Side Event: Accelerating SDGs through risk-informed investments in infrastructure

Date |Time : 17 September, 2023 | 1145 – 1315

Venue : CR 7 | UNHQ

Format: High-level Panel Discussion

Session objective:

The Coalition will convene a high-level panel discussion on risk and resilience metrics to measure climate and disaster risks, the role of data for comprehensive risk management, and pathways to create a conducive policy ecosystem to attract investments in infrastructure resilience, thus accelerating SDG implementation. 

Background:

Infrastructure is central to the achievement of SDG 9 (industry, innovation, and infrastructure) and closely linked to health & well-being, quality education, clean water & sanitation, affordable clean energy, sustained employment, poverty reduction and gender equality. Concurrently, climate and disaster resilience of infrastructure is a precondition for providing sustainable, inclusive and disaster-resilient environments to communities.

Infrastructure resilience can foster a sustainable development trajectory defined by quality and reliable essential services, reduced loss and damage, and a social and economic development paradigm. However, the annual investment required to address the infrastructure deficit, achieve the SDGs, realize net-zero, and strengthen resilience, amount to the tune of USD 9.2 trillion.^[1] In order to address the wide resilient infrastructure investment gap, it is imperative to change the perception of resilience as a cost and demonstrate that risk-adjusted returns of resilient infrastructure investments are attractive to investors. 

An understanding of the resilience dividend provides a solid economic imperative for investing in infrastructure resilience. The wide-ranging benefits include avoided asset loss, reduced service disruption, better quality, and reliable public services, accelerated economic growth and social development, reduced carbon emissions, enhanced biodiversity, improved air and water quality, among others.

CDRI and partners will launch a one-of-a-kind open access global platform later this year, to inform risk-informed investments in infrastructure resilience by making data as a public good. Through a suite of financial risk metrics, the platform will assist investors to understand fiscal implications of the contingent liabilities within infrastructure systems, consider the magnitude of infrastructure deficit in each country, and assess the capacity to absorb, respond to and recover from asset loss and damage. This in turn can support countries to embark on a sustainable development trajectory.

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^[1] Krishnan, M., & Woetzel, J. (2022, April 6). Infrastructure for a net-zero economy: Transformation ahead. McKinsey & Company.  https://www.mckinsey.com/capabilities/operations/our-insights/global-infrastructure-initiative/voices/infrastructure-for-a-net-zero-economy-transformation-ahead 

Session Overview:

This session will examine how financial risk metrics can enable the estimation of the benefits and co-benefits of resilient infrastructure and thus enable the integration of resilience in public investment planning and evaluation, the design of public and private infrastructure projects, the formulation of resilience-based design standards and in the calibration of insurance and other risk financing instruments.

This session will highlight the need to increase both public and private investment to reduce infrastructure deficit, achieve the SDG, transition to net-zero and strengthen resilience, particularly in low-income countries. The deliberations will delve into the diverse opportunities for countries to strengthen infrastructure resilience, to avoid accumulating new contingent liabilities, increasing asset loss and damage and service disruption. 

Discussion Points

      1. Current state of play in countries

• Considering future climate risks and incorporating risk-informed approaches in current infrastructure investments.
• Adopting national resilient infrastructure policies, plans and strategies to send positive market signals and reduce risk perceptions.

      2. Data needs

• Data and tools required to stress test infrastructure investments for current risks and future climate challenges.
• Leveraging financial risk metrics in the development of resilience-based design standards and risk finance mechanisms.

      3. Private sector engagement

• Attracting private sector investments through better risk information.
• Availability of better risk information that benefit infrastructure insurance mechanisms.

      4. Capacity development

• Developing robust and credible financial risk metrics that inform infrastructure planning, design, standards, and certification.
• Good practices and opportunities to train and build the capacity of stakeholders across different sectors to effectively use risk information.