Spending to Build Back Better

Oshani Perera

Geography: Global
Sector: Climate Adaptation
Mobility
Environmental: Green Stimulus


To ensure this spending does in fact “build back better,” governments must tie their spending to sustainability targets or conditions.

The response to coronavirus disease 2019 (COVID-19) has seen unprecedented public spending. As economies reopen, we can expect even higher sums of public money to be spent on rebooting consumption and upgrading public infrastructure and services. To ensure this spending does in fact “build back better,” governments must tie their spending to sustainability targets or conditions.

To put these targets into play, however, public entities must issue tenders that emphasize the performance or outcomes that they seek. For example, instead of prioritizing urban road upgrades specifically, tenders can ask for low–carbon and climate-resilient mobility solutions more generally. Innovative suppliers could then respond with designs such as permeable road surfaces to reduce flooding, urban gardens to improve aesthetics and demarcate pedestrian zones, or increased space for non-motorized traffic.

The advantage of performance-based tenders is that they enable suppliers at the forefront of green innovation to propose solutions that procurers would be hard pressed to generate on their own. The EU’s Pre-Commercial Procurement arrangement goes even further and allows public entities to procure and field test early design prototypes of green and digital technologies.

To make all this a reality, policymakers and investors need reliable information on the financial performance of sustainable public infrastructure. IISD designed the Sustainable Asset Valuation (SAVi) methodology to simulate the costs of both risks and externalities or the environmental and social costs of public assets. SAVi uses a combination of system dynamics and project finance modeling to provide holistic valuations of the types of infrastructure procurement that are at the core of both the post-pandemic recovery and the UN SDGs.

Originally published by One Earth.