1) The document summarizes an OECD report on infrastructure needs and investment opportunities to 2030. It finds water infrastructure will require the largest investments of $770 billion to $1 trillion annually. 2) Transportation infrastructure like roads will need $220-290 billion annually while rail requires $50-60 billion. Telecom investments are estimated to peak at $650 billion before declining. 3) The report provides 17 policy recommendations to help close the infrastructure funding gap through 2030, including innovative financing, improved regulation, governance and strategic planning, technology development, and expanded toolkits for decision-making.

1. Infrastrucure to 2030: opportunities and challenges
April 14th 2010

2. Infrastructure to 2030:
opportunities and
challenges
by Pierre-Alain Schieb
Counsellor, Head of OECD
Futures Projects
April 14th 2010
Mexico City

3. Who are we?
Advisory Unit to the Secretary-General
(SGE/AU)
International Futures Programme (IFP)
• Multidisciplinary team, created in 1990, reporting directly
to the Secretary-General of the OECD
• Mission = Identify and explore emerging policy issues to
2030 (management of new emerging risks, the security
economy, bioeconomy, migrations, infrastructure, future
shocks…), discuss policy options..
• Participation / Project Funding = Involvement of
governmental bodies and private sector actors in each
(self-financed) project
© OECD International Futures Programme 3

4. Examples of OECD/IFP projects
Infrastructure
2006
Space
2005
Infrastructure
2007
Space
2004
© OECD International Futures Programme 4

5. Why infrastructure in OECD countries?
• Economic benefits in OECD countries were deemed
« unconclusive » in the 80’s (Ashauer, 1989, A.
Munnel..)
• Cost of opportunity in 2000s: shortages, market
failures, ageing infrastructure..
• Attractiveness (Krugman): what if you have science
parks and universities but no more 24/24 power,
clean water, efficient public transportation?
• Many kinds of social benefits (Lewis Mumford etc)
• And now, keynesian approaches (stimulus packages)
© OECD International Futures Programme 5

6. Italy Blackout (2003)
6© OECD International Futures Programme

7. Rail congestion in Europe (2006)
http://www.cemt.org/online/Congestion07/UIC.pdf 7

8. Water stress by major water basins in 2000 and
2030
Source: OECD Environment
Directorate (2006), Working
Party on Global and Structural
Policies, Revised
environmental baseline for the
OECD environmental outlook
to 2030, 20-21 November
2006,
ENV/EPOC/GSP(2006)23
8

9. Main Features of the Project (Phase I)
• Long-term view of infrastructure development
and investment
• 2 year duration (2005-2007)
• OECD countries + BRICs
• Telecoms, electricity, road, rail, water
• Time horizon 2030
• Project team – OECD IFP
• Steering Group (government, business, research)
• Collaboration across OrganisationOECD International Futures Programme 9

10. Phase 1: Assessment of needs, potential
demand and the future evolution of the
sector
• Critical assessments of existing reports
• What are the key factors driving the future
evolution of the sector?
• Longer term prospects for needs and
potential demand
• Cross sectoral interdependencies/synergies
© OECD International Futures Programme 10

11. Electricity Sector Investment to 2030
(IEA, Trevor Morgan)
Reference scenario:
• OECD: 3,940 trillion $
• Transition economies 0,653 trillion $
• Developing countries: 5,205 trillion $
• Total: 9,798 trillion $
IEA
© OECD International Futures Programme 11

12. Electricity sector investment to 2030
Alternative policy scenario: - 15,7 %
• OECD: 3,184 trillion $ (-19,2%)
• Transition economies 0,515 trillion $ (-21,2%)
• Developing countries 4,564 trillion $ (-12,3%)
Total: 8,263 trillion $ (-15,7%)
IEA, February 2006
© OECD International Futures Programme 12

13. Water investment to 2030
(R. Ashley, A.Cashman, Sheffield, UK)
OECD and « big five » only :
• to 2015: 772 billion $ a year
• to 2025 1 trillion $ a year
© OECD International Futures Programme 13

14. Transport Investment to 2030
(David Stambrook, Canada)
• Road transport: 220 to 290 billion $ a year
(2/3 in OECD countries)
• Rail transport: 50 to 60 billion $ a year
(2/3 in OECD countries)
• Policy matters: potential shift of 10%
from road to rail© OECD International Futures Programme 14

15. Telecom Investment to 2030
(Erik Bohlin, Simon Forge and al.,
Sweden and UK)
Global investment needs:
• 2005: 650 billion $
• 2010: 745 billion $
• 2020: 572 billion $
• 2030: 148 billion $
© OECD International Futures Programme 15

16. Lessons learned:
Change of ranking:
-Water comes first (OECD +Big five): 770
Billion$/year, 1 trillion $ by 2025
-Telecom: range of 650, 745 and 572 Billion$/year
(global)
- Electricity: 350 Billion$/year (global)
- Transport: 220-290 Billion$/year (Road) +
(50-60 Billion$/year Rail) on a global basis
© OECD International Futures Programme 16

17. Estimated average annual world infrastructure
investment requirements 2003-2030
(additions and renewal)
In USD Bn and as a percentage of world GDP
Table 1 p 29 - Infrastructure to 2030: Telecom, Land Transport,
Water and Electricity (2006)
Type of
infrastructure
2000-10 Approx. %
of world
GDP
2010-20 Approx. %
of world
GDP
2020-30 Approx. %
of world
GDP
Road 220 0.38 245 0.32 292 0.29
Rail 49 0.09 54 0.07 58 0.06
Telecoms1
654 1.14 646 0.85 171 0.17
Electricity2
127 0.22 180 0.24 241 0.24
Water1,3
576 1.01 772 1.01 1 037 1.03
1. Estimates apply to the years 2005, 2015 and 2025.
2. Transmission and distribution only.
3. Only OECD countries, Russia, China, India and Brazil are considered here.
17

18. Phase II- Possible challenges for project
design and business models?
• Huge opportunities but a financial gap
• From centralised to decentralised, smaller scale
• From large equipment to small equipment
and perhaps different suppliers
• From ground to mobile/on board networked systems
• From « conventional » to new policy challenges
(funding, back up systems, safety, liabilities..)
• Shortage of human capital (quantitative and qualitative
basis)
© OECD International Futures Programme 18

19. In OECD countries, public capital investment as
a share of total government expenditure is
declining
General Government GFCF
As a percentage of total government outlay
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Ye a r s o f S ur v e y
Source: OECD Economic Outlook No. 80 database, November 2006. 19

20. Public sector finances increasingly less able
to meet future infrastructure needs from
traditional sources
Social expenditures have increased their share (from 16%
of GDP in 1980 to 21% today)
Spending on public health and long-term care likely to
increase from 6.7% of GDP today to between 10.1% and
12.8% by 2050
Pensions set to rise by 3-4 percentage points
Lower spending on education for the young and child benefits
But higher spending expected on secondary, tertiary and
lifelong education
Tax base may come under pressure through ageing
workforce
20© OECD International Futures Programme

21. Source : Intelligent Infrastrucutre Futures / The Scenarios – Towards 2055
Office of Science and Technology
21© OECD International Futures
Programme

22. Extremes of exchanges in infrastructure changes with telecommunications substitutions
Infrastructure element Investment increase
or decrease
First estimate % change increase
(+ve) or decrease (-ve)
Road transport infrastructure -- -5 to -10%
Air travel (business)
infrastructure
-- -5 to 10%
Fuel oil – car, air transport - -5%
Health care -- -10%
Education - or same -5 to -10%
Justice --- -20%
Electricity supply + +5%
Gas supply + +5%
Heating oil + +5%
Water supply + +5%
Sanitation + +5% 22

23. © OECD International Futures Programme 23

24. Phase III -17 policy recommendations
Source: Volume 2, Infrastructure to 2030 (OECD, 2007)
1- Innovative approaches to finance
2- Improving the regulatory and institutional
framework conditions
3- Strengthening governance and strategic
planning
4- Developing and integrating technology
5- Expanding and improving the toolkit
© OECD International Futures Programme 24

25. 3.1 Innovative approaches to finance
Main findings and policy recommendations – Infrastructure to
2030 (2006)
• Encourage public private partnerships (PPPs) as a means of raising
additional financing for infrastructure investment and diversifying
business models.
• Encourage the investment of pension funds and other large
institutional investors in infrastructures.
• Make greater use of user charges for funding infrastructures. They
should be designed to signal prices, reflect real costs and contribute to
demand management.
• Diversify and expand traditional revenue-raising sources.
25

26. 3.2 Improving the Regulatory and
Institutional Framework
• Examine the legal and regulatory framework conditions with a
view to encouraging the emergence of fresh sources of capital
and new business models for the construction, maintenance and
operation of infrastructures.
• Encourage the emergence of new players and new business
models through the creation and promotion of frameworks that
stimulate the development of effective competition either in or for
the market.
• Place greater emphasis on the issue of reliability of infrastructure
functioning.
• Strengthen the framework for standards, as a tool for encouraging
new operational models and for improving interoperability.
Main findings and policy recommendations – Infrastructure to 2030 (2006)
26

27. 3.3 Governance and Planning
Main findings and policy recommendations - Infrastructure to 2030
(2006)
• Support the development of long-term, co-ordinated
approaches to infrastructure development.
• Reduce the vulnerability of long-term infrastructure
planning and implementation to short-term thinking and
priority setting.
• Ensure the involvement of a broader range of stakeholders in
the process of needs assessment, prioritisation, design,
planning and delivery of infrastructures.
• Strengthen international co-operation to improve the
efficiency, reliability and security of flows of goods, services
and information across transborder infrastructures.
27

28. 3.4 Use technologies both to improve efficiency
in infrastructure and to enhance demand
management
• Intelligent transport systems and capacity improvement
programmes
• New systems of road network pricing and tolling
• Remote metering
• Further development of cross-border electrical transmission
interconnection
• Microbial fuel cells for energy from wastewater
• ICT-driven public transport management
• Enhanced signalling and freight rail capacity
• Use of GIS to facilitate life-cycle management of assets28© OECD International Futures Programme

29. 3.5 Improving the Toolkit
• Strengthen public capacity to inform decision-
making, improve analysis, monitor
performance, and develop the requisite
interdisciplinary skills to address infrastructure
issues.
• Data collection, research and analysis, accrual
accounting and asset management, wider use
of cost-benefit analysis, new interdisciplinary
approaches to education and training.
29© OECD International Futures Programme

30. 3.6 Impact of current crisis
• Financing/funding:
 short term retreat from bank financing
 increased gap for long maturity financing
 difficult time for increase of user charges, but
 hedge funds move to infras., concept of an asset class is more
popular, clubs of investors are created, dedicated funds are
launched (see Canada, Switzerland..), national bonds in France..
• Differentiation between projects: some will be
postponed, reconsidered, or re-designed, some
should be accelerated with derogatory procedures,
governments are required to act more proactively as
catalysts and PV as integrators.
© OECD International Futures Programme 30

31. 4- Transcontinental infrastructure
(Phase II, ongoing 2009-2011)
• Project: 2009-2011
• Major hubs: ports, airports, corridors, multimodal
platform ..(offshore, onshore, inland..)
• Time horizon: 2015, 2030, 2040-50 with trends,
drivers..
• Long term potential impacts: Panama, Kra canal,
northwest pole route, security issues, Siberian
corridors etc..
• Mid term impacts on competitiveness: capacity
shortages, funding..
© OECD International Futures Programme 31

32. Important changes in the short to
medium term
• Progressive delivery of the many large (over 10,000
TEU) container ships currently being built
- as well as those to be built following reactivation of deferred
orders
• Changes to global trade patterns and services in response
to opening of enlarged Panama Canal (2014)
- possible increase in services along circum equatorial route?
• Impacts of larger container ships and changing global
services patterns on the balance between ‘direct’ and
‘transhipment’ services to important ports.
32© OECD International Futures Programme

33. TEU Pre-Crisis Forecasts vs actual growth rates
33© OECD International Futures Programme

34. Emerging global maritime routes and
markets
Source: J-P Rodrigue (2010) “Maritime Transportation Drivers for the Shipping and Port industries, ITF preparatory Session , Jan 2010, Paris
Increased volumes could reinforce circum equatorial route & trans-shipment34

35. Higher volume trans-shipment locations
Source: Notteboom, T. and J-P Rodrigue (2010) “Foreland-Based Regionalization: Integrating Intermediate Hubs with Port Hinterlands”, Research in Transportation
Economics.
Larger container vessels and container volumes will change service patterns – but how?

36. Increasing vessel sizes -
Largest available container ships
Source: Notteboom, T. and J-P Rodrigue (2009) “The Future of Containerization: Perspectives from Maritime and Inland Freight Distribution”, Geojournal, Vol. 74, No. 1, pp. 7-22.
Increased number of large capacity liners to be delivered over next few years

37. Pre-Crisis Container Traffic 2007
(Millions of TEUs)
37

38. Asia – USA Container Traffic, 2005
Source: Mexico’s Infrastructure Program 2007-12 - Vice Minister T &C PPT, Sept 2008 38

39. Port Container Handling Projections
Central America, Mexico total & 3 large ports
Source: Drewry Container Market 2009/10: Annual Review and Forecast; UNCTAD Review of Maritime Transport, 2009
Container volumes fell quickly – and could grow quite quickly as well
39

40. Quality of Port Infrastructure
Source: Global Competitiveness Report 2009-10, World Economic Forum, 2009
40

41. Pre-Crisis Port Development plans
Source: Mexico’s Infrastructure Program 2007-12 - Vice Minister T &C PPT, Sept 2008
41

42. Options for Mexico
• OECD Project on Transcontinental
Infrastructure Phase II- (2009-2010) ?
• Participation in OECD Space Forum
(2009-2014) ?
• Project on Future Global Shocks (2009-2011) ?
• Project on Future of Family Structures
(2009-2011) ?
© OECD International Futures Programme 42

43. Thank you.
Pierre-Alain Schieb
pierre-alain.schieb@oecd.org
www.oecd.org/futures
© OECD International Futures Programme 43