The World Bank’s Public-Private Partnership Group and Public-Private Infrastructure Advisory Facility report that total private participation in infrastructure (PPI) fell in the transportation sector in emerging markets by 39 percent to $33.2 billion in 2013, compared with 2012 levels.
In part, this reflects a broader trend – overall, PPI in all infrastructure sectors fell by 24 percent. The biggest drop was in South Asia, which saw PPI in transport fall from just over $20 billion in 2012 to approximately $3 billion in 2013, mostly because of significant decreases in India. Two other regions – Latin America & the Caribbean (LAC) and Eastern Europe and Central Asia (ECA) – also saw decreases. PPI in transport increased in East Asia and the Pacific (EAP) and Africa, but not by enough to offset decreases elsewhere.
2013 Transport PPIs by region
This is not good news for the world’s poor. Transportation is a critical component of development and growth, enabling people to access schools, hospitals and markets. It facilitates labor mobility and ensures that raw materials and finished goods get to customers. In rural areas, transportation systems provide an economic and social connection with the rest of the country. Within cities, good urban transportation is often the only form of transportation available to the poor. It also improves the flow of goods and services, reduces greenhouse gas emissions, and improves the overall quality of life.
Photo: When disasters strike – like floods, tsunamis, earthquakes or cyclones – they can cause, not just human suffering, but financial damage. Using well-crafted Disaster Risk Financing and Insurance (DRFI) instruments can help ease the impact of a potential financial catastrophe. Credit: World Bank Photo Collection.
When Tropical Storm Sendong battered the Philippines in late 2011, catastrophic flash floods claimed more than 1,200 lives and damaged over 50,000 houses. In addition to the human suffering, disasters like this often have a devastating effect on the budget of vulnerable countries, leading to the reallocation of scarce resources away from development programs to recovery and reconstruction. Governments also need immediate resources for rapid response to minimize post-disaster impacts.
But the Philippines had taken steps to prepare against such disasters. Just months before Sendong made landfall on the island of Mindanao, the government signed a US$500 million contingent credit line with the World Bank. This provided immediate access to liquidity to help finance emergency response and recovery operations.
Yet questions remain about financial protection strategies and instruments such as this contingent credit in the Philippines. For example: Does a government need to establish prior rules for post-disaster expenditure, or does it otherwise risk a slow and poorly targeted response with low impact on poverty and developmental outcomes? Was contingent credit the most appropriate instrument to finance this risk, or should other instruments, such as insurance, have been considered instead of or in addition to it? And fundamentally: Is disaster risk financing and insurance (DRFI) a cost-effective way of reducing (expected) poverty and improving (expected) developmental outcomes?
“Nothing is softer or more flexible than water, yet nothing can resist it.” Lao Tzu
In the film Quantum of Solace, James Bond battles a corrupt environmentalist to prevent a company from taking over Bolivia’s water supply. The company planned to enrich itself by creating a monopoly and charging excessive rates for water. Fortunately, Bond foils the plot, and the people of Bolivia do not lose affordable access to their water resources.