Research highlights from the Fifth GGKP Annual Conference – Q&A with Michael Mullan

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Team Leader (Climate Change Adaptation), OECD
20 November 2017

Michael Mullan leads the Organisation for Economic Cooperation and Development’s (OECD) work on climate change adaptation. Michael will be presenting his recent research, ‘Climate-resilient Infrastructure: Getting the policies right’ at the Fifth GGKP Annual Conference on Sustainable Infrastructure, hosted by the World Bank in November 2017.

 

Tell us a bit about the research you'll be presenting at #GGKP5. 

The underlying message of our paper is that infrastructure resilience requires a coordinated policy response to ensure that infrastructure owners and developers have the incentive and capacity to integrate resilience.  The framework is aimed at policy makers in OECD countries, but the underlying messages can be applied to other country contexts.  The paper identifies four key areas for action: improving risk information and assessment to support decision making; screening and factoring climate risks into public investment; enabling resilience through policy and regulation; and, encouraging the disclosure of climate risks.

 

What are the main policy messages?

It is urgent for resilience to be integrated into infrastructure development and operation. The OECD's recent report Investing in Climate, Investing in Growth estimates that USD 6.3 trillion of new infrastructure investment is needed globally every year to sustain growth. Decisions made about the location and design of these investments will affect communities' vulnerability to the effects of climate change. Getting things right at the outset will be cheaper and less disruptive than being forced into subsequent costly retrofitting.

The other key message is that resilience is often about doing things differently rather than necessarily at significantly higher cost. For example, in France, the power operator has changed the maintenance schedule of its power plants to account for higher summer temperatures. There is also the opportunity to secure co-benefits using creative approaches, such multifunctional or green infrastructure. In Copenhagen, the expansion of green space and permeable surfaces has made the city more liveable, while also being cheaper than the use of traditional flood defences.

 

In your paper, you mention Real Option Analysis (ROA) and Robust Decision Making (RDM). What is ROA and RDM, and why is it relevant to sustainable infrastructure?

Uncertainty is a key issue for long-lived infrastructure. Parts of the London Underground, for example, are 150 years old. During this time, it is inevitable that there will be significant technological and socio-economic changes. Added to this, there is now the challenge of understanding how climate change will affect infrastructure over its lifetime.  Although the overall direction of climate change is well understood, there are still considerable challenges inherent in modelling such a complex system. For example, the IPCC Fifth Assessment Report projects that sea level rise could range between 42 and 98 cm by the end of the century, but subsequent analysis suggests that 2 metres is a possibility.  Infrastructure needs to be prepared for a range of possible outcomes.

For this reason, it is important to design infrastructure in a way that accounts for uncertainty. This entails building in flexibility, providing opportunities to make revisions in light of new information. Increasingly sophisticated tools, such as ROA and RDM are already being used to inform decision-making, in areas such as the flood defences in the Netherlands.  More information on these approaches can be found in our publication Climate change risks and adaptation: Linking policy and economics

 

You also mention a number of sustinable infrastructure initiatives, including the Room for the River projects in the Netherlands, the Slussen masterplan in Sweden, and the Boston Central Artery project. What policy conditions and/or investment environments facilitated these projects?

One of the common elements across these case studies is the vital need to develop sustainable funding models to cover the costs of resilient infrastructure. Progress on the Room for the River project has been enabled by the provision of predictable and adequate funding from the central government. Meanwhile, disputes between local governments about the allocation of costs for the Slussen masterplan will need to be overcome for implementation to proceed. The net benefits are positive, but the political economy is challenging.

Another key factor in facilitating these projects has been the previous investments in climate data and high levels of technical capacity. The Boston project, for example, developed new modelling approaches to assess flood risk, but this was building on previous public investments in providing climate data and tools.

 

Any final thoughts? 

Sustainability goes beyond ensuring that infrastructure is low-carbon and climate resilient. In principle, it covers the range of objectives set out in the Sustainable Development Goals. This means that a much broader set of issues would have to be considered in the decision-making processes: these include resource efficiency, biodiversity and social inclusion. Current tools and approaches will have to be refined to take account of this broader set of issues.

Investors have a key role to play in supporting this broader agenda. There has been an increased emphasis on information disclosure, but there remains a need to ensure that this disclosure is aligned to the needs of decision makers. For example, it would be useful to develop meaningful but simplified and standardised metrics for communicating exposure to climate risks. I also see value in further work in modelling infrastructure as complex, interlinked systems to improve our understanding of where potential vulnerabilities lie. As a simple example, the resilience of a port depends on the resilience of its inland transport links. 

 

Read Michael's paper Climate-Resilient Infrastructure: Getting the Policies Right.


The opinions expressed herein are solely those of the authors and do not necessarily reflect the official views of the GGKP or its Partners.