Defining and Measuring Performance for Sustainability in Infrastructure Development

Global Infrastructure Basel, 21 May 2014

Agenda

Main question

Performance based contracts take us some of the way but do we need to go further – challenging but necessary

Comments

• Performance based contracts

• Definitions – what should we mean by performance in sustainable infrastructure?

• Measurement for sustainability – what can, and/or should we measure?

• Challenges and opportunities

Notes: High level, abstract, stating the obvious

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Performance based contracts - flexibility

Waste infrastructure solutions-Moving from recycling outcomes to carbon performance

-Can be met through variety of infrastructure solutions-High waste reuse + incineration + landfill-High recycling + landfill-Recycling + AD + gasification and fuel preparation

Waste infrastructure solutions-Moving from recycling outcomes to carbon performance

-Can be met through variety of infrastructure solutions-High waste reuse + incineration + landfill-High recycling + landfill-Recycling + AD + gasification and fuel preparation

Energy efficiency in buildings-Energy performance leading to payback and carbon outcomes

-Can be met through different technologies-Challenges in asset ownership/ leasing, financing and asset transfer

Energy efficiency in buildings-Energy performance leading to payback and carbon outcomes

-Can be met through different technologies-Challenges in asset ownership/ leasing, financing and asset transfer

Energy generation-Energy generation and carbon performance

-Can be met through different ways e.g. Combination of low carbon, renewable and fossil fuels

Energy generation-Energy generation and carbon performance

-Can be met through different ways e.g. Combination of low carbon, renewable and fossil fuels

Infrastructure that facilitates triple bottom line

Investor economic returns

GDP

Asset creation

Facilitation of wider economy

Investor economic returns

GDP

Asset creation

Facilitation of wider economy

Climate change mitigation/ adaptation

Natural resource consumption/ depletion

Pollution

Climate change mitigation/ adaptation

Natural resource consumption/ depletion

Pollution

Livelihoods protection/ creation

Skills creation

Empowerment/ choice/ opportunity

Health impacts

Livelihoods protection/ creation

Skills creation

Empowerment/ choice/ opportunity

Health impacts

EconomicEconomic EnvironmentalEnvironmental SocialSocial

Project level considerations

DevelopmentDevelopment ConstructionConstruction OperationOperation De-commission

De-commission

ConsiderationsConsiderations

EnergyWasteWater

BiodiversityMaterials

LivelihoodsTransparencyGovernance

etc.

EnergyWasteWater

BiodiversityMaterials

LivelihoodsTransparencyGovernance

etc.

Outcome based measurement – difficult.

National policy level e.g. National Green Accounts India proposal“Basis for economic evaluation should be comprehensive notion of wealth”:•Reproductive capital•Human capital•Natural capital

National policy level e.g. National Green Accounts India proposal“Basis for economic evaluation should be comprehensive notion of wealth”:•Reproductive capital•Human capital•Natural capital

Policy/ Project Levele.g. UK Green Book MethodologyAttempts to quantify and monetise different project benefits to generate a societal IRRExamples: Carbon reduction, job creation, etc.Example of considerations: displacement, leakage, additionality

Policy/ Project Levele.g. UK Green Book MethodologyAttempts to quantify and monetise different project benefits to generate a societal IRRExamples: Carbon reduction, job creation, etc.Example of considerations: displacement, leakage, additionality

Outcome Levele.g. Energy, Carbon and Cost reduction-Persistence factors-Technology replacement timings

Outcome Levele.g. Energy, Carbon and Cost reduction-Persistence factors-Technology replacement timings

Challenges and opportunities• Challenges

– Difficulty in measuring e.g. Natural capital. (value of one village pond will be different from another as depends on the context)

– Metrics not fully developed/ not widely known

– High resource capacity required to perform comprehensive measurements and monitoring

• Opportunities– Tools do exist to help – carbon and ecological footprinting;

ecosystem services valuation; social impact assessment tools

– Considerable opportunity to improve natural and human capital rather than ‘avoid or mitigate negative outcomes’ - public sector risk-sharing role can facilitate this

THANK YOU!

Sumeet Manchanda

Sumeet.Manchanda@thomsonreuters.com

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