The Economics and Financing of Resilient Urban Infrastructure

Lead Research Organisation: University of Leeds
Department Name: School of Earth and Environment

Abstract

The UK government has launched its industrial strategy, which sets out a long-term plan to improve the productivity of British industries and enhance the earning power of the population (HM Government, 2017b). One of its five main pillars is the undertaking of a major upgrade of the UK's infrastructure. Focusing on infrastructure is essential, since it has been recognised that the existing UK's infrastructure rates poorly compared to that of other advanced economies (HM Government, 2017a). Poor infrastructure affects the productivity and competitiveness of businesses and industries in the UK, while it increases the risks of adverse economic and social impacts due to extreme weather events, such as flooding.

Flooding has been identified as the major climate change risk faced by communities, businesses and infrastructure in the UK (CCC, 2017). In recent years, the UK has been impacted by several extreme flood events. For instance, the 2013/14 and 2015/16 winter floods caused severe disruptions in transport, provision of basic services (water, electricity, telecommunications), causing severe losses to households and businesses (Chatterton et al., 2016; Sakai et al., 2016). Climate projections for the UK point out future increases in flood risk (DEFRA, 2013; CCC, 2017). There is, in this sense, a genuine and urgent need among UK industries and businesses to upgrade the existing infrastructure in order to protect them against these risks, improve productivity and build climate resilience.

The government has committed to enhance infrastructure at risk, especially flood defences (DEFRA, 2014). However, issues relating to the economics and financing are under-addressed. This is especially the case at the urban scale, where cities could invest in a wide range of resilience options, but frequently lack the economic evidence base and the financing arrangements that might enable them to do so. In this sense, several questions arise. What resilient infrastructure options available to cities are the most adequate and sustainable? What are the most cost-effective options? What options can deliver the greater co-benefits (e.g. economic, social, environmental)? How could infrastructure options be delivered and financed? These queries reveal a research and policy gap that this fellowship aims to address.

The overall objective of this fellowship is thus to develop the economic case for investing in resilient urban infrastructure at a city scale, exploring the synergies between disaster risk reduction and improvements in productivity, economic growth, employment, environmental quality, and human well-being. This research will focus on the Leeds city area, which is a relevant case study since it has been affected by extreme flooding in the past, seeking to draw lessons that can be applied more broadly to other cities in the UK and abroad.

The fellowship will be based on close collaborations with Arup, as well as with other public bodies including the Environment Agency and Leeds City Council. It will also be directly aligned with the Leeds Climate Commission (leeds.candocities.org), a city-wide collaboration of 24 key organisations established to promote investment in low carbon and climate resilient development within the city of Leeds. The fellowship will also link to existing research projects and centres, like the Centre for Climate Change Economics and Policy, Water@Leeds, the Yorkshire Integrated Catchment Solutions Programme, the EU funded project ThinkNature (which involves various academic organisations across the EU) and the Climate Change Adaptation Group of the University of Leeds.

Working closely with these partners and organisations will ensure strong stakeholder engagement along all the stages of the fellowship in order to in order to maximise policy uptake, increase climate resilience and the economic productivity of UK industries, and produce a positive impact in the lives of the UK cities' inhabitants, and beyond.

Planned Impact

This fellowship seeks to produce knowledge that will directly benefit industries, businesses, communities and local government institutions in the Leeds City Area. Furthermore, it is expected that these benefits will spread more widely to other actors in the rest of the UK.

From the outset, a number of key stakeholders has expressed substantial interest in this fellowship and foresee potential opportunities to benefit from it. Among these is the Leeds Climate Commission, whose participation is essential, since it comprises 24 private and public organisations. The Commission will provide a better panorama of ongoing efforts, facilitate access to other key players, secure trust, legitimise the project's objectives and increase the receptiveness of the outputs. Involving the Commission will thus increase the chances of influencing policy through co-production of evidence that can lead to more informed decisions and successful outcomes.

Local government organisations

The Leeds City Council will directly benefit from this fellowship, since many of the fellowship outputs will be targeted to this institution. More specifically, the Council will receive clear evidence on the vulnerability of the city, its exposure to extreme weather events, and the needs of the city's businesses (in various economic sectors). Moreover, the Council will benefit from a systematic assessment tool to understand the economic significance of different infrastructure risks and identify the most cost-effective urban climate-resilient infrastructure options.

The knowledge produced will also be of value to the Environment Agency, who will benefit from the vulnerability assessment and the identification of green infrastructure options. Building upon existing networks, findings will be offered to national policy makers in Parliament and Whitehall (e.g. BEIS), who have showed interest in the problems that are being addressed and are willing to take action.

Private sector

The private sector will specifically find significant value in the findings derived from this fellowship, especially those small and medium enterprises (SMEs) located in areas at risk. Some of these firms have already been seriously impacted in the past and expect swift and concrete solutions to avoid future problems. These firms, in particular, will benefit from an upgrade in existing infrastructure that can ameliorate the risks, as well as from alternative financing arrangements to help them prepare against and recover from extreme weather events.

Larger firms in the water (Yorkshire Water), energy (Northern Gas Networks) and transport sectors will benefit from an enhancement in infrastructure that can avoid disruptions in basic services, as well as from improved productivity levels. During the fellowship, direct contact will be made with the Leeds Chamber of Commerce and other business organisations and outputs will be made available to them.

Civil society organisations

A number of non-governmental organisations and practitioners will find this study significantly useful. Some of these have been engaged from the outset as members of the Leeds Climate Commission. Among these are Friends of the Earth and the Leeds Civic Trust. The fellowship will also liaise with other existing networks in the region, which include the Upper Calder Valley Renaissance and Yorkshire Forward.

Household sector

The household sector, especially those situated in areas at risk, will find direct benefits in the form of reduced material, monetary and human losses associated with extreme weather events. Households in general will also gain from fewer disruptions in basic services, such as water, energy and transport.

In general terms, the population of the Leeds City Region will benefit from more employment opportunities related to the creation and maintenance of urban climate-resilient infrastructure, as well as from enhanced levels of economic growth.

Publications

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