Infrastructure investment serves as a critical foundation for sustainable economic development in developing nations. By improving transportation, energy, water, and communication networks, these investments catalyse productivity, connectivity, and growth. However, recent climate change impacts such as increasing temperatures, shifting patterns of precipitation, increased intensity or recurrence of extreme weather events and rising sea levels have highlighted the vulnerability of infrastructure systems, resulting in disruptions and substantial losses.
Home to over 3.2 billion people, the BRICS countries – Brazil, Russia, India, China and South Africa – are projected to account for 44% of the US$94 trillion infrastructure investments needed by 2040. Coupled with the changing and extreme climate conditions as temperatures are likely to rise by more than 1.5°C above pre-industrial levels by 2027, infrastructures within the nations have not been spared of climate-related risks and will only suffer more economic losses should they not be well adapted to climate change. Investing
in infrastructure that is robust and adaptable to climate is now imperative. Studies show that making infrastructure more climate-resilient can add up to 3% to upfront costs, however it has a benefit-cost ratio of about 4:1, accruing improved rate of return with enormous net benefits from investing in climate adaptation and resilience. World Bank also found that investing $1 trillion in the incremental cost of making infrastructure more resilient in developing countries would generate $4.2 trillion in benefits. Aside from the avoided losses and economic benefits, climate adaptation investments also offer non-market societal benefits. An International Labour Organisation study on BRICS countries suggested for every $1 million invested in the construction sector, close to 120 jobs are expected to be created in the Russian Federation, 160 in Brazil, 200 in China and 650 in India. By building climate-resilient infrastructure, these projects can withstand and adapt to these climate-related challenges, minimizing the potential for significant disruptions and economic losses, and ensuring long-term viability for infrastructures.
NDB’s General Strategy for 2022–2026, titled “Scaling Up Development Finance for a Sustainable Future”, has set the course for the Bank’s evolution into a leading provider of solutions for infrastructure and sustainable development for emerging market economies and developing countries, and has committed to direct 40% of total financing to projects contributing to climate change mitigation and adaptation.
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