- Resilient infrastructure is about people. Particularly in developing countries, infrastructure disruptions are an everyday concern that affects people’s well-being, economic prospects, and quality of life.
- There is a significant economic opportunity from investing in resilient infrastructure: the overall net benefit of doing so in developing countries would be $4.2 trillion over the lifetime of new infrastructure.
- For infrastructure investors, governments, development banks and the private sector the message is clear: rather than just spending more, also spend better
Infrastructure is at the heart of lives and livelihoods. It can enable schools and hospitals, businesses and industry, and access to jobs and prosperity. In developing countries, however, disruptions to infrastructure are an everyday concern, reducing opportunities for employment, hampering health and education, and limiting economic growth.
In low and middle-income countries, direct damages from natural hazards to power generation and transport alone cost $18 billion a year, cutting into the already scarce budget of road agencies and power utilities. But the main impact of natural shocks on infrastructure is through the disruptions they impose on people and communities, for instance, businesses unable to keep factories running or use the internet to take orders and process payments; or on the households that don’t have the water they need to prepare meals or on people unable to go to work, send children to school, or get to a hospital.
Along with poor maintenance and mismanagement, natural hazards are one of the main causes of the disruptions that costs households and firms at least $390 billion a year in low- and middle-income countries. And this is a conservative estimate that does not factor in the indirect burdens, such as those placed on women who are often the ones in charge of securing water for households, or the effect on small firms that are unable to grow and innovate because they must bear the cost of electric generators.
The Resilient Infrastructure Opportunity
According to Lifelines, a new report from by the World Bank and the Global Facility for Disaster Reduction and Recovery, the net benefit of building more resilient infrastructure in low- and middle-income countries would be $4.2 trillion, with $4 in benefit for each $1 invested.
Solutions to improve the resilience of infrastructure exist and investments to do so are both sound and profitable. What does this resilient infrastructure look like? It could be digging deeper foundations, using alternative materials, building flood protection, strengthening electrical poles and cell towers, improving road design, and building stronger water treatment plants.
But it is also necessary to look beyond each individual asset and build more resilient systems and networks. Building redundancy in networks, that is by increasing the number of connections that serve a community, for instance, can be a gamechanger. A city that is accessible through multiple roads and powered through multiple transmission lines is less likely to find itself isolated or without power when a devastating storm strike.
At the same time, not all disruptions can be prevented, so ensuring that households and businesses plan for and manage them – for instance, by ensuring that each home has emergency supplies, or that communities have robust and adaptable supply chains – will also be essential.
Closing the infrastructure gap to meet the Sustainable Development Goals will require substantial investments in new infrastructure and in the maintenance of existing assets. However, it’s not only about spending more, it’s also about spending better. Investing in regulations and planning, in the early stages of project design, and in maintenance can significantly outweigh the costs of repairs or reconstruction after a disaster strikes. These kinds of early investments may be difficult to fund in low-income countries. They can therefore be considered as priorities for the international community and development aid.
This report lays out how to unlock this $4.2 trillion opportunity with a range of clear and concrete recommendations:
- Get basics right. Tackling poor management and governance of infrastructure systems is key. For instance, a poorly-maintained infrastructure asset cannot be resilient.
- Build institutions for resilience. Wider political economy challenges also need to be addressed, and critical infrastructure assets and systems need to be identified so that resources can be directed toward them.
- Include resilience in regulations and incentives. Financial incentives can be used to ensure that the full social costs of infrastructure disruptions are accounted for, encouraging service providers to go beyond just meeting mandatory standards.
- Improve decision making. Access to better data, tools, and skills is needed to build resilience: for instance, digital elevation models for urban areas are not expensive and are critical to inform hundreds of billions of dollars in investments per year.
- Provide financing. The right kind of financing at the right time is key. For example, the amounts of resources needed to support regulators and consider natural risks at the early stages of infrastructure design are small compared to the billions needed to repair and recover in the aftermath of a disaster.
There is no time to waste. With a rapidly changing climate and large investments in infrastructure taking place in many countries, business as usual over the next decade would cost us $1 trillion more. By getting it right, however, we can provide the critical infrastructure services – lifelines – for better development for those who need it the most.