Integrating Resilience and Adaptation into Infrastructure Investment: Learning and Opportunities for Future-proofing Infrastructure of Developing Economies

Day 1, 4 May 2022, 1500 - 1630 IST

Session Annotation

Numerous studies have corroborated that transition from low to middle-income economies is predominantly based on infrastructure investments, and to high-income with investments focused on innovation and digital infrastructure. Infrastructure assets are characterized by large irreversible investments with a long lifespan and limited alternative uses. It is necessary to provide the required infrastructure on an affordable, socially equitable and environmentally sustainable basis, more so against the backdrop of climate change. This session will focus on the need for integrating resilience, amidst the transition from high carbon to low carbon targets and commitments, to future-proof the large infrastructure investments in transitioning economies.

Session Overview

Globally, countries are transitioning in terms of demography, urbanization, social interactions and behaviour, and changing climate—at   varying   pace. Infrastructure   being   the   backbone for development catalyses growth, connects people to services, and maintains the quality of life. In the post-pandemic scenario, infrastructure is needed more than ever to accelerate economic   recovery, create   jobs, reduce poverty, and   stimulate   productive   investment, particularly in developing economies. The gap between infrastructure capital demand and supply is further widening. Out   of   the   estimated   $97   trillion   of   global   infrastructure investments required by 2040 to support sustainable development, two-thirds are yet to be built in developing economies in the coming decades. While the policies on infrastructure resilience are shaping the sector, the large inflow of investments are already chiselling the landscape. With varied   perceptions   and   capacity   to   adopt   resilient   interventions, the infrastructure assets are increasingly exposed to threats stemming from extreme and unpredictable climatic events. With global investments and policies leaping towards green energy and decarbonization efforts, as expected, there are several examples of previous investments and related assets becoming  redundant and  risk  of  asset  stranding. The transition risk due to regulatory responses to climate change pose challenges in terms of devaluation, loss of revenue, and investment returns. Today, substantial examples of stranded assets come from energy and tourism sector. These stranded assets (both human and physical assets) have profound effect limiting socio-economic development, increased health and safety risk, social stability, and environment degradation. 

While investments and assets are affected due to policies, there are also cases of investments and assets failure due to deficient predictive models and misestimates. With climate change exacerbating the frequency and intensity of disasters, especially the utility assets are increasingly exposed to extreme climatic events. This raise concerns on possible financial stress on stakeholders, reduced safety, stability and serviceability of physical assets, lowered investments, and service disruption. With lack of access to information and modelling tools to assess likelihood of high impact climatic events, there is high probability of climate change bankruptcy incidences in developing economies. Developing economies have limited resources for infrastructure investments. Understanding climate risk, provides rationale to allocate investment on resilience adaptation. Apart from new infrastructure, the existing asset base too requires adaptation interventions to climate change to safeguard the asset, investment and accrued socio-economic benefits through it. There is a need to upscale the capacity of institutions for resilience adaptation. This session of ICDRI  2022 proposes to highlight the learning on integrating resilience interventions in large infrastructure investments in developing economies with insights on policy, finance, awareness, capacity, and management of assets in sectors such as power, telecommunication, transportation, etc., through contextual challenges and transitioning environment.