This report discusses ways to make infrastructure resilient to climate change. In emerging markets, climate change threatens infrastructure that is critical for development. Roads, airports, water systems and power plants are vulnerable to weather changes. Severe storms and major droughts can disrupt economic activity. Because private companies and investors in emerging markets often manage infrastructure projects through public-private partnerships, they will now need to address climate change risks when planning and building these projects.
The paper offers the following recommendations:
- Public-private partnerships (PPPs) will need to account for climate risks in infrastructure planning, making sure that projects are resilient to the effects of climate change.
- Because PPPs are not equipped to deal with such types of unpredictability, creating more certainty around climate risks is the key to building infrastructure projects that can withstand changing weather patterns.
- Improved tools that provide more accurate forecast -even decades into the future- will help all
parties better evaluate risks from the outset.
- Scenario planning will also help parties better evaluate a range of possible climate situations.
- Insurance companies can encourage developers to incorporate climate risk measures into infrastructure projects by offering more favourable terms such as lower premiums.
- Insurers will have to experiment beyond traditional products and pricing to better match the climate change risks of infrastructure projects in emerging markets.
- The PPP procurement process can include insurance requirements that lower losses from disasters. This can help public entities ensure that private companies include structural and financial resilience measures in procurement proposals.