Graham Watkins, Inter-American Development Bank
Countries of Latin America and the Caribbean keep demonstrating their commitment to sustainable development. Adopting the 2030 Agenda and ratifying the Paris agreement showed their willingness to remain well below 2C degrees Celsius. Such commitments require mobilizing enormous amounts of resources, in particular from private sector investors.
This week, I had the pleasure of moderating a panel during the PPP Americas event in Costa Rica. Increasingly, sustainability is a focus of discussions in the PPP agenda – particularly regarding the importance of climate resilience and stakeholder engagement. The panelists included Guy Felio from Stantec in Canada, John Firth from Acclimatise, Christophe Dossarps from the Sustainable Infrastructure Foundation, and Jaime Garcia-Alba from our sister organization – the International Investment Corporation (IIC)– together, a collective 100 years of experience!
What are the main challenges to moving towards more sustainable infrastructure over the coming years? The discussion focused on several key challenges:
- First, we need to emphasize that infrastructure is about providing services – movement, energy, water, sanitation, and communications – and no longer about the asset – roads, power plants, pipelines, sewers, and transmission lines. This will require new approaches to policy and planning that consider that there may be different solutions available to provide the same services.
- Future discussions also need to be about existing infrastructure as much as about new infrastructure – there are many opportunities to improve existing infrastructure. Operational costs (which could reach 80% of the total infrastructure cost) are often under-emphasized, compared to capital costs.
- We need to address how climate change will affect service supply through direct impacts on assets but we also need to look at how climate change will affect service demand. Sadly, in a review of 15 country PPP regulatory frameworks undertaken by Acclimatise, none referred to the management of climate risks, even though each of the countries had a national climate change policy – which just shows how far we must go.
- We need greater emphasis on operational management. To achieve cost savings over project life-cycles, we will need to consider how data on infrastructure is gathered, managed, and used for decision making – permitting adaptive management.
- We need to enable greater engagement with the private sector, both as project developers and operators and as financiers, to increase the delivery of services that have traditionally been in the public domain.
The coming 15 years will be extremely challenging – climate change will likely accelerate and so too will technological change – innovation will help overcome the challenges and drive the transition from business as usual to sustainable infrastructure provision:
- Modeling uncertainty is necessary and increasingly more sophisticated and useful in planning investments – but in many cases, professional judgment may be more important to deciding on the most appropriate approach.
- “Big data” – making available data in ways that it can be used more effectively for decision making – information on service demand and supply and factors that affect demand and supply and ensure that this information becomes more transparent.
- Pay attention to risk across the whole life cycle of projects – we need to address the institutional/governance context, planning, procurement and tendering, preparation and design, construction, and, critically, operations and maintenance.
- Standardize the way in which we report on risks – building on global reporting and disclosure standards for companies and assets – ensuring that we transparently bridge the communications gap between engineers, developers, and financiers as well as between the public sector, private sector, and civil society.
- Finally, we need to agree on our vision for the way forward – to provide a common, clear, and yet simple understanding of what “sustainable infrastructure” is and how to achieve it – as a framework to “house” different approaches to resilience and sustainability.
Delivering this agenda requires systemic change, in particular regarding the way the public and private sectors work and relate to each other– and, as we have pointed out previously, it requires us to clarify our vision, to commit to working as a team, to collaborate and coordinate to empower change, and to continually communicate our successes to institutionalize the changes.