Economies in the Asia Pacific region should prioritize quality investment in infrastructure, one that is resilient and well-planned, especially in a post-pandemic world where sustainability is necessary.
In the latest Asian Development Bank (ADB) blog, ADB chief compliance officer Bruno Carrasco, principal public management specialist Hanif Rahemtulla, and public-private partnership expert David Bloomgarden said investing in resilient and adaptive infrastructure after the pandemic will help reignite global growth, attain the Sustainable Development Goals (SDGs), and lessen climate risks.
Globally, the authors said COVID-19 has slowed investment in resilient infrastructure supposed to improve lives over the long term.
“Given the large upfront costs, the long time frames, and the importance of such investment, it is critical to ensure effective governance for planning, funding and implementing projects,” they said.
It is estimated that the AsPac region needs to allocate at least $26 trillion for water and sanitation, telecommunications, power, and transportation from 2016 to 2030.
This includes about $200 billion to mitigate climate change and $41 billion per year to make infrastructure more resilient.
The authors said governments should ensure that public spending is efficient and use resources to target economic, social, environmental, and climate priorities.
Developing countries in AsPac, including the Philippines, lose an average of 32 percent of their investments due to inefficient planning and development.
“To be fiscally sustainable, infrastructure investment should be linked with budgets and medium-term spending plans. Governments around the world are under intense fiscal pressure, and this will likely get worse the longer COVID-19 hampers economic growth, while we wait for populations to get vaccinated,” they said.
They added that stronger early planning, along with monitoring, can help decision-makers understand the long-term effects of infrastructure projects and take climate impacts into account.
This means having a rigorous process to appraise and select projects by assessing the economic, social, fiscal, environmental, and climate-related costs and benefits.
The World Bank earlier reported that the net benefit of investing in more resilient infrastructure in developing countries is $4.2 trillion globally with $4 in benefit for each $1 invested.
“The risks of infrastructure projects are often not well integrated in governance and draw only modest attention when big investment decisions are made. It is important to build strong institutional capacity for climate risk analysis, planning, and project implementation,” the authors said.
Amid budget pressures in most economies, governments will need to mobilize private financing and public investments and the perception of policy, regulatory, and institutional risks has limited institutional investment in developing countries.
The authors emphasized that governments can influence the risk profile of infrastructure investments by promoting diversified risk mitigation instruments and incentives.
“Local governments account for a large portion of infrastructure investment. As such, they will play a big role in sustainable and resilient investment as part of the post-pandemic recovery,” they said.