Latin America urged to focus on sustainable infrastructure

00:00 | Punta Cana (Dominican Republic), May. 21.

Sustainable infrastructure —with an emphasis on mitigating effects of climate change— and the need to boost transparency in projects were the main themes on the final day of the largest regional forum on public and private partnerships (PPPs).

"We not only believe that there is a general gap in infrastructure in Latin America, but that the quality is low," Gema Sacristan, director general of the investment arm at the Inter-American Development Bank (IDB), expressed. 

"We want to make infrastructure that is more resistant to the effects of climate change," she added at the PPP Americas 2019 event in Punta Cana.

The official with IDB Invest —a co-organizer of the conference— said that by next year, the IDB Group wants 30% of projects to include elements for mitigation or adaptation to climate change.

"Governments need to understand that while sustainable infrastructure can cost a little more today, that pays off in the long run," Sacristan told EFE.

That is certainly the case in the Caribbean, one of the areas most vulnerable to climate change and a region that depends heavily on tourism as an economic engine.

Investors are also increasingly attentive to the importance of building things that endure.

"The private sector is changing a lot and very quickly. Over the last three years, they are embracing the great agendas of sustainable development. When previously it was an issue for multilateral organizations such as the IDB or the World Bank," Sacristan stated.

Another vital element for the success of PPPs is transparency and the bolstering of regulatory frameworks.

IDB figures indicate that the region currently invests only around 3.5% of gross domestic product (GDP) per year in infrastructure, well below the estimated 5-6% of GDP that studies show is needed to achieve an adequate level of development.

That means the shortfall in terms of needed infrastructure spending over the next two years will amount to roughly US$150 billion region-wide.

Because Latin American and Caribbean countries lack the resources to close the gap, "it is necessary to resort to international investors, and PPPs are instruments that can provide profitable results for both parties," IDB Invest CEO James Scriven told EFE during the forum in Punta Cana.

Since 2006, the IDB Group has approved more than US$5.8 billion for the development of different projects in the region under PPP arrangements.

The PPP Americas Forum, which finished on Thursday, brought together more than 500 representatives from the public sector and private investors in the region.

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Published: 5/21/2019