Infrastructure resilience has become a critical global priority as climate change and disaster risks continue to threaten essential services and economic stability. The stakes are immense with approximately 14 Percent of global GDP growth at risk every year from infrastructure losses due to climate change, and disasters[i]. At the same time, the investment requirements are significant, in trillions every year. While governments and development partners have traditionally led resilience efforts, there is now a strong consensus, reflected in discussions in multilateral banks such as the World Bank high-level discussions at forums such as G20, and the Conference of Parties (COP), that far greater private sector engagement is indispensable. Brazil's COP30 Action Agenda has once again established a comprehensive framework for private sector engagement towards building resilience[ii]. 

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The most recent Sevilla Platform for Action introduced at the Financing for Development (FfD4) also highlights the need for enhanced private sector engagement. Yet, leveraging private capital for resilience will require a lot more concerted effort.  Against this backdrop, the 2^nd edition of the Global Infrastructure Resilience report of the Coalition for Disaster Resilient Infrastructure (CDRI) shows that a dollar invested in resilience may return at least $7 in terms of benefits, and even up to $15. How to translate this evidence into a paradigm shift that resilient infrastructure will also be bankable infrastructure? In order to respond to this challenge, CDRI is positioning itself to shape a global narrative on expanded private sector engagement in disaster resilient infrastructure (DRI). Through a comprehensive programme of advocacy, support for creating enabling environments, and collaborating with bilateral and multilateral partners in preparing resilience components of infrastructure projects, CDRI aims to work with the coalition partners in systematically addressing barriers to greater private sector participation in resilient infrastructure.

This blog series is intended to put forth, CDRI's current thinking on the different roles that the global private sector can play, with the aim of creating stronger momentum for private sector participation, culminating in the launch of a dedicated private sector initiative for disaster-resilient infrastructure. 

Private Sector – Role as a Financier

Private sector investment in infrastructure resilience is crucial, yet it remains fragmented and underutilized. In 2021-22, private finance accounted for only about 2 Percent of the total adaptation finance flows of around $65 billion, highlighting the need for attracting more substantial private investments in this space.^[iii].  Enhanced collaboration between public entities and private investors is essential to bridge existing gaps and mobilize the necessary resources for infrastructure resilience. The imperative for private sector engagement is driven by three critical factors: constrained fiscal space in public budgets, prospects for innovation, and speed of delivery.  

Given this context, climate adaptation actions especially for infrastructure resilience are no longer optional buffers but existential demands. This urgency is underscored by COP30's call to at least triple adaptation finance from current levels to $120 billion annually by 2035[iv].  Increased private sector engagement is critical for protecting vulnerable populations who face disproportionate climate impacts, particularly as global Average Annual Losses from infrastructure damage reach US$732-845 billion equivalent to 14 Percent of global GDP growth[v]. The Coalition for Disaster Resilient Infrastructure (CDRI) surveyed over 500 businesses on resilience investments. The findings reveal that incorporating resilience into early project design increases upfront costs by only 5 to15 Percent while delivering returns of 7 to 12 times the initial investment through avoided losses and ensured business continuity. Such comforting and compelling evidence, along with other reforms to the enabling environment, could form part of the incentive structure for private actors to integrate resilience considerations[vi].  

Another enabler is insurance. Beyond direct investment returns, having adequate financial cover to face risks or well-functioning insurance mechanisms serves as both a post-disaster payout mechanism and a proactive tool that incentivizes risk reduction and builds long-term resilience[vii]. Further, cross-sectoral infrastructure initiatives could leverage innovative risk transfer mechanisms such as catastrophe bonds that transfer infrastructure risks to global capital markets alongside parametric insurance and risk pooling arrangements that provide financial protection while enabling adaptation investments[viii]. Considerable, consistent and concerted efforts are needed on all of these fronts to mobilize private capital at scale.  

Private Sector – Role as a Facilitator 

The private sector acts as a crucial facilitator by bridging crucial gaps between policy intent and on-ground infrastructure resilience actions. Key issues that need addressing include lack of harmonized resilience standards, gaps in knowledge transfer, limited cross-sectoral integration, and high transaction costs[ix]. The state of play suggests that engineering bodies (e.g., the Institution of Civil Engineers, or FIDIC (International Federation of Consulting Engineers) are developing resilience guidelines while forums such as World Business Council for Sustainable Development (WBCSD) promote private sector innovation in resilience financing. Stakeholders in this space can be brought together to work in a much more collaborative manner to embed resilience considerations across the infrastructure value chain.

Private Sector – Role as a Implementor

While the private sector has not been putting its risk capital in infrastructure at the scale needed in most developing countries, it has always played a critical role in various aspects of implementing infrastructure projects. As implementors, private sector entities translate resilience concepts into tangible assets and lasting value. They operationalize resilience through risk-informed design, construction, and asset management. Here, besides the constraints mentioned earlier, a major factor of influence is the adequacy of the public procurement framework. There are financial aspects of public procurement, as well as governance elements that need to integrate resilience considerations. In most cases, there is a strong link between the two. For instance, public officials would need clear guidance to choose infrastructure solutions focused on resilience as they will cost more. The entire procurement value chain needs to work in tandem, right from specifications, to award, to implementation, to independent supervision, and to sound operations and maintenance of the assets once constructed. As long as the public sector foundation is built on strong governance requirements, the private sector can be brought into play its part in a transparent and effective manner.    

This blog series will lay the groundwork for the launch of a pioneering private sector initiative on infrastructure resilience. By harnessing CDRI’s convening power and expertise, we can unlock new partnerships and drive concrete action, thereby ensuring that private sector solutions become integral to climate and disaster resilience efforts worldwide. Over the span of the next 18 to 24 months, CDRI seeks to engage deeply with different stakeholder groups to create comprehensive knowledge for decision-makers, emphasizing actionable recommendations and policy implications. 

By:

Avinash Venkata Adavikolanu, Specialist-Knowledge Management, CDRI

This blog is the first in the series on Mobilizing Private Sector Actions for Disaster Resilient Infrastructure (DRI).