Five measures to promote safe and resilient development in Central America

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Tramo marino del Corredor Sur en la Ciudad de Panamá.
Corredor Sur in Panama City . Photo: : Federico Bervejillo

 

The average net benefit of investing US$1 in more resilient infrastructure in low- and middle-income countries is US$4. Therefore, when investing in infrastructure in regions highly exposed to natural hazards, such as Central America, it is essential to determine if its useful life can continue after a disaster , that is, if it is a resilient investment. Furthermore, each dollar invested in more resilient infrastructure generates benefits in 96% of the thousands of scenarios used to analyze possible socioeconomic and climatic trends. The current COVID-19 (coronavirus) crisis has increased the challenges in the Central American region and has reinforced the notion that the resilience of public and private investments will be an essential element for an assured reconstruction process. 

In Central America, which has the second fastest urbanization rate in the world and ranks second in vulnerability to disasters, investments in infrastructure should include an analysis of disaster risks and possible climate change scenarios. Likewise, the region’s geography, subjected to multiple natural hazards, represents a permanent challenge for the provision and design of new infrastructure and supply of services. Safe and sustainable development will not only promote productive and high value-added activities but will also contribute to reducing inequality and poverty.   

One more step towards safe development in Central America

If the vulnerability of existing infrastructure in the region is reduced, officials will avoid a constant drain on public finances . There are two fundamental issues relating to the impact of disasters: first, infrastructure becomes unable to fulfill its useful life, and second, there can be on-going deterioration in the quality of service provision.  

Shielding future investments in the medium and long term involves critically reviewing public and private investment planning as well as improving information platforms. It is not enough to have generic remedies and guides for current public investment needs in the region; instead, we propose five measures to improve regional capacities while promoting resilient public investment:

  1. Improve resilient investments while strengthening national public investment systems. There are innovative financial protection opportunities for existing infrastructure portfolios as well as for financing future constructions prior to 2030. Pre-investment mechanisms offer room to include more robust risk analyses, which can result in longer project lifespans and lower cost.
  2. Transform crises triggered by disasters into occasions to strengthen existing portfolios. Post-disaster reconstruction reduces the risk of future disasters and increases the adaptive capacity of critical sectors . When viewed through the lens of building back better, reconstruction takes into account the adverse effects of climate change.
  3. Develop fiscal and budgetary shielding mechanisms for investment projects. This assures future investments in public infrastructure aren’t built under conditions of risk. Similarly, there are advantages offered by the various market options so that countries in the region can defer part of their catastrophic risk and reduce their fiscal liability.
  4. Promote public-private partnerships (PPPs) through regional-level terms and conditions. This could promote attractive infrastructure investment and global financing mechanisms – such as the Green Climate Fund – designed to reduce the deficit in resilient investments.
  5. Identify disruptive projects with regional impacts. The potential inherent in the region's location still awaits wagers of innovative investment that would help cover deficiencies and provide jobs and services in lagging territories. History has shown how investments that stimulate development and innovation can maintain medium-term benefits and returns. However, it has been decades since Central America receives these types of investments. 

This article is part of a series based in the report Towards a More Resilient Central America. Read the series and share your opinions on social media using #CentroaméricaMásResiliente

Recommended Readings:
•    Hacia una Centroamérica más resiliente 
•    Estudio de la urbanización en Centroamérica
•    Hablemos de la gestión del riesgo durante la COVID-19
•    Lifelines: Tomando acción hacia una infraestructura más resiliente

 

Authors

Haris Sanahuja

Senior Disaster Risk Management Specialist

Mirtha Escobar

Disaster Risk Management Specialist

Alonso Brenes

Alonso Brenes - Disaster Risk Management and Territorial Development Consultant