Infrastructure maintenance: Among G20 top priorities

Workers maintain the thermal power station at Takoradi, Ghana | Image: World Bank

The original version of this blog appeared on the G20 website.
 

An unexpected topic at July’s G20 Finance Track ministerial meeting

Though it went almost unnoticed by the media, something remarkable occurred at the July G20 Finance Ministers and Central Bank Governors meeting in Venice: the endorsement of a G20 Policy Agenda on Infrastructure Maintenance. Indeed, maintenance itself tends to be invisible when it works well, only to become newsworthy when failure or disasters strike. The Italian G20 Presidency showed boldness and leadership when it proposed that infrastructure maintenance be included among its priorities for 2021. In fact, this issue may seem too technical to claim a spot on the agenda of Finance Ministries and Central Banks. On the contrary, the endorsed Policy Agenda embraces the idea that there is much more to maintenance than just the wide range of activities aimed at keeping the infrastructure/asset in serviceable condition.

In a nutshell, the G20 calls for a shift in perspective: it invites us to look at spending on infrastructure maintenance not just as the cost of keeping assets in good order, but rather as an investment yielding significant benefits both in the short and long term.

Infrastructure maintenance can boost prosperity

The World Bank Group’s report Well Maintained: Economic Benefits from more Reliable and Resilient Infrastructure effectively documents how good and timely infrastructure maintenance boosts prosperity, enabling growth and well-being of people, firms, and economic systems. Estimating (just) the direct costs imposed to firms in low- and middle-income countries, sales losses due to power outages amount to $82 billion a year; disruptions to the water supply infrastructure cost $6 billion annually; and reduced utilization rates of transportation due to disrupted infrastructure cause a loss of $107 billion a year. These estimates exclude indirect coping costs, loss of competitiveness, and capacity to attract investments.

While disentangling the causes of disruption (natural hazards, obsolescence, poor management, etc.) remains a challenge, investing in higher resiliency of infrastructure is a cost-effective and robust policy choice. One analysis estimated that for each $1 spent making exposed infrastructure more resilient, there is a greater than $1 gain (and this benefit-to-costs ratio is even more favorable if the scenario accounts for exposure to natural hazards).

Well-maintained infrastructure is more shock-resilient

The OECD’s report Building Resilience – New Strategies for Strengthening Infrastructure Resilience and Maintenance illustrates that infrastructure systems are increasingly exposed to a combination of old and new challenges. Increasingly frequent extreme weather events are a serious concern (storms, floods, earthquakes, and other natural hazards are responsible for 10 to 70 percent of all disruptions, depending on the country and sector), but so are past maintenance negligence, lack of risk preparedness, and/or inadequacy of decades-old structures to withstand present usage. Besides, different demand patterns and increasingly complex supply chains are making infrastructure systems more interdependent (for example, widespread digitalization, and de-carbonization efforts are increasing economies’ reliance on telecommunication and electricity networks).

Promising initiatives are underway

Along with the Policy Agenda and accompanying reports, G20 members and observer countries collected examples of how they have achieved either project-level benefits (such as cost efficiency, asset life extension) or positive impacts on the environment and the economic system as a whole. Below are just a few of the 45 initiatives presented in the Annex of Infrastructure Maintenance Case Studies:

• The Korean Seoul Infrastructure Next 100-Year Project combines consistent monitoring, technological advances, and a mid- to long-term investment plan to reduce life-cycle maintenance costs, extend assets’ life span, and increase safety performance.
   
• Since 2013, Japan’s National Strategy for Life Extension of Infrastructure applies innovative maintenance solutions to existing (mature) infrastructure, such as roads, tunnels, and river management facilities. Benefits include assets’ life extension, efficiency, as well as increased safety and resilience.
   
• In Turkey, through the Istanbul Seismic Risk Mitigation and Emergency Preparedness Project, 1,400 public buildings (including healthcare facilities and schools) have been retrofitted or reconstructed, becoming resilient to disasters.
   
• Russia’s recently launched initiative, Energy Efficient School Maintenance Systems, is expected to achieve up to a 70 percent reduction in energy consumption for lighting and heating of schools. It is based on a combination of weather-dependent sensors, digitization, and automation of engineering systems.
   
• The Dutch Procurement of Innovative Circular and Modular Bridges shows the country’s commitment towards minimizing CO2 emissions and materials consumption. Including knowledge sharing and small business innovation support, it showcases circular economy principles applied to transportation.
   

Genoa and Italy’s path towards prioritizing maintenance

Turning to Italy, the progressive obsolescence of the country’s existing infrastructure assets, combined with its morphological complexity and exposure to various natural hazards, prompted the launch of several policy interventions aimed at improving the safety and quality of the national infrastructure stock. In 2018, the tragic collapse of the Morandi bridge in Genoa was definitely a wake-up call. Yet, the reconstruction of the (now) San Giorgio bridge represents an inspiring best practice. Not only was it rebuilt in record time (with thanks to the supportive engagement of the city), but it’s a prominent example of state-of-the-art technology applied to increase the resilience, sustainability, and cost-efficiency of operations and maintenance.

For this reason, Italy’s G20 Presidency is pleased that Genoa will host the G20 High-Level Conference on Local Infrastructure Investment on September 27 (prior to the sixth G20 Infrastructure Working Group meeting). The conference—which will be opened by the Italian Finance Minister, Daniele Franco—is an opportunity to hear from international representatives, local authorities (mayors and state governors), and other organizations supporting subnational infrastructure investments. This is a novelty for the G20 and an important acknowledgement of the crucial role local entities play in planning, funding, operating, and maintaining quality infrastructure.

What’s next? Ensuring maintenance becomes a priority and is systematically addressed

Under the Italian G20 Presidency, the Infrastructure Working Group worked hard to explain why and document how prioritizing infrastructure maintenance (and allocating adequate resources for it) can yield significant benefits in the short and long-term.

Here are three fundamental messages worth highlighting:

1. Embracing a long-term vision. “Life-cycle costing”, “risk preparedness”, “preventive maintenance”, and other keywords surfacing from the maintenance debate ultimately have one thing in common: a long-term vision. The cases mentioned above reveal a forward-looking approach to infrastructure design and management aimed at preserving the planet’s natural resources and meeting future generations’ needs.

2. Envisioning a “re-branding” of maintenance. No one contests that prioritizing infrastructure resilience makes good political sense and spending on maintenance makes good business sense. Yet action is still inadequate. Perhaps a re-branding of maintenance is needed to increase awareness of its significance. Granting the deserved priority to caring for existing assets hinges on the availability of better and systematically collected data on infrastructure (for example, assets’ location, status, exposure to risks, performance, impacts).

3. Fostering coordination with local entities. In a workshop earlier this year, the mayor of Freetown, Sierra Leone, put it very clearly: “Cities are very often the recipients of issues, but they don’t necessarily have the mandate to address the root causes of problems.” Indeed, the pressure of rapid urbanization on infrastructure systems is just the symptom of a wider phenomenon: rural-urban migration. Of course, the optimal level at which infrastructure services are planned, regulated, and delivered depends on many factors, but efforts should be made to reconcile the tension between oversight that must be strategically centralized, versus attention to needs, opportunities, and constraints that benefit from localized oversight.

There’s a long road ahead to bring infrastructure maintenance up to adequate levels (in developed and emerging countries alike), but hopefully, the work presented above has provided robust reasons and inspiring examples to give infrastructure maintenance the prominence it deserves.

Disclaimer: The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff, or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.