3 Reasons why it is critical to make our infrastructure resilient
From serving our most basic needs to enabling our most ambitious ventures in trade or technology, infrastructure services support our well-being and development. Reliable water, sanitation, energy, transport, and telecommunication services are universally considered to be essential for raising the quality of life of people. Access to basic infrastructure services is also a central factor in the productivity of firms and thus of entire economies, making it a key enabler of economic development. And in this time of rapid climate change and intensifying natural disasters, infrastructure systems are under pressure to deliver resilient and reliable services.
The resilience of four essential infrastructure systems: power, water and sanitation, transport, and telecommunications is critical because all of these systems provide critical services for the well-being of households and the productivity of firms, yet they are particularly vulnerable to natural hazards because they are organized in complex networks through which even small local shocks can propagate quickly. Making them more resilient—that is, better able to deliver the services people and firms need during and after natural shocks—is critical, not only to avoid costly damage but also to minimize the wide-ranging consequences of natural disasters for the livelihoods and well- being of people.
Building on a wide range of case studies, global empirical analyses, and modeling exercises, the report Lifelines: The Resilient infrastructure Opportunity arrives at three main messages:
1. The lack of resilient infrastructure is harming people and firms.
Natural disasters cause direct damage to power generation and transport infrastructure, costing about $18 billion a year in low- and middle-income countries. This damage is straining public budgets and reducing the attractiveness of these sectors for private investors. But natural hazards not only damage assets, they also disrupt infrastructure services, with significant impacts on firms and people. Altogether, infrastructure disruptions impose costs between $391 billion and $647 billion a year on households and firms in low- and middle-income countries. These disruptions have a wide range of causes, including poor maintenance, mismanagement, and underfunding. But case studies suggest that natural hazards typically explain 10 percent to 70 percent of the disruptions, depending on the sector and the region.
2. Investing in more resilient infrastructure is robust, profitable, and urgent.
In low- and middle-income countries, designs for more resilient assets in the power, water and sanitation, and transport sectors would cost between $11 billion and $65 billion a year by 2030—an incremental cost of around 3 percent compared with overall investment needs. And these costs can be reduced by looking at services, not just assets, and making infrastructure service users—households and supply chains—better able to manage disruptions. This report finds that investing $1 in more resilient infrastructure is beneficial in 96 percent of thousands of scenarios exploring possible future socioeconomic and climate trends. In the median scenario, the net benefit of investing in more resilient infrastructure in low- and middle-income countries is $4.2 trillion, with $4 in benefit for each $1 invested. Climate change makes action on resilience even more necessary and attractive: on average, it doubles the net benefits from resilience. And because large investments in infrastructure are currently being made in low- and middle-income countries, the median cost of one decade of inaction is $1 trillion.
3. Good infrastructure management is the necessary basis for resilient infrastructure, but targeted actions are also needed.
Unfortunately, no single intervention will make infrastructure systems resilient. Instead, a range of coordinated actions will be required. The first recommendation is for countries to get the basics right—proper planning, operation, and maintenance of their assets—which can both increase resilience and save costs. However, good design and management alone are not enough to make infrastructure resilient, especially against rare and high-intensity hazards and long-term trends like climate change. To address these issues, this report offers four additional recommendations: define institutional mandates and strategies for infrastructure resilience; introduce resilience in the regulations and incentive systems of infrastructure sectors, users, and supply chains; improve decision making through data, tools, and skills; and provide appropriate financing—especially for risk-informed master plans, asset design, and preparedness. Actions on these issues can be highly cost-effective and transformational, but they can nevertheless be challenging to fund in many poor countries, making them priorities for support from the international community.
The message for infrastructure investors, governments, development banks, and the private sector is this: Invest in regulations and planning, in the early stages of project design, and in maintenance. Doing so can significantly outweigh the costs of repairs or reconstruction after a disaster strikes.
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 $1 trillion more. By getting it right, however, we can provide the critical infrastructure services—lifelines—that will spur sustained and resilient economic development