Infrastructure Sector

Purpose and Perspective

Transportation infrastructure influences many sectors including education, health, agriculture, industry and services. We use a supply chain approach to model the dynamics of transportation infrastructure (paved and unpaved roads, and railways), including construction, maintenance, and decay. This allows us to explicitly consider the effect of time lags in transportation infrastructure development, and on the rural access index. The key policy consideration in the model is funding, however the effectiveness of governance influences maintenance and infrastructure decay rates.

In the transportation sector we also determine the intensity and frequency of natural disasters, and their impacts on infrastructure, health, and private capital, which affect investment in the production sectors. As natural disasters are set to increase in frequency and intensity with climate change, we allow the possibility to invest in climate change adaptation, in order to offset such negative effects.

Model Structure and Major Assumptions

  • Transportation infrastructure funding is first allocated to maintenance. Funds remaining after maintenance are allocated to construction start-ups, a capital cost per kilometer of infrastructure [1]

  • Governance, regulating the construction quality and use of transport infrastructure, potentially extends infrastructure life and reduces maintenance cost [2]

  • Infrastructure construction and maintenance cost are estimated based on Archondo-Callao (2000) and Collier et al. (2013) [3]

  • Natural disasters frequency and intensity increases with climate change [4]

  • The economic cost of climate change adaptation depends on the extent of temperature increase [5]

  • Roads density affects the rural access index [6]

Exogenous Input Variables


Initialization Variables

  • Initial transportation infrastructure – Units: km

  • Initial transportation infrastructure under construction – Units: km

Modeling Details

The use of subscripts allows us to model the dynamics of paved roads, unpaved roads, and rail with the same basic structure. Should it be necessary to consider further types of infrastructure in the analysis, such subscripts can be expanded to include other elements.

Footnotes and References

[1] Lambert, M., & Huh, K. (2004). Fixing It First: Targeting Infrastructure Investments to Improve State Economies and Invigorate Existing Communities. Washington, DC: NGA Center for Best Practices.

Rioja, F. (2003). Filling potholes: macroeconomic effects of maintenance versus new investment in public infrastructure. Journal of Public Economics, 87, 9-10: 2281-2304.

[2] Kenny, C. (2007). Infrastructure governance and corruption: where next? Policy working paper 4331. Washington, DC: World Bank

[3] Archondo-Callao, R. (2000). Roads Works Costs per Km. Washington, DC: World Bank.

Collier, P., Kirchbergern, M., & Soberdom, M. (2013). The cost of road infrastructure in developing countries. Centre for the Study of African Economies.

[4] Intergovernmental Panel on Climate Change (2012). Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation. A Special Report of Working Groups I and II of the Intergovernmental Panel on Climate Change Field, C.B., V. Barros, T.F. Stocker, D. Qin, D.J. Dokken, K.L. Ebi, M.D. Mastrandrea, K.J. Mach, G.-K. Plattner, S.K. Allen, M. Tignor, and P.M. Midgley (eds.). Cambridge, UK and New York, NY: Cambridge University Press.

[5] United Nations Environment Programme (2014). The Adaptation Gap Report. Nairobi: United Nations Environment Programme (UNEP).

[6] World Bank (2006). Rural Access Index: a Key Development Indicator. Washington, DC: The International Bank for Reconstruction and Development/The World Bank.