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Urban resilience requires new thinking on infrastructure development: ADB paper

Cyclone relief efforts underway in Bagerhat, Bangladesh after Cyclone Amphan in May 2020

October 2022

The way that infrastructure is planned, designed, financed, delivered and maintained needs a fundamental rethink in order to meet the needs of growing cities in Asia, according to an ADB technical paper written in conjunction with the Global Centre on Adaptation (GCA). The recommendations of the paper are geared towards a fundamental shift in mindset about how to increase resilience to climate change and other shocks and stresses, while also supporting the development objectives of the cities by delivering access to critical services and making the urban environment more livable.

The new approach is especially important as ADB has identified building climate and disaster resilience as one of seven operational priorities under its Strategy 2030. It has also set an ambition to commit $100 billion to climate adaptation and mitigation between 2019 and 2030. Meeting its targets will require expanding investments in climate adaptation, especially in the context of infrastructure investments.

A change in mindset

The paper suggests moving away from an asset-centric approach to infrastructure development and towards systems thinking. This can help unlock new ways of approaching infrastructure development, and even what constitutes ‘infrastructure’ itself. In fact, if a problem can be solved without any new infrastructure intervention at all, then this could be the best approach.

For example, conventional approaches to flood management in a city might lead to the installation of a hard infrastructure asset such as a flood barrier or levee. However, the same impact may be achieved at lower cost by using a combination of Nature-based Solutions (NbS) such as new parks and green spaces which can also double as detention ponds, better zoning and planning to ensure critical infrastructure and vulnerable populations are not exposed, and an effective early warning system so residents can be evacuated ahead of time.

Changes along the project cycle

The report explains that a systems approach requires new thinking at all stages of the infrastructure development cycle. Importantly, there is a need to move climate-resilient infrastructure planning upstream, and to ensure it is better integrated at a strategic level. The paper also indicates that better use of analytical tools to understand climate risk at a systems level is needed, such as ADB’s Spatial Data Analysis Explorer (SPADE) tool. This shift will require sustained engagement to foster leadership from governmental finance and planning ministries to allow for more efficient and flexible responses.

In UCCRTF, we have also found that this strategic level for integrating resilience is at the project concept stage when they are still identifying the project coverage. This is done through the conduct of CRVAs at national, regional, city level, at each stage incrementally identifying specific risks/vulnerabilities which in turn inform the project components and design.

The paper argues a systems approach requires three main actions:

  1. Moving resilience upstream by integrating climate risk assessment into strategic and early-stage planning of infrastructure, to provide strategic coherence and efficient delivery;

  2. Investing financial resources in adaptation projects, especially green adaptation infrastructure (nature-based solutions or ecosystem-based adaptation), to reduce climate risks and deliver economic growth and socioeconomic benefits; and

  3. Mainstreaming the use of climate-resilient standards and regulations throughout the process of infrastructure development, to simplify and deliver resilience.

As Figure 1 shows, climate change will fundamentally alter the context in which infrastructure is financed and delivered over the next few decades. Governments and private infrastructure providers will need to prepare for increased risks of asset-value losses, increases in capital and operating costs, and/or a decline in the economic benefits or revenues that infrastructure assets generate.

As infrastructure investment in Asia’s cities increases, a new approach is needed to ensure development and maintenance of infrastructure is affordable. Increased pressure from climate-related shocks and stresses, means that unless changes are made in current practices, we risk facing higher costs, lower service quality, and increasing liabilities for the public sector, according to the paper (see Figure 1).

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Figure 1: Impacts of Climate Change on Infrastructure Asset Financial Performance[1]

The effect of climate impacts extends beyond any individual asset. It will affect the entire approach to planning, delivering, financing, and managing infrastructure, and on the national public finances. As the paper explains, this due to four key issues:

  1. An increased chance of cascading risks, as damage to critical infrastructure leads to knock-on impacts in other sectors and geographies. These will magnify the economic damage of climate-related disasters and exacerbate their fiscal impact.

  2. Credit rating agencies factoring climate change risks into sovereign creditworthiness increasing risk premiums. This could increase borrowing costs, requiring government spending on debt servicing rather than development.

  3. Climate change leading to contingent liabilities with implications for financing models, including public–private partnership (PPP), potentially. Difficulties in allocating climate risks may make PPPs increasingly unattractive for infrastructure financing.

  4. Rising climate extremes undermining insurance, with availability of insurance declining and/or its price rising, increasing the risk of financial instability.

The implication of this is that the support of national ministries of finance and planning is crucial in order to facilitate the shift to systemic, resilience approaches to urban development.

Practical application

How such changes will take effect has been the focus of the work of ADB’s Urban Climate Change Resilience Trust Fund (UCCRTF), which has been supporting resilience approaches to urban development through ADB investments since its launch in 2014.

As shown in Figure 2, the ADB technical paper recommends that to deal with asset level and system-wide climate impacts, countries should: move climate-resilient infrastructure planning upstream; ensure investments support climate adaptation objectives; and strengthen engineering and design standards.

In UCCRTF’s explerience, the most appropriate strategic entry point for integrating resilience is at the project concept stage. At this point the overall loan is in place, but the project components and scope is still being decided.  Climate Risk and Vulnerability Assessments (CRVAs) conducted at the national, regional and city levels provide progressively more detailed climate risk information that can inform project development in a way that can inform project components and design.

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Figure 2: Key Elements of a More Strategic Approach to Climate Risks in Infrastructure[1]

A good example of this approach is UCCRTF’s work supporting the Coastal Towns Environmental Infrastructure Project (CTEIP) in Bangladesh. Approved in 2014 with an ADB loan of $82 million and grant funds of $12 million, CTEIP’s objective is to strengthen climate resilience and disaster preparedness in eight vulnerable coastal secondary towns. UCCRTF supported the upstream work by carrying out climate risk and vulnerability analysis (CRVA), including the preparation of climate risk integrated urban plans (CRIUP)[1] in five towns. UCCRTF then allocated a $6 million investment grant as additional financing[2] for the construction of cyclone shelters, drains and emergency access roads, including the preparation of integrated drainage plans in two coastal towns: Bagerhat and Patuakhali.

During the design phase of the grant, the SPADE platform was used to verify the location of the shelters to ensure that they would not be flooded in the event of a cyclone, based on historical data and climate projections. The granularity of the data provides more accurate information on specific climate risks and the severity of the same for each city, thereby offering better guidance on sub-project selection, detailed engineering design and site selection. This kind of approach helped to reduce costs and ensure installed infrastructure is fit-for-purpose.

 

According to the ADB technical paper, investing in climate adaptation infrastructure brings high economic benefits and offers a range of other socioeconomic gains. This was also the experience in NCC, where significant cost savings were made as a result of reduced earthworks and ecological modification, and from the future savings from mitigated damages caused by flooding.

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Download a copy of the A System-wide approach for infrastructure resilience: Technical note here.

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[1] ADB (2021) A System-wide approach for infrastructure resilience: Technical note. https://www.adb.org/sites/default/files/publication/672501/system-wide-approach-infrastructure-resilience.pdf

[2] ADB (2021) A System-wide approach for infrastructure resilience: Technical note. https://www.adb.org/sites/default/files/publication/672501/system-wide-approach-infrastructure-resilience.pdf

[3] This was financed under TA 8913 Regional: Promoting Urban Climate Change Resilience in Selected Asian Cities - Developing Integrated Urban Development Plans in Selected DMC Cities Incorporating Urban Climate Change Resilience Principles (Subproject 1)

[4] Grant 0524: Coastal Towns Environmental Infrastructure Project, approved in 2016

CONTACT

  • UCCRTF Secretariat