Caribbean Infrastructure: Strategies to increase the appeal of the Caribbean as an infrastrucuture investment destination
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This presentation was delivered by Daniel Best, Director, Projects Department, CDB, at the Caribbean Infrastructure Finance Forum in The Bahamas on December 6, 2016. For more information about infrastrcuture investment in the Caribbean, visit www.caribank.org.
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Caribbean Infrastructure: Strategies to increase the appeal of the Caribbean as an infrastrucuture investment destination
- 1. CARIBBEAN INFRASTRUCTURE: STRATEGIES TO INCREASE THE APPEAL OF THE CARIBBEAN AS AN INFRASTRUCTURE INVESTMENT DESTINATION CARIBBEAN INFRASTRUCTURE FINANCE FORUM Daniel Best Director, Projects Department Caribbean Development Bank December 6, 2016
- 2. The IPCC’s FifthAssessment Report: What’s in it for Small Island Developing States? Further climate change is inevitable in the coming decades Climate change is affecting SIDS’ growth and development Climate change poses an existential threat to some SIDS Adaptation can reduce the impacts of climate change, but there are limits and risks involved
- 3. The IPCC’s FifthAssessment Report: What’s in it for Small Island Developing States? Economic cost of adaptation to climate change is high in SIDS relative to the size of their economies SIDS stand to benefit from further integration of climate adaptation, mitigation and development approaches Transformation to a low-carbon economy implies new patterns of investment: AN OPPORTUNITY
- 4. Volume of lending by Sector 122,895 240,302 98,940 10,694 Distribution of loans, secondary mortgage, equity and grants (US $'000) (2010-2014) Environmental Sustainability and Disaster Risk Reduction Multi-sector & Other Power, Energy, Water and Sanitation Agriculture and Rural Development 894 25163 85763 11773 Volume of lending under Environmental Sustainability and Disaster Risk Reduction (US $’000) (2010-2014) Environmental Sustainability Sea Defence/Flood Prevention/Control Disaster Prevention and Preparedness Reconstruction Relief and Rehabilitation CDB funding extends across a wide range of sectors A significant portion has been allocated to assisting BMCs in disaster risk reduction, preparedness and rehabilitation
- 7. Borrowing Member Countries’ nationally determined contributions Country Transport RE/EE PA/ Forestry Coastal Resilience Water Agri. Infrastructure Financial Risk Mgmt. ANTIGUA & BARBUDA BARBADOS BAHAMAS BELIZE DOMINICA GRENADA GUYANA JAMAICA ST. KITTS & NEVIS ST. LUCIA ST. VINCENT & THE GRENADINES SURINAME TRINIDAD &
- 8. To what degree is investment appetite impacted? • Project preparation support useful and or /necessary • Technical analytical “Know How” limited within the Region and outside the Region • Incremental project preparation costs 2% to 14%: • Credible climate, environment datasets, analytical support • Updated technical standards, designs, technologies, materials Project cost increases of 5% to 10%
- 9. Critical issue: High Debt Change in Debt/GDP ratio 2009-2014 and 2014 Debt/GDP Ratio
- 10. 4.2 3.5 3.3 3.4 3.1 6.3 5.3 4.9 4.6 4.00 4.9 3.2 3 1.3 -0.1 1.5 0.9 1.6 2.2 1.4 2011 2012 2013 2014 2015 GDP GROWTHWorld Emerging Markets and Developing Economies Latin America and the Caribbean BMCs Average growth of 1.5 % over the past 5 years
- 11. 0 20 40 60 80 100 120 140 Debt to GDP DEBT-TO-GDP RATIO 2015 Antigua and Barbuda Bahamas Barbados Belize Dominica Grenada Guyana Haiti Jamaica St. Kitts and Nevis St. Lucia St. Vincent and the Grenadines High fiscal deficits and growing debt (domestic)
- 12. Vulnerability to Climate Variability & Change • High incidence due to geography (tropical climate, topography, etc.) • High impact related, inter alia, to size, openness and insularity
- 13. Lifetime of infrastructure 0 10 30 Roads, Bridges, Sea Defences 40 Power Plant 50 Ports 60 70 80 Dams, Reservoirs 90 100 100 + Adapted From– Economic Aspects of Adaptation Climate Change: Integrated Assessment Modelling of Adaptation Costs and Benefits, OECD Environment Working Papers No.6 OECD Publishing, 2010
- 14. Factoring Climate Change into the risk profile of infrastructure projects Explicit CC considerations REQUIRED from the TORs Stage Address interdependencies within infrastructure networks Strategic vision and sector planning Strengthen institutional capacity and cross-agency relationships and partnerships Sectoral Governance Reform - prioritize overcoming inefficiencies
- 15. Accreditation to global climate finance funds Adaptation Fund FEBRUARY 2016 Green Climate Fund OCTOBER 2016
- 16. Green Climate Fund Investment Criteria Source: Green Climate Fund
- 17. R² = 0.6768 0 100 200 300 400 500 600 700 800 900 0 20,000 40,000 60,000 80,000 100,000 120,000 Vehiclesper1000people(2010) GDP per capita (2010) Vehicles per 1000 people, 2010 Infrastructure Investment Need
- 18. R² = 0.7516 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 0 10,000 20,000 30,000 40,000 50,000 60,000 kWhpercapita(2010) GDP per capita USD (2010) Electricity consumed (kWh), 2010 Infrastructure Investment Need
- 19. Regional infrastructure investment need All Values are in USD Millions Country Electricity Transport Water and Sanitation Total Haiti 8,584 79 3,552 12,214 Jamaica 1,109 1,199 891 3,198 The Bahamas 409 640 71 1,121 Trinidad and Tobago 165 544 226 935 Guyana 353 36 231 621 Belize 244 142 110 496 Suriname 269 48 146 463 Barbados 168 198 66 432 St. Lucia 104 284 37 424 Cayman Islands 109 173 4 286 Antigua and Barbuda 69 81 22 172 Grenada 66 59 31 157 St. Kitts and Nevis 49 91 15 155 Turks and Caicos Islands 51 72 5 128 St. Vincent and the Grenadines 66 18 33 116 British Virgin Islands 46 61 8 115 Dominica 31 55 18 105 Anguilla 20 15 1 36 Montserrat 7 2 1 10 Total 11,919 3,796 5,467 21,183
- 20. Regional infrastructure investment need Regional Infrastructure Investment Need
- 21. GCF impact areas GCF Result Areas Low-emission energy access and power generation Low-emission transport Buildings, cities, industries and appliances Forest and land use Resilience of vulnerable populations Health, food and water security Infrastructure and built environment Ecosystems and ecosystem services
- 22. Renewable Energy • Cost of imported fuel – still relatively high • High electricity prices – small scale of operations • How to reduce GHG emissions – NDCs • High % govt. spend on electricity – fiscal implications, contributing to indebtedness • Ignoring Green Economy opportunities • Little focus on energy efficiency – wasted energy across all sectors • Regulatory and capacity issues at all levels – technical, financial, legislative, regulatory ENERGY SECURITY = ECONOMIC SECURITY COMPETITIVENESS FOREIGN EXCHANGE SAVINGS REDUCE GHG EMISSIONS - NDCs STABLE ENERGY PRICES “GREEN” JOB CREATION
- 23. Model Structure for Geothermal Project (SPV under PPP Arrangement)
- 24. Thank You! Ground-mounted section of CDB’s 150kW Solar PV Plant