Smart Cities Mission & Climate Change

Ninety cities are now under the ambit of India’s Smart Cities Mission. However, bold policy measures and big infrastructure investments are likely to fall short if they don’t factor in climate change. 

The Smart City proposals show that these urban centres will rely much on information and communication technology (ICT). Energy use, transport, water, sanitation and solid waste management are also core elements of these proposals.

Protecting infrastructure investments against a changing climate will entail at least four steps.

  • First regular risk assessments. In the context of infrastructure, this means addressing questions such as the likelihood of buckling of railways under a 4°C temperature rise or a one-in-hundred year rainfall event. It also involves assessing the impacts on emergency services associated with electricity disruptions due to extreme heat.
  • Second, technical standards that consider climate change. City governments often share a request for proposals (RFPs) as part of the procurement process for various services. These RFPs could specify technical parameters (for example, heat-resistant pavement materials) or standards (for example, ISO) that align with climate transitions. 
  • Third, interdependencies. Infrastructure components are highly interconnected: Electricity failures could disrupt transport or ICT services, transport disruption, in turn, could affect emergency health services. The failure of one set of infrastructure can amplify risks across other sectors. It is important to map these interconnections as well as study whether current governance structures are adequate to address the associated risks.
  • Fourth, develop innovative financial instruments. Very often, infrastructure project finance does not account for future climate risks as part of the risk portfolio. New debt instruments such as climate-resilience bonds could be used to insure infrastructure against specific climate risks. Such bonds would spread risk across multiple investors while borrowing money from the debt market. Investors would receive market or higher rates of return until the onset of an adverse climate event, after which they would forfeit capital up to their investment liability. Prudent use of financial instruments could hedge against future climate risks.


Leave a Reply