Infrastructure Planning and Management: An Integrated Approach 9783030485580

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Virendra Proag

Infrastructure Planning and Management: An Integrated Approach

Infrastructure Planning and Management: An Integrated Approach

Virendra Proag

Infrastructure Planning and Management: An Integrated Approach

Virendra Proag Civil Engineering Department University of Mauritius Reduit, Mauritius

The ideas/opinions expressed in this book are those of the author and not necessarily those of the institutions with which he may be associated. ISBN 978-3-030-48558-0 ISBN 978-3-030-48559-7 https://doi.org/10.1007/978-3-030-48559-7

(eBook)

© Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

To my wife, Aslakha and my sons, Amsha and Satya-Lekh

If I have been able to see a little farther than some others, it was because I stood on the shoulders of giants. Sir Isaac Newton

Preface

Why infrastructure? Five decades ago, many countries that were on the way to or were getting their independence suddenly discovered to their amazement that many facilities were missing, first and foremost, water, roads and probably electrical energy were topping the list. In fact, for quite a long time such facilities described the basic infrastructure requirements of these countries. Later, when the author was leaving college for higher studies abroad and asked why he wanted to study civil engineering, he replied: “to help in building the infrastructure of the country”, because he had seen the phrase somewhere in a newspaper and had read a book on civil engineering which described the construction of roads and bridges as pertaining to this field. To cut a long story short, the author started working in the water industry with the sole water distributor, alongside consultants, contractors, and funding agencies who were eager to lend money to the country for its projects. This 15-year work experience gave the author ample opportunity to reflect on water as being an essential infrastructure service, while the meetings with representatives of funding agencies and engineers from other disciplines helped bringing home that there was much more to infrastructure and that many of the problems encountered were similar. For several reasons, the author left the industry to spend more than two decades in academia, where he was able to carry out some research on the subject of infrastructure and discuss and teach some of its topics to students. One lesson learnt, among others, was: thinking differently is not necessarily difficult, but getting the conclusions across to convince others, particularly engineering colleagues – thinking more of their clients’ resistance to change, rather than the correct or appropriate approach – is certainly less easy. This said, the subject matter of this book started, as explained, with classroom notes, discussions and examples about the environment, never ending road congestion, town layouts, drain design, cyclonic conditions, flood experiences, living without electricity for 6 weeks, etc. The book is divided into 22 chapters, as shown in Fig. 1. Examples provided in the book use currencies such as dollars, euros and rupees, just to use a monetary unit. ix

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Preface

INFRASTRUCTURE PLANNING AND MANAGEMENT The Long Term Plan for Infrastructure

5

Infrastructure as a System

Infrastructure Vision for SD

4

Reliability and 9 Quality of Infrastructure

Environmental 8 Aspects of Infrastructure

Infrastructure and Spatial Organisation

3

Climate Change and Infrastructure

Infrastructure Resilience

11

Infrastructure and Economic Growth

2

Modelling in 13 Infrastructure Planning

Disaster Recovery and Management

12

Introduction to Infrastructure

1

Multi Sector/Purpose 14 Infrastructure Planning

Multi Objective 15 Evaluation Criteria for Infrastructure

Infrastructure Implementation

22

PROJECT ECONOMICS

Decision Taking with 16 Infrastructure

Quality of 21 Infrastructure Service Delivery

PROJECT MANAGEMENT

Infrastructure as 17 Public or Private Goods

Human Resources Management for Infrastructure

Cost Allocation for Infrastructure Implementation

Infrastructure Markets 18 and the Private Sector

20

6

10

19

Economic and Social 7 Aspects of Infrastructure

Fig. 1 Overall view of the book

Chapter 1 starts with an overview of what infrastructure covers and how essential it is to everyday life. Apart from technical infrastructure, there are other sectors, as well as economic, social, and, more specially, critical infrastructure. Chapter 2 tries to show how macroeconomists relate infrastructure – in the general sense of the term – to the development of a country, with possible economic growth, and negatively in some cases.

Preface

xi

Chapter 3 examines how the spatial organisation of our cities affects infrastructure provision. Green space is certainly welcome but is difficult to provide if the construction of roads and buildings is allowed all over the place without any proper planning. Chapter 4 discusses sustainable development from a long way. Explained in simple terms, the concept may still be difficult to apply when the stakeholders are so many, think so differently or do not know what to think. Chapter 5 explains that before an infrastructure is implemented, it must be planned to work satisfactorily for a century, and some 20 years, even before it starts working! This is one of the concepts which is difficult to get across. Chapter 6 shows that unfortunately different fields (e.g. water, agriculture, electricity) of infrastructure and different infrastructure sectors (e.g. technical, economic, environmental, legal) are interdependent and must be thought of as systems or networks. Chapter 7 starts with some simple welfare economics concerning infrastructure provision, which the technical person might well consider. How the population views infrastructure in the life of a country gives an interesting perspective in the second part of the chapter. Chapter 8 expounds the different methods which may be used to investigate the environmental impacts of infrastructure provision. Sometimes, they are enough to forbid project implementation. Chapter 9 deals with reliability and quality of infrastructure and approaches that are used to ensure them. To take a simple example, it might be difficult for the modern citizen to really manage without electricity. Chapter 10 talks about the possible impacts of climate change on the availability of infrastructure. Weather conditions can decrease infrastructure service quality, quantity or reliance and can necessitate infrastructure retrofit, a concept not very easy to convey. Chapter 11 explains the ability of infrastructure systems to absorb and recover from the impact of disruptive events without fundamental changes in function or structure, followed by ways to introduce resilience when designing infrastructure facilities and systems. Another concept which is difficult to transmit. Chapter 12 presents a three-level risk management framework: (1) before the disaster – planning, drills and communication; (2) during the event – communication and operations associated with the operation of existing systems; and (3) after the disaster – assessment and reconstruction and lessons learnt for starting all over. Chapter 13 explains the different possibilities and mathematical techniques which exist and then proposes a simulation example which depicts what type of results may be obtained for discussion and for decision making. Chapter 14 considers infrastructure systems which can have multiple goals and objectives which are in conflict or competition with one another, most particularly when the stakeholders or customers or users may have different preferences; it proposes a few approaches to handle this problem Chapter 15 gives examples to show how to tackle the objectives under different criteria, with weightage coefficients which may be applied to different objectives. Step by step calculations are given for examples applied to infrastructure and ancillary projects.

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Chapter 16 explains that decisions concerning infrastructure are taken under three types of environments – (a) decision making under certainty conditions, (b) decision making under uncertainty conditions and (c) decision making under conditions of risk – and presents a few examples showing the use of different criteria. Chapter 17 clarifies the different concepts of private goods and public goods, along with the externalities involved, and provides examples of the same. Given the wide variety of infrastructure, the demarcation is not always clear. In some cases, infrastructure may also present the symptoms of the Tragedy of the Commons. Chapter 18 explains the concepts of Build Operate Transfer (BOT) and the potential advantages and risks involved. Whether the approach always works also depends on the cultural history of the nation and prevalent circumstances and conditions. Chapter 19 uses the example of a dam providing water storage for different purposes by different organisations which need to share the cost. The underlying principle of cost allocation for infrastructure investment behind the different methods available to calculate cost apportionment is explained through worked examples. Chapter 20 develops the idea that people matter. Infrastructure certainly needs people to design the systems that will provide the services. However, once operational, the infrastructure network or service needs other people to run the organisation, be it on the maintenance side for equipment or public relations when dealing with customers. Chapter 21 stresses that infrastructure services are provided by its operation and complex interaction between human, economic and technical systems and the environment. It examines several facets of service related to the infrastructure sector and discusses some approaches to improve the perception of service to the customer. Chapter 22 describes in detail the different steps that occur from the moment someone gets a brilliant idea that he or she wants implemented and explains that all parties to the project (client, consultant, contractor and probably the funding agency) need, individually, a project manager to monitor the progress of the relevant parts of the project under their responsibility. This last chapter also brings out the necessity of (1) proper project management and (2) project economics, which, it is hoped, will be the subject of future publications from the infrastructure perspective. The use of quotations abstracted from literature (classical and modern) shows that infrastructure or its associations have been raising concerns since long. Nowadays, the Internet has helped greatly in searching for them as well. It is expected that this book will prove valuable to all those interested or attracted to the subject of infrastructure. For a few, it might be a confirmation of what they already guessed, while for others it might open the route to amazing links which need to be discovered. I hope you are in the latter category. May you enjoy your reading! Virendra Proag Reduit, Mauritius

Virendra Proag

Acknowledgements

On a topic of the breadth which this book attempts, my friends and colleagues in the industry and associated infrastructure sectors, and students from the University of Mauritius, and ENSTA Paris (École Nationale Supérieure de Techniques Avancées, Paris) have provided a useful platform to gather material as well as discussing ideas. Naturally, errors in fact or interpretation are the responsibility of the author alone. It is impossible for any one person to originate from personal knowledge and experience all the information which comprises the subject matter of a technical book of this kind. So, in addition to the valuable assistance received from those already acknowledged, the author wishes to thank all the publishers and authors from whom material for the text has been drawn. If any acknowledgement has been overlooked, it is deeply regretted. The preparation of the text has been supervised and monitored by Ms Karthika Menon, Ms Margaret Deignan and their colleagues who had to give the text its proper layout. Admittedly, not a very easy task with the numerous tables and figures. I am thankful to them for their patience. My thanks also go to Ms Petra van Steenbergen who gave the first encouragement for the book. The blame of any poor quality photographs rests entirely upon me. The drawings were prepared by Mr Anil Seenundun and his colleagues from my sketches, before being converted into figures by the publisher.

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Contents

1

Introduction to Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1 Problems of Infrastructure . . . . . . . . . . . . . . . . . . 1.1.2 Definition of Infrastructure . . . . . . . . . . . . . . . . . . 1.2 Examples of Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.1 Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.2 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.3 Communication and Telecommunications . . . . . . . 1.2.4 Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.5 Energy and Power . . . . . . . . . . . . . . . . . . . . . . . . 1.2.6 Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.7 Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.8 Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.9 Recreation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.10 Tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.11 Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.12 Waste Management . . . . . . . . . . . . . . . . . . . . . . . 1.2.13 Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.14 Wastewater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Why Do We Need Infrastructure? . . . . . . . . . . . . . . . . . . . . 1.4.1 Economic Infrastructure . . . . . . . . . . . . . . . . . . . . 1.4.2 Social Infrastructure . . . . . . . . . . . . . . . . . . . . . . . 1.4.3 Critical Infrastructure . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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1 1 2 2 4 4 7 9 10 11 13 14 14 17 18 19 24 26 27 28 29 29 30 30 32

2

Infrastructure and Economic Growth . . . . . . . . . . . . . . . . . . . . . . 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1 Why Do We Need Infrastructure? . . . . . . . . . . . . . 2.1.2 Economic Roles of Government . . . . . . . . . . . . . .

. . . .

33 34 34 35 xv

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2.2

Economics Applicable to Infrastructure . . . . . . . . . . . . . . . . 2.2.1 Selective Overview of Economics . . . . . . . . . . . . . 2.2.2 Factor Endowments of the Country . . . . . . . . . . . . 2.2.3 The GDP as a Measure of National Income . . . . . . 2.3 Investing in a Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 Determinants of Cost . . . . . . . . . . . . . . . . . . . . . . 2.3.3 Determinants of Benefits . . . . . . . . . . . . . . . . . . . 2.3.4 Mathematical Formulation . . . . . . . . . . . . . . . . . . 2.3.5 Growth: Miracles and Disasters . . . . . . . . . . . . . . 2.3.6 Infrastructure v/s Growth . . . . . . . . . . . . . . . . . . . 2.4 The Process of Production . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.1 Classifications . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.2 Primary, Secondary and Tertiary Production . . . . . 2.4.3 Direct and Indirect Production . . . . . . . . . . . . . . . 2.5 Impact of Infrastructure on Economic Development . . . . . . . 2.5.1 Nature of Impacts . . . . . . . . . . . . . . . . . . . . . . . . 2.5.2 Achieving the Potential of Infrastructure Impacts . . 2.6 Infrastructure’s Effects on Economic Development . . . . . . . . 2.7 Infrastructure and Macroeconomic Stabilization . . . . . . . . . . 2.8 Implications for Infrastructure Planning and Policy . . . . . . . . 2.9 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix 2.1: “Constant Return to Scale” . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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37 37 38 39 40 40 41 42 43 43 44 44 44 45 45 47 47 49 50 50 56 56 58 59

Infrastructure and Spatial Organisation . . . . . . . . . . . . . . . . . . . . 3.1 Cities Are for People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Green Urbanism Principles . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Infrastructure According to Spatial Organisation . . . . . . . . . . 3.4 Smart and Sustainable Cities . . . . . . . . . . . . . . . . . . . . . . . . 3.4.1 Important Parameters Needing Consideration . . . . . 3.4.2 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.3 Transport and Land Use . . . . . . . . . . . . . . . . . . . . 3.4.4 Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.5 Cars – An Expensive Asset . . . . . . . . . . . . . . . . . 3.4.6 Public Transport Priorities . . . . . . . . . . . . . . . . . . 3.4.7 Movement Within the Town . . . . . . . . . . . . . . . . . 3.4.8 Movement Outside the Town . . . . . . . . . . . . . . . . 3.4.9 Goods Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.10 Parking Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.11 Facilities and Their Location . . . . . . . . . . . . . . . . 3.4.12 Leisure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.13 Residential Space . . . . . . . . . . . . . . . . . . . . . . . . 3.4.14 Other Parameters . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.15 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . .

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61 62 74 76 83 83 84 85 88 88 89 90 90 91 91 92 93 94 96 97

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3.5 Low or High Density . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 3.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 4

Infrastructure Vision for Sustainable Development . . . . . . . . . . . . . 4.1 Objectives of Development . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.1 The Three Objectives of Development . . . . . . . . . . 4.1.2 Development in Practice . . . . . . . . . . . . . . . . . . . . 4.1.3 Possible Strategies . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1 Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.2 Possible Reasons for Non Sustainability . . . . . . . . . 4.3 Extractive Industries Causing Environmental Concerns . . . . . . 4.3.1 Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.2 The Hardrock Mining Industry . . . . . . . . . . . . . . . . 4.3.3 The Logging Industry . . . . . . . . . . . . . . . . . . . . . . 4.3.4 The Seafood Industry (Marine Fisheries) . . . . . . . . . 4.4 Important Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.1 There Is No Such Thing as a Free Lunch! . . . . . . . . 4.4.2 Urgent Environmental Issues . . . . . . . . . . . . . . . . . 4.4.3 Possible Approaches to Solutions . . . . . . . . . . . . . . 4.5 Sustainable Development Goals . . . . . . . . . . . . . . . . . . . . . . 4.6 Using Infrastructure to Achieve SDGs . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

103 104 104 105 107 109 109 110 112 113 114 116 119 120 120 122 122 125 131 132

5

The Long Term Plan for Infrastructure . . . . . . . . . . . . . . . . . . . . 5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Planning Investment in the Water Sector . . . . . . . . . . . . . . . 5.3 Basic Activities Required . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.1 Assess the Infrastructure (Water) Requirements . . . 5.3.2 Assess the Water Availability . . . . . . . . . . . . . . . . 5.3.3 Preliminary Matching of Resources and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.4 Formulating Possible Schemes . . . . . . . . . . . . . . . 5.3.5 Cost Estimates of Schemes . . . . . . . . . . . . . . . . . . 5.3.6 Formulating the Draft Master Plan . . . . . . . . . . . . 5.3.7 Marketing the Master Plan and Acceptance Thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.8 Feasibility Studies . . . . . . . . . . . . . . . . . . . . . . . . 5.3.9 Looking for Funds . . . . . . . . . . . . . . . . . . . . . . . . 5.3.10 Implementation of Proposed Schemes . . . . . . . . . . 5.4 Planning the Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 Establishing the Time Frame . . . . . . . . . . . . . . . . . . . . . . . . 5.6 Action Plan for Safeguarding Infrastructure Availability . . . . 5.6.1 The Plan Period . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6.2 The Long Term Plan . . . . . . . . . . . . . . . . . . . . . . 5.6.3 The Medium Term Plan . . . . . . . . . . . . . . . . . . . .

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133 134 137 138 138 139

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139 140 140 140

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140 141 141 141 142 145 148 148 149 150

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5.6.4 5.6.5

The Short Term Plan . . . . . . . . . . . . . . . . . . . . . . Carrying Out the Infrastructure Estimation Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 Use of the Backcasting Method . . . . . . . . . . . . . . . . . . . . . . 5.7.1 The Possible Demographic Changes . . . . . . . . . . . 5.7.2 Applying the Backcasting Method . . . . . . . . . . . . 5.8 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. 150 . . . . . .

151 153 153 154 157 157

6

Infrastructure as a System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Interactions Between Water and Other Sectors . . . . . . . . . . . 6.2 Interactions Among Infrastructure Sectors . . . . . . . . . . . . . . 6.3 Systems Analysis in Infrastructure Sectors . . . . . . . . . . . . . . 6.3.1 System Concepts . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 System Characteristics . . . . . . . . . . . . . . . . . . . . . 6.3.3 Complexity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.4 Organisations as Systems . . . . . . . . . . . . . . . . . . . 6.3.5 The Systems Approach . . . . . . . . . . . . . . . . . . . . 6.3.6 Enlarging the Paradigm . . . . . . . . . . . . . . . . . . . . 6.4 Applying Systems Analysis to Infrastructure . . . . . . . . . . . . 6.4.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.2 Scenarios and Assessment . . . . . . . . . . . . . . . . . . 6.4.3 Step 1: Scenario Generation . . . . . . . . . . . . . . . . . 6.4.4 Step 2: Strategy Generation . . . . . . . . . . . . . . . . . 6.4.5 Step 3: Infrastructure System-of-Systems Models . . 6.4.6 Step 4: Evaluating Infrastructure Strategies . . . . . . 6.5 Elements of System Dynamics Modelling . . . . . . . . . . . . . . 6.5.1 Physical flows . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.2 Level and Rate Variables . . . . . . . . . . . . . . . . . . . 6.5.3 Information Flow . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.4 Flow Diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.5 Delays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.6 Smoothing of Information . . . . . . . . . . . . . . . . . . 6.5.7 Table Functions . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Modelling Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.1 Causal Loops . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6.2 The Diagramming Approach . . . . . . . . . . . . . . . . 6.6.3 Simple to Complex Modelling . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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159 160 161 162 162 163 164 165 165 166 168 168 169 170 170 171 173 174 174 175 176 177 179 180 181 183 183 183 183 184

7

Economic and Social Aspects of Infrastructure . . . . . . . . . . . . . . . . 7.1 Welfare Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 The Benefit-Cost Viewpoint . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 The Allocation of Incommensurable Resources for Incommensurable Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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7.4

. 193 . 195

Social Welfare Functions . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4.1 Simple Profit or Benefit-Cost Ratio Maximization . 7.4.2 Profit Maximization with Inclusion of Secondary Social Benefits and Costs . . . . . . . . . . . . . . . . . . . 7.4.3 Profit Maximization with Constraints . . . . . . . . . . 7.4.4 Vote Maximization . . . . . . . . . . . . . . . . . . . . . . . 7.4.5 Democratic Strength of Preference . . . . . . . . . . . . 7.5 Designing Measures of Effectiveness: Public Health . . . . . . . 7.6 Allocation of a Scarce Resource Space for Cars . . . . . . . . . . 7.6.1 By Congestion Pricing . . . . . . . . . . . . . . . . . . . . . 7.6.2 By Rationing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6.3 By Money Pricing . . . . . . . . . . . . . . . . . . . . . . . . 7.7 Engineering as Opposed to Construction . . . . . . . . . . . . . . . 7.8 Social Aspects of Infrastructure . . . . . . . . . . . . . . . . . . . . . . 7.8.1 Sustainable Knowledge Infrastructure . . . . . . . . . . 7.8.2 Infrastructure as Stored Potential . . . . . . . . . . . . . . 7.8.3 Water Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8.4 Treating People Differently . . . . . . . . . . . . . . . . . 7.8.5 Projects and Promises . . . . . . . . . . . . . . . . . . . . . 7.8.6 Is Infrastructure ¼ Development? . . . . . . . . . . . . . 7.8.7 Infrastructure as Country Icons . . . . . . . . . . . . . . . 7.8.8 Aesthetics of Infrastructure . . . . . . . . . . . . . . . . . . 7.9 From Inception to Oblivion . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

. . . . . . . . . . . . . . . . . . . . .

195 195 196 196 197 199 199 199 199 200 202 202 202 203 205 206 208 209 212 213 218

Analysis of Environmental Impacts of Infrastructure . . . . . . . . . . . 8.1 Economic Measurement of Environmental Impacts: Theory . . 8.2 Generally Applicable Techniques . . . . . . . . . . . . . . . . . . . . . 8.3 Using Market Prices to Value a Change in Production . . . . . . 8.3.1 Changes in Productivity . . . . . . . . . . . . . . . . . . . . . 8.3.2 Loss of Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.3 Opportunity Cost . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Using Market Prices to Value Costs . . . . . . . . . . . . . . . . . . . . 8.4.1 Cost-Effectiveness Analysis . . . . . . . . . . . . . . . . . . 8.4.2 Preventive Expenditures . . . . . . . . . . . . . . . . . . . . . 8.4.3 Choosing a Technique . . . . . . . . . . . . . . . . . . . . . . 8.5 Potentially Applicable Techniques . . . . . . . . . . . . . . . . . . . . . 8.6 Techniques Using Substitute Market Prices . . . . . . . . . . . . . . 8.6.1 Property Values . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6.2 Other Land-Value Approaches . . . . . . . . . . . . . . . . 8.6.3 Wage Differentials . . . . . . . . . . . . . . . . . . . . . . . . . 8.6.4 Travel Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6.5 Marketed Goods as Environmental Surrogates . . . . .

219 220 222 223 224 225 225 225 226 228 229 229 229 230 230 230 231 231

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8.7

Cost Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7.1 Replacement Costs . . . . . . . . . . . . . . . . . . . . . . . . 8.7.2 Relocation Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7.3 Shadow Projects . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 Survey-Based Methods and Macroeconomic Models . . . . . . . 8.8.1 Contingent Valuation Methods . . . . . . . . . . . . . . . . 8.8.2 Bidding Games . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8.3 Take-it-or-Leave-it Experiments . . . . . . . . . . . . . . . 8.8.4 Trade-off Games . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8.5 Costless Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8.6 Delphi Technique . . . . . . . . . . . . . . . . . . . . . . . . . 8.8.7 The Limitations of Contingent Valuation . . . . . . . . . 8.9 Macroeconomic Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9.1 Generalised Input-Output Models . . . . . . . . . . . . . . 8.9.2 The Basic Procedure . . . . . . . . . . . . . . . . . . . . . . . 8.9.3 Input-Output Models: Including the Environment . . 8.9.4 Leontief’s Extended Input-Output Tables . . . . . . . . 8.9.5 Limitations of Input-Output Models . . . . . . . . . . . . 8.9.6 Linear Programming Models . . . . . . . . . . . . . . . . . 8.9.7 Limitations of Linear Programming . . . . . . . . . . . . 8.10 Economic Measurement of Environmental Impacts: Limits . . . 8.10.1 Income Distribution . . . . . . . . . . . . . . . . . . . . . . . . 8.10.2 Intergenerational Equity . . . . . . . . . . . . . . . . . . . . . 8.10.3 Risk and Uncertainty . . . . . . . . . . . . . . . . . . . . . . . 8.10.4 Irreversibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10.5 Value of Human Life . . . . . . . . . . . . . . . . . . . . . . . 8.10.6 Incrementalism . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10.7 Cultural, Historical and Aesthetic Resources . . . . . . 8.10.8 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

231 232 232 232 233 233 233 234 235 235 236 236 237 237 237 238 240 242 242 243 244 245 245 246 247 248 250 250 250 251 251

Quality and Reliability of Infrastructure . . . . . . . . . . . . . . . . . . . . . 9.1 Quality and Reliability in Infrastructure . . . . . . . . . . . . . . . . . 9.2 Introduction to Quality and Reliability . . . . . . . . . . . . . . . . . . 9.2.1 The Meaning of Quality . . . . . . . . . . . . . . . . . . . . . 9.2.2 The Meaning of Reliability . . . . . . . . . . . . . . . . . . . 9.2.3 The Meaning of Failure . . . . . . . . . . . . . . . . . . . . . 9.2.4 Effects of Time on Reliability . . . . . . . . . . . . . . . . . 9.3 Importance of Quality and Reliability . . . . . . . . . . . . . . . . . . 9.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.2 Infrastructure Unreliability . . . . . . . . . . . . . . . . . . . 9.3.3 Costs of Unreliability . . . . . . . . . . . . . . . . . . . . . . . 9.3.4 Effect on Cost Recovery . . . . . . . . . . . . . . . . . . . . 9.3.5 Distributional Effect . . . . . . . . . . . . . . . . . . . . . . . . 9.3.6 The Growing Importance of Reliability . . . . . . . . . .

253 254 255 255 257 259 259 260 260 260 261 262 262 263

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Demand for Quality and Reliability . . . . . . . . . . . . . . . . . . . . Building Quality and Reliability in Infrastructure . . . . . . . . . . 9.5.1 Introducing Quality into Infrastructure . . . . . . . . . . . 9.5.2 Implications of the Concept . . . . . . . . . . . . . . . . . . 9.5.3 Cost-Benefit Analysis . . . . . . . . . . . . . . . . . . . . . . 9.5.4 Focusing on Reliability to Improve Productivity . . . 9.6 Reliability of Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6.1 Reliability of Systems . . . . . . . . . . . . . . . . . . . . . . 9.6.2 Series Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6.3 Parallel Systems . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6.4 General Series-Parallel System . . . . . . . . . . . . . . . . 9.6.5 Standby Redundancy . . . . . . . . . . . . . . . . . . . . . . . 9.7 Measures of Reliability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

264 265 265 265 266 266 267 267 268 269 270 271 273 277

Climate Change and Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 Climate Change Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.1 Climate Change Impacts on Infrastructure Sectors . . 10.2.2 Exposure and Vulnerability of Infrastructure to Climate Hazards . . . . . . . . . . . . . . . . . . . . . . . . 10.2.3 Frequency or Return Period to Be Considered . . . . . 10.2.4 Is a Return Period of 50 Years Acceptable? . . . . . . . 10.3 Preparing Infrastructure for Climate Change . . . . . . . . . . . . . . 10.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.2 Government Role . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.3 Private Sector Led Adaptation . . . . . . . . . . . . . . . . 10.3.4 Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.5 Infrastructure Owners and Operators . . . . . . . . . . . . 10.3.6 Economic Regulators . . . . . . . . . . . . . . . . . . . . . . . 10.3.7 Insurers and Re-insurers . . . . . . . . . . . . . . . . . . . . . 10.3.8 Engineering Sector . . . . . . . . . . . . . . . . . . . . . . . . 10.3.9 Research Community . . . . . . . . . . . . . . . . . . . . . . . 10.3.10 The Cost of Infrastructure Adaptation . . . . . . . . . . . 10.4 Approaches and Mechanisms to Support Climate Resiliency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4.1 Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4.2 Vulnerability Approach . . . . . . . . . . . . . . . . . . . . . 10.4.3 Increasing Resilience . . . . . . . . . . . . . . . . . . . . . . . 10.4.4 Suggested Policies to Increase Infrastructure Resilience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4.5 Examples of Policy Options . . . . . . . . . . . . . . . . . . 10.5 Challenges and Barriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5.2 Information Gaps . . . . . . . . . . . . . . . . . . . . . . . . . .

279 280 283 283

10

285 287 287 290 290 290 291 291 292 293 293 294 294 294 295 295 296 297 299 300 301 301 301

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10.5.3 Managing Uncertainties . . . . . . . . . . . . . . . . . . . . 10.5.4 Balancing Priorities . . . . . . . . . . . . . . . . . . . . . . . 10.5.5 Short-Term Regulatory Focus . . . . . . . . . . . . . . . . 10.5.6 Capital Projects Discounting . . . . . . . . . . . . . . . . . 10.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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302 302 303 303 304 304

Infrastructure Resilience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1.1 Vulnerability and Resilience . . . . . . . . . . . . . . . . . . . . . . . . 11.1.1 Vulnerability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1.2 Resilience of Systems . . . . . . . . . . . . . . . . . . . . . 11.1.3 Sectors Needing Resilience . . . . . . . . . . . . . . . . . 11.1.4 Definition of Resilience . . . . . . . . . . . . . . . . . . . . 11.1.5 Relationships Between System Capacities, Performance, and Recovery . . . . . . . . . . . . . . . . . 11.1.6 Resilience Enhancement Features and Resilience Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Assessing Infrastructure Resilience . . . . . . . . . . . . . . . . . . . 11.3 Qualitative Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3.1 Risk Analysis Approach . . . . . . . . . . . . . . . . . . . . 11.3.2 Resilience Assessment Approach . . . . . . . . . . . . . 11.4 Quantitative Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4.1 Resilience Efficiency . . . . . . . . . . . . . . . . . . . . . . 11.4.2 Resilience Quality . . . . . . . . . . . . . . . . . . . . . . . . 11.4.3 Effort (Cost) Resilience . . . . . . . . . . . . . . . . . . . . 11.4.4 Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 Using Cost Benefit Analysis for Resilience . . . . . . . . . . . . . 11.5.1 General Principles . . . . . . . . . . . . . . . . . . . . . . . . 11.5.2 The Actors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5.3 CoBAYe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5.4 Resilience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 Case Study: Resilience in a Water Supply Network . . . . . . . 11.6.1 Vulnerability in the System . . . . . . . . . . . . . . . . . 11.6.2 Remedial Measures . . . . . . . . . . . . . . . . . . . . . . . 11.6.3 Resilience Features in the Water Supply System . . 11.6.4 Cost of Providing Resilience . . . . . . . . . . . . . . . . 11.7 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .

305 306 306 306 309 311

. 312 . . . . . . . . . . . . . . . . . . . . . .

313 314 315 315 315 317 317 317 318 320 320 320 323 325 325 326 326 326 327 329 330 331

Disaster Recovery and Management . . . . . . . . . . . . . . . . . . . . . . . . 12.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 Vulnerability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.1 Disaster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.2 Hazard and Risk . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.3 Vulnerability . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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12.3 12.4 12.5 12.6 12.7 12.8

Risks and Their Origin . . . . . . . . . . . . . . . . . . . . . . . . . . . . Factors Influencing Risk Perception . . . . . . . . . . . . . . . . . . . Risk Hazard Classification . . . . . . . . . . . . . . . . . . . . . . . . . Measuring Disasters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk Management Framework . . . . . . . . . . . . . . . . . . . . . . . Before the Disaster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8.1 Prediction Techniques . . . . . . . . . . . . . . . . . . . . . 12.8.2 Monitoring Techniques . . . . . . . . . . . . . . . . . . . . 12.8.3 Warning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8.4 Risk Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8.5 Risk Reduction Strategies . . . . . . . . . . . . . . . . . . . 12.9 Management of Disasters . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9.1 Reducing the Magnitude of the Disaster . . . . . . . . 12.9.2 Time Management . . . . . . . . . . . . . . . . . . . . . . . . 12.9.3 Crisis Management Tools . . . . . . . . . . . . . . . . . . . 12.9.4 Geography of the Crisis Management . . . . . . . . . . 12.10 After the Disaster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.10.1 Assessing the Impacts . . . . . . . . . . . . . . . . . . . . . 12.10.2 Unequal Compensation . . . . . . . . . . . . . . . . . . . . 12.10.3 Reconstruction Principles . . . . . . . . . . . . . . . . . . . 12.11 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

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337 338 338 338 341 341 341 343 343 343 344 347 347 347 348 350 350 350 351 351 352 352

Modelling in Infrastructure Planning . . . . . . . . . . . . . . . . . . . . . . . 13.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1.1 Infrastructure Problems . . . . . . . . . . . . . . . . . . . . . 13.1.2 Basic Rules of Modelling . . . . . . . . . . . . . . . . . . . . 13.1.3 Communication Between Decision Makers and Modellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2 Operations Research Methodology . . . . . . . . . . . . . . . . . . . . 13.2.1 Formulating the Problem . . . . . . . . . . . . . . . . . . . . 13.2.2 Constructing a Model for the Problem . . . . . . . . . . . 13.2.3 Deriving a Solution from the Model . . . . . . . . . . . . 13.2.4 Testing the Model and the Solution Derived from It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2.5 Establishing Controls over the Solution . . . . . . . . . . 13.2.6 Implementing the Solution from the Model . . . . . . . 13.3 Types of Mathematical Models . . . . . . . . . . . . . . . . . . . . . . . 13.3.1 Mathematical Techniques . . . . . . . . . . . . . . . . . . . . 13.3.2 Statistical Techniques . . . . . . . . . . . . . . . . . . . . . . . 13.3.3 Inventory Models . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.4 Allocation Models . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.5 Sequencing Models . . . . . . . . . . . . . . . . . . . . . . . . 13.3.6 Routing Models . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.7 Competitive Models . . . . . . . . . . . . . . . . . . . . . . . . 13.3.8 Queuing Models . . . . . . . . . . . . . . . . . . . . . . . . . .

353 354 354 355 356 357 357 357 358 358 358 359 359 360 360 360 361 362 362 363 363

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13.3.9 Dynamic Programming Models . . . . . . . . . . . . . . . 13.3.10 Simulation Techniques . . . . . . . . . . . . . . . . . . . . . . 13.3.11 Decision Theory . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.12 Replacement Models . . . . . . . . . . . . . . . . . . . . . . . 13.3.13 Heuristic Models . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.14 Goal Programming . . . . . . . . . . . . . . . . . . . . . . . . 13.3.15 Reliability Theory . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.16 Markov Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.17 Combined Methods . . . . . . . . . . . . . . . . . . . . . . . . 13.4 Operations Research in Infrastructure . . . . . . . . . . . . . . . . . . . 13.4.1 Suitability to Infrastructure . . . . . . . . . . . . . . . . . . . 13.4.2 Scope of Operations Research . . . . . . . . . . . . . . . . 13.4.3 Applications of Operations Research . . . . . . . . . . . . 13.5 Advantages and Disadvantages of Modelling . . . . . . . . . . . . . 13.5.1 Advantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.5.2 Difficulties in Operations Research . . . . . . . . . . . . . 13.5.3 Limitations of Operations Research . . . . . . . . . . . . . 13.6 Simulation of Operating a Water Reservoir . . . . . . . . . . . . . . Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

363 364 365 366 366 366 367 367 368 368 368 370 370 373 373 373 373 374 380

Multi Sector/Purpose Infrastructure Planning . . . . . . . . . . . . . . . . 14.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1.1 Multiple Goals and Objectives . . . . . . . . . . . . . . . 14.1.2 Infrastructure Planning . . . . . . . . . . . . . . . . . . . . . 14.1.3 The Role of Modelling . . . . . . . . . . . . . . . . . . . . . 14.2 Descriptive Models of the Planning Process . . . . . . . . . . . . . 14.2.1 The Policy-Making Process . . . . . . . . . . . . . . . . . 14.3 Planning Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.4 Infrastructure Planning Objectives . . . . . . . . . . . . . . . . . . . . 14.4.1 Principles for Infrastructure Planning . . . . . . . . . . 14.4.2 Quantifying Infrastructure Planning Objectives . . . 14.4.3 Mathematical Models for Multiobjective Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5 Trade-Offs and Political Feasibility . . . . . . . . . . . . . . . . . . . 14.6 Formulation of Planning Alternatives . . . . . . . . . . . . . . . . . . 14.7 Plan Selection: The Identification of Politically Feasible Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.7.1 When Preferences Are Certain . . . . . . . . . . . . . . . 14.7.2 STEM, an Iterative Procedure . . . . . . . . . . . . . . . . 14.7.3 When Preferences Are Uncertain . . . . . . . . . . . . . 14.8 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

381 382 382 384 384 385 385 386 387 387 389

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Multi Objective Evaluation Criteria for Infrastructure . . . . . . . . . . 15.1 Multi-criteria Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1.2 Multi-criteria Evaluation Models . . . . . . . . . . . . . . . 15.2 The Simple Additive Weighting (SAW) Model . . . . . . . . . . . 15.3 The Simple Additive Weighting Method in Practice . . . . . . . . 15.4 Sensitivity Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.5 Probabilistic Additive Weighting . . . . . . . . . . . . . . . . . . . . . . 15.5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.5.2 Expected Value . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.5.3 Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.6 Allocating Weights to the Decision Criteria . . . . . . . . . . . . . . 15.6.1 Presumption of Equal Weights . . . . . . . . . . . . . . . . 15.6.2 Ranking System for Obtaining Weights . . . . . . . . . . 15.6.3 Ratio System for Obtaining Weights . . . . . . . . . . . . 15.6.4 Pairwise Comparison Weighting System . . . . . . . . . 15.6.5 The Resistance-to-Change Grid . . . . . . . . . . . . . . . 15.6.6 Hierarchy of Weights . . . . . . . . . . . . . . . . . . . . . . . 15.6.7 Multiple Weighting Systems . . . . . . . . . . . . . . . . . . 15.6.8 Scoring Systems for the Criteria . . . . . . . . . . . . . . . 15.7 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

411 412 412 413 414 416 418 422 422 423 423 427 427 427 429 430 431 433 436 438 439 440

16

Decision Taking with Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . 16.1 Risk Assessment and Management . . . . . . . . . . . . . . . . . . . . 16.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1.2 Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1.3 Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 Decision Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2.1 Steps in Decision Theory Approach . . . . . . . . . . . . 16.3 Decision Making Environments . . . . . . . . . . . . . . . . . . . . . . . 16.4 Decision Making Under Conditions of Certainty . . . . . . . . . . 16.5 Decision Making Under Conditions of Uncertainty . . . . . . . . . 16.5.1 Maximax Criterion . . . . . . . . . . . . . . . . . . . . . . . . 16.5.2 Maximin Criterion . . . . . . . . . . . . . . . . . . . . . . . . . 16.5.3 Minimax Regret Criterion . . . . . . . . . . . . . . . . . . . 16.5.4 Hurwicz Criterion (Criterion of Realism) . . . . . . . . . 16.5.5 Laplace Criterion (Criterion of Rationality) . . . . . . . 16.6 Decision Making Under Conditions of Risk . . . . . . . . . . . . . . 16.6.1 Expected Value Criterion . . . . . . . . . . . . . . . . . . . . 16.6.2 Expected Opportunity Loss (EOL) Criterion . . . . . . 16.6.3 Expected Value of Perfect Information (EVPI) . . . . . 16.6.4 EMV for Items That Have a Salvage Value . . . . . . . 16.6.5 Use of Incremental (Marginal) Analysis . . . . . . . . . 16.6.6 Maximum Likelihood Criterion . . . . . . . . . . . . . . .

441 442 442 442 444 445 445 446 447 447 448 449 449 450 452 454 454 456 459 461 464 466

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16.6.7

Expected Value Criterion for Continuously Distributed Random Variables . . . . . . . . . . . . . . . . 466 Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 17

18

Infrastructure as Public or Private Goods . . . . . . . . . . . . . . . . . . . . 17.1 The Different Kinds of Goods . . . . . . . . . . . . . . . . . . . . . . . . 17.1.1 Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1.2 Excludability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1.3 Rivalrousness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.2 Public Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.2.1 The Free-Rider Problem . . . . . . . . . . . . . . . . . . . . . 17.2.2 Consumption Goods and Capital Goods . . . . . . . . . 17.3 Capital Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3.1 Rival Consumption Good (Bread Example) . . . . . . . 17.3.2 Rival Capital Good (Scrap Steel Example) . . . . . . . 17.3.3 Nonrivalrous Consumption Goods and Nonrivalrous Capital Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4 Social Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4.1 Nonmarket Goods . . . . . . . . . . . . . . . . . . . . . . . . . 17.4.2 Merit Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4.3 Social Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.5 The Relationship Between Social Goods and Externalities . . . 17.6 Societal Demand for Infrastructure . . . . . . . . . . . . . . . . . . . . 17.6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.7 Commercial, Public and Social Infrastructure . . . . . . . . . . . . . 17.7.1 Categories of Infrastructure . . . . . . . . . . . . . . . . . . 17.7.2 Commercial Infrastructure . . . . . . . . . . . . . . . . . . . 17.7.3 Public and Social Infrastructure . . . . . . . . . . . . . . . 17.7.4 How Demand Manifestation Problems Lead to Supply Problems . . . . . . . . . . . . . . . . . . . . . . . . 17.8 Infrastructure Is Dynamic . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8.1 Infrastructure Changes Status . . . . . . . . . . . . . . . . . 17.8.2 The Risk of Misdirected Prioritization, Optimization, or Design . . . . . . . . . . . . . . . . . . . . . 17.8.3 Uncertainty with Infrastructure Resources . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Infrastructure Markets and the Private Sector . . . . . . . . . . . . . . . 18.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.2 Traditional Project Financing . . . . . . . . . . . . . . . . . . . . . . . 18.3 The History of Build, Operate, Transfer . . . . . . . . . . . . . . . . 18.3.1 The First BOT Project in the Modern World: The Suez Canal . . . . . . . . . . . . . . . . . . . . . . . . . . 18.3.2 Lessons from This Example . . . . . . . . . . . . . . . . . 18.3.3 Recent BOT Projects . . . . . . . . . . . . . . . . . . . . . .

. . . .

469 470 470 472 472 474 475 477 478 478 478 479 480 480 481 482 483 484 484 487 487 488 488 490 494 494 496 496 497 499 500 500 501

. 501 . 503 . 503

Contents

18.4

18.5

18.6

18.7 18.8

18.9

18.10

xxvii

Characteristics of BOO – BOT Projects . . . . . . . . . . . . . . . . . 18.4.1 Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.4.2 General Mechanism of BOO – BOT . . . . . . . . . . . . The Advantages of a BOT Offering . . . . . . . . . . . . . . . . . . . . 18.5.1 To the Host Government . . . . . . . . . . . . . . . . . . . . 18.5.2 To the Citizens of the Host Country . . . . . . . . . . . . 18.5.3 To the BOT Consortium . . . . . . . . . . . . . . . . . . . . . BOT Partners Interactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.6.1 Role of the Sponsor/Project Company . . . . . . . . . . . 18.6.2 Role of Host Government/Government Utility . . . . . 18.6.3 Role of Multilaterals . . . . . . . . . . . . . . . . . . . . . . . Implementing a BOT Package . . . . . . . . . . . . . . . . . . . . . . . . Structuring a BOT Financing Package . . . . . . . . . . . . . . . . . . 18.8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.8.2 Financial Viability . . . . . . . . . . . . . . . . . . . . . . . . . 18.8.3 Debt Participants Requirements . . . . . . . . . . . . . . . 18.8.4 Host Government Support . . . . . . . . . . . . . . . . . . . 18.8.5 Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.8.6 Subordinated Loans by Government . . . . . . . . . . . . 18.8.7 Foreign Currency Issues . . . . . . . . . . . . . . . . . . . . . 18.8.8 Transfer to Host Government . . . . . . . . . . . . . . . . . 18.8.9 Earning Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.8.10 Regulatory and Fiscal Issues . . . . . . . . . . . . . . . . . . Analysis of BOT Project Risks . . . . . . . . . . . . . . . . . . . . . . . 18.9.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9.2 Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9.3 Natural Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9.4 Technical Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9.5 Financing Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9.6 Debt Service Risks . . . . . . . . . . . . . . . . . . . . . . . . 18.9.7 Inflation Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9.8 Foreign Exchange Risks . . . . . . . . . . . . . . . . . . . . . 18.9.9 Escrow Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9.10 Political Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9.11 Political Risk Insurance . . . . . . . . . . . . . . . . . . . . . 18.9.12 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9.13 Protection from Competition . . . . . . . . . . . . . . . . . 18.9.14 Operational Risks . . . . . . . . . . . . . . . . . . . . . . . . . 18.9.15 Risk Backstopping . . . . . . . . . . . . . . . . . . . . . . . . . Project Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.10.1 Concession Agreement/Implementation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.10.2 Shareholders Agreement . . . . . . . . . . . . . . . . . . . . 18.10.3 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . .

504 504 505 507 507 507 507 508 508 509 510 511 512 512 513 513 514 515 515 515 516 517 517 518 519 519 519 520 520 520 521 521 522 523 523 523 524 524 524 524 526 526 526

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18.10.4 18.10.5 18.10.6 18.10.7

Sales/Purchase Agreement . . . . . . . . . . . . . . . . . . Supply Agreement . . . . . . . . . . . . . . . . . . . . . . . . Construction Agreement . . . . . . . . . . . . . . . . . . . . Operations and Maintenance (O & M) Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.10.8 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . 18.10.9 Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 18.11 Sectors where BOT May Be Applied . . . . . . . . . . . . . . . . . . 18.12 Applicability of BOT in Mauritius . . . . . . . . . . . . . . . . . . . . 18.12.1 Basic Financial Principle . . . . . . . . . . . . . . . . . . . 18.12.2 Welfare Economics . . . . . . . . . . . . . . . . . . . . . . . 18.12.3 Taxpayer Pays for Better Service . . . . . . . . . . . . . 18.12.4 Hotels – The Foreign Tourist Pays . . . . . . . . . . . . 18.13 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

. 527 . 527 . 528 . . . . . . . . . . .

528 528 529 529 530 530 530 531 532 533 533

Cost Allocation for Infrastructure Implementation . . . . . . . . . . . . . 19.1 The Need for Cost Allocation . . . . . . . . . . . . . . . . . . . . . . . . 19.1.1 Introduction to the BPP Principle . . . . . . . . . . . . . . 19.1.2 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.1.3 Applications of BPP in Infrastructure . . . . . . . . . . . 19.2 Criteria for Cost Allocation Method . . . . . . . . . . . . . . . . . . . . 19.3 Basic Definitions Relating to Cost Allocation . . . . . . . . . . . . . 19.3.1 Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3.2 Function/Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3.3 Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3.4 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3.5 Allocation of Cost . . . . . . . . . . . . . . . . . . . . . . . . . 19.3.6 Alternative Cost . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3.7 Alternative Justifiable Cost (Expenditure) . . . . . . . . 19.3.8 Justifiable Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3.9 Specific (Exclusive) Cost . . . . . . . . . . . . . . . . . . . . 19.3.10 Remaining Alternative Cost . . . . . . . . . . . . . . . . . . 19.3.11 Separable Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3.12 Joint Cost (Common Cost/Distribution Cost) . . . . . . 19.3.13 Remaining Benefit . . . . . . . . . . . . . . . . . . . . . . . . . 19.3.14 Vendibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.4 Basic Principles for Allocation of Cost . . . . . . . . . . . . . . . . . 19.4.1 Basic Components . . . . . . . . . . . . . . . . . . . . . . . . . 19.4.2 Basic Principle of Cost Allocation . . . . . . . . . . . . . 19.4.3 Common Allocation Procedures . . . . . . . . . . . . . . . 19.4.4 Current Cost Allocation Methods . . . . . . . . . . . . . . 19.5 Brief Description of Each Method . . . . . . . . . . . . . . . . . . . . . 19.5.1 Alternative Cost Method . . . . . . . . . . . . . . . . . . . .

535 536 536 537 537 538 540 540 540 540 540 541 541 541 541 542 542 542 543 544 544 544 544 544 545 545 546 546

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19.5.2

Alternative Justifiable Cost Method (AJC Method) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5.3 Bearability Concept . . . . . . . . . . . . . . . . . . . . . . . . 19.5.4 Benefits Methods . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5.5 Ceiling Allocation (or Priority of Use) Method . . . . 19.5.6 Equal Apportionment Method . . . . . . . . . . . . . . . . . 19.5.7 Separable Costs – Remaining Benefit Method (SCRB Method) . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5.8 Use of Facilities Method . . . . . . . . . . . . . . . . . . . . 19.5.9 Vendibility Method . . . . . . . . . . . . . . . . . . . . . . . . 19.5.10 Apportioning Joint Cost . . . . . . . . . . . . . . . . . . . . . 19.5.11 Suitability of the Various Methods . . . . . . . . . . . . . 19.6 Allocation Mechanisms Commonly Used . . . . . . . . . . . . . . . . 19.6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.6.2 The SCRB Method . . . . . . . . . . . . . . . . . . . . . . . . 19.6.3 The Alternative Justifiable Expenditure Method (AJE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.6.4 The Use-of-Facilities (UoF) Method . . . . . . . . . . . . 19.7 Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.8 Precautions – Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Human Resources Management for Infrastructure . . . . . . . . . . . . 20.1 Infrastructure and Its Design Requirements . . . . . . . . . . . . . 20.1.1 Nature and Characteristics of Failure . . . . . . . . . . . 20.1.2 Critical and Degraded Failures . . . . . . . . . . . . . . . 20.1.3 Evident Failures . . . . . . . . . . . . . . . . . . . . . . . . . 20.1.4 Hidden Failures . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1.5 Incipient Failures . . . . . . . . . . . . . . . . . . . . . . . . . 20.1.6 Incipiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1.7 Limits to the Application of Condition Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1.8 Desirable Infrastructure Design Quality . . . . . . . . . 20.2 Infrastructure and its Operation Requirements . . . . . . . . . . . 20.2.1 The Operating Conditions . . . . . . . . . . . . . . . . . . 20.2.2 The Feedback Control Model . . . . . . . . . . . . . . . . 20.2.3 Life Without Failure . . . . . . . . . . . . . . . . . . . . . . 20.2.4 Capability and Expectation . . . . . . . . . . . . . . . . . . 20.2.5 Human Failures . . . . . . . . . . . . . . . . . . . . . . . . . . 20.3 Infrastructure and its Maintenance Requirements . . . . . . . . . 20.3.1 Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.3.2 Types of Maintenance . . . . . . . . . . . . . . . . . . . . . 20.3.3 The Need for Maintenance . . . . . . . . . . . . . . . . . . 20.4 Human Resources Availability . . . . . . . . . . . . . . . . . . . . . . 20.4.1 Four Kinds of People . . . . . . . . . . . . . . . . . . . . . .

546 546 546 547 547 547 548 548 549 549 551 551 551 552 553 553 554 561

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563 564 564 564 565 565 566 566

. . . . . . . . . . . . . .

570 570 571 571 572 572 573 575 578 578 578 580 583 583

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21

Contents

20.4.2 Skills Required . . . . . . . . . . . . . . . . . . . . . . . . . . 20.4.3 Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5 Manpower Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5.1 Maintenance Skills Facts . . . . . . . . . . . . . . . . . . . 20.5.2 Steps to a Successful Training Programme . . . . . . 20.5.3 How to Get the Training an Organization Needs . . 20.6 Human Resources Management for Infrastructure . . . . . . . . . 20.6.1 Managerial Power and Politics . . . . . . . . . . . . . . . 20.6.2 What Does Human Resource Management (HRM) Do? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6.3 Quality Circles . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6.4 Service Delivery . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . .

584 586 587 587 587 587 589 589

. . . .

591 591 592 592

Quality of Infrastructure Service Delivery . . . . . . . . . . . . . . . . . . . 21.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1.1 Customer Service from Infrastructure Services . . . . 21.1.2 Examples of Infrastructure . . . . . . . . . . . . . . . . . . 21.2 Customer Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2.1 Apollo Hospital, Mauritius . . . . . . . . . . . . . . . . . . 21.2.2 Victoria Hospital, Mauritius (Anecdote 1) . . . . . . . 21.2.3 Victoria Hospital, Mauritius (Anecdote 2) . . . . . . . 21.2.4 Clinic in Cape Town, South Africa . . . . . . . . . . . . 21.2.5 Hospital in Paris, France . . . . . . . . . . . . . . . . . . . 21.2.6 Hospital in Toulouse, France . . . . . . . . . . . . . . . . 21.2.7 Customs – Airport 27 August 2017 . . . . . . . . . . . . 21.2.8 New Road to Plaisance Airport, Mauritius . . . . . . . 21.3 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3.1 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3.2 Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3.3 Service Quality . . . . . . . . . . . . . . . . . . . . . . . . . . 21.4 Customer Perception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.4.1 Customer Expectations . . . . . . . . . . . . . . . . . . . . . 21.4.2 Word of Mouth Communications . . . . . . . . . . . . . 21.4.3 Personal Needs . . . . . . . . . . . . . . . . . . . . . . . . . . 21.4.4 Past Experience . . . . . . . . . . . . . . . . . . . . . . . . . . 21.4.5 External Communications . . . . . . . . . . . . . . . . . . 21.5 Characteristics of Services . . . . . . . . . . . . . . . . . . . . . . . . . 21.6 The SERVQUAL Model . . . . . . . . . . . . . . . . . . . . . . . . . . 21.6.1 The SERVQUAL Model . . . . . . . . . . . . . . . . . . . 21.6.2 Deficiencies Highlighted by the Model . . . . . . . . . 21.6.3 Expectancy Pattern . . . . . . . . . . . . . . . . . . . . . . . 21.6.4 Service Quality Determinants . . . . . . . . . . . . . . . . 21.7 The RATER Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.7.1 The RATER Model . . . . . . . . . . . . . . . . . . . . . . . 21.7.2 Understanding the RATER Metrics . . . . . . . . . . . .

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595 596 596 597 597 597 597 599 599 599 600 601 601 602 602 602 602 603 603 604 604 604 604 605 606 606 606 607 608 608 608 609

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21.8

The GAP Model of Service Quality . . . . . . . . . . . . . . . . . . . 21.8.1 The GAP Model of Service Quality . . . . . . . . . . . 21.8.2 Knowledge Gap . . . . . . . . . . . . . . . . . . . . . . . . . . 21.8.3 Standards or Policy Gap . . . . . . . . . . . . . . . . . . . . 21.8.4 Delivery Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.8.5 Communications Gap . . . . . . . . . . . . . . . . . . . . . . 21.8.6 Satisfaction Gap . . . . . . . . . . . . . . . . . . . . . . . . . 21.8.7 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.9 Quality Service in the Public Sector . . . . . . . . . . . . . . . . . . . 21.10 Satisfying the Customer . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.11 Cost Recovery as a Method to Improve Customer Service . . . 21.12 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .

611 611 612 612 613 613 614 614 614 615 615 618 618

Infrastructure Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1 Examples of Project Implementation . . . . . . . . . . . . . . . . . . 22.1.1 Taj Mahal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1.2 The Great Pyramid . . . . . . . . . . . . . . . . . . . . . . . 22.1.3 The Space Race . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1.4 Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.2 What Is a Project? What Is Management? . . . . . . . . . . . . . . 22.2.1 Project Definition . . . . . . . . . . . . . . . . . . . . . . . . 22.2.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.2.3 Parties to the Project . . . . . . . . . . . . . . . . . . . . . . 22.3 Project Inspiration and Implementation . . . . . . . . . . . . . . . . 22.3.1 Project Inspiration . . . . . . . . . . . . . . . . . . . . . . . . 22.3.2 Appraisal by Client . . . . . . . . . . . . . . . . . . . . . . . 22.3.3 Appraisal (Review) by Third Party . . . . . . . . . . . . 22.4 The Project Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.4.1 Identification and Definition . . . . . . . . . . . . . . . . . 22.4.2 Preparation and Formulation . . . . . . . . . . . . . . . . . 22.4.3 Appraisal and Funding . . . . . . . . . . . . . . . . . . . . . 22.4.4 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . 22.4.5 Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.5 Project or No Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.5.1 Without Project State . . . . . . . . . . . . . . . . . . . . . . 22.5.2 With Project State . . . . . . . . . . . . . . . . . . . . . . . . 22.5.3 Without and With Project Comparison . . . . . . . . . 22.6 Project Management in Theory . . . . . . . . . . . . . . . . . . . . . . 22.6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.6.2 The Project Management Cycle . . . . . . . . . . . . . . 22.7 Project Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.7.1 Promoter’s Intention . . . . . . . . . . . . . . . . . . . . . . 22.7.2 Establishment of Requirements . . . . . . . . . . . . . . . 22.7.3 Investigations by the Consultant . . . . . . . . . . . . . .

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22.7.4 Outline Programme . . . . . . . . . . . . . . . . . . . . . . . . 22.7.5 Estimates of Cost . . . . . . . . . . . . . . . . . . . . . . . . . . 22.7.6 Consultant’s Report or Feasibility Study . . . . . . . . . 22.7.7 Presentation to Promoter . . . . . . . . . . . . . . . . . . . . 22.7.8 Form of Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.7.9 Decision to Proceed With the Project . . . . . . . . . . . 22.8 Project Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.8.1 Appointment of Contractor . . . . . . . . . . . . . . . . . . . 22.8.2 Appointment of Consultant . . . . . . . . . . . . . . . . . . . 22.8.3 Best Value at Budget Price . . . . . . . . . . . . . . . . . . . 22.8.4 Best Value With Weightage . . . . . . . . . . . . . . . . . . 22.8.5 Project Supervision . . . . . . . . . . . . . . . . . . . . . . . . 22.8.6 Operation and Management . . . . . . . . . . . . . . . . . . 22.9 Project Management in Practice . . . . . . . . . . . . . . . . . . . . . . 22.9.1 Scope of Management . . . . . . . . . . . . . . . . . . . . . . 22.9.2 Project Within Project . . . . . . . . . . . . . . . . . . . . . . 22.9.3 Management Limitations . . . . . . . . . . . . . . . . . . . . 22.10 The Project Management Cycle Re-visited . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

639 639 639 640 640 641 641 641 642 643 643 645 645 646 646 646 647 647 649

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 667

Chapter 1

Introduction to Infrastructure

I consulted several things in my situation, which I found would be proper for me: first, health and fresh water I just now mentioned; secondly, shelter from the heat of the sun; thirdly, security from ravenous creatures, whether man or beast; fourthly, a view to the sea, that if God sent any ship in sight, I might not lose any advantage for my deliverance, of which I was not willing to banish all my expectation yet. Daniel Defoe (Robinson Crusoe) There is a tide in the affairs of men. Which, taken at the flood, leads on to fortune; Omitted, all the voyage of their life Is bound in shallows and in miseries. William Shakespeare (Julius Caesar Act 4, scene 3, 218–221) A rising tide doesn't raise people who don't have a boat. We have to build the boat for them. We have to give them the basic infrastructure to rise with the tide. Rahul Gandhi (former Prime Minister of India) Water, water, everywhere, Nor any drop to drink. Samuel Taylor Coleridge (The Rime of the Ancient Mariner) . . .infrastructure might not be a sexy word, but it’s on practically everyone’s lips. . .it’s not just a business issue; it’s a family issue. And it’s a political issue, a leadership issue, not just an engineering issue. Rosabeth Moss Kanter (Move)

This chapter introduces infrastructure, its definition and its benefits. The importance of infrastructure arises not for its own sake, but rather for the services it provides directly to users, or to other infrastructure. For example, electricity is used by consumers and for transport. Thus, infrastructure needs providers, users and may be interconnected. They may also create externalities, such as pollution. Apart © Springer Nature Switzerland AG 2021 V. Proag, Infrastructure Planning and Management: An Integrated Approach, https://doi.org/10.1007/978-3-030-48559-7_1

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1 Introduction to Infrastructure

technical infrastructure, as is currently understood, an exposition of other types of infrastructure – environmental, economical, social, just to name a few – are explained. Many people can manage without electricity, but nobody can live without water. This explains the notion of critical infrastructure, for which it is essential to consider better reliability and availability.

1.1 1.1.1

Infrastructure Problems of Infrastructure

Robinson Crusoe’s problem was to find food and shelter, security and how to communicate – with his servant Friday and the outside world. In modern times, similar problems not only still exist, but have considerably increased. A small hamlet may accommodate a few people living close together, but the village has more problems calling for more solutions. How to communicate among each other in order to bring food, water from the source (or storage area, depot) to the end of the village. Other amenities are not different, for it would be equitable to make these accessible to one and all.

1.1.2

Definition of Infrastructure

A first appearance of the term infrastructure appears in the late 1880s in France, but was subsequently used in America in 1927 to designate the complex linkages of waterways, roadways, and communication networks assisting military organisation in the United States (Bowker 2018). It is not very easy to give a definition to the word infrastructure. Structure comes from the latin word struere meaning assembly, whereas infra means below. Structure could be defined as the organisation of the elements of a complex system into a coherent and permanent form. This expression is general enough to cater for the architectural, economical, philosophical and public works viewpoints. Superstructure is anything that rests on a base. It is a word that is commonly used in marine terminology meaning the construction resting above the deck. From the philosophical point of view, it is the political system (State) and the ideological system (judicial, education, cultural, religious), resting on a given economic platform, or infrastructure. This enables defining infrastructure as the means and forces of production which are necessary for social development. In more practical terms, all the works necessary for the development of a community would constitute infrastructure. However, the works – although necessary – are important, not because of their physical form or appearance, but because they provide or facilitate the provision of services to users and decision makers. This creates multiple and complex linkages of infrastructure to

1.1 Infrastructure

3

the economy because there are externalities (spillover effects – both positive and negative) involving huge expenditure flows. The economic development of a country depends heavily on the availability of adequate infrastructure facilities. (An externality is the benefit or cost that results on a third party when someone else takes an action. More in Chaps. 2 and 17.) For example, to attract tourists and provide them with a satisfying experience on which long-term, profitable business can be built, construction of suitable accommodation, restaurants and passenger transport terminals at the resorts is necessary. In addition, there must be a sufficiency of essential and basic services: roads, and transportation, water, electricity, sewerage disposal systems harbours, airports serving both the local residents and visitors. As governments seem to be well aware of this, most of them have invested heavily in such sectors, apart from providing education and training, health and empowerment of disadvantaged groups. Thus, the complex interaction and operation among human, economic, technical systems and the environment comprise the network of infrastructure services for which Hall et al. (2016) identify (a) suppliers (b) customers and (c) externalities. (a) suppliers comprise the public and private sectors which implement, and operate the physical facilities together with the relevant manpower. (b) customers consist of individuals and households, who need these services for their welfare, government and businesses, which run their organisations with the support of these services. (c) externalities to the supplier-customer connection are the various impacts (e.g. positive – shorter trips benefitting people and negative side-effects such as pollution of the environment) resulting from the implementation of such infrastructure services (more in Chaps. 2 and 17). Between source and destination, there are many ways of providing infrastructure services – conversion or treatment, storage and conveyance. As there is no precise distinction between these categories (e.g. gas and water pipelines provide both storage and conveyance), Hall et al. (2016) gives following definition: An infrastructure service operates physical facilities and ancillary human organisations to transform, store and convey (physical and virtual) resources so as to provide an option for an activity. Among other things, the resources in the above definition include freight, passengers, water, waste products, various types of energy carriers, and information (data). But, much will depend on the relevant infrastructure service, More will be explained later on the nature of “systems” in Chap. 6. For the time being, given the way infrastructure services and the associated processes for their provision, (mechanical, human, communications systems controlling the physical operation of actual infrastructure facilities), it is fitting to provide a definition of infrastructure systems: An infrastructure system provides a particular infrastructure service through the assembly, interlinking, and coordinated operation of the relevant physical facilities and human systems required.

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1 Introduction to Infrastructure

Of course, any country has a network of infrastructure services: electricity and water, to name just two of them. If each network form a “system”, then it should be easy to understand how any National Infrastructure is a system of-systems of infrastructures. These systems are integral to the proper functioning of modern economies, but also face a number of serious challenges. This is further developed in Chap. 6.

1.2

Examples of Infrastructure

By and large, infrastructure can be classified into several main categories (see Table 1.1) which are discussed below. Fig. 1.1 shows a pictorial view of infrastructure assets.

1.2.1

Agriculture

Agriculture provides the means to produce food, as a basic requirement for life. Man has learnt to cultivate the necessary plants, with or without irrigation, depending on the circumstances. In many countries, it is not possible to cultivate crops successfully without irrigation. A cash crop or profit crop is grown for sale and is typically purchased by parties distinct from an or not owning farm. Sometimes a fast-growing crop (catch crop) is planted between rows of a main crop. Thus, potatoes which take 70–120 days, tomatoes (75–90 days), beans (45–60 days), radishes (25–30 days), to mature, can be grown between rows of sugar cane and harvested before the main crop (sugar cane) matures. This practice allows more efficient use of land. Without irrigation, the average yield per hectare can be very low, while irrigation facilities can considerably increase the yield per hectare. This can contribute significantly to the national economy and to the country’s food security. However, irrigation expansion can place a greater demand on surface and ground water resources, at the expense of other sectors such as the industrial and the domestic supply. An important side issue might be to ask what if the irrigation system does not pay for itself by the extra yields obtained with irrigation. Sometimes, subsidizing water and electricity for irrigation for political reasons, may lead to wasteful use, rather than more optimal practices. It is almost a truism that all planters (farmers) would like to get irrigation water for free. Most irrigation departments, have limited revenues and budgetary support, and therefore find it difficult to operate and maintain the efficiency of irrigation systems, thereby leading to further temporal deterioration of the ageing structures and systems.

1.2 Examples of Infrastructure

5

Table 1.1 Different categories of infrastructure in a country Category Agriculture Buildings

Communication

Education Energy

Health

Housing Industry Recreation

Tourism Transportation

Waste Management Water Wastewater

Details Different crops cultivated Irrigation systems Materials Public and private buildings (hospitals, fire stations, prisons, schools, government offices, police stations, car park structures) Other buildings (public, residential, commercial, multipurpose complexes) Public and private housing facilities Industrial, manufacturing, warehousing and supply chain facilities Telecommunication networks (land telephone/optic fibre networks, telephone exchange stations, transmission towers) Cable television networks Wireless/satellite networks Information technology (IT) infrastructure networks: (cable distribution, computer networks, backup and recording mediums, cloud computing infrastructure). Postal and Shipping Primary and secondary schools, universities, other training institutions Hydroelectric plants (turbines, penstock, surge tower) Thermal plants (gas, oil, coal fuelled power generation), nuclear Gas pipelines (gas production at landfills, storage tanks) Petroleum/oil distribution (pumping stations, truck/pipe transport, storage tanks) Renewable energy (infrastructure for solar power, wind power, biofuels) Electric power distribution grid networks Public and private health facilities (hospitals, clinics) Teaching and Research hospitals Private nursing homes Houses, apartments Factories, equipment, logistics Parks and playgrounds, recreational facilities, swimming pools, picnic areas National monuments and Icons Lake and water sports, fishing facilities Theme parks, restaurants, security facilities, casinos Hotels, transport and recreation facilities (fun parks, safari tours, ecotourism) Vehicles, bridges and tunnels, access roads. parking areas Airports, helipads, air traffic control, ground facilities, Seaports, dry docks Mass transit (monorail, trams, bus, platforms, stations) Solid waste (transport, landfills, transfer stations, recycling facilities) Hazardous waste (transport, storage facilities, treatment plants, security) Nuclear/radioactive waste (transport, storage facilities, security) Water supply (pumping stations, treatment plants, service reservoirs, trunk mains, boreholes, mechanical/electrical equipment) Structures (weirs, dams, impounding reservoirs, tunnels, aqueducts) Irrigation water distribution (rivers, canals, weirs, gates) Sewerage (sewerage pipes, septic tanks, treatment plants) Stormwater drains (roadside gutters and drains, canals)

Adapted from Proag (2010)

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1 Introduction to Infrastructure Category Agriculture

Details

Category Industry

Buildings

Recreaon

Communicaon

Tourism

Educaon

Transportaon

Details

Energy

Health

Waste Management

Housing

Water Wastewater

Fig. 1.1 Categories of infrastructure assets

Water supplies for irrigation can be obtained from three sources: 1. Directly from river flow by diversion canals. 2. Storage of flood-waters (rivers and rain water). 3. From water underground through boreholes. The availability of supplies from these three sources varies in different parts of the country, according to physical presence and the cost of exploiting them. However, two criteria need to be met before irrigation can be practised: (1) an adequately large availability of water of the proper quality; this requires the right (geology, water supply, topography, etc.) conditions an impounding reservoir, and (2) distributing the water economically through proper pipes and canals to the cultivated area. Water passing through hydro turbines usually go back to the same river course from which it was abstracted – it is then sometimes possible for the same water to be used several times, depending on topography, for several generating stations to operate along the same river – or sometimes diverted to another river valley, at a level lower than the exiting tail race water. In other cases, suitable water works combinations provide that the exiting tail race water is used for say, irrigation or domestic water supply. To summarise, the whole problem lies in proposing development schemes which can consider the following parameters: (a) the extra production and yield obtainable from new crops and methods;

1.2 Examples of Infrastructure

7

(b) how to market the extra production and yield; (c) what extra capital, new equipment and other supplies, e.g. fertiliser, are now required with the new techniques; (d) the new organisation logistics required; (e) how to disseminate the new techniques and convincing farmers to change their old habits into new ones; (f) the resulting modifications in social organisation and land tenure; (g) how to adapt the plan to the different local area conditions, so that it becomes a network of inter-locking plans. Of course, time is a very crucial factor in agriculture, in contrast to other economic sectors because of the following reasons: (1) the physical time needed for any improvement to manifest itself significantly. (2) the psychological time required for farmers to understand and practise a new technique. (3) the time required to bring in new materials, fertiliser, suitable seeds, etc. (4) the time taken by consumers to accept and purchase new products. (5) the time required to recruit staff members to engage in skilled research and dissemination. It is necessary for advisory staff not to be only to be familiar with the new techniques, but also be knowledgeable in teaching and winning the co-operation of the farmers. Otherwise, the whole plan may fail to achieve its aims. The above indicate the introduction of a time lag between the concept and the implementation and/or the results.

1.2.2

Buildings

“Buildings, buildings, everywhere, Nor any chair to sit down anywhere.” is probably what Coleridge might say. It is a fact that buildings are needed for most uses, such as: • Public buildings (government offices, hospitals, police stations, schools, fire stations, parking structures, prisons). • Other buildings (public, residential, commercial, multipurpose complexes). • Public and private housing facilities. • Industrial, manufacturing, warehousing and supply chain facilities. Even supplying water or electricity warrants buildings to house pumping plants or generators, among other needs. Different buildings may require different materials for their different properties or advantages with respect to the uses required of them. The location of industrial areas may depend on the land area available, transport facilities, and certainly on the type of industries involved. This, in turn, affects the

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type of buildings to be constructed, whose layout will affect other services such as roads, drainage, water and electricity supply. Some administrative offices have to be frequented by numerous members of the public seeking to secure permits, to pay taxes etc. Other offices include public works planning, purchasing, educational organisation, higher law courts, etc. The buildings should therefore be properly located to allow easy access. In a way, the town centre determines where residential housing will be conveniently located, as well as work places, some of which will probably be far from the town centre. If the land is organised into convenient school units, with roads and paths conveniently placed to collect children, at the different schools, primary and secondary. From a safety point of view, children commuting to school should not have to cross major roads unless they can do so safely, and conveniently. Thus, small land areas separated by a main road may not be suitable for residential buildings. Furthermore, optimum school size and maximum walking distances, dictate the approximate catchment area for a single primary school and probably exert a more powerful influence on the layout than is the requirement for conveniently sited shops. If construction of buildings near each other is indiscriminately allowed, the results can be (i) (ii) (iii) (iv)

dangerous, unhealthy, disagreeable, and a cause of congested traffic.

Conversely, each individual site owner might feel that any necessary space should be taken care of the neighbour rather than by himself. As owners of small dwellings are often unaware of possible resulting bad conditions, the planning authority should enforce minimum rules about: (a) setback (if required) from the street, (b) loading and unloading facilities within the building’s boundary or compound, (c) distance of the building from other buildings and from the boundary of its plot. This last criterion may, of course, allow some possibility of building contiguity to enable continuous development of the street frontage. The distances prescribed will be affected by different considerations, such as fire prevention, fire-fighting and ventilation, etc. Building height (see also Chap. 3) is important for different reasons: 1. it affects density, the number of people visiting the building and the volume of traffic connected to the building; 2. it influences the lighting (natural and artificial) of other buildings; 3. it influences the structural details, preventing collapse, of other buildings, as well; 4. it affects the fire-fighting problem.

1.2 Examples of Infrastructure

9

Many local factors, such as climate, the type of construction to be used in each building, local habits etc., will influence the standards. The main point, however, is the specific purpose behind every regulation – which each relevant official can convincingly explain to members of the public, because he understands it. These detailed regulations will be applicable either to all buildings or to buildings of certain categories, for example, to all houses or all shops. These regulations should, thus, be very clearly drafted and distributed freely to public members considering the planning or construction of a new building. Of course, the authorities should not prescribe such standards unless they do examine all plans for new buildings to check their compliance with the standards, and can inspect the buildings during construction to compare adherence to the approved plans.

1.2.3

Communication and Telecommunications

The postal system together with broadcasting services form part of the most extensive networks in the world. The postal system currently provides several services, inter alia: (a) (b) (c) (d) (e)

transportation (letters, parcels, postcards, newspapers), money order services (mandat poste, money orders etc.), banking services (deposits, withdrawals, life insurance), agency services (payment of several types of bills), courrier services (fast delivery service of letters, parcels).

Tariffs for such services were formerly fixed using social considerations. In many countries, the public sector had, until recently, the monopoly of the telecommunications sector. Given the very often poor quality of services provided by public sector, and an associated high cost, the introduction of competition has gradually improved service quality, increased capacity, and allowed using new technology, such as IT (Information Technology). The result has been improved communications and a significant impact on the economy. The last 25 years has brought an overall transformation in the telecommunications sector. The quality and range of services available have greatly improved through technological advances. New developments in information technology, such as data communication through e-mail and associated services through the internet, television broadcasting through satellites, cell phone and other communication possibilities have introduced new ways for people to conduct business and communicate. Of course, a country can only benefit from the telecommunications network transformation if it keeps in touch with the technological development. However, being able to access or acquire data at will is one thing. Interpreting the information before integrating the data usefully into the country’s industrial structure is another: this depends on the thinking abilities of the individuals – to be addressed under education – accessing the data. In many industries (textile, garment, toy and

10

1 Introduction to Infrastructure

consumer electronics), countries have increased their competitiveness because they were able to obtain prompt information about demand trends or price movements, due to close and rapid links between the foreign markets and local production. Service industries such as banking, trading, retailing, transportation, maintenance, and insurance can equally benefit when high speed information and realtime communication are available throughout the production process. Several countries have increased their competitiveness through a reduction of their service costs, thus entailing a higher efficiency of their financial markets and their economic system are reduced through shorter time. As shown above, all activities (agriculture, industry, trade and commerce) become more productive. A few decades ago, communication between two persons A and B consisted in person A writing a letter to person B, who after receiving it 1 week later would reply to person A through the same postal service. Telephoning was expensive, if existent. Nowadays, information technology has enhanced human welfare by allowing cheap modes of communication (internet, live/video telephony) between families, friends and acquaintances. A rapid growth in this sector is probably essential for developing countries through a proper policy. In most countries, a consumer can, using a telephone, fax machine, or personal computer linked to the Internet, place an order for goods with Amazon, etc., and have the articles delivered by DHL, and charge the purchase to a credit card. The same consumer may also contact (fax, phone, email) any number of financial institutions 24 hours a day, transfer money from anywhere to anywhere, in order to avoid the artificially low interest rates which may have been imposed by the government. Twenty years ago this would have been unthinkable. For Nintendo kids, this will be a normal part of everyday life. Can a country afford to lag behind in the telecommunications sector? However, the country needs to develop security of telecom infrastructure and cyber security, as this represents an important vulnerable link in the communication sector. in particular are escalating. Appropriate arrangements for co-ordination among several agencies may be required if they the new and emerging challenges are to be met.

1.2.4

Education

Poor countries cannot spend as much as rich countries for the education of children. Therefore, priorities both for quality and quantity have to be established. In poor countries, the cost of education is higher because: (1) with higher birth rates, there are more children in schools. (2) educated people being relatively scarce, the ratio of a teacher’s salary to per capita national income is much higher in poor countries (Lewis 1966).

1.2 Examples of Infrastructure

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The strategy is to estimate the demand for skills, and to try to train at least as many people as are required to meet the demand for places with different levels of education. However, even when there is a high proportion of high school and university graduates, there seems to be a lack of technically skilled people (workers, technicians, agricultural assistants, nurses, teachers, competent secretaries and supervisors) or professionals such as engineers, scientists, agronomists and doctors. Both apprenticeship facilities and in-service training are required. Estimating the demand for skills is not easy; this will give a minimum number to be trained should production go on as expected. However, as soon as the market situation changes (often seasonally, or depending on overseas markets and fashion), some trained people might still find themselves unemployed, or there is a still further demand for such training in another field. One solution would be to train people to be multi-disciplinary or slightly versatile. People go for courses where they expect higher salaries, but whatever expectations potential employees might have, the employers will try to use the lowest qualifications suitable for the job. It is also possible that employers would recruit secondary school graduates for jobs as sales clerks instead of primary school graduates, simply because the economy so dictates. The tendency to go to higher qualifications for a particular job resides partly on the lack of thinking skills displayed by those coming out of the modern education system. Fifty years ago, the photocopying machine was barely available. There was no internet. Any student trying to write an essay would first consult encyclopedias, then take some notes (normally too lazy, or it is too tedious to copy verbatim) on the essay subject. With those notes in hand, the student would then sift through the ideas to write a presentable essay. This process, did force the student to think about the essay title, among providing other skills. Today, the internet – making information available at a mouse click – has killed such possibilities. Employers believe, rightly or wrongly, that those students with higher qualifications have better thinking skills. It is therefore important to keep track of thinking skills or data interpretation as an important component of the education system, in particular if there is an emphasis towards ICT development in the country.

1.2.5

Energy and Power

In physics, it is learnt that energy is related to power through the time the latter is available. In the real world, these two topic subjects are so close that it is difficult to separate them. Most materials useable as fuel on a large scale are useable to produce power, while other forms of power such as electricity, are useable for heat production. Primitive fuels such as dung and brushwood are not plentiful enough to be used on a large scale. However, for national development, power is vital for both industry and transport. In industry, electricity dominates, while transport relies more on

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petroleum products for power. Of course, other forms of heat and power are sometimes required by some industries require, but generally speaking, however, electricity is fast becoming the versatile source. Power supply is influenced by the country’s physical endowments (gas, water, coal, oil, etc). If there is a shortage of power resources in one region, it may be possible to mitigate the lack thereof from other regions; however, if the country, itself, does not have such resources, importing resources (such as oil, gas, or coal) to produce power will definitely affect the country’s planning (both national and regional). The planning, or more specifically the programming, of power development should take place before any development at all in other sectors, is considered. Industrial development can only take place after the necessary and relevant power supplies are made available. No firm or industry investor, whether private or public would be convinced by vague promises about power being made available. The business investor may consider investing in his own power source or generator (see also Chap. 9 on Reliability), because he cannot have an undue dependence on outside or national sources unless he is given a firm guarantee of what kind of infrastructure will be available and when. The distance between the power source and the point of use influences the cost of power at that particular point. The cost of transmitting power was formerly so huge that the power source and the point of use needed to be practically identical. However, since electricity has been widely available, the equation has changed, given that electricity can be cheaply transmitted and the transmission costs are often negligible compared to other parameters. As energy consumption depends on population growth and economic development, the energy policy of the country must consider the following issues: 1. Transport infrastructure depends on fuels for transport (petrol, diesel and electricity), which should be available at competitive prices. 2. Reasonable prices for electricity, and clean cooking fuels for households. Their needs for an affordable and adequate supply are growing. This will help avoiding indoor air pollution and collecting fuel wood. 3. The demand for fossil fuels, compared to import requirements of gas, crude oil, and petroleum products. 4. Adopting clean fuels and clean technologies will entail positive environmental impacts (indoor, urban and regional). 5. Social costs of different fuels as reflected by prices, subsidies, taxes and transportation costs of each. Unfortunately, the above considerations are usually conflicting, thus requiring trade-offs. The different sectors: agriculture, business, households, industry, transport have increasing demands, which present a challenge to satisfy, solely, by cheap and clean electricity. Some governments try to provide a convenient lifeline water supply to the poor, going to the extent of providing it for free. Is it possible to do the same thing for

1.2 Examples of Infrastructure

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energy on the basis that this is also critical for their welfare? Side question: is it a good practice to provide such free infrastructure services? It is possible to improve energy efficiency in a country through different measures: (a) (b) (c) (d) (e)

auditing the large consumers, comparing with other users to find more efficient practices, using energy ratings and implementing their use for consumers’ equipment, encouraging high energy consumers to adopt higher efficiency practices, providing incentives for energy efficiency in buildings. Procurement policies should work on two fronts:

• Encourage consumers to buy energy efficient products – with relevant labelling, • Use life cycle costs, rather than initial costs only, to purchase equipment.

1.2.6

Health

Governments spend money on the health system because this is important in three ways: (1) the number of working man-hours is increased, (2) the quality of work gets improved with healthier employees, (3) when uninhabitable areas are cleared, natural resources which would not otherwise be used, may be harnessed. Preventive public health policies or programmes can help more than curative medicine. The death rate has decreased drastically over the last centuries because the main killers have been wiped out at relatively small cost, using the services of only a handful of doctors, engineers either by improvements in the water supply – which have curbed cholera, typhoid and dysentery – or by environmental sanitation – which has materially reduced the incidence of malaria, yellow fever and tuberculosis – or by vaccination – which has nearly eliminated smallpox, diphtheria and poliomyelitis. A country needs a minimum number of doctors to provide a good public health service. Beyond this number, extra doctors add to the comfort and convenience of patients, but do not add a great deal to health. Most Governments realise the productivity of expenditure on public health. The debate, however, relates to the expenditure on curative medicine, especially on hospitals and on clinics. This part of the medical service is also the most visible to the public, who might want more of it. Unfortunately, it also costs most, and has a low productivity. Although we might judge infrastructure (or its services) only in terms of productivity, people value health for its own sake, as they value consumer goods. Good health is valueless: people will often mortgage all they possess (e.g. go for expensive

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surgery) in search of better health; they buy medical attention even when it does not bring health, and so spend much money on the chronically ill, including those who will never again be able to work. If a Government is trying to give people what they want, it seems wise to think that they want health more than they want anything else. In the light of the COVID19 pandemic prevailing in 2020, how many people felt the lack of proper and adequate infrastructure?

1.2.7

Housing

Shelter is an essential component of human survival. Shortage of shelter is a universal phenomenon faced by majority of countries and particularly the developing nations. More often than not, however, it is perceived more as an urban problem. However, the magnitude of the housing shortage in rural areas is enormous. As long back as 1948, the United Nations recognised housing as a basic human right. A roof over one’s head is an important personal asset which enhances one’s physical comfort and mental well-being. However, governments’ intended policies and achievements in this field provide cause for much frustration. The cost of building houses probably is an important cause of the difficulty: how to build an acceptable house or apartment (wood, brick or cement) for urban working class family at a cost of less than Rs. 500,000, without the land. The annual cost of such a house is about Rs. 50,000. If a worker paid 10 per cent of his income in rent, he would need an income of Rs. 500,000 a year. Even if he paid 20 per cent he would need to earn Rs. 250,000 a year. And the percentage of workers who earn Rs. 250,000 a year in developing or third world countries is small. Is it possible for the Government to build houses for the poor or should it encourage private persons to build houses, whether for owner-occupation or for rent? If the Government cannot subsidise houses, but insists that people live in expensive and unaffordable houses, then the housing problem becomes insoluble. There should be more emphasis on the environment rather than on the house itself. Well-spaced houses, painted in different colours, can be very attractive. Governments should provide sites where workers can build their own houses cheaply; control the spacing of buildings; and look after lighting, water supplies and garbage disposal. Slums are not houses made of cheap material, but rather the over-crowding of sites and the absence of utilities. The provision of water supplies and waste disposal cannot be over-emphasised.

1.2.8

Industry

Although in towns, industry is only one of the employment sources, industrial activity starts becoming important as soon as the town grows beyond the minimum threshold when it served only as a simple commercial exchange centre. As society

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15

develops, industry becomes part of the landscape and has to consider its rate of expansion, compatible with employment it has to provide to persons who cannot be employed in agriculture and who will be attracted to towns. In his novels, Ruined City and A Town like Alice, Neville Shute gives a good description how industrial activity can die down or start anew or why people might leave country life. Industries, in different regions, crop up differently for various reasons (see also Chap. 2), depending on local available resources (materials, labour, power, etc), and the possible location of the factory with respect to these resources. Then things are simple. Often, however, few factories are set up because all these conditions are met and even when this is the case, probably not enough employment is created to absorb the local excess of labour. Three factors often dominate the physical location of most modern industries: (a) presence of some physical disadvantages, if any; (b) availability of suitable or specialised labour in the vicinity; (c) easy access to raw materials, marketing and distribution arrangements for the produce. These three considerations entail that industries tend to favour flat land in the larger towns -which are likely to be the richer places already. Although commendable, it is not easy to start or develop industries in poor, mountainous areas, Furthermore, the money and time spent in developing industries in unsuitable or difficult areas might well result in a slower growth rate of industrial development. This may impact unfavourably on the general national development. It must not be forgotten that though workers like to earn much money, they also form part of the consumers who wish every product were cheap. Thus, these same workers would not be prepared to spend a lot, even to help their fellow workers who produce goods, which can be obtained more cheaply from other trade channels. This danger is very present with new industries competing against imported products, sometimes at dumping prices. Given that power is almost synonymous to electricity, availability of power, although an important consideration, there is no constraint to power provision to most industrial centres, unless the quantity required is very large, where the price could also be significant. Whether there is a local tradition for industrial activity or organisation could also be another important parameter, in the sense that if a factory work tradition exists, skilled personnel (process workers, qualified technicians, managers, etc.) might be available or opportunities exist for local training in the various skills required. Proper commercial connections are certainly necessary as well as suitably experienced entrepreneurs with initiative capability to conceive and implement large projects. Although the entrepreneur most often looks after a private enterprise, however a good manager must have entrepreneurial skills whether the company is privately owned or state-owned. Whether the government starts or nationalises a company, its foremost duty will be to get a manager with the necessary talent and skills to run the company. To be considered competent, this manager must possess qualities which differ significantly from those demonstrated by the usual state administrative official. Nowadays, more and more, industries use technology (sometimes highly sophisticated) to run their factories. Even if a simple, but devoted, manager can accomplish

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much good work, even better progress will be achieved with the proper first class talent of the right kind. As industries develop further, this may become more acute. An important public enterprise may act as a nucleus for a cluster of flourishing private companies, though it might not be easy to start at a moment’s notice. However, it certainly depends on the skills of the rare enterprising manager. In order to achieve economic development at an optimum rate, it is primordial to attract many types of economic investors with as many talented people as possible. As a means to attract investors and encourage exports, many countries have exploited the possibilities of the export processing zone (EPZ), a specialised industrial estate located physically and/or administratively outside the customs barrier, oriented to export production. It is not necessarily a specific zone (Likosky 2003), located near the port area. The buildings and services provided in the EPZs enable transforming imported raw materials and intermediate goods into manufactured finished goods, for export without incurring customs duty. If part (or all) the goods are sold locally, normal duty has to be paid. Often, apart from custom duty exemption, EPZ firms are also exempted from legislation such as labour laws and domestic taxes. The export processing zone is thus an “enclave” within which firms, mainly foreign, enjoy special privileges which do not apply to the country as a whole. Other names include Special Economic Zones (SEZs) or Free Trade Zone (FTZ). Mauritius used the EPZ approach to attract investors in the 1970s and 1980s to locate their labour-intensive activities in Mauritius, with several benefits and a package of fiscal concessions. (Zafar 2011, Bheenick and Schapiro 2006). Gradually, several reforms solved recurrent problems. Under certain basic conditions, the Mauritian EPZ model could be useful to other countries. Technology, as well as machinery, encompasses organisation of production, knowledge, whether embodied in hardware or software, people, institutionalised practices. It follows that technological capability is the ability to make effective use of technology. This includes the capability to choose technology, operate processes and produce goods or services. It also includes the capability to manage change in products and processes, and in the associated procedures and organisations. Thus technological capability involves the following: (i) the ability to search for available alternatives and to select appropriate technologies, (ii) the ability to make selective use of technology in producing goods and/or services, (iii) adapting technology to specific production conditions, (iv) bringing minor innovation into the technology, (v) research and development (R&D) facilities in institutions, (vi) carrying out basic research.

1.2 Examples of Infrastructure

1.2.9

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Recreation

Tribe (2011) explains terms relating to both recreation and tourism. After considering time taken for sleep, domestic and personal chores, work, commuting, there is some leisure time available to be used freely. Activities, such as watching television or reading (indoors), or sports, cinema, tourism (outdoors), pursued during this leisure time are grouped into the term recreation. While someone regularly travels to his home or her place of work, a movement towards a place outside these destinations is called a visit. When the visit includes at least one night, this becomes tourism! While at one time, most people barely had leisure time, except for rest, living conditions have changed considerably, so much so, that a whole leisure and tourism industry now exists, supplying goods and services for or influencing the use of leisure time. Other organisations, such as the IT sector, try to satisfy both leisure and non-leisure activities. A few details are given in Table 1.2. Many of these recreation activities do not require much personal outlay (e.g. watching TV, exercise, gardening, hobbies), but others might need basic infrastructure facilities, together with ancillaries for road access, parking areas etc., such as: • • • •

Parks and playgrounds, National monuments and Icons, Lake, reservoir and water sports (picnic areas, fishing facilities), Theme parks/casinos (restaurants, security facilities).

Both public or private sector organisations may provide these leisure and recreation facilities. Table 1.2 Recreation and tourism Recreation at home watching TV and videos listening to the radio/ music hobbies use of computers exercise playing games gardening DIY reading

Recreation outside home visiting attractions

Travel and tourism travelling to destination

eating and drinking

accommodation at destination

hobbies sports participation betting and gaming watching entertainment Bird watching

Recreation – may include activities from both previous columns

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At local government level, leisure and tourism provision includes: • • • • •

public gardens and recreation facilities, libraries (reading rooms and borrowing facilities), leisure centres and swimming pools, arts centres, tourism support (free local maps, tourism advice bureau).

While some facilities (parks) are generally provided for free, others may be payable so as to meet operational costs (arts and leisure centres). Whether the municipality provides subsidised rates and public provision or lower local taxes and private-sector provision will depend much on the local political party in power. In large countries, neighbouring towns may have different policies, while a single rule might apply in a small country, notwithstanding that political parties are influenced by: • • • •

the national government, the local press, pressure groups, trade unions.

Private sector organizations (non-government-owned) can provide many of the services that can or are provided by the government organisations, except that the services are not free. These organizations can be divided into profit-making and nonprofit-making ones.

1.2.10 Tourism The tourism industry basically considers people (1) (2) (3) (4)

moving from one region (where they live or work) of the world to another, making visits of a few days to a few weeks, with different modes of travel, at the resorts or destinations catering to the needs of the visitors.

Thus, tourism involves a complex mixture of material factors (accommodation, transportation, the attractions and entertainments available) and psychological parameters (the wide spectrum of human attitudes and expectations based on recreational pleasure, culture and education, ethnology, and generally business, major events, adventure, sociology). The multiplier effect spreads the benefits of tourism far beyond the resort. Broadly speaking, there are three categories of economic impact: (1) A direct expenditure: tourists spend money on accommodation, food, and on tourist facilities in the region.

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(2) An indirect expenditure: activities above create business transactions (airfares, tour operators). Conversely, bird watching, or watching a football match in another town or country may also create impacts in the first category. (3) The induced expenditure: local nationals (hotel employees, taxi drivers), having derived income from above, now spend their money on their needs, locally, or practice tourism elsewhere! Tourism expenditures provide an increasing income to the area with a resultant social impact. Some other points need consideration: (1) Should tourism be encouraged and expanded and will there be net benefits for the country or region? (2) The main benefits are the provision of jobs, increased income and improved amenities for resident nationals. (3) In many countries tourism is the major (e.g. Seychelles, Maldives), sometimes only, employer. (4) Government revenue may also be increased through taxes (airport tax, environmental protection) and import duties on goods and services imported for tourism purposes. Sometimes, the tourism industry benefits from fiscal incentives because it is a job creator. (5) Besides the development of hotels, tourism requires investment in airports, roads, public transport, telecommunications and public utilities. This improvement of the infrastructure and superstructure create long-term benefits for other parts of the economy. However, too rapid development of tourism can contribute to inflation by causing land prices to rise, encouraging speculation on land and properties and destruction of agricultural land. It also puts excessive demand on construction and other industries that are suppliers to tourism. Next, this may add to the problems of pollution and danger to the ecology of the country, especially the flora and fauna. Historical, cultural and archaeological sites may also need protection through restrictive legislation. Then, since most tourism developments are irreversible, sudden changes in demand may lead to greater unemployment, substantial trading losses and increases social tensions. Facilities cannot often be converted to other uses and the creation of alternative employment takes time and substantial investment. Finally, social disadvantages may arise. The presence of a large number of tourists encourages consumption and behaviour patterns which are often inappropriate for local nationals.

1.2.11 Transportation Transportation networks provide the backbone for the economy and without them much of our today civilisation could not exist. Transport is used by many people, who are able to observe and experience the defects (e.g. not enough seats, timetable not followed) of the transport facilities provided to them. Among other things, this

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has also led to an intensive and widespread yearning to own a car, even just to drive only during the week end. In fact, transport problems are not easy to analyse except at a very superficial level. Although calculating the savings in man-hours and tonne-kilometres that could result by reducing or decreasing certain road trips, is straightforward, these are only the obvious parameters and not the only ones. Thus, a scheme which might be subject to such easy analysis as above, may exhibit some complications when compared against others. Any scheme improving transport facilities will affect (significantly or less so) other land uses and thus impact on the traffic flow which initiated this transport improvement scheme being planned. This is quite an important parameter in urban areas, where significantly improving transport facilities entail major upheavals in land uses. Although up to a threshold road traffic flows may be treated in isolation – a first diversion and re-channelling them, in canals or channels, so to say, just as water flows could be conveyed – this is a mistake of assuming that traffic flows are independent phenomena that can be individually processed. Unfortunately, traffic flows result from many other activities and unless this is recognised, it will be difficult to solve traffic problems. The morning traffic entering into a town most likely includes the following components: (a) (b) (c) (d) (e)

people going to work; business or pleasure trips; to be consumed in the town; transport of materials for manufacture or other processes in the town; people and goods travelling through the town towards some other place, etc.

At one time, the railway became an important means of transport, particularly for long distances, but often the last (or first) leg of the journey was by road. However, in the recent decades, road transport has achieved new peaks with new technology in road construction, motorways and with motorised vehicles. Railways now show relative advantages under the following circumstances: (i) transport of heavy goods over long distances, such as cars, petroleum and bulk cement which can be easily transhipped. (ii) commuter traffic between the suburbs and big urban centres concentrations, with distances ranging between 20 to 60 km. (iii) fast inter-urban traffic where the plane alternative might not happen to be convenient. When the road network is comparatively undeveloped, the number of motor vehicles is usually small, but as the inhabitants (1) acquire more wealth and (2) experience the defects of available transport facilities, they will try to acquire a car. This may quickly increase the national vehicle fleet by several times, thereby increasing road traffic considerably.

1.2 Examples of Infrastructure

1.2.11.1

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Roads

A good road network (or a road in good condition) provides road access and connectivity to markets, schools, hospitals. Backward regions can use this basic infrastructure for trade and investment. (see Chap. 2 for the case of Budapest). Roads develop inter-modal transport networks by establishing connections with railway stations, harbours and airports. An efficient road network is a sine qua non for rapid growth. Road transport connects the remote and hilly areas to the rest of the country, thereby enabling social integration and further economic development. Ease of access, operational flexibility, door-to-door service and reliability count as benefits of road transport over other transport modes. However, these also create road congestion as they increase both passenger and freight traffic. The complication is that any further investment to improve road transport leads to an increase in the number of users, thereby leading to further road congestion – a vicious circle indeed. Thus, an associated problem of the road transportation is road congestion. Is there an alternative which minimises it? Part of the answer should lie with our spatial organisation. (see Chap. 3).

1.2.11.2

Water Transport

The specific features of water transport and its special merits can be observed under several distinct and distinguishing circumstances of use. First, the ferry is usually used for short distance water trips. Although its slow speed, combined with embarking hassles, shows sharp contrast with the speed and ease of land travel, the ferry has not disappeared as a means of transport. Progress in bridge construction techniques and tunnelling, may have significantly reduced the number of ferries in operation. With the construction of the “Chunnel” – tunnel under the English Channel – it was believed that ferry service and the hovercraft would have significantly reduced. Surprisingly, both means of transport are still much in use, thereby having significantly impacted on the income expected to be generated by the operation of the “Chunnel”. Secondly, canal and river navigation, though having been widely used in the past, has seen a reduced activity due to road transport improvements, in particular for perishable goods and small consignments. However, developments in barge design and propulsion have maintained this means of water transport, either for goods or for touristic travel. The vessels can be regularly seen on the large rivers, Thames, Seine or Danube or even smaller ones. Heavy goods suitable for bulk transportation are convenient to both railways and canals, where large volumes bring in economies of scale. However, here, railways have a speed advantage over canals. Thirdly, transportation of sea freight long distances has a good market, again with economies of scale, with bigger and bigger cargo ships or tankers with a minimum of personnel aboard given the amount of technology now being inbuilt. Of course, air

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cargo services might become an important competitor, but only for small or perishable goods, such as flowers or textiles where the products need to reach the consumer before the fashion period is over. For several purposes sea transport has no competitor. However, the growing technical evolution of ships requires the construction of probably fewer and bigger ports, where transhipment to smaller ships may be carried out. The increasing ship tonnage entails that terminal size and ancillary equipment is now pertinent to sea traffic. Railways do not present a similar issue due to their technical limits restricting expansion in this direction, but as for sea transport, terminals with the proper equipment and the adequate personnel are required for efficient operation. Hence, the tendency, to focus on fewer terminals with more sophisticated equipment.

1.2.11.3

Ports – Utility and Capacity

Ports are useful to the country because they: • provide a shelter to ships, • allow ships to replenish resources (water, food, fuel, repair, safety, etc) for further navigation, • enable cargo transfer between port and hinterland transport systems, • provide quick, efficient, cost-effective cargo transfer and aggregation facilities. Aggregation of individual berth capacity gives a port’s capacity. The individual berth capacity is influenced by the type of commodity it handles and is determined by (1) the berth’s size, (2) the length, (3) the size of vessel it can handle. The berth capacity is measured by the deadweight tonnage of the vessel that can be serviced by the berth. Berth occupancy is used as a yardstick for berth use efficiency. The various parameters affecting a break-bulk berth’s efficiency include (1) (2) (3) (4) (5)

the berth’s cargo-handling capacity, the vessel’s cargo-handling capacity, the cargo’s nature, how the cargo is stored ashore, how the cargo is transferred from the berth or storage facilities (by truck, train, etc.).

Thus a country which wants to increase potential volume of foreign trade should think about increasing and upgrading its port capacity. A port’s productivity also largely relies on the productivity of the entire logistics chain of which the port forms part. Any interruption in the smooth functioning of any of these links (poor road/railway linkages, unsympathetic attitude of customs

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personnel, and lack of adequate inland warehousing facilities) affects port productivity adversely. Apart from the efficiency of its own operations, the productivity of a port depends on the co-ordination of the operations of the various links in cargo movement such as stevedores, truckers, consignees, railway etc.

1.2.11.4

Airports

Transport at low prices is important, but other factors which should or are considered include simplicity, reliability and speed. In particular, air transport provides an excellent example. These factors have made road transport popular because the load owner obtains good facilities and, more or less, complete control over the journey from beginning to end. For example, over short and medium journeys, a farmer or merchant who wishes to use his truck has a certain control over his departure and arrival times, in contrast to his arrangements made through a third party such as the railway line, particularly if the required trips often change from day to day. Transhipment hassles are also usually avoided. Air travel has developed quite a lot, and passenger planes now travel over short distances (100–200 km) as well as over longer trips (non-stop for some 12 hours (8–10,000 km). Local circumstances and new technology have greatly increased the role of air travel and its importance. In some countries, air cargo has made a spectacular development due to fast changing markets overseas. The transport of high value and perishable goods, business travel, and access to difficult terrains have been improved, around the world, by air transport, given the speed and time saved. Furthermore, as in many countries, national carriers no longer have a monopoly and private air services are actively competing with other modes of transport because they have become affordable. However, for short-haul flights, the gain might be debatable because of time required between check-in and actual flight departure. Even on a 800 km journey, the home to destination travel time by a high speed train might be less than the air trip total time. Far from being a mere mode of transportation for a selected few, air transport contributes significantly to the national economy and plays an important role in sustaining trade and tourism development. The civil aviation sector has perfectly managed to cope with the growth of domestic and international traffic through four categories of services, namely: (1) (2) (3) (4)

regulatory, developmental, infrastructure, and operational.

1.2.11.5

The Relation of Transport to Other Activities

A region’s transport system determines its economic activity. Once this has been studied, it is then possible to attempt at providing social improvements. Thus, the

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important areas sending goods to other places may be identified, together with a comparison of the various means of transport. In many ways, towns are better cared by governments than villages. However, it is difficult for towns to exist without transport, the more so when they become more specialised, with a need to send their products to distant markets. Nevertheless, governments probably do not spend enough on keeping the town traffic network up to date. Rural roads manifest their value through the following principal purposes: (a) connectivity: sending crops, fresh vegetables regularly to the market, (b) education: transport of children from several villages to educational institutions, (c) farmers’ education: sending trainers to the villagers for new agricultural knowledge, (d) health services: transporting patients to and from clinics, and allowing free movement of doctors and nurses, etc.

1.2.12 Waste Management In any country, managing solid waste means the monitoring and regulation of (1) waste collection, (2) its transport, (3) the different treatment processes and (4) its final disposal. Integrated solid waste management (ISWM) tries to encourage waste prevention, through the 3Rs, namely: (1) Reduce, (2) Reuse and (3) Recycle. Sometimes, when there is an additional step, e.g. biological processes such as composting, a fourth ‘R’ for Recovery, is added. In order to make policies related to national composting and recycling more effective, it is useful to consider source separation to produce cleaner, improved quality waste components. Although source separation has been implemented in developed countries (Japan, South Korea, Switzerland, Sweden, and UK) with success, implementing such a practice in developing countries is still one of the difficult tasks to tackle sustainable waste management. The behavior patterns of individuals when requested to carry out source separation of waste or asked about their willingness to cooperate depends on many factors. If these influence factors are properly assessed and understood, it will be easier to extract maximum cooperation for the implementation of such policies by applying the right nudging conditions and incentives. Generally speaking, waste generation rate varies directly with the economic activity level of the country. Cities, developed countries, typically, produce a waste of about 1 kg/person/day. Developing countries are not always lagging behind. Collection cost of waste depends on the following major factors: • The method of collection; • The vehicle type and its capacity; • The number of personnel required;

1.2 Examples of Infrastructure

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• Hauling distances to disposal sites, and • Collection frequency. The collection frequency is influenced by several factors such as (1) (2) (3) (4)

the characteristics and quantities of the wastes, the climate and its effect on waste, the types of storage available, and the authorities’ degree of involvement.

Collection often varies between one to seven days per week, depending on the budget, urgency of collection, etc. In several areas, collection is even carried out at night, if possible after closure of business, to avoid proliferations of pests and rodents and/or to present a clean landscape early next morning. Discharging municipal solid waste (MSW) into a landfill is also dependent on: • • • •

Government objectives, targets and policies; Local environmental conditions; Nature of the wastes and potential reactions, and Feasibility of the treatment process (technical, financial, economical, etc.)

In practice, however, land availability for a landfill may be scarce, particularly if no proper infrastructural planning has been carried previously. Local residents or politicians who might be affected are important and, sometimes strong, stakeholders when a new landfill site is being identified. Common terms, such as NIMBY (Not In My Back Yard), NIMET (Not In My Election Term) or NIMTOO (Not In My Term Of Office) are often used by them. This, sometimes vociferous, opposition often results in the new landfill projects being thwarted. However, one way of attenuating the NIMBY or NIMET/NIMTOO opposition is to reduce the design capacity (size) of the disposal facility. This, of course, requires an adequate treatment and processing at a suitable transfer station so that there are minimal wastes transferred to the landfill. A radical mindset change may be obtained by planners (Carpintero 2015) shifting from the basic question How do we get rid of our waste efficiently with minimum damage to public health and the environment?

to the more appropriate How do we handle our discarded resources in ways which do not deprive future generations of some, if not all, of their value?

There are so many technologies available for the treatment and disposal of solid waste that there are multiple ways to formulate an integrated solid waste management (ISWM) system.

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1.2.13 Water Water is a natural resource which is essential for the survival of man and for his activities, especially his economic activities because it cannot be replaced in most of its uses. It is not only an essential element for life but also, in the twofold aspect of quality and quantity, a conditioning factor of economic growth and of social welfare. Water supplies in small quantities for domestic use can be obtained from rivers by direct abstraction, without any storage impoundment, but this, of course, limits the water flow available to only a fraction of the dry weather river flow. In that case, impounding of rivers can become more frequent. In some cases, tapping underground sources may be necessary. Characteristics of Good Quality Water: These can be listed as follows: 1. 2. 3. 4. 5.

It must be pleasant to taste and appearance. It must be free from pathogenic organisms. It must be free from toxic substance. It should not be corrosive in nature. It should not contain excessive amount of solid substances which cause physiological effects on human beings and other consumers. 6. It should have sufficient quantity of dissolved oxygen. 7. It should be available in large quantities. Should impoundment be implemented for some other purpose, such as hydrogeneration, it might be possible to use the tail race water for domestic water supply or eventually, direct from the reservoir. Water needs for domestic purposes are usually quite small when compared to water requirements for irrigation and for generation of electricity. Per capita water consumption depends on numerous social and economic factors, more particularly, the way the water is supplied. The daily basic consumption, for example, when water is supplied from public fountains, varies between 5 and 20 Litres/person, but for houses equipped with flush toilets, baths, sinks, lavatories and wash tubs the daily quantities of water used reach 120 Litres/person, and in certain places may reach average daily values of about 250 to 1000 Litres/person, for all domestic uses, irrespective of water being metered or not. The requirements for industry differ from domestic water use in two ways: (1) Quality: water used for industrial need not always satisfy the same standards of purity. Thus, sometimes, the effluent from the municipal sewage purification works, though unsuitable for domestic consumption, may be used for washing, cleaning, cooling, etc. Sometimes, however, even water suitable for domestic use needs its iron contents to be removed before it can be used for dyeing textiles; otherwise, the textiles get reddish stains. (2) Future water requirements: For a given population, it is not difficult to forecast possible population growth, from which water requirements for domestic use in the future may be determined. This enables project planning schemes which can provide these future needs, for domestic purposes. However, industries depend

1.2 Examples of Infrastructure

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heavily on fashion and changing needs, which complicates the possibility of forecasting water requirements in this sector, over long periods. The only comfort is that there are only few industries requiring very large amounts of water. And, if the country does not have plentiful supplies, the industry will never be set up. The guiding principle is that, given water supplies in a region are limited, nothing more can be provided, except at prohibitive prices (desalination, import, etc). However, ingenious schemes may be developed to use the water resources more fully than ever before, and eventually, used several times over (hydropower, domestic use, and then recycled for irrigation). Typically, hotels in tropical climates may use some 400 cubic metres daily for potable purposes; the effluents are treated and recycled for irrigation use (at night, to avoid any accidents).

1.2.14 Wastewater Water is essential for development. Once the water has been used it is essential to have a good sewerage system to sustain the development. A small coastal community might discharge untreated sewage directly into the sea without any ill effects, but if the same population were located besides a small stream, a high degree of treatment might be required, particularly during the low flow season. Improved standards of living, urbanisation, and industrial growth have increased the strength and quantity of municipal sewage in recent decades to the point that dilution alone is not enough to prevent the undesirable effects of pollution. The level of treatment required depends on the composition and strength of the sewage and the disposal facilities. There are many different ways to treat sewage, while sometimes, more advanced treatment may be required. Water-quality control has become a new concept in the field of water-resources management. Recognising the economic value of water quality has introduced the need to maintain certain minimum flows in rivers. Treatment processes are often classified as primary, secondary, or tertiary processes. Primary treatment separates the suspended solids from the sewage, by screening and sedimentation in settling basins. The separated solids are then decomposed by bacterial action in a tank, and the liquid effluent is diluted before disposal or used irrigation, although some care is needed. Considerable organic material remains in the liquid effluent resulting from primary treatment, and needs much oxygen to oxidise it. This is the BOD (Biochemical Oxygen Demand), which is used as an indicator of organic pollution in the water. Secondary treatment goes further: effluent from a primary treatment process is oxidised, generally, through biological processes using filters, aeration, oxidation ponds, and other means. The ensuing effluent will usually have little oxygen demand and may even contain several milligrams per litre of dissolved oxygen.

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Tertiary treatment is often accomplished by passing the effluent from secondary treatment through a fine sand filter. Several factors, including the disposal facilities available will dictate the choice of treatment methods. In practice, the distinction between primary and secondary treatment is rather minor or arbitrary as many modern treatment methods include both sedimentation and oxidation in the same operation. The Goreangab (Namibia) water treatment plant processes sewage from Windhoek’s 300,000 residents into potable water through a technology that partially mimics nature. Constructed in 1968, it was the first plant of its kind in the world. (https://www.pri.org/stories/2016-12-15/recycling-sewage-drinking-water-no-bigdeal-theyve-been-doing-it-namibia-50-years). Since its start, all the relevant standards have been fulfilled without difficulty. “People are always trying to catch us out so they can say that reusing water does not work. They have not succeeded.” (Pierre van Rensburg in The Namibian, 16th March 2016.). Using recycled water means that this can be an addition to existing (waning) resources.

1.3

Services

The general public does not really know much how the commercial and financial services work or their usefulness. Nevertheless, these services are particularly important in the process of national development. Firstly, apart from people employed in government administration, the commercial and financial services, as a sector, employs up to 30% of the active urban population. Secondly, as the supply of capital where needed and proper marketing depends on these services, they ensure a smooth running of business because efficient marketing includes grading, transport, superior forms of storage and the necessary logistics to ensure that the right goods reach the right place where they are required at the right time. When these factors are absent, either in less developed countries, or even in highly industrialised countries (but lesser developed parts), the following defects may be found: (a) Lack of organisation entailing a difficulty to quickly obtain a required service – the less common goods or specialist advice are not available locally, and quite some time elapses before these are delivered. (b) If the service headquarters are located outside the region, their interests are probably also elsewhere. (c) Banks do not have sufficient resources to satisfy all sound loan applications. If adequate capital is not available for commercial purposes, efficiency may be quite seriously affected, causing a scarcity of handling facilities and efficient storage. At the other extreme, what do banks do when they have excess liquidity with only a few loan applications?

1.4 Why Do We Need Infrastructure?

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(d) Lack of expertise may lead to inefficiency and a co-ordination failure. Sometimes as new needs emerge, there is an over-investment in new equipment due to many persons hoping to set a foothold in the market without referring to what others are doing. While there is often an excessive number of computer or smartphone shops, it also happens that many farmers will plant the same crop at the same time, with a resulting glut in the market. It is probably worth stressing one or two special issues: Capital, (loans or otherwise) is an important parameter in economic development. Although thought of as charging high commissions (see also Shute (2009)) financiers provide services needed by society. There is no short-cut to free money. As a small scale saver, households like to receive interest on their bank savings. If the bank lends this money to large scale investors, the bank will necessarily add the minimum rate preferred by the households to its own commission. The lower the rate the households accept, the lower can be the lending rate to business investors. This is what is often called the cost of money: at which rate can the investor borrow money? Government may sometimes intervene by legislating on low interest rates for special purposes (as incentives to investors), but it would be a mistake to believe that this is the “correct” rate, because, in fact, the government is just subsidising the cost of money for a special purpose. Producers, can only produce the right product at a convenient price if they understand and know the market conditions. Otherwise, they may end producing unwanted goods at no big value to them. For example, farmers should produce vegetables, at the right dates, of the right quality, preferably avoiding gluts, or low market prices will result. If they have to pay for commercial and financial services, they should enquire what they are obtaining in exchange. Getting a proper organisation is probably the most difficult issue because a first class co-operation and team work is required for efficient commercial work, the more so as economic development proceeds and the country’s economy becomes more complex.

1.4 1.4.1

Why Do We Need Infrastructure? Economic Infrastructure

Economic development requires that measures capable of exerting favourable effects on the flow of income should be taken in public services. Generically, economic infrastructure has the following distinct components: (a) energy (electricity, coal, petroleum and natural gas, renewable energy sources and atomic power for civil use), (b) transport (roads, railways, shipping, ports and airports), (c) telecommunications and information technology,

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(d) special economic zones (SEZs), (e) tapping water resources (hydro-generation, irrigation), (f) rural infrastructure (water supply and sanitation, transport, housing, telephony), and (g) urban infrastructure (water supply network, housing, sewerage, transport, slum clearance/development, and solid waste management). Economists use the term social overhead capital to denote funds invested in such basic services, which are essential to the functioning of primary, secondary and tertiary productive activities (see Chap. 2).

1.4.2

Social Infrastructure

Social Infrastructure comprises the following: (a) (b) (c) (d) (e) (f)

human development programmes and social security, health, poverty alleviation programmes, and family welfare, education, training and skill development, availability of labour, its employment and labour welfare, female empowerment, and raising the living standards of socially disadvantaged groups.

In order for development to occur, it is necessary to provide social overhead capital – and with it health care, and water supply facilities. Rather than being an end in itself, this is a basic investment, because this will supply the basic outlay required to uphold productive processes such as manufacturing. Rather than concentrating on built infrastructure, this concept can easily be extended to other sectors which provide services. (see Fig. 1.2) These necessary services, which are also a sine qua non to a host of various economic and everyday activities, are generally provided by public agencies under some form of public regulation. These services may be provided for free or at rates determined by government. Neglect of such public utilities and facilities can, very easily and quickly, become a most serious drag on economic progress.

1.4.3

Critical Infrastructure

What would happen if tomorrow the transport system breaks down? How do people go to work? How are goods (including food) transported to other towns? What about a breakdown of the electricity network? A little reflection shows that there are some sectors which cannot afford the luxury of a momentary outage! In fact, we say that these sectors form part of “critical infrastructure”. The European Union (European Commission 2020) defines

1.4 Why Do We Need Infrastructure?

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Technical Organisational Political

l

Environmental

Social

Legal

L

Ecological

Economical

Fig. 1.2 Infrastructure sectors Critical infrastructures consist of those physical and information technology facilities, networks, services and assets which, if disrupted or destroyed, would have a serious impact on the health, safety, security or economic well-being of citizens or the effective functioning of governments in the Member States. Critical infrastructures extend across many sectors of the economy, including banking and finance, transport and distribution, energy, utilities, health, food supply and communications, as well as key government services. Some critical elements in these sectors are not strictly speaking ‘infrastructure’, but are in fact, networks or supply chains that support the delivery of an essential product or service. For example the supply of food or water to our major urban areas is dependent on some key facilities, but also a complex network of producers, processors, manufacturers, distributors and retailers.

(https://eur-lex.europa.eu/legal-content/EN/ALL/?uri¼CELEX:52004DC0702). Accessed 22 January 2020 The UK government’s official definition of Critical National Infrastructure (CNI) is: “Those critical elements of infrastructure (namely assets, facilities, systems, networks or processes and the essential workers that operate and facilitate them), the loss or compromise of which could result in: (a) Major detrimental impact on the availability, integrity or delivery of essential services – including those services whose integrity, if compromised, could result in significant loss of life or casualties – taking into account significant economic or social impacts; and/or (b) Significant impact on national security, national defence, or the functioning of the state.” (https://www.cpni.gov.uk/critical-national-infrastructure-0). Accessed 22 January 2020

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Following the terrorist attacks of September 11, 2001, the US Congress passed the USA PATRIOT Act of 2001 (P.L. 107–56) which defines “critical” infrastructure (CI) as “systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters (Sec. 1016(e)).” The definitions above show that Governments are aware that infrastructure is not only important, but that some of them are so essential (the term used is “critical”) that without these critical links, the whole country, if not part only, practically stops functioning. (e.g. are there many countries which could still function properly if there was a general electricity power breakdown?). While UK defines 13 critical infrastructure sectors, USA considers some 16 sectors (updated in 2018) from a previous list of 18 in 2013. The preceding section on social infrastructure, however, should have highlighted that there are many components in the range of infrastructure which could be critical to the smooth running of everyday life. Chapter 11 on resilience should certainly give a better opportunity to reflect on all these components and help us (or governments) decide on what we should call critical infrastructure sectors.

References Bheenick, R., & Schapiro, M. O. (2006). The Mauritian export processing zone. https://doi.org/10. 1002/pad.4230110314. Bowker, G. C. (2018). Sustainable knowledge infrastructures. In N. Anand, A. Gupta, & H. Appel (Eds.), The promise of infrastructure. Durham: Duke University Press. Carpintero, A. (2015). Solid waste management challenges & opportunities. May 2015 ed. [Leaflet] UNEP/IETC: Japan International Cooperation Agency. Critical National Infrastructure. (2020). https://www.cpni.gov.uk/critical-national-infrastructure-0. Accessed 22 Jan 2020. European Commission. (2020). https://eur-lex.europa.eu/legal-content/EN/ALL/?uri= CELEX:52004DC0702. Accessed 22 Jan 2020. Hall, J. W., Nicholls, R. J., Hickford, A. J., & Tran, M. (Eds.). (2016). The future of national infrastructure: A system of systems approach. Cambridge: Cambridge University Press. Lewis, A. (1966). Development planning: The essentials of economic policy. London: George Allen & Unwin. Likosky, M. B. (2003). Dual legal orders: From colonialism to high technology. Global Jurist Topics, 3, 2. Published Online: 2003-06-30 https://doi.org/10.2202/1535-167X.1087. Proag, V. (2010). Sustainable development by design. The Journal of the Institution of Engineers Mauritius, [online]. Available from: http://www.iemauritius.com/upload/files/sustainable_devel opment_by_design.pdf. Accessed 30 Jan 2016. Shute, N. (2009). Ruined city. Vintage Classics. Tribe, J. (2011). Introduction to recreation, leisure and tourism organizations. Elsevier BV. Zafar, A. (2011). Mauritius: An economic success story. In Yes Africa can: Success stories from a dynamic continent (pp. 91–106).

Chapter 2

Infrastructure and Economic Growth

Infrastructure is a critical input for broad based and inclusive growth aimed at improving the quality of life, generating employment, and reducing poverty across regions. China and other East Asian economies have been investing over 10 per cent of their GDP in infrastructure as compared to about 4–5 per cent in India. Gajendra Haldea We need to stop thinking about infrastructure as an economic stimulant and start thinking about it as a strategy. Economic stimulants produce Bridges to Nowhere. Strategic investment in infrastructure produces a foundation for long-term growth. Roger McNamee Dubai’s world class physical infrastructure has already established it as a major player in terms of trade, tourism and as the leading conference and exhibition venue in this part of the world. Abdul Aziz Al Ghurair The Chinese economy has exploded. And like its legendary firework displays, the explosion has been dazzling. In just thirty years China has shifted some 300 million of its people from abject poverty and wretched indigence to economic standards that rival the West’s – a feat unprecedented in the history of the world. Dambisa Moyo In the last decade the main driver of China’s boom was a surge in the investment share of GDP from 35 per cent to almost 50 per cent, a level that is unprecedented in any major nation. Investment spending includes everything from transportation and telecommunication networks to office buildings and equipment, factories and factory machinery – all the stuff that lays the foundation for future growth, which is why this is a critical indicator. Ruchir Sharma

© Springer Nature Switzerland AG 2021 V. Proag, Infrastructure Planning and Management: An Integrated Approach, https://doi.org/10.1007/978-3-030-48559-7_2

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This chapter discusses the economic importance of infrastructure, which is required to satisfy the basic needs of suppliers and consumers. High quality service may require even more dependable (reliable) technology. Sustainable economic growth can only be achieved if quality infrastructure services can be provided at reasonable cost. This is certainly the challenge of many countries to improve the quality of services and the delivery system through an adequate infrastructure investment. The institutions, the regulations, and the enforcing laws constitute the infrastructure of an economy, and determine to what extent individuals are prepared to invest in capital, to develop skills, and adopt technology, associated with long-term economic success. Countries where the government provides the proper environment conducive to production are very dynamic and successful. Countries where the government uses its power to allow diversion are certainly less successful.

2.1 2.1.1

Introduction Why Do We Need Infrastructure?

Social overhead capital is a term used to denote funds which are invested in basic services (e.g. water, roads), essential to the functioning of primary, secondary and tertiary productive activities. Providing social overhead capital enables economic development to occur because this creates favourable circumstances capable of exerting favourable effects on the flow of income in a country. Amenities improving the standard of living, services which enhance productivity and increase production comprise the infrastructure which contributes to the country’s development in different ways. 1. Infrastructure services help in reducing the input costs in production processes, thus raising the profits from production. This allows more output, higher income, and more employment. 2. The productivity of other factors (such as labour, capital) are also increased with practically no further or little expenditure. These infrastructure services are often called an ‘unpaid’ factor of production. As described in Chap. 1, infrastructure covers a wide range of services, which help society or impact the operation of organisations. Each infrastructural service (or sometimes even sub-sectors) is different from another due to (1) its administration (2) its operational structure, (3) the legal framework regulating its functioning, (4) the type of technology used and (5) the extent of commercialisation. Furthermore, while some services can be considered as private goods (e.g. telecommunications) on a strictly commercial basis, others are public goods (e.g. roads, national defence), with an expectation to be fully provided by the Government or at least part-subsidised. Economic development can only proceed in a country when adequate infrastructure facilities are made available, because they help in coping with population

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growth, trade expansion and diversifying production. Thus, infrastructure improves environmental conditions, and helps to eradicate or reduce poverty. The composition of infrastructure changes with income levels. Samli (2011) argues that lack of capital, wasted capital, lack of understanding and discrimination act as infrastructure inhibitors in developing countries. These countries will invest in water, irrigation, transport, etc. In contrast, in the industrialised world, the same role is played by expensive infrastructure, reduced infrastructure budget, not seeing the relation between infrastructure and economic development and, lastly, many countries are investing only on the short run trade related infrastructures. Telecommunications and power have a bigger share in high-income countries. As infrastructure services constitute inputs in many productive processes or activities in agriculture, industry and services (transport, electricity, water, telecommunications, etc), their eventual low cost decreases the cost of production, thereby raising the production profitability. One method to assess whether investment in infrastructure brings any return is to measure or estimate any cost reduction to users. For example, a manufacturing company might be producing its electricity through a private generator. Does its cost of electricity per unit consumed, decrease when the electricity is provided from a generator supplying several such users? Apart from economies of scale, there might be better quality of service or higher reliability. If infrastructure services are inefficient (e.g. it takes 4 hours for a 20 km journey across a badly maintained road), firms are forced to seek higher-cost alternatives (e.g. use a longer but smoother road, generate their own electricity to alleviate frequent power cuts) that induce detrimental impacts on profits and production levels. Unreliability (see Chap. 9), such as inadequate water pressure, frequent power cuts, etc.), and inadequate access to (or absence of) infrastructure services may result in existing productive capacity being under-used. This puts constraints in the short term production efficiency and long term growth in output. Consumer firms may find it better to invest in alternatives such as boreholes, standby generators, which unfortunately, increase capital costs. Consequences may include ripple effects, the creation of bottleneck production and/or over-production capacity in other sectors. Lack of maintenance facilities and poor quality of service provision thus shift the burden of inadequate or insufficient infrastructure provision (here, to the users themselves) – increasing total production costs – thereby producing less economically efficient outcomes. At Budapest, the capital of Hungary, the first permanent bridge built across the river Danube, was opened in 1849. The Széchenyi Chain Bridge is a suspension bridge that links the western and eastern sides, namely Buda and Pest, on the two (right and left banks, respectively) of River Danube. It immediately boosted the country’s economic, social and cultural life. (See Photo 2.1).

2.1.2

Economic Roles of Government

Usually, the government has four main economic roles, namely:

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Photo 2.1 The Széchenyi bridge linking Buda and Pest

1. 2. 3. 4.

allocation distribution regulation stabilisation

2.2 Economics Applicable to Infrastructure

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1. Allocation: Using efficiency as a criterion, the government allocates resources to those sectors having highest efficiency. However, as monopoly organisations/ sectors and other forms of ‘market failure’ produce market distortions, the government must take this into consideration. 2. Distribution: the government tries to influence income distribution through several means – taxes, social security, allowances, and free/subsidized public sector services – thereby introducing both efficiency and equity in resource allocation. 3. Regulation: the market economy works only if consumer protection, the rule of law, access to justice exists in a country. Thus, as a regulator, the government upholds the rule of law by legislating and enforcing the laws of contract, etc. 4. Stabilisation role: the above three roles – allocation, distribution and regulation – affect the microeconomics of the country. By trying to control inflation, unemployment, etc., through the use of monetary, fiscal, and other economic policies – which is a macroeconomic approach (see below), the Government establishes its stabilisation role. Of course, these four roles are interactive among themselves: e.g., changes in fiscal policy (stabilisation role) affects taxation and public expenditure (allocation) that, in turn, affect income distribution whether in cash or in kind (distribution role). For example, the quantum of public sector services (education, health, etc.) is finally dependent on fiscal changes.

2.2 2.2.1

Economics Applicable to Infrastructure Selective Overview of Economics

The six subsets of economics which interest us when we are dealing with infrastructure are macroeconomics, microeconomics, engineering economics, welfare economics, resource economics and behavioural economics. (a) Macroeconomics Macroeconomics studies the economy at a national level where broad economic policies are considered. Factors such as interest, rate of return, inflation, unemployment are considered. Macroeconomics also studies the economic growth of a country, usually through the Gross Domestic Product (GDP) and how the governments use policies to moderate harm caused by recessions. (b) Microeconomics Microeconomics represents the building blocks of the economics system as firms/individual people/producing units and households. Households represent a group of individuals sharing income so as to purchase goods, services or commodities. This discipline studies the behaviour of (1) individuals when they are faced with spending their money and (2) profit maximizing firms both as individuals and against competing firms in the same market.

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(c) Engineering Economics Engineering economics is a subset of the whole subject of economics for the application to engineering. Engineers have as main task to find technical solutions to problems and civil engineers are most likely to evaluate cost implications in the construction of a structure. Tools used in the engineering economy are the Net Present Value (NPV), Internal Rate of Return (IRR) and Discounted Cash Flows (DCF). They are used to assess alternatives for a project such that the most effective, least costing alternative is then chosen. (d) Welfare Economics Welfare economics is also a subset of the whole subject of economics. It studies how economic well-being is affected by the allocation of resources. Welfare economics analyses the total welfare that is achieved in a country and the distribution of this welfare. It involves the study of income and the distribution of the latter. Welfare economics focuses on the buyers’ profit as well as on the sellers’ profit, hence aiming at market equilibrium which is driven by “invisible hands”. (e) Resource Economics Resource economics is the branch that deals with the demand, the availability and the allocation of natural resources in an effective way, aiming at a better understanding of the role of resources in the economy and how we can manage them so as to create a sustainable environment. This is important in order to keep these resources available for future upcoming generations. Resource economics, being part of the whole economics field, targets at developing a sustainable and efficient economy. (f) Behavioural Economics While conventional economics (as described above) assumes rational decisions from the different players, behavioural economics examines carefully how realistic the psychological, sociological, and institutional assumptions are when introduced into economic models and decision making (Altman 2012, Angner 2012, Kahneman 2012). Very often, it is found that people (inter alia, decision makers) are loss averse – people dislike losses more than they like commensurate gains. This loss aversion is reflected by the observation that most people are more upset when they lose a Rs100 note than the pleasure they get when they receive a Rs100 note unexpectedly. As a further difference from conventional economics, this loss aversion effect is also affected by whether the monthly income is Rs1,000 or Rs100,000.

2.2.2

Factor Endowments of the Country

There is a story about someone who is unqualified for a clerical job, but manages to become rich through operating a small trade shop of selling tomatoes, the moral being that many things are necessary or essential before earning plenty of money. (see also The Verger by W. Somerset Maugham.)

2.2 Economics Applicable to Infrastructure

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Table 2.1 Factor endowments of a country Factor Endowments Natural resources

Human resources

Capital resources

Enterprise

Apart from the minerals of the earth, natural resources comprise the atmospheric gases, the plants, trees and other vegetable products, the animals both wild and domesticated, the marine produce and the energy resources of the country. Any country dependent on foreign supplies can be adversely affected, if there is a disturbance of the economic situation – a war, or the closure of a canal. Contrary to being sober, industrious, intelligent, knowledgeable, skilful and energetic, the countrymen may be intemperate, lazy, boorish, ignorant, untrained and somnolent. However, wealth (added value) can be created by the people’s skills by adding value to the imported raw materials which the nation lacks. E.g. Singapore, some 5.6 million people living on an island 721 km2, shows what can be achieved by the proper management of human resources. (Lee Kwan Yu). Capital is the stock of producer (factories, roads, machinery, etc.) goods which a country owns at any given time. If in short supply, the stock has to be increased. This is effected by using factors to create capital assets rather than goods for current consumption. The government – through plans and budgets – tries to create capital assets and limit demand from the consumer public who may find it difficult to see why its efforts should be so poorly rewarded. This is one of the human skills not possessed by all people. Some are able to lead the way in creating wealth for the national income. But, above all the political climate must be right. Uncontrolled capitalism is usually a bad thing, because it produces expenses (e.g. polluted air, polluted rivers, derelict land, etc.), upon the society to be borne as ‘social costs’. However, excessive control on enterprise hampers entrepreneurship at the expense of the nation too, blocking wealth creation and driving enterprising individuals abroad (draining of human resources – brain or skill or talent-drain).

So, how does the national income of any country increase? As in the story above, the factor endowments on which a nation can rely determine the crucial elements for the national income. It seems easy to imagine that countries such as United States or Europe, with a wide variety of natural resources, should achieve national prosperity. In contrast, one should marvel how tiny countries such as Singapore, or Hong Kong, tiny specks of land without any natural resources at all, have achieved any prosperity at all. There must be something more than natural resources. The term “factor endowments” has a wider meaning. The chief factor endowments are given in Table 2.1.

2.2.3

The GDP as a Measure of National Income

Infrastructure forms part of the national or international economy. All the general aspects related to the relevant problems are valid for infrastructure matters.

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The gross national product (GNP) is defined as the total production of goods and services by the country nationals, at home and abroad. In the national accounting, it is a measure of the performance of the nation’s economy within specific accounting periods (usually one year). Linked to the national territory without the income from foreign countries, the denomination becomes the gross domestic product (GDP) Y ¼ C þ I þ G þ NX where. Y ¼ GDP ¼ value of all goods and services produced domestically during a period. C ¼ consumption expenditures made by households on goods and services, produced either domestically or abroad I ¼ investment expenditures made by firms on new capital goods including buildings, equipment and factories, changes in inventories G ¼ goods and services purchased by government NX ¼ net exports (i.e Exports (EX) minus Imports (IM)). NX ¼ EX – IM Before discussing the effect of investment I (investment in infrastructure, among other things) on the GDP (and eventually on economic growth), we may examine the processes of investment, under what infrastructure conditions does an investment occur.

2.3 2.3.1

Investing in a Business Introduction

Somebody asking questions like: “Why are some countries rich?, Why are other countries poor?” may receive replies such as “rich countries invest more in infrastructure” and “rich countries invest more time in disseminating and learning to use new technologies”. The opening quotations of this chapter compared China and India. As the manager of a multinational enterprise, if you wish to open a subsidiary in a foreign country, you would probably use a cost-benefit approach to reach a decision. How do the total benefits compare with the total costs of the project? If profits are generated every year, these can be discounted to obtain a total value of the profits, giving the value of the subsidiary as B. Conversely, the set up costs (one-off), C, include obtaining domestic and foreign permits, as well as establishing contacts with local distributors and suppliers. Logically, if benefits exceed the costs (B  C), the project investment can go ahead. It sometimes happens that once the business subsidiary is set up, the owner wishes to sell it, or receives an offer. Again, he can or should only sell if the offer exceeds the costs, C.

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The reasoning above applies not only to a foreign multinational firm, but also to a local business or skills acquisition by an individual. If he or she decides to acquire some specific skills, C includes the cost of schooling, (1) as direct expenditure, and (2) as opportunity costs – no salary earned while attending school. The benefit B is the present discounted value of the increase in wages arising after acquiring the additional skills. There may be variations in C and B around the world because the government policies and institutions are different. Figure 1.2 showed that infrastructure, far from being technical only – included many other elements which could help to maximise the difference B – C, in order to encourage investment. It is presently judicious to explore this path.

2.3.2

Determinants of Cost

Once the business idea is born, setting up involves several steps, each of which requires interacting with another party. Sometimes, the other party has the ability to “hold up” the process, delays may occur or cost increases. Any of the steps above (inspection/survey by officials, business permit, obtaining electricity, etc) offers a chance for a dishonest bureaucrat to request a bribe or for the government to impose a licensing fee. All of these increase the cost, to say nothing of delays. To make matters worse, imagine the last bureaucrat in the line requesting a bribe equal to B (or slightly smaller)? If he feels he has no other choice at this stage, the rational manager may pay the bribe rather than cancel the project. Previously paid fees and bribes are “sunk costs” and do not intervene in the decision of whether the next fee should be paid. However, it is likely that this scenario has been considered at the outset, if the manager has done his homework. In cases like this, the rational manager, at this ex ante point, decides not to invest at all. Who loses? The business man who will decide to invest in another country providing a dynamic business environment, offering investment opportunities with a minimum of “red tape” or the country where no investment occurs, precisely because of all the “extra” costs involved. There are many stories about countries where foreigners find it too difficult or lengthy to invest! Shleifer and Vishny (1993, pp. 615–16) mention that foreigners do not invest in Russia because too many bribes are involved in the investment application process. De Soto (1989) describes how his group of researchers purposely set up a small garment factory in Lima, Peru, to determine how much a small entrepreneur starting a business needed to meet the official requirements. Overall, the researchers found that 289 person-days were needed to comply with the official requirements, the cost of which amounted to the equivalent of 32 times the monthly minimum living wage.

42

2.3.3

2 Infrastructure and Economic Growth

Determinants of Benefits

The expected profitability from the investment can be classified into three categories: (1) the market size, (2) whether the economy favours production or of diversion, and (3) the stability of the economic environment. The size of the market impacts heavily on B. If the market is only local, the benefits might not warrant the necessary investment costs. However, a larger market, not to say the world, increases the potential reward to go ahead with the investment because the “scale effect” related to one-off or fixed costs. Incidentally, if the market is overseas as well, it is a great help if the country possesses a good harbour lying along international shipping routes. The second important profit determinant concerns how the economy’s rules and institutions (a) favour production by encouraging individuals to create and trade in goods and services or, (b) encourage diversion through theft or expropriate resources from production units. The diversion may also involve illegal means, such as theft or corruption, or “protection money” payment. Sometimes, it is legal, as in the case of government confiscatory taxation, frivolous litigation, or the lobbying of the government by vested interests. (see also Jeffrey Archer) Diversion, firstly, acts like a tax on a business. A fraction of the profits is abstracted away from the entrepreneur, reducing the benefit from the investment, and acts like a disincentive. Secondly, it encourages the entrepreneur to find ways to avoid the diversion, including hiring more personnel (lawyers, accountants or security guards) or pay bribes to minimise other means of diversion. These extra costs for avoidance are, however, a further form of diversion. While some taxation is needed for government to fund the institutions and enforce the rules linked with an infrastructure that favours production, the taxing power can be exaggerated by the government to engage in diversion. Abuse of bureaucratic regulation and red tape measures allow government officials to exert their influence in diverting resources. It is not unknown to have regulations (these are not publicised in the Press, only in official government newsletter which few people read) amended each time there is a new important investment proposed by an investor. Finally, the stability of the economic environment determines whether the businessman is ready or willing to invest. If the rules and institutions are frequently modified, he might consider that the country might be a risky place with possible low returns. While today’s policies in place favour productive activities in an open economy, tomorrow’s policies might not. Wars and revolutions do not add to the stability of an economy, but are rather extreme forms of the contrary.

2.3 Investing in a Business

2.3.4

43

Mathematical Formulation

This reasoning helps in rewriting the economy’s aggregate production function as Y ¼ IK α ðhLÞ1α , where I represents the influence of an economy’s infrastructure on the productivity of its inputs, K is physical capital, h represents skills acquisition by the workers, as new equipment (capital goods) are introduced, L is labour force. However, the outputs of two countries with identical K, h, and L may still differ because the two economic environments differ. In one, capital may be spent on fences, security systems, etc., where skills are focused on holding up investors or bribe collection. In the other, all inputs focus on productive activities. Note: The form of the function is chosen to produce what is called “constant return to scale”. (Please see also Appendix 2.1).

2.3.5

Growth: Miracles and Disasters

The institutions and government policies constituting the economy’s infrastructure will influence investment and productivity, thereby impacting on the wealth of the nation. Fundamental modifications in infrastructure can therefore generate growth miracles, or, in contrast, growth disasters. According to North (1981), individuals in authority or power will follow paths or actions that maximize their own utility. Instead of doing benevolent social planning, to maximize or improve the welfare of society, government officials have vested interests, just like other humans. If we try to imagine what the leaders and the voters have to gain and/or lose and how easy/or difficult it is for the voters to replace the leaders, it is possible to understand why certain laws, rules, and institutions are implemented in an economy. There is a difference between: (a) the ownership structure which maximizes rents to the ruler (and his group) (b) a redistributive society which reduces transaction costs and encourages economic growth. History has demonstrated how this difference has prevented many countries from a sustainable economic growth. Similarly, Mokyr (1990) explains how China lost its technological supremacy after the fourteenth century, after having developed paper, gunpowder, ship-

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2 Infrastructure and Economic Growth

building, etc. because institutions no longer supported entrepreneurship. After the Ming dynasty replaced the Mongol dynasty in the year 1368, the earlier interested and enlightened emperors did encourage technological progress; but, one decision maker was enough to deal a death assault. During the later Ming period, the rulers clearly preferred a stable and easily controllable environment, where innovators and carriers of foreign ideas were looked upon as potential troublemakers to be discouraged. Although such rulers were equally present in Europe, no single one controlled the whole continent. This enabled innovators to move from one area to another. This connects to the Renaissance period where Columbus was born in Italy, lived and married in Portugal and was financed by Spain for his voyage to discover a westward route to the East Indies (India, etc). Between 1870 and World War II, the income of Japan stagnated around 25% of U.S. income. Following significant reforms set up after the war, Japan’s current GDP per capita is nearly two thirds that of USA. Argentina has shown a reverse trend. Although just before the twentieth century, it was as rich as most western European countries, Argentina’s current GDP per capita is barely 20% that of USA, the decline being largely attributed to disastrous policy reforms.

2.3.6

Infrastructure v/s Growth

Canning and Bennathan (2000) and Lucas (1988) studied the complementarity and substitutability pattern between inputs into the production function. They found that (1) (2) (3) (4)

individually, different types of infrastructure have rapidly diminishing returns there is, thus, no evidence of growth being led just by infrastructure infrastructure is a strong complement to both physical and human capital there is no valid reason for increasing infrastructure availability, just for its own sake (5) the rate of return with infrastructure projects follow a marginal pattern – highest when infrastructure shortages are present with respect to their levels of human and physical capital, and in countries where infrastructure construction costs are low (cf. Samli (2011) in Sect. 2.1.1).

2.4 2.4.1

The Process of Production Classifications

Public sector departments or business firms process the available resources into goods or services to benefit mankind by changing a natural material into a more

2.4 The Process of Production

45

useful form, or moving it geographically or in time (by warehousing, storage, refrigeration, etc.). This productive process comprises both the provision of goods and services: the lorry driver is therefore ‘a producer’ just as the farmer whose tomatoes he is carrying to the market; the mason is as productive as the manufacturer of the concrete mixer he is using; and the tax collector who collects taxes – for redistribution to the underprivileged, or to finance public projects – is doing this job because it has a productive role in society. Service provision thus entails changing factor inputs into services delivered at the time and place required. Thus the surgeon uses sophisticated products from secondary production and his own skills acquired over many years to bring relief to patients. If we have to look in a more detailed way at production, it is best to start by classifying it under different headings, such as (1) primary, secondary and tertiary production and (2) direct production and indirect production.

2.4.2

Primary, Secondary and Tertiary Production

Table 2.2 gives a simple chart which illustrates the classification of production into primary, secondary and tertiary stages.

2.4.3

Direct and Indirect Production

The second method of classifying production is to divide it into direct production and indirect production, as shown by the examples in Table 2.3. It is important to understand that in advanced economies, Man uses a system of indirect production to provide the utilities he needs. E.g. the motor vehicle assembler ‘produces’ all he needs – food, clothing, shelter, education, entertainment, etc. – by hanging doors in an automobile factory, while the farmers, garment workers, builders, teachers and television producers ‘assemble’ their cars indirectly by working in the fields, in clothing factories, building sites, schools and television studios respectively. So, what is direct and indirect production? Direct production is production for one’s own use, like Robinson Crusoe on his island. It has become the ecological fashion to adopt such a mode of life, but such a primitive existence where one is more or less self sufficient (hunting, own food crops, etc.) suffers from extreme vulnerability, as shown in Chaps. 11 and 17. Indirect production is production for the market, rather than for our own use. Any individual selects work that is agreeable/convenient to him, or within his capabilities, and thus specialises in a particular trade or profession. As a result, he achieves a much greater output than he can consume himself, and the vast majority of it must be marketed, i.e., exchanged for other goods which he requires. Physical infrastructure, such as water and sanitation, irrigation, transport, telecommunications and power – absorbs, in all countries, a significant proportion of

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2 Infrastructure and Economic Growth

Table 2.2 Stage Classification of Production Primary

Secondary

Tertiary

Primary production is the production of goods made available by Nature. It embraces many types of activity. (1) extractive industries – mining for iron ore, coal, precious metals, diamonds, non-metals like sulphur and compounds like salt. (2) other extractive industries – drilling for water, crude oil, natural gas and geothermal energy. (3) agricultural activities – forestry, animal husbandry, crop cultivation (tea, coffee, cocoa, rubber, sugar cane, banana, palm oil and natural fibre industries and citrus fruit farming, etc.) (4) Fishing, whaling and other marine activities – fish farming, ostreiculture, pearl farming, etc. Secondary production processes Nature’s gifts to make them more appropriate for use, resulting in better satisfaction. Thus peaches are a primary product, but tinned, sliced peaches become a secondary good. Other examples include household goods, crude oil derivatives, electronic products, etc. All such goods require some sort of manufacturing or refining process, to improve the natural product such as wood, copper, aluminium, etc., which are transformed into furniture, brassware, aeroplanes and a million other convenient and appropriate articles for everyday use. Tertiary production is the production of services, rather than goods. Here, production is concerned with the means of bringing those goods to the consumers (commercial services) and satisfy their other wants, such as security and defence, entertainment, medical care, education, etc. which may, or may not, require goods, but they also involve services of a very personal nature. This is also called provision ‘production’. Tertiary production (services) can be divided into (1) commercial services and (2) personal services. Commercial services deal with (a) four branches of trade – import trade, export trade, wholesale trade and retail trade – and (b) four activities ancillary to trade, these being: transport, banking, insurance and communications. The personal services include medical care, education, entertainment and defence. Some of these are provided specifically to individuals, (e.g. a doctor-patient, or a lawyer-client relationship). Others are provided to the general community (police services or the government ministries). But such services may still be provided to an individual (Police helping somebody, etc).

public investment, ranging from 3% to 6% of GDP (Kessides 1993). Haldea (2011) comments that India is spending only 4–5%, compared to China and other East Asian countries where over 10% of GDP is devoted to infrastructure investment. (see also Moyo (2012) and Sharma (2013), as also given at the beginning of this chapter). In fact the debate about infrastructure performance with respect to economic growth started in the mid 1980s. Research that has tried to find a link between infrastructure and economic growth has taken a macroeconomic approach, as it is difficult to carry out otherwise. In developed countries, studies show that infrastructure capital impacts positively on growth and economic output. However, as all possible spillover effects or externalities arising from infrastructure investment have been considered, the analysis cannot explicitly point out how infrastructure affects growth, nor can provide any policy guidance about the strategies to adopt.

2.5 Impact of Infrastructure on Economic Development

47

Table 2.3 Types of production The production of goods Primary production Secondary production The production of The production of processed prodgoods made available ucts derived from the natural priby nature mary products

Farmer Fisherman

Aeronautical engineer Builder

Fur trapper etc. Herdsman Lumberjack Miner

Cabinet maker Carpenter Decorator Electronic Engineer

Oil driller Pearl diver Whaler

Engineer Plastics engineer Potter Refinery technologist Shipbuilder Steelworker Tailor

2.5 2.5.1

The production of services Tertiary production The production of services

Commercial services Banker Communications engineer Exporter Importer Insurance agent Merchant-navy captain Retailer Ship’s crew Stockbroker Transport driver Wholesaler

Personal services Author Clergyman Dentist Detective Doctor Editor Entertainer Lecturer Nurse Policeman Psychologist Teacher TV personality Undertaker Vocalist

Impact of Infrastructure on Economic Development Nature of Impacts

The nature of impacts are at least fourfold: First, the availability of infrastructure and its nature act on both the supply and the demand. It thus affects economic growth. Generally, the availability of infrastructure decreases production costs, which, in turn, influences international trade through the costs and service quality (trade logistics), and hence affects competitiveness in export/import markets. In undeveloped (rural) areas, for example, many sectors can access applications of modern technology through telecommunications (Nilekani 2009) – which may indicate centres of demand (consumption possibilities) as well as growth of alternative employment.

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2 Infrastructure and Economic Growth

The converse proposition (Kessides 1993) of the following examples: (1) urbanization without congestion or adverse net environmental impacts, (2) transport time reduction or better health through improved and easier access to clean water and sanitation, increase the efficiency of labour with higher economic returns, (3) Financing and implementation of infrastructure services to save on land, fuel or water consumption show that the absence of infrastructure makes itself felt. Second, the quality of life is raised through infrastructure by (1) providing basic necessities: clean water, land and air and a better spatial arrangement of urban areas conducive to architectural appeal and civic pride. (2) contributing to basic or improved services: transport, health, communications. (3) employment creation: not only implementing infrastructure plans creates immediate employment, but in many cases, this can be sustained through the long term, provided a proper mode of financing infrastructure investment, operations and maintenance is chosen so as to avoid the regular deficits occurring in many utilities (such as railways, airlines, power, water, etc.. . .). Third, infrastructure investment through expenditure flows produce some economic effects notwithstanding those induced by the operation or generation of services, such as (1) the multiplier effect: when infrastructure facilities are constructed, the money, spent on wages and materials used, gets transferred – through the workers – to demand and output in other sectors. (2) financial “crowding out”: when money is used for infrastructure implementation, this influences the availability of financial capital in other sectors of the economy. This lack of capital will raise the lending rate – the cost of capital – from banks: this is described as financial “crowding-out”. It should, however, be pointed out that the above effects are not specific to infrastructure; they may also apply to any sector where government expenditure is involved. Furthermore, “crowding-out” is not limited to investment expenditure. It would also occur if subsidies (through taxation) or borrowing, rather than revenues from the services provided, are used to finance operation and maintenance (O&M) activities. Fourth, practically all economic processes depend on infrastructure (Hall et al. 2016) as a production input, and the specific role infrastructure plays in enabling trade, communication and innovation may be complex. Thus infrastructure is a critical factor in the economic network. As with most networks, any disruption of one link (here infrastructure) may block or affect the whole chain of activities leading to additional economic losses. For example, an electricity power cut may lead to a loss in power throughout the country. Water pumps stop working, equipment and machinery stop working and manufacturers cannot produce goods, while other businesses cannot operate their computers and ICT equipment.

2.5 Impact of Infrastructure on Economic Development

Direct damage to physical assets e.g due to hurricane

49

Reduction in value of assets e.g. Pylons, cables, pipes

Cost of repairs

Direct losses in Economic Output caused by the event or hazard e.g. No electricity to consumers

Indirect losses in Economic Output

Resulting from primary loss in Economic Activity OUTSIDE event or hazard area e.g. Industries not working from lack of electricity Resulting from indirect disruptions OUTSIDE event or hazard area e.g. No rail (electricity) transport No electricity for pumping water

Fig. 2.1 Economic impacts resulting from infrastructure failure

The net impacts of infrastructure disruption on the rest of the economy may be estimated from both (1) the physical indirect effects caused by physical infrastructure systems failure in cascade and (2) indirect economic effects from loss in production. Figure 2.1 gives a pictorial explanation of failures in infrastructure services leading to economic impacts.

2.5.2

Achieving the Potential of Infrastructure Impacts

It has been mentioned in Chap. 1 that infrastructure is really better appreciated through services generated rather than the physical structures, themselves. However, these impacts on economic development depend on four conditions: (1) investment in infrastructure should not remove resources away from other (possibly more productive) investment. This means that resource allocation should be efficient. This would depend on having the right macroeconomic conditions.

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(2) investment in infrastructure (roads, power, water) cannot produce economic benefits (produce and sell goods), only develop the potential through complementing the productive capacity of other resources (factory, workers). (3) infrastructure must be able to provide reliable and quality service as required by users who will then be able to produce and/or consume the most durable and significant activities. (4) user charges to discourage wasteful consumption. If these are based on economic prices (costs of production/supply, externalities and willingness to pay), economically efficient infrastructure facilities, with favourable environmental impacts can be provided. Otherwise, infrastructure may be inadequate or inexistent. The reduced availability may worsen inequalities, rather than the poor getting improved access to services.

2.6

Infrastructure’s Effects on Economic Development

In developing countries, the effect of inadequate infrastructure services on the economic growth and welfare is more visible, with regards to availability, reliability and quality, diversity and price range compared to developed countries (Table 2.4).

2.7

Infrastructure and Macroeconomic Stabilization

It is the government’s duty to see that resources are well utilised to produce the highest benefits to the country. When the same funds can finance only one of two projects A or B, the one that should be upheld is the one producing the higher benefits, not necessarily financially, but rather to the economy of the country. For example, trying to sell water to poor people will not yield high revenues, but it is essential to the economy that the citizens get the benefit of a safe, potable water supply to remain in good health to provide the labour force necessary to run the economy. Thus, even if public money spent on infrastructure ‘crowds out’ investment from the private sector, this will become significant only if higher benefits could be obtained from the same funding, labour and materials. Infrastructure benefits can only be assessed through the degree the infrastructure effectively satisfies the demand from the users in the economy and the ancillary externalities (environmental impacts – see also Fig. 17.1). On this basis, when a public infrastructure is being contemplated, it is difficult to assess its impact on economic growth if there is an inefficient allocation of resources and prior to it being evaluated by users (Fig. 2.2). Allocating resources efficiently to infrastructure is highly dependent on how expenses are financed – do they come from annual taxes collected or from a user service charge i.e. users pay for the service? The financing policies must be

2.7 Infrastructure and Macroeconomic Stabilization

51

Table 2.4 Effect of infrastructure on economic development Contributions to growth through reduction in costs 1

Effects on Production, investment and employment

2

International competitiveness

3

Domestic Market development

4

Economic diversification

Infrastructure unreliability results in multiple economic costs: (1) direct costs resulting from loss of raw materials or finished goods, delays in production, potential damage to electronic equipment, leading to existing production capacity being underused, and placing constraints on the production efficiency. (2) the user must add more capital to invest in alternative (more reliable) sources. (3) the resulting higher production costs and intermittent output have a negative impact on other sectors of the economy, with bottlenecks and underused capacity in other industries. Countries, which intend to trade internationally, cannot sufficiently rely on inadequate and unreliable infrastructure. As information technologies have greatly reduced logistics costs, these countries, wishing to acquire business overseas, need to invest in modern logistics management. Apart from policy instruments which provide a suitable regulatory framework for production and trade, EPZs (export processing zones) comprise two components: (1) a suitably well connected – sea, air, and road transport systems – industrial estate. (2) communications infrastructure and utilities. When zones are located in faraway regions, the infrastructure investment costs are exorbitant, and as often, they do not produce enormously either, they do not produce high returns. After a farmer has produced his goods, he has to bring them to the market. A good road or transport system will greatly reduce his transport costs and increase his marketing opportunities. Beenhakker (1987) mentions that for foodstuffs, in developing countries, marketing and transport costs amount to 25–60% of the final prices, equally shared. A competitive marketing system may be created by providing communication and transport systems which give access to market transparency and market information. Contributions to growth through structural change Infrastructure produces similar direct effects in industry or in agriculture with regards to production costs and profitability. Income levels are affected, as well as alternative income sources being available, consumption levels, and the health of the population. As more people use credit and alternative nonfarm employment outside the farm becomes possible, this results in increased total earnings. In Thailand, (Binswanger et al. 1989) reduced transport costs from improved roads were found to shift local demand away from cheap locally-produced goods as costs of competing manufactured consumer goods were reduced; however, the improved roads were found to contribute more nonfarm jobs than were lost. (continued)

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Table 2.4 (continued) 5

Technological innovation

6

Structure of Production and consumption

7

Personal welfare

8

Value in consumption

Telecommunications has undergone a rapid technological change, not only expanding on the availability of services offered, but also with a significant decrease in cost. This has, in turn, decreased transportation costs, as well as those of other activities involving telecommunications (Hufbauer 1991). As a result, cost structures have changed significantly, many activities use/send information more intensively, there is more global trade, manufacturing, and capital flows. This has been accompanied by an increased contact across borders and cultural exchange among nations. Infrastructure influences patterns of demand and supply. Given that sectors such as the service, sophisticated technology, and finance have expanded, this has increased the need for telecommunications. In contrast, the relative needs for transport of industrial inputs and products, and the disposal needs for industrial waste have decreased. Similarly, manufacturing systems development which should be flexible and, which are often computer-integrated, entail that production takes place nearer to the domestic market final consumers. This increases the need for short-haul transportation rather than long-haul conveyance throughout the country. Infrastructure relates to welfare in three general ways: (1) water may be available from the tap or through vendors. The water (of same value to the user) will cost less or more (depending on the source) and will affect how the user spends the rest of his income. A parallel can be made for other types of infrastructures services; (2) labour having easy access to employment (good roads and adequate buses) will be more productive and be more capable of increasing their potential income; (3) when available, infrastructure increases actual wealth. In most countries, if not all, (Selowsky 1979, Meerman 1979) infrastructure services are not readily available to low income groups. Even when available, the quality of such services may be lower than that available to the higher income groups of the country or population. This may give the impression that, even if infrastructure is provided to alleviate poverty, the way public expenditure is used to implement infrastructure availability, inequalities tend to worsen, Clean water, sanitation, power, transport, and communications are important infrastructure services, which provide considerable benefits to people. When available, such infrastructure provides a measure of the basic population welfare. Such services may be considered as commodities. Apart having direct value as a household “consumption basket’ item, infrastructure services enable acquiring other facilities. For example, electric power does not only provide lighting and energy as direct benefits, but also more hours of study time, entertainment facilities (television, cinema), and allows the use of labour-saving equipment as indirect benefits. The available budget will add constraints to the consumption pattern of the (continued)

2.7 Infrastructure and Macroeconomic Stabilization

53

Table 2.4 (continued)

9

Labour productivity

10

Wealth

11

Environment

household as it compares the cost of infrastructure services to those of other needs. The budget constraints include both household income and time. The value of an infrastructure service to households can be partly, quantitatively, estimated by observing three types of behaviour: (1) willingness to pay: it is usually assumed that households spend some 3–5% of their income to buy water. But, because water has value as a basic necessity, poor people may spend as much as 20% of their revenue to purchase water from private vendors. (Whittington et al. 1989; Economist 2009). (2) allocation of expenditure: Transport is usually more expensive than walking, which generally, however, consumes more time. Thus, the poor, who may have to walk due to financial constraints will forego time which could have been devoted to higher value personal activities. (3) allocation of time: Once time has been saved because of an infrastructure service being available (time saving due to transport, tap water), how is the extra time used by the people? The lack of a minimum threshold level of infrastructure services impacts unfavourably on poor people – whether producers or consumers. Otherwise, markets function inefficiently. Employment in urban areas depends on time and money required for commuting to work. Inadequate infrastructure (transport, communication, water, sanitation) has thus an impact on health and consequently, on workers’ productivity and quality of life (air pollution, safety hazards on congested roads). Poverty mitigation and inequality reduction are affected by the different methods of providing and financing infrastructure. Generally, the poor have less attractive (or fewer) options at their disposal than the rich. The latter can invest in private transport, a water pump, more expensive cooking or lighting appliances or move to a better-provided locality. In contrast, these amenities would reduce the real income of the poor, thus reducing their welfare. Infrastructure may have both negative and positive environmental effects, because of interdependence. An inadequate (underinvested) wastewater network may lead to contamination of water resources or the water network, thereby reducing the health benefits arising from the water supply proper. Boiling untreated (or contaminated) water needs a significant amount of energy, thus increasing cost of the resource. Abuse of water for irrigation purposes also reduces its availability for potable use in urban areas, with higher or better economic and environmental returns. In many cities, communication with insufficient telephone connections may lead to more transport use with more noise and air pollution. (continued)

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Table 2.4 (continued) In contrast, positive synergism may arise among infrastructure activities and other sectors. Landfill sites and sewage treatment wetlands have been reclaimed to be converted into creative and useful recreational parks. Appropriate sorting of wastes (domestic, industrial) may lead to environmentally-sound practices. If users and stakeholders are able to participate in infrastructure management process (planning, operation, and regulation), this could provide for a better environmental management. Given the options available for obtaining a required level and quality of service, users may indicate how much they can contribute financially and otherwise in the overall management process. Government can help in public education – promoting suitable technologies and group participation, in particular those hampered by environmental externalities, making credit available and in regulation.

AFFECT THE LEVEL OF PRODUCTION OR CONSUMPTION

ACTIONS BY PRODUCER OR CONSUMER

POSITIVE (benefit on other party free of charge)

The beneficiary gets a windfall gain, without paying for the benefit

TECHNOLOGICAL OR PECUNIARY

CHANGE THE DEMAND AND SUPPLY CONDITIONS

EXTERNALITIES

NEGATIVE (costs on other party)

The affected party gets NO compensation at all

Fig. 2.2 Externalities

appropriately designed so that the required expenses for infrastructure do not disturb macroeconomic stability by distorting the labour market or by bringing fiscal or financial imbalances. Table 2.5 examines the connections between infrastructure expenses and the markets for labour and capital in developing countries.

2.7 Infrastructure and Macroeconomic Stabilization

55

Table 2.5 Infrastructure and the economy 1

Linkages Fiscal

2

Credit markets

3

Labour markets

4

Labour intensive public works

Although some infrastructure services (water, irrigation) may require subsidies, this should be properly targeted and seen to be equitable. If poor people can afford to pay electricity bills and own smartphones, there is little justification for a subsidy on a water bill which is lower than the former. Subsidies should not unduly benefit higher income groups. Some infrastructure services may provide substantial fiscal revenue to the government, but this should not be at the detriment of the organisation lacking managerial and financial autonomy. Generally, subsidies reduce public funds which could have been more efficiently used for poverty alleviation on other projects. In developing countries, infrastructure is very often provided by public or parastatal bodies, funded by government budgets or through bank loans guaranteed by government, conversely, in developed countries, infrastructure is very often provided by municipalities and private sector suppliers which receive finance from private capital markets. Financial autonomy for public infrastructure service providers may be initiated by reducing government funds. However, if the government simultaneously fixes tariffs, etc., this may not give any incentive to obtain private capital (revenue bonds or equity) which requires high returns. Although these instruments do have a strong potential to finance infrastructure services, a proper legal framework is needed to initiate and regulate capital market activity in this sector. While infrastructure investment does create employment at the construction or implementation stage, it does not always follow up to the later operation stage. Public works (like roads, buildings) do not need many people after construction, except for maintenance. Public bodies entrusted with such construction may, in fact, create overemployment, when fewer workers are required for maintenance, and when it is difficult to lay off government workers. In contrast, other works (hotels, industry, etc), besides needing workers during construction, also provide substantial employment opportunities over the duration of the asset. “Quand le bâtiment va, tout va”. This expression is used to say that if buildings are being constructed, then all is going smoothly in the economy, because there is surely full employment. Probably, there is some truth because infrastructure construction implies workers earning money which they spend in turn to buy goods from sellers who, from their profits, buys other things. This is called a multiplier effect in economics, well understood by politicians and managers, and used as a stimulant for growth during bad times. Public deficit spending, nor foreign savings can always be used for investing in infrastructure where it is judicious to consider the effects in the long term. When infrastructure projects are labour intensive, governments often use these to build roads, water, irrigation or sewerage networks or other public works to create assets, generate employment, mitigate poverty or a combination of objectives. (continued)

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Table 2.5 (continued) Linkages

5

2.8

Labour redundancy

As explained above, the infrastructure created may generate employment both in the short term (during construction) and in the medium to long term (operation stage). Thus, when projects are competing for the same funding, they should be assessed and compared for both stages. Although infrastructure investment can generate substantial short term employment, a better quality of infrastructure will be obtained if the selected projects have been designed to generate the highest economic yields, rather than to maximise employment at construction stage – which may happen prior to election time. This is why it is important that different projects are considered within an integrated development plan of any given area or region. Of course, if users, besides identifying and contributing to the investment, also consider operation and maintenance charges, this would ensure an efficient and equitable way of implementing the overall infrastructure. Organisations providing infrastructure services often have an overstaffing problem. For example, in the water provision sector, the norm is to have some four employees per 1000 water subscribers. Many utilities may find themselves overstaffed for a number of reasons, such as: • the usual public sector lack of incentives to reduce costs, • recruitment under political influence, • and legal constraints (staffing norms and constraints against laying off), • an employee is a potential voter, a laid off employee is not. There may be economies of scale in some sectors, but labour redundancy often intensifies because of new technology. Sometimes, implementing labour reductions before restructuring the operation procedures is a pre-requisite to attract private firms as a partner or management team.

Implications for Infrastructure Planning and Policy

The discussion above suggests that several conditions are required for infrastructure to impact favourably on economic development. Four main criteria to evaluate infrastructure services are given in Table 2.6.

2.9

Conclusion

With the exception of small localised markets, infrastructure is required to satisfy the basic needs of suppliers and consumers. Means of communications (roads, for a start) are necessary besides other requirements of modern society. High quality service may require even more dependable (reliable) technology.

2.9 Conclusion

57

Table 2.6 Criteria for evaluating infrastructure services 1

Demand for specific services

2

Possible alternatives to satisfy the services needed

3

Different investments – Economic analysis

4

Assessment of infrastructure services

Investment requirements should be calculated on expected capacity use of facilities, and estimates of future consumption of services, rather than the physical structures themselves. This will require analysing the range of different users and their demand or need for specific services. This investigation: • needs to survey how potential users are currently being served. Can these channels (informal or illegal) be exploited when designing future networks? • should design measures (without or/and with investment) to increase the efficiency of the existing infrastructure and mitigate congested areas; • should encourage conservation possibilities (e.g. by managing demand); • should propose projects to add more capacity. Such an approach will avoid countries from making new investments immediately, or delay them through better management of the existing facilities and/or the demand itself. This approach is compatible with the principle of “least cost investment planning”. When potential infrastructure investments have to be compared with other alternatives or projects in other sectors, it is best to use traditional benefit-cost (rate of return) analysis. Very often, ex-post (after completion) ERRs are lower than those estimated at appraisal (ex-ante) stage, because there is a tendency to overestimate project benefits. While physical parameters (length of road, capacity of treatment plant or reservoir, etc) of the infrastructure facilities and its efficiency may be used as comparative indicators by its planners and operators, it is useful to add user satisfaction and quality of service to the list of performance indicators in order to help planners and regulators assess performance benchmarks of different infrastructure service providers.

Infrastructure policy should aim at effective delivery of infrastructure services of high quality compatible with low cost to the country’s households and firms. Such infrastructure policies may be deemed to have been successful when the end-users can compare the quality and quantity with respect to prices favourably against global norms. Sustainable economic growth can only be achieved if quality infrastructure services can be provided at reasonable cost. This is certainly the challenge of many countries to improve the quality of services and the delivery system through an adequate infrastructure investment. Infrastructure investment implies investing highly during a short period, high risks of failure or delays to reap benefits, a low return associated with a long recovery period. Such constraints affect the outlook of governments on possible efficient delivery of infrastructure services. It is certainly useful for governments to consider

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moving away from this traditional role of services provider to one of facilitating and regulation in order to ensure proper delivery of infrastructure services. The institutions, the regulations, and the enforcing laws constitute the infrastructure of an economy, and determine to what extent individuals are prepared to invest in capital, to develop skills, and adopt technology, associated with long-term economic success. Countries where the government provides the proper environment conducive to production are very dynamic and successful. Countries where the government uses its power to allow diversion are certainly less successful. In the same vein, some countries carried out revolutions to give more liberty or rights to its citizens with the result that they successfully developed or adopted the relevant institutions and the infrastructure ancillaries. This theory explains how some countries such as Singapore, Hong Kong, and Japan have changed from being relatively poor to being relatively rich over a short time span of only four decades. Conversely, countries like Argentina or Venezuela can move backwards.

Appendix 2.1: “Constant Return to Scale” Consider the equation Y ¼ AK α H β X γ Lð1αβγÞ

ð2:1Þ

where Y is total output A is total factor productivity, K is physical capital, H is human capital, X is infrastructure capital, L is labour force. If all the inputs are multiplied by m, then we have Ym, the new output as. Y m ¼ AðmK Þα ðmH Þβ ðmX Þγ ðmLÞð1αβγÞ ¼ AðmÞα ðmÞβ ðmÞγ ðmÞð1αβγÞ K α H β X γ Lð1αβγÞ ¼ Amα mβ mγ mð1αβγÞ K α H β X γ Lð1αβγÞ ¼ Amαþβþγþð1αβγÞ K α H β X γ Lð1αβγÞ ¼ Am1 K α H β X γ Lð1αβγÞ Y m ¼ mAY i.e., multiplying all the inputs by m, increases the output by m. This is called “constant return to scale”

References

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References Altman, M. (2012). Behavioral economics for dummies. Wiley. Angner, E. (2012). A course in Behavioural economics. Palgrave Macmillan. Beenhakker, H. L. 1987. Issues in agricultural marketing and iransport due to government intervention (Transportation Issues Series. Discussion Paper No. TRP7). World Bank, Transportation Department, Washington, DC. Cited by Kessides. Binswanger, H. P., Khandkluar S. R., & Rosenzweig, M. R. (1989). How infrastructure and financial institutions affect agricultural output and investment in India (Policy, Planning and Research Working Paper No. 163). World Bank, Latin America and the Caribbean Country Department II, Washington, DC. Cited by Kessides. Canning, D. , & Bennathan, E. (2000). The social rate of return on infrastructure investments (World Bank Policy Research Working Paper No. 2390). De Soto, H. (1989). The other path. New York: Harper and Row. Haldea, G. (2011). Infrastructure at crossroads: The challenges of governance. New Delhi: Oxford University Press. Hall, J. W., Nicholls, R. J., Hickford, A. J., & Tran, M. (Eds.). (2016). The future of National Infrastructure: A system of systems approach. Cambridge: Cambridge University Press. Hufbauer, G. (1991). World economic integration: The long view in international economic insights. Washington, D.C.: Institute of International Economics. Kahneman, D. (2012). Thinking, fast and slow. Penguin Books. Kessides, C. (1993). The contributions of infrastructure to economic development: A review of experience and policy implications. Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22, 3–42. Meerman, J. (1979). Public expenditure in Malaysia: The benefits and why. Oxford University Press. A World Bank Research Publication. Mokyr, J. (1990). The lever of riches. New York: Oxford University Press. Moyo, D. (2012). How the west was lost. London: Penguin Books. Nilekani, N. (2009). Imagining India: Ideas for the new century. Penguin Books. North, D. C. (1981). Structure and change in economic history. New York: Norton. Samli, A. C. (2011). Infrastructuring: The key to achieving economic growth, productivity, and quality of life. Springer. Selowsky, M. (1979). Who benefits from government expenditure? A case study of Colombia. New York: Published for the World Bank by Oxford University Press. Sharma, R. (2013). Breakout nations: In pursuit of next economic miracles. England: Penguin Books. Shleifer, A., & Vishny, R. W. (1993). Corruption. Quarterly Journal of Economics, 108(August), 599–618. The Economist. (2009). Pump and be damned in The Economist, 12 September 2009, published by The Economist Group, Berlin, Germany Whittington, D., Lauria, D. T., & Mu, X. (1989). Paying for urban services: A study of water vending and willingness to pay for water in Onitsha, Nigeria. Working Paper INU-40. World Bank, Infrastructure and Urban Development Department, Washington, D.C.

Chapter 3

Infrastructure and Spatial Organisation

At the root of any new project is an idea and if we cannot find a fresh concept for a project, we will not implement it because it will fall short of what we have come to respect. We believe that the shortest way to the bright future we seek lies in a creative and pioneering approach. Mohammed bin Rashid Al Maktoum “What’s OPM?” “Other People’s money. What makes real estate a great business is that the government lets you take deductions on interest and depreciation while your assets keep growing. The three most important things in real estate are location, location and location. A beautiful building up on a hill is a waste of time. An ugly building downtown will make you rich.” Sidney Sheldon “Cities must not be built for economics alone – to build up the property market – not for politics alone – to glorify the Prince (in whatever form of government). They must be built for people and for the poorest first.” Barbara Ward . . .It took a vision. That was supplied by a Danish architect. . . Jan Gehl. . .But it was also driven by the long-term, marketfriendly, practical backing of the city authorities in Copenhagen since 1962, when the main shopping street, Stroget, was pedestrianized. Hamish McRae . . .throughout the history of their development, people have been linear, frontal, horizontal, 5 km/h – 3 mph beings. Jan Gehl life, space, buildings – in that order Jan Gehl

© Springer Nature Switzerland AG 2021 V. Proag, Infrastructure Planning and Management: An Integrated Approach, https://doi.org/10.1007/978-3-030-48559-7_3

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This chapter explains how the spatial organisation of our cities affects infrastructure provision. Green space is certainly welcome, but is difficult to provide if construction of roads and buildings is allowed all over the place without any proper planning. More roads produce fluid vehicular traffic, in turn attracting more cars, and thus more reliance on fuel, producing more pollution, more noise, and so on – the very opposite of sustainable development visions. A hundred years ago, there were practically no cars and the size of towns was limited to pedestrian access, within a reasonable time. Today, we keep on harping on the congestion and pollution caused by vehicular transport. In view of problems regarding infrastructure requirements, it is important for some strategic planning to be carried out right now for the next 50 years or more. The aim of this chapter is to propose a healthy town that would provide a clean and quiet environment, free from pollution (air and noise), reduce traffic problems and allow freedom of movement.

3.1

Cities Are for People

The city is for people. In that sense, the city should be used by people for their benefit and enjoyment, rather than be congested with vehicular traffic. The following pages show photographs, under different headings, which show different facets of life in towns: Parks Public space Roads Roads are for people Bicycles

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Parks:

Pamplemousses Gardens, Mauritius

Park in Madrid

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Public space:

Public space, Madrid

Walking space, Toulouse

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Roads:

(a) The driver is requesting access

(b) The road pillar barriers have gone underground

(c) The road pillar barriers rise up once more

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Roads:

Pedestrian shopping road with restricted vehicle access, Toulouse

Road crossing, Boulevard Jourdan, Paris. Tramway lines with pedestrian path, bicycle path, and two-lane road on each side

One-lane road, with pedestrian pavements on each side, Toulouse

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Roads are for people:

Pedestrian road, Madrid

Pedestrian road, Toulouse

Pedestrian road, St. Denis, La Réunion

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Roads are for people:

Pedestrian road with restaurants and shops on both sides of road, Toulouse

Pedestrian road, Budapest

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Roads are for people:

Pedestrian and shopping road in Porto, Portugal

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Bicycles:

Child carriage on a bicycle

Bicycle fitted with a child trailer

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Bicycle stand in Toulouse

Bicycle stand in Budapest

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Renting a bicycle on Boulevard Jourdan, Paris

Driving a bicycle on Boulevard Jourdan, Paris

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Apart from their houses, people enjoy green spaces, parks for walking or simply enjoying the scenery, and their relative silence. In many towns, once a person is out of the house or apartment, there are just roads and roads, filled with vehicles of all kinds, with little space available for persons to feel at ease, benches to sit down, if tired. When people have to cross six lanes of road, it is not easy to do so safely, unless precautions are taken or have been imposed, such as crossing in two stages, etc., of course, with the proper stoplights for motorists. When tram lines come into the picture, this may add to the complication. Once, decades ago, people used to walk, at least in the town or village. Then, the car suppressed this habit or culture. Some towns have tried to help pedestrians through some car free roads (at certain times, usually shopping hours) or restricted vehicular access. Fortunately, some towns have advocated bicycle paths, both to ease vehicular traffic and to help pedestrians who wish to travel a bit faster. Notwithstanding transport (which may create congestion), people do spend plenty of time on the roads, walking for a purpose to their destination, shopping, and, rarely, just strolling, without any particular destination. However, it feels nice when one can walk without the hassle of cars going around. As the pictures show, many roads, in many countries, are being devoted for people to feel comfortable in many senses of the word. The photographs have been taken from many countries, to confirm that the trend is spreading, and will hopefully become worldwide. This said, the implication is that the relevant infrastructure should consider these trends when being designed, both for enjoyment by local residents and by tourists. Thus, a bicycle stand should not unduly block the pedestrian pavement, nor block the road. Often, they have replaced the parking space, previously allocated to two to four cars.

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Green Urbanism Principles

There are many researchers who have worked on the idea of transforming towns into more liveable areas (Crawford 2000; Gehl 2010; Lefèvre and Sabard 2009; Lehmann 2010) among others. McRae (2010) describes how the authorities in Copenhagen gave full support to the idea of transforming the town, since 1962 over the next decades, into a car free town. While some advocate increasing the land devoted to green space, and others propose to reduce car influence gradually, Rose (2019) believes that in the distant future, cars will disappear because people will become more and more cyber oriented, with little need to commute. However, it is difficult to believe that this will happen within the next decade. Table 3.1 summarises the principles proposed by Lehmann (2010) to turn towards greening the built environment.

Table 3.1 Green urbanism principles 1

2

3

4

5

6

7

Principles Climate conditions and local conditions will shape the city Every sustainable project design must consider the unique features of the site: orientation, solar radiation, rain, humidity, prevailing wind direction, topography, shading, lighting, noise, air pollution, etc., so as to help reduce the project’s heat gain or losses, with a minimal environmental footprint, blending with the existing landscape, and the local microclimate. The city should be self sufficient in energy It is likely that oil supplies will run out well before the life-expectancy of most buildings. It is judicious to look towards a renewable energy source. Adopt a zero waste policy Zero-waste urban planning comprises reducing, recycling, reusing and composting wastes to generate energy. All material flows need to be investigated thoroughly so as eliminate the notion of waste. High water quality within a closed loop urban management system The project must include a high performance integrated infrastructure managing high quality water cycle process taking care of sewage (grey and black water) recycling, stormwater, and rain water harvesting, which allows for drought resistant crops, needing less water. Maximum availability of gardens, landscapes and biodiversity As trees absorb CO2, it is important to include inner-city gardens, urban farming/agriculture and green roofs in, and a green belt around the project design to provide for food, maximize the eco-system’s resilience. The “urban heat island”(UHI) effect will be reduced through plants for air-purification and urban cooling. Eco-mobility and low impact transport system An integrated non-motorized transport system, such as walking, cycling and, friendly pedestrian/bicycle environments, with safe bicycle lanes, free rental bike schemes and pleasant public spaces would help both people and the environment. Using local materials and prefabricated systems The use of local materials and local technology, when possible, is environmentally friendly, and enables shorter supply chains. Modular prefabrication can entail affordable housing, possible reuse of building components, and waste reduction. (continued)

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Table 3.1 (continued) 8

9

10

11

12

13

14

15

Principles Retrofitting existing districts to increase compactness This principle involves increasing sustainability through buildings developing vertically rather than horizontally, optimizing transport systems, retrofitting inefficient buildings and systematic reduction of the city’s carbon footprint. Using solar energy for green building design Passive design principles should be used to design all buildings to minimize energy use, to use solar architecture principles, to create long-term value buildings that consume less energy than they produce. Affordable housing and mixed use buildings A mixed-income and mixed-use city promotes more social sustainability and social inclusion, and helps to regenerate the city centre. It is judicious to have a maximum diversity of users, so that various sectors in the city can assume different roles within a 24 h cycle, just as the central business district (CBD) can serve for more than simply office work. IT and teleworking from home can greatly reduce transport needs: (motto: “Don’t commute to compute”). Increase food security with reliance on local food production If adequate land is devoted to food local production local, without using fertilizers or pesticides produced from oil, this will move urban areas towards natural eco-systems and healthy food systems, as well as reduce petrol based transport (for transported food) and energy and water consumption. Safe and healthy city, both in terms of health and culture The design of the city should consider its distinct environment – materials, history and population desires – to uphold grassroots strategies, to protect its built heritage and to maintain its distinct cultural identity, be it by encouraging locally owned businesses, supporting creativity and cultural development, nurturing distinctive places with high to sustain basic public travel and walk-to retail services. Urban governance and sustainable procurement method A democracy should be able to empower and enable people to actively shape their urban environment. Bureaucratic practice could, inter alia, raise public awareness; improve planning participation and policy-making, implement anti-sprawl land-use, legislate for controls in density and support high-quality densification, eventually adopting green urbanism principles. Training and education As it is necessary to change attitudes and personal life styles, primary and secondary students need to be trained in subjects, such as waste recycling, water efficiency and sustainable behaviour. Knowledge could be shared by providing adequate educational opportunities and training for the citizenry to increase their participation in green jobs. Universities can help transform cities by acting as “think tanks”. Particular strategies for developing countries Developing and emerging countries have their own specific needs. Strategies, technology transfers and funding mechanisms should also be specific and appropriate. Local people should be trained and empowered so that they are versatile, with the possibility of adapting to diverse job structures. Combating climate change is a priority.

After Lehmann 2010

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Infrastructure According to Spatial Organisation

Figure 3.1 shows the area taken by a building on a given area of land. Although the building covers the same area in all the three cases, the location chosen will influence many things, inter alia: (1) (2) (3) (4)

How the remaining area may or may not be developed in the future The visual aspect of the building on the given area How the users see external features from inside the building The location and layout of infrastructure services.

Before moving to the problem of infrastructure layout, it would be proper to go through a few definitions which apply to the spatial organization relating to buildings. Figure 3.2 shows a building where the plot ratio is 0.25 because the building footprint area covers one-quarter of the land area. The footprint is the actual area covered by the building. Fig. 3.1 The building location affects many factors, including infrastructure service provision

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Fig. 3.2 Plot ratio ¼ 0.25

Fig. 3.3 Plot ratio ¼ 0.75

Thus, the buildings in Figs. 3.3 and 3.4 have the same footprint as in Fig. 3.2, but because the total floor areas are respectively 3 and 10 times more than in Fig. 3.2, the plot ratios are given as 0.75 and 2.5. The plot ratio can thus be defined as Plot ratio ¼

Total Floor area of building Land area:

In contrast, the site coverage compares the building footprint area to the land area, with the definition being

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Fig. 3.4 Plot ratio ¼ 2.5

Site coverage ¼

Building footprint area Land area

Thus, in Fig. 3.5, both buildings (one or three levels) have the same site coverage of 0.25 because both buildings have the same footprints. The top half of Fig. 3.6a shows two flats, with green space in front and side ways. There is also a similar set of two flats, (lower half of Fig. 3.6a) behind the first set of two flats. The infrastructure services (water pipes, electric cables, etc.) will probably be installed as shown. Conversely, 3.6b shows a block of four flats – with green space in front and on the sides. In this case, however, the flats are now back-to-back. The infrastructure services will probably be installed, differently. With many houses in the neighbourhood, there will probably not be much difference in the total length of pipes or cables.

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Fig. 3.5 Site coverage ¼ 25%

Figure 3.7 shows four buildings A, B, C and D which are fed from one central pipe. The other four buildings E, F, G and H are, however, fed differently with different lengths and sizes of pipes. Whether the buildings A, B, C and D are individual flats, medium-rise or high rise buildings will affect the sizes of the pipes used. Consider, for a moment, the buildings A1, A2, A3, A4 on Fig. 3.8. If they can be grouped on top of each other, they can form the group of buildings A shown on Figs. 3.7 or 3.9. Figure 3.7 also shows that buildings G, H, E1, and F1, are fed through two lines installed on different sides of the same road, so as to minimise disturbance to road users and customers during repairs and maintenance works.

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Fig. 3.6 Different ways of arranging four flats. (a) Grouping flats two by two. (b) Back to back arrangement

Similarly, the other buildings shown on Fig. 3.8, can be grouped into four corners (or elsewhere) of the land available (Fig. 3.9). However, both building configurations (Figs. 3.8 and 3.9) can be fed differently with differing lengths and pipe sizes. This will influence the cost of the infrastructure services provision. If there are four adjoining plots similar to Fig. 3.9 which are located around a street corner (see Fig. 3.10), the pipe routes and sizes can again be different. On Figs. 3.1 and 3.5, the buildings are surrounded by green space. In contrast, the layout of Fig. 3.11 shows a courtyard layout, where the green space is surrounded by buildings, of low to high rise size. Here again, the way the customers are provided with their services will affect the lengths and sizes of infrastructures services provided (pipes, cables, etc). Although single lines are mostly shown on the figures above, Fig. 3.7 shows how sometimes two lines may be installed on the same road, one on each side, so as to minimise disturbance to road users and customers during repairs and maintenance works.

3.3 Infrastructure According to Spatial Organisation Fig. 3.7 Feeding four flat blocks with one or more pipes

Fig. 3.8 Feeding 16 flat blocks

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Fig. 3.9 The 16 flats have been regrouped into 4 blocks, with a different feeding arrangement

Fig. 3.10 Four blocks around a road junction

The design of sustainable or smart cities will have to consider many other principles, but, among them, will also examine the installation and operation costs of the required infrastructure. A few possible examples have been given above. The next section will deal with some of the principles involved to propose a car free town to cater for a population of 100,000 persons on an area of 4 km2.

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Fig. 3.11 Courtyard arrangement with buildings around green space (gardens, playground, etc)

3.4 3.4.1

Smart and Sustainable Cities Important Parameters Needing Consideration

Although everybody has personal concepts about sustainable development, a careful planning should bring out the following themes that need to be considered: • Transport • Wise Land Use

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• • • • • • • • • • • • • • • • •

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Landscape and Green Space Harnessing of Public Places Energy Management Noise Pollution Air Quality Water Management and Quality National Heritage Materials Household Waste Construction Site Management Responsible and Sustainable Urbanism Maintenance and Repairs Hygrothermal Comfort Visual Comfort Olfactive Comfort Sanitary Conditions Risk Management

3.4.2

Methodology

It is judicious to proceed as follows: Consider a certain population within a specific land area. Determine residential, office, commercial, schools and leisure space for the chosen population based on the typical population distribution of the country. Design of individual apartments and eventually draw buildings of various shapes with the following considerations: Maximise population within a small area Maximise green spaces Provide adequate natural lighting (light concentrators on top of buildings) Easy access to facilities (commercial, office, services) Discuss the advantages and disadvantages of each type and shape of apartment and building considered. Safety aspects within the town General safety aspects with respect to fire outbursts considered Drawing of town layout with road network Discussion of transport facilities to be provided and on the limits set to motor vehicular traffic within the town. Location of the different facilities: Commercial areas Services – Post Office, Fire Station, Police Station, Bank, Cash payment offices (e.g. water, electricity, phone)

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Offices Hospital Schools Leisure and recreational areas Town hall and ministry offices University Hotels and casinos Sports facilities – stadium, gym, swimming pools Religious places Water supply Sizing of main pipeline Sizing of Water towers and Distribution of water Design of main pipe Location of Water Treatment Plant Sewerage Waste loads from the different buildings Type of disposal – sewer line to Wastewater Treatment Plant (WWTP) Design of main pipe Location of Wastewater Treatment Plant (WWTP) Energy requirements Total energy consumed – domestic and commercial – for 100,000 people. Sources of energy Means of collecting energy Amount of energy that can be collected and saved through the various sources. Preliminary sizing of some foundations Calculation of loading from slab and beam to column Sizing of some foundations – pad footing and raft foundation Housing Policies Future Development Providing shelter for a population growth of 500,000 people As mentioned earlier, the issue of land planning and transport will first be discussed.

3.4.3

Transport and Land Use

3.4.3.1

Limiting Traffic Flow

One of the objectives of this proposal is to minimize traffic problems within the town. A means of doing so is to construct high-rise buildings with commercial centres and offices within the same building or within walking distance to another

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building. Thus, the persons living in a flat can move downstairs or to the adjacent building to go to work and for shopping such that most of the inhabitants of the town would rarely need to use vehicular transport. Hence, traffic flow in the town will be largely reduced. Given that the town is not completely self-sufficient, goods need to be transported to the town. Examples of the goods that have to be transported include livestock, fresh vegetables, clothes, etc. There will also be movement of those inhabitants working in factories outside the town boundary every day in the morning and in the afternoon. Traffic movements can also arise from movement of people from other towns either to the particular town and vice versa.

3.4.3.2

Collector Roads

Although the above-mentioned movements in and out of the town are not very significant, they are bound to cause traffic problems if the carriageways are not properly designed. Thus a dual 4-lane carriageway is proposed to be used as the collector roads. The sizes considered are as detailed below. Dual 4-lane carriageway 14.60 m wide. Footways with drains underneath 2  3.00 m Central reserve with drains 3.50 m Shoulder 2  2.50 m Total width of carriageway

¼ 14.60 m ¼ 6.00 m ¼ 3.50 m ¼ 5.00 m 29.10 m

This is approximated to 30 m such that a space of 0.45 m is allowed on each side of the road. This space can be used aesthetically by growing palm, fruit or other trees and flowers on either side of the road, thus enhancing the appearance of the town. The trees can also act as a shield between the vehicles and the pedestrians, thus limiting the risk of accidents. Although allowance is made for motor vehicular transport by providing a dual 4-lane carriageway, traffic within the town will be limited. Control will be exerted on the movement of goods vehicles.

3.4.3.3

Access Roads

As for the access roads, dual 2-lane carriageway would be adequate since little motor vehicular traffic will be met on these roads, because the commercial centres and office areas are either down in the same building or within walking distance as discussed before. Because walking, as a healthy habit and to reduce vehicular traffic, is encouraged in the town, the width of footways is an important factor to be considered on the

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access roads. Adequate space need to be provided for children to walk to schools, for parents to walk to their work places, etc. Thus for access roads: Dual 2-lane carriageway 7.30 m ¼ 7.30 m Footways with drains underneath 2  3.50 m ¼ 7.00 m Total length of carriageway 14.30 m This is approximated to 15 m with footways of 3.85 m wide on either side of the road. Furthermore, an allowance of about 7 m is left on either side of the road between the buildings and the road so that footways may be extended if needed. On either side of the footways, flower shrubs will be planted for aesthetic reasons. The secondary access roads are those that allow movement between two adjacent access roads. Initially, it was proposed to add bicycle tracks, but it was thought better to use the carriageway detailed above for bicycles and then restrict the movement of motor vehicles. That is, the movement of motor vehicles can be controlled using obstacles or barriers thus limiting access at certain periods of the day. A road link will provide access to the buildings from the access roads and vice versa. Its major role will be to act as a walking path for the inhabitants. But it will also be used in cases of emergencies to provide access to fire engines, ambulances and taxis. Because of the rare occurrence of these events, the road will be a one way single lane carriageway of 3.5 m width with footways of equal widths on each side of the carriageway. Fire hydrants will be provided at 150 m intervals along sides of the road or at the junction of two roads whereby the maximum distance between the junction and the buildings does not exceed 200 m since it is the length of the hose of a fire fighter.

3.4.3.4

Fly-Over Bridges for Pedestrians

Fly-over bridges need to be provided for pedestrians for crossing the wide collector roads and also the access roads whereby there is frequent bus movement. This is to reduce the risk of accidents. These bridges can be converted into green space areas. (See an example on Fig. 3.12). The sizes of bridge provided are to be the same as the footways along the roads being crossed, that is, Across a collector road: Width ¼ 3.00 m or more, Length ¼ 24.00 m Across an access road: Width ¼ 3.50 m or more, Length ¼ 7.30 m

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Fig. 3.12 Bridges for pedestrian use can be enhanced with green features

3.4.4

Transport

The need for transport is governed by the demand for movement due to two main purposes: 1. For access – access to workplaces, schools, shops, recreation, etc. 2. For mobility – it arises as a result of the desire for access. Among the basic concepts for the development of cities lies the concept of reducing the impact of transport. Therefore, managing the demand for movement is essential. This can be achieved: • by minimising the need for movement and • by influencing the choice of transport mode.

3.4.5

Cars – An Expensive Asset

The attractions of using one’s own transport are well known. It has enormous advantages namely:

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Instant availability No waiting Door-to-door Ability to choose companions Ability to carry personal and household goods The ability to own and use a car at will is regarded as a right notwithstanding the downsides of congestion, pollution and the constant demand for more space. Considering the long-term ill-effects of cars, they can be termed as expensive assets. In order to render the possession and use of a car meaningless, therefore, the concept of building high rise buildings, with workplaces and recreational areas in the same block of flat or within walking distance from one’s own apartment, has been considered. Furthermore, restraint measures in terms of car movement will be imposed in that no car movement will be allowed inside the town unless in urgent cases. Access roads with large footways are provided to encourage walking. Cycle riding is promoted along the roads. Some stadia and other sports centres like football ground, basketball, volleyball, tennis courts, etc., are provided at some 15 min of walk from the residential blocks. Also public gardens are located in the penultimate rim of the town for allowing movement such that the need for mobility is not overlooked. An added advantage of such a strategy is that it is a good way of developing a healthy population.

3.4.6

Public Transport Priorities

Cars have many advantages, but in contrast, public transport, namely buses, do also have benefits like: Energy efficient Lower air and noise pollution Reduced congestion Safest transport mode Accessibility for those without discretionary use of a car. While the car benefits are direct and personal to the user, the bus benefits are indirect and of a general nature for the community at large. As buses are able to transport many persons at a time (about 50), they can make more efficient use of road space, thus reducing congestion and the demand for space.

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Movement Within the Town

In the proposed town, the bus route is limited to one at mid-distance from the centre and the outer rim of the town. This route is devised for movement of people within the town. Bus stops will be placed in the highly residential areas at some 100 m intervals on each side of the roads. The buses can be scheduled at 10–30 min intervals during the peak hours and during the day respectively. Another alternative is to provide small buses of about 20 seats during the day and larger buses of 60 seats during peak hours. Two bus stations, each with 20-bus parking areas are provided. An alternative to the bus can be an underground railway. Though it involves a rather expensive investment, in the long run it will be beneficial in that it can save a lot of time by avoiding hours of congestion like those occurring at peak hours in many towns. It is also safer in that the occurrence of accidents can be lower than is presently the case with buses. It can be considered a safe alternative by arranging single and separate routes for each subway. The major problem would occur in cases of breakdown in places where an underground substation is quite far so that much time may be taken for the technicians to reach the subway for repairs. But in ensuring proper maintenance, the occurrence of such an incident can be greatly reduced. Taxi stands are provided at several places in the town as an alternative to the use of buses or walking. This is mainly for elderly and sick people. Since taxis are mostly to be used as help, the taxi fares can be made to be nearly the same as bus fares.

3.4.8

Movement Outside the Town

For those people moving out of the town for work and for providing access to other towns, two alternatives can be considered.

3.4.8.1

Alternative 1

The same bus station can be used to allow movement out of the town through a separate route that does not enable any movement in the town centre.

3.4.8.2

Alternative 2

A bus station can be constructed outside the town boundary such that no bus movement is allowed in the radial corridors of the town. Thus, people going to work would walk to the bus station and take buses to their respective places of work.

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Goods Vehicles

As has been mentioned earlier, there is a need for goods vehicles. A way of avoiding traffic problems at peak hours is by imposing a time constraint on the delivery of goods. Goods vehicles can, for example, enter the town early in the morning at about six or seven o’clock before the rush hours or after at about ten o’clock. This method is presently being adopted in many places, whereby the goods vehicles deliver their goods at ten o’clock in the morning when there is practically no traffic movement at the place. Another alternative can be to have two different routes for the goods vehicles and pedestrians. Many shopping centres, for example, make use of this alternative. While customers walk into the hypermarket by the front door, goods vehicles move in through a separate road behind the building. In such a way, there is no interference between pedestrians and goods vehicles, which is also safe in terms of accidents. These means allow the vehicles to deliver their goods at the required places without running the risk of causing congestion. Both alternatives can be implemented in the town.

3.4.10 Parking Areas Parking areas are important for such places as hospitals, police stations and fire stations due to emergencies. Thus, for these facilities, parking areas need to be provided. While underground parking can be provided for hospitals and police stations, it is proposed to provide a ground parking for the fire station so that there is ease of access to the roads in cases of fire. Furthermore, parking areas will to be provided, for those persons coming from other towns or moving away from the town by car. Those persons will have no access to the town centre and upon parking their cars, they will have to either walk to the town centre or take the bus depending on their destination. As for lorries and vans, parking areas will be provided in the outer rim of the town as shown on the town layout. Parking areas provided are as follows (Table 3.2):

Table 3.2 Parking areas for vehicles

Parking for lorries Parking for cars Garage Taxi stand

Number of parking lot 150 lorries per parking 100 cars per parking 18 cars 80 taxis each

2 2 2 4

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3.4.11 Facilities and Their Location 3.4.11.1

Commercial Space

Commercial space includes the following: 1. 2. 3. 4. 5. 6. 7. 8.

Department stores Supermarkets Market halls (vegetable, fruits) Bakers/pastry shops Butchers shop Fabrics and materials shop Bookshops/libraries Restaurants and Café

The above necessities would be provided in central buildings, that is, people living in nearby buildings, within walking distance, would also have access to these facilities. However, the buildings further away from the central ones would consist of some shops, supermarkets, vegetable markets, and restaurants.

3.4.11.2

Services

Services involve the following: 1. 2. 3. 4. 5.

Dispensary Pharmacy Citizens access offices to water, wastewater, electricity, phone and other services. Post office (letter box to be found in all buildings) Bank The services would be found in central buildings on the ground floor.

3.4.11.3

Offices

Many buildings can be devoted exclusively to house offices, while offices involving public access should mainly be located on ground floors, preferably.

3.4.11.4

Schools

Primary School One primary school is provided for a group of buildings. Primary schools would be preferably found on ground floors in specified wings with adjoining yard. Space

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provided for primary schools in buildings would also consist of playrooms, gymnasium for the children, etc. Secondary School Buildings provided as a whole for secondary schools with adjoining yard are also provided for.

3.4.12 Leisure Indoors recreational facilities are proposed on ground or first floor of central buildings. The following recreational facilities are proposed:

3.4.12.1

Public Gardens

These will consist of: Large green spaces with artificial ponds, Children parks and specially designed paths for handicapped persons (in wheelchairs), Food courts together with some fast food stalls. The public gardens will be located at several places within the town for relaxation and picnic purposes. Some green space will be provided on the roof of some buildings to break the monotony of the high-rise construction. Fly-over bridges for pedestrian will also contribute as green space.

3.4.12.2

Swimming Pools

Some swimming pools will be located on the roofs of some high rise buildings, in the open air, together with food courts and fast food stalls. These swimming pools will be provided for relaxation purposes and for amateurs. Indoors swimming pools will be built for professional swimming, for swimming lessons and for competitions. These could be located on the first floor of the central buildings.

3.4.12.3

Stadium and Gymnasiums

At least two stadiums will be provided in the two halves of the town. Gymnasiums will be provided in most of the residential blocks.

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Cinemas and Theatres

About six to seven cinema halls will be provided each consisting of about 200–300 seats. Cinemas, theatres, art galleries, halls, discos, casinos, bookshops, libraries, etc. could be located on the first floors of the central buildings.

3.4.13 Residential Space Central buildings will contain residential space as from the third floor. Other buildings will be completely residential except for their ground floors. Space has been provided for slightly more than 100,000 people.

3.4.13.1

Environmental Aspects

However, in designing this town, two of the main considerations have been to protect the environment and to enhance nature. These have been achieved by leaving free spaces for parks, gardens, trees, forests, vegetable, fruit and flower plantation and even wilderness. Also, provision has been made to reduce air, noise and land pollution.

3.4.13.2

Parks and Gardens

Parks have been recognised as instruments of social health: They are recreational places for people to relax and enjoy. People with access to parks would be less prone to stress, disease, crime and social discontent. Parks, gardens as well as roof top planting and flower plantation enhances the beauty of the town.

3.4.13.3

Vegetation

The presence of vegetation helps reduce pollution, improves rainwater collection, and it provides recreational sites for people, thereby reducing urban stress. Green spaces can also add considerably to the urban food supply.

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Trees/Forests

Trees are beautiful, but they also provide environmental benefits. They are the planet’s air conditioners, but without producing the unwanted waste products. In cities, they fulfil the same function; cities, without trees, are poorer places. A single tree can transpire as much as 380 l of water a day, cooling the air in the vicinity. They also have the ability to absorb and filter dust. Fruit trees, while providing shade and a green ambience, can also contribute to the urban food supply.

3.4.13.5

Pollution Free Environment

Air and noise pollution can be decreased by the reduced use of vehicular transport. The car free scheme is important to prevent traffic congestion. Public transport must be promoted, while walking and cycling are encouraged. Providing a pool of free bicycles at public places, would probably go a long way towards this. Anybody could have access to any of these bicycles anywhere in the town. If there is a sufficient number, there would not even be a need to own one. Large pavements must be provided for pedestrians and cycle tracks (the roads, as indicated) must be provided. Land pollution can be prevented by the provision of bins and also strict measures could be taken against those throwing waste around and not using the bins. Two examples could be stated to illustrate this point. Firstly, in France for instance, many towns (Paris, Lyon, Marseille, Bordeaux, Nantes. . .) have developed a rental scheme for bicycles (see also earlier photographs) for use within the town. There are bicycle stands near every metro station and generally there is no gap of more than 500 m between two such spots. Therefore, a park-and-ride solution (or metro and-bike solution) can be easily developed. Subsidies from the respective municipalities have decreased the fare of these bicycles: free for the first 30 min, 1 euro for 1 additional hour, etc.. . . Actually, the system (Vélib) was quite successful, that it encouraged the installation of a similar system (Autolib) for electric cars. Secondly, the Netherlands is considered by many to be the “country of bikes”: 16 million people and 21 million bicycles. Actually, everyone possesses his own bike, from the 5-year old child to the grandmother (though for elderly and handicapped people, there are motorised wheelchairs running on cycle paths). This flat country is ideal for developing an ideal network for cycle paths, with every road having an extension of 1 m reserved for cycle paths, except the motorways. However, one does not especially need to buy his own: at each railway (or bus) station, hiring municipality bikes for the day is possible. Indeed, the Netherlands have developed a philosophy of mobility centred on the bicycle: people ride their own from their home to the (bus or train) station in the morning, keep it there for the day and take the train to their workplace nearby station, then they borrow a bike

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(or take their second bike which was parked there) and drive to their workplace. The return way follows the same pattern. Of course, all this results in an incredibly small number of cars inside the town, with all the roads designed for pedestrians and cyclists. Houten (Netherlands) is a town which has been designed to encourage people to travel by bicycle and train.

3.4.14 Other Parameters It has been shown above that it is possible to arrange for housing 100,000 people (at least) within an area of 4 km2, with a very high (if not complete) reduction in car or vehicular traffic. This will certainly address many parameters, such as fuel (energy) imports, lower carbon dioxide emissions, noise and air pollution, availability of green space, etc. The town itself is compact, meaning that the provision of services (water, wastewater, electricity, etc) may be effected using smaller lengths of pipes, cables, etc. to reach the places to be supplied. Often, when development takes place haphazardly into a sprawl, whenever a location for a facility (landfill, wastewater plant), is being investigated, it is “discovered” that there is no place which is further than 1 km from any residence. With this proposed “Car Free Town”, no such problem will arise. These facilities may be located outside the car free town, though modern technology allows many things. For example, a wastewater treatment plant is located underneath the football stadium in Marseilles, France, since several decades, without having caused any complaints. A town for 100,000 people is a reasonably sized town which can be built as a stand-alone module. If need be, such modules may be added, gradually. Of course, if a town of 100,000 people is considered too big, a smaller size town may be considered, depending on housing required, and which facilities may be built, in advance, to be used in common with other modules when they are constructed. Using the basic town layout, several arrangements are possible to cater for such a population. Five such towns may be built, close to each other, around a central point. In this alternative, each of the towns has its own parking area but may share facilities such as, the University, some specialised medical centres. It also allows easy movement from the central town to the other surrounding towns that are only 500 m away. Thus, those inhabitants, who need to move from one of the surrounding towns to the central one, say for example, to go to the University, can walk or cycle-ride to their destination. For old people, inter-town buses can be made available. Furthermore, these towns can share the same water and wastewater main pipelines. Central network systems can be developed for all these towns so that fewer water towers will be constructed instead of different pipelines being used. Similarly, a single wastewater treatment plant may be constructed for the treatment of the whole network of towns.

3.4 Smart and Sustainable Cities Table 3.3 Area distribution for the car free town

Facility Apartments Office space Schools and colleges Commercial space Public gardens Sports ground Roads (mainly pedestrian) Other facilities Green space TOTAL (4 km2)

97 Area (m2) 300,000 100,000 100,000 100,000 250,000 150,000 300,000 200,000 2,500,000 4,000,000

Although area estimates have been carried out above, Table 3.3 gives generous estimates for the possible area distribution over the town. The main criterion has been the provision of much green space and pedestrian access within the town.

3.4.15 Implementation In fact, having discussed the advantageous aspects of designing such a town, the ultimate objective of this proposal is to promote the application of this concept to the whole region in the future. Existing buildings, houses having reached their lifetime would need to be gradually replaced. For example, for Mauritius, with a target population of 1.6 million in the long term, 16 such towns might be implemented over Mauritius (total area 1860 km2). If the towns are constructed near each other, a total area of some 70–100 km2 might be used. Otherwise, this might go within a maximum area of 300 km2. This is highly advantageous in that the eventual residential area occupied will represent about one sixth of the island area so that the remaining land can be effectively used for agriculture and other uses that will be economically beneficial to the country. It has been shown that, with proper planning, it is possible to build a “Car Free Town” catering for 100,000 residents. Furthermore, this concept addresses so many, if not all, of the issues such as fuel (energy) imports, lower carbon dioxide emissions, noise and air pollution, availability of green space, etc., dear to our SDGs (Sustainable Development Goals), that it is worthwhile giving it a serious thought. Adoption of one town can eventually lead to gradual extension to cater for the whole of the region. The first step is to decide what form of sustainable development that we want to achieve – sustained construction all over the area OR plenty of green space with minimal transport (and ancillary) needs. The choice is ours.

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Low or High Density

The discussion about spatial organisation has shown clearly, it is hoped, that it is difficult to have plenty of green space through the construction of single floor buildings, apart from an inefficient arrangement of infrastructure. The figures given in Table 3.3 require high rise buildings for offices and the apartments. Several possibilities are available and each architect would certainly propose a new one. The town need not be necessarily circular, except that is easier to draw and plan for the infrastructure layout. The central and radial configuration comes from many town centres. Figure 3.13 shows an aerial view of Paris from the Arc de Triomphe, at the start of the Champ Elysées. Average building height would be around 10 storeys, but one variation that is possible is to have buildings in the centre at 15 storeys, with a gradual decrease towards the outskirts of the town to some 5 storeys. This gradual decrease in height moving radially outwards has the advantage of maximising exposure to sunlight (lighting and energy production with photovoltaic cells), and overcomes the feeling of overcrowding, if any, with so much green space. Figure 3.14 depicts a 3-D view of a possible car free town, while Figs. 3.15 and 3.16 show two possible plan layouts.

Fig. 3.13 Radial configuration from an aerial view of Paris

3.5 Low or High Density

Fig. 3.14 3-D view of a possible car free town

Fig. 3.15 Plan view of a possible car free town

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Fig. 3.16 Plan view of a possible car free town

Having seen the idea of such possible towns, it is not difficult to group them into various configurations as desired or required, either for immediate use or for possible additions in the future (Fig. 3.17) (see also Chap. 5).

3.6

Conclusion

The spatial organisation of towns affects the infrastructure layout and its cost. A hundred years ago, there were practically no cars and the size of towns was limited to pedestrian access, within a reasonable time. Today, we keep on harping on the congestion and pollution caused by vehicular transport. If we have a housing problem, we cannot go on building individual houses, which decreases the free land area available. At the same time, several problems regarding infrastructure requirements start cropping up. It is, thus, important for some strategic planning to be carried out right now for the next 50 years. (see also Chap. 5). Some cities, in the world, have achieved housing densities of up to 30–50,000 people per square kilometre (with nevertheless a low crime rate). If we can imagine something of this sort happening to small islands, then all the people would be housed on only a small area of land. Imagine having plenty of green space all round. It is necessary to start planning ahead. Singapore is more than good model in terms of population of 5.6 million people (2017 figures, estimated at 6.2 million for

3.6 Conclusion Fig. 3.17 Possible town configurations for grouping

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July 2020) over a land area of 709 km2. Yet it manages very well with its high population density. It should be borne in mind that the resources, which will be injected for the implementation of a new town, will be the cost forgone for wild development and all its associated often, irreversible problems. The guiding principle in this chapter has been to propose a healthy town that would provide a clean and quiet environment, free from pollution (air and noise), reduce traffic problems and allow freedom of movement. Current problems arising from current sprawling development are: 1. lack of space 2. traffic congestion. The first problem can be solved by increasing the population density through vertical construction, while the second by minimizing vehicular transport. Dealing first with these issues will, in fact, help, addressing the other goals of development. Readers might be interested in consulting the internet list of car free places in the world, and examine future projects such as Masdar, Wanzhuang (China), Dong Tang. At La Rochelle, France, some 80,000 persons manage without cars, whereas at Ilha Grande, Rio de Janeiro in Brazil, the number rises to 175,000 persons.

References Crawford, J. H. (2000). Car free cities. Utrecht: International Books. Gehl, J. (2010). Cities for people. Washington, DC: Island Press. Lefèvre, P., Sabard, M. (2009). Les éco-quartiers. Rennes: Editions Apogée. Lehmann, S. (2010). Principles of green urbanism. Washington, DC: Earthscan. McRae, H. (2010). What works. Successin stressful times. London: Harper Press. Rose, S. C. (2019). Cybercommunities: Car free cities. Seattle: Kindle Edition, Amazon.

Chapter 4

Infrastructure Vision for Sustainable Development

Vision is the art of seeing things invisible. Jonathan Swift Some men see things as they are and say why. I dream of things that never were and say why not. Robert Kennedy An original vision is one that allows you to grasp the future. A visionary leader should adhere to his vision, fully confident that he can see things that those in his entourage may not be able to perceive and that his vision will fulfil its set goals. Such a leader would also seriously consider any criticism of his vision and be prepared to defend it, convince others of its validity and efficiency and overcome all obstacles obstructing its way. Mohammed bin Rashid Al Maktoum (My Vision. Challenges in the Race for Excellence) . . .It took a vision. That was supplied by a Danish architect. . . Jan Gehl. . .But it was also driven by the long-term, marketfriendly, practical backing of the city authorities in Copenhagen since 1962, when the main shopping street, Stroget, was pedestrianized. Hamish McRae. (Traffic Management in Copenhagen. What works) Nous n’héritons pas de la terre de nos ancêtres, nous l’empruntons à nos enfants. African proverb Sustainable development is development which meets the needs of the present without compromising the ability of future generations to meet their own needs. (Bruntland 1987)

© Springer Nature Switzerland AG 2021 V. Proag, Infrastructure Planning and Management: An Integrated Approach, https://doi.org/10.1007/978-3-030-48559-7_4

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4 Infrastructure Vision for Sustainable Development If no one really knows what it is, who’s accountable for it, how do you measure it, and then how do you know if you’ve achieved it? (Cole 2012) Architecture is measured against the past; you build in the future, and you try to imagine the future. Richard Rogers

People obtain the perception of development, when physical factors (new buildings, trees, infrastructure facilities) enhance the daily lives of citizens, through some amalgamation of social, economic, and institutional practices. Development in all societies must include a minimum of improvement in the availability of basic goods, an increase in the standards of living, and a wide variety of economic and social choices accessible to individuals. Sustainable development should allow us to satisfy our own needs, while we keep in mind that enough resources must remain to permit future generations to meet their own needs. Of course, extractive industries might hinder such goals, but the notions of extractive economies and inclusive economic institutions are also discussed to show how infrastructure, properly planned and implemented, can help in achieving the sustainable development goals.

4.1 4.1.1

Objectives of Development The Three Objectives of Development

When physical factors (new buildings, trees, facilities) improve the daily lives of citizens, through some amalgamation of social, economic, and institutional practices (Todaro and Smith 2014), people obtain the perception of development. Without getting into the details causing this perception, development in all societies must include a minimum of the following three goals: 1. Improvement in the availability of basic goods, such as shelter, food, health, and protection and their broad distribution. 2. Increase in the standards of living, comprising, higher incomes, the creation of more jobs, better education, and the promotion of cultural and humanistic values, all of them enhancing material well-being and generating better individual and national self-esteem. 3. Expansion of the variety of economic and social choices accessible to individuals and nations by reducing or eliminating dependence on other people and nation-states.

4.1 Objectives of Development

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Development in Practice

Table 4.1 shows what development might mean in practice. There are, in fact, many countries, where at least one of these criteria has not been fully met. Figure 4.1 shows how development in a country might take place. Time changes along the x-axis, while development changes along the y-axis. Initially, there is a slow rate development, which suddenly increases. When this occurs, the country undergoes rapid change in many sectors, sometimes so much so that even the people Table 4.1 Development in practice Criterion Basic human needs Work for all Equal opportunity Politics

Successful development People can satisfy their basic needs for food, shelter and clothing Everyone who needs paid work can find a job (or work from home) There are equal opportunities for all people, regardless of class, religion, gender or ethnic group Everyone can participate in government decision-making at different levels, through free elections and free debate People belong to a nation which is independent, both economically and politically There are high levels of literacy and education Women have the same opportunities as men

Independence Literacy Gender equality Sustainability

The economy can be sustained in order to meet the needs of future generations

Development rate is

Development

Increasing

Constant

Development Decreasing

rate decreases

Development is increasing 0

Fig. 4.1 Development rate against time

Time

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are overtaken or surprised by the new possibilities or opportunities. Then there is a gradual slowing down of the development rate, pending the next upsurge. The following questions: (1) (2) (3) (4) (5)

How does development happen? What moves development forward? What slows it down or stops it? Why have some countries developed more than others? Can development occur continuously (indefinitely)? often raise heated debates.

Taking the expression “the engine of development”, let us use the analogy of the engine (motor car) to obtain some clarifications. If in Fig. 4.1, the y-axis showed distance travelled, instead of development, we would have a distance-time graph, with the slope showing the velocity (speed) of the car. If the slope is varying (i.e. not constant), the velocity is not constant – the car is undergoing acceleration (the car’s velocity keeps on increasing more quickly) or deceleration (the car’s velocity keeps on decreasing more quickly). Figure 4.1 has been reproduced as Fig. 4.2 to show this. We can now ask similar questions: (1) (2) (3) (4) (5)

How does the car move? What moves the car forward? What slows it down or stops it? Why have some cars travelled more than others? Can the car keep on moving (indefinitely)?

Distance

Of course, before the car moves, we must start the engine which is connected by some mechanical arrangement to the wheels. Once, the clutch is on and we are in the right gear, the car will move, either forward or backward (reverse gear). If we push

Deceleraon = decreasing slope = velocity decreases Distance has stopped increasing Slope = zero Velocity = zero Car has stopped

Constant slope = velocity constant 0

Car starts from rest

Acceleration = increasing slope = velocity increase

Fig. 4.2 Car movement against time

Time

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the accelerator pedal, the car will gather speed (how quickly will depend on how hard we push the pedal and the car’s (clutch disk) reaction to the engine acceleration. If we relax our hold on the pedal, the car will gradually slow down and may come to a stop through some road resistance or lack of acceleration. Several cars, moving at the same speed, can only accomplish the same distance during a given time. However, if some started earlier, or were able to accelerate more for some of the time, certainly, the distance travelled would be different for the different cars. So long, as the car and its components are well maintained in good condition, the car will be able to move. A fuel tank has a limited capacity, which can be regularly replenished. Imagine a car fitted with a solar photovoltaic panel, continuously (during daylight) recharging the batteries. So long, as we do not withdraw more energy from the batteries than what is being supplied by the sun’s rays, the car can keep moving (forever!). This sums it up. Can we have perpetual movement (sustainable development) if we are careful not to exceed (or exhaust) our supply of resources?

4.1.3

Possible Strategies

Three components are crucial to development, namely: (1) social improvement, (2) political rights, (3) economic growth. Depending on the approach selected, each country has a mixture of the three or emphasises on one of them as detailed in Tables 4.2, 4.3 and 4.4. The three approaches have advantages and disadvantages, with some difficult choices, at times. Table 4.2 The social approach to development Policies Intended results

Possible barriers and problems Role of the state

Emphasising social improvement first Make sure everyone’s basic needs are met, provide employment, build schools, hospitals and houses General standards of living will rise. Quality of life will improve, especially for women and children. People will work better because they are healthy and educated. GNP will rise because everyone is working. Population will stabilise. How to find the capital for investment in social infrastructure. If the State borrows the capital, it may get into debt. People may expect standards to keep on rising. Government will have to take the lead in this policy.

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Table 4.3 The political approach to development Policies Intended results

Possible barriers and problems Role of the state

Putting political development first Build democracy, have regular elections, ensure basic rights and participation by everybody. Everyone will take part in decision-making . . . There will be equal opportunities for all. Wealth will be shared more fairly. Conflicts will be settled by persuasion and negotiation, not by force. People may demand too much too quickly. Decision-making may be slow. A lot of compromise may be needed. Government and individuals will need to work closely together.

Table 4.4 The economic growth approach to development Policies

Intended results

Possible barriers and problems

Role of the state

Going for economic growth first Invest at a high rate, mobilise people and resources, either through government or through the market, open the country to foreign capital and foreign technology, develop trade. GNP per capita will rise. Even if some people get richer than others, wealth will gradually trickle down to everyone. The trade balance will be positive. Exports will grow so that the country can afford to import more. Jobs will be created for both women and men. Where to get the capital for investment. How to sell the exports on the world markets. If foreigners invest, they may end up controlling the economy. Uneven development: some parts of. the country may develop while others may remain poor. Some people or classes may get much richer while others may remain poor; wealth may not trickle down. Although there are jobs, wages may be very low. Individuals need to take initiatives, while the government supports them in various ways.

There is no best choice, but most people today would agree that development: (1) is not an easy process which takes quite some time (2) may proceed randomly and that some people or groups might receive more than others (3) industrialisation of some sort is required to create the jobs, as well as produce the goods and services, required to improve the standard of living and increase the quality of life (4) the world is one planet, whose fate we all share.

4.2 Sustainable Development

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Sustainable Development Sustainability

Sustainable development should allow us to satisfy our own needs, while we keep in mind that enough resources must remain to permit future generations to meet their own needs. We cannot afford to present apologies to future generations, particularly if certain actions are irreversible. How do we know that enough remains for future generations, unless we are able to measure quantitatively what we want to improve, as Cole (2012) says. The world exists since a long time and history has already shown several cases, where development does not seem to have been sustainable, the most popular being Easter Island, the Maya civilization in Central America and the ancestors of the Maoris in New Zealand. Acemoglu and Robinson (2013) give several examples of countries where extractive economies (Latin America, Korea) have resulted in different parts of the same country developing differently, or compared the whole country with other countries, where economies are inclusive (United States). They explain that inclusive economies allow and motivate the general population to participate in economic activities that make the best use of their talents and skills, while providing opportunities for individuals to make the choices they wish. In order to become inclusive, economic institutions must show features such as legal private property rights, an unbiased rule of law, and a host of public services that offer a level playing field where people can trade, exchange and contract. This playing field also allows the entry of new entrepreneurs and permits people to choose their careers. Diamond (2011) similarly compares Haiti and the Dominican Republic. In contrast, extractive economies do the exact contrary, with people having little right to do anything for themselves or of their own free will, or owning anything. Inclusive economic institutions, in turn, rest on foundation stones supported by inclusive political institutions, which allows broad distribution of power in society and inhibits its arbitrary exercise. Such inclusive political institutions also render it more difficult for others to appropriate power and undermine the fundamentals of inclusive institutions. Politicians in control of political power cannot use it easily to establish extractive economic institutions for their own advantages. Inclusive economic institutions, in turn, generate a more equitable sharing of resources, enabling the perseverance of inclusive political institutions. In general, combinations of inclusive and extractive institutions are usually unstable. Extractive economic institutions under inclusive political institutions are unlikely to persist for long (e.g. Barbados).

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4.2.2

Possible Reasons for Non Sustainability

Is it possible to go blindly towards danger without taking any corrective action? If such an action might be excusable for an individual, is this possible that a whole society attempts a similar path (such as cutting down the last tree or intentionally wreaking ecological damage)? Tainter (1990) lists down 11 themes for explaining collapses: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Depletion or cessation of a vital resource on which the society depends The establishment of a new resource base The occurrence of some insurmountable catastrophe Insufficient response to circumstances Other complex societies Intruders Class conflict, societal contradictions, elite mismanagement, or misbehavior Social dysfunction Mystical factors Chance concatenation of events Economic factors

He argues that complex societies are well equipped, administratively and technically, to allocate labour and resources to deal with problems, even to fight against adverse environmental conditions. Doing nothing, when facing impending disaster, does not seem a conceivable option. However, Diamond (2011) confirms that many civilisations did, precisely, and independently, the same mistake: failing to manage their environmental resources, which eventually led to the collapse of societies such as Easter Island, the Mayas, etc. He gives four possible reasons: (1) (2) (3) (4)

Failure to anticipate a problem before it actually arrives, Even when the problem occurs, the group fails to perceive it, Even after perception, the group does not even try solving it, and No guarantee of success even if there a solution attempt,

which are elaborated in Table 4.5. In modern democracies, where politicians are elected on a “first past the post” principle, it is not that difficult to get elected. If there are only two parties, obtaining 50% of the votes plus a minor fraction is sufficient for the winning party. If there are three parties, obtaining 33% of the votes plus a minor fraction is sufficient for a party to win and implement campaign promises (for which the other 66% might be against) and which the 33% (who voted for) might have misunderstood. Without even mentioning the possibility that votes might have been bought, if the above can occur even in today’s modern world, one can easily imagine what could happen if there were ten candidates (or parties) standing for election or in countries where dictators were in power. Yes, if in today’s developed world, a whole society or civilisation can willingly or blindly walk in the wrong direction, by voting,

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Table 4.5 Possible reasons for collapse of societies 1

2

3

Explanations Failure to anticipate a problem before it actually arrives. No prior experience of similar problems, and therefore no sensitization to the possible problem. Even prior experience is not a guarantee that a society will anticipate a problem, if the experience happened so long ago as to have been forgotten. A society may fail to anticipate a problem due to reasoning by false analogy. In unfamiliar situations, why not compare with an older, but familiar situation. However, this can prove dangerous if there is only superficial similarity. Even when the problem occurs, the group fails to perceive it. The origins of some problems are literally imperceptible. Distant managers who are rarely on the field A slow trend hidden within widely up-anddown variations. Related terms include: “creeping normalcy” or “landscape amnesia”. People do not perceive small changes occurring every day, because they form part of the landscape or environment. Even after perception, the group does not even try solving it. “Rational behaviour” related to conflicts of interest between people, who correctly think that they can further their own interests by morally reprehensible behaviour towards other people. “Tragedy of the commons” (see Chap. 17), or “the prisoner’s dilemma” and “the logic of collective action”. The consumers may identify and understand their common interests and attempt to design, obey, and enforce conservative harvesting quotas themselves. “ISEP” ¼ “It’s not my problem, it’s someone else’s problem.” The principal consumer has no long-term stake in preserving the resource but society as a whole does. When the interests of the decision-making elite in power conflict with the society’s interests. In particular, if the elite can isolate

Examples

Droughts and floods which occurred centuries ago

Vikings French Military (second World War)

Soil nutrients

Global warming

Subsidies (direct or indirect) to uneconomic industries.

Water rights in Montana, Tikopia islanders, New Guinea highlanders,

International loggers can the forest as quickly as possible, renege on any replanting agreement and move to another country Politicians Enron (continued)

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Table 4.5 (continued) Explanations

4

itself from the consequences of its actions, it is likely acting for its own profit, if even this harms other people. “Irrational behaviour” arising when people are torn by clashes of values: a bad status quo is ignored because people cling to deeply held values which favour it. The same individual may face conflicts between short-term and long-term motives. Governments, too, regularly function on a short-term focus: they feel overawed by impending disasters and attend only to problems that are on the limit of explosion. Psychological denial where some perceived problem arouses such painful emotions, (terror, anxiety, and grief), that the person subconsciously denies this perception in order to avoid the unbearable pain, even if the end result might prove disastrous. No guarantee of success even if there is a solution attempt. The problem is beyond present solving capacities. The solution exists, but is too expensive. Efforts made are not sufficient, or are made too late. Some attempted policies or solutions miscarry and worsen the problem.

Examples

People are reluctant to abandon a policy (or to sell a stock) in which they have already invested heavily. Poor fishermen in tropical reef areas use dynamite and cyanide to kill coral reef fish (and the reefs as well) in order to feed their children today, thereby destroying their future livelihood.

After Diamond (2011)

seemingly, the wrong person to power, then we must accept that the explanations given in Table 4.5 are very plausible.

4.3

Extractive Industries Causing Environmental Concerns

Extractive industries, from the name, extract natural resources (both non-renewable such as oil and metals, and renewable such as wood and fish) from the planet. All modern societies obtain their supplies of energy from oil, gas, and coal. Most goods which society uses, such as tools, machines, vehicles, buildings, consist of metal, wood, or plastics (either petrochemical-derived or/and other synthetics). Writing and printing is carried out on wood-derived paper. An important wild source of food stems from fish and other seafoods.

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Thus, the economies of many countries depend heavily on extractive industries. The discussion below will look as four examples (Diamond 2011) of extractive industries: (1) (2) (3) (4)

oil, hardrock mining and coal, wood logging, and marine fishing,

to explain what may happen, both when no corrective action is taken and when there is a proper monitoring of the environmental aspects of the industries.

4.3.1

Oil

On Salawati Island, Indonesian New Guinea, when oil extraction was being carried out, in the late 1980s, natural gas obtained as a byproduct, was being burned off due to lack of facilities to liquefy and transport it for sale. The forests had 100 yard (approximately 90 m) wide clearances created for road access, but were much too wide for many species of New Guinea rainforest mammals, birds, frogs, and reptiles to cross. There were many oil spills on the ground. Even the oil company employees were animal (bird) hunters. In contrast on the Kutubu oil field, Kikori River watershed of Papua New Guinea, only a 10 yard (9 m) wide road, designed to be just wide enough to enable two vehicles passing safely in opposite directions. Strict health and safety precautions were being observed. There was a strong concern for the environment, which entailed that the Kutubu oil field was, in reality, the largest and most rigorously controlled national park in Papua New Guinea. This paragraph describes the behaviour of another company, as may have been guessed. There are many factors which have contributed to these environmental policies: (1) The company’s concern for the environment itself was a motivating factor. (2) The importance of avoiding very expensive environmental disasters. (3) The economic value of clean environmental policies, such as cleaning up pollution is usually far more expensive than preventing pollution. It is cheaper to prevent diseases in the first place by cheap, simple public health measures than their cure. (4) Extracting oil is an infrastructure investment which is going to be productive between 20 and 50 years. Policies which reduced oil spills to once in a decade, would still produce 2–5 big oil spills during the years of operation. Given its impacts, an oil spill is highly visible across the world, and therefore this would be unacceptable. Thus, more rigorous policies would be required and desirable. (5) If they wish to be able to invest intelligently, some companies devote an office to comprehend the world and appreciate events or trends several decades in the future.

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(6) Local support is necessary, and the best way to obtain it, is to take prudent steps to minimize harm and maintain a good relationship with the local people. (7) Environmentally clean practices by a company increases its reputation and credibility that help it sometimes to obtain a competitive advantage in obtaining contracts. (8) Oil companies have learned that it is far cheaper to build a clean facility incorporating environmental precautions at the outset, than to retrofit that facility later when government standards become tightened. The companies have come to expect that, if a country in which they are operating is not environmentally aware now, it is likely to become so within the lifetime of the facility.

4.3.2

The Hardrock Mining Industry

Although the hardrock mining industry resembles the oil and gas industry, it has evolved differently, for three reasons: (1) different economics and technology, (2) different attitudes within the industry itself, and (3) different attitudes of the public and government towards the industry. The environmental problems caused by hardrock mining are of several types. The land surface is affected (surface mines and open-pit mines), when the ore lies near the surface and is reached by scraping away the earth over it, contrary to oil drilling, where only a small area is disturbed. There are also some mines where the ore body does not lie deep underground, and the tunnels, which disturb only a small surface area, are dug down to the ore body. Hardrock mining also creates water pollution by the metals themselves, processing chemicals, sediment and acid drainage. Metals and metallic elements in the ore itself – especially arsenic, antimony, cadmium, copper, mercury, lead, selenium and zinc – are toxic and likely to create pollution by ending up in nearby streams and aquifers following mining operations. Some of the chemicals employed in mining, e.g., cyanide, mercury, sulphuric acid, and nitrate produced from dynamite, are also toxic. Sediments conveyed out of mines in runoff water may harm aquatic life, for instance by covering up fish spawning beds. The next environmental issue relates to the residues from mining: (1) (2) (3) (4)

the “overburden” – soil overlying the ore and scraped away, waste rock containing too little mineral to have economic value, tailings – the ground-up residue of ore after extracting the minerals, the residues of heap-leach pads after mineral extraction.

The last two types of residue are usually stocked in the tailings impoundment or pad respectively, while the overburden and waste rock are left in dumps. Depending on the national laws, where the mine is located, the disposal of tailings (a slurry of water and solids) include:

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(a) unloading them into a river or ocean, (b) stacking them up on land, or (c) stacking them up (most often) behind a dam. Unfortunately, tailings dams fail in a quite a number of cases, given that they are often cheaply designed, and cheaply built from the wastes themselves rather than with concrete. As they are constructed over extended periods, it is difficult to have a final inspection, certifying a safe and final completion. It is judicious that they are regularly monitored. There is, on average, a tailings dam failure, every year, around the world. Within the mining industry, opinions differ. Coal mining practices include land reclamation as mining proceeds, while the hardrock mining practises an opposite strategy, i.e. to clean up and restore after closing the mine. This last policy is probably not the best one, because it costs much more than expected, and very often, hardrock mining companies, when confronted with such cleanup costs, evade those costs by proclaiming bankruptcy and reassigning their assets to other companies managed by the same directors. When mining companies declare bankruptcy, the burden of cleaning up the mess falls on the tax payers, and this has left a very bad public image of the industry as a whole. The hardrock mining industry is a very good example of an industry business favouring its own short-term interests over possible long term benefits by harming public interests and, therefore, driving itself into extinction through self-defeating practices. One possible or plausible explanation for this reluctance to adopt clean environmental policies as in the oil or other industries, lies in the low rates of return of the industry, barely meeting the cost of capital. While it is possible for customers to identify oil or coal suppliers and pinpoint them if there is an environmental disaster, very few consumers are aware which metal they are using or have bought and where! Apart from steel in one’s car, what other metals is one using (and in what proportions) becomes a very difficult question for practically everybody. One engineer claimed that a smartphone contains elements comprising half of the periodic table. Thus, if the price of one smartphone goes up – because the metal producers have adopted good environmental practices, against extra expenses – the customer will swap to a cheaper one, instead of shouting against the metal producers who have not adopted such good practices! On the physical side, hardrock mines produce far more wastes, needing much more expensive cleanup costs, compared to oil wells. Typically, for oil wells, the waste-to-oil ratio is around one (mostly water), while the ratio rises to 400 for a copper mine, and 5,000,000 for the gold sector. And, it is real dirt, instead of just water! With such quantities of material to cleanup, the mining industry faces huge costs which consumers are reluctant to bear. Metal ore travels – from the mine to the customer – through a very long supply chain comprising refiners, warehouses, Asian jewelry manufacturers and European wholesalers before reaching a retail jewelry store. Sometimes, there is an extra intermediary, a smelter. That long supply chain

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inhibits customer reimbursement to copper and gold mining companies for providing cleaner mines. Who should pay for the environmental costs of mining being carried out now or to be carried out in the future? The mining industry is, generally, so unprofitable that customers cannot pinpoint to huge company profits from which costs can be met. However, it is necessary that mining companies clean up their pollution, so that the public does not suffer from mining-related messes: unusable mined land surfaces, unsafe drinking water, and polluted air. On the other hand, it must be admitted that the environmental costs of extracting metals form part of necessary expenses of hardrock mining, as genuine as the expenses incurred for the bulldozer digging the pit or the furnace melting the ore. The environmental costs should be factored into the price of metals before they are sold to customers. Unfortunately, most mining companies have a bad history and have found it difficult to do so, given the long and opaque supply chain from mineral mines to the public.

4.3.3

The Logging Industry

The logging industry and the fishing industry differ from the oil industry, and from the hardrock mining and coal industries, in two basic ways: (1) Trees and fish are renewable resources which, if harvested at a lower rate than the rate of reproduction will last indefinitely. In contrast, oil, metals, and coal are not renewable. (2) Trees and the fish are valuable parts of the environment, whose extraction can entail environmental damage. Forests represent our principal source of timber products, among which are firewood, office paper, newspaper, paper for books, toilet paper, construction timber, plywood, and wood for furniture. For Third World people, they also provide non-timber products such natural rope and roofing materials, birds and mammals hunted for food, fruits, and nuts and other edible plant parts, and plant-derived medicines. For First World people, forests represent popular recreational sites. Forests also behave as a major sink for carbon and its dangerous compounds, with the consequence that deforestation is a major driving force behind global warming by reducing that carbon sink. Evapotranspiration from trees returns water to the atmosphere, so that deforestation entails reduced rainfall and increased desertification. Trees preserve water in the soil and keep it humid. They safeguard the land surface against erosion, landslides and minimize sediment runoff into streams. Often cleared land becomes infertile. Finally, forests offer a habitat to most other living things on the land: for example, tropical forests cover 6% of the world’s land surface but have between 50% and 80% of the world’s terrestrial species of plants and animals.

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More than 50% of the world’s original forests have been felled or heavily impaired during the past 8,000 years. Nevertheless, forest product consumption is increasing: more than 50% of those losses took place within the past 50 years, partly due to forest clearance for agriculture, and a sixfold increase in paper consumption since 1950. Logging is, unfortunately, often only the first step in a chain reaction: further to loggers building access roads into a forested area, poachers use the same roads to hunt animals, and squatters follow them to settle. Only 12% of the world’s forests lie within protected areas. In the pessimistic situation, most of the readily accessible remaining forests, beyond those protected areas, would be devastated by unsustainable harvesting within the next few decades. In contrast, in an optimistic scenario, the world’s timber requirements could be sustainably satisfied from less than 20% of those forests areas, if they were properly managed. Consequent to the concerns about the long-term future of the timber industry, discussions resulted in the founding, in 1993, of the Forest Stewardship Council (FSC), which has headquarters in Germany and is funded by several businesses, governments, foundations, and environmental organizations. The council is managed by an elected board, and ultimately by the FSC’s members, which comprise representatives of the timber industry and of environmental and social organisations. The FSC’s original tasks were threefold: (1) to draw up a list of criteria for proper forest management, including: (a) harvesting trees only at a rate that can be sustained indefinitely, with growth of new trees adequate to replace felled trees; (b) sparing of forests of special conservation value, such as old-growth forests, which should not be converted into homogenous tree plantations; (c) long-term preservation of biodiversity, nutrient recycling, soil integrity, and other forest ecosystem functions; (d) protection of watersheds, and maintenance of adequately wide riparian zones along streams and lakes; (e) a long-term management plan; (f) acceptable off-site disposal of chemicals and waste; (g) obedience of prevailing laws; and (h) acknowledgment of the rights of local indigenous communities and forest workers. (2) to establish a certification mechanism to confirm whether any particular forest met those criteria. Instead of certifying forests itself, the FSC accredits forest certification bodies that truly visit a forest and devote up to a fortnight inspecting it. There are about a dozen such bodies around the world, all of them licensed to operate internationally. The manager or the owner of a forest contacts a certification body for an inspection, and pays for the audit, without any prior guarantee of a favourable report. After the inspection, the certifier will often provide a list of pre-requisites that must be satisfied before approval, or just to give a provisional authorisation based on conditions to be satisfied before the use of the FSC label will be allowed.

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As the certifiers do not roam around inspecting forests, it is up to the manager or the owner of a forest to take the initiative of getting his forest certified. It is usually in his interest to have this inspection, albeit against payment, because it opens access to more markets and customers through the improved reputation and standing obtained via an independent third party certification. The principle of FSC certification is that customers can believe it, because it is not the company boasting itself, but the product of an examination, against internationally accepted best practice standards, by trained and experienced inspectors who will impose conditions or say no, if required. (3) to establish another instrument for tracing products from such a licensed forest through the complex supply chain down to the customers, so that a customer could be certain that the chair, board or paper that he was purchasing in a store, with a FSC logo, really originated from a properly managed forest. This step is carried out by documenting the “chain of custody” or paper trail, which records how wood from a tree cut in Malaysia finishes as a board on sale in a store in Cape Town. Even when the forest is certified, the forest’s owners may send its timber to a sawmill that also processes uncertified timber, and then the sawmill may send its cut wood to a factory that also purchases uncertified cut wood, and so on. The web of interrelationships among producers, suppliers, manufacturers, wholesalers, and retail stores becomes so complex that even the companies themselves do not always know where their wood ultimately originates from or ends up, except for knowing their immediate suppliers and customers. In order to instill confidence in the Cape Town customer, that the board she is purchasing truly came from a tree in a certified forest, intermediate suppliers must retain certified and non-certified material separate, and auditors must endorse that every intermediate supplier really does that. That constitutes “certifying the chain of custody”: tracking certified materials through the whole supply chain. A fastidious job, but essential, because otherwise the customer could not be confident about the origins of that board in the Cape Town store. Price is the most significant parameter in purchasing decisions, but experiments have shown that the public really does consider environmental values when effecting its purchases, and a significant portion of the public accepts to pay more for those values. It would further seem that certification does not add significantly to the wood product’s inherent cost. In fact, retailers offering a certified product, in high demand, but available only in short supply, found that they could increase the price, without any decrease in sales. While home construction is the largest wood consumer, most homeowners do not know, choose, or control the choice of forestry companies providing the wood used in their house. Rather, the customers of forestry products include the buyer group of companies buying in bulk to supply furniture, etc. to individual customers. The “green building standard” known as LEED (Leadership in Energy and Environmental Design) has been instrumental in spreading the use of the FSC logo. As the LEED code grades the environmental design and use of materials in the construction

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industry, some governments provide tax credits to companies adopting high LEED standards, and require contractors to adopt LEED standards on their building projects. This has become an important consideration for construction firms, which choose to purchase FSC-labeled products because they benefit from reduced taxes and enlarged access to bidding on projects. Although these firms and the buyer groups do not directly deal with the public, nor are very visible to consumers, they are both ultimately motivated by environmental concerns of individual consumers, and by their desire to associate their corporate brand with environmental responsibility towards consumers. The LEED standards and buyers’ groups have, in fact, provided a mechanism where individual consumers can influence the behaviour of companies which, otherwise, would not directly respond to individual consumers.

4.3.4

The Seafood Industry (Marine Fisheries)

This industry faces the same fundamental problem as do the oil, mining, and timber industries: rising world population and affluence leading to increasing demand for decreasing supplies. As the world population moves from the mainland towards the coast within a country, the demand for seafood will increase. In particular, more than half the world’s population lives within 50 km of the seacoast. As a by-product of this increasing seafood demand, the sea provides employment for 2–3% of the world’s population. Fishing forms an important basis of the economies of many countries. It is not easy to manage renewable biological resources, but marine fisheries present further difficulties. Not only for fisheries limited to areas controlled by a single nation, but even more for fisheries spreading over areas under the jurisdiction of several countries and have been the earliest to collapse, as no single nation can enforce its will. Furthermore, fisheries in the open seas, beyond the 200-mile (320 km) marine limit, are outside the jurisdiction of any national government. Diamond (2011) argues that, if properly managed, the world’s seafood resource could be developed to sustain a catch even higher than present day levels. However, the tragedy of the commons provides the main reasons behind all present failures to do so: (1) the difficulty for consumers to strike an agreement in spite of a mutual benefit, (2) a general lack of regulation and effective management, and (3) the uneconomical subsidies that many governments pay for political reasons – namely, large unprofitable fishing fleets, oversized compared to their fish stocks, and entailing overfishing. Overfishing also leads to damaging the fish reserves because most seafood is caught by netting and other methods that entail the haulage of unwanted animals as well. This by-catch represents quite a significant proportion of the total catch, which is thrown back overboard. However, by-catch mortality could be avoided by a change of fishing gear and practices. Heavy damage to marine habitats on the seabed

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also occurs with trawlers and to coral reefs by dynamite and cyanide fishing. Finally, overfishing also affects fishermen, by ultimately eradicating the basis of their employment and eliminating their income. Happily, not only economists and environmentalists were worried, but also some seafood industry leaders, who in 1997, founded with the World Wildlife Fund, the Marine Stewardship Council (MSC). The main objectives were (1) to deliver credible eco-labeling to customers, and (2) to help fishermen avoid their own tragedies of the commons through a positive market appeal incentive instead of a negative threatened boycott incentive. The Marine Stewardship Council applies criteria that were developed in consultation among fishery scientists, environmental groups, fisheries managers, fishermen, seafood processors and retailers. The main criteria are the fishery should: (1) preserve, for the unlimited future, its fish stock’s health (including the stock’s sex and age distribution and genetic diversity) (2) produce a sustainable yield (3) uphold ecosystem integrity (4) reduce impacts on marine habitats and on non-targeted species (the by-catch) to a minimum (5) follow rules and procedures for handling stocks and minimizing impacts, and (6) observe prevailing laws. Application for certification pertains to a fishery or a fish stock, and the fishing method and practices, or gear employed to manage that stock. The organisations which apply for certification include fishermen collectives, government fisheries departments applying on behalf of a national or local fishery, and intermediary processors and distributors. Applications also come from fisheries dealing not only with fish, but also with molluscs and crustacea.

4.4 4.4.1

Important Considerations There Is No Such Thing as a Free Lunch!

A business exists to distribute profits to its shareholders, rather than being a non-profit making charity. Furthermore, shareholders of public companies are entitled to the maximum profits the company can generate legally. It would be a “breach of fiduciary responsibility” if the company’s directors expressively manage the company resulting in a reduction of profits. Thus, shareholders, in 1919, successfully sued Henry Ford (of car model Ford T fame) for having raised the workers’ daily salary to 5 dollars, when the average going rate was 2.5 dollars. The main costs of an investment will be:

4.4 Important Considerations

• • • •

121

planning costs costs of capital goods cost of financing investment running costs of the investment

A basic financial principle to which the private sector firmly adheres is profitability. Unless the financial viability of the project over its entire life can be clearly demonstrated, equity investors and other long-term investors will be unwilling to provide the amount of funding required at competitive interest rates. The integrity of the cost of construction must be sound and the revenue stream must be realistically calculated. If a project is well structured, international banks will provide funding for 15 years and beyond. Commercial banks are a more flexible source of funds, but they generally require early repayment and may not be the most appropriate for use on these long-term projects. Thus, any business can exist, if it is generating enough revenue to meet all its costs, and distributing profits to its shareholders. The business will exist so long as it is selling enough goods to its customers. Certainly, all customers would prefer buying a product at a price A, lower than the price B. However, if the customer is aware that the product sold at price A, is produced without following sustainable development standards, without taking care of the environment, and continues buying the product at price A, he will ensure that the company continues with its bad practices. Only, if he stops buying the product at price A, can he ensure that good environmental practices are followed by the company selling at price B! In this way, the customer does hold the power of enforcing or encouraging good environmental practice! Depending on the circumstances, an industry really may, at least in the short term, maximize its revenue and profits, by harming the environment and endangering life. Such cases still exist, e.g. fishermen in an unmanaged fishery without quotas, and for international logging companies with short-term leases on tropical rain-forest land in countries with corrupt government officials and unsophisticated landowners. The public is ultimately responsible for creating the conditions that allow a business to generate revenue through danger to the public – e.g., for not insisting that industries clean up their pollution, or for not stopping to buy wood products from non-sustainable logging operations. In the long term, it is the public, either directly or indirectly through its politicians, that holds the power to render destructive environmental policies illegal and unprofitable, and to create sustainable environmental policies profitable, both for the industry and for the people. As resource extraction concerns usually need to mobilise large capital investments, inputs up front, most of these extraction industries are big corporations which tend to view environmentalists as potential enemies and vice-versa. It is true that such corporations may harm people through environmental damage, notwithstanding upholding their pecuniary interests in preference to the public good.

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On the other hand, consumers and environmentalists seem to be blissfully unaware of business realities (profit, loss, jobs creation for local people and host governments) preferring animal welfare to human development, and not considering the corporations’ environmental policies when they are proper and sound.

4.4.2

Urgent Environmental Issues

In 1972, the Club of Rome commissioned a study with a self-explanatory title: Limits to Growth (Meadows et al. 1972). At that time, one concern was, of course, economic growth, while pollution and environmental problems had just begun to be discussed with Carson (2000) who started the alert and the debate against the heavy use of pesticides, etc. The environmental problems have not stopped increasing, unfortunately. Diamond (2011) elaborates on some 12 problems which have been summarised in Table 4.6. Problems 1–4 relate to natural resources being lost or destroyed, followed by three concerning the upper limits of available natural resources. As people produce or transport dangerous products, these lead to problems 8–10, while the remaining two are in connection with population issues.

4.4.3

Possible Approaches to Solutions

“If the boat sinks, then we will sink together”, is one approach adopted by many people (nations) when faced with a crisis which requires sacrifices, yet nobody wishes to show the way. The completely opposite approach is demonstrated by the Dutch citizens who acknowledge the benefit of co-operation for the common good. As one fifth of the land area (polders) is below sea level (as much as 7 m), continuous pumping needs to be carried out to keep the sea out, and the expression has become: “I need to prevent my enemy from drowning, otherwise I will drown with him.” With his background information, there is not a single most important problem in Table 4.6, but rather 12 most important issues, all to be addressed. There is no planet B to escape to or where our problems can be exported. Although many of the problems mentioned involve uncertainties, there are optimistic opinions expressed about new solutions (suddenly) being found. This is also termed as the ostrich’s approach: “Bury your head underground, and you will not see the danger.” Some of these opinions are summarised in Table 4.7. Rich people or those in power, can influence, one way or another, the environmental agendas in their countries. People with more modest means might try other things such as:

4.4 Important Considerations

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Table 4.6 Environmental problems of modern times 1 2

3

4 5

6 7

8

9

10

11

12

Environmental issues which need to be addressed Natural habitats are being destroyed or converted into towns, roads, villages Both provide protein, but apart fishing costs, seafood is obtained for free, in contrast to breeding animals. Even aquaculture (fed from wild fish meat) entail more exploitation of wild caught fish, further aggravating the tragedy of the commons problem. Losing genetic diversity or a fraction of wild species might not seem important, but what if an airplane lost even just a few of the rivets holding the parts together? (cf Concorde accident, July 2000 with the loss of a titanium alloy strip which started everything). Soil erosion is occurring faster than soil forming rates. While known energy reserves (oil, gas and coal) may last a few more decades, further reserves (much deeper underground) are likely to be very expensive for extraction, processing and environmental protection. Most surface water resources are fully exploited while water is being pumped from aquifers more quickly than the replenishment rate. Temperature and rainfall influence the quantum of solar energy captured by plant photosynthesis. Given population growth, with half a century, all solar energy will be used to meet human needs (crops, etc). There should be little left for forests, etc. The chemical industry produces many toxins – insecticides, pesticides, and herbicides and so many more which people swallow with their food and water, breathe in the air, and absorb through their skin. Although in very low concentrations, they often entail birth defects, mental retardation, and permanent or temporary damage to the human immune and reproductive systems Some alien species (transferred, intentionally or not, from their native place to a habitat “foreign” to them) may be valuable as crops, domestic animals, and landscaping. But others may destroy the prevailing native species, either by preying on, parasitizing, infecting, or outcompeting them, just as humans who have been newly exposed to measles or other viruses. Human activities produce gases that contribute to global warming through ozone layer destruction or as greenhouse gases. Although warmer temperatures imply faster plant growth, crop yields may increase in cool areas, while crop yields in already warm or dry areas may decrease. With growing population, the world needs more food, water, energy and other resources. However, growth rates vary from less than 1% to slightly more than 4%. Will the trends stay the same and will migration directions stay the same? If everybody in the world finally attained the First world living standards, would there be enough resources to sustain this development rate?

After Diamond (2011)

(1) Voting for the candidate with the right and proper environmental agenda. (2) Inform elected representatives, in writing, of one’s views about current environmental issues. (3) Businesses look at their sales to decide what to sell or stop producing. The customer can influence this decision with their buying choices. (4) The world being global, such buying choices will also influence overseas suppliers and policy makers. (5) Drawing attention to the suppliers’ company policies and products will also influence their environmental outlook.

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Table 4.7 Answers to common opinions expressed to disregard environmental issues 1 2 3 4

5

6

7

8

9 10

11

12

Pertinent answers to common optimistic opinions about the future Preventing environmental issues becomes cheaper than cleaning up environmental problems, both in the short term and in the long term. cf. parallel with human health. Past experience shows that technology not only solves existing problems, but also introduces new issues to address. It is difficult to switch to another resource satisfying the same need. Usually, it takes time or might be impossible. Nobody has yet been able to replace water! Even if enough food is presently produced in the world, how come undernourishment is still prevalent in the world? Is it just a lack of transport or unwillingness to share food across the world? Prosperity cannot be sustained if it relies on spending the environmental capital (non-renewable energy sources, fish stocks, topsoil, forests, etc.) at a faster rate than resource replenishment can provide. A person’s bank account indicates how rich the person is, but this will dwindle if he is spending more than the interest from the account! Although there might be false alarms, no country can afford to be without a proper fire department. If such precautions can be taken, should not society also consider possible environmental predicted dangers? Even if the population growth rate is decreasing, the overall population is not decreasing! If the Third world attains the living standards of the First world, the environmental impact will not decrease. More people and a higher population growth rate entail more poverty, not more wealth. There are very few countries, if any, which are both rich and with a comparatively high population density. The problems (environment, resources, etc.) of poor countries will eventually affect the rich people, if no solution is prepared or planned for the poor countries. Today’s environmental problems will become acute when our children become adults or slightly more mature. Does it make sense to take care of their education, etc., without planning for the environmental problems they are going to face? Despite their small number of inhabitants, the Easter Islanders were able to destroy their environment and bring their society to collapsing point. Is it easier to manage today’s societies with the bigger number of people? Why is the list of countries with political problems similar to the list of countries with environmental problems, such as Afghanistan, Bangladesh, Burundi, Haiti, Indonesia, Iraq, etc.? What can I, as a single person, do when governments or rich people take decisions?

(6) Although embarrassing companies might be useful, praising those companies or suppliers who are adopting the right policies will encourage the others to follow suit. (7) To be effective, customer actions must be directed to the important supply chain intermediaries who can most influence the producer or supplier. (8) Important people in companies are often influenced by their immediate contacts or relatives, who may also be targeted towards action. (9) There are sometimes strong religious reasons to support good environmental practices. (10) Investing time and effort to improve one’s own local environment.

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(11) Besides the immediate benefits, the example may drive neighbours and motivate other groups or nations. (12) Any donation to NGOs will improve their budgetary resources. However, there must be a life commitment to a policy of actions. We probably need to learn, the hard way, that the world is a polder, before hoping for survival. Reclaimed from the sea in the Netherlands, a polder is a low lying land, where a system, of dykes and pumps, keeps the water away. The population living in the polder, whether rich or poor, is constantly aware of the sea. This consciousness keeps other inequalities at bay. Neither the rich person, nor the poor one has the luxury to isolate himself from the results of his actions (or inactions). A broken dyke or a negligence of a pump repair does not forgive: all people will die together. The 1953 flood has kept that danger alive. In that sense, work that needs to be executed today, cannot be postponed until tomorrow. Diamond (2011) believes that this environmental awareness in the Netherlands, is unmatched anywhere else in the world. It is, however, difficult to conceive that the developed world, or the rich persons in the developing world, will deliberately downsize their standards of living so that the whole world can attain a more representative vision of the possibilities. The problems (environment, resources, etc.) of poor countries will eventually affect the rich people, if no solution is prepared or planned for the poor countries. Today’s environmental problems will become acute when our children become adults or slightly more mature. Does it make sense to take care of their education, etc., without planning for the environmental problems they are going to face?

4.5

Sustainable Development Goals

The 2030 Agenda for Sustainable Development was adopted at the seventieth session of the General Assembly of the United Nations, held on 25 September 2015. The goals that were developed are given in Table 4.8 and elaborated further below. Goal 1: End Poverty in All Its Forms Everywhere Although extreme poverty rates have been reduced drastically since the beginning of this century, some 15–20% of people in developing regions still have to manage with less than $2 daily. Some more millions of people have barely more than this daily amount, notwithstanding that many people risk falling back into poverty. Poverty is not just a lack of income and resources to support a sustainable livelihood. Poverty manifests itself through also hunger and malnutrition, little or no access to education and some other elementary services, societal discrimination and marginalization as well as being unable to participate in decision-making. Sustainable jobs and equality can only be promoted when economic growth is inclusive. (Acemoglu and Robinson 2013).

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Table 4.8 The Sustainable Development Goals (SDGs) Goal 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Infra

Brief description End poverty in all its forms everywhere End hunger, achieve food security and improved nutrition, and promote sustainable agriculture Ensure healthy lives and promote well-being for all at all ages Ensure inclusive and quality education for all and promote lifelong learning Achieve gender equality and empower all women and girls Ensure access to water and sanitation for all Ensure access to affordable, reliable, sustainable, and modern energy for all Promote inclusive and sustainable economic growth, employment, and decent work for all Build resilient infrastructure, promote sustainable industrialization, and foster innovation Reduce inequality within and among countries Make cities inclusive, safe, resilient, and sustainable Ensure sustainable consumption and production patterns Take urgent action to combat climate change and its impacts Conserve and sustainably use the oceans, seas, and marine resources Sustainably manage forests, combat desertification, halt and reverse land degradation, halt biodiversity loss Promote just, peaceful, and inclusive societies Revitalize the global partnership for sustainable development

Goal 2: End Hunger, Achieve Food Security and Improved Nutrition, and Promote Sustainable Agriculture Is food grown, shared and consumed in a proper way? If properly practised, agriculture, forestry and fisheries should be able to provide sufficient nutritious food for everybody and generate reasonable incomes, while encouraging peoplecentred rural expansion and protection of the environment. Presently, soils, freshwater systems, forests, oceans, and biodiversity are being quickly degraded. Climate change is affecting even further the resources we depend on, producing further risks linked with weather extremes such as droughts and floods. Many rural people can no longer earn a living on their land, compelling them to move to cities looking for opportunities. Thus, a deep change of the global food production and agriculture system is required if we wish to nourish today’s 800 million hungry people and the 2 billion more persons anticipated by 2050. Core solutions for development are available in the food and agriculture sector, which is a central hub for hunger and poverty eradication. Goal 3: Ensure Healthy Lives and Promote Well-being for All at All Ages Safeguarding a healthy life style and encouraging the well-being of everybody at all ages is necessary for sustainable development. Important strides have helped to increase life expectancy and reduce some of the usual killers linked to infant and

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maternal mortality. Significant progress has been achieved to improve access to clean, potable water and sanitation, to reduce malaria, tuberculosis, polio and to minimise the risks of HIV/AIDS. However, much more effort is required to totally eliminate a wide variety of diseases and tackle many different tenacious and emergent health problems. Goal 4: Ensure Inclusive and Quality Education for All and Promote Lifelong Learning Getting a quality education immediately improves people’s lives and provides the stepping stone to sustainable development. There has been much progress to improve, at all stages, access to education and to increase school enrolment rates, in particular, for women and girls. Although this has increased basic literacy skills considerably, more efforts are required to achieve greater strides reach universal education goals. For example, although gender equality has been achieved in primary education, few countries have reached that target at all education levels. Goal 5: Achieve Gender Equality and Empower All Women and Girls Apart from forming part of fundamental human rights, gender equality is necessary to maintain peace, prosperity within a sustainable world. The Millennium Development Goals has enabled much progress towards this end. However, the feminine gender still suffers violence and discrimination in every country. Does part of the problem lie in men’s inability to talk as easily and fluently as women during an argument? Providing both genders with similar access to education, reasonable pay for equal work, health care, and participation in political and economic democratic forums will energise sustainable economies and generally help societies and humanity. Goal 6: Ensure Access to Water and Sanitation for All Access to clean and potable water to everybody is important for everybody in the world. There is enough fresh water available to achieve this. However, because of inadequate infrastructure or poor economics, several millions of people, in particular children, die yearly, from diseases linked with improper hygiene arising from inadequate available water and sanitation facilities. Lack of water, or poor water quality, together with inadequate sanitation already affect food security negatively. Furthermore, across countries, this limits livelihood choices and opportunities for education in poor families. In some of the world’s poorest countries, drought occurrence further worsens the problems of hunger and malnutrition. It is likely that by 2050, at least 25% of people will be living in countries affected by regular shortages of fresh water. Goal 7: Ensure Access to Affordable, Reliable, Sustainable, and Modern Energy for All What happens in today’s world when there is a power cut? All daily activities depend on energy being available, be it for jobs, food production, security. Whether to generate more income, or to tackle climate change impacts, access to energy for everybody is vital.

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Access to modern energy services, improved efficiency and increase availability and use of renewable sources would be an important step towards creating a better social welfare. Goal 8: Promote Inclusive and Sustainable Economic Growth, Employment, and Decent Work for All About 50% of the world’s population still survives on the daily equivalent of about US $2. Unfortunately, even having a job does not ensure escaping from poverty. It is therefore essential for societies to rethink and update our economic and social models designed for poverty eradication. A continuous dearth of reasonable work opportunities, inadequate investments and under-consumption entail an erosion of the fundamental social contract essential to democratic societies: that all must participate in progress. Creating quality jobs will continue to be the main challenge for nearly all economies, well beyond this decade. A sustainable economic growth implies that societies need to create the basic conditions that permit people to work in quality jobs that kindle the economy without harming the environment. Job prospects and reasonable working conditions are also needed for the entire working age population. Goal 9: Build Resilient Infrastructure, Promote Sustainable Industrialization, and Foster Innovation Infrastructure investments – transport, information and communication technology, irrigation, and energy, inter alia – are crucial to accomplish sustainable development and empower communities in many countries. Chapter 2 has also indicated the link between productivity growth, incomes and infrastructure investments which also enhance improvements in health and education. Inclusive development is a basic income generator which permits rapid and sustained improvements in standards of living for all people, and offers the technological possibilities to accelerate environmentally sound industrial development. Technological progress may help to attain environmental objectives, for example, increased resource and energy-efficiency. Development can only happen through industrialization encouraged by technology and innovation. Goal 10: Reduce Inequality Within and Among Countries International aid has benefitted many countries by helping them to lift people out of poverty. Vulnerable nations, such as Small Island Developing States (SIDS), landlocked developing countries, and the LDCs (the least developed countries) have not stopped their progress towards poverty reduction. None the less, inequality still continues and access to health, education facilities, and other infrastructure services still show some large disparities. However, although globalization may have reduced income inequality between countries, it has not always done so within the countries. If economic growth is not inclusive, nor involves the three sustainable development pillars – economic, social and environmental aspects – it will not suffice in reducing poverty.

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Inequality can only be reduced if policies apply universal principles giving due attention to the requirements of underprivileged and ostracized persons. Goal 11: Make Cities Inclusive, Safe, Resilient, and Sustainable Villages grow into towns and cities by becoming production centres, commercial, and cultural hubs for ideas, science, social development and so much more. At their apogee, cities have empowered people to progress socially and economically. However, many challenges hinder maintaining cities on the way to prosperity through job creation, without stressing land and resources. Typical urban challenges comprise congestion, a scarcity of funds to offer basic services, a lack of proper housing and deteriorating or insufficient infrastructure. Cities can face the challenges in several ways that permit them to continue to flourish and blossom, while refining resource use and decreasing pollution and poverty. The future we wish for, most probably, includes cities with opportunities for everybody, with access to all the basic infrastructure services, as a minimum. Goal 12: Ensure Sustainable Consumption and Production Patterns Sustainable consumption and production tries to stimulate resource and energy efficiency, allow access to basic services and encourage sustainable infrastructure services, create green and reasonable jobs and generating a better standard of living for everybody. Its realization helps to accomplish overall development plans, to decrease economic, environmental and social costs in the future, to reinforce economic competitiveness and to diminish poverty. Sustainable consumption and production tries to “do more and better with less”, to increase net welfare benefits from economic activities by decreasing resource use, deterioration and pollution along the entire lifecycle, while improving the quality of life. Overall, different stakeholders are concerned, comprising, inter alia, policy makers, researchers, scientists, business, retailers, media, consumers, and development cooperation agencies. The different actors – from producer to final consumer – functioning in the supply chain, should also use a systemic approach and cooperate. Consumers need to be engaged through raising their awareness, by educating on sustainable consumption and lifestyles, providing them with sufficient information through standards and labelling practices and informing them on sustainable public procurement rules, etc. Goal 13: Take Urgent Action to Combat Climate Change and Its Impacts Climate has been changing over millennia. However, during the last few decades, the change has been more visible in its extreme impacts – hurricanes, droughts or floods – affecting most countries and their economies, and affecting infrastructure assets or services negatively, for more years to come. People are feeling the impacts and undergoing the profound effects of climate change, which comprise modified weather patterns, sea levels rising more quickly, and more weather events with sharper extremes. Greenhouse gas emissions arising from human activities seem to be the driving force behind climate change and, do not show any signs to decrease. If there is no corrective action, daily temperatures are

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likely to increase by some 3  C this century. Once again, the most affected are the poorest and most vulnerable people. Countries can, not only access, but even leapfrog to better, more resilient economies through affordable, scalable technological solutions. The rate of change is accelerating as more people turn towards renewable energy and a variety of other measures that should reduce emissions and improve adaptation efforts. However, climate change is not limited to national borders, but represents a global challenge. Emissions (natural from volcanoes, man made from human activities) from anywhere can upset and harm people everywhere. Solutions to such an issue require international level coordination and needs international cooperation to assist developing countries transit towards a low-carbon economy. There have been several international conferences and Agreements at international level, with mitigated success, sometimes with disagreements from important groups of people (America, India, China, etc.). Paragraph 4.2.2 then takes its full importance: is it possible to go blindly towards danger without taking any corrective action? Goal 14: Conserve and Sustainably Use the Oceans, Seas, and Marine Resources The world’s oceans – sea currents, tidal movements, fish life, their chemistry and temperatures – provide the driving systems making the planet Earth habitable and its climatic variations. Our climate, changing weather patterns, coastlines, rainwater, drinking water, an important fraction of our food, and the atmosphere’s oxygen that we inhale, are all ultimately supplied and regulated by the sea. Throughout history, the oceans and seas have served as important routes for trade and transportation. The seas form part of an essential resource that requires sustainable management. Goal 15: Sustainably Manage Forests, Combat Desertification, Halt and Reverse Land Degradation, Halt Biodiversity Loss Forests cover nearly one third of the Earth’s surface, and further to providing shelter and ensuring food security, forests play a critical role in mitigating climate change, biodiversity protection and safeguarding the habitat of the indigenous population. Every year, some 130,000 km2 of forests are being lost while the consistent deterioration of drylands has entailed the desertification of 36 million km2. Certainly, deforestation and desertification – produced by human activity and climatic change – present significant challenges to sustainable development, while negatively influencing the livelihoods of millions of people in the battle against poverty. Efforts have been made and are still ongoing to manage forests and fight desertification. Goal 16: Promote Just, Peaceful, and Inclusive Societies This goal tries (1) to promote peaceful and inclusive societies to encourage sustainable development, (2) to provide easy access to justice for everybody, and (3) to build accountable and effective institutions at all levels.

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“If you want peace, prepare for war.” People can learn karate as a means to exercise, or as a means of self-defense should they be attacked. So long as countries adopt this attitude, there is no reason why this goal could not be attained. But history has rarely shown us a period, when there was no war, between at least two countries, going on. Goal 17: Revitalize the Global Partnership for Sustainable Development The success of the sustainable development agenda heavily depends on partnerships between governments, the private sector and civil society. These inclusive partnerships erected upon principles and values, a common vision, and collective goals that are centred on people and the planet are necessary at the local, national, regional and global level. The objectives of sustainable development are known. Money in terms of trillions of dollars (1 trillion ¼ a million million) of private resources can be raised. However, urgent action is required to mobilize, redirect and unlock this potential. These substantial private resources can help in ensuring long-term investments for developing countries, particularly in critical sectors comprising sustainable energy, transport infrastructure services, and information and communications technologies. The public sector will require establishing a clear direction in order to appeal to such investors for reinforcing sustainable development, with new models for reviewing and monitoring frameworks, new regulations and motivating structures that support such investments. It will be necessary to brace national overviewing mechanisms such as supreme audit institutions and supervisory functions by legislatures.

4.6

Using Infrastructure to Achieve SDGs

Table 1.1 has listed the facilities that infrastructure can provide. Chapter 3 has shown the possibilities for new developments. When a child is born, the baby comes with all the organs necessary for a complete and proper functioning of the body. As the child grows up, the different organs of the body grow in size, such that there is no need to add any extra component, as would happen when somebody wishes to add a room to enlarge his house, etc. It would indeed be wonderful, if it were possible to design a town which can grow up, a bit in the same way, as a body – it would be necessary to add rooms or buildings, or enlarge/increase the existing infrastructure asset – provided that some prior planning had been carried out, and the necessary space, already provided for. Thus, when we examine the Sustainable Development Goals, there are very few which have no link at all with infrastructure. (Compare Tables 1.1 and 4.8). The planning should, therefore, include having a vision (see the opening quotations of this chapter) which encompasses the Sustainable Development Goals and

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devote the necessary time and technical staff to move forward towards implementation, bearing in mind the pitfalls that other nations have suffered in the past. The story does not stop here. Many of the following chapters will help in refining the vision and planning that may be required to transform a dream into reality.

References Acemoglu, D., & Robinson, J. A. (2013). Why nations fail: The origins of power, prosperity and poverty. London: Profile Books. Bruntland, G. H. (Ed.). (1987). Our common future: The World Commission on environment and development. Oxford: Oxford University Press. Carson, R. (2000). The silent spring. Originally published in 1962, republished in 2000, by Penguin Classics. Cole, M. (2012). Deconstructing the case for sustainability. New Civil Engineer, 12 July: 10–11. Diamond, J. (2011). Collapse: How societies choose to fail or survive. London: Penguin. http://www.un.org/sustainabledevelopment/biodiversity/ http://www.un.org/sustainabledevelopment/cities/ http://www.un.org/sustainabledevelopment/climate-change-2/ http://www.un.org/sustainabledevelopment/economic-growth/ http://www.un.org/sustainabledevelopment/education/ http://www.un.org/sustainabledevelopment/energy/ http://www.un.org/sustainabledevelopment/gender-equality/ http://www.un.org/sustainabledevelopment/globalpartnerships/ http://www.un.org/sustainabledevelopment/health/ http://www.un.org/sustainabledevelopment/hunger/ http://www.un.org/sustainabledevelopment/inequality/ http://www.un.org/sustainabledevelopment/infrastructure-industrialization/ http://www.un.org/sustainabledevelopment/oceans/ http://www.un.org/sustainabledevelopment/peace-justice/ http://www.un.org/sustainabledevelopment/poverty/ http://www.un.org/sustainabledevelopment/sustainable-consumption-production/ http://www.un.org/sustainabledevelopment/sustainable-development-goals/ http://www.un.org/sustainabledevelopment/water-and-sanitation/ https://www.brainyquote.com/quotes/richard_rogers_613200?src¼t_architecture Meadows, D., Meadows, D., Randers, J., & Behrens, W. (1972). Limits to growth: A report for the club of Rome’s project on the predicament of mankind. Washington, DC: Earth Island. Tainter, J. (1990). Collapse of complex societies. Cambridge: Cambridge University Press. Todaro M., & Smith S. C. (2014). Economic development. United Kingdom: Pearson

Chapter 5

The Long Term Plan for Infrastructure

Prediction is very difficult, especially about the future. Niels Bohr If you don’t invest for the long term, there is no short term. George David Objectives can be compared to a compass bearing by which a ship navigates. A compass bearing is firm, but in actual navigation, a ship may veer off its course for many miles. Without a compass bearing, a ship would neither find its port nor be able to estimate the time required to get there. Peter Drucker The best way to predict your future is to invent it. Abraham Lincoln The Australia to 2050 report highlights something that is well understood by South Australians, that infrastructure plays a key role in long-term economic expansion. Kevin Rudd The infrastructure deficit in India is widely recognised as a constraint on growth. Congestion on highways, ports, airports, and railways has increased, as have power shortages . . . . This widening deficit is characterised by the fact that the demand has grown much beyond the anticipated levels and the creation of infrastructure has persistently fallen short of the targets set by the government. Gajendra Haldea What we build today will last centuries. Santiago Calatrava The only thing we know about the future is that it will be different. Peter Drucker

© Springer Nature Switzerland AG 2021 V. Proag, Infrastructure Planning and Management: An Integrated Approach, https://doi.org/10.1007/978-3-030-48559-7_5

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5 The Long Term Plan for Infrastructure It is a mistake to look too far ahead. Only one link of the chain of destiny can be handled at a time. Winston Churchill

When people cannot benefit from infrastructure services in the immediate future, it seems foolish to consider the long term as if that really matters. This chapter explains why a long term view is required: (a) a major project takes a few years to construct (b) carrying out the activities required prior to actual implementation may take anything between 5–10 years (c) considering a short design period (20 years) requires frequent renewal/updating of infrastructure installations (d) the project’s useful life starts after its completion, and will be providing infrastructure (water) facilities for the next 50 to 100 years or more. Forecasting is one method used for such planning. The spirit of sustainable development requires that intergenerational equity be carefully addressed. Given the constraints of planning and the lifetimes of infrastructure facilities, it is necessary to daydream and think of the future possibilities. A backcasting approach is probably preferable together with other methods. It is only by acting pro-actively now, rather than reacting after the crisis, that we can hope to achieve a sustainable development rather than a sustainable infrastructure nuisance!

5.1

Introduction

During the 1960s, there was the battle towards independence and suddenly, after independence in 1968, an array of problems seemed to crop up. Many areas received a poor water supply with daily cuts during the day, a problem which apparently is still on the daily schedule for several areas in Mauritius. In the early 1980s, colleagues in Réduit could end their lectures at noon, take a car trip to the Port Louis market (8 km away) to buy their vegetables and still be able to come back in time for their lectures starting at 1 p.m. A trip from Curepipe to Port Louis (18 km) similarly took little time, with parking facilities under the very building where one had a meeting. Presently, these 1980 realities are the dreams of 2060! The quotations above do give an idea of the problem facing us. Even if things are comfortable now, we can only address sustainable development by safeguarding development for the next and successive generations by giving them a comfortable start. Just like every parent tries to leave a significant legacy to offspring, we should bequeath a comfortable infrastructure to the next generation which it can build upon: this is the principle of intergenerational equity. If successive generations have to correct the mistakes of past and present generations, then we have produced a sustainable nuisance!

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1,700,000 1,600,000 1,500,000 1,400,000 1,300,000

Population in Mauritius

1,200,000 1,100,000 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Low Scenario

Year Medium Scenario

High Scenario

Fig. 5.1 Population change in Mauritius

Figure 5.1 shows that the population of Mauritius has gone a long way from the 180,000 in the 1850s to the present day of 1.3 million. Depending on the rate of growth, Statistics Mauritius (2016) is forecasting a possible increase to 1.6 million in the high scenario. The population will not increase significantly from now in the low scenario. However, several issues need to be addressed. If the population does not increase significantly, the problems of road congestion, water supply, etc. should nevertheless be addressed. There will be an increased number of old people, to whom the relevant attention needs to be given. If the population does increase to 1.6 million, either naturally or by massive immigration, other problems such as more housing, more schools, etc. should be given more attention rather than just mentioning them as a being a mere possibility. But then, one might well ask, what are these problems that are being referred to? Are they that important to worry about? Table 5.1 shows the categories of infrastructure on which the population depends for everyday life. The example of water supply will be taken as an illustration. Once the nature of the planning problem is established, the reasoning can be extended to infrastructure in general. At one time, water availability did not seem a problem. Then, there was a sudden development (economic growth) of the country, with water requirements increasing too quickly for them to be satisfied.

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Table 5.1 Different categories of infrastructure in a country Category Agriculture Buildings

Communication

Education Energy

Health

Housing Industry Recreation

Tourism Transportation

Waste management

Details Different crops cultivated Irrigation systems Materials Public and private buildings (hospitals, fire stations, prisons, schools, government offices, police stations, car park structures) Other buildings (public, residential, commercial, multipurpose complexes) Public and private housing facilities Industrial, manufacturing, warehousing and supply chain facilities Telecommunication networks (land telephone/optic fibre networks, telephone exchange stations, transmission towers) Cable television networks Wireless/satellite networks Information technology (IT) infrastructure networks: (cable distribution, computer networks, backup and recording mediums, cloud computing infrastructure) Postal and shipping Primary and secondary schools, universities, other training institutions Hydroelectric plants (turbines, penstock, surge tower) Thermal plants (gas, oil, coal fuelled power generation), nuclear Gas pipelines (gas production at landfills, storage tanks) Petroleum/oil distribution (pumping stations, truck/pipe transport, storage tanks) Renewable energy (infrastructure for solar power, wind power, biofuels) Electric power distribution grid networks Public and private health facilities (hospitals, clinics) Teaching and research hospitals Private nursing homes Houses, apartments Factories, equipment, logistics Parks and playgrounds, recreational facilities, swimming pools, picnic areas National monuments and icons Lake and water sports, fishing facilities Theme parks, restaurants, security facilities, casinos Hotels, transport and recreation facilities (fun parks, safari tours, ecotourism) Vehicles, bridges and tunnels, access roads. Parking areas Airports, helipads, air traffic control, ground facilities Seaports, dry docks Mass transit (monorail, trams, bus, platforms, stations) Solid waste (transport, landfills, transfer stations, recycling facilities) Hazardous waste (transport, storage facilities, treatment plants, security) Nuclear/radioactive waste (transport, storage facilities, security) (continued)

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Table 5.1 (continued) Category Water wastewater

Details Water supply (pumping stations, treatment plants, service reservoirs, trunk mains, boreholes, mechanical/electrical equipment) Structures (weirs, dams, impounding reservoirs, tunnels, aqueducts) Irrigation water distribution (rivers, canals, weirs, gates) Sewerage (sewerage pipes, septic tanks, treatment plants) Stormwater drains (roadside gutters and drains, canals)

Asset capacity

Adapted from Proag (2015)

Well-planned asset build-up

Asset build-up lagging behind

Existing asset capacity

Yt

Forecasted requirements

Existing asset no longer adequate

To

Time (years)

Fig. 5.2 Asset capacity build up

5.2

Planning Investment in the Water Sector

After construction, any asset will meet demand to a given threshold. This infrastructure capacity may be constant, improve (rarely) or more usually deteriorate with time (wear and tear, etc). On Fig. 5.2, the existing asset is shown as having a fixed capacity, as a horizontal straight line, and provides more capacity than required. However, with time, the water requirements will increase gradually for several reasons (demography, tourism, industrial development, agriculture, etc). This requirement is represented by curve Yt. Hence, after an unknown (as yet) time To, the present asset will not be able to satisfy the demand, and it will be necessary to increase the infrastructure capacity. If the infrastructure capacity increase is planned well ahead, the gradual or sudden asset capacity increase can be implemented to adequately meet the demand at all

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times. It may be noted that the time scale before and after To is not indicated at this present stage, and will be defined hereunder. Assessing the requirements, followed by infrastructure capacity implementation, are just two of numerous steps which take time. It is therefore easy to introduce a significant time lag between the identification of the requirements and meeting them. In that case, a cat-chasing-tail experience can follow – indefinitely, if not during a long period, which is often experienced in many sectors (roads, water, etc). As is well known, there is a continuous interaction between infrastructure parameters. Thus, though the trend equations will give the forecast values for water and waste water, there is, nevertheless, a close link between them: the development in the two sectors needs to be synchronised.

5.3

Basic Activities Required

In order to carry out infrastructure capacity implementation before it becomes due, it is desirable to examine all the activities required. These are broadly as follows: • • • • • • • • • • •

Determine the infrastructure (water) demand or requirements Determine the present infrastructure assets or resources (water availability) Carry out a preliminary cross-matching of availability and demand Formulate possible project alternatives or schemes Estimate costs for different project alternatives or schemes Formulate a Draft Master Plan for circulation Market the Master Plan with government officials and other stakeholders to obtain their approval (in principle, at least) Carry out feasibility studies for different project alternatives or schemes (see also Chap. 14) Seek funds for construction Select final project alternative Implementation of proposed schemes Infrastructure requirements include demand plus any losses.

5.3.1

Assess the Infrastructure (Water) Requirements

It is, of course, necessary to assess the water requirements. Present uses can be surveyed, both for quality and quantity, but possible future uses must also be imagined. The next question is the forecasting period. It may be argued why a forecasting period of 50 years or so should be considered here. In many cases, population estimates are made for 20 years, and their accuracy is doubtful. However, in the author’s experience, several arguments justify a long term view beyond a 20 year period:

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(1) A major project takes a few years to construct. (2) Carrying out the activities detailed above, prior to actual implementation, may take anything between 5–10 years. (3) The time taken for project completion is detailed out later, but very often, when completed, the facility provided already reaches its design capacity (as designed 20 years ago) very quickly, i.e., even before it starts operation, it is already under-designed. (4) The project’s useful life starts after its completion, and will be providing infrastructure (water) facilities for the next 50 to 100 years or more, as discussed later. Thus, the assessment of infrastructure (water) requirements should really take a long term view. Even if a mere 50 years is considered, it is still 50 years beyond To and not only 20 years!

5.3.2

Assess the Water Availability

Certainly, before anybody spends money, it is necessary to know how much money is available. Thus, an assessment of the water available over the country will need to be carried out, starting from rainfall to river flows and groundwater data.

5.3.3

Preliminary Matching of Resources and Requirements

Once the two assessments above have been carried out, a preliminary matching may be carried out to check on the feasibility of our dreams. If the projected water requirements exceed water availability, this means that at some time, there will be a possible water shortage, unless the water demand is reviewed or some external means of producing water (water recycling, desalination, etc.) is brought in. If the projected water availability exceeds water requirements, this means that with a well-planned infrastructure build up, it should be possible to meet all the water requirements of the projected forecast. New technology makes an on-going appearance. As such, it is difficult to foresee what type of technology will be used in the future. Churchill may have a good argument, but instead of being wishful thinking, this forecasting exercise does bring down to earth, both planners and decision makers: • what is the infrastructure capacity that has to be implemented for the future? • are conservation measures required? • what are the constraints (natural or otherwise) in bringing about such possible future development scenarios?

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5 The Long Term Plan for Infrastructure

Formulating Possible Schemes

Given the theoretical water availability, it is possible to formulate possible schemes (storage dams, run of river diversions) or groundwater pumping stations which could ensure a guaranteed, reliable flow in the future.

5.3.5

Cost Estimates of Schemes

For any given scheme, it is found that the cost depends on the flow that it is possible to harness. It will be, thus, possible to determine a series of costs for each possible scheme with different flows. In principle, the cost rises rather exponentially as the flow increases.

5.3.6

Formulating the Draft Master Plan

It will be remembered that water is required, both in space and time, i.e. in certain areas and over time. For example, a region A may be presently well served, but will lack water in 25 years’ time and will need the implementation of 2 projects, one to be ready by the 25 years and another to be available after another 10 years. A region B will have another set of requirements, maybe for agricultural or touristic reasons. Thus, the implementation of the schemes must be planned in such a way that the different regions obtain their water requirements, as and when they need them or, slightly before.

5.3.7

Marketing the Master Plan and Acceptance Thereof

Engineers are reputed to think technically. During the preparation of the Master Plan, most likely, experts in several fields will have carried out extensive studies to produce a technically very coherent set of project alternatives to meet the future infrastructure capacity demand or requirements. However, the phrase “Man proposes, but God disposes” is very apt here: if the Master Plan does not have the blessing of the different stakeholders (decision makers, users, etc.), it would be most unwise to believe in the implementation of any of the project alternatives, if at all. It is, thus, most essential that some funds be allocated in the project budget for the Client and Consultant to meet all stakeholders (through their associations or delegates) early enough – sometimes twice or more, at the preliminary stage and final stage – when possible schemes are discussed and formulated and the Draft Master Plan prepared. It is judicious to organise presentations at different stages with

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141

potential stakeholders and request their comments. As long back as 2003, the small town of Rundu (37,000 inhabitants in the 2001 census growing to 63,000 in the 2011 census) in the north of Namibia invited representatives of some 30 ministries and NGOs to a presentation for an upcoming water supply project to the town. The idea was to invite all these institutions to have their possible views, to be taken on board, as far as possible. Several sittings might be necessary. Those who did not come would not be in a position later to contest decisions taken or plans approved by the majority. A commendable democratic exercise! This kind of exercise is quite common in many developed countries, but less so in other countries.

5.3.8

Feasibility Studies

After the relevant authorities have given their approval in principle to the Master Plan, one or several extensive feasibility studies would be required before implementing any project alternative. Normally several such studies would be started. However, such an exercise would require consultants, the choice of whom would necessitate 6–12 months. While the feasibility studies are ongoing, refined estimates will be available and should enable the Government to contact a few potential funding agencies.

5.3.9

Looking for Funds

While the funding agencies would show interest at the stage above, they would not commit to anything unless they have seen the feasibility study and approved the whole report. Even if a funding agency had approved the Master Plan, the submission of a proper feasibility study is a prime requirement for any further funds for project implementation. If one funding agency is not interested or does not wish to participate in the project, then the Government will have to look for some other sponsor.

5.3.10 Implementation of Proposed Schemes When there is a positive indication that funds will be obtainable, albeit in a few years, the Client may initiate proceedings for detailed design work and the preparation of Tender documents. Of course, the latter will be floated in due course and the different contracts awarded. The project duration may be short (1 year) or longer (up to 3–4 years) for dam projects.

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It is only after the completion of the scheme that water will be available to meet the needs. But what year are we talking about?

5.4

Planning the Activities

A tentative time schedule has been shown in Table 5.2 on the basis of personal experience in Mauritius and Rodrigues. It is very edifying. If we want to secure water in the future, we need to know something about our future requirements. Table 5.2 lists down the activities detailed in para. 5.3 and gives estimates of minimum and usual maximum time taken for the activity. Of course, the real maximum time might be much more. Adding all the minimum durations (barring concurrent activities) gives the minimum finish time. A similar exercise with the usual durations will give the normal finish time. Thus, the minimum finish time means that 10 years will pass before users are likely to benefit from a major water project, while 17 years may be required with normal durations. A longer period is, probably, more realistic, say 20 years, as there is no dearth of persons who will procrastinate before taking decisions, or through the usual bureaucratic process. As an example, the pre-feasibility of Bagatelle dam (Mauritius) was carried out in 1991, construction started in 2012 and was completed by 2017. At the time of writing, in September 2019, the associated water treatment has just been completed. So, this

Table 5.2 Schedule of activities required to ensure timely infrastructure capacity

Activities Determine the infrastructure service requirements Determine existing infrastructure capacity/resources Preliminary matching of resources and requirements Formulate possible schemes Estimate costs of schemes Formulate draft master plan Marketing the master plan for approval, in principle Feasibility studies for different project alternatives Seek funds for construction Select final project alternative Implementation of final project alternative

Duration Years 1–2

Concurrent Yes/No Y

Earliest finish time Year 1

Normal finish time Year 2

1–2

Y

1

2

1–2

Y

1

2

1–2 1 1 1

N Y N N

2 2 3 4

4 4 5 6

1–2

N

5

8

2–5 1 3–4

N Y N

7 7 10

13 13 17

Asset capacity

5.4 Planning the Activities

143

Well-planned asset build-up

Asset build-up lagging behind

Existing asset capacity

Yt

Forecasted requirements

Existing asset no longer adequate

To ≤ 20

T = To + 50+ Time (years)

Fig. 5.3 Time services provision for infrastructure

gives a period of 28 years between pre-feasibility and actual supply, when a dam (Baptiste-Guibies scheme) for the area serviced was imagined as long back as 1974! Thus, the time before To should be of the order of 20 years, or more. Furthermore, the project will last for another 50 to 100 years, if not more. Figure 5.3 illustrates this situation-infrastructure starts providing services some 20 years after being conceived and during the following decades or century. The project, after construction or implementation, will most likely be effectively used during a period of 50 to 100 years or more before a need is felt to upgrade or supplement it. To further complicate matters, a water project is not an end in itself. There are various sectors – if not all – which influence or are influenced by the availability of water, as shown in Fig. 5.4. Coming back to Fig. 5.3, we are thus faced with the problem of estimating requirements for 20 + 25 or 20 + 50 ¼ 70 years (or even more) from now. This is for the first project to be implemented. Other schemes identified in the Master Plan will be expected to follow up gradually, as time goes on. Thus, for these, the estimate of water requirements must go even further. This is probably a tall order, particularly if we realise that water is a commodity that interacts with all economic activities, as shown for example in Fig. 5.4. As regards project lifetime, many Codes of Practice consider the average lifetime of most structures and buildings to be near 50 years. Although this may have been likely at some time, other new, modern considerations, need to be addressed:

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POPULATION LAND USE

WELFARE SERVICES

AGRICULTURE

Water Sewerage Soild Waste Energy Telecommunications

Sugar Vegetables Fishing

INDUSTRY Factories Offices

ECONOMY

TOURISM

Hotels Ecotourism

COMMERCIAL SERVICES Financial/offshore Shops Markets

WELFARE SERVICES Housing Schools Hospitals Administration

POLLUTION

TRANSPORT

Roads Parking space Ports Airports

GREENSPACE

Forests Gardens

OCEAN Fishing Tourism

METHODOLOGY Data Collection Mass Balance/Experiments Limits and Consraints Models for analysis and policy decision Surveys with public Long Term planning

Note: Arrow represent main net flows.

Fig. 5.4 Interaction of different parameters in the national environment

(1) better and stronger materials, now available and used, have increased the useful life of the structures and buildings. How many cathedrals built since the medieval times have fallen down? (2) why would any infrastructure owner, demolish his structure after 50 years, if it can still be maintained for providing the services required? A good example is the Eiffel Tower, built in 1889, for the Universal Paris Exhibition. It was expected to be dismantled in 1909 (after 20 years of operation). For various reasons, it was not demolished, and is still being regularly maintained. (3) it might be difficult to choose another site in the future. A road surface may have a lifetime of 20 years, but there is, after 20 years, rarely the possibility of enlarging the road, if both sides have been built up and no provision was made for possible enlargement. (4) for other facilities, dam site, water treatment, etc., enlargement is only possible if space provision was made at the initial stages of planning/construction. (5) in large countries, an altogether new site or route may be chosen because of space availability (in France, the TGV follow routes which are completely

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Table 5.3 Probable planning period for different uses

Agency Look out institutions, social technology, natural resources, etc. Industry in social technology, e.g. communications Space programme Defence National economy e.g. French plan National goals e.g. US government Innovating industry e.g. chemistry, electronics Consumer type industry

Forecast period of concern (years) Formal Informal Up to 50+ 5–10 30–50 10–20 20–30+ 7–10 20–25+ 5 20–25 5–6 10–30 5–10 10–20 3–5 5–10

Jantsch (1967)

different from existing rail routes). However, on small islands, space is usually at a premium. (6) dismantling or demolishing costs are now so high that the owner will likely wait for as long as the structure does not fail before he really pulls down the infrastructure. In effect, not only may the lifetime of an asset exceed 50 years, but the space available might dictate that successive additions be made to existing infrastructure. Thus, we see that the time after To may well exceed 50 years. It is interesting to compare the figures given by Jantsch (1967) cited in Roberts (1983), shown in Table 5.3. Roberts (1983) indicates that while land use planning needs a formal forecast for a 20-year period, it is useful to have an informal forecasting for up to 40 years. Given the technical exigencies of infrastructure planning, the 50 years mentioned here should not seem farfetched. In Fig. 5.3, given that the time before To should be of the order of 20 years, while the time after To may well exceed 50 years. It is therefore imperative that the planners’ vision extend beyond 70–100 years.

5.5

Establishing the Time Frame

One solution is, of course, to bury one’s head in the sand and do nothing: we will address the issue when it arises (we cross the bridge when we reach the river – maybe, but is there a bridge?). This policy, at best, is a piecemeal approach that will provide, if possible, assets, which are always lagging behind. In fact, we have not solved the problem of safeguarding our water supply or ensuring that infrastructure is available when needed.

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5 The Long Term Plan for Infrastructure

This is precisely one of the biggest challenges of planning which is, too often, classified in the “too difficult” box. As a result, only short term solutions are examined. However, if one wants to handle sustainable development seriously, it is important to address the principle of intergenerational equity, namely to plan for the long term, where future generations will inherit infrastructure that they use comfortably, rather than be confronted with everyday inadequate provision of facilities. In short, a sustainable nuisance! As mentioned earlier, it is difficult to foresee future technology and, thus, future requirements. However, the forecasting exercise raises useful questions if the future of the country needs to be addressed. This approach would, as indicated earlier, result in an assessment of the water resources potential and future water demand culminating in a Master Plan for Water resources for the country, and identifying the gaps, where a delay in project implementation would result in a poor distribution to the population. Having seen the example of water, it should be easy to switch to infrastructure, generally. The time taken to assess requirements, conceive a project and actual implementation will require a timeframe in the neighbourhood of 20 years. Having switched to general infrastructure, do different infrastructure influence or impact each other? Unfortunately, too much so. Figure 5.5 shows that the different infrastructure along the different rows do have an impact on those infrastructure shown in the columns. Conversely, the relationship may be bilateral. But, there are cases where the infrastructure shown in the columns do not really influence those shown in the different rows. In short, things have started becoming complicated, and we are in the presence of a complex system!! (see Chap. 6). Once these are understood, the plans may be re-formulated, in such a way that they are realistic. The present government will just have to ensure that it formulates

Transportation

Water Waste Wastewater Mgmt

Transportation

X

Water Wastewater

X

Waste Mgmt

X

Energy

X

X

Buildings

X

X

Health

X

Recreation

X

Communication

X

Energy

Buildings

X

X

Health Recreation Communication

X

X

X

X

X

X

X

X

X X

X X

X X

X

X X

Fig. 5.5 Interaction between different infrastructure sectors

X

X

X X

X

5.5 Establishing the Time Frame

147

Fig. 5.6 Establishing the time frame for infrastructure

plans for the next 5 to 10 years in line with the overall development proposed and accepted for the next 50–100 years. Figure 5.6 shows the planning approach that must be used. A 50–100 year planning can only be implemented by different plans spanning 10 years, 5 years or even 1 year. Thus, as explained earlier, the water requirements must be estimated for the next 50–100 years, on the basis of possible and potential development in the country.

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5.6

5 The Long Term Plan for Infrastructure

Action Plan for Safeguarding Infrastructure Availability

The aim of development planning is to overcome the shortcomings of the market mechanism and to provide a blueprint for achieving the maximum rate of development possible. A development plan normally seeks to maximise the growth of the nation’s GNP over time, with due attention being paid (especially in more recent years) to the serious unemployment and underemployment problems that the nation may face. A good development plan generally includes the following: (1) a survey of the nation’s current economic situation; (2) an objective and systematic designation of realistic objectives or targets; (3) a realistic macro plan subdivided into a consistent multisectoral plan composed of well drawn up projects representing the most efficient utilisation of the nation’s resources; (4) the proper phasing of the plan in time and space; (5) a public investment program, chiefly for infrastructures; (6) policies to stimulate, direct, and influence private investment in the desired quantity and direction; (7) a co-ordinated program to raise and channel sufficient resources, domestic and foreign, to finance the desired public and private investment programs; (8) policies aimed at changing basic institutions, including labour training, land reform, trade policy, etc.; and (9) a program to enlist the co-operation and support of the people of the nation.

5.6.1

The Plan Period

Plans are made for three different time durations: the long, medium and short terms. The short term is the Annual Plan. A most popular choice for the medium term is 5 years, but may range between 3 and 7 years. The long term is often taken between 10 years and 20 years. There are several reasons (see earlier discussion) why this could extend up to a hundred years. The income tax or the health service, are ordinary instruments, whereas planning has a broader objective. As it is oriented to the general objective of developing the national economy, a Plan is concerned with strategy and specific policy acts which define the tactics which execute the strategy. Writing a plan involves looking at economic policy as a totality, at the interconnections between various policy instruments and the web of reactions they set up. In other words, preparing a plan can be viewed as a way of arriving at a set of decisions which is internally consistent and reinforcing. A plan is, thus, a super-instrument: it is policy seen as a whole. Nevertheless, a policy-by-policy or problem-by-problem approach to the neglect of viewing economic policies as a co-ordinated whole may not give an efficient

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149

package of policies, viewed overall. For the individual instruments will not necessarily reinforce each other, nor will they add up to a consistent approach to economic issues. In fact, it may be desirable to adopt some apparently inferior solutions to some particular problems in the interest of coherence and co-ordination among economic policies. A problem-by-problem approach may also lead to a proliferation of many policy instruments which, taken together, are beyond the capability of the public service to handle.

5.6.2

The Long Term Plan

People build their houses according to their house plan. The Plan, once made, is a guide, if not a commitment, and thus the house plan limits choices. Similarly, development plans tend to limit choices in a range of possibilities outside the plans. This may not be a serious limitation, but needs to be highlighted. On the other hand, during the plan preparation, the possible alternative choices and the constraints should be well examined among, and by different stakeholders, society being one of them. This is why, in many countries, large or important projects (an airport, a metro project which will have implications over decades or centuries) are presented to and discussed with the community liable to be affected. Notre Dame Les Landes airport site, in France, (https://www.reuters.com/article/us-france-airport/france-abandons-plan-fornew-airport-squatters-ordered-out-idUSKBN1F61LQ) is a good example. It has been seen (Chap. 1 and Table 5.1) that infrastructure involves many sectors (water, electricity, roads, etc.). Thus, it is difficult to plan infrastructure in any one sector, without giving due attention to other sectors (see Chap. 6). It is advisable to identify the various sectors of the economy (multisectoral planning, in effect) and analyse the interdependencies among them, so as to produce something coherent and compatible outputs. In order to keep the number of sectors and the analysis manageable, it is preferable to define broad categories, as for example machinery as a whole rather than by type of machinery. When a comprehensive development plan is well-prepared, the multisectoral plan provides the necessary link between macro planning (the most aggregative form of planning) and project planning (the most disaggregative and detailed form of planning). If this multisectoral plan is not prepared, it is difficult or practically impossible to compare and assess objectively the relative merits and benefits of different sectoral development projects. It is not very helpful, either to relate the development projects directly to the macro plan while by-passing the intermediate stage of multisectoral planning. It is necessary to know the Plan’s objectives before multisectoral planning can start and try achieving them. These objectives – estimates of the demand for final commodities (how much water, electricity, number of roads, etc) – may be obtained from projecting historical trends, using income elasticity figures, or other prediction methods. Next, all sectoral outputs required to support these final demands are estimated, making sure that they are consistent with one another. Sectoral

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investments and other input requirements are then determined for each year of the plan (the constraints). Thus, in multisectoral planning, we need projections for the demand of final commodities, sectoral outputs, sectoral investments, other sectoral inputs, imports, and exports over the period of the plan. Finally, the government specifies the direct and indirect policy instruments that it intends to utilise to achieve the sectoral aims of the plan. Multisectoral planning is essential to ensure the consistency of intersectoral plans in the economy and to help determine the most productive use of the limited resources of the developing nation. The consistency of intersectoral flows can be tested with product and factor balances or more precisely with an input-output table. The efficiency of sectoral investments can be analysed with more complicated linear programming models. Linear programming is also a method for calculating the shadow prices which correspond to the equilibrium conditions and thus correctly reflect social costs.

5.6.3

The Medium Term Plan

Planning has an important use: decision-makers are forced to stop and think about the long-range goals, and the immediate actions required to achieve these longer perspectives. In the context of a medium term Plan, the general policy guidelines would be as follows: 1. 2. 3. 4. 5. 6. 7. 8.

Determine policy regarding variables which be controlled. Use a proper and adequate forecast estimate. Plan for adequate capacity units (of the upper steps of Fig. 5.2). Avoid under (over)employment by maintaining a more or less stable work force. Monitor stock. Maintain flexibility to address fluctuations in requirements. Respond to demand as per established rules. Assess and monitor the planning at regular intervals.

5.6.4

The Short Term Plan

This Plan does not replace the others. The Annual Plan is an operative document, in the sense that this is the only document which is ratified by Parliament (normally in the form of an annual capital budget). It is the controlling Plan, which authorises Ministers to spend money. A Five or Ten Year (medium term) Plan does not authorise anything, but is merely a statement of intentions. The Annual Plan is also the controlling Plan because, every year, it should match resources with achievable performance. The Annual Plan is governed by either the

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151

medium or the long term Plans, which lay out the direction, but not the immediate future.

5.6.5

Carrying Out the Infrastructure Estimation Exercise

Planning infrastructure for the long-term involves three components, namely: (1) having a vision of how we want the infrastructure to work in our future world (2) deciding what characteristics the infrastructure must have (3) estimating how our vision will affect the characteristics above, and determine demand, use and impact of the infrastructure. Approaches to address these three components of long-term planning include (a) forecasting (b) foresighting with scenario planning and (c) visioning and backcasting. It is important to consider all life-cycle stages of the project, to assess the benefits, impacts, costs and hence viability of an infrastructure project on a “whole-life” basis. Forecasting forms part of predictive modelling tools, which are developed and calibrated on the basis of objective science, and appear attractive as they can often appear to promise precise answers. The approach can be effective in circumstances where the problem is relatively simple, and the answer is required only over the short term. Forecasting becomes less reliable over longer time horizons (greater than, say, 10 years), and where systems are complex and subject to unpredictable perturbations (e.g. the structural integrity of tall buildings being intentionally struck by aircraft) and uncertainties arising from incomplete knowledge, inherent unpredictability and multiple knowledge frames. A sensitivity analysis in the model forecasting, may help partly, but there are clear dangers in merely extrapolating forward while assuming that all other constraints and conditions remain the same as in the present. Thus forecasting is only useful where the rules connecting the present and future are not in doubt. The foresighting with scenario planning approach removes some of these limitations by seeking to address a number of different ways in which the future might happen. Trends in society, over time horizons ranging from 20 to 80 years, are examined against a range of possible technological developments. This requires the development of a series of self-consistent and recognisable scenarios, in which separate and distinct views of relevant possible futures are developed. Whereas forecasting uses analytical capabilities, scenarios require creativity and imagination. We cannot know what the future is but we can plan for different eventualities. Scenarios are used to challenge the strategy, to see how it performs in various possible future worlds.

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5 The Long Term Plan for Infrastructure

The backcasting technique tries to connect the future to the present by envisioning an acceptable future system state, which is then used as a reference for tracing pathways back to the present. With proper milestones along those pathways, short-term challenges can be identified and obstacles on the way can be overcome. If we think of sustainability as an achievement target, the backcasting method can help us to determine such a route, as we focus on future objectives that avoid extrapolating from the present situation with existing constraints. However, backcasting is precisely what we do when playing chess. Analysis from a distant future or perspective challenges stakeholders to think on the objectives to satisfy, in the near future, step by step, rather than focussing on their own direct interests. As an example (McRae 2010), the pedestrian area in Copenhagen has been extended from 15,000 square metres in 1962 to 95,000 by 1995. This has not been a mere formal exercise of creating traffic-free avenues and commercial centres, as may have occurred in other towns and cities of Europe; rather, the car has been, gradually, removed from circulation and the equation, such that the two-kilometre-long Stroget has been transformed into the main artery for accessing a complete grid of pedestrian blocks, with over 100,000 square metres devoted to walkers. Forecasting and scenario planning are more familiar techniques to many, but forecasting can be limited by using models calibrated against past and present circumstances, which do not deal well with likely complex future situations and require many assumptions, rendering predictions often simplistic, reductionist and even absurd. We have seen that infrastructure systems can interact to become very complex. While forecasting and scenario planning go from the present towards the future, backcasting comes in the other direction from the future back to present. Backcasting may be conveniently used for the following problems: (1) for infrastructure systems or networks which tend to become complicated or complex. (2) when major modifications are needed instead of marginal alterations. (3) when one or several trends dominate. (4) when externalities are significant. (5) when there is choice among different possibilities over the course of the long term planning frame period. In order to fulfil the backcasting process, it is necessary to (1) (2) (3) (4) (5)

identify a common vision of the future with stakeholders, examine requirements and analyse them, identify possible improvement options, develop paths leading to the vision envisaged, secure consensus on the paths to be followed.

This is important, if we wish to implement infrastructure and ancillary services that ensure sustainable development, rather than entail sustainable nuisance!

5.7 Use of the Backcasting Method

5.7

153

Use of the Backcasting Method

5.7.1

The Possible Demographic Changes

The population projection as worked out by the Central Statistical Office, (CSO) Mauritius does not include the migration of foreign workers into Mauritius. Such a population trend represents a negative impact on the “working age population” as well as the national economy in the long term. Given that the development of water schemes take a long time, it is dangerous to rely on the CSO population projections for the planning of water resources of the country. A massive increase in immigration (if the government decides to attract foreign workers to sustain the national economic growth) is likely to occur more quickly that the development in water supply – the country may then be faced with an acute water shortage in the long term. Therefore, the water demand arising from both the population trend and migration of foreign workers in the long term should be considered in water demand management and planning in the future. As such, the population projection worked out by Proag (2016) is probably more appropriate if an infrastructure component like water is being considered. In this case, the extrapolation extends until 2067 so as to cover the 50 years planning horizon considered above. From Fig. 5.7, the population in year 2067 for low, medium and high variant will be 1.228 million, 1.469 million and 1.841 million respectively.

2,000,000

Populaon Projecon for Mauritus Island, 1851 - 2067

1,800,000 1,600,000

Populaon

1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1850

1900

1950

2000

2050

Year High Variant

Medium Variant

Fig. 5.7 Population projection from 1850 to 2067

Low Variant

2100

154

5.7.2

5 The Long Term Plan for Infrastructure

Applying the Backcasting Method

From the above, the possibilities can seem to be Business as Usual (BAU) or very challenging. We may have to cater for a long term population of 1.0 million, but also be prepared to handle a population of 1.2–1.8 million. The range is enormous! It becomes all the more important that we sit down and reflect (our vision) on the mode of life that we would like to see in the future, given the state of technology and its trends. Figure 5.8 depicts the application of backcasting. Some backcasting approaches involve the broad participation of stakeholders for the identification of scenarios through workshops and interviews. Such studies take a longer time and have higher cost implications, but they could be very useful in securing consensus among the population about future development. The advantages of such an approach would be: • • • • • •

enhanced legitimacy context/group specific knowledge increased reflexivity/quality of outcomes support for outcomes (co-ownership) learning (mental frameworks) accountability (increased co-responsibility)

It is important to identify the stakeholders who are NOT only experts, BUT also people, groups, organizations, companies, knowledge institutes, governments, societal organisations, goods and service providers, etc. The steps required to apply the backcasting method are given in Table 5.4. It is important to try achieving consensus in the group accounting even minor opinions. To set the ball rolling, the important criteria to be examined need to be well set out and explained. For example, the list could be as follows: A. Climate change B. Prices for resources ... ... Y. Demography dynamics Z. Government policy Is there any criterion which will mark the future? For example, (1) what are the roles of Demographics, Political, Economic, Technological, Social/ Cultural aspects, etc.? (2) can the level of impact and uncertainty for each of the criteria be assessed? (3) what are the key uncertainties (criterion with high impact and high uncertainty)? Possible solutions for the vision can be debated upon, as well as the different options that characterize/differentiate these solutions.

5.7 Use of the Backcasting Method

155

Backcasting Method while playing chess End Result : To checkmate Black Strategy : White to play and win in 3 moves To imagine the moves and possible responses from the opponent

Backcasting Method for Long Term Infrastructure Planning End Result : Vision for the country’s INFRASTRUCTURE Strategy : To conceive the end result: WHAT services to PROVIDE To imagine the steps necessary to attain the end result and possible constraints from other sectors

Fig. 5.8 The backcasting planning strategy

It is recommended to evaluate each scenario according to the set of selected criteria, for example by using a scale [1–5], where 1 corresponds to the poorest performance and 5 to the best one. Group results should be reached through

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5 The Long Term Plan for Infrastructure

Table 5.4 The 5 steps of backcasting 1

Strategic problem orientation

2

Develop future vision

3

Backcasting analysis

4

Elaborate future alternative and define the follow-up agenda

5

Embed result and agenda and stimulate follow-up

1A. Topic, setting boundaries, goals and demands 1B. Define own backcasting methodology and work/ process plan 1C. System analysis (regime analysis) e.g. also external factors (two types) and niches 1D. Actor/stakeholder analysis 1E. Problem analysis and problem definition 2A. Set normative demands E.g. factor 20, attractive for whom, etc. 2B. Generate and elaborate ideas 2C. Make one or several visions: Dimensions for variation (scale, lifestyle, consumption) System dimensions (e.g. buying, storing, treating, consuming) 3A. WHAT-WHO-HOW analysis: Technological, cultural-behavioural, organizational, and structuralinstitutional changes 3B. Update Stakeholder identification: Required stakeholders and actions 3C. Drivers and barriers analysis 4A. Vision elaboration and assessment Link to stakeholder interviews (e.g. by email) 4B. Define action-agenda and follow-up recommendations 4C. Make pathway towards future 4D. Communication and implementation plan 4E. Elaborate one specific project proposal

consensus agreement of all stakeholders, rather than voting, to ensure active support later on. During these discussions, it will be useful to consider using the Ws! (see Fig. 5.9). Some useful questions, among others, would be 1. What changes are necessary (C, S, T)? C ¼ Culture, S ¼ Structure T ¼ Technology 2. How can these changes be achieved? 3. Who (which stakeholders) are needed? 4. What are drivers and barriers for this pathway?

References

157

Fig. 5.9 Use of the Ws

HOW

5.8

WHO S E WH E R E WH E N WH A T WH O WH Y WH OM WH I CH

Conclusion

The spirit of sustainable development requires that intergenerational equity be carefully addressed. Given the constraints of planning and the lifetimes of infrastructure facilities, it is necessary to daydream and think of the future possibilities. In many countries, the population have been suffering from inadequate provision of infrastructure facilities in various sectors. It is important to decide what kind of future the population wishes to have – preferably with its active participation. A backcasting approach is probably preferable together with other methods. It is only by acting pro-actively now rather than reacting after the crisis that we can hope to achieve a sustainable development rather than a sustainable infrastructure nuisance!! This chapter is trying to advocate using the backcasting approach to address the future infrastructure, among others. Stroget, in Copenhagen, is a good example of the application of the method. Backcasting, its advantages and the way to apply it, have been explained above. It is important to understand that it is better to shape our future, rather than let the future shape us or our lives.

References Bohr, N. https://www.brainyquote.com/quotes/niels_bohr_130288 Churchill, W. https://www.brainyquote.com/quotes/winston_churchill_138575 Drucker, P. https://quotefancy.com/quote/887801/Peter-F-Drucker-Objectives-can-be-comparedto-a-compass-bearing-by-which-a-ship-navigates Drucker, P. https://www.brainyquote.com/quotes/peter_drucker_154442 http://statsmauritius.govmu.org/English/CensusandSurveys/Pages/census/Census%2D%2DSeries.aspx. Accessed 15 Aug 2016 Jantsch, E. (1967). Technological forecasting in perspective. Paris: OECD.

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Lincoln, A. https://www.goodreads.com/quotes/328848-the-best-way-to-predict-your-future-is-tocreate McRae, H. (2010). What works: Success in stressful times. Harper Books. Proag, V. (2015, September). Planning resilient infrastructure for the community. Journal of the Institution of Engineers, 27–35. Proag, V. (2016). Sustainable development or sustainable nuisance: Planning for the long term. Journal of the Institution of Engineers, 11, 27–35. Roberts, M. (1983). An introduction to town planning techniques. Hutchinson. Rudd, K. https://www.brainyquote.com/quotes/kevin_rudd_476333 Statistics Mauritius. (2016). Statistics Mauritius, 2016. Census-Historical Series [online]. Available from: http://statsmauritius.govmu.org/English/CensusandSurveys/Pages/census/Census-Series. aspx. Accessed 15 Aug 2016.

Chapter 6

Infrastructure as a System

Infrastructure design in itself is a tightrope act. A design is the balance that is achieved by taking all stakeholders needs and the business function into consideration and proposing a solution that benefits the business while mitigating risks and failure wherever possible. Kalen Arndt Infrastructure design is more than just designing the solution to work, but also preventing risk of failure. You must really consider all of the scenarios in which a solution can fail, understand the impact, then mitigate or solve them within the constraints of the design. Joseph Sllvagi There is no “perfect” strategic decision. One always has to pay a price. One always has to balance conflicting objectives, conflicting opinions, and conflicting priorities. The best strategic decision is only an approximation and a risk. Peter Drucker Engineers work under various constraints: nature, cost, safety, environment, ergonomics, reliability, manufacturability and maintainability, among others. P. Ghosh The reason that fish form schools, birds form flocks, and bees form swarms is that they are smarter together than they would be apart. They don’t take a vote; they don’t take a poll: they form a system. They are all interactive and make a decision together in real time. Louis B. Rosenberg

© Springer Nature Switzerland AG 2021 V. Proag, Infrastructure Planning and Management: An Integrated Approach, https://doi.org/10.1007/978-3-030-48559-7_6

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Water interacts with several other sectors in the economy (hydroelectricity production, potable water, irrigation, industrial use). Additional hydropower may reduce water availability for irrigation, or for industrial use, both with direct impacts to the economy. Power production affects energy availability in other sectors (manufacture, transport, and so on). Thus, infrastructure services occur, both as outputs for users, or as inputs among the raw materials for other infrastructure processes or services elsewhere. This means that infrastructure services form part of a network. An infrastructure system constitutes a complex grouping of equipment and persons, having an objective, usually influenced by the neighbouring sub-systems, which often, have multiple (usually conflicting) objectives, and a compromise between these conflicting objectives has to be determined through trade-offs, etc. For maximum efficiency operation, the infrastructure system design should try to achieve the overall objective in the best possible way.

6.1

Interactions Between Water and Other Sectors

Figure 6.1 illustrates the interactions between water and several other sectors in the economy. As a start, surface water (water collected through lakes and rivers and impounding reservoirs) is, after treatment, distributed for domestic and other uses. In many countries, this distribution is usually done through gravity with minimum use of pumping. If necessary, underground water is pumped to supplement the supply of surface water. However, pumping water from underground aquifers requires additional energy. Thus, one strategy is to use surface water, as much as possible, before starting to use ground water. While surface water may be stored in impounding reservoirs, notwithstanding evaporation, ground water will flow towards the sea whether it is being harnessed or not. Therefore, a different strategy would advise pumping as much ground water as possible, while saving the surface water for future use when the aquifers run dry during dry weather and severe droughts. Both strategies are possible. While the former tries to minimise energy use, it does not guarantee availability of water during dry periods. The latter strategy tries precisely to safeguard water availability, at a cost however: energy – which, in some countries, may be expensive. It is fitting to note here that water and energy interact on each other. Furthermore, in some locations it might be possible to generate hydroelectricity from water and still be able to use the water for domestic, industrial and irrigation uses. However, the interaction becomes even more extensive. Some farmers might still be willing to pay for ground water (or desalinated water, as in the Canary islands) at a higher price if they can still market their goods at a profit. The same reasoning goes for industry.

6.2 Interactions Among Infrastructure Sectors

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Fig. 6.1 Interactions between water and other infrastructure sectors

Thus, although water may have been imagined as one infrastructure system (and probably isolated), it becomes clear that there is an interaction – sometimes in both directions – between two different infrastructure sectors (water and energy) or among several disciplines (water, energy, agriculture, industry). In some countries, this relationship goes towards increasing the country’s revenue which then contributes to developing further investment (infrastructure!) in the country.

6.2

Interactions Among Infrastructure Sectors

Figure 6.2 shows how stakeholders, strategies, scenarios of the different infrastructure sectors interact.

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Scenarios influenced by Demography Climate

Strategies for providing infrastructure

Economy Energy Price

STAKEHOLDERS

System models for sectors Water

Energy

Waste

Water

Transport

Waste

ICT

Others

NATIONAL DATABASE

RESULT FOR EACH SECTOR

IMPLEMENTATION

Fig. 6.2 Overview of the system of systems modelling

6.3 6.3.1

Systems Analysis in Infrastructure Sectors System Concepts

The word “system” arises from the Greek systema, itself stemming from syn meaning together and histema meaning “to set”, giving literally “to set together” for system. A complex arrangement of interrelated parts also defines a “system”. The Oxford English Dictionary (1989, 2nd ed.) describes system as “a set or assemblage of things connected, associated, or interdependent, so as to form a complex unity; a whole composed of parts in orderly arrangement according to some scheme or plan”. Using a very simple example, a finger can operate by itself, as well as all the fingers on one hand. The hand, itself, is linked to the forearm and arm, not to say to other parts of the human body. Thus, the hand can be seen as a system by itself, containing or linked to many other interdependent components. As such, a system can comprise sub-systems which, in turn, can consist of several sub-subsystems, etc. Conversely, a system can form part of a bigger super-system, and so on. Table 6.1 gives a list of definitions.

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Table 6.1 Systems approach definitions Problem

System

Goal seeking

Input Output Feedback

Entropy

Internal environment External environment Subsystem

Super system System boundary

Interdependence Process

6.3.2

A problem expresses a situation that, if properly understood and resolved, can be improved upon, either through a new opportunity or a bright idea, even if there is nothing wrong. A system often achieves its objectives through an arrangement of compatible components, working together in a given setting to carry out the relevant functions necessary. A system tries to achieve a goal through its objectives. These need to be identified in order to understand the system (new or existing) and assess its effectiveness. Every system requires an input. Every system provides an output, which may be checked against the objectives expected to be achieved. A system becomes effective and efficient if a feedback mechanism enables it to assess whether the system’s outputs are really those required. A perfect system is self-regulating. Entropy measures the degree of disorder in any system, which usually will tend towards disorder. Therefore, check points can (or need to) be installed in order to monitor the adequacy of the system’s output. The internal environment is that part of the system which it can itself control. The external environment is that part of the system affecting its own operation, but over which it has no control. A system usually comprises several subsystems: Self-contained but interrelated components. Identifying these subsystems, helps in understanding the interlinkage, required to develop a complete system. A system comprising two or several systems may be considered as a super system of those different components. Data may flow as output from one subsystem or system to another as input. A system boundary demarcates this point. In an open system, data can flow freely; this is called a permeable boundary. If there is strict control (or even restriction), this is called an impermeable boundary. This is called a closed system. Most systems are interdependent. Systems (or subsystems) are rarely completely isolated. It is important to identify this interdependence early. A process is a sequence of inter-related activities that proceeds in time.

System Characteristics

Systems have some major characteristics, which apply very well to infrastructure networks or systems: (1) An infrastructure system constitutes a complex grouping of equipment and persons. (2) An infrastructure system comprises sub-systems. While drawing the flow diagrams of the subsystems, the level of detail required will depend on the problem being studied.

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(3) A given sub-system cannot be studied in isolation as it interacts with other sub-systems. Figure 6.1 and para. 6.2 have shown how a given sub-system outputs may be the inputs to other sub-systems. (4) Sometimes, systems form a hierarchy of systems, where the infrastructure system is considered of lower rank, subject to considerable and undue influence from those at the top and considered very important. (5) An infrastructure system has an objective/goal, usually influenced by the neighbouring sub-systems. Often, systems have multiple (usually conflicting) objectives, and a compromise between these conflicting objectives has to be determined through trade-offs, etc. (6) For maximum efficiency operation, the infrastructure system design should try to achieve the overall objective in the best possible way.

6.3.3

Complexity

An infrastructure system is often called complex because of the following factors: (a) the number of interactive elements, (b) the number of purposeful components, i.e. the number of elements that can set their own goals and can act to satisfy these goals, irrespective of the overall goal of the system, (c) the number of non-linear and dynamic interactions among the components, (d) the number of different subgoals, and (e) the different ways in which a system interacts with its surroundings. A system may be considered as complex because (1) it really has an intrinsic complexity (2) how it operates is not fully understood, or (3) it is difficult to capture, document, and analyse the required information. Major factors, extrinsic to a system, which make a system appear more complex than what it actually is, are: (a) the difficulty in measuring variable values, (b) the difficulty in knowing the goal and sub-goal structures, (c) the difficulty in tracking policy guidelines (the way the decisions are taken and actions implemented), (d) the difficulty in monitoring possible or tentative cause-effect relationships, and (e) the difficulty in collecting data about a system and analysing it.

6.3 Systems Analysis in Infrastructure Sectors

6.3.4

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Organisations as Systems

An organisation is a purposeful system because: (a) (b) (c) (d)

there is a common purpose the division of labour among the system components, the communication among the parts of the system, and an in-built decision-making and control function.

An organisation is considered an animate (living) system. It exhibits similar stress and strain under conditions of lack or excess of matter, energy, or information, when they are inputted or outputted. Anticipation of a stress (threat) can also cause a strain. The difference, however, is that unlike an organism, an organisation possesses elements which are purposeful.

6.3.5

The Systems Approach

The systems approach provides one way of solving problems (infrastructure, among others) in society, through a practical thinking and philosophical methodology. Basically, the problem is defined holistically, determining the desired objectives, designing for the necessary change, and in assessing the design. Gigch (1974) calls it a design methodology and an applied general systems theory with the following characteristics: (1) The way the system is connected by a set of objectives to superordinate systems, defines the problem. (2) The system’s objectives must be compared with respect to these superordinate systems or the complete network. (3) Existing designs should be compared to the optimum design by assessing opportunity costs or the degree of divergence. (4) The optimal design is rarely obtained through incremental improvement of existing designs. A thorough planning and assessment of new proposals, offering creative and innovative differences from the present solution is required. (5) Induction and synthesis should be used as new thinking processes for designing systems, i.e. thinking of a new system, rather than trying to improve existing systems through usual deductive and reductive methods. (6) The planner should take a leading role, proposing possible solutions, rather than be a follower, so that problems can be avoided and prevented from occurring rather than looking for solutions later on. There are six broad stages of system dynamics modelling. Each stage is supported by one or more of the viewpoints discussed above. Table 6.2 gives the stages and the associated viewpoints.

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Table 6.2 Problem-solving stages and the associated viewpoints 1

Stages Define the problem

2

Define the model boundary and build model aggregate.

3

Build the detailed model

4

Test and validate the model

5

Analyse the model and evaluate the policy alternatives

6

Recommend the most viable policy

6.3.6

Viewpoints Models try to solve problems The models aim at solving long-term problems The central focus is policy Cause-effect links play a major role Policy decisions appear in feedback loops Behaviour is generated endogenously A mental database is used to construct causal structures It explicitly considers physical and information flows Most models are generic in nature Policy structures are expected to hold under all conditions It uses simple graphical and mathematical schemes The model emphasizes more on the structure rather than on the values of the variables In real life, decision variables are not always continuous, but the model may simplify The model should simulate symptoms of problems encountered with real systems Model validation is a multi-stage procedure The model is tested under extreme conditions Model understanding is the basis for deriving new model or policy structures New policies are intuitively developed. Causal structures generating past behaviour do not change substantially in the future The dynamics of implementation of the new policies can also be modelled

Enlarging the Paradigm

During the past decades, many attempts have been made to enlarge the system dynamics paradigm by including appropriate tools and techniques from other fields of inquiry. The following paragraphs touch upon these new links. (a) Operations research Operations research basically helps in finding out values of decision variables which optimize quantitative objective functions under constraints. An operations research model usually operates in an open loop manner. The emphasis is normally on isolated decision(s) at discrete time points. The short planning horizon usually used in an operations research approach, the urgency of the problem which it addresses, and the immediacy of results which it can render upon implementation makes it very attractive to practitioners.

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System dynamics can use operations research approaches in designing decision functions. The effect of these decisions can be tested in a closed loop structure. Similarly, the effectiveness of a sequence of static optimized decisions can be tested in a dynamic environment created by a system dynamics model. (b) Econometrics Using econometrics for long-term forecasting is very popular in macroeconomic literature. Thus, econometrics is a truly competing methodology for system dynamics. Econometrics also builds causal relationships between one variable and one or more explanatory variables. However, these relationships are always established on the basis of past data and are supported by statistical significance tests. System dynamics can make use of past data and statistical significance tests in capturing the hidden cause – effect relationships’ and in analysing the model results. (c) Feedback control theory System dynamics is founded on the principles of feedback control. The theory of feedback control has undergone a radical change in the past fifty years. Particularly worth mentioning are the developments in the fields of stabilizing control and the theory of optimal control. Great possibilities exist for the use of these developments in the system dynamics framework, particularly during the crucial stages of model analysis and new policy design. (d) Information processing Computer-based information systems are becoming the order of the day. The emphasis is also changing from transaction processing to decision support. System dynamics can be a valuable aid in identifying the information required for policy decisions. (e) Qualitative analysis Simulation may not always excite all modes of behaviour of a system. Sensitivity analysis may not guarantee testing of the model with all possible values of parameters. Therefore, the traditional method of model testing is not a foolproof method of generating all the feasible modes of behaviour. Qualitative analysis can unfold the various modes of behaviour of the model even without resorting to simulation, but using tools such as eigenvalue analysis, phase-plane diagram, and bifurcation analysis. System dynamics experts have already started using these tools for formal analysis of their models. Development of appropriate software is required to accelerate this process. (f) The Delphi technique The Delphi method and its variants are techniques to obtain expert opinion on specific issues. The initial stages of defining a problem, developing a causal loop diagram, and fixing the model boundary and even the intermediate stage of outlining policy options require expert opinion for validation. These techniques can help in providing a strong foundation to those rather weak stages of system dynamics modelling.

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(g) The organisation theory The role of humans in organisations is central to organisation theory. Organisation theory considers such delicate and subtle issues as motivation, learning, adaptation, information processing, decision-making, leadership, group dynamics, and so on. These behavioural issues are extremely important in shaping the success and failure of organisations. If system dynamics has to succeed as a methodology of inquiry into social systems, the rich ideas of organisation theory should be used in system dynamics models. (h) Simulation games Games have established themselves as teaching tools. They have almost a similar development history as that of system dynamics. They allow human participation in decision making but use mathematical models to generate behaviour in time. System dynamics models are excellent materials for games because both emphasize policy decisions and dynamic behaviour. System dynamics-based games are both feasible and desirable. (i) Stochastic systems theory The stochastic systems theory, which is based on the principles of probability and statistics, has already established itself as an important modelling approach. Though system dynamics generally assumes deterministic interaction among factors, it can certainly be extended to study systems which are generally considered stochastic. This is possible, provided more details are available on the individual componentsand their mutual interactions. It is also possible to incorporate available stochastic relationships among certain elements in an otherwise deterministic framework of a system dynamics model. These models can unfold hidden modes of behaviour of such systems. It seems to be possible to show, with the help of system dynamics modelling, that certain types of stochastic models stand on completely deterministic frameworks.

6.4 6.4.1

Applying Systems Analysis to Infrastructure Overview

As seen earlier, infrastructure in a country is a network (assembly) of a system of infrastructure systems – which interact among themselves. Each different infrastructure can be designed by its own experts, but applying systems theory to the country’s infrastructure will allow: (1) adopting consistent planning assumptions for each sector, (2) using similar metrics or yardsticks for evaluating performance in each sector, (3) quantifying the same important factors that influence uncertainty and performance in the different sectors,

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(4) using multiple performance metrics to obtain an aggregate view of infrastructure performance, (5) assessing vulnerability and risk management for infrastructure networks at a national scale, (6) looking at the national infrastructure from a long term view to investigate different provision strategies for infrastructure, (7) improving the management and governance of different infrastructure sectors through an integrated approach to national infrastructure.

6.4.2

Scenarios and Assessment

We have now set out the framework and the main components in our system-ofsystems assessment of infrastructure performance. The main steps within that framework are: Step 1 involves the construction of quantified scenarios of change in the exogenous factors that influence future infrastructure system performance; Step 2 involves the formulation of strategies for national infrastructure provision; Step 3 uses system models to simulate those strategies and generate metrics of system performance; and Step 4 involves evaluation of infrastructure strategies to inform decision-making. Scenario generation: A set of key exogenous factors are sampled, in order to test how the infrastructure would perform when subjected to a wide variety of possible and plausible future events. Strategy generation: National infrastructure stakeholders are consulted to develop national infrastructure provision strategies, using top-down and bottom-up approaches, and iterating the process, if required. The strategies developed should be explicitly linked to the corresponding policy commitments (e.g. funding, environmental issues, managing demand, etc.), using a whole range of policy instruments (from major investments to technology and demand). These strategies should coherently span the infrastructure sectors. Infrastructure system performance evaluation: Infrastructure sector models properly integrated around a central database are tested under different strategies. The system models simulate strategies and generate metrics of system performance. Evaluating infrastructure strategies: The performance for each sector is assessed, through suitable metrics, temporally, spatially and future conditions. Each sector’s performance can be compared through the necessary visual tools, so that the right strategies can be proposed for informed and justified decision-making.

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Step 1: Scenario Generation

A scenario of future conditions detail out (as far as possible) the external parameters under which infrastructure systems might operate. Sometimes, specific values can be assigned, Scenarios describe the main factors that are outside the control of decision-makers (they are said to be “exogenous”), which influence the future performance of strategies. They include: (1) changes in population – which influence the demand for infrastructure services. (2) the economy – the demand for infrastructure services may increase in rich economies, while economic growth will influence investment in infrastructure systems. (3) global energy prices will affect operation and maintenance costs (4) the climate – climate extremes impose extreme operating conditions on infrastructure systems. If D is the number of scenarios for demography, E for the economic sector, G for global energy costs, and C for climate change scenarios, then a potential of C x D x E x G combinations may have to be considered, However, with judicious reasoning, this potentially high number of combinations may be reduced to a more manageable number, the more so when many of these combinations produce very similar results.

6.4.4

Step 2: Strategy Generation

Strategies are sets of choices, or rationales for taking choices, about the provision of infrastructure services. Strategies will typically involve investment in the provision of infrastructure combined with instruments to manage infrastructure demand. They extend across infrastructure sectors (energy, transport, water, waste and ICT), so consist of strategic options from each of the sectors; It is not a fixed plan, as it is recognised that the future performance of infrastructure depends on many unpredictable factors and contingencies, to which the strategy should be adaptable. There are genuine questions involved in choosing between different strategies: • How much are we prepared to invest; where and when? • What steps can be taken to manage demand for infrastructure services? • How committed are we to reducing the environmental impacts of (a) legacy infrastructure and of (b) the infrastructures that will be built in the future? Three questions are important at high-level policy level: (1) what is the willingness for providing new infrastructure or further investment? (2) is there a will to address the environmental issues concerning infrastructure operation? (3) is there a commitment to address or manage demand through different instruments, such as important price nudges, incentives for technological and behavioural change?

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The rate of investment, demand management policies or environmental issues can be tackled rapidly, if resources are available, or more slowly. Surely, this rate will be part of the strategies considered. From a bottom-up perspective, there are different strategic options that are available for every infrastructure sector: energy, transport, water, waste and ICT (Hickford et al. 2015). The following sub-strategy elements are often proposed when advocating strategies for specific sectors: (i) Instruments, for managing demand, which try to modify the scale and timing of demand for infrastructure services, for example via prices and regulation; (ii) System efficiency measures which change the technology, the operation and management (O&M) modes and practices of infrastructure systems. This may be achieved by using more efficient plant or utilising infrastructure capacity (e.g. road-space) more efficiently; and (iii) Capacity expansion changes, which modify the number, capacity and connectivity of physical infrastructure assets. Strategies for demand management: Education, new consumer technologies or tariff structures and price incentives will influence or modify user behaviour and hence the demand for the service provided by the infrastructure. Strategies enabling change in capacity utilisation and provision: The same infrastructure system may be used differently (different approaches – flexitime or not for roads), or through different technologies. These affect the capacity of use and, thus, the efficiency of the infrastructure system. Developing strategies for the long-term: There are four contrasting cross-sectoral infrastructure strategies, as follows: Minimum intervention (MI) – business as usual. There is no willingness to reduce future demand or address important environmental issues. Capacity expansion (CE) – increase infrastructure capacity through further investment, without, necessarily, a proper long term planning to reduce future demand. System efficiency (SE) – technological and policy interventions are used to address both supply and demand so as to optimise the performance and improve the efficiency of the existing system, System restructuring (SR) – the existing mode of providing infrastructure service is fundamentally restructured and redesigned, using a mix of targeted centralisation and decentralisation methods.

6.4.5

Step 3: Infrastructure System-of-Systems Models

This arrangement addresses questions related to the performance of different infrastructure strategies under different scenarios, including:

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• When and where will critical situations occur with the existing infrastructure system? • Are there strategies which enable robust and resilient infrastructure service performance under different scenarios? • When demand changes occur or scheduled plans are implemented, will there be qualitative changes in the multi-sector infrastructure system? If yes, can they be identified? This approach seeks to provide evidence to address these and other ‘what if’ questions, from the perspective of a decision-maker who is interested in choosing between alternative strategies. There are many people who might be interested in these answers: governments, regulators, infrastructure owners/operators, customers/ passengers and so on. The performance of infrastructure sectors may be analysed by system models, which estimate the capacity of existing infrastructure and compare against the demand for services. (This has been further detailed in Chap. 5) The system-of-systems perspective enables addressing the important interlinkages among the infrastructure sectors. These links originate from demands across sectors and feedbacks, inter alia: • Energy-transport connections: electric vehicles, smart grids and the power grid structure impact upon one another via a set of feedbacks (prices, demand). • Energy-water, energy-waste connections: water production, wastewater and solid waste treatment not only need energy, but are interlinked, possibly through schemes involving energy recovery, the circular economy or co-emissions. Meanwhile, energy production requires water resources for cooling and hydrogeneration. • ICT-infrastructure connections: the increase of integrated ICT systems has modified the use patterns and hence, and the demand for classical infrastructure. New connections are now possible between different transport modes or for managing the demand for energy. These interdependencies can best be represented on a systems modelling framework (shown in Fig. 6.2), so as to determine the possible impact of different strategies. Instead of just running a number of specialised single sector simulations, the systems modelling framework enables cross-sector model integration, by enabling rapid communication among a group of models. Even if, at different time stages, allocation of scarce resources might require or induce performance trade-offs among different sectors, the systems modelling framework would still allow the implementation of a cross-sectoral decision-making process. While the supply capacity of existing infrastructure systems depends on the physical state of the infrastructure assets, and its ongoing maintenance, the demand for infrastructure services can be estimated through demand models or elasticity functions relating demand to other variables. However, it is important to know whether demand does not exceed supply capacity of existing infrastructure. Any possible capacity limitation in the future implies that further investment or some policy interventions might be required.

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Figure 6.2 shows the how the different systems are linked in the system-ofsystems modelling framework. This coupling of each of the system models allows model runs to be sampled centrally, to collect model results and carry out centralised post-processing and visualise complex cross-sector simulation outputs on top of a single database structure. The framework also shows the different stages at which engagement with stakeholders enables feedback on framing the strategies and validating model inputs and outputs. The crucial interdependencies among the different infrastructure sectors originate from (1) correlated demand (e.g. population change is the common factor linking increases in both energy demand for households and commuter transport demand) and (2) from cross-sector demand for infrastructure service provision (e.g. providing energy services needs cooling water, water pumping needs energy, etc.). The integrated model structure, which combines the different infrastructure sector capacity and demand models, enables analysing these demand interdependencies through harmonised strategy and scenario assumptions and by using iterative procedures within the modelling framework. The area under investigation will depend on the type of analysis being carried out. Usually, it is better to deal nationally because, (1) the national policy is being studied; (2) usually data (e.g. economic input-output data) is available at this scale; and (3) the physical boundaries are well-defined.

6.4.6

Step 4: Evaluating Infrastructure Strategies

Long-term infrastructure assessment relates to the quality of current and future infrastructure provision and what is required to ensure providing the proper quality of infrastructure service. Depending on how infrastructure performance is defined and measured spatially and temporally, given the number of priorities and metrics, assessing how the national infrastructure systems succeed in providing satisfactory infrastructure services to users (e.g. households, businesses and the public sector) involves several parameters. Generally, the different performance variables should not be aggregated by a weightage of indicators. This enables obtaining a better insight on single performance dimensions to allow comparisons among different sectors under different modelling future scenarios. Suitable performance indicators are given below: Capacity: the extent and amount of activities potentially available during operation of the infrastructure system. Demand: the amount and extent of actions requested by the users of the infrastructure services. Actual supply: the amount and extent of actions that are actually obtained by the users. The capacity utilisation (capacity margin): the fraction of the available capacity actually activated to provide the actual level of supply.

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Apart from availability, other infrastructure service attributes which could be measured include, for example, water quality, road safety, passenger comfort, electricity frequency fluctuations, time taken to address a complaint, etc. These would measure quality of service. Cost and efficiency indicators can, from (i) the consumer and (ii) the service providers point of view, determine the cost of infrastructure services. For users, the costs are measured in money units per units of service (e.g Euros X/kWh, $/m3, etc.), while the inverse units are applicable to measure efficiency by the service providers (Z m3/Euro, Y kWh/$, etc.). In a similar reasoning, the service provider might also wish to measure his efficiency in terms of service provision per unit of energy input. For example, a water supply provider may also measure how many cubic metres of water are produced per kilowatt hour of energy used at each treatment plant. It will be seen later (Chaps. 8 and 17) that providing infrastructure services is also accompanied by other positive or negative effects (gas emissions, accidents, beautiful scenery, etc.) called externalities. Thus, externality indicators may be established to indicate the degree or extent of such side effects for each infrastructure sector or service.

6.5

Elements of System Dynamics Modelling

System dynamics modelling needs explicit appreciation of two kinds of flows: (1) physical flows which are maintained and (2) information flows which are not preserved. Increases take place in both types of flows, which have different properties. Their accumulations are also different from each other.

6.5.1

Physical flows

Physical flows resemble water flow in pipes, and while accumulations resemble accumulated water in the storage reservoirs at various nodes of the pipeline. The volume of accumulated water in a reservoir, of course, depends on the inflow and outflow rates of water from the reservoir. Therefore, the flow rates automatically govern the accumulated water. Physical instruments determine only the average flow rate values over a period of time, but the instantaneous flow rate values are, rarely, really measurable. The volume accumulated is, of course, quantifiable at any point of time. Instantaneous flow rate values are usually functions of the accumulations, and are ruled by certain laws. While natural laws rule in physical systems, social systems are governed by laws representing the policies and controls which may or may not have been established explicitly, but which, nonetheless, dictate individual decisions now and then.

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Table 6.3 Some physical flows in real systems Physical flows Flow of material

Flow of order

Flow of men

Flow of money

Flow of capital equipment

Accumulations Material in transit Raw material inventory In process inventory Finished product inventory Orders in clerical processing Orders in mail Order backlog Workers in training Trained work force Workers/managers in various grades Children (Age 0–12) Teenagers (Age 13–19) Young adults (Age 20–24) Prime aged (Age 25–44) Middle aged (Age 45–60) Old aged (Age 61+ up) Accounts receivables Cash at hand Accounts payable Debt outstanding Retained earning Production capacity in transit Production capacity during installation Production capacity Buildings of various age groups

Flow rates Material shipment rate Goods receiving rate Production rate Order decision rate Order mailing rate Order receiving rate Order filling rate Hiring rate Training completion rate Promotion rate Retirement rate Birth rate Population transfer rates between consecutive age groups

Cash incoming rate Expense rates on various heads Borrowing rate

Capacity shipment rate Capacity receiving rate Capacity installation rate Capacity depreciation rate Construction rate Demolition rate

In order to model in a system dynamics framework, one must distinguish the physical flows in the real system and their associated accretion points and flow rates. Table 6.3 gives some examples of the common physical flows, the accumulations, and the flow rates occurring therein.

6.5.2

Level and Rate Variables

The two sets of variables which are necessary (and sufficient) in system dynamics models are:

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(a) the level variables to characterise the accumulations, or integrations and (b) the rate variables to denote the instantaneous flow rates. The first set of variables is known as the level (or state) variables. Integrations may be used if there are continuous flows, while summations are used if the flows occur at distinct instants in time. The second set of variables is known as the rate (or policy, or flow) variables. In contrast to physical systems, where the natural laws govern how rate variables behave, in man-managed systems (infrastructure, socioeconomic or industrial), the rate variables often vary according to the policies behind individual decisions. (see Table 6.3). In fact, the hardest stages in system dynamics modelling relate to: (a) monitoring the policies being applied to the existing system, and (b) designing a better or new policy for the system. They are hard because repeated experimentation with actual social systems is both unwelcome and often impossible including the prospect of disastrous consequences, and a long period of time before reaching any conclusion. Thus, a core problem in system dynamics modelling resides in precisely defining the rates or the policy variables. Physical flows are conserved flows. When an outflow takes place from one level into another level, the volume stocked in the first level decreases while that in the second level increases such that the total volume in both stocks remains the same. Consider a source of large capacity from which a flow originates to end up in a sink, then the total amount in the flow line, that is the sum of the amount stored in the levels, the source, and the sink remains the same. Usually, the rate variables are complex functions of level variables. For example, one subdivides the rate into various auxiliary variables. Rate variables (or auxiliary variables when they are used) may also depend on some constant terms within the time frame considered. These constants must relate to real-life and must be distinguishable in real systems.

6.5.3

Information Flow

Information helps in decision-making. Therefore, rate variables are governed by information about level variables and constants, and about auxiliary variables, if they are defined. But given that auxiliary variables are subdivisions of rate variables, they must appear only in the information flow channels linking the rates to the levels. Information flows are not conserved flows. Information neither decreases the value of the level, auxiliary variable or the constant from which the information is abstracted, nor intensifies the value of the rate/auxiliary variable at which the information is delivered, or used. Rates always designate non-quantifiable instantaneous values; hence information on rates should not be available. Therefore, no information should be abstracted

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from a rate variable. Since information links always finally terminate at rates, rate-torate coupling is not permissible. Information flows perform the vital role of linking the physical flows. For example, the flow of order for capacity increase may depend on information relating to capacity on hand (in the flow of capacity), order backlog (in the flow of requisition), and inventory (in the flow of material); and material requisition rate may depend on inventory on hand (in the flow of materials), inventory on order (in the flow of orders and material) and on cash at hand (in the flow of cash). Thus, physical flows are separate and isolated without the information flows.

6.5.4

Flow Diagrams

The symbols shown in Fig. 6.3 are generally used for flow diagramming of system dynamics models. Thus, a square/rectangle represents a level, a valve represents a rate, a circle represents an auxiliary, a cloud represents a source/sink, a solid line represents a constant, a solid arrow represents a physical flow, a broken (line with dashes) arrow represents an information flow, and a small circle on the boundary of a symbol from which a broken arrow emerges represents an information take-off. A few flow diagrams are shown in Figs. 6.4 and 6.5. Figure 6.4 uses all the symbols of Fig. 6.3, with a model showing a situation which tries to build up inventory through material requisition to attain a required (desired) inventory level. Flow of materials is a physical flow. The accumulation (stock) in this flow is Fig. 6.3 Flow diagramming symbols

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Inventory Material requisition rate

Desired inventory

Inventory discrepancy Time to meet inventory discrepancy

Fig. 6.4 Information flow connecting a level to a rate

Men in training Hiring rate

Training manpower Men leaving rate

Training completion rate

Average length of service

Average training time

Inventory Production rate

Shipment rate

Labor productivity

Fig. 6.5 Information flow joining two dissimilar physical flows

the inventory level and the instantaneous flow rate is the material requisition rate. Inventory is measured in units. Material requisition rate is measured in units per unit time (e.g. units/day). The required inventory is a constant. The difference between the required inventory and the actual (existing) inventory is the inventory discrepancy (or deficit). Inventory discrepancy is an auxiliary variable. Information on desired inventory and on actual inventory is necessary to define this variable. Thus, it obtains

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information flows from both the desired inventory and the inventory level. The average time during which this inventory discrepancy is adjusted is termed here the ‘time to meet inventory discrepancy’. This time is considered here as a constant. For a precise definition, the material requisition rate requires information on both inventory discrepancy and the time to meet inventory discrepancy. It may be observed here that if the inventory level exceeds the desired inventory value, the inventory discrepancy becomes negative. This entails a negative value of the material requisition rate, thus resulting in an outward flow of material from the inventory level. In case the inventory is at its desired level, the inventory discrepancy is zero, the material requisition rate is zero, and the inventory level continues to be at its desired value. (In the simulation example of Chap. 13, water either remains in the reservoir or gets spilled. It is still a flow, with the desired inventory level at VMAX.) Two physical flows are shown in Fig. 6.5, namely (1) the flow of men and (2) the flow of material. The accumulations (increases) in the flow of men arise from (a) the men in training and (b) the trained manpower. The flow rates are (i) the hiring rate, (ii) the rate at which men complete their training, and (iii) the rate at which men leave the organisation. Two time constants are associated with this flow, namely (a) the average training time, and (b) the average length of service. These constants, along with the levels, help in defining the rate variables. The only accumulation in the flow of material is the inventory. It increases with production rate and decreases with the shipment rate. The production rate (units/day) is defined as the product of trained manpower (man) and the labour productivity (units/man/day). Labour productivity is a constant. Figure 6.5, thus, shows how two physical flows are linked by an information flow.

6.5.5

Delays

Physical flows are often subject to delays, such as training of workers, order processing (clerical, mailing, fulfilling), shipment, etc., and possess the following properties: (a) In a physical flow, the rate variable is subject to a delay. (b) An accumulation will occur during the delay. (c) Two factors affect the outflow rate: (1) the amount accumulated in the delay and (2) the average time a unit stays in the delay. (d) When conditions are steady (inflow rate = outflow rate = constant), the accumulation (level) in the delay is also constant, being equal to the inflow rate times the average delay time constant. (e) The transient response features of delays vary from situation to situation. In some cases, there is a sharp and quick response between inflow and outflow rates. In other cases, the outflow rate response may suffer a time lag, with different rates of increase.

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A delay is defined by: (a) (b) (c) (d)

6.5.6

the inflow rate, the delay constant, the outflow rate, and the order of the delay.

Smoothing of Information

Human beings do not totally discard previously held ideas, beliefs, thoughts, bias or information when new information is received. Some more credibility is given to the current information, while progressively less weight is devoted to the old information. In other words, humans try to smooth the information psychologically (or intuitively). Such smoothing is significant in decision making. Very often, a person takes a decision, based on his beliefs instead of factual, recent information. Such beliefs change slowly and gradually as more and more information is obtained. Such psychological smoothing of information generates an accumulation (level) of information in his mind. This level characterises the state of belief the person forms in his mind. There are three differences between a smoothed level and a pure level. (1) A smoothed level is present on an information flow whereas a pure level exists on a physical flow. (2) A smoothed level obtains information from the variable being smoothed and from the smoothing time constant, whereas a pure level must not collect any information from anywhere. It can only accept flow rates which are physical in nature. (3) The third difference concerns the dimension of the level variable with respect to the dimension of the input variable. The dimension of a pure level variable is always equal to the product of the dimension of the flow variable associated with this level and time. For example, inventory has a dimension ‘units’, and production rate, the inflow rate to the inventory, has a dimension ‘units/day’. In contrast, a smoothed level has the same dimension as that of the variable being smoothed. Thus, both average production rate and production rate have the same dimension ‘units/day’. The variable to be smoothed could be a level, a rate, or an auxiliary variable, or another smoothed level. Such smoothed level variables are always present in information flow channels. Some examples of smoothed levels comprise average price, average sales rate, average quality of product, average order rate, quality recognized by customers, average capacity acquisition rate, average production rate, and prevailing delivery delay in the market. It can be demonstrated that smoothing is equivalent to delays. Both are exponential in nature and use time constants. The output rate of a delay is equivalent to the

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smoothing level. There is, thus, no contradiction with respect to the dimensions, either. Similar to the steady state, the output rate of a delay equals the input rate, the smoothed level adopts the value of the variable being smoothed in the steady state. Furthermore, the transient response characteristics of smoothing are accurately comparable to the transient response characteristics of the delays. Using this line of argument, some researchers have introduced the concept of ‘delay in information’, and of ‘cascaded smoothing’, thus bringing in the concept of ‘higher-order smoothing’.

6.5.7

Table Functions

Sometimes a rate (or an auxiliary variable) is associated to another variable (a level or an auxiliary) through a complicated nonlinear relationship. Defining this relationship and estimation of the parameters linked to this function may present some difficulties. Past data is often inexistent or is inadequate to completely define the relationship. As the system identification and estimation techniques available can be extremely complex, system dynamics enables model builders to avoid this problem by defining table functions for such cases. Another justification for table functions is that even when the function relating two variables is linear, the conversion coefficient (the proportionality constant) may not be easily recognisable in the real system. Consider, for example, the case of customer order rate (OR) as a function of delivery delay (DD). Assuming a linear relationship such as: OR ðtÞ ¼ a þ b  DDðtÞ OR has a dimension (units/week), and the dimension of DD is (week). So the dimension of b is (units/week). Such a dimension is meaningless in a real sense. Using statistical procedures, such as least square estimation, the parameters a and b can be estimated. However, system dynamics offers a substitute in the form of table functions. A table function gives a static relationship between two variables. In this case, the values of the affected variable y are estimated for discrete values of the causal (independent) variable x covering the whole feasible range over which the causal variable x can vary. The pairs of values of the two variables (x, y) can then be tabulated. Thus, y can be expressed as a function of x through the use of a table, hence the name ‘table function’. Coming back to the case of order rate (OR) as a function of delivery delay (DD), assume that under normal conditions, OR is 10,000 units/month and DD is 4 months. The feasible range of values over which DD can vary is first established. It is assumed that this range lies from 0 to 8 months. Next, certain equally spaced point values of DD are chosen, say 0, 2, 4, 6, and 8 months. The most likely values of OR

182 Table 6.4 Table function relationship between OR and DD

6 Infrastructure as a System DD (months) 0 2 4 6 8

OR (units/month) 20,000 20,000 10,000 6000 5000

Fig. 6.6 Customer order rate (OR) vs. Delivery Delay (DD) table relation

for each point value of DD are then estimated or even guessed. Table 6.4 gives these values. The table function relation can be conveniently shown in a graphical form. Figure 6.6 depicts the relationship defined in Table 6.4. Figure 6.6 shows the table function as piecewise linear functions. This implies that when the X axis variable takes a value different from the specified point values, linear interpolation is carried out to estimate the corresponding Y axis value. Graphical representation of a table function helps in two ways: (1) it helps in defining the overall shape of the curve. For Fig. 6.6, it is known that as delivery delay of products goes up, the order rate for the products goes down and vice versa. Therefore, the slope of the curve around the normal value must be negative. The normal point is made up of the normal delivery delay and the normal order rate values (4 months,10,000 units). The shape of the curve around the extreme values of the X-axis variable is often different from that around the normal point. If in the past, the real system has never achieved such extreme values, then no past data will be available. The only guiding parameters would then be intuition and logic. For example, in the case of Fig. 6.6, it may be

6.6 Modelling Principles

183

assumed that the order rate has reached its saturation limit and thus, it will not be affected even when the delivery delay is reduced below 2 months. At the other extreme, it may be assumed that increase in delivery delay will decrease the order rate only less than proportionately, as perhaps, some customers will still remain loyal to the company’s product. (2) a table function proposes an explicit assumption (visually displayed) which may be discussed and debated, before changing it, if required.

6.6 6.6.1

Modelling Principles Causal Loops

Causal loop diagrams represent visually the cause-effect connections among the system elements which form structures of feedback loops. As such diagrams are easy to produce and show clearly the overall system causal structure, they often help to conceptualize real-life problems, to write the model equations, to interpret the results from simulations, to design new policies, and eventually, to communicate with persons unfamiliar with the system dynamics method. Causal loop diagrams are therefore quite popular in system dynamics modelling. While developing a causal loop diagram, it must not be forgotten that there is no unique diagram for a given problem. The number of variables incorporated in a diagram will vary from person to person. If the model builder opts to make a skeleton representation of the problem situation, he will choose very few variables in the causal loop. In contrast, if the modeller desires a detailed diagram, he will select a number of variables.

6.6.2

The Diagramming Approach

A causal loop diagram records a succession of cause-effect relationships in a circular fashion. Therefore, to know about causal loop diagrams, we have to first know about cause-effect relationships and the way they are identified and represented.

6.6.3

Simple to Complex Modelling

This chapter has described briefly that infrastructure in a country comprises sub-systems which sometimes interact in complex ways. These subsystems need to be studied, as seen in Chap. 5, some decades before actual implementation, and will be functioning for even many more decades.

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It is therefore important to understand the different functions connecting the variables. Sometimes, simple functions will serve the purpose, sometimes more complex ones will de needed, and as shown later (Chaps. 13, 14 and 15), more complex methods of resolution might be required.

References Drucker, P. https://quotefancy.com/quote/887972/Peter-F-Drucker-There-is-no-perfect-strategicdecision-One-always-has-to-pay-a-price-One Gigch, J. P. V. (1974). Applied general systems theory. London: Harper and Row Publishers. Hickford, A. J., Nicholls, R. J., Alexander, O., Hall, J. W., Blainey, S. P., Tran, M., & Baruah, P. (2015). Creating an ensemble of future strategies for national infrastructure provision. Futures. http://statsmauritius.govmu.org/English/CensusandSurveys/Pages/census/Census%2D%2DSeries.aspx. Accessed 15 Aug 2016. International Journal of Quality & Reliability Management, Volume 21, Issue 5 (2006-09-19). Journal of Manufacturing Technology Management, Volume 20, Issue 7 (2009-10-02). Rosenberg, L. B. https://www.brainyquote.com/quotes/louis_b_rosenberg_818615?src¼t_decision TU811 36E. Thinking strategically systems tools for managing change (Study Guide ISBN978178007208). Open University.

Chapter 7

Economic and Social Aspects of Infrastructure

Politicians are the same all over. They promise to build bridges even when there are no rivers. Nikita Khrushchev And our nation, though it has no drinking water, electricity, sewage system, public transportation, sense of hygiene, discipline, courtesy, or punctuality, does have entrepreneurs. Thousands and thousands of them. Especially in the field of technology. And these entrepreneurs – we entrepreneurs – have set up all these outsourcing companies that virtually run America now. Aravind Adiga (The White Tiger) . . .but there is no hospital in Laxmangarh, although there are three different foundation stones for a hospital, laid by three different politicians before three different elections. Aravind Adiga (The White Tiger) We need to stop thinking about infrastructure as an economic stimulant and start thinking about it as a strategy. Economic stimulants produce Bridges to Nowhere. Strategic investment in infrastructure produces a foundation for long-term growth. Roger McNamee What mothers need, as well as fathers, spouses, and the children of aging parents, is an entire national infrastructure of care, every bit as important as the physical infrastructure of roads, bridges, tunnels, broadband, parks and public works. Anne-Marie Slaughter

The services that infrastructure offer to users (people and industry) influence several aspects of the national economy, as well as the social aspects. Infrastructure planning gives a picture of how people (politicians, planners, engineers, architects, and the public, when consulted) imagine their society in the future. Thus, forcibly, infrastructure should always be implemented not only to exceed present needs, but also to © Springer Nature Switzerland AG 2021 V. Proag, Infrastructure Planning and Management: An Integrated Approach, https://doi.org/10.1007/978-3-030-48559-7_7

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provide for requirements likely to arise in the future many decades from now. Once built, the infrastructure can rarely (because of the expenditure) be relocated, and may attract other facilities. A new road might attract houses, schools, businesses, etc. Thus, the planning of the infrastructure carries temporal and spatial dimensions with it. A country may have real needs to satisfy, but it is perceived as modern, developed and industrial, only when there are visible signs of infrastructure or use thereof: buildings, roads, the internet. Infrastructure often depicts three dimensions: (a) facilitating communication, travel, and the transportation of goods (b) a biopolitical ambition to improve the health and welfare of the population (c) the visible symbol of a visionary future.

7.1

Welfare Economics

Welfare economics analyses the circumstances which optimise the solution to a general equilibrium model. This needs, inter alia, an optimal distribution of factors among commodities and an optimal distribution of earnings among consumers. The distribution of production factors is considered to be Pareto optimal if production cannot be restructured to increase one commodity output or more without diminishing the yield of some other commodity. Therefore, considering a two-commodity economy, when the distribution of production factors for the two commodities is Pareto optimal, the locus (curve joining the relevant points) gives the production contract curve. Similarly, a distribution of commodities can be considered to be Pareto optimal if the allocation cannot be reshuffled to increase the utility of one individual or more without diminishing the utility of another individual. Thus, in a two-individual economy, the consumption contract curve is represented by the locus of the Pareto optimal allocation of commodities between the two individuals. A branch of economics that is particularly concerned with infrastructure planning is welfare economics, which studies the apportionment of scarce resources. This is different from traditional economics, because as natural resources do not always possess a market value, they cannot be, usually, allocated by the market mechanism. Another justification for this distinct branch of economics lies in that many natural resources (e.g. air and water) are considered public goods. Thus, how they are allocated or used is a societal decision, not necessarily decided by the market – even if pricing is used. The objective of welfare economics is to distribute these resources such that social welfare (or social utility) is maximized. Essentially, welfare economics decide the combination of goods to be produced from the available resources, which then define the respective utilities (values) these commodities provide to the individual people. Eventually, if it were possible, the goods would be allotted such that the overall societal utility was maximized. Very often, this theory is not easy to apply to public service systems as there is no clear obvious method to assess, measure, or even envisage qualitatively, the benefits to be achieved from different allocations. Hence the next paragraphs are devoted to

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some examples of how this problem has been approached in recent analyses of significant public activities.

7.2

The Benefit-Cost Viewpoint

In the following paragraphs, the word “good” is used to describe any entity preferred by a company, society, group or individual. Some goods can be obtained for free, or nearly so. Here, the goods are considered sufficiently expensive (monetary or other terms) to require the consumer to try to be efficient when buying the goods. When a rational consumer needs to choose among two or more goods, all satisfactorily meeting some or all of the same required or preferred objectives, he will try to choose the “best” one among them. What criteria should he use to do this? If all goods provide the same benefits, and if each of the different goods can be distinguished only by its monetary cost, then certainly the consumer should select the cheapest one. Conversely, if all goods have the same price, while the benefits provided by each good can be fully determined by a single quantity (monetary or other metric), then the good offering the highest-benefit is the best. Clearly, the choice, in both cases is the “best value for money”. It may happen that the goods have different costs and different benefits, although both costs and benefits can be determined through a common metric (monetary or other). One may then determine, for each good, the ratio of benefits to costs. If all the goods have acceptable costs (i.e. within budget, not abnormally high), then the good with the highest benefit-cost ratio is the rational best choice. Even if the benefits and the costs are measured in different units, this ratio method may still be the appropriate decision function, so long as all benefits are measured in the same units; and similarly for costs. Here again, the maxim “best value for money”, applies. Example 7.1 A badminton player is offered a choice between two options for court time at a neighbourhood club. Option A proposes 100 h for Rs.200, while option B offers 50 h for Rs.150. Clearly, option A, at ½ h per rupee, gives a higher benefitcost ratio than does option B at 1/3 h per rupee. However, despite option A being better, the player may have other reasons to prefer option B. Sometimes, a good can be acquired in variable amounts, for different prices, entailing a benefit-cost ratio which fluctuates with the amount bought. In such cases, the best choice for the consumer might be a combination of different goods. Example 7.2 A community wishes to allocate efficiently its budget for lifeguards between two beaches, A and B. Table 7.1 shows costs and expected benefits, in lives saved per season, for various numbers of guards at both beaches. These figures have been obtained by tabulating the disasters of past years. Table 7.1 also shows the resultant benefit-cost ratios (BCRs) and the incremental BCRs for each additional guard. In this situation, where the BCRs change with the cost level, the choice of goods (i.e., guards at A or guards at B) should be made incrementally, one unit at a

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Table 7.1 Data for benefit-cost ratio (BCR) example

Beach A

B

Number of guards 0 1 2 3 4 0 1 2 3 4

Cost 0 1000 2000 3000 4000 0 1000 2000 3000 4000

Expected number of lives saved 0 1.00 1.50 1.60 1.65 0 0.80 1.20 1.24 1.26

BCR in lives per Rs.10,000 0 10.0 7.5 5.3 4.1 0 8.0 6.0 4.2 3.2

Incremental BCR for one more guard in lives per Rs.10,000 10.0 5.5 1.0 0.5 – 8.0 4.0 0.4 0.2 –

time, until the desired resource commitment is reached. At each step, the allocation should be to the good yielding the higher incremental BCR. Thus, the first guard should be at A, the second at B, the third at A, the fourth at B, and both the fifth and the sixth at A. Of course, if all resources are unlimited and can be procured at given costs, and if all the required goods can be measured by a common metric, it follows that there will be no difficulty in allotting resources such that the aggregate value of the goods is maximized. However, in practical real-world resource allocation, there are frequently two annoying problems, one facing most purchasers and the other, usually facing public agencies (governments, or equivalent), when seeking the public’s benefit with optimal allocation: 1. Resources are usually limited; their costs cannot always be quantified in monetary terms; and the alternative goods have no common yardstick for measurement. 2. While maximising the goods he can obtain is a satisfactory solution to an individual customer, the government wishes a proper distribution of goods among the population.

7.3

The Allocation of Incommensurable Resources for Incommensurable Goods

Two independent variables or more cannot be concurrently maximized or minimized in an optimization problem. In such conditions, it is judicious converting all costs and benefits into common monetary terms, though this is sometimes not possible, either. When this occurs, a sensible approach is to minimize or maximize one variable, considering the given constraints on the other parameters. Some common examples are:

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1. A structure (bridge, building, etc.) should be as robust and durable as possible, while having the lowest possible cost. The adopted procedure has been to establish construction codes of practice which prescribe the minimum acceptable strengths or conditions acceptable, with regards to materials, workmanship, structural behaviour, etc. The cheapest structure satisfying the code specifications is then constructed. 2. When a town proposes to construct public housing units, land for building and money for construction are the two scarce resources. Unfortunately, for political and spatial motives, these resources are not easily exchangeable. As two goods need to be produced, (1) a maximum quantity of housing units and (2) a maximum comfort within each unit. The favoured procedure will probably minimise the construction cost per housing unit, given the constraints restraining the choices of the other variables. Land area will be minimized through a minimal amenity standard within each housing unit. Similarly, the project drivers can use their social judgement to enhance a building code ensuring a minimum structural amenity standard. This is also likely to result in the cheapest acceptable housing units built in a crowded space, subject to available money for construction. 3. Police manpower resources need to be allotted between traffic management and the other usual police activities. As managing traffic, usually at school crossings and at busy intersections is properly understood, it is not difficult to establish satisfactory standards for this activity. It is more difficult to lay down standards for the other police activities, mostly crime fighting. Thus, an arbitrary, but understandable and satisfactory, standard will be established for the manpower resources assigned to traffic. The remainder of the policemen will be allocated to the other activities. 4. A municipality owns a plot of land which it wishes to develop into an industrial park. The prevalent council members of the majority propose to apportion the land, among potential industries which can maximise estimated employment, given quantified constraints on water and electricity requirements, transport facilities, and environmental impacts. Members of the opposition, argue instead that waning, low-wage industry will be encouraged by this approach. The opposition, therefore, recommends the alternative of maximizing monetary output of the new industries, considering the same constraints specified above. These examples demonstrate that although an arbitrary constraint approach is indeed practical, a better methodology should be adopted for an effective allocation when resources and goods cannot be compared with the same yardstick. This has led economists to devise an optimal resource allocation mechanism, where “consumption indifference curves” try to group, in a quantifiable way, the benefits obtained from combinations of incommensurable goods. The approach is very easily understood by limiting oneself to two resources, A and B, which can be processed to obtain two chosen goods, X and Y. Thus, the resources might be land and money, and the goods might be public golf courses and ball fields.

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Fig. 7.1 Family of production indifference curves

X3

B X2 X1

X1 ˂ X2 ˂ X3

X3 X2 X1

A

Consider first the good X, where, following a given outlay of resources A and B, a corresponding unique amount of good X is obtained. Furthermore, any increase in the outlay of either A or B, will entail an increase in the quantity of good X, but, at least, no reduction, in the worst case. Thus, one can plot, for a specified amount of the good X, say X1, the relationship between the required outlays of A and of B required to produce that amount X1. Figure 7.1 depicts a family of curves denoted X1, X2, X3 which show the outlay of resources, A and B, required to produce different quantities of good X. These curves are known as “production indifference curves”. Following the same reasoning as above, production indifference curves can be plotted to show the quantities of good Y as a function of resource outlays of A and B. They will have a similar shape as the curves for good X. In practice, resources A and B are not available in unlimited quantities. If the resources A and B are limited to amounts AT and BT and if these resources are to be used up entirely to purchase goods X and Y, it means that the outlay of A used to produce good X (say AX) limits the amount of resource A to a quantity of (AT - AX) that can be used to produce good Y. Similarly, for the use of resource B, the quantity is limited to (BT - BX) to produce good Y. Figure 7.2 gives the production indifference curves for good X, just as Fig. 7.1 does. However, the horizontal and the vertical axes have their ranges limited to the resource availability values, namely, AT and BT. The distances along axes AX and BX give the quantities of resources allocated to good X. So now, only (AT - AX) ¼ AY and (BT - BX) ¼ BY are available to produce good Y. Figure 7.2 therefore depicts the production indifference curves for good Y, turned around in order to originate from

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AY

Fig. 7.2 Optimum allocation possibility function

Y1

OY

X3

X2 X3

Y2

P

BY

Y3 Y1

BY X1

Q

X2

Y4 BX X1 Y3

Y4 OX

Y2

AX AY

the upper right corner of the diagram. The distances along axes AY and BY give the quantities of resources apportioned to good Y. With this arrangement, every point on the graph shows an allocation of resources A and B to goods X and Y. If the point P, on Fig. 7.2, is considered, it can be observed that the distance from P down to the AX axis is the quantity of resource B apportioned to good X. The rest of the total BT, from P up to the AY axis, is allotted to Y. Resource A is similarly apportioned between goods X and Y. The production curve X2, transiting through P, gives the quantity of X produced with this apportionment. Similarly, the production curve Y2 depicts the quantity of Y produced. It can be deduced now that P is not an optimum allocation point, because the entire shaded region, defined by X2 and Y2, can produce more goods for identical overall resources AT and BT. Thus, if X2 is kept constant, while one moves to point Q, the good Y increases from Y2 to Y3. Therefore, point Q characterises a better allocation than point P. Point Q lies on the tangent of the two production curves X2 and Y3. From this tangent point Q, it is not possible, to move to another point, to try increasing either X or Y without concurrently diminishing the quantity of the other good. The line joining (locus) such tangent points, here given by the curve OXOY is known as the “optimum allocation possibility function”. Any optimal allocation, between goods X and Y, will lie on this locus curve because any point which is not on this curve, in fact, represents a decrease in one good without a matching increase in the other.

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Y

Y (AT,BT )

X (AT,BT )

X

Fig. 7.3 Optimal-choice function

All the different points Q, on this optimal relation, using outlays AT and BT for resources A and B, between goods X and Y, can be abstracted and plotted as the “optimal-choice function”, depicted on Fig. 7.3. At its ends, of course, this curve corresponds to the quantities of X and Y produced by allotting all resources to either of the goods. Thus, on the X-axis, the quantity of X produced is X(AT, BT) with Y ¼ 0. Is there an optimum point on the optimal-choice curve? To answer this question, a preference ranking must be developed among the potential combinations of commodities X and Y. Of course, if there is no favourite, any point on the curve is as suitable as any other. On the assumption that the consumer has certain preferences, and prefers more of any good rather than less of it, the combination of goods in amounts (X1 + ΔX, Y1) is preferred over the combination (X1, Y1), with ΔX > 0. Similarly, (X1, Y1 + ΔY) is preferred over (X1, Y1) for ΔY > 0. Assume the consumer estimates the combination of goods in quantities (X1, Y1), at a qualitative “value” V1. As both X and Y are supposed to be valued goods, the consumer may be willing to accept trade-offs of X and Y such that he estimates other possible combinations of the goods at the same value. He is considered to be “indifferent” with respect to the choice among equally estimated combinations. Figure 7.4 depicts, an “indifference curve of” V1 for all goods combinations that are estimated (or valued) as equal to the combination (X1, Y1). The assumption that more goods are favoured over fewer goods entails that the indifference curve is convex relative to the origin. If another combination of goods, in amounts (X2, Y2), is considered, and estimated more highly than is (X1, Y1), at value V2, then the indifference curve V2, of combinations estimated as equal value to (X2, Y2), must lie above the curve V1, resulting from more goods being more desirable over fewer.

7.4 Social Welfare Functions

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V3 V2

Y

V1

V1 < V 2