Inadequate infrastructure systems are costing the global economy billions in losses each year. With accelerating climate change, these systems are becoming vulnerable and increasingly exposed to extreme events.

A resilient future requires resilient infrastructure systems. It has been estimated that every year, an amount of US$ 9.2 trillion must be invested in the infrastructure to support sustainable development. [1]

To bridge this investment gap, it is essential to scale up infrastructure investments and integrate resilience across the entire lifecycle of infrastructure project pipelines, thereby significantly enhancing their bankability.

The issue of embedding resilience can be addressed by speeding up implementation of the G20 Quality Infrastructure Investment (QII) Principles. These principles ensure that economic, social and environmental benefits are reaped over time with sustainable, resilient and inclusive infrastructural growth.

Infrastructure Investment Gap: A Growing Divide

The widening infrastructure investment gap cannot be bridged solely through public resources. Private capital must be rapidly mobilized. In 2023, private sector funding amounted to US$ 86 billion, representing a mere 0.2 percent of the GDP for all low- and middle-income countries (LMICs). [2]

Several barriers hinder the flow of private capital to infrastructure projects, including the absence of innovative financing mechanisms such as blended finance, de-risking strategies, data availability, localized approaches and a credible pipeline.

It is essential to identify elements that can ensure risk mitigation, robust governance and transparent procurement for the development of infrastructure as an asset class. QII Principles can create an environment conducive to addressing investment shortfalls.

It is not just a Financing Challenge; It is a Quality Challenge

We need to focus on building better and quality infrastructure rather than just building more. Recently, the Coalition for Disaster Resilient Infrastructure (CDRI) convened global experts for a dialogue on ‘Quality Infrastructure Principles for Resilience: A Global Consensus’.

• Kenichiro Tachi from the Ministry of Land, Infrastructure, Transportation and Tourism, Japan, presented a compelling case study of changes instituted after the 1995 Kobe Earthquake. Infrastructure standards were revised to ensure that critical infrastructure could withstand stronger earthquakes, and reinforced structures later endured the 2011 Great East Japan Earthquake unscathed.

• André Laboul, provided a comprehensive overview of the evolution of QII principles over time. These principles gained widespread recognition and full endorsement during Japan’s G20 presidency (2019); Figure 1 illustrates their progression from a national perspective to a global consensus. Since then, each G20 presidency has contributed to their refinement, highlighting their growing significance in quality infrastructure development.

Fig.1. The evolution of QII principles [3]

• Karlos Moresi from the Pacific Islands Forum Secretariat highlighted that Pacific Quality Infrastructure (PQI) Principles serve as a framework that addresses regional priorities of the Pacific.

The QII principles transcend traditional infrastructure development and integrate the essential criteria of sustainability, resilience, and inclusivity. By incorporating environmental, social and governance (ESG) considerations, QII ensures long-term viability.

The principles’ adaptability allows for tailored implementation across diverse geographies, from urban megaprojects to climate-vulnerable regions like Small Island Developing States (SIDS). This balanced approach provides a solid foundation for delivering high benefits at low cost in the long run, contributing to sustainable development.

Overcoming Barriers to QII Implementation

One significant challenge is the lack of technical expertise among governments and project developers. Additionally, changing demand patterns and technological advancements pose further obstacles. Furthermore, the voluntary and non-binding nature of these principles may limit their enforcement, which is necessary for driving a change at large scale.

Many sustainable and resilient infrastructure assets incur high capital investment costs and have longer repayment periods, which can deter private investments. Investors need a strong foundation of confidence to evaluate such investment opportunities. Therefore, it is crucial to assess the alignment of investments with QII principles and quantify their contribution to quality infrastructure outcomes. [4]

The Way Forward

A paradigm shift is necessary in infrastructure planning, design, construction and operation. The imperative is no longer to question the necessity of resilient infrastructure, but rather to expedite the integration of quality into every stage of infrastructure development.

In this endeavour, organizations like CDRI can play a pivotal role. CDRI has consistently advocated for the prioritization of infrastructure resilience. It is committed to providing technical assistance, policy support and knowledge exchange on financing mechanisms, risk-informed investments, standards and labels, and capacity-building for resilient infrastructure.

The road ahead requires a multi-stakeholder approach where governments, financial institutions, private investors and local communities must come together to speed up the implementation of QII principles.

By:

Dr Kopal Verma, Analyst – Advocacy at CDRI

The views and opinions expressed in this blog are those of the author and do not necessarily reflect those of the Coalition for Disaster Resilient Infrastructure (CDRI).

References: 

[1] CDRI (2023). Global Infrastructure Resilience: Capturing the Resilience Dividend - A Biennial Report from the Coalition for Disaster Resilient Infrastructure, New Delhi.

[2] Private Participation in Infrastructure (PPI) – Annual Report (2023). World Bank Group

[3]     a. G7 Ise-Shima Principles for Promoting Quality Infrastructure Investment

b. G20 Roadmap to infrastructure as an asset class

c. G20 Principles for Quality Infrastructure Investments

d. Compendium on QII indicators, refining metrics for assessing infrastructure resilience

e. G20/OECD Report on Financing Cities of Tomorrow

f. G20/OECD report on approaches for financing and investment in climate-resilient infrastructure

[4] Compendium on QII indicators, refining metrics for assessing infrastructure resilience