Energy-intensive infrastructure may tie up fossil energy use and carbon emissions for a long time after investment, and thus be crucial for the ability to control long-run emissions. Much or most of the resulting carbon emissions can often be eliminated later, through a retrofit that may however be costly. This paper studies the joint decision to invest in such infrastructure, and retrofit it later, given that future climate damages are uncertain and follow a geometric Brownian motion process with positive drift. We find that higher climate cost volatility (for given unconditional expected costs) then delays the retrofit decision by increasing the option value of waiting to invest. The initial infrastructure is also chosen with higher energy intensity, further increasing total emissions, when volatility is higher. We provide conditions under which higher climate cost volatility increases total expected discounted climate damage from the infrastructure, which happens in a wide set of circumstances.
Identifying Spatial Efficiency-Equity Trade-offs in Territorial Development Policies : Evidence from Uganda
This article to the debate on the spatial allocation of infrastructure investments by examining where these investments generate the highest economic return (‘spatial efficiency’), and identifying trade-offs when infrastructure coverage is made more equitable across regions (‘spatial equity’).
Making Schools Resilient at Scale : The Case of Japan
Japan's Program for Earthquake-Resistant School Buildings has increased the seismic safety of Japanese schools, and hence increased the safety of Japanese schoolchildren, teachers, and communities. Since 2003, when the program accelerated, the share of earthquake-resistant public elementary and junior high schools has increased, from under half of schools in 2002 to over 95 percent in April 2015. Japan is sharing knowledge from this program with developing countries through its relationship with the Global Facility for Disaster Reduction and Recovery (GFDRR), whose Global Program for Safer Schools has been supported by the Japan–World Bank Program for Mainstreaming Disaster Risk Management in Developing Countries and its implementing arm, the Disaster Risk Management Hub, Tokyo.