Under-investment in infrastructure can cripple lives. Across the world, 1.3 billion people have no access to electricity, 2.5 billion do not have adequate sanitation, and a further 2.5 billion rely on the traditional use of biomass for cooking. Building adequate infrastructure is a vital tool of social development. But it is also a crucial underpinning of economic growth. McKinsey estimates that the world needs to invest $57 trillion in infrastructure between 2013 and 2030 simply to keep up with projected global GDP growth. That’s more than the total estimated value of the infrastructure already on the ground today.
By Stephanie Pfeifer, Institutional Investors Group on Climate Change (Europe); Nathan Fabian, Investor Group on Climate Change (Australia/New Zealand); Chris Davis, Investor Network on Climate Risk (North America); and Alexandra Tracy, Asia Investor Group on Climate Change.
The British economist Lord Nicholas Stern has labelled climate change “the greatest market failure the world has ever seen.” Failing to put a price on carbon emissions leaves the market with no way to address the harm created by these emissions. And with no cost attached to a harmful activity, participants in the market have no incentive to pursue less harmful alternatives. Thankfully, this is changing.
About 40 national and more than 20 sub-national jurisdictions globally have implemented or are scheduled to implement carbon pricing schemes. The world’s emissions trading schemes are valued at about $30 billion, with China home to the world's second largest group of carbon markets, covering the equivalent of 1,115 million tons of carbon dioxide emissions, after the 2,309 million tonnes covered by the EU’s Emissions Trading Scheme.
This progress is good news, and furthering the spread of carbon pricing is essential. Putting a price on carbon reduces emissions and the costs associated with these emissions, costs that end up being borne by everyone, including companies and societies, through an array of impacts resulting from climate change.
Decentralization in Tunisia means empowering local government. A new World Bank project aims to build the capacity of local government and make it accountable. Jaafar Friaa, Team Leader for the Program discusses the project's goals.
In January, World Bank Group President Jim Yong Kim urged the audience at the World Economic Forum in Davos to look closely at a young, promising form of finance for climate-smart development: green bonds. The green bond market had surpassed US$10 billion in new bonds during 2013. President Kim called for doubling that number by the UN Secretary-General's Climate Summit in September.
Just a few days ago—well ahead of the September summit—the market blew past the US$20 billion mark when the German development bank KfW issued a 1.5 billion Euro green bond to support its renewable energy program.
Walking past the Check-in counter in Casablanca’s Mohamed V International Airport, a digital sign claims X amount of solar energy used and X amount of energy savings occurred in powering a transit hub with the use of polycrystalline panel technology. As a tourist, this may come as a pleasant surprise if she has not yet had the opportunity to see other improvements, like Rabat’s tram system. As a citizen, this may be inspiring as the term “smart city” hints at better infrastructure and technology use. However, what qualifies a city as a “smart city” is more often a topic for discussion only among Maghreb countries and not implementation.
Thanks to Urbanization, Tomorrow's Megalopolises Will Be in Africa and Asia
Tokyo will still be the world’s largest city in 2030, but it will have many more contenders on its heels. According to a fascinating new report from the United Nations, the globe will have 41 “mega-cities” -- defined as those with 10 million or more inhabitants -- up from 28 now. Although the world’s largest urban centers have historically been concentrated in the developed world, fast-paced urbanization in Africa and Asia means that the megalopolises of tomorrow will be found in the developing world. By 2030, Asia and Africa will host nine of the world’s 10 largest cities, according to the report.
Mobilizing Private Investment for Post-2015 Sustainable Development
The sustainable development goals are likely to have a more ambitious scope than the Millennium Development Goals. Accordingly, they will need a more ambitious financing for development strategy that can mobilize much more public, private, and “blended” finance. Very rough estimates indicate that at least $1 trillion of additional annual investment is required in developing and emerging economies. At first glance this might appear to be a large number, but it represents only approximately 10 percent of extra investment above current levels. It is clear that official development assistance, on its own, would be incapable of meeting financing needs, even if the target to provide 0.7 percent of gross national income were to be achieved by all developed countries. But official development assistance (ODA) could, through leverage and catalytic support, help mobilize substantially more private capital.
As population and income rise, car and motorcycle ownership quickly increased in both megacities while mass transit is not developing fast enough, with serious consequences on traffic congestion, accidents and pollution. São Paulo has 150km+ traffic queues daily and losses of productivity, wasted fuel, health impacts and accidents estimated at around 2% of Brazil’s GDP in 2013, with three fatal deaths daily in motorcycle accidents alone. Mumbai, in addition to all-day road traffic jams, have an astounding six deaths daily from riders hanging and falling from packed trains which circulate with open doors to avoid reducing carrying capacity. The city comes to a standstill when the rail right-of-way is flooded by heavy monsoon rains.
Access to jobs and basic services in both mega-cities is extremely difficult – particularly for the poor, who often live far from major employment centers. The two cities need to act quickly and take drastic measures to improve mobility and access... But this is easier said than done: expanding the transport infrastructure in these megacities requires careful planning, massive investment, and may also involve relocating large numbers of people and businesses.
Traffic in Dhaka. Ismail Ferdous/World Bank
Dhaka, the capital city of Bangladesh, has been dubbed as “the traffic capital of the world” because of its chaotic traffic and frequent traffic jams. Some say Dhaka needs more roads, because only 7% of land is covered by roads in Dhaka, while in many developed capital cities it is more than 20%. That argument may hold some water.
For many years, many cities in the world did try to build more roads to relief traffic jams after motorization took place. However, no city has been able to build itself out of congestion. In fact, allocating more urban land to roads means you have to reduce the portion of land allocated for other urban functions, such as housing, industrial, commercial and entertainment. What has also been widely recognized is that building more roads does NOT reduce traffic congestion. It would actually induce more motorized traffic and thus create more traffic congestion.
Traffic congestion, air pollution, accidents – the negative externalities from car transport are not just a popular field of economic research, but also a daily arduous reality for millions of commuters around the world. However, there is more: carbon emissions and climate change may be a less visible externality from road transport, but the economic and social costs will be substantial and borne at a global scale.
When dealing with such externalities, pricing instruments (such as carbon or fuel taxes) are the policy response favored by economists: if car users paid the full cost of driving, they would adjust their driving practices and thus reduce the negative environmental and social impacts.