The aim of the paper is to review evidence of the economic impacts of developing “green infrastructure” in fragile states in regards to their opportunity costs vis-a-vis “non-green” infrastructure developments. The research seeks to answer the following questions:
- Are green infrastructure choices more expensive than non-green choices?
- Do green infrastructure choices require more state involvement than non-green choices?
- Do green infrastructure choices provide more or less poverty reduction benefits than non-green choices?
- Do green infrastructure choices provide more or less employment opportunities than non-green choices?
- Are there any other co-benefits, costs or risks associated with green infrastructure investments?
- Are green alternatives considered or appraised for infrastructure projects in Fragile States?
The Review has found that:
- Upfront construction costs for green infrastructure are up to 8% higher than for non-green infrastructure projects. Climate finance is currently not being adequately captured by fragile states for such investments and governance issues may further hinder their capability to take full advantage of them.
- Green infrastructure investments require strong government participation as well as institutional capacities and capabilities that fragile states may not possess.
- Green infrastructure investments have potentially positive poverty reduction benefits such as improved agricultural yields and higher rural electrification rates, benefits that can be transmitted to other sectors of the economy not directly linked to the green infrastructure investment.
- Whilst there are examples of green infrastructure investments creating new jobs in a number of sectors, it is unclear what the employment opportunities advantages are in respect to traditional infrastructure investments. The correct market conditions (i.e. labour regulations or energy demand) are also required in order to maximise employment creation opportunities. Such factors that may not be fully exploited by fragile state governments lacking the capacity to do so.
- Green infrastructure investments have a number of co-benefits including increased energy security and improved health outcomes, whilst a potential reduction of a country’s vulnerability to the negative effects of climate change being arguably the most important co-benefit for such investments in a fragile state context.
- There is (limited) evidence that green infrastructure options are taken into consideration during the project appraisal process. Engagement tends to mostly occur for projects that are specifically designed with green goals, hence there is no data that shows the decision making processes that lead to a shift towards any green alternative. Comparisons of costs, co-benefits, poverty reduction benefits or employment creation benefits between the two typologies are also not evident.