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The views expressed in this presentation are the views of the author and do not necessarily reflect the

views or policies of the Asian Development Bank Institute (ADBI),


the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper
and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

Investment needs in people,


prosperity and the planet –
projections through 2030

Daniel Jeong-Dae Lee


Macroeconomic Policy and Financing for
Development Division, UNESCAP

ADBI-UNESCAP Seminar
Fiscal Governance for Sustainable Growth
and Development in Asia and Pacific Region
Bangkok, 25 April 2019
Earlier we discussed the need for:

• A functional medium-term fiscal framework which


is fully integrated with the country’s development/
SDG priorities
• Medium-term projections of the cost of proposed
and approved policy changes, to compare
against baseline
• Sectoral strategies which link budget allocations
with expected policy achievements, based on
which ceiling can be decided
• Integration of the annual budget into medium-
term expenditure framework
Baseline scenario through 2030
Increasing output and wealth in Asia-Pacific
Population, 2000-2030 GDP, 2000-2030
5000000 10000 60000

4500000 9000
50000
4000000 8000

Billions of USD, 2016 price


Population total, 000s

3500000 7000
40000
3000000 6000

2500000 5000 30000

2000000 4000
20000
1500000 3000

1000000 2000
10000
500000 1000

0 0 0
2000 2005 2010 2015 2020 2025 2030 2000 2005 2010 2015 2020 2025 2030
Developing Asia-Pacific ASEAN
ASEAN India
China SAARC
India Developing Asia-Pacific (rhs)
SAARC China (rhs)
… but 130 million people still in extreme poverty,
and many more deprived of a fair chance in life
… and with energy demand met by fossil fuels,
carbon emissions keep rising
Can we do better?
Inclusive and sustainable development scenario

People Planet

Prosperity
How much would it cost to achieve the
Sustainable Development Goals?

Using various costing models, ESCAP’s Economic


and Social Survey 2019 finds that an additional
investment of $1.5 trillion per year would allow
Asia-Pacific developing countries to end extreme
poverty and ambitiously move towards universal
health coverage, quality education and enabling
infrastructure, while staying on track to limit climate
change.
General methodology and challenges

• Intervention- and unit cost-based costing for


most social and infrastructure sectors
• Integrated models for energy and the
environment
• Some SDGs do not have clear numerical targets
• Establishing a baseline is challenging for some
SDG sectors
• Builds on costing models used by specialized
agencies in their respective area of work
• Aggregation issues
Annual average additional investment needs
Annual average additional investment needs
$ billions in 2016 constant prices
Annual average, 2016-2030

669

People Prosperity Planet


Annual average additional investment needs
$ billions in 2016 constant prices
Annual average, 2016-2030

669

People Prosperity Planet


Annual average additional investment needs
$ billions in 2016 constant prices
Annual average, 2016-2030

669

People Prosperity Planet


Just under a dollar per person per day

CLEAN ENERGY
FOR ALL NO POVERTY
37₵ & ZERO
PROTECTION
43₵ HUNGER
FOR NATURE
HEALTH AND
EDUCATION

12₵

SUSTAINABLE
INFRASTRUCTURE
FOR ALL
Investing in PEOPLE to realize basic human
rights and human capacities

700
• Universal access to
600 138
quality education
• Universal health
billion, United States dollar

500
158 coverage
400
21
• Agricultural productivity
4
300 • Nutrition-specific
interventions
200 317
• Social protection floor
100

0
32
Additional investment in
• Targeted cash transfer
PEOPLE per year
Social protection floor
350

For minimum income security


300
throughout the lifecycle, a floor
250 consisting of child, maternity,
200
unemployment, disability, and old-age
$ billions

benefits
150

100
Annual cost is the product of the
50 estimated beneficiary population and
the unit cost of the benefit, set at the
0

Universal old-age pension benefits


national poverty line
Universal disability benefits
Universal unemployment benefits
Universal maternity benefits
Source: ESCAP, based on
Universal child benefits Ortiz and others (2017)
Agriculture
South Asia Share of public
$ billions investment
Primary agriculture and natural resources 4.13
Soil conservation 0.43 30
Water conservation/improved irrigation 1.93 30
Preservation/improvement of: ..
Crop 0.16 30
Animal 0.12 30
Fish 0.30 30
Forest 0.13 30
Mechanization 1.05 10
Agroprocessing operations 3.95
Cold and dry storage 0.72 20
Rural and wholesale market facilities 1.16 50
First-stage processing 2.07 10
Infrastructure 5.89
Rural roads 3.93 90
Rural electrification 1.96 80
Institutional frameworks 2.68
Source: ESCAP, based
Land titling, tenure security 0.33 90
on FAO, IFAD and WFP
Rural finance 1.96 50 (2015)
Food safety related regulations 0.39 90
R&D and extension 3.27
Research and development 1.31 90
Extension 1.96 90
Total 19.92 64
Health
250,000

200,000

150,000
$ millions

100,000

50,000

-
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Additional Programme-specific investments


Commodities and supplies
Emergency Preparedness, Risk Management and Response (incl International Health Regulations)
Health financing policy + Governance
Supply chain
Health information systems
Health workforce
Source: ESCAP, based
on Stenberg and others
Infrastructure (facilities and operational cost) (2017)
Education
400 1,800
1,600

Per pupil cost in United States dollars


350
300 1,400
Millions of students

1,200
250
1,000
200
800
150
600
100 400
50 200
0 0
Pre- Primary Lower secondary Upper secondary
primary
Students (2015) Students (2030)
Per pupil cost (2015) Per pupil cost (2030)

Source: UNESCO-ESCAP
Educations Costing Model
Investing in PLANET to secure humanity’s
future and live in harmony with nature

600

500 156 • Biodiversity


billion, United States dollar

400

180 • Energy efficiency


300

200 • Renewable energy


100
242 • Universal access to
clean cooking
2
0 10 • Universal access to
Additional investment in
the PLANET per year electricity
Energy India, $ billions

2018- 2025- 2018- 2025-


2017 25 30 2017 25 30
Energy supply investment 72 105 122
Fuel supply 17 21 17 SDG7.1 universal access to
Oil and gas 12 15 13 electricity 9 8
Coal 5 5 3 SDG7.1 universal access to
Biofuel 0 1 1 clean cooking 1 1
Power supply 55 84 105
Power generation 35 53 64 SDG7.2 substantially increase
Coal 15 9 3 the share of renewable energy
Gas 0 2 4 in the global energy mix 19 34 47
Oil 1 0 0
Nuclear 0 3 7 SDG7.3 double the global rate
Renewables 19 38 51 of improvement in energy
Bioenergy
efficiency 8 21 44
0 2 2
Hydro 2 6 10 Total 27 61 97
Wind 5 10 16
Solar PV 11 20 21
Other renewables 0 0 2
Electricity networks 20 31 41 Source: ESCAP, based on
End-use investment 23 34 66 IEA (2018)
Energy efficiency 8 21 44
Industry 5 12
Buildings 8 10
Transport 9 22
Other end-use investment 15 13 22
Percentage

-5.0
0.0
5.0

-25.0
-20.0
-15.0
-10.0
Australia
Russian Federation
New Zealand
China
Eastern Europe and…
The Rest of East Asia and…
Asia-Pacific region
World
South Asia excluding India
material intensity in 2030

India
Deviation from historical trend of

Indonesia
Resources efficiency

Republic of Korea
Japan

Percentage
0.0
1.0
2.0
3.0
4.0
5.0
6.0

China
South Asia excluding India
India
Asia-Pacific
Indonesia
New Zealand
in 2030

World
The Rest of East Asia and…
Republic of Korea
Japan
Australia
Deviation from histrocial trend of GDP

Russian Federation
ESCAP

Eastern Europe and…


Source:
Biodiversity Investment needs based on the Aichi targets
($ billions)

Target 8: Pollution

Target 11: Protected areas (terrestrial and marine)

Target 5: Reducing habitat loss (forests and wetlands)

Target 9: Invasive alien species

Target 6: Fisheries

Target 14: Ecosystem restoration

Target 7: Sustainable agriculture, aquaculture and forestry

Target 15: Restoration of forests

Target 12: Species conservation

Targets 17-20: National plan, science base and financing

Targets 1-4: Awareness training, values, incentives,…

Target 13: Genetic diversity

Target 10: Coral reefs Source: ESCAP,


Target 16: Nagoya Protocol based on CBD (2012)

0 10 20 30 40 50
Investing in PROSPERITY through enabling
infrastructure
200

180
14 • Water and sanitation
160
56 • Information and
billion, United States dollar

140
communications
120
technology
100

80

126
60
• Transport
40

20

0
Additional investment in the
PROSPERITY per year
Investment needs vs. current flows in
transport, ICT and WSS infrastructure
Methodology and considerations

General methodology
• Projection of future infrastructure demand based on economic,
demographic, urbanization variables
• Estimation of public and private flows to infrastructure
Transport (roads and railways)
• Project-based country-specific unit costs
• Resource optimization holds a high promise
ICT (mobile and fixed-broadband)
• High- and low-cost scenarios based on ITU data
• Critical for the digital economy
Water and sanitation
• Within the premises, readily accessible, free from contamination
• Challenges of water stress and water-related ecosystems
While overall within reach, additional investment
need is more than 16% of GDP in least
developed countries and 10% in South Asia
Investment gap (lower bound) by sub-regions and

18
Similarly, Pacific SIDS face steep
16
and country group, % of GDP

challenges due to high vulnerability to


14 climate change, but results are not shown
given limited data availability.
12
10
8
6
4
2
0
Least South and South-East East and North and
developed South-West Asia North-East Central Asia
countries Asia Asia

People Prosperity Planet


Achieving the SDGs is NOT JUST
about money

Goals whose achievement depends heavily on other


factors (e.g. laws and regulations) and on effective
mainstreaming across all SDG investments
Meeting the investment
needs through effective
planning and financing
Prioritizing Goals: considering both progress and
investment gaps
Prioritizing Goals: considering both progress and
investment gaps
Prioritizing Goals: considering both progress and
investment gaps
Prioritizing Goals: considering both progress and
investment gaps
DEA-based estimation of efficiency frontiers

• Education (5) – enrolment in


primary and secondary; quality
of education system, primary
education, and math and
science
• Health (3) – Maternal and
infant survival rate, life
expectancy at birth
• Infrastructure (13) – road,
railway, airport density and
quality; mobile and fixed
broadband subscription;
energy use and perception;
access to defecation facilities
Higher impact / lower cost through improved
investment efficiency
1.0

0.8
Potential
savings
0.6

0.4

0.2

0.0
Developing Asia- World Developed countries
Pacific countries
Overall, low tax revenues but some progress in
35
recent years

New Zealand
30
Macao, China
Australia Solomon Islands
Tax revenue in 2017 or latest in % of GDP

Fiji
Samoa
25 Georgia
Maldives Republic of Korea
Armenia Kiribati
Nepal Tonga Uzbekistan
20 Kyrgyzstan Viet Nam
Tajikistan Russian Federation
Japan China
Vanuatu Turkey
Marshall Islands
Cambodia Singapore Thailand Mongolia
15 Philippines Kazakhstan
Azerbaijan Papua New Guinea
Hong Kong, China Malaysia
Sri Lanka Bhutan
Micronesia Timor-Leste
India Lao PDR
10 Pakistan Indonesia
Bangladesh
Afghanistan

5 Myanmar

0
0 5 10 15 20 25 30
Tax revenue in 2012 in % of GDP
Fiscal space is limited by poor access to stable
and affordable financing
Scope for greater private investment
100
Developing countries
90
percentage of total investment

80 Developed countries
Private flows as a

70
60
50
40
30
20
10
0

Source: UNCTAD (2014)


Available financial resources in developing
Asia-Pacific region

Source: ESCAP Survey 2018


Possible ways to improve the linkages
between plans and budgets
• Increase stakeholder understanding of PFM reform agenda,
and expand ownership beyond MOF
• Combine the central planning and budgeting functions into a
single department, with joint responsibility for budget analysis,
planning and resource mobilization
• Build the capacity of sector ministries to more accurately and
realistically estimate the resource requirements of
development projects and policies, over the medium term
• Mandate that all new policies and project proposals undergo
a review of their fiscal and budgetary impact prior to Cabinet
consideration
• Institutionalize effective coordination and consolidated
reporting processes
Please visit
www.unescap.org/publications/
economic-and-social-survey-
asia-and-pacific-2019