Editor’s Note: This article was adapted from “Investing for the Future,” published July 22, 2021. 
 
As governments consider major infrastructure proposals, the Lincoln Institute has published a new book that will help policy makers achieve a greater return on public investments. Edited by José A. Gómez-Ibáñez and Zhi Liu, Infrastructure Economics and Policy: International Perspectives includes contributions from 30 leading international academics and practitioners on topics such as project appraisal, financing, governance, climate change, and technology. 

The book comes out at a time when governments of many countries are considering infrastructure as a policy instrument to stimulate national economies that have been adversely affected by the COVID-19 pandemic. The book offers case studies, data, and analyses that can help governments evaluate infrastructure proposals. 

It includes the following six takeaways to consider in any infrastructure investment package, based on extensive research into the ingredients for success: 

Think Long-Term Growth, Not Quick Stimulus. Contrary to conventional wisdom, infrastructure investment is not an effective way to provide a quick economic stimulus. It takes many years to secure the permissions and funding necessary to begin construction on a new project, and the sophisticated equipment and training required by modern construction means such projects do not offer pathways to quick employment for large numbers of unskilled workers. Infrastructure Economics and Policy explains why infrastructure investments offer few short-term impacts, even when the long-term economic impacts are clearly positive. 

Shovel-Worthy Matters, Not Shovel-Ready. The impacts of infrastructure projects depend greatly on their quality. Many infrastructure agencies are required to prepare cost-benefit analyses of the major projects or policies they are considering and of the relevant alternatives to those projects. However, few governments (if any) require the agencies to adopt the alternative with the highest net benefit. This is often because of political considerations, including concerns that cost-benefit analysis might not adequately reflect the goals of fairness and equity. While cost-benefit analyses are not perfect, they are one of the best tools available for evaluating infrastructure proposals, and agencies should be cautious about departing significantly from the option with the highest net benefit without good reason. 

Beware of Over-Confidence and Over-Optimism. A landmark analysis of some 2,000 infrastructure projects found that actual costs were significantly higher than forecast, while usage was significantly lower, as Bent Flyvbjerg and Dirk W. Bester explore in a chapter of the book. The authors identify several well-known behavioral limitations that lead to these outcomes, particularly overconfidence bias and optimism bias. Fighting these biases is difficult because they are so deeply ingrained in human nature, but the book describes measures that can help, such as holding forecasters legally accountable or using independent audits. 

Take Equity Seriously. The costs and benefits of infrastructure projects are often distributed inequitably. On the one hand, major infrastructure facilities such as highways and power plants are often built in locations where the negative impacts are felt disproportionately by low-income residents and people of color. On the other hand, the lack of access to basic infrastructure, particularly in the developing world, impairs quality of life and contributes to inequality. Governments need to take both problems seriously and enact complementary policies to address them. 

Consider Governance Challenges. State and local governments have historically been deeply involved in regulating both private and government-owned infrastructure due to important concerns including access, siting, and protecting against monopolization. However, the advent of a major new infrastructure program—particularly one focused on decarbonizing the energy system to address climate change—will increase the role of the national government. National governments are uniquely positioned to invest in new technologies that require collective action, and to mitigate the economic impact of climate change policies—for example, compensating owners of fossil fuel plants and other assets that lose their value. These and other governance challenges related to infrastructure may prove even more difficult than the financial challenges that current debates focus on. 

Invest for the Future and Address Radical Uncertainties. In the face of radical uncertainties including climate change, the pandemic, automation, and the emerging sharing economy, governments must not only fix deteriorating infrastructure, but also invest in a new generation of infrastructure that is climate-resilient and takes advantage of new technologies. This transformation will require overcoming significant institutional barriers, assessing the pros and cons of the new technologies, and putting an effective change management process in place. 

Sustainably built infrastructure is indispensable to resilient, equitable, and livable communities and regions worldwide. Through in-depth analysis, Infrastructure Economics and Policy questions the conventional wisdom about several issues, from the most efficient levels of congestion charges on routes into city centers to the belief that privatization greatly affects the performance of infrastructure. With chapters covering land value capture and other funding mechanisms; the role of infrastructure in urban form, economic performance, and quality of life, especially for disinvested communities; and other essential concepts, this new book offers evidence-based solutions and policy considerations for officials in government agencies and private companies that oversee infrastructure services, for students, and for policy-oriented lay readers alike. 

To learn more or to order a copy of Infrastructure Economics and Policy, visit https://www.lincolninst.edu/publications/books/infrastructure-economics-policy.

Image Credit: shaunl via Getty Images.

En algún momento de los últimos años, fue como si hubiesen activado un interruptor: se hizo evidente que la revolución de la tecnología de vehículos eléctricos es real y podría tener una gran influencia sobre la planificación y el uso del suelo. Durante aproximadamente la última década, se ha puesto el foco de atención en cómo esta energía alternativa menos contaminante podría alimentar nuevos proyectos de vehículos autónomos y compartidos, o innovaciones de micromovilidad, como bicicletas o monopatines eléctricos. Pero los experimentos más esclarecedores sobre vehículos eléctricos que se están llevando a cabo hoy tienen que ver con el transporte público, como trenes, sistemas de tranvías y la categoría más humilde de todas: el autobús urbano.

Si bien China es, por lejos, líder mundial en construir y usar transporte público eléctrico debido a sus políticas industriales estatales y su plan de reducción del carbono, las ciudades de América Latina empiezan a ser importantes partícipes en este mercado emergente. Según una estimación, hacia fines de 2020 había más de 2.000 autobuses eléctricos circulando en, al menos, 10 países de América Latina. Se espera que esta cifra sea cada vez más alta: un análisis predice que hacia 2025 la región añadirá más de 5.000 autobuses eléctricos al año.

El motivo de la puja por los autobuses eléctricos reside en la necesidad imperiosa de reducir las emisiones de diésel que contaminan el aire y contribuyen al cambio climático. Es probable que la implementación generalizada genere un cambio importante, dado que, según informes, la cantidad de usuarios de transporte público per cápita en la región es la más alta del mundo.

Hace poco, la Corporación Financiera Internacional (IFC, por su sigla en inglés), una organización mundial de desarrollo que forma parte del Grupo del Banco Mundial y C40 (una coalición de acción climática) publicó un informe que destacó dos notables ejemplos de ciudades con grandes inversiones en autobuses eléctricos. Santiago, la capital de Chile, tiene una flota de más de 700 unidades y suma cada vez más. Es la mayor flota fuera de China. En comparación, en 2020 había unos 650 autobuses eléctricos en todo el territorio de los Estados Unidos, aunque parece haber un impulso político por generar inversiones en el sector. Santiago apunta a una flota con cero emisiones para 2035. En Colombia, Bogotá ha emprendido una labor ambiciosa para habilitar más de 1.000 autobuses electrónicos, vinculada con un plan mayor por recortar las emisiones de carbono en un 20 por ciento hacia 2030.

Ambas ciudades están usando innovadores acuerdos de financiamiento público y privado. Tal como destaca el informe de IFC/C40, casi todos los sistemas municipales de transporte público pertenecen a un organismo público o a un operador privado con algún tipo de concesión municipal. Pero los nuevos acuerdos “desagregan” la posesión y las operaciones: en esencia, usan los tipos de estrategias de alquiler conocidos, por ejemplo, en las aerolíneas comerciales, en las que un conjunto de empresas fabrica aviones y otro los alquila y los opera. “Los propietarios poseen y los operadores operan”, indicó el informe. 

Por ejemplo, en Bogotá, para entregar la flota de autobuses, Transmilenio, la entidad municipal de transporte público, hizo un acuerdo con Celsia Move, una subsidiaria del conglomerado multinacional Grupo Argus centrada en cuestiones energéticas. A su vez, Celsia Move firmó un convenio a 15 años con Grupo Express, una empresa aparte, para que esta operara la flota y se encargara del mantenimiento. John G. Graham, especialista de la industria para el grupo mundial de transporte de la IFC, explica que con esta desagregación cada entidad resulta atractiva para distintos conjuntos de inversionistas en potencia. Una entidad propietaria puede esperar pagos fijos, y sus activos se pueden poner en garantía; una operadora implica mucho menos riesgo de capital.

Los trenes y autobuses eléctricos requieren una inversión inicial mucho mayor que sus rivales de combustibles fósiles: se calcula el doble o más de costo. Pero, según se informa, estas recientes asociaciones público-privadas han motivado el compromiso de más de 15 inversionistas y fabricantes, que recaudaron unos US$ 1.000 millones para alimentar la incorporación de 3.000 autobuses eléctricos más en varias ciudades. El financiamiento internacional para respaldar a los autobuses electrónicos y otros proyectos ecológicos en toda la región provino de pesos pesados como el Banco Interamericano de Desarrollo y la iniciativa P4G (Partnering for Green Growth and the Global Goals 2030), cuyos fondos iniciales provinieron del gobierno danés.

Como destaca Graham, de la IFC, también evoluciona la rentabilidad subyacente. El mantenimiento de un autobús eléctrico puede abaratarse con el tiempo, lo cual significa que, a medida que las mejoras tecnológicas de las baterías reducen los costos iniciales, el llamado “costo total de propiedad” de la vida útil de un vehículo debería acercarse al de las alternativas con motores de combustión interna. 

Aun así, será esencial hallar fuentes sostenibles de respaldo, dado que no deja de ser difícil financiar proyectos de transporte importantes, como mejoras en la electrificación. Una opción puede ser el financiamiento basado en el suelo. En Costa Rica, por ejemplo, el Instituto Lincoln de Políticas de Suelo trabajó con gestores de políticas para explorar estas opciones de financiamiento y compensar el costo de US$ 1.500 millones de la expansión y la electrificación de una importante línea de tren que funciona en San José, la capital. Martim Smolka, miembro sénior del Instituto Lincoln y director del Programa para América Latina y el Caribe, indica que en toda la región se han usado estrategias de recuperación de plusvalías para ayudar a financiar proyectos importantes, como el redesarrollo de antiguas zonas fabriles e industriales. El modelo de recuperación de plusvalías procura que una parte del incremento del valor territorial ocasionado por las acciones municipales se devuelva al municipio para ayudar a compensar los costos de otros proyectos, como mejoras en la infraestructura local.

“El transporte ayuda a estructurar el valor territorial”, dice Smolka, pero recuperar ese valor puede ser más complicado que con un proyecto directo de redesarrollo, dada la escala de muchos de estos emprendimientos. Destaca que un enfoque efectivo es aumentar la densidad alrededor de estaciones particularmente ajetreadas. Para ello, sugiere fomentar desarrollos nuevos, pero exigiendo a los emprendedores que se benefician con la rezonificación que paguen por la oportunidad. Añade que en un estudio de impacto económico encargado por Costa Rica se observó que la expansión del tren eléctrico tendrá un impacto positivo en el valor territorial, y el proyecto encaja con una promesa por llegar a la neutralidad de carbono hacia 2050.

El transporte eléctrico sigue siendo apenas una gota en el mar del transporte público de América Latina, y la pandemia acarreó nuevas dificultades. No obstante, el mercado latinoamericano podría estar particularmente preparado para capitalizar y expandir esta tendencia. Smolka indica que la región es conocida por su buena predisposición ante las innovaciones en transporte, desde tranvías eléctricos en la década de 1950 hasta el autobús de tránsito veloz de hoy, los taxis de propano y las líneas de teleféricos que atienden a asentamientos informales densos ubicados en colinas. Con autoridades de transporte relativamente avanzadas y un historial de financiamiento de proyectos importantes, “tienen los mejores sistemas de transporte público en el mercado en desarrollo”, dice Graham.

Esto significa, entre otras cosas, una profusión de datos sobre rutas existentes que pueden ayudar a implementar nuevos autobuses eléctricos con eficiencia. Según Graham, es mucho más difícil “dar el salto” a un sistema eléctrico en un municipio con poco historial de transporte público que hacer un traspaso de tecnología en un sistema existente. Además, América Latina tiene una relación comercial cada vez más fuerte con China, que fabrica cerca del 98 por ciento de la flota mundial de autobuses eléctricos. Todo esto podría posicionar a la región como líder en una transición que, con el tiempo, ocurrirá en todo el planeta. Como dice Graham: “Se viene la electrificación”.

Rob Walker es periodista; escribe sobre diseño, tecnología y otros temas. Escribió The Art of Noticing (El arte de darse cuenta). Puede consultar su boletín en robwalker.substack.com.

Fotografía: Autobuses eléctricos en una estación de carga en Santiago, Chile. Crédito: Cortesía de C40 Knowledge Hub.

Contenido relacionado

Construir valor: En Brasil, la recuperación de plusvalías responde a las necesidades comunitarias

Movimientos en masa, resultados variados: Las ciudades de América Latina son líderes en tránsito urbano, pero ¿quién se beneficia?

Claudia López, mayor of Bogotá, Colombia, is confident the sprawling capital is ready to take action to confront climate change, despite the wearying effects of the pandemic and rising unemployment and poverty. 
 
“There is no doubt that I have a clear mandate from Bogotá’s people” to act on the environment, López said in an interview for the Land Matters podcast, while she was en route to the COP26 global climate summit in Glasgow, Scotland. “I think we have a deep social debt, and a deep environmental debt that we have to pay now.” 

The 51-year-old López, who was elected in October 2019 as the city’s first female mayor and also the first openly gay mayor, ran under Colombia’s Green Alliance party. Prior to her political career, she worked as a journalist and researcher, and brings a background in urban planning and public administration to the job. 
 
To reduce emissions, López seeks to stop expansion of the urban periphery into forests and rural land, and to make it easier to get around the city with public transit, including gondolas, powered by renewable energy. She also wants to overhaul waste management, which relies heavily on unsustainable landfills. 
 
At the same time, she says she remains committed to building equity and promoting economic opportunities for the metropolitan region’s 10 million residents, nearly half of whom live in informal settlements. Funding for urban amenities and social infrastructure, she says, can come from land value capture—harnessing some of the increased values associated with city-enabled urban development. That approach is part of a long tradition in Colombia; this year marks the centenary of the Colombian value capture tool, contribución de valorización or betterment contribution. 

“Basically, we agree what’s going to be the value that’s going to be generated by the transformation of land use and we agree with the developer” to help build “the infrastructure and the urban and social equipment that new development will need,” she said. 

“This is not about having lovely maps with marvelous plans,” she said. “This is actually what I think is urban planning—making sure that either through public investments or through land value capturing or through private investments, we ensure an equitable and sustainable share of the cost and benefits of building the city. That’s the role of the government, and that’s what we’re trying to achieve here.” 
 
One element of social infrastructure that López says could be transformative is providing support for an estimated 1.2 million women caregivers, essentially unpaid workers keeping families together. 

“Half of the economy is informal, half of the jobs are informal. They don’t have pension funds. They don’t have health insurance. They don’t have care when you are sick or when you are (older). Who does that? It’s the unpaid care women who do that … who don’t have jobs, don’t have education, don’t have time for themselves because they are caregivers of others,” she said. 
 
“We are reserving land for social infrastructure to provide care, institutionalized care, for children, for women, for elders, for people with disabilities, so that we can relieve and free time for women, so that they can access time to rest, first of all. They don’t have a free weekend ever in their life. (And) time to get education for themselves, care for themselves, and income generation opportunities.” 
 
Other interventions are aimed at making life less onerous in informal settlement, including some relief from strict building codes and other regulations designed for the formal city, so that homeowners can build a second floor or run a business out of the first floor. “For poor people, housing in not only the place they live, it’s also the place where they produce and they generate income,” she said. 
 
“We’re trying to balance. I think the development in Bogotá has been incredibly unbalanced. I mean, (much) of the advantage is on the developer side,” she said. “Of course, the developers need profitability … we are trying to find the equilibrium point.” 
 
López saluted the Lincoln Institute’s long-running Latin America program for prompting informed discussion of land use issues in the region. “There’s a huge network of people thinking, researching, innovating, putting out these debates, which is incredibly important,” she said. “I cannot tell you how important, how useful has been all the things that you taught me before throughout the years on land value capturing, for example, on land use development, on being aware of how land and urban value is created.” 

In this 75th anniversary year, the interview with López (also available as a Land Lines article) is the latest Q&A with chief executives in cities that share some history with the Lincoln Institute. Previous interviews feature the mayors of Cleveland, where founder John C. Lincoln got his start; Phoenix, where he founded the Lincoln Foundation 75 years ago; and Cambridge, site of the Lincoln Institute’s headquarters since 1974.  

You can listen to the show and subscribe to Land Matters on Apple Podcasts, Google Podcasts, Spotify, Stitcher, or wherever you listen to podcasts.
 

Further reading 

Profile of Claudia López Hernández, the Elected Mayoress of Bogotá 

The commitment of cities around the world UN News

Building Value: In Brazil, Land Value Capture Supports the Needs of the Community 

 
Anthony Flint is a senior fellow at the Lincoln Institute of Land Policy, host of the Land Matters  podcast, and a contributing editor of Land Lines. 

Image: Bogotá Mayor Claudia López. Credit: Mayor’s Office of Bogotá

Local governments around the world, no matter their size or capacity, have access to an effective land-based financing tool that can help create more climate-resilient, equitable, and sustainable cities and regions. That tool is land value capture, a policy approach that enables communities to recover and reinvest land value increases that result from public investment and other government actions. Land value capture is rooted in the notion that public action should generate public benefit—and while it is technically feasible to implement almost anywhere, it is often underutilized, says Enrique Silva, director of international initiatives at the Lincoln Institute, who deems it an “untapped source” of revenue. 

In late October, Silva hosted a Lincoln Institute dialogue with guests Barbara Scholz of the German Agency for International Cooperation (GIZ) and Rudiger Ahrend of the Organisation for Economic Cooperation and Development (OECD). The Lincoln Institute and the OECD, with contributions from GIZ, are creating a compendium to showcase the successful implementation of land value capture in 61 countries. The compendium, which will be published in 2022, will offer the first global overview of a policy approach that can fund critical infrastructure ranging from public transit to affordable housing.  

With an estimated $4 trillion needed each year to improve and expand global infrastructure, Scholz said, value capture “offers a huge repertoire of instruments” that can be customized based on local needs. It can improve the financial performance of subnational governments, facilitate access to affordable and secure land and housing, protect ecosystems, and foster equitable and climate-friendly urban development. Value capture can be especially helpful in developing countries and regions, said Scholz, noting that it has successfully been used in countries including Bangladesh, Namibia, and Ethiopia. GIZ works to promote and achieve sustainable development around the world, partnering with businesses, governments, and research organizations in more than 120 countries. 

The speakers noted challenges related to value capture, including a lack of shared vocabulary that can hamper conversations among policy leaders in different areas who are working toward the same goals. Developing a shared vocabulary “is one of the big opportunities of the compendium,” Ahrend said. “It will enable dialogues” that aren’t currently possible, he added. Noting that cities will absorb 2.5 billion more people by 2050, Scholz confirmed that GIZ hopes to use the compendium to foster dialogue about urban policies, value capture instruments, and country-specific challenges and opportunities, especially in places that are experiencing rapid growth and are vulnerable to the impacts of climate change. 

“These are tools that can be applied and built in contexts where governance institutions might not be as robust as in other countries,” Silva said. “The new compendium will help us open up opportunities to consider the extent to which land value capture can not only finance urban development, but also finance climate action and climate adaptation work. This conversation is ramping up.” 

The special 75th anniversary Lincoln Institute Dialogue series continues on December 8 with a discussion about sustainability in the U.S. West. Learn more about the Lincoln Institute’s 75th anniversary and related events.  

Katharine Wroth is the editor of Land Lines. 

Photo: Octavio Frias de Oliveira Bridge, São Paulo, Brazil. Credit: iStock/thiagogleite.

The following is an excerpt from a chapter in the forthcoming Lincoln Institute book Infrastructure Economics and Policy: International Perspectives, which includes contributions from leading international academics and practitioners addressing the latest approaches to infrastructure policy, implementation, and finance. Edited by José Gómez-Ibáñez of Harvard University and Zhi Liu of the Peking University–Lincoln Institute Center for Urban Development and Land Policy, the book is now available for preorder. 

As the world focuses on the COVID-19 pandemic, the disruptive reality of global climate change looms on the horizon. Its implications for public infrastructure could be immense. Forest fires in Australia, Siberia, and California, record cold in Texas, droughts in southern India and South Africa, intense hurricanes and floods in the United States and the Philippines, and the melting of the Arctic ice sheet are all harbingers of what a changing climate has in store. 

As pointed out by Martin Weitzman and Gernot Wagner in their book Climate Shock, “Climate change is unlike . . . any other public policy problem. It’s almost uniquely global, uniquely long-term, uniquely irreversible, and uniquely uncertain—certainly unique in the combination of all four” (2015). 

The impact of climate change on infrastructure services will be integral to the world’s economy. How we power our factories, buildings, and homes; allocate and treat our water; and transport people and goods may look very different 30 years from now. Uncertainty surrounds both the impacts of and responses to climate change, but the direction is clear. The effects will be more disruptive in 2050 than today. More floods, droughts, fires, and heat waves will occur. While countries may struggle to transition their economies, escalating climate impacts may force them to accelerate their efforts.  

The biggest challenges to meeting national and local climate goals through infrastructure investments will not be in the realms of engineering or technology, but rather in the areas of governance and public policy. Key institutional issues include the broad governance issues that prevent governments at all levels from working together effectively; infrastructure siting; stranded economic and social assets; and the need for greater public investment in preventing damages as opposed to investing only in relief and recovery. 

Structural Inefficiency 

Governments consist of multiple agencies, each with a defined portfolio of responsibilities. The water resources department provides water to consumers. Another department might provide sewerage services, while still another addresses water pollution. In many jurisdictions, irrigation is within the purview of the agriculture department, while the public health agency sets quality standards for drinking water. In many countries there are agencies that develop plans for coastal areas, while another agency has a similar responsibility for rivers and lakes. If the country requires desalination technologies to meet the demand for potable water, it must work with the agencies responsible for electricity, since such facilities consume substantial amounts of power. 

When these agencies want to make investments in new infrastructure, they must seek permits from a variety of other agencies. Finally, yet another group provides support services such as budget oversight, procurement, and human resources. This description is simply the governance structure for water infrastructure. The same complex map of complementary responsibilities exists for transport or energy. 

In most cases, these water departments were established at different times to meet different public policy problems. Establishing a new department, as opposed to expanding an existing one, allowed public officials to demonstrate responsiveness to the public concern of the moment. In some countries, the existence of multiple agencies gives elected officials the ability to make more appointments, which is a key currency for elected officials. The result, however, is a balkanized system that does not effectively manage problems that cross departmental responsibilities. Interagency coordination and cooperation will be growing concerns for presidents, prime ministers, governors, and mayors as they address the underlying interconnections inherent in climate policy. 

Horizontal coordination challenges are replicated at the vertical level. What responsibilities should lie with national or central governments, and which should be given to mayors? Highways, transmission lines, pipelines, and possibly water lines are important to realizing national goals and priorities; however, their construction and management often require substantial cooperation between national and subnational governments. Permitting electric generating facilities is essential to meeting national targets for adequate power, yet this responsibility is usually allocated to subregional governments. 

Climate change does not recognize jurisdictional boundaries. Most countries contain states or provinces, each with its own government, its own bureaucracies, and, in many cases, its own priorities. Many of these states or provinces contain metropolitan areas, each consisting of a large city surrounded by smaller cities and towns whose economies are closely linked, but whose governments are independent of each other. 

The challenge of managing climate change becomes very difficult when these jurisdictions do not share common goals and when their ability to cooperate is derailed by financial and political rivalries. The ability to develop new and innovative intergovernmental structures will determine whether subregional governments can ensure the continuing operation of infrastructure services in a climate-constrained world. 

Climate is the ultimate interagency issue, and it will impact a vast majority of the existing governance structures. To meet this challenge, governments will have to organize themselves so that responsibilities for responding to the threat and damages from climate disruptions are better assigned. Which climate-related activities are best handled by local governments, and which should be tackled by higher levels of governance? To what extent should the national government be able to overrule subnational governments when an infrastructure decision or climate investment falls within the jurisdiction of the subnational government but is deemed to be of national importance? 

How can governments design and implement greater interagency coordination, both horizontally among agencies at the same level of government and vertically across those at different levels? To meet this need, some governments have established major decision-making bodies at their highest levels. For example, China has a State Council, and the United States has expanded the roles of the Domestic Policy Council and the National Security Council. However, only issues of highest priority reach these bodies. Climate change will require thousands of decisions made by thousands of officials at all levels. 

Finally, subnational governments have access to only certain revenues, while national governments almost always have access to a larger portfolio of revenue sources. Climate change will dramatically increase the fiscal burden on local, state, and provincial governments. It may do so in scenarios in which local fiscal revenues are decreasing, as investors move their money to regions less vulnerable to climate disruption. 

As discussed earlier, subnational jurisdictions will face substantial infrastructure costs. They will look to national governments for financial assistance, but what will be the political and structural cost demanded in exchange for those funds? For example, if the federal government provides substantial assistance, should it take on greater responsibility for the provision of local services? Will local governments voluntarily allow national governments to micromanage services that heretofore were their exclusive responsibility? Or will national governments provide substantial incremental assistance with no strings attached? Will national governments be willing to experiment with creative pilots that encourage effective coordination at the subregional level? How the institutions of governance are structured and operate will have a major impact on the provision of more resilient infrastructure services. 

Infrastructure Siting 

In the first half of the 20th century, western countries embarked on ambitious infrastructure programs. Intercity highways were constructed. Impressive boulevards and parkways were built as dilapidated neighborhoods were demolished to be replaced by modern downtown areas. Many countries initiated efforts to develop power-generation complexes and transmission grids to move electricity. Airports and seaports were built, and global trade was expanded. While these achievements were impressive, they often happened without much consultation with the people affected by these investments. Environmental considerations were ignored. Too often, the infrastructure seemed to be built because it could be built. Bigger and more modern projects crowded out smaller and more appropriately scaled facilities. Alternative options were not considered. 

The backlash that ensued resulted in the establishment of rigorous siting procedures to ensure that critical externalities and social concerns would no longer be ignored. Stakeholders with a wide spectrum of interests were given multiple opportunities to raise their concerns. Often developers not only had to demonstrate a regional need for a project, but also had to show that it met the specific needs of each jurisdiction affected by the proposed project. A power line moving electricity from point A to point B that crossed region C had to demonstrate a benefit to the populations of all three jurisdictions. 

In many instances, this process became very expensive and time-consuming. Developers (and their lenders) became reluctant to invest the time and money needed to guide a project through the labyrinthine permitting process, obtain support from multiple stakeholders, and survive legal challenges. While siting may be more difficult in democracies, even authoritarian governments such as China have encountered strong public opposition to certain infrastructure projects, forcing them to forgo or amend those investments. 

It would be hard to argue against stakeholder involvement or the merits of greater sensitivity to the environmental and social consequences of large infrastructure projects. No one is suggesting that governments return to the first half of the 20th century, when officials imposed large public works projects on an uninformed, and sometimes skeptical, public. However, the infrastructure requirements to transition to a decarbonized economy will be huge. In 2019, global electricity generation consisted of 9,824.1 terawatt-hours (TWh) of coal, 825.3 TWh of oil, and 6,297.9 TWh of natural gas (BP Statistical Review of World Energy 2020). In a decarbonized world, a significant proportion of this fossil fuel capacity will be replaced by renewables that have approximately half the capacity of an equally sized fossil fuel facility, which means nations will need to build many more generating stations than they have today. Further, renewable systems will require substantially more land and significantly expanded transmission and distribution systems. 

In the United States alone, an analysis by Wu (2020) found that achieving net-zero greenhouse gas emissions by 2050 would require about the land area of New Mexico for new onshore wind capacity and about the land area of Vermont for new solar photovoltaic capacity. The probability that these investments can be successful under today’s siting regimes is, unfortunately, low. The consequences of not making these investments will be to fail to transition public infrastructure to meet national climate goals and to suffer ever greater climate disruption.  

Transitioning water and sewerage infrastructure (to manage ever more droughts and floods) and transportation infrastructure (to meet the realities of climate disruption) may require less investment in the siting process than energy infrastructure. However, over the next 30 years, significant infrastructure siting will be needed across all three of these sectors. Identifying this problem is easier than solving it. Many reform policies and programs have been suggested, but most have failed to improve the siting process. Any meaningful reforms must have several characteristics. 

First, reforms will require a renewed trust in the public sector. The magnitude and scope of infrastructure investments required will not happen without significant government involvement. Second, the number of government agencies involved in permitting and siting will need to be compressed, which means that existing siting laws will have to be amended. A comprehensive one-stop siting shop may be too difficult to achieve, but narrowing down the fifteen to twenty involved agencies to four to five could significantly expedite the process for new infrastructure. 

The biggest and most important step will be to establish siting institutions across different levels of government while incentivizing officials from the national and subregional governments to conduct joint assessments with a prior agreement that both will abide by the joint decision. For example, in the United States, offshore wind projects require permits from the federal, state, and, in some situations, local governments. Under the present system, opponents can strive to sequence the three siting processes until the developer runs out of money and leaves. Identifying processes to encourage the three levels of government to review siting in a collaborative process could significantly reduce the cost and timeline. 

Third, the entire siting process for a project must be concluded in a reasonable time frame. Drawing the process out for years is a luxury that societies could afford in a non-climate-constrained world, but it will not be feasible if countries desire to effectively respond to the looming climate threat. Stakeholders need to be listened to, and environmental concerns need to be assessed; at some point, however, infrastructure decisions must be made, and appeals to the courts limited. One idea is to establish a compressed review process for only a subset of projects that meet certain criteria, such as zero greenhouse gas emissions. The challenge will be reaching agreement on the appropriate criteria. 

Fourth, societies must accept that this process will produce a few bad projects and a few projects in which new facts and problems will emerge after decisions have been made. The present system minimizes the number of such projects. The siting process described above could increase that number, but the trade-off may be necessary for countries to benefit from being better prepared to manage emerging climate disruptions. 

Stranded Assets 

Investments to decarbonize the energy sector and adapt to climate change will result in human dislocations (for example, climate refugees, workers who lose their jobs, and communities that lose their sources of employment) and economic dislocations (for example, unamortized physical assets). These problems may be less urgent in the cases of transportation and water infrastructure, since the existing assets are unlikely to be replaced by an entirely new system. 

Energy, however, will be a different case, as countries replace the existing fossil fuel system with one that relies heavily on renewables, storage, and possibly sequestration. Past efforts to deregulate portions of the vertically integrated electric industry give us a sneak preview of the importance of managing the stranded asset problem. High-cost generating facilities were not competitive in the new deregulated market. The utilities that owned these assets would not accept the proposed deregulation policies unless regulators allowed them the opportunity to recover the cost of their previous investments, approved by past regulatory bodies. 

If countries intend to decarbonize their electricity sectors, the magnitude and cost of the stranded assets will be much larger than those in recent history, as will the pressure on regulators to compensate the owners of fossil-fueled generating assets. This problem will be larger in countries such as China and India, where a significant portion of their coal-fired generation was built in the last 20 years and will not be fully amortized until 2040 to 2055. 

The labor-force dislocation associated with climate mitigation and infrastructure adaptation may prove to be even more challenging to manage. Millions of men and women are employed in the fossil-fuel-intensive electricity sector, and their prospects for finding work in another industry may be limited because of age or geography. Some countries have no social security net for retired workers, who are instead simply retained on their company’s payroll. If the plant is closed, their pensions evaporate. There will be understandable political opposition to retiring these facilities without a funded plan to take care of these employees. Simply retraining them to install solar collectors or build transmission lines will not be politically sufficient or practically feasible at a meaningful scale. One creative approach is an effort championed by the Evergreen climate group, inspired by Washington State Governor Jay Inslee and established in 2020, which advocates a GI Bill of sorts to assist fossil fuel workers and communities through pensions, health care, and other training and financial support. While the governance solution to these stranded communities and workers may not be quite so drastic, equity considerations demand that they be addressed in any national climate-infrastructure policy. 

Invest in Disaster Relief or Prevention? 

Historically, governments have placed significantly more emphasis on responding to disasters than on disaster preparation and resilience. In the United States, the Federal Emergency Management Agency (FEMA) spends billions on disaster relief and recovery while spending negligible amounts on avoiding or minimizing those damages in the first place. Why do governments so rarely prioritize climate disaster prevention? 

Some state and local governments, often in partnership with nonprofit organizations, purchase coastal barriers or create artificial wetlands or mangrove swamps; these investments are often driven by the cobenefits (in the form of habitat protection, biodiversity, or parklands) as opposed to climate adaptation. Governments in some earthquake-prone regions have inserted requirements for more resilient building practices into city zoning regulation, but those cities are frequently the ones that have repeatedly experienced severe earthquake damage, making the public more enthusiastic about investments in greater resilience. Research has shown some cases in which the government bought up land to reduce the costs of damages (both human and economic) from a future earthquake; these cases are the exceptions, not the rule. 

Governments are concerned that tax revenues be spent on activities for which the benefits can be documented and the public can be assured that their tax dollars have not been misused. If FEMA were to spend millions buying private properties in areas vulnerable to significant flooding, but no floods occurred for the next 15 years, the agency would be accused of having wasted taxpayer money. But if FEMA were to spend nothing on resilience and a flood were to occur a few years later, FEMA would be judged on its response to the victims of that flood and its willingness to help that community recover. Few would point out after a disaster that the recovery costs would have been far less if FEMA had bought out the most vulnerable of the buildings prior to the disaster. The incentives are clearly skewed toward investing in recovery rather than in preparation or resilience. 

To put this dilemma in perspective, southern Australia has experienced forest and bushfires that were especially severe because of years of droughts and unusually hot weather. After the 2009 Black Saturday fires, the government of Victoria implemented a housing buyback program. Its offer received considerable publicity at the time, since here was an example of a government trying to get ahead of a future problem. However, it took a year to get the program passed because of bureaucratic delays, and few homeowners were interested in pursuing the government’s offer thereafter (Herscher and Rizzo 2020). In 2019 and 2020, the same areas experienced even more severe bushfires. 

Interestingly, few criticized the government for its inability to implement the buyback program, and there has been no clamor from the public to develop a new program. Some experts suggest measures such as more stringent building codes, expanded voluntary buyback programs, and enhanced early warning systems; thus far, these policies have not been pursued (Henriques-Gomes 2020; Hill and Martinez-Diaz 2020). 

Will this dilemma change? It is unlikely, without a significant push from the public. Admittedly, the financial costs of relief and recovery efforts are skyrocketing as disaster intensity increases. The Wharton Risk Management and Decision Processes team at the University of Pennsylvania found that post-disaster spending in response to 2017 events in the United States was more than $130 billion—a record high (Lingle, Kousky, and Shabman 2018). Perhaps as this number increases, pressure will increase for greater national governmental investment in climate preparation. 

Most future investments in preparation and resilience will be made by property owners who will do their own cost-benefit analyses, realizing that government assistance in the best of circumstances will be inconsistent and difficult to predict. This outcome is not necessarily bad, but it ignores lower-income communities and households, many of which are located in the most vulnerable locations. 

It might be more effective to direct incremental government adaptation funds to these lower-income neighborhoods than to attempt to convince the major public and private relief organizations to fund large-scale infrastructure adaptation and resilience. Perhaps those agencies responsible for housing and urban development should lead the national government’s efforts to promote preparation in concert with their sister institutions at the subnational level. 

Conclusions 

The climate problem is real, and its impacts will be severe. These impacts will be neither homogeneous nor temporally or spatially predictable. In light of these uncertainties, many governments will hesitate to invest in low-carbon infrastructure without economic and financial assistance at scales that exceed normal political comfort.  

What can be done to address these challenges? First, rational pricing for infrastructure services such as electricity and water will become substantially more important in a world dependent on renewable energy, electric vehicles, and water from distant aquifers or capital-intensive desalination facilities. Pricing that reflects the true social cost of these services is essential but by itself will not be enough. In addition, governments at all levels must develop interagency and intergovernmental institutions and processes to address adaptation and mitigation investments. These initiatives should be accompanied by a commitment to transfer funds to where they are needed. Traditional political rigidities must be superseded by a willingness to be creative and to take political risks based more on vision and less on historical stakeholder loyalties. Finally, this new sense of innovation must focus on governance reforms in areas such as siting, stranded assets, interagency coordination, and preventive investments. These reforms will occur only when key stakeholders become more aware of the looming risks of climate change and demand that their elected officials respond to these threats with considerably more urgency than shown to date. 

Henry Lee is the Jassim M. Jaidah Family Director of the Environment and Natural Resources Program within the Belfer Center for Science and International Affairs at the Kennedy School of Government, Harvard University. He also serves as faculty cochair of the Sustainability Science Program and a senior lecturer in Public Policy. He is the coeditor of a forthcoming book on the pathways to decarbonization in China, to be published by Cambridge University Press in late 2021. 

Lead image: Seyhan River, Turkey. Credit: tunart via Getty Images.  

REFERENCES 

BP Statistical Review of World Energy. 2020. 69th ed., “Electricity–2019 in Review.” https://www.bp.com/en/global/corporate/energy-economics/statistical-reviewof-world-energy.html

Henriques-Gomes, Luke. 2020. “Bushfire-destroyed Homes Should Not Be Rebuilt in Riskiest Areas, Experts Say.” The Guardian. January 18. https://www.theguardian.com/australia-news/2020/jan/19/bushfiredestroyed-homes-should-not-be-rebuilt-in-riskiest-areas-experts-say

Herscher, Rebecca, and Meredith Rizzo. 2020. “Sell or Stay? Australia’s Fire Zone Experiment.” NPR. February 25. https://www.npr.org/2020/02/25/807084043/sell-or-stay-australia-s-fire-zone-experiment

Hill, Alice, and Leonardo Martinez-Diaz. 2020. Building a Resilient Tomorrow. Oxford and New York: Oxford University Press.  

Lingle, Brett, Carolyn Kousky, and Leonard Shabman. 2018. “Federal Disaster Rebuilding Spending: A Look at the Numbers.” Wharton Risk Management and Decision Processes Center. https://riskcenter.wharton.upenn.edu/lab-notes/federal-disaster-rebuilding-spending-look-numbers

Weitzman, Martin L., and Gernot Wagner. 2015. Climate Shock: The Economic Consequences of a Hotter Planet. Princeton, NJ: Princeton University Press. 

Wu, Grace. 2020. “Spatial Planning of Low-Carbon Transitions.” Sustainable Development Solutions Network Deep Decarbonization Pathways Project for the United States. National Center for Ecological Analysis and Synthesis: The Nature Conservancy. https://www.unsdsn.org/new-paper-and-webinar-spatial-planning-for-a-low-carbon-future

Among its many consequences, the pandemic ushered in a period of experimental, rapid-fire adjustments to public space. Cities were suddenly tweaking zoning rules to allow more outdoor dining, blocking off streets to give pedestrians and bicyclists more space, and figuring out how to respond to dramatic upticks in food and retail pickup and delivery. It has been a pivotal stretch, in short, for managing the curb. 

Even before the lockdowns began, the increasing popularity of transportation network companies—from ridesharing services like Uber and Lyft to scooter firms like Bird and Lime—had made curb management a rising priority for many cities. “In today’s urban fabric, few spaces are more contested than the curb,” the American Planning Association declared back in the before-times of 2019. 

But the welter of recent experiments, some involving deployment of new technologies, seems even more significant. Consider the case of Aspen, Colorado. Aspen is an unusual municipality, with a downtown business district that is geographically modest, at just 16 square blocks. Nevertheless, it’s extremely busy: the retail and restaurant businesses there rack up a collective $1 billion a year. The inevitable upshot is that demand for curb space—for parking, for deliveries—can outpace supply. And that makes Aspen a useful curb-management lab. 

In February 2020, Aspen joined a group of municipalities exploring pilot programs with a start-up called Coord, one of a number of “smart city” tech companies with a curb-management bent. “I’m a data freak,” explains Mitch Osur, Aspen’s director of parking and downtown services. He figured that at the very least, Coord’s platform—which integrates “smart zones” with a payment app used by delivery drivers (and a separate app for enforcement officers)—could give him fresh insight into how the downtown streets are really being used. 

The city identified what it believed were its busiest loading zones. Starting in November 2020, using these zones required booking space through Coord’s app, at a cost of $2 an hour. While regular street parking in downtown Aspen can cost $6 an hour, the city (like many others) had never previously charged for loading, but figured it was necessary to get delivery fleets’ attention. In the end there wasn’t much pushback; most drivers appreciated being able to capture a time slot. When one shipping fleet manager questioned the scheme, Osur explained that the shipper could use other loading zones, but the data Aspen was collecting would affect policy decisions about curbs across the downtown area. “If you’re not part of the program, your data won’t count,” he added. Moreover, he was sharing data with participants and soliciting their input. The shipper signed on. 

Because the Coord platform tracks actual usage of the smart loading zones, Osur did indeed get plenty of fresh data. Some was expected, some surprising. He figured average “dwell times” were about 30 minutes, and found they were averaging 39 minutes and 13 seconds. The dwell times were longer in the morning and shrank to about 15 minutes after 2 p.m. He was surprised to learn that the busiest days weren’t Monday and Friday, as expected, but Tuesday and Thursday; Wednesday’s loading zone use was half that of peak days. Based on these insights, Aspen is planning to change the rules for some zones, converting them to regular parking at 11 a.m. on some days rather than 6 p.m. (Osur has seen other changes as a result of adopting Coord; drivers have stopped snagging space early and eating lunch in loading zones, a previously routine practice.) 

Coord has run similar pilots in Omaha, Nashville, and other cities. But it is just one entity involved in curb-management experiments. Cox Communications, through its Cox2M “internet of things” division, is testing curbside kiosks that can essentially monitor dwell times in loading zones and present a countdown clock warning drivers not to overstay their time on the curb; the technology can alert city enforcement when drivers linger. Las Vegas is running a pilot program with the technology, which can also be used to manage commercial deliveries, a Cox official told Government Technology. Columbus, Ohio, and Washington, DC, have run pilots with another app, curbFlow, designed to coordinate deliveries from multiple services along particularly busy curb stretches. 

Technology such as video kiosks and app-based location trackers adds both new options and new complexity to the business of managing curbs. Traditionally, defining curb use has involved signage and paint, which are hard to tweak quickly, notes Anne Goodchild, professor of civil and environmental engineering at the University of Washington, whose Urban Freight Lab has focused on public-private efforts to address evolving delivery logistics and planning. 

Perhaps because of the pandemic, cities have been more willing to try new options. Before the pandemic, a curb change would have entailed lengthy public processes. The crisis showed that a more nimble alternative was possible. “We did some things differently,” Goodchild says. “For example, we changed curb allocations literally overnight.” 

The pandemic pushed a fast-forward button on both new patterns of street usage and policy responses to those patterns, says Heather Hannon, associate director of planning practice and scenario planning at the Lincoln Institute. During the pandemic, the organization’s Big City Planning Directors Institute shifted from a twice-yearly gathering to a monthly one (held virtually, of course). The pandemic, she points out, “was a reason to try new things.” 

Hannon has observed a spike in interest in scenario planning for potential futures among U.S. communities since the pandemic began. She also points out that curb management isn’t merely an issue for downtowns or commercial districts, noting that it tilts into residential neighborhoods as well. The demand for home delivery has soared: food-delivery apps doubled their revenues in a six-month period during 2020 compared to the same period in 2019, and e-commerce in the United States grew 44 percent in 2020 compared to the previous year. These trends will only be complicated by the experiments with robots and drones that policy makers increasingly have to accommodate. 

Aspen, meanwhile, has expanded its pilot program, adding new loading zones to the experiment as the number of participating drivers keeps growing. While it is just one experiment in a small city, it overlaps with a singular moment in the way citizens and businesses use technology to interact with planned spaces, opening a window onto how planners and policy makers might think about the future of the curb. “This is totally scalable,” Osur says, referring not to any specific app or technology but to the general idea of cities using new tools to more actively manage the curb. “This is the future.” 

Rob Walker is a journalist covering design, technology, and other subjects. He is the author of The Art of Noticing. His newsletter is at robwalker.substack.com. 

Image: Curb management has become a rising priority in cities including Las Vegas, where Cox Communications is piloting curbside kiosks that monitor dwell times in loading zones. Credit: Courtesy of Cox Communications.