Infrastructure development is crucial for economic growth and human well-being—but it can have detrimental social and environmental impacts when poorly planned.
Landscape-level infrastructure planning can reduce habitat fragmentation and community impacts while still achieving development goals such as power generation.
In reducing environmental and social risks, smarter planning also reduces delays and associated cost overruns—it’s better for the economy and the environment.
Just after the November mid-term elections in the United States, one issue resurfaced as a conduit for potential bipartisan and, even, global agreement—the need for investment in infrastructure. U.S. President Trump reiterated infrastructure as a priority; Rep. Nancy Pelosi (D-CA) signaled willingness to seek bipartisan support for a new era of infrastructure investment; and, globally, U.S. Treasury Secretary Mnuchin has stressed its importance. For developed and developing nations alike, infrastructure—ports, roads, energy and water management facilities, power stations, and more—lies at the foundations of economic growth, trade, human well-being, and even political stability. The question, of course, is what constitutes good infrastructure policy.
“Infrastructure,” announced G20 finance ministers, “is critical to boost productivity, enhance connectivity, sustain long-term inclusive growth and provide our citizens with physical and digital access to the new economy.” As these finance ministers have affirmed: yes, major increases in investment are essential—estimated at $350 million to $1 trillion in additional annual spending. But money is not the only need. Smart infrastructure investment requires smart planning and regulatory frameworks, which can reduce risks, associated delays, and, therefore, costs, along with improving other social and environmental outcomes.
Poor quality and poorly sited infrastructure can degrade lands and water, disrupt local communities, result in deforestation, unnecessarily fragment habitat, and undermine economic opportunities, such as fisheries, that are tied to healthy ecosystems. And failure to consider these impacts raises the risk of project delays, higher costs, conflict, and litigation. In short, these potential impacts of poorly conceived projects are entwined with economic outcomes and returns-on-investment.
This is not just speculation. An Inter-American Development Bank study of 40 years of infrastructure investments shows that lack of upfront planning to anticipate and avoid or minimize social and environmental impacts often has resulted in significant project delays and additional costs. By contrast, the sort of upfront planning used in Colombia for hydropower development on the Magdalena River system was estimated to double the rate-of-return on projects without increasing capital expenditures or decreasing energy generation.
At many locations across the globe, The Nature Conservancy has applied this kind of large-scale, upfront planning approach, using our “development by design” planning tools, to identify critical areas of biodiversity, water supplies, and other systems and values to help avoid, minimize, and mitigate infrastructure impacts. The approach is relevant in developed and developing nations alike and needs to be embedded in the process of developing infrastructure pipelines.
In the United States, the Conservancy actively participated in development of a Desert Renewable Energy Conservation Plan, recognizing that a single utility-scale solar facility can cover an area as large as downtown San Francisco. The Desert Renewable Energy plan covers 10 million acres of public lands in California and identifies pre-screened zones—development focal areas—and areas to conserve. The large-scale spatial planning process resulted in avoidance of critically sensitive environmental areas while halving project development time.
At a meeting with U.S. Cabinet secretaries over a year ago to discuss infrastructure, the Trump Administration, eager to shape their infrastructure agenda, asked a simple question: how could more rapid, efficient, cost-effective investment occur while still meeting environmental and related objectives? In the global arena, this is precisely what G20 participants should ask.
At this dialogue a year ago, the Conservancy emphasized that a landscape-scale planning lens, accompanied with a decision tier of avoiding, minimizing, then mitigating impacts, could improve social, environmental and economic outcomes.
G20 countries need investment decision frameworks that integrate large-scale spatial planning and consider multiple dimensions—economic, social, environmental, and institutional—as criteria for evaluating infrastructure projects. Focusing on the funding gap underscores the scope of demand for infrastructure to meet transportation, energy, sanitation, and other needs. But filling those demands has potentially major impacts and implications—and these effects matter for economies and investment returns.
Consider that with a projected global population of 9.7 billion by 2050, energy demand could increase by an estimated 56 percent—with significant implications for lands and rivers. Already, hydropower and other dams adversely affect nearly half of threatened and endangered freshwater species. With projections for hydropower capacity projected to double by 2050, the tensions between supplying clean energy and sustaining freshwater ecosystems are significant.
As G20 countries grapple with the challenges of infrastructure investment and economic development, they would benefit from heeding a caution once offered by former U.S. President Dwight Eisenhower, who opined: “Whenever I run into a problem I can’t solve, I always make it bigger. I can never solve it by trying to make it smaller, but if I make it big enough, I can begin to see the outlines of a solution.”
Global infrastructure challenges cannot be addressed by money alone—indeed, efficient, effective and timely projects, translating into solid returns of investment, require considering the planning, regulatory and institutional frameworks that combine economic, social and environmental results.
As G20 countries seek to solve the conundrum of bringing private investors to infrastructure finance, they might expand the vision beyond investment in merely concrete and steel and call upon them to finance a sustainable future that combines economic, social and environmental progress.