making a sound economic case for investment in …

B U I L D I N G P R O S P E R O U S C I T I E ST H E R O L E O F ‘ N A T U R A L C A P I T A L ’ A N D ‘ G R E E N I N F R A S T R U C T U R E ’2 7 T H S E P T E M B E R 2 0 1 6

M A K I N G A S O U N D E C O N O M I C C A S E F O R I N V E S T M E N T I N G R E E N I N F R A S T R U C T U R E

D R J I M C O L E M A N , H E A D O F E C O N O M I C S – B U R O H A P P O L D E N G I N E E R I N G

MAKING A SOUND ECONOMIC CASE FOR INVESTMENT IN GREEN INFRASTRUCTURE

OPYRIGHT © 1976-2016 BUROHAPPOLD ENGINEERING. ALL RIGHTS RESERVED

I N T R O D U C T I O N

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Infrastructure is complex and often controversial

Successful, growing cities need a fully functioning infrastructure platform

Infrastructure spending = 3.8% of global GDP: 3.4trillion USD p.a. by 2030

Green Infrastructure is one component of this platform



I N F R A S T R U C T U R E S E C TO R S & E L E M E N T S

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Transport & Mobility− Roads & Bridges− Transit – road, rail, air, water

Technology & Comms− Wired & wireless

Energy− Electricity generation− Gas− Renewables

Water− Water supply− Wastewater− Flood control

Waste− Solid waste− Hazardous waste

Green Infrastructure− Parks and gardens − Amenity Greenspace − Natural and semi-natural urban greenspaces

Social infrastructure− Healthcare− Education − Community



D E L I V E R I N G I N F R A S T R U C T U R E I N A S T R AT E G I C WAY

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P R I O R I T Y I N F R A S T R U C T U R E F O R U R B A N D E V E LO P M E N TF R A M E W O R K

Alignment/ synergy with regional/ government

infrastructure Project(s)…

Backbone/ Must-have infrastructure to enable

development of any form…

Infrastructure needed to leverage ‘quick wins’/

tactical opportunities…

Infrastructure needed to accelerate Parcel B

development…

2

Energy Water Waste Telecom Landfill …

District utilities Land clearing Landscape/ Open space

Regional Transit Regional roads Regional utilities

Streets/ Hardscape

Temporary facilities

Site strip Bulk earthworks Haul road Site compound …

Central Park River restoration …

HSR alignment Regional LRT line &

spur …

Regional highways connecting to existing

Bridges Grade separated

junctions …

Regional utilities upgrade

Gas Power Telecoms Potable water …

Primary street network

Secondary street network

…

Central park car park Tree and planting

nursery …

1

LON

G L

IST

LON

G L

IST

LON

G L

IST

LON

G L

IST

LON

G L

IST

LON

G L

IST

LON

G L

IST

LON

G L

IST

District utilities Land clearing Landscape/ Open space Regional transit Regional roads Regional

utilitiesStreets/

HardscapeTemporary

facilities

3

SHORT-LIST… SHORT-LIST… SHORT-LIST… SHORT-LIST… SHORT-LIST… SHORT-LIST… SHORT-LIST… SHORT-LIST…

Refined Development area phasing…Updated infrastructure shortlist…

6COST

Potential to unlock development yielding higher commercial

return…

Potential to unlock development yielding higher

economic impact…

Phasing Considerations

District utilities Land clearing Landscape/ Open space Regional Transit Regional roads Regional

utilitiesStreets/

HardscapeTemporary

facilities

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4

INFRASTRUCTURE TYPOLOGIES AND LONG LIST

KEY STRATEGIC CONSIDERATIONS

PROVISIONAL SHORT LIST

PHASED PRIORITY INFRASTRUCTURE SHORTLIST

PRIORITY INFASTRUCTURE TYPOLOGIES FOR 2016 & 2017

KEY:BENEFIT

ENABLING INFRASTRUCTURE



E C O N O M I C C A S EPA RT O F A F U L L B U S I N E S S C A S E

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Basic principles:

Who is making the case?

To whom?

For what?

Assessment?

Public to public

Private to public

Public to private

Private to private



A P P R OA C H E S & G U I D A N C E

• Standard guidance– E.g. HM Treasury Green Book– HCA Additionality Guide

• Standard indicators– Employment, incomes, GDP, GNP, GVA

• Non-standard socio-economic measures– Environment/green space– Health related impacts– Education related impacts– Wellbeing/welfare related impacts



B U S I N E S S C A S EO V E R V I E W A N D A P P R O A C H

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Strategic Case

•The case for intervention that provides a holistic fit with the strategic and policy priorities

•National/ local policy and strategic fit

Economic Case

•Public value/ benefit of the intervention and government investment

•Public costs and benefits analysis•Demonstration of public benefit through qualitative and quantitative analysis•Key metrics1: CBA/ CBR; VfM; Employment impact; GDP impact; GNI impact etc.• Indirect and induced impacts

Commercial Case

•Demonstrating that the intervention will result in a viable procurement and attractive deal for the market

• Implementation efficiency•Procurement strategy and delivery schedule

Financial Case

•The intervention is affordable for the public sector and can be funded through a viable financial arrangement

•Financial model•Funding sources

Management Case

•The project can be implemented using best practices in programme and project management.

•Delivery Plan•Project management team and qualifications•Benefit realisation and contract management plan•Ex-ante evaluation strategy

1 2 3 4 5

Source: HMG Treasury Green Book Five Cases Model Guidance1 For abbreviations, refer to glossary of terms



T H E T E C H N I C A L E C O N O M I C C A S EA C R I T I C A L C O M P O N E N T O F T H E F U L L B U S I N E S S C A S E

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Benefits valuation:

Range of attributable benefits? Monetisation – very challenging

for GI Stated preference (CV, WTP) Revealed preference (Hedonic

Pricing) Value Transfer Natural capital accounting

Discounted benefits Adjustments Net present value (NPV) Cost-Benefit Ratio (CBR)

CBR>2 Ideally?

Prosperous cities are resilient cities

Green infrastructure supports urban resilience• Climate adaptation• Reduced disaster risk• Carbon storage• Demographic change – inclusive

population growth• Health and wellbeing improvements• Productivity gains• Co-benefits (+ multiple benefits)

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G R E E N I N F R A S T R U C T U R E & U R B A N R E S I L I E N C E

Prosperous cities are resilient cities

What does the counterfactual or ‘do nothing’ scenario look like• Net additional impact• Alleviating or avoiding risks by

investing in green infrastructure• Risk mitigation planning• Reduced CAPEX from green

infrastructure – higher long term return and more cost effective

• Improved CBR?

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G R E E N I N F R A S T R U C T U R E & U R B A N R E S I L I E N C E

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F I N A N C I N G G R E E N I N F R A S T R U C T U R EF I N A N C I A L & C O M M E RC I A L C A S E S

Value capture through real estate development

Exploiting the relationship between GI and other elements of the urban infrastructure platform

Improves financial return & CBR Transport and mobility

• Enabling access to green infrastructure

• Increasing economic returns from transport investment

• Enhancing financing opportunities and cross-subsidy

Housing Energy and water supply/management

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M A X I M I S I N G T H E E C O N O M I C C A S E F O R G R E E N I N F R A S T R U C T U R E

BUSINESS CASEMALAYSIA VISION VALLEY- PARCEL B JUNE 2016COPYRIGHT © 1976-2016 BUROHAPPOLD ENGINEERING. ALL RIGHTS RESERVED

B U I L D I N G P R O S P E R O U S C I T I E ST H E R O L E O F ‘ N A T U R A L C A P I T A L ’ A N D ‘ G R E E N I N F R A S T R U C T U R E ’2 7 T H S E P T E M B E R 2 0 1 6

M A K I N G A S O U N D E C O N O M I C C A S E F O R I N V E S T M E N T I N G R E E N I N F R A S T R U C T U R E

D R J I M C O L E M A N , H E A D O F E C O N O M I C S – B U R O H A P P O L D E N G I N E E R I N G

making a sound economic case for investment in …

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