Executive Summary
Sustainable development is a goal that emphasises a long-term (intergenerational) and holistic perspective, integrating economic, environmental, social and cultural dimensions. This paper describes the links between sustainable development and infrastructure, and explores the trade-offs and complementarities among these four dimensions that arise in the New Zealand context. We also examine interactions across sectors, for example, between energy and transport systems. These interactions become sharper when we apply a "sustainable development" lens to infrastructure.
The role of physical infrastructure in contributing to economic development is an important one - its contribution is clearly vital and a pre-requisite for continuing prosperity in New Zealand. This proposition is not under challenge. But that does not mean that more infrastructure is necessarily better. Good quality infrastructure is necessary to avoid bottlenecks and service disruptions, and support a range of activities, but too much infrastructure, or infrastructure of an outdated or inappropriate sort, is a poor investment. Infrastructure investment involves deploying scarce resources, so making informed and intelligent choices is important for prosperity.
However, the economic role and significance of infrastructure should not be accorded "precedence" over the other dimensions of sustainable development - the social, cultural and environmental aspects. Impacts of infrastructure on these aspects of well-being are equally important, and the positive contribution that well-designed infrastructure can make to improvement in the other dimensions of sustainability is also vital.
In all sectors (transport, energy, water and telecommunications) too much, too little, or poorly judged infrastructure may cause undesirable environmental, social and cultural impacts. Too much - e.g. excessive road development in sensitive areas, or loss of heritage / wāhi tapu for water infrastructure - can cause unnecessary environmental, social or cultural damage. But equally, too little infrastructure can mean the loss of opportunities to advance social, cultural or environmental goals. For example, "enough" and "appropriate" transport system investment can make an invaluable contribution to access, mobility and social connectedness.
To ensure that investment in infrastructure is appropriate, two key elements, each utilising a number of tools, are needed. Firstly, all "externalities" (wider benefits and costs) of infrastructure investment should be considered: policy mechanisms should be designed to do this comprehensively. A second requirement is to use broader approaches to change attitudes, such as information provision and awareness raising. Both these elements, for example, contribute to demand management. Demand management is vital in all sectors, and has in the past often been the poor cousin to supplying more infrastructure. We should not give primacy to supply, and we should not ignore the demand side - integrated management of both sides is necessary to reach an "optimal" solution.
Prices are a highly important mechanism, and "getting prices right" is far from easy, not only because of the difficulty in valuing non-market impacts, but also because of distributional impacts, including increased impacts on vulnerable groups. But major misallocation of resources can arise if prices are distorted. Prices should not only reflect resource costs, but should wherever possible be "corrected" to internalise externalities. If price mechanisms cannot be used, other "internalisation" mechanisms such as voluntary agreements and education can also play a role.
The existence of negative externalities (costs imposed on others), such as road use impacts, reflects the existence of tensions and trade-offs "on the ground". But the correction of these externalities can generate complementarities (complementary benefits for sustainable development). For example, pricing of water resources may lead to water being used more wisely, reducing demands on infrastructure, and contributing to economic prosperity, as well as enhancing environmental and cultural objectives.
Other important considerations in the framework developed in this report are those of lock-in and path dependency. These occur largely because infrastructure has a long life - and they point to the need for flexibility in infrastructure design, so that changing needs can be accommodated at low cost. Similarly, allowing for "system innovation" is important for infrastructure, especially at critical evolutionary points.
This report provides a necessarily speculative overview of emerging technological, market and social changes likely to matter most for the sustainable development of infrastructure over the next generation. For the transport sector, important trends affecting sustainability will include decarbonisation (reduction in the carbon intensity of transport systems), continuing urban agglomeration and concern with livability, and dematerialisation (reduction in the material intensity of transport systems). Similar trends will be important for energy infrastructure, with concern about energy security and gradual scale reduction accompanying decarbonisation as key issues. In the water sector, scale reduction and decentralisation are also likely, together with integration of the management of urban water services. And in telecommunications, key trends are likely to include the rapid development and merging of technologies, including broadband, and the persistence of the digital divide.
In Part 3 of the report, we examine in more detail the implications of sustainable development issues in the four infrastructure sectors. Given the limitations on the size and scope of this report, we focus, for each sector, on selected key issues.
For the transport sector, we examine sustainability issues around the roading network since it is by far the largest transport infrastructure asset, and it raises major sustainability questions. The overarching issue is how to secure a positive contribution from roading infrastructure to all dimensions of sustainability. We raise concerns about whether the adverse external effects of road use and congestion are being comprehensively and adequately assessed, especially in Auckland. For example, how much does transport system quality affect perceived livability and hence the international attractiveness of New Zealand cities? This turns on factors such as the social and environmental externality impacts of traffic noise and air pollution, but there are also equity and other social impacts of urban road congestion in Auckland. We consider possible sustainability effects of using various congestion pricing mechanisms to address congestion.
Another key emerging transport policy debate concerns the external costs and benefits of more active modes (walking, cycling, public passenger transport) and the case for travel demand management and promotion. Substantial central and local government work is taking place at present on "sustainable cities"; we consider this essential given the inadequate attention in the past to sustainability issues around transport systems and urban issues. These include the links between physical activity and health, infrastructure design (especially road design), urban form and density, and related government policies, both at central and local government level.
For the energy sector, our focus is mainly on the sustainability of the infrastructure of the electricity industry, essentially because the electricity sector is more important in an economic sense than the gas sector. Some evidence suggests that electricity supply quality continues to be a critical element of infrastructure as countries' income levels increase.
Key issues for energy sector sustainability arise in respect of the security of energy services and pressures for reduction in the carbon intensity of energy. It seems likely that there will be a trend away from traditional patterns of energy distribution towards more decentralised patterns but the speed of this depends in part on how distributed generation and new renewables contribute to security, and whether their contribution is impeded or facilitated by government policy.
With New Zealand facing rising electricity prices and continuing pressure to develop new energy resources, both supply and demand issues are important. The question arises of whether there are sufficient incentives and information available to market participants to encourage demand-side participation and reduce energy wastage. On the supply side, a critical question is whether the full costs of new generation face decision makers. Social and cultural issues include the pros and cons of a low fixed charge tariff, and whether the interests of tangata whenua in energy infrastructure impacts, and access to energy, are being adequately considered.
In respect of the need to "decarbonise" our energy system, questions include timing and the wider benefits of accelerating New Zealand's investment in the innovative energy systems needed for the transition. There are likely to be some "external" benefits to New Zealand innovation from accelerating the contribution of new renewables such as bioenergy, and there could be significant changes to energy infrastructure if new renewables are more actively promoted. In the medium to longer term, the attractions and benefits of hydrogen-based fuel systems need closer consideration.
While water infrastructure issues are not as vital as transport and energy for economic development, they are nevertheless significant, and issues around irrigation are increasingly salient.
The key sustainability-related questions in respect of urban water infrastructure include economic issues, such as how efficient water supply utilities are, and whether there is a greater need and scope for promoting water demand management; social issues, such as how well community water supplies meet drinking water standards, and whether the tariff structure can encourage cost-effective water conservation but also provide equitable access to water services; and environmental issues such as how the abstraction of water affects critical catchments and aquifers.
Infrastructure for sewerage and wastewater treatment faces similar questions. Differences occur in terms of environmental impacts, with a risk that certain economic and socio-cultural activities (e.g. food gathering at mahinga kai) may be compromised by pollution from wastewater facilities. The central question is what technological and social / behavioural innovations could significantly affect decisions about infrastructure renewal, and an answer to this may be emerging in the evolution of integrated water, sewerage and wastewater management (the "urban water cycle").
This integrated approach is gradually becoming visible, and ideally involves rainwater harvesting and re-use of "grey water" to reduce the demand for potable water and the amount of wastewater discharged from individual properties; temporarily-stored stormwater and recycled wastewater from local treatment units becoming sources for selected local water uses, and reduced spending on expensive buried pipelines. This vision provides a reference point against which infrastructure proposals can be evaluated. It is also directly relevant to the questions about urban form raised under the sustainable cities theme of the Government's Sustainable Development Programme of Action, and a direct link exists with transport issues, because the quantity and quality of stormwater generated in an urban area is much affected by the roading infrastructure.
Information and communications technologies, which are supported by telecommunications infrastructure, are an important component of the government's framework for social development, economic growth and innovation. ICT unquestionably contributes substantially to innovation and economic development and may also contribute to social connectedness. ICT may, for example, help to maintain rural community sustainability - i.e. there may be a real complementarity between economic and social objectives.
A salient sustainability issue is the social one of the digital divide, i.e. limited access by a range of groups to ICT, including those on low incomes and in rural areas.
While ICT infrastructure presents some local environmental issues relating to cellphone towers, the more important longer-term issues are the wider potential environmental (and other) benefits from reducing needs for other forms of infrastructure. There may, on the supply side, be a role for government to support innovation that would substitute information for material resources and mobility. On the demand side, there may be a role for government in shaping telecommunications and "hard" infrastructure (transport, utilities, urban form, buildings) to take advantage of opportunities for radical improvements in resource productivity arising from the diffusion and innovative use of ICT, e.g. for transport pricing.
In Part 4 of the report, we turn to four examples of cross-sectoral interaction - areas in which the interface between infrastructure sectors needs further exploration to allow more sustainable solutions to be developed. We identified the following areas as having significant potential for complementarities:
- At the transport-energy interface, shaping infrastructure (especially transport systems) to make our cities more livable holds the potential to generate both social (e.g. health and social interconnection) and environmental benefits
- At this same interface, there is also potential for development of more economical and environmentally friendly vehicle fuels. Reducing fossil fuel energy use in the transport sector through externality pricing may also generate a reduction in the need for new roading infrastructure at the margin.
- At the water-energy interface, there is a growing need for improved allocation mechanisms to get the best results for sustainable development, especially in dry years. Creating markets that put a value on water would turn the waste-inducing current situation on its head.
- At the telecommunications-transport interface, there is potential for savings (e.g. peak hour trip savings, reducing infrastructure needs) from network pricing systems; teleworking and teleconferencing also have some potential, but the jury is still out on the extent and persistence of these savings.
Part 5 of the report argues that some simple criteria may help select infrastructure issues with the most critical sustainability implications, for priority policy focus. Criteria include whether the issue involves a major potential impediment to advancing economic, social, cultural or environmental objectives, taking into account both potential infrastructure underprovision (which might lower the productive capacity of the economy, might limit social or cultural development, or might limit environmental protection or restoration) and risks of overprovision (especially where there is evidence that external costs are significant and not fully internalised). Other suggested criteria include whether the issue arises in an area of interaction (e.g. between sectors), and whether the issue stands out as presenting a problem in terms of any of the principles for sustainable development set out in the sustainable development Programme of Action.
Auckland transport infrastructure issues, particularly the level and nature of access-facilitating infrastructure investment, stand out as a top priority, as does finding more innovative solutions to security and decarbonisation issues in the electricity sector. And reshaping the management of the urban water cycle in a more integrated way, while a lower priority, is nevertheless an area in which opportunities should be taken over the next decade for reconfiguring infrastructure to be more sustainable.
Part 6 describes what we see as the key issues for the development of indicators to enable them to illuminate infrastructure sectors' contribution to (and impact on) sustainable development. We suggest that the following questions be posed:
- Are indicators available that track adequacy of infrastructure in terms of asset condition, capacity to meet future needs, security and reliability, efficiency of service provision and perceptions of adequacy across these dimensions?
- Are indicators available that track positive contributions and adverse impacts of infrastructure on economic performance, social and cultural objectives, and environmental goals?
- Are indicators of decoupling available to assess whether social and environmental pressures from economic development are easing or increasing, both relatively and absolutely, over time?
- Are indicators available to capture attitudinal change ("wider internalisation") initiatives?
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