Financing Sustainable Infrastructure
What is sustainable infrastructure? Infrastructure is the backbone to sustainable development, comprising of energy and water infrastructure, transport systems and building, as well as social and nature-based infrastructure.
None of the United Nations Sustainable Development Goals can be achieved without infrastructure, but financing it is a challenge which requires careful consideration due to the enormous impacts to the well-being of people and the planet.
Planning phases for sustainable infrastructure can be longer and more expensive than for traditional projects, since they require systemic thinking, concerted design for the environment, and expertise in project and infrastructure finance. Using of greener and cleaner materials and technologies may involve higher performance risks, as these new solutions have yet to develop robust track records. Design and construction phases are also periods of high risk, trial, error and experimentation; when expenditure is high, delays are common place and no stable revenues are flowing in.
IISD provides research and advisory services on infrastructure and project finance. We help policy-makers and their many stakeholders appreciate the technical dynamics of investing in both large and small projects and help develop their skills in managing project and infrastructure finance. This includes
- Sustainable Asset Valuation (SAVi)
- Innovative financing strategies to blend public and private capital
- Dedicated focus on credit enhancement instruments
- Development of domestic bond markets
- Strategies to crowd in domestic investors into financing infrastructure
- Public–private partnerships (PPPs), stressing the importance of risk allocation and moreover, that PPPs can present significant stress on public balance sheets for many years to come.
Since 2018, we have also been working on digital finance and tokenization, which promises to disrupt and democratize the financing of infrastructure in an unprecedented manner. Our preliminary thoughts are presented in the report Tokenization of infrastructure. This report examines how blockchain and other digital finance technologies can address the inherent barriers of the infrastructure asset class.
Ongoing flagship projects are:
- Sustainable Asset Valuation (SAVi), a simulation tool to calculate the costs of risks and externalities of infrastructure projects. SAVi is built on systems dynamics and project finance models that are customized to projects, portfolios and policies.
- Inventory of credit enhancement instruments for infrastructure, an online inventory of over 100 credit enhancement and de-risking instruments and more than 60 instrument providers.
- Sustainable Infrastructure Finance Portal reporting on news and views of the infrastructure finance.
- Second Opinions for Green and Sustainability Bond Frameworks
We serve on the B20 Infrastructure Taskforce, UNECE Expert Group on PPP, the OECD Experts Groups on PPP, Green Finance and Long-Term Investment, and the Expert Network on Second Opinions (ENSO). We work closely with the Berne Union (a global association for the export credit and investment insurance industry), Credit Guarantee and Investment Facility (CGIF), Inter-American Development Bank (IADB), New Development Bank (NDB), Union Economique et Monétaire Ouest Africaine (UEMOA) and the European Bank for Reconstruction and Development.
An Application of the Sustainable Asset Valuation (SAVi) Methodology in Sri Lanka: Assessing the economic value of restoring the ecological health of Beira Lake in Colombo
The SAVi assessment quantifies the economic value of investing into different ecological restoration options for South-West Beira Lake in Colombo and makes a strong case for such investments given the positive effects on property values and recreational value of the lake.Read More
Modelling for Sustainable Development: New decisions for a new age
This book provides a detailed overview of models used in designing projects and policies that integrate sustainable development considerations and objectives.Read More
Sustainable Asset Valuation (SAVi) of the Bus Rapid Transit Project in Senegal
This report discusses the results of the SAVi analysis on the Bus Rapid Transit project in Dakar (Senegal).Read More
Sustainable Asset Valuation (SAVi) Assessment of the N'Diaye Wind Farm in Senegal
This SAVi analysis on the N'Diaye wind farm project in Senegal demonstrates that, compared to other energy technologies (coal and high-fuel oils), the wind project brings the most benefits to the Senegalese economy and environment.Read More
Tokenization of Infrastructure: A blockchain-based solution to financing sustainable infrastructure
This report presents how tokenization can address some of the fundamental challenges of financing sustainable infrastructure projects.Read More
Why Financing Rural Infrastructure Is Crucial to Achieving Food Security
Financing infrastructure, including roads, storage and localized energy grids, will help provide food security for the millions of people living in hunger worldwide.Read More
Applying the Sustainable Asset Valuation (SAVi) Tool to the 9.5 GW Offshore Wind Farm, North Sea, The Netherlands
Applied to the 9.5 GW offshore wind farm in the North Sea, the SAVi tool compares the financial attractiveness of the wind farm with other energy technologies under four different scenarios.Read More
Credit Enhancement for Sustainable Infrastructure
The paper identifies the demand and supply-side barriers for upscaling credit enhancement solutions for sustainable infrastructure projects.Read More
High-tech data needed to stop sewage overflows
Financial sector technology could help as cities struggle with waste.Read More
Infrastructure, Industrialization and Innovation: Why SDG 9 matters and how we can achieve it
With half the world now living in cities, and billions of dollars spent each year on growth and infrastructure, we need to finance and implement sustainable infrastructure practices that reduce our environmental footprint, employ clean technologies and are economically viable.Read More