Paving the Way for Climate-Resilient Infrastructure - UN CC:Learn

Chapter 7: A Framework for Risk Assessment and Risk-Informed Decision-Making for Infrastructure DevelopmentSustainable decision-makingSustainable decision-making takes into consideration three primary units—societal, economical and environmentalfactors—for both present and future generations. Optimization of these three factors dependson cost-benefit evaluations for all generations in the future. Based on this principle of intergenerationalequity, the transfer of income, costs and resources over generations of decision makers results in one jointintergenerational decision maker. By assessing utility as the sum of utility of all generations—throughsummation of costs and benefits for all generations in the future—and maximizing benefits for the sumof all generations, it is possible to derive general guidelines for sustainable decision-making. For example,because current overuse of non-renewable resources deprives future generations of these resources,present generations need to compensate future generations for this loss by developing resource substitutes(e.g. through investment in research of renewable resources and energy efficiency).Equity also implies that utility for future generations should be reduced based on assumed economicalgrowth. Based on utility functions, the derivation of predicted economic growth indicates what discountrate is affordable (from a sustainability perspective) to use in cost-benefit analysis. Discounting consideredfor present and future generations should include economic growth, as 2 percent per annum, and preferenceto spend early rather than late, referring to 3 percent per annum.The consideration of intergenerational equity concerns decision-making about infrastructure and theimportance of economical development exercises. Optimally, decisions regarding affordable performanceof infrastructure, including safety issues, must be seen in close relation with the interaction betweenperformance and economy. Improvement of efficiency of infrastructure has a tendency to increase GDPup to 40 percent. While societies often make the mistake of investing predominantly in maintenance ofinfrastructure, they would generally benefit more from expansions of infrastructure.It is possible to derive these types of decisions through the coupling of economic models. By couplingmodels and analysis of economies that describe economical performance of society as a function ofperformance of infrastructure, it is possible to evaluate different strategies with regard to the quality andquantity of the infrastructure. These evaluations can reveal the optimum balance between greater investmentin cheaper, less reliable infrastructure and less investment in more expensive but less reliable infrastructure.In other words, sustainable decisions informed by these coupled models optimize the use forsociety’s resources for infrastructure with respect to society’s capacity and need for the infrastructure.Instruments for implementationInstruments for risk management are based on society’s hierarchy of organizational management.Allocation of resources among ministries, sectors, divisions, departments, branches and individual projectsshould reinforce optimum distribution. Risk assessment following LQI principles provides the tool forevaluating where investment yields the greatest value.The hierarchical organization of distributing resources and allocating funds is one way to improve a situation;enhancing best practices is another way. Improving best practices in design, procedure for operations,and maintenance optimizes prioritization not only on a global scale, but also for individual projects.Risk assessments can be applied to identify best practices for improvement, again based on greatestbenefit or return on investment.90Paving the Way for Climate-Resilient Infrastructure: Conference Proceedings