Underinvestment In Infrastructure

The World Economic Forum publishes an annual risk assessment. The 2010 report (Global Risks 2010: A Global Risk Network Report) looked at the interconnectedness between our global risks. The report commented on three global themes - - (1) The increase in interconnections among risks means a higher level of systemic risk than ever before, (2) The biggest risks facing the world today may be from slow failures or creeping risks, and (3) Poor global coordination on issues such as climate and energy polices have produced serious global governance gaps.

The report listed the top three global risks. What was interesting was risk #2 - - Underinvestment in infrastructure, both new and existing, and its consequences for growth, resources, scarcity, and climate change adaptation (#1 was our global fiscal crises and the social and political implications of high unemployment, while #3 was chronic diseases and their impact on both advanced economies and developing countries).

The World Bank has put global infrastructure investment needs at US $35 trillion over the next 20 years. The US spends approximately 2.4% of GDP per annum on infrastructure, compared with approximately 15% of GDP on health. Underinvestment in infrastructure, especially the US produces barriers to growth and development. The culture of the US has a foundation in our endless dreams and possibilities (and sustainability issues may change the context of some of these endless possibilities). We have all come to learn how complicated and costly it can be to sustain a dream. It really boils down to a simple fact - - endless possibilities and unbounded growth require adequate infrastructure (all this lost a little meaning when we dropped public works for infrastructure - - like in many avenues of our democracy, changing a word changes citizenship responsibilities).

The report addresses infrastructure needs in the context of the following areas:

• Agriculture -- Approximately 75% of the world's poor continue to live in rural areas. Storage and transportation systems are critical to move agricultural resources from Point A to Point B. Improving water efficiency and irrigation systems are also critical to our global agricultural needs.


• Energy Security - - The long-term trend of energy consumption is upwards. Needs in this area range from existing oil and gas infrastructure projects to investing in renewables. Once the global economy starts growing again, look for substantial price jumps in our energy resources associated with our underinvestment.


• Climate Change Adaptation - - Roughly 15 of the world's 20 mega cities are coastal. Climate change is unavoidable -- investment in infrastructure is needed to manage raising sea levels and extreme weather events. This is a very good example of the social, political, economic challenges associated with creeping long-term risks.