Infrastructure is an essential ingredient for the success of a modern economy that positively impacts output, productivity and long-term growth. The OECD and IMF have found that every dollar of investment in infrastructure has a multiplier of 1.6×1 in the form of a boost to short-term employment combined with a longer-term productivity gain to the economy.
Investment in these critical public assets, usually a large and long-term commitment, is a major financial decision for governments and subsovereigns, especially in emerging countries where resources are scarcer, and development needs stronger. These investments therefore need to be protected by ensuring the assets are maintained and are resilient against a variety of risks.
Disaster risk is one of the most important to protect against given the significant damage that can be caused to assets and the fact that disruptions to critical infrastructure can exacerbate a disaster’s economic impacts; for example, by cutting access to lifelines like electricity, water or food distribution. Large and very rapid volumes of financing are therefore needed which account for a major share of public expenditures. These costs are also the most difficult to control.
