Driving Sustainable Development through Better Infrastructure: Key Elements of a Transformation Program

The agendas of accelerating sustainable development and eradicating poverty and that of climate change are deeply intertwined. Growth strategies that fail to tackle poverty and/or climate change will prove to be unsustainable, and vice versa. A common denominator to the success of both agendas is infrastructure development. Infrastructure is an essential component of growth, development, poverty reduction, and environmental sustainability.

The world is in the midst of a historic structural transformation, with developing countries becoming the major drivers of global savings, investment, and growth, and with it driving the largest wave of urbanization in world history. At the same time, the next 15 years will also be crucial for arresting the growing carbon footprint of the global economy and its impact on the climate system.

A major expansion of investment in modern, clean, and efficient infrastructure will be essential to attaining the growth and sustainable development objectives that the world is setting for itself. Over the coming 15 years, the world will need to invest around $90 trillion in sustainable infrastructure assets, more than twice the current stock of global public capital. Unlike the past century the bulk of these investment needs will be in the developing world and, unlike the past two decades, the biggest increment will be in countries other than China.

Getting these investments right will be critical to whether or not the world locks itself into a high- or low-carbon growth trajectory over the next 15 years. There is powerful evidence that investing in lowcarbon growth can lead to greater prosperity than a high-carbon pathway. At present, however, the world is not investing what is needed to bridge the infrastructure gap and the investments that are being made are often not sustainable. The world appears to be caught in a vicious cycle of low investment and low growth and there is a persistence of infrastructure deficits despite an enormous available pool of global savings. At the same time, the underlying growth trajectories are not consistent with a 2 degree climate target. And climate change is already having a significant impact, especially on vulnerable countries and populations.

Yet there are major opportunities that can be exploited to chart a different course. The growth potential of developing countries can be harnessed to boost their own development and global growth and demand. Long-term interest rates are at record lows and there are major untapped sources of finance. Technology change offers prospects for breakthroughs on development and climate outcomes (smart cities, distributed solar power). And there is growing recognition of the importance of decarbonization and new commitments to it by advanced countries as well as developing countries.

The current infrastructure investment and financing model needs to be transformed fast if it is to enable the quantity and quality of growth that the world economy needs. The urgency of action cannot be overemphasized. Given the already high level of emissions, the next 15 years will be a crucial period and the decisions taken will have an enduring impact on both development and climate outcomes. The forthcoming U.N. Conference on Financing for Development at Addis Ababa in July provides a historic opportunity to reach consensus on a new global compact on sustainable infrastructure.


Executive Editor

Ms Anna Sullivan

Ms Anna Sullivan