Lack of clean water facilities, roads in need of repairs, recurring power outages – these are the realities of many developing countries, including in the East Asia and Pacific region. The Status of Infrastructure Services in East Asia and Pacific, a report by the World Bank Group’s Infrastructure, PPPs, and Guarantees unit, or IPG Group, based at the Hub for Infrastructure and Urban Development in Singapore, shows in detail the infrastructure gaps that are critical for economic growth.
The findings reflect the composition of the region, a diverse mix of high-income and low-income economies with several large middle-income economies. Infrastructure access is also marked by fragmentation, with notable differences between low-income and high-income ASEAN countries, between ASEAN and the Pacific Islands countries, and between rural and urban areas.
These distinctions inform the three broad groupings with respect to access: highly advanced and well-equipped countries, such as Singapore and South-Korea; a semi-advanced group which includes middle-income countries, such as China, Malaysia, Thailand, and Fiji; and countries with less access, such as Myanmar and most of the Pacific Islands, excluding Fiji and Samoa.
Initiatives are underway to crowd in more private financing in infrastructure investment, as part of the World Bank Group’s efforts to maximize finance for development. Currently, public finance remains the largest source of funding for infrastructure development. In East Asia and the Pacific, private participation in infrastructure investments have recovered to pre-1997 Asian financial crisis levels, but they still account for a fraction of total infrastructure investments. In China in 2015, for example, private investment amounted to less than 1 percent of total investment in transport, energy and water.
Attracting more private investment will require regulatory reforms that impact the investment climate, and also business models that ensure returns. Currently, revenues from service tariffs in many East Asian and Pacific countries do not cover the costs of production. In several ASEAN countries – notably Indonesia, Vietnam, Malaysia and Philippines – average unitary revenues from electricity tariffs do not cover the marginal cost required to generate electricity, let alone to distribute and transmit electricity to users. Only China, Malaysia, and Thailand are operating at general cost recovery levels for electricity production.
The following are the report’s additional key findings:
- With the exception of Fiji and China, on average water utilities cover their operating costs by tariff revenues. This does not imply, however, that current water revenues are sufficient to cover the capital costs required to expand service or rehabilitate existing infrastructure.
- Among the countries with available information, only the Philippines, South Korea and Cambodia reported operating cost coverage ratios above two, which would allow water utilities to make capital investments to expand and maintain their infrastructure.
- Singapore has the most developed infrastructure services, with 100 percent access to electricity, piped water, and sanitation.
- Though strong economies, Malaysia, Thailand, and Fiji require more infrastructure development. Road infrastructure in rural Malaysia remain lacking, as are urban sewerage facilities in its cities. Water treatment and urban sanitation services in Thailand and Fiji can also improve.
- The Pacific Island states – particularly Papua New Guinea, Timor-Leste, and the Solomon Islands – report low levels of access and quality of infrastructure services. In ASEAN, Cambodia and Myanmar are in most need of broader access to all services.
- Access to electricity is relatively broad. Outside of the high income countries, EAP’s cities have 86 percent coverage for electricity, while rural access stands at 65 percent. However, nearly 60 million people still lack access to electricity, particularly in the Philippines, Lao PDR, Cambodia, and Myanmar.
- Among the Pacific Island countries except for Fiji and Samoa, access is defined by the urban-rural divide. Electricity access in Vanuatu’s cities is 100 percent, but only 11.5 percent in rural areas.
- While access to improved water sources is relatively high in the region, access to piped water supply is low. Only Malaysia and high income countries such as Japan, South Korea and Singapore have extensive access to piped connections for residential areas. In low-income ASEAN countries and Pacific Island nations that comprise the third tier, overall household access levels for piped water are only 20 to 30 percent – and only 8 percent and 9 percent in Myanmar and Papua New Guinea, respectively.
- Piped sewerage connections in cities are limited, with significant differences between economies. Access rates in the cities of some countries are ten times lower than rates in more developed economies, and only high-income economies enjoy full access to urban piped sanitation systems. Cambodia, Malaysia, and Timor Leste also have better access to urban sewerage, at 44 percent, 42 percent, and 18 percent, respectively.
- Elsewhere in the region – even in the cities – coverage for piped sewerage are at single-digit levels.
World Cities Day: Value communities, today and for the future
Top UN officials have highlighted the “extraordinary” contributions of grassroots communities in towns and cities across the world in the face of the coronavirus pandemic, and urged that their unique efforts be built on, during recovery.
In a message marking the World Cities Day, commemorated annually on 31 October, UN Secretary-General António Guterres said that COVID-19 has brought into sharp focus the importance of close-knit communities.
“Cities have borne the brunt of the pandemic”, said Mr. Guterres.
“With the pandemic often overwhelming public health and support services, communities have organized to keep their neighbourhoods safe and functioning, engaging with local and national governments to support the official response”, he added.
Innovation and resilience
Neighbours shopped and cooked for the sick and elderly, residents cheered health workers, and local volunteer and faith-based groups supported the vulnerable, across the world. Communities also came together, formed self-help networks, developing apps to link up those in need, with those offering help.
“Communities are innovative, resilient and proactive”, said Mr. Guterres.
In addition, with forecasts predicting that around 68 per cent of the world’s population will be living in urban areas by 2050, up from the current 55 per cent, the UN chief highlighted that communities will be all the more important for the rapidly urbanizing world to respond effectively to the pandemic and prepare for future infectious disease outbreaks.
“Let us maintain this recognition of their value [and] put our communities at the heart of the cities of the future”, he said.
Communities bring sustainable solutions
“We must recognize that communities must be at the centre of designing their own, longer term solutions and we must listen to them as their on-ground experience will help us build resilience and equity in the future”, she said.
“Valuing our communities is an important first step towards the transformational change we need to build back better and build back greener”, added the head of UN-Habitat.
The World Cities Day
Designated by the UN General Assembly in 2013, World Cities Day recognizes the significance of urban basic services as a foundation for the overall social and economic development. The Day also ties into the Sustainable Development Goals (SDGs), with Goal 11 aiming to make cities and human settlements inclusive, safe, resilient and sustainable.
This year, in the midst of the COVID-19 pandemic, the theme of the World Cities Day is “Valuing Our Communities and Cities.”
The 2020 Global Observance, on 31 October, will take place in the Kenyan city of Nakuru – the first time it is being hosted in Africa. The event will be held virtually due to the COVID-19 pandemic.
Alongside, commemorative events will be held across the world, including a special event, on 29 October, supported by the UN World Health Organization (WHO) featuring health leaders and mayors on the urban response to COVID-19. UNESCO will also be hosting an “Urban Dialogue” on 30 October, with the academia, public and private sectors, and civil society.
Bridge for Cities 2020: Mayors discuss urban development during COVID-19 crisis
The Bridge for Cities 2020 event provided a forum for mayors and other urban stakeholders to discuss and exchange views on relevant experiences, challenges and opportunities related to the COVID-19 pandemic. The event placed particular emphasis on green, social and technological innovations which can assist cities to recover from the crisis and act as an accelerator for the Sustainable Development Goals.
Organized jointly by the United Nations Industrial Development Organization (UNIDO) and the Finance Center for South-South Cooperation (FCSSC), in close collaboration with the City of Vienna, the event attracted more than 500 attendees.
In his opening statement, UNIDO’s Director General, LI Yong, stressed that “the pandemic has forced us to think outside-the-box and identify innovative solutions. It is important for us all to work collaboratively towards an inclusive and climate-resilient recovery. Bridge for Cities aims to facilitate long-lasting city-to-city partnerships in the course of the COVID-19 crisis and beyond.”.
CAI E-Sheng, Chairman of the FCSSC, added that “in the post-pandemic era, urban development should be resilient. Resilient cities should have both the ability to deal with the crisis, and the ability to recover from the crisis.”
Discussing how digitalization can help to promote behavioral shifts in designing and imagining cities in the context of the COVID-19 crisis, Professor Carlo Ratti, Director of the MIT Senseable City Lab, highlighted that “to respond to the pandemic, cities must act fast, try new innovations, and obtain citizens feedback, as this constant feedback loop will allow the transformation of cities for the future.”
The first Mayors’ Roundtable brought together representatives from Almaty, Antananarivo, Dortmund, Manama, Shenzhen, Vienna, Zamboanga and Zhengzhou to present their cities’ response in ensuring an inclusive recovery from the crisis. The discussion focused on solutions to protect peoples’ jobs, especially those of vulnerable groups, and to support measures for MSMEs that will assist urban development in the long term.
The second Mayors’ Roundtable moved the spotlight onto the topic of a green economic recovery. Mayors and representatives from Amman, Budapest, Colombo, Damietta, Manizales, Sarajevo, Sihanoukville and Tunis offered diverse perspectives on the issue, including opportunities to decouple industrial production and urban infrastructure growth from environmental degradation by making the necessary investments now.
The event was enriched by a series of workshops and exhibition booths organized by partner cities, international organizations and innovative start-ups, showcasing ground-breaking solutions for the future of smart cities’ development.
Rebuilding Cities to Generate 117 Million Jobs and $3 Trillion in Business Opportunity
COVID-19 recovery packages that include infrastructure development will influence the relationship between cities, humans and nature for the next 30 to 50 years. With the built environment home to half the world’s population and making up 40% of global GDP, cities are an engine of global growth and crucial to the economic recovery.
Research shows that nature-positive solutions can help cities rebuild in a healthier and more resilient way while creating opportunities for social and economic development. The World Economic Forum’s new Future of Nature and Business Report found that following a nature-positive pathway in the urban environment can create $3 trillion in business opportunity and 117 million jobs.
“Business as usual is no longer sustainable,” said Akanksha Khatri, Head of the Nature Action Agenda at the World Economic Forum. “Biodiversity loss and the broader challenges arising from rapid urban population growth, financing gaps and climate change are signalling that how we build back can be better. The good news is, there are many examples of nature-based solutions that can benefit people and planet.”
Cities are responsible for 75% of global GHG emissions and are a leading cause of land, water and air pollution, which affect human health. Many cities are also poorly planned, lowering national GDP by as much as 5% due to negative impacts such as time loss, wasted fuel and air pollution. However, practical solutions exist that can make living spaces better for economic, human and planetary health.
The study, in collaboration with AlphaBeta, highlighted examples of projects deploying nature-positive solutions and the business opportunities they create.
Cape Town: Cape Town was just 90 days away from turning off its water taps. Natural infrastructure solutions (i.e. restoring the city’s watersheds) were found to generate annual water gains of 50 billion litres a year, equivalent to 18% of the city’s supply needs at 10% of the cost of alternative supply options, including desalination, groundwater exploration and water reuse
Singapore: Singapore’s water leakage rate of 5% is significantly lower than that of many other major cities thanks to sensors installed in potable water supply lines. Globally, reducing municipal water leakage could save $115 billion by 2030. Returns on investment in water efficiency can be above 20%.
Suzhou: Suzhou Industrial Park’s green development in China has seen its GDP increase 260-fold, partially through green development. The park accommodates 25,000 companies, of which 92 are Fortune 500 companies, and is home to 800,000 people. The park has 122 green-development policies, including stipulations on optimizing and intensifying land use, improvement of water and ecological protection, and the construction of green buildings. As a result, 94% of industrial water is reused, 100% of new construction is green, energy is dominantly renewable and green spaces cover 45% of the city.
San Francisco: San Francisco requires new buildings to have green roofs. The “green” roof market is expected to be worth $9 billion in 2020 and could grow at around 12% annually through 2030, creating an incremental annual opportunity of $15 billion.
Philippines: The loss of coastal habitats, particularly biodiverse and carbon-rich mangrove forests, has significantly increased the risk from floods and hurricanes for 300 million people living within coastal flood zones. A pilot project in the Philippines, one of the countries most vulnerable to climate change, is monetizing the value of mangroves through the creation of the Restoration Insurance Service Company (RISCO). RISCO selects sites where mangroves provide high flood reduction benefits and models that value. Insurance companies will pay an annual fee for these services, while organizations seeking to meet voluntary or regulatory climate mitigation targets will pay for blue carbon credits. Overall, restoring and protecting mangrove forests in human settlements can reduce annual flood damage to global coastal assets by over $82 billion while significantly contributing to fighting climate change.
The report identifies five complementary transitions to create nature-positive built environments and outlines the business opportunities and potential cost savings for programmes targeting urban utilities for water, electricity and waste, land planning and management, sustainable transport infrastructure and the design of buildings.
Office space the size of Switzerland
Global examples call out areas to be improved. For example, an estimated 40 billion square metres of floor space is not used at full occupancy during office hours – an area roughly equivalent to the size of Switzerland. The COVID-19 upheaval has prompted a surge in flexible and remote working models in many countries – greater application of such models could help reduce the need for private office space in the future.
Governments’ role to raise and steer finance
The report calls for both government officials and businesses to play their part in raising and steering finance for sustainable urban infrastructure. “Regulations in areas including urban master planning, zoning and mandatory building codes will be critical to unlocking the potential of net-zero, nature-positive cities and infrastructure,” said Khatri. “We are at a critical juncture for the future of humanity. Now is the time to treat the ecological emergency as just that. A net-zero, nature-positive path is the only option for our economic and planetary survival and how we choose to use COVID-19 recovery packages might be one of our last chances to get this right.”
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