Strengthening New Infrastructure Assets
This paper explores the benefits and the costs of strengthening infrastructure assets to make them more resilient, reducing the repair costs and infrastructure disruptions caused by natural hazards. Strengthening infrastructure assets in low- and middle-income countries would increase investment needs in power, transport, and water and sanitation by between $11 billion and $65 billion a year, i.e. 3 percent of baseline infrastructure investment needs. The uncertainty pertaining to the costs and benefits of infrastructure resilience makes it difficult to provide a single estimate for the benefit-cost ratio of strengthening exposed infrastructure assets. To manage this uncertainty, this paper explores the benefit-cost ratio in 3,000 scenarios, combining uncertainties in all parameters of the analysis. The benefit-cost ratio is higher than 1 in 96 percent of the scenarios, larger than 2 in 77 percent of them, and higher than 4 in half of them. The net present value of these investments over the lifetime of new infrastructure assets -- or, equivalently, the cost of inaction -- exceeds $2 trillion in 75 percent of the scenarios and $4.2 trillion in half of them. Moreover, climate change makes the strengthening of infrastructure assets even more important, doubling the median benefit-cost ratio.
| Main Authors: | , , , , |
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| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019-06
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| Subjects: | INFRASTRUCTURE, INFRASTRUCTURE INVESTMENT, COST-BENEFIT ANALYSIS, WATER SUPPLY, CLIMATE CHANGE IMPACT, RESILIENT INFRASTRUCTURE, |
| Online Access: | http://documents.worldbank.org/curated/en/962751560793977276/Strengthening-New-Infrastructure-Assets-A-Cost-Benefit-Analysis https://hdl.handle.net/10986/31916 |
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| Summary: | This paper explores the benefits and the
costs of strengthening infrastructure assets to make them
more resilient, reducing the repair costs and infrastructure
disruptions caused by natural hazards. Strengthening
infrastructure assets in low- and middle-income countries
would increase investment needs in power, transport, and
water and sanitation by between $11 billion and $65 billion
a year, i.e. 3 percent of baseline infrastructure investment
needs. The uncertainty pertaining to the costs and benefits
of infrastructure resilience makes it difficult to provide a
single estimate for the benefit-cost ratio of strengthening
exposed infrastructure assets. To manage this uncertainty,
this paper explores the benefit-cost ratio in 3,000
scenarios, combining uncertainties in all parameters of the
analysis. The benefit-cost ratio is higher than 1 in 96
percent of the scenarios, larger than 2 in 77 percent of
them, and higher than 4 in half of them. The net present
value of these investments over the lifetime of new
infrastructure assets -- or, equivalently, the cost of
inaction -- exceeds $2 trillion in 75 percent of the
scenarios and $4.2 trillion in half of them. Moreover,
climate change makes the strengthening of infrastructure
assets even more important, doubling the median benefit-cost ratio. |
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