It pays to future-proof climate investments

First Published in Business Day on   February 23rd, 2023   |   by   Gracelin Baskaran

It pays to future-proof climate investments

Building resilient infrastructure makes for more efficient and rewarding economics

The suspension of my Honda Civic has been tried and tested more times than I can count over the past year. Every time I cross the intersection at Oxford and Jellicoe roads in Rosebank I’m as impressed that my car survived as I am concerned for my safety, as I’ve watched the pothole form, grow into a sinkhole and be refilled no fewer than a dozen times in the past year.

The reality is that SA’s roads, bridges and infrastructure as a whole are not ready for climate change. The financing is there: the government has committed to spending R903bn on more roads, bridges and other infrastructure projects in SA over a three-year period. It’s an applaudable goal — expanding infrastructure is the very backbone that facilitates economic growth.

When I visited Nairobi a few years ago I experienced the nightmare I’d heard tales of: traffic jams that made London, Sydney and Johannesburg pale by comparison. In 2018 Nairobi was ranked the second most congested city in the world. In 2019 the Nairobi Metropolitan Area Transport Authority noted that vehicles stuck in traffic were costing Kenya nearly $1bn per annum in lost productivity.

The bottleneck was alleviated in 2022 when the new Nairobi Expressway was opened — already nearly 70,000 vehicles have moved over from the previous congested route per day. This has enabled people to get in and out of the city easier, relieved the housing pressures associated with urbanisation and helped attract investment. There’s no doubt that efficient infrastructure is critical.

In SA, though there are budget allocations to finance infrastructure, there’s still a long way to go to build it to withstand climate shocks. After all, infrastructure only facilitates growth to the extent that it is operational and safe, even when temperatures exceed 38°C or monsoon levels of rain come down for prolonged periods — events that are happening with greater frequency and severity.

Building infrastructure that cannot withstand climate change is an inefficient allocation of limited resources — also known as wasteful spending. This requires structural adaptation across the spectrum: selecting appropriate surfaces for road surfaces to reduce run-off amid heavy rainfall and reduce the likelihood of deformation with high temperatures; shifting urban planning to reduce the need for heating and cooling; building seawalls to mitigate damage resulting from rising sea levels; adjusting design requirements for energy transmission infrastructure and burying distribution lines; and scaling up grey infrastructure to build drainage capacity in dense areas.

Climate-resilient infrastructure is a gift that keeps on giving. In low- and middle-income countries, investing in more climate-resilient infrastructure gives us $4 in benefits for every $1 invested. That’s a great return on public investment. It improves the reliability of service provision and increases asset life and investment returns. It also increases productivity, attracts employment-generating investment, and supports human capital development.

The World Economic Forum offers this example: if a new bridge in an area frequented by monsoons in India is designed and built with high climate-resilient standards and is constructed as a low-carbon structure, it is more likely not just to survive but remain operational into the next century. By contrast, a poorly constructed bridge is likely to be damaged seasonally and frequently out of commission (go to KwaZulu-Natal for examples).

We’ve seen the consequences of infrastructure that is not designed to high climate standards elsewhere on the globe too. In February 2021 Texas, my home state, was hit by a power crisis after winter storms brought sub-freezing temperatures and froze electricity grids that were not winterised. It caused at least $20bn in damage and left more than 10-million people without power. In July 2023, while I was in London, the train system came to a grinding halt due to melting railways; and in April 2022 there was a slowdown of economic activity in KwaZulu-Natal after transportation networks were wiped out.

The absence of climate-resilient infrastructure has substantial consequences via transmission risks to the rest of the economy. When I was in the Western Cape over the December holidays the scenic Clarence Drive was closed due to rockfalls and mudslides after heavy rains. Some businesses on the way took a hit, including my favourite little coffee stand, as tourism stalled on that stretch.

As a first point of action-strengthening development, implementation and enforcement of climate regulatory standards for infrastructure are critical. It makes public investment more efficient and can help mobilise private investment as it reduces the financial sector’s exposure to climate risk.

That’s something to keep in mind as Cyclone Freddy comes hurtling towards southern Africa, with floods and landslides likely in parts of SA. Meanwhile, I may have to find a new route to Rosebank.

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