Investing in Urban Infrastructure In A Changing World

Julie Rozenberg, Sustainable Development Chief Economist Office

Prediction errors are common

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Urban infrastructure investments have very long lifetimes

Flood Protection Transportation Systems

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Good Decision Making is Challenged by Uncertainty and Disagreement

Shanghai 1990 vs. 2010

Rapid Changes

Competing Priorities

Conservation vs. Development

UncertainFuture

Climate Change

Traditional Planning Asks “What Will The Future Bring?”

What will thefuture be?

What is the best near-term decision?

How sensitive is our decision to our

prediction?

“Traditional Planning”

• Conditions are stable or easy to predict

• There is consensus among stakeholders

Works well when:

It can lead to overconfidence in our projections“What if I’m wrong?”

What will the future be?

What is the best near-term decision?

How sensitive is our decision to our predictions?

“Predict Then Act”

Decision Making Under Uncertainty Runs the Analysis Backwards

Develop strategy adaptations to

reduce vulnerabilities

Identify vulnerabilities of these strategies

What are the available

strategies?

Decision Making Under Uncertainty (DMU)

Urban Water Supply In Lima, Peru

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Robustness test of current system

• Identification of no-regret investments

• Phasing of investment based on future observation of climate and demand

Urban wetlands in Colombo

Rent decrease

vs

Flood risk, water quality, recreation

Impacts on poor and non-poor

Under which conditions is the development of the wetlands a good economic option?

Final remark: Stakeholder involvement is key