The Nexus Between Infrastructure and Environment

Infrastructure plays a crucial role in the drive for achieving development by providing energy, transportation, and water. There have been ups and downs in the degree of emphasis placed on infrastructure, but infrastructure has remained the largest component of the public investment programs in developing countries—two to six percent of gross domestic product (GDP). Nearly half of the international financial institutions’ project lending to developing countries goes to infrastructure. Going forward, the Organisation for Economic Co-operation and Development (OECD) estimates that developing countries might have to invest over $700 billion a year in infrastructure in the coming decade—rising to $1 trillion a year by 2030—in order to sustain rapid growth rates.

Well-designed infrastructure can have positive impacts on the environment, which also is crucial for development. However, there is a dark side to infrastructural investments: they often lead to environmental degradation. Fossil fuel energy generation and transportation create emissions that contribute to acid rain locally and global warming. Hydropower and irrigation can lead to flooding, water pollution, and disruption of communities. Roads can lead to erosion, deforestation, and biodiversity loss. These environmental costs have been estimated to reach four to eight percent of GDP for some developing countries, with most of the effects falling on the poor.

The Evaluation Coordination Group (ECG) recognizes the importance of this linkage, which we call the infrastructure-environment nexus. It represents a large and growing challenge for the countries and the international financial institutions (IFIs) in their development goals. Meeting the Millennium Development Goals depends on the provision of adequate infrastructure, such as providing clean water and sanitation, as well as on reducing adverse environmental impacts, such as reducing the impacts of air pollution on health and agricultural production (e.g., acid rain). The ECG commissioned this initial review of members’ experiences to learn what can be done both to minimize the detrimental impacts of infrastructure on the environment and to enhance infrastructure’s positive contribution to the environment beyond the role of existing safeguards.

The evidence points to the need for the nexus issues to be addressed both at the project level relating to selection, design, implementation, and supervision, as well as at the sectoral and national level relating to policies, regulations, and environmental capacity.


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