World bank: Sustainable development costs just 4.5% of GDP

Spending better, not more, will allow developing countries achieve their infrastructure-related Sustainable Development Goals and stay on track to limit climate change to up to 2°C, the World bank says in a recent report.

The spending goal of 4.5% of GDP represents a preferred scenario whereby countries adopt policies that account for long-term climate goals to avoid expensive stranded assets later, invest in renewable energy, combine transport planning with land-use planning, develop railway systems attractive to freight, and deploy decentralized technologies in rural areas—such as mini-grids for electricity.

In the power sector, the World bank analysis suggests that the pathway to universal electricity access by 2030 could begin with tailored technological solutions instead of directly aiming to connect the whole population to the grid. The emergence of new technologies and business models for mini-grid and off-grid electrification should help to reduce costs and facilitate the journey toward universal access, the report concludes.

Moving toward a decarbonized power system, on the other hand, will promote investment in renewable energy and storage at the cost of no more than 2.2% of GDP.

"Our analysis clearly shows that developing countries can build the climate-smart infrastructure they need by spending around 4.5 percent of GDP. The good news is this is close to what many countries already spend," said Kristalina Georgieva, Interim President of the World Bank.

"With the right choices, infrastructure can be built that helps achieve globally agreed emissions targets. The focus must be on smarter and more resilient investments, not necessarily more money,” she added.

The full report is available here

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