1. Implementing O&M Best Practices:
1.4 Mitigate externalities
Infrastructure is a public good, with great economic and social advantages for a variety of stakeholders. The advantages come at a cost, of course, and often not just financial costs but also environmental and social externalities.
The environmental impact includes contributions to climate change, air pollution, loss of biodiversity, and soil and water pollution. For example, total external transport costs in the EU (excluding congestion) amount to more than € 500 billion or 4% of total GDP, and more than half is attributable to environmental impacts.101
Figure 19: Overview of Externalities in Transport and Electricity
1. Including landscape and biodiversity losses, soil and water pollution, and urban impacts 2. Vehicle and fuel production, and infrastructure provision 3. Including material usage and impact on crops
Note: The data displayed for transport refers to the “high scenario” in the source.
Source: External Costs. Research results on socio-environmental damages due to electricity and transport, 2003. Brussels: European Commission
The social impact includes adverse health effects and the annoyance of noise and congestion. Traffic accidents kill more than 1.2 million people worldwide each year, and injure up to 50 million.102 See Figure 19 for an overview of the environmental and social externalities of different transport modes and electricity-generation technologies.
Increasingly, infrastructure operators are being scrutinized for their environmental and social sustainability. Against a background of resource constraints – scarcity of water, energy and raw materials – and the problems of waste management and climate change, infrastructure operators not only have to meet the tighter environmental regulations set by policy-makers, but also have to pre-empt public criticism from consumers, societal groups and the media.
Three broad approaches can be taken: planning a comprehensive programme of sustainability/health, safety and environment (HSE) interventions; embedding sustainable practices into everyday operations; and cooperating with other relevant stakeholders.
Arrange comprehensive sustainability/HSE plans
Develop a holistic sustainability/HSE strategy and plan.
Sustainability is a wide domain, so no single measure will suffice. Operators need to take action, and set clear KPIs, on a number of fronts to tackle environmental and social issues. In particular:
- Improve resource efficiency to use materials, energy and water in a thoughtful and eco-friendly way, and to minimize waste.
- Minimize the impact on biodiversity and the ecosystem.
- Minimize noise, dust and emissions to mitigate the adverse health impact on local residents.
- Commit to responsible business conduct by, for example, respecting labour rights, preventing corruption and preserving cultural and historical monuments.
Figure 20: Case Study on French Highways
Source: Nos actions concrètes: Le paquet vert autoroutier, November 2012. Rueil-Malmaison Cedex: Vinci Autoroutes.
One comprehensive model of concerted action is the “Paquet Vert Autoroutier” that Vinci Autoroutes signed with the French government, which addresses several aspects of sustainability (Figure 20).
Adopt a comprehensive set of sustainability measures: “Reduce, Recycle, Replace” – and Rethink.
- Reduce input materials, waste and emissions. London Underground is using regenerative braking to save up to 25% of used electricity. Modern water treatment facilities can reduce sludge production by 35% and energy use by 30%, while emitting little bad smell.103 And, the UK’s National Grid has reduced greenhouse gas emissions by 58% from the 1990 baseline.104
- Recycle waste, as a resource for other products. The East Bay Municipal Utilities District in California uses methane from waste to power generators, thereby making it one of the first wastewater treatment facilities in the US to be a net-energy producer.105 And in Singapore, the advanced treatment facilities produce 30% of the country’s water supply, thus reducing reliance on imports from Malaysia.106
- Replace equipment, and leverage innovative technologies. Examples of this are Tokyo’s Toei subway, which has replaced most of its trains with energy-efficient rolling stock; and efficient coal plants that emit about one-third less CO2 than most of the plants currently installed.107
- Rethink the conventional ways of operating infrastructure. For example, the US city of Charlotte conscientiously set about transforming the city from being traditionally automobile-oriented (e.g. 75% of streets had no sidewalks) to having more liveable urban space.108 The effect is expected to halve the death rate among pedestrians and bicyclists.
Evaluate sustainability measures by taking a long-term, whole life-cycle and strategic perspective.
- Consider the project’s whole life-cycle impact to justify the upfront investment. Environmental compliance is likely to involve higher costs initially, but could well yield efficiencies in the long term. The switch to greener alternatives might serve to offset the soaring prices of scarce resources, which should be modelled in different business case scenarios.
- In conducting the project evaluation, take into account the additional strategic “soft” benefits that would derive from sustainability, including improved reputation and increased employee motivation.
- If the sustainability measures appear unlikely to pay for themselves, seek additional finance methods, such as the Clean Development Mechanism (CDM), a Kyoto Protocol mechanism whereby developed countries finance low-emission infrastructure projects in some developing countries. Both the Delhi metro and the Bogotá, Colombia BRT system received funding via the CDM.109 In addition, leverage grants for pilot initiatives. Norway’s Transnova programme, for example, provides grants for environmentally friendly transport technology, better utilization of capacity, and demand-side solutions.
Unfortunately, environmental and social goals are not always compatible with each other, let alone with financial constraints, and difficult trade-offs will sometimes be needed. Operators will have to find the sweet-spot between financial, environmental and social performance, and select from a range of competing strategic priorities.
Embed sustainability/HSE into routine operations
For a sustainability strategy to last, it needs to become a fully incorporated element of the operator’s daily processes and organization. While sustainability has been on the radar of many public and private organizations, only a few have really made it a strategic issue embedded in the operating model beyond public relations or corporate social responsibility activities.
- Start by defining a bold and clear sustainability vision. Increasingly, operators are looking beyond mere compliance with environmental regulations, and are seeking a lasting competitive advantage and reputation by achieving a neutral or even positive environmental status. For example, the ACP, by reforesting 20,000 hectares near the canal, aims to offset its greenhouse gas emissions to the point of becoming carbon-neutral in 2014.110
- Ensure dedicated leadership of any sustainability initiative, and incorporate sustainability activities into the senior management agenda. For example, Hong Kong’s Mass Transit Railway (MTR) established a board-level corporate responsibility committee; developed a sustainable competitive advantage model to guide its actions; adopted a corporate responsibility policy; and, in 2001, was the first Chinese company to publish an annual sustainability report.111
- Engage the broader workforce, and build a sustainability culture within the whole organization. In particular, arrange an internal communication programme and training courses for all staff members, not just for those responsible for HSE. For example, Manila Water runs extensive employee training, convenes monthly meetings to discuss environmental issues and raise awareness, monitors energy use and greenhouse gas emissions, and conducts energy audits.112
- Adjust governance structure. Ideally, create a sustainability department with appropriate authority and accountability; however, also assign responsibilities for sustainability to the key units of the organization, not just to the central team.
- Amend business processes. For example, to reduce work-related injuries, the MTA Metro-North Railroad made safety a line management priority, improved safety processes after analysing hazards and increased communication and audits on safety. As a result, lost-time injuries decreased by 60% and lost work days by 81% between 2002 and 2006.113 By taking similar measures, the Los Angeles County Metropolitan Transportation Authority (US), which received 2,700 injury claims in 2001 at an estimated cost of US$ 68 million, managed to reduce the number of claims and lost work days by about 50%.114
Cooperate with relevant stakeholders
Successful operators in the sustainability field take a multistakeholder approach. They have an active programme of communicating with stakeholders, as well as collaborating with fellow operators and other stakeholders for higher impact across the infrastructure system.
Communicate promptly and proactively with stakeholders.
- Develop an information campaign to raise the awareness and interest of employees, suppliers, customers and other stakeholders. The ACP proactively engages with its surrounding communities through an outreach programme; its water governance approach is based on six regional advisory councils and 30 local committees.
- Ensure transparency. Manila Water, for example, became the first Philippine company to publish a climate change policy and a sustainability report. It also offers tours of its water and wastewater treatment plants to public- and private-sector visitors and schools.115
- Make sure the information provided to stakeholders is understandable and concise, and not in the form of a full technical analysis/report.
- Ensure that communication is two-way. Solicit reports on sustainability attainments or shortfalls, and invite suggestions on remedies.
Collaborate on systemwide sustainability measures.
Adverse social and environmental effects are often due more to the users than to the infrastructure operators. No single operator can remedy the problem on its own; sustainability efforts have to be made across the system and value chain, and should be addressed in collaboration with customers, adjacent operators, suppliers and other stakeholders.
- Evaluate measures from a system perspective. For example, innovative road surfacing not only benefits the operator financially by saving on maintenance, but also benefits drivers and the public at large by reducing car fuel consumption. The refurbishing of Missouri’s Interstate 70 (US) with smoother surfacing improved fuel efficiency by 2.5%, reduced emissions and enabled annual savings of US$ 8 million for the 9,000 large trucks that use the road every day.116
- Incentivize users to improve their environmental performance. For example, Zurich airport was the first in the world to charge differentiated landing fees according to the aircraft’s emissions, a policy that has contributed to the marked increase in efficient, emission-class 4 and 5 aircraft at the airport – from about 55% of movements to above 85%.117
- Support customers to operate sustainably by providing them with the necessary facilities. For example, the Port of Los Angeles runs an air quality programme to reduce emissions from ships: as a result of its “Alternative Maritime Power”, vessels at berth can now run on mains electricity rather than on heavy-diesel-fuel combustion engines.118
- Require and help suppliers and contractors to adhere to environmental standards; implement a system of compliance checks or certification. Manila Water, for example, conducts training courses and audits for suppliers to help improve their environmental performance.
- Coordinate with other agencies. The South African National Roads Agency runs a comprehensive road safety programme that not only focuses on costly engineering measures but also cooperates cost-effectively with other authorities on user education (e.g. road safety lessons at schools) and on enforcement (e.g. overload control).
- Cooperate across the value chain. Improvements to air traffic management, for instance, require the cooperation of aircraft manufacturers, airports, airlines, regulators and air traffic controllers. Backed by such cooperation, a full implementation of next-generation air traffic management could lead to a 4% reduction in aviation CO2 emissions by 2020.119
- Cooperate across sectors. For example, mining infrastructure could generate more social value if the various stakeholders, including mining firms, transport operators and government agencies, were to work together to create a multipurpose transport system where mine cargo and passenger traffic can interoperate.