climate change; (ii) creating financial incentives for service providers to promote resilience infrastructure services; and (iii) ensuring that infrastructure regulations are consistent with risk-informed land use plans and guide development toward safe areas.

  4. Improve decision-making: Even with financial incentives and regulations, infrastructure providers will not be able to do much without access to data and tools, and the skills to put them to use. Governments therefore need to help stakeholders by (i) investing in freely accessible natural hazard and climate change data; (ii) making robust decisions via stress-testing that will work across a range of uncertain futures, minimizing potential for regret and catastrophic failures; and (iii) developing the skills needed to use data and models to mobilize the practical know-how of the private sector.

  5. Provide appropriate financing: Affordability and financing constraint will also inhibit action on making infrastructure more resilient. Making resilient changes may well result in decreased repair costs, but may also incur greater design, construction, and maintenance costs. Therefore, there needs to be (i) provision of adequate funding to include risk assessments in master plans and early project design; (ii) a government-wide financial protection strategy and contingency plan in order to raise funds in the aftermath of a disaster; and (iii) a promotion of transparency to better inform investors and decision-makers of the physical risks associated with investments and assets.

Central to all five of these recommendations is the emphasis on implementing resilience thinking in the early design and planning stages of infrastructure services. These early stages are where a little investment in resilience thinking can go a long way and significantly improve the overall resilience of infrastructure systems, securing people’s well-being and livelihoods.

Download a copy of the Lifelines report here.

[1] Jeandron, A., J. M. Saidi, A. Kapama, M. Burhole, F. Birembano, T. Vandevelde, A. Gasparrini, B. Armstrong, S. Cairncross, and J. H. J. Ensink. 2015. “Water Supply Interruptions and Sus- pected Cholera Incidence: A Time-Series Regression in the Democratic Republic of the Congo.” PLoS Medicine 12 (10): 1–16. https:// doi.org/10.1371/journal.pmed.1001893.

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