A recent paper from the Asian Development Bank (ADB) outlines the Bank’s experiences in designing, executing and scaling up of interventions that build resilience and demonstrates how lessons from these can help push forward the resilient infrastructure agenda.
The paper ‘Building Resilient Infrastructure for the Future’, maps the trajectory of ADB’s work on resilience and outlines emerging developments and climate challenges. To address these challenges ADB is not just looking at new and innovative modes of financing but also planning a holistic resilience approach to ensure that investments made lead to effective, efficient and equitable action. To disseminate these approaches, ADB will continue with its collaborations to enhance awareness and create an enabling environment for resilience building at all levels.
Through its Strategy 2030, ADB plans to enhance its efforts to build knowledge and capacity, mainstream climate and disaster resilient design practices, and explore different avenues for collaborative financing. However, critical gaps persist in the Asia, in terms of information availability, knowledge on best practices across the region, and adopting a more systematic approach towards infrastructure resilience.
The paper makes the case that ongoing and future resilience building interventions can play a key role in addressing these gaps. Documenting experiences of implementing these interventions and disseminating them widely can create a wider knowledge base, while new knowledge partnerships can provide the necessary platform for facilitating learning and co-production of knowledge. To implement new or revised methods for resilient infrastructure development, an array of skills in a diverse set of fields will be required. Along with implementation, countries need to have adequate capacity to ensure sustainability of such projects. For this both formal and technical education and knowledge sharing are necessary.
To strengthen and promote the use of disaster resilient design initiatives, ADB is looking to focus on enhancing its existing climate risk management framework through provision of climate services, detailed economic analysis of resilience interventions, and capacity building of key project partners. ADB is collaborating with international standard setting bodies to work towards updating building codes and engineering design standards to include the latest climate information, and address resilience gaps. This can also provide the space for private sector involvement and uptake of resilience in commercial bank lending.
To deliver infrastructure resilience at scale, significant finance, both from the public and private sector, needs to be mobilised. While governments can use their purchasing power or introduce incentives to accelerate investments in resilience, a large part of the financing effort will be through engagements with the private and public-private partnerships sectors which are responsible for a significant share of urban infrastructure construction and management. ADB hopes to play a key role in leveraging private sector finance to expand financing beyond available funds and modalities, especially with increasing recognition of the need to assess and disclose physical climate impact risks in investment proposals. Insurance is also expected to play a crucial role in unlocking private sector financing. In this context, ADB’s Asia-Pacific Climate Finance Fund (ACliFF) plans to provide financial risk management products which have been established but not widely commercially available in its DMCs.
A watershed moment for resilience in Asia
Infrastructure growth is vital for enabling development in Asia and the Pacific. The region is expected to see huge investment in new infrastructure in the coming decades.
“In order to meet the growing demand for infrastructure as driven by ongoing urbanization, population growth and an aspiration to move towards a more sustainable development pathway, analyses suggest developing countries in Asia will need between $20tn and $30tn in infrastructure investment over the next 15 years.” explains report author Xianfu Lu, “The upper end of this cost range is about the same as the current forecast for all assets under management in Asia-Pacific in 2025.”
The level of infrastructure investment required provides an important opportunity to build resilience. ADB, which will play an important role in accelerating this investment, recognises the integral linkages between infrastructure development, disaster risk reduction and climate change adaptation. According to global studies, the economic costs of climate change in South and Southeast Asia can be up to double of the global average by 2060s. Seven of ADB’s developing member countries (DMC) rank amongst the top 10 countries which face the highest risk from natural events and disasters.
ADB is, therefore, keen to ensure that infrastructure development and resilience building of systems go hand in hand in the region and has been systematically addressing this dual challenge by prioritising investment in resilient infrastructure.
Building climate resilient infrastructure: Lessons from practice
The paper summarises ADB’s experience and insights from building infrastructure resilience in three core areas: i) a holistic approach to resilience; ii) increased investment; and iii) leveraging knowledge and partnerships.
1. ADB’s corporate resilience strategy and policies adopt a holistic approach to building resilience and situating infrastructure building processes within the Bank’s climate risk management framework.
‘Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability’ is one of the seven key priorities set by ADB’s Strategy 2030. To scale up investments in resilient infrastructure, ADB aims to ensure that a minimum of 75% of its committed tasks will support climate change mitigation and adaptation by 2030, and $80 billion will be allocated by the bank between 2019-2030 for climate finance. To mainstream resilience at all levels, ADB has adopted four key resilience building lenses: i) physical infrastructure resilience; ii) financial resilience; iii) eco-based resilience; and iv) social and institutional resilience.
This approach recognises the importance of factoring disaster and climate risks, biodiversity and ecosystem services, socio-economic vulnerability and financial management of residual risk into the planning, designing, and building infrastructure projects. In this context, the Bank supports ecosystem-based approaches in areas such as erosion control and coastal protection, assisting its DMCs to develop disaster-contingent financing and risk transfer mechanisms, and initiating a project which will focus on streamlining investments for building resilience of the poor and vulnerable.
ADB has a climate risk management framework in place that includes contextualized climate risk screening, climate risk and adaptation assessments, technical and economic evaluation of adaptation options and monitoring and evaluation of climate risks. Disaster risks, short and long term, have been recently included in the framework, and adaptation finance is being estimated and tracked. In the face of increasing climate and disaster risks, the bank has conducted a comprehensive review of the framework and is working towards improving it to adequately assess climate risks and adaptation needs in rapidly changing and diverse contexts.
2. ADB’s financing of climate and disaster resilient public infrastructure has been steadily increasing.
Along with investing significantly ($4.29 billion between 2013- 2017) in climate adaptation projects, the Bank operates a number of climate resilience funds such as the Pilot Programme for Climate Resilience under the Climate Investments Funds (CIF). ADB has also worked with the Green Climate Fund (GCF) to leverage finance for resilient infrastructure development in vulnerable countries and sought co-financing for adaptation in its DMCs from bilateral donors.
ADB has also invested in infrastructure designed for disaster risk reduction and adaptation. The Bank has helped update policies and mandates based on latest information to enable more accurate decision making and interventions. For example, in Vietnam, during the project preparation phase of the project titled ‘Basic Infrastructure for Inclusive Growth in the North-eastern Provinces Sector’, ADB supported adjustments in road design parameters for the country to incorporate changes in extreme rainfall events in the future. These adjustments were done through analyses to estimate engineering design parameters under future climate projections.
Another important aspect of ADB’s investments has been to strengthen its DMC’s financial resilience to residual climate and disaster risks by helping them prepare and improve their risk financing and execution strategies. For example, through its policy-based loan instrument, ADB has established contingent financing for five Pacific island countries. This provides these countries immediate access to liquidity post disasters.
3. Leveraging knowledge and partnerships and catalysing finance.
The Climate Change Operational Framework 2017-2030 sets guidelines for enhancing internal cooperation and coordination for knowledge sharing through a range of initiatives for DMCs such as strengthening their networks and partnerships to share learnings and best practices on climate governance, accessing and delivering climate finance, and the implementation of their Nationally Determined Contributions.
In this way, ADB has supported knowledge sharing, partnerships and networks for informed decision making and catalysing action for resilience. This includes sharing climate information, working with analytical methodologies and tools for assessing climate risks, developing partnerships with leading research institutions, and active involvement in a range of multilateral and bilateral partnerships and networks.