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​Is infrastructure in emerging markets a good investment?

Laurence Carter's picture
There’s a lot of discussion about attracting more investors to invest in infrastructure in emerging markets. This will be one of the themes of the Financing for Development Conference next week. Last month the PPI Database’s 2014 full year update showed that total investment in infrastructure commitments in emerging markets for projects with private participation in the energy, transport and water and sanitation sectors increased six percent to US$107.5 billion in 2014, compared to 2013.  
 
But what does the evidence tell us about how good those investments might be for investors?
 
One interesting source comes from a Moody’s study based on the performance of over 5,300 projects. This data represents more than 60 percent of all project finance transactions worldwide over 1983-2013. It is broadly representative of worldwide project finance activity by year, industry sector and regional concentration. The data shows that:

Where will the footprints be when there is no more sand? Coastal erosion and the future of Senegal

Matthias Cinyabuguma's picture

Where will the footprints be when there is no more sand?  Coastal erosion and the future of Senegal

Rocky shores that hardly measure more than several meters at high tide are all that are left of some of Senegal’s most highly prized beaches at the seaside resort Saly. With every year that passes, the Atlantic ocean inches closer, much to the dismay of locals and tourists alike.
25% of the Senegalese coast is at high risk for coastal erosion, and it is estimated that this figure will increase to 75% by 2080 if sea levels continue to rise. A victim of climate change, Senegal tourism has taken a hit despite being one of the key focus areas of the Plan Sénégal Émergent, the country’s long-term growth and development strategy.

PPPs in the Caribbean: Filling the gap

Brian Samuel's picture
Prior to about 2005, for many tourists their Jamaican vacation was ruined at the last minute, by the hot and overcrowded conditions inside Montego Bay’s Sangster International Airport. Fast forward 10 years, and waiting for a flight at Sangster is an altogether more pleasant experience. The air conditioning actually works, and the whole environment is infinitely less stress-inducing than before.
 
A new waiting area at Montego Bay's
Sangster International Airport.
Photo: Milton Correa/flickr

What’s the difference? The private sector.

In 2003, the Government of Jamaica finally succeeded in doing what it had been trying to do for a decade: privatize Montego Bay Airport. A private sector consortium, led by Vancouver International Airport, quickly invested millions of dollars in expanding the terminal building, doubling the airport’s capacity and opening dozens of new retail spaces. Since then, the consortium has invested more than US$200 million on expansions and improvements to the airport, all of which has been entirely off the government’s balance sheet.

Jamaica has gone on to implement several more public-private partnerships (PPPs), with mixed results. The second phase of its ambitious highway construction program — the Mount Rosser Bypass — was recently opened, cutting a swath through miles of virgin territory. However, early indications are that traffic levels are not living up to expectations, probably due to the Bypass’ steep eight percent gradient, which is beyond the means of most Jamaican trucks and buses.

In the energy sector, Jamaica is completing three PPPs with a total of 115 megawatts of renewable energy (RE) capacity, putting the country on track to meet its RE target of 12.5 percent of generating capacity by the end of 2015. Lastly, the government is currently completing formalities for the sale of Kingston Container Terminal (KCT) to a consortium of CMA/CGM and China Merchant Marine, a transaction that is expected to result in a US$600 million capital expenditure program by the port’s new owners.

Public-private partnerships: Promise and hype

Michael Klein's picture
Here is a new paper I wrote that provides perspectives on patterns of public-private partnerships (PPPs) in infrastructure across time and space.  
 
PPPs are a new term for old concepts. Much infrastructure started under private auspices. Then many governments nationalized the ventures.

Governments often push infrastructure providers to keep prices low. In emerging markets, the price of water covers maybe 30 percent of costs on average, that of electricity some 80 percent of costs. This renders public infrastructure ventures dependent on subsidies. When governments run into fiscal troubles, they often look again for PPPs, and price increases. As a result, PPPs keep making a comeback in most countries, but are not always loved.

Human wellbeing depends on a functioning planet—the Pope’s call

Paula Caballero's picture
Children in Bhutan look out on terraced fields. (Photo by Curt Carnemark / World Bank)The papal encyclical “on care for our common home” reflects the kind of insightful and decisive leadership that will be needed to reverse trends that will affect humanity’s capacity to feed itself and provide for collective well-being. The encyclical is not only a sobering call to address climate change, but also a manifesto for environmental stewardship and action. It touches on topics that we, as earth’s dominant species, need to urgently care about if we are to keep millions out of poverty today and tomorrow, and deliver on the rising expectations of a global middle class.

At the core of the encyclical is both a concern for the health of the planet and for the earth’s poor, reflected in a commitment to social values and integrity, environmental resilience, and economic inclusion.

The stock-taking begins, aptly, with pollution: “Some forms of pollution are part of people’s daily experience. Exposure to atmospheric pollutants produces a broad spectrum of health hazards, especially for the poor, and causes millions of premature deaths.” The World Bank’s latest edition of the Little Green Data Book finds indeed that in low and middle-income countries, 86% of the residents are exposed to air pollution levels (measured in exposure particulate matter less than 2.5 microns in diameter) that exceed World Health Organization (WHO) guidelines. The WHO last year made headlines when it calculated that 7 million people had died prematurely from indoor and outdoor air pollution in 2012. From safer cookstoves in rural areas, to better air quality management in fast growing cities, this is an area where solutions are known and must be urgently applied.

Sesame Street, World Bank apply behavioral and educational insight to scale up sanitation and hygiene

Stephen Sobhani's picture
Sesame Street’s Global Health Ambassador
Raya and math expert Count von Count at
World Bank HQ. Characters © Sesame
Workshop. All rights reserved. Photo
​© Simone D. McCourtie/World Bank

Stephen Sobhani, Sesame Workshop's Vice President, International, and Junaid Ahmad, World Bank Group Senior Director for Water, wrote a blog for The Huffington Post. Read an excerpt below and continue reading on The Huffington Post.

A bright, green global ambassador for life-saving hygiene habits from Sesame Street -- the world's largest informal educator of children. Unprecedented investments in water and sanitation from the World Bank Group -- the world's largest development financier. What do Sesame Street and the World Bank Group have in common? Far more than you think...

Obrigado, Brasil!

Clive Harris's picture
Paving a highway in Brazil. In 2014, Brazil's
 infrastructure investment commitments
​drove an overall global increase.
In March we released the update from the Private Participation in Infrastructure (PPI) Database for the first six months of 2014, covering investment activity in energy, transport, and water and sanitation. The good news of a rebound of investment commitment from a decline in 2013 was noteworthy, alongside the heavy concentration of activity in Brazil.
 
The PPI Database’s 2014 full year update for these sectors has just been released, and it confirms the trends we began tracking for the first six months. Total investment in infrastructure commitments for projects with private participation in the energy, transport, and water and sanitation sectors increased six percent to $107.5 billion in 2014 from levels in the previous year. The total for 2014 is 91 percent of the five-year average for the period 2009-13, which is the fourth-highest level of investment commitment recorded – exceeded only by levels seen from 2010 through 2012. 
 
This increase over 2013 was driven largely by activity in Brazil. Without Brazil, total investment commitments would have fallen by 18 percent, from $77.2 billion in 2013 to $63.4 billion in 2014.  Although this is lower than H1 2014 (57%), Brazil’s large stake is a continuation of a recent trend.
 
The Latin America and the Caribbean (LAC) region saw $69 billion of investment commitments, or nearly 70 percent of the total for 2014. Three of the top five countries by investment commitments in 2014 were from LAC.  The top five, in order, were Brazil, Turkey, Peru, Colombia, and India. 

Connecting the dots in 2015 for sustainable development

Paula Caballero's picture
View from the River Congo between Kinshasa and Lukolela, DR Congo. Photo by Ollivier Girard for CIFOR via Creative CommonsWhat will 2015 stand for? Only half-way through the year, it may be risky to make predictions. But 2015, a year in which the international community is supposed to forge new deals for climate action and sustainable development, should be a year rich in connections. A year in which the health of the planet is finally understood to be of central concern to the future of people. A year in which the management of natural resources – from fish stocks and fresh water, to fertile soil, forest habitats and the carbon in the atmosphere - is understood to have significant national, international and inter-generational consequences.

Awareness is certainly progressing. From the streets of Sao Paulo, Brazil - a country that hosts nothing less than the mighty Amazon River, to the farmlands of California, people are coming to the realization that resources such as water are not limitless. More and more businesses are looking at the security of their supply chains and the footprint of their operations with zeal fueled by self-interest. And countries seem poised to adopt Sustainable Development Goals that signal an understanding that economic, social and environmental issues are inherently interdependent.

Climate change, water shortages and other environmental crises are bringing home the message loud and clear: we need to connect the dots between human actions across the landscape and seascape, or the earth will cease to care for us. It will cease to grow food, to store water, to host fish and pollinators, to provide energy, medicine and timber. Changing temperatures will stress systems already overwhelmed by unsustainable patterns of production and consumption, while a growing middle class will further strain planetary boundaries.

How can we help economies develop better, for lasting poverty reduction and prosperity, within the limits of natural resources? How can we make more rational use of natural and financial resources to maximize social and economic benefits and reduce carbon emissions while increasing our resilience to climate extremes?

Bangladesh: The challenges of living in a delta country

Lia Sieghart's picture



Deltas are often described as cradles of civilization. They are the testing grounds for early agriculture and the birthplace of hydraulic engineering as we attempted to shape the landscape to suit our needs.

Deltas are the unique result of the interaction of rivers and tidal processes resulting in the largest sedimentary deposits in the world. Although comprising only 5% of the land area, deltas have up to 10 times higher than average population—a number, which is increasing rapidly, especially for deltas in Asia.

Low lying, deltas are widely recognized as highly vulnerable to the impacts of climate change, particularly sea-level rise and changes in runoff, as well as being subject to stresses imposed by human modification of catchment and delta plain land use.

Innovating through the 'valley of death'

Kristoffer Welsien's picture
Water flow sensor tested in rural Tanzania.
​Photo credit: WellDone

In December 2013, I was excited to receive funding through an Innovation Challenge Award to pilot water flow sensors in rural Tanzania, where the sustainability of rural water supply is a major development challenge. Approximately 38% of rural water points are not functioning properly. The sensor we wanted to develop would remotely monitor flow, making it easier to deliver operational information to the Ministry of Water’s water point mapping system.

The pilot brought one of the first 3D printers to Tanzania and we connected the American start-up WellDone International to the local non-governmental organization (NGO) Msabi. The project team implemented the gadget effectively, and my colleagues at the Water and Sanitation Program (WSP) and I navigated the procurement and implementation challenges. The pilot ended successfully in June of 2014 and we were proud of our achievement in bringing an innovative ICT solution to the Tanzanian rural water sector. 


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