Low, middle income countries have deficits in infrastructure, but high risk of destruction from disasters

  • The annual average loss of infrastructure and buildings, due to natural disasters and climate change, is estimated to be worth $700 billion.
  • Health and education infrastructures in low income countries are particularly vulnerable to disasters and carry escalating risks.
  • Infrastructure investments grew by 8.3 percent in developed countries, but fell by 8.8 percent in developing ones in 2021. Funding infrastructure resilience alongside climate adaptation can help bridge the gap.

The year 2023 has been marked by disasters that have dented state budgets. In Sikkim, which was hit by a glacial lake outburst flood last week, damages are estimated to run into thousands of crores. The intense rainfall and flooding that swept away entire roads and buildings in Himachal Pradesh in July cost the state Rs. 10,000 crores and the land subsidence in the town of Joshimath, which began sinking early this year, has cost the Uttarakhand government over Rs. 565 crore in damages.

Infrastructure is often the first casualty when disaster strikes, apart from human lives. A new report by the Coalition for Disaster Resilient Infrastructure (CDRI) reveals that the annual average loss of buildings and infrastructure due to natural disasters and climate change is $700 billion, and that impacts are not uniform across high and low income countries.

Low and middle income countries will require at least $2.84-2.9 trillion in funding to strengthen and make their infrastructure resilient, but what’s available “is at least one order of magnitude less than the estimated requirements,” says the report. In 2021, private infrastructure investments and climate financing in low and middle income countries was $40 billion and $50.7 billion in 2021.

“This report actually puts a number to this type of risk globally. So when you’re having discussions about how much money is needed for mitigation, here’s a report that gives you a sense of how much risk you’re carrying,” said Amit Prothi, director general of the Coalition for Disaster Resilient Infrastructure

The report comes two months ahead of the 28th Conference of Parties (COP28), where climate finance and funding climate induced losses and damages will be hotly debated by developed and developing countries. Most climate finance is going towards mitigation measures to reduce carbon emissions and not enough to help ecosystems and societies adapt to the effects of a changing climate. The CDRI’s report suggests setting aside funds for infrastructure resilience, the lack of which threatens the few assets low income countries have, while threatening to upend achievement of the sustainable development goals.

A collapsed building after the 2015 Nepal earthquake. Photo by Rajan Journalist/Wikimedia Commons.

Infrastructure in low and middle income countries is most vulnerable because of a number of challenges, the report says: a deficit in infrastructure to begin with, poor infrastructure governance, disaster-related asset loss and damage and service disruption, and “a stock of legacy infrastructure increasingly ill-suited to address the challenges posed by climate change and rapid technological change.”

The aim of the report, the CDRI says, is to “to make visible the resilience dividend,” which it describes as the full range of benefits derived from investing in infrastructure, such as avoided asset loss, reduced service disruption, better quality and reliable public services, accelerated economic growth and social development, reduced carbon emissions, enhanced biodiversity, improved air and water quality, and more efficient land use.

Inequitable investments

Investments in infrastructure are not evenly distributed across the world and the differences are widening, the report warns. In 2021, 80 percent of private infrastructure investments went to high income countries, where they grew by 8.3 percent. By contrast, investments in low and middle income countries fell by 8.8 percent the same year. “Even among low and middle income countries (LMICs), most of the available capital flowed into middle-income countries. In 2022, low-income countries received only around 2 percent of global foreign direct investment,” says the report.

For low income countries, this could be an obstacle in achieving their sustainable development goals (SDGs), particularly in the education and health sectors. The report finds that the relative risk internalised in these sectors in low income countries is three times more compared to high income countries. Apart from infrastructure deficits, low and middle income countries harbor great infrastructural risks because disaster and climate risk is “rarely considered systematically in the conceptualization, planning, design, regulation, and management of infrastructure systems,” the report says.

Funding resilience

Across the world, roads and railways, power and telecommunications infrastructure are most vulnerable in the face of disaster. Flooding and wind are associated with two thirds of annual average losses to the power sector, says the study. Wind is associated with two thirds of annual average loss to the telecommunications sector and earthquakes and landslides are associated with over three fourths of losses to rail and roadways.

The report proposes integrating Nature Based Infrastructure Solutions, like mangroves instead of sea walls, to improve infrastructure resilience. Photo by Josi Salgado/Wikimedia Commons.

The report proposes integrating Nature Based Infrastructure Solutions (NbIS) into mitigation strategies, which can “be used to complement, substitute for, or safeguard traditional gray infrastructure,” at a fraction of a cost. Certain nature based solutions, such as mangroves instead of sea walls, to mitigate coastal erosion, become stronger and more resilient as they grow, “increasing their protective function.”

Nature based solutions are an example of adaptive measures countries can take to deal with the onset of climate change, but according to the report, only a small fraction of this funding goes towards infrastructure resilience. The report instead proposes considering infrastructure resilience as a separate and complementary area of funding. “Mobilizing capital would, therefore, require a new approach combining public sector resources to identify and monetise the resilience dividend and de-risk investments, and private sources of capital to fund aggregated pipelines of infrastructure projects, complemented by climate and risk financing where appropriate,” it says.

“When we make an argument for more finances needed for climate adaptation, we’re actually missing out on some of the other hazards, geophysical hazards particularly, which are not climate related, and those still need to be supported,” said Prothi, adding, “When you’re looking at risk reduction and investment for resilient infrastructure, a substantial amount could be climate related, but at least one third is not climate related. That still needs to be supported.”

Banner image: A flood affected road in Amreli, Gujarat. Photo by Indian Air Force/Wikimedia Commons.

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