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Financing Green Growth in a resource-constrained World

Contents
1 Preface
3 Introduction
6 India’s National Solar Mission:
Private Finance to Support Public
Leadership
22 The South Africa Water Partners Network:
Regional Funds for Adaptation
30 The Southern Agriculture Growth Corridor
of Tanzania: Investment Models for
Climate-smart Agriculture
40 Further Resources
40 Acknowledgements and Stakeholder
Contributions
41 End Notes

Preface

Dominic Waughray
Senior Director
Head of Environmental
Initiatives

In 2011, floods in Thailand cost the economy US$ 45 billion (7% of its
GDP) with disruptions to many global supply chains. Floods in the
Philippines have claimed at least 1,500 lives and caused corresponding
negative impacts to infrastructure and land. Meanwhile, parts of China
have experienced their worst drought in 60 years, with over 4 million
farmers facing severe water shortages. Two failed rainy seasons across
Djibouti, Ethiopia, Kenya, Somalia and Uganda have created the worst
drought since 1950, affecting more than 10 million people and pushing
food prices upward across the region. In 2010, 17 million people were
affected by floods in Pakistan, making it the country’s most expensive
natural disaster, while an autumn drought in the Amazon brought river
flow to its lowest level since 1902 in some parts.
The scale and frequency of these kinds of weather shocks, combined
with long-term economic forecasts of climate change impacts and fossil
fuel costs, are having a political as well as an economic impact.
Many developing country governments are changing their approach to
infrastructure and industrial planning, choosing to design more
sustainable, resilient pathways to economic growth. They are developing
comprehensive national investment programmes in clean energy,
energy efficiency, water management, climate-resilient agriculture, smart
grids and low-carbon transport systems. This strategic shift has been
termed as “greening the economy” or making a “green growth”
transition.
This is creating a new opportunity.
To address worsening environment and resource challenges like climate
change or water security, such green investment must happen quickly.
However, given the scale of the finance required, combined with
tightening fiscal constraints in industrialized countries, overseas aid
cannot fully fund this transition. The ability to leverage significant private
investment into these new national plans will therefore be crucial.
Currently, significant private investment is not being attracted into these
plans due to a range of perceived risks and the newness of the market.
What public-private partnerships can support developing countries to
create large-scale, investment-grade blueprints for their green growth
strategies? What new financing mechanisms can use targeted public
funds to address key risks and leverage a step change in private capital
flow into green infrastructure projects?
The size of the prize is potentially large – an analysis undertaken for the
World Economic Forum’s Infrastructure Initiative estimates a market size
of US$ 18.1 trillion cumulative investment in infrastructure within
developing economies by 2030. Is 2012 the time to scale up green
infrastructure financing?