I would like to thank James Stewart, Global Infrastructure Chairman, KPMG in the UK, for writing this article with me.
The True Cost of Infrastructure
Maria da Penha watched her home get bulldozed in Rio de Janeiro last month. A stout campaigner against Brazil's 2016 Olympic Park, she was reportedly the last resident in the Vila Autódromo community evicted to make way for this summer's Games.
How will history remember Brazil's Olympic and Paralympic legacy? Will the city thrive thanks to its investments in new housing, Bus Rapid Transit, a new subway line, improved expressways, and a commitment to cleaner waters? Will the city live up to its promises? Or will the sacrifice of Maria da Penha and the hundreds of other families forced out of the Vila Autódromo largely be in vain?
Community as well as government and business leaders carry a moral obligation to carefully weigh the politically-charged dilemmas of infrastructure development. These choices frequently impact the most vulnerable and least well off in society above most others. This is a global challenge, and certainly not one unique to Brazil.
65 years ago, a Latino community in the Chávez Ravine area of Los Angeles saw their homes destroyed to make way for new public housing backed by the United States Federal Housing Act of 1949. Officials used eminent domain to force private individuals to sell their property to the government with the promise that they would have first choice for buying the new homes.
However, no new homes were ever built. Many public housing projects like the one planned for Chávez Ravine were considered "Un-American" in the early 50s and withdrawn by the fervour of McCarthyism that spread across the country. Eventually, the city of Los Angeles built a professional baseball stadium there in 1959.
Frank Wilkinson, the assistant director of the Los Angeles City Housing Authority and one of the main supporters behind the Chavez Ravine housing project, expressed his regret in the 2003 documentary Chavez Ravine: A Los Angeles Story. "It's the tragedy of my life, absolutely," he said. "I was responsible for uprooting I don't know how many hundreds of people from their own little valley and having the whole thing destroyed."
Infrastructure and Development
Infrastructure development is intended to serve the public good, improve people's lives and support economic development. A fact that explains the focus on infrastructure in achieving the Sustainable Development Goals (SDGs). However, building the foundations for a stable and productive society is occasionally painful and often disruptive.
Infrastructure morality is an issue for everyone in society. If we agree that improving our public services is generally a good thing - providing affordable energy, housing, clean water, healthcare, transport, etc. - we must also be accountable for the negative aspects of development and ensure that sufficient protections are in place for those impacted.
Population growth, migration and urbanisation are forcing an increase in infrastructure development, especially in emerging economies and developing countries. By one estimate a total of US$57 trillion is needed by 2030, or US$3.4 trillion per year, to meet this demand.
If we take Lagos, Nigeria, currently Africa's largest megacity with a population of 13 million, it is estimated to soar to just shy of 19 million by 2025. This type of growth is a challenge as existing infrastructure is insufficient. To deal with this influx of people, significant investment is needed and quickly.
History is filled, however, with well-intended "economic" decisions that had unintended social or environmental consequences. The construction of the Sardar Sarovar Dam in western India is a high-profile example with environmental protection and indigenous rights criticisms plaguing it since the 1990's.
The benefits of the dam were purported to be so great that they outweighed the costs of the immediate human and environmental disruption. Without the dam, the long term costs for people would be much greater and lack of an income source for future generations would put increasing pressure on the environment. The project was meant to feed as many as 20 million people, provide domestic and industrial water for about 30 million, employ about 1 million, provide valuable peak electric power in an area with high unmet power demand and help provide flood protection. It is estimated, however, that 1-2 million people have been forcibly displaced as a consequence of this development.
To meet the aspirations of the SDGs, and to realise the level of investment needed, great care and consideration needs to be taken. Not just to protect the rights of indigenous communities and the defence of the environment; infrastructure morality needs to take into account the impacts of climate change.
The aftermath of last year's Cyclone Pam that hit Vanuatu killing 16 people and leaving more than 3,000 displaced, was a timely reminder. Its president, Baldwin Lonsdale, was addressing delegates at the 3rd World Conference on Disaster Risk Reduction in Sendai, Japan and stated that climate change was contributing to more extreme weather conditions. Infrastructure is being damaged by rises in sea levels, heavy downpours and extreme heat and the strain being placed upon it is projected to increase with changes in the world's climate.
Infrastructure and Corporate Responsibility
Japan's 2011 Fukushima nuclear disaster in the aftermath of a devastating earthquake and tsunami highlights another aspect of infrastructure morality - poor risk management and resilience. The Japanese government recently indicted three former executives of Tokyo Electric Power Co. for failing to take measures to prevent what an independent investigation commission considered a "man-made disaster". The need for businesses to do the right things right is because lives and livelihoods at stake. There is no room for error and even the most improbable risks must be planned for.
Negligence also played a role in the 2015 Gold King Mine spill that sent 3 million gallons of orange wastewater carrying heavy metal contaminants through the US states of Colorado, New Mexico, and Utah. The US Environmental Protection Agency accidently triggered the blowout and was heavily scrutinised for its actions while trying to clean-up and secure the site. The mine was privately developed in the late 1800s and abandoned in 1923. Poor drainage allowed wastewater to build up for decades - highlighting the moral need to decommission infrastructure properly.
Exploitation and the morality in infrastructure goes beyond environmental concerns. There is also corruption, using illegal or undocumented labour, offering poor and unsafe working conditions and - in this new digital age - misusing public and personal data.
However, with a US$3.4 trillion per year bill to meet our infrastructure needs we must have an open and honest debate, but eventually a decision has to be made. Doing nothing is as immoral as doing the wrong thing. Some will have to make sacrifices - as Maria da Penha and the families of the Vila Autódromo can attest.
With the emergence of the SDGs and growing infrastructure needs resulting from rising populations and urbanisation, and with the impacts of climate change, we must ensure that our investment decisions work for the most vulnerable in a society as well as the masses. We need to understand the development impact of good infrastructure and above all we need government and business leaders to act responsibly. After all, it's important to invest in getting the long-term decision right and land on the right side of history.