The infrastructure gap in Latin America and the Caribbean
Water and sanitation, electricity, transportation, and telecommunications sectors in Latin America and the Caribbean are projected to require annual investments of US$2.2 billion, or 3.12% of GDP, through 2030.
Due to the COVID-19 pandemic, many economic, social, and environmental problems in Latin America and the Caribbean (LAC) have gotten worse. In response, the Inter-American Development Bank (IDB) has set out in its Vision 2025 a set of guiding principles and priorities that are in line with the Sustainable Development Goals (SDGs) and aim to help achieve sustainable and inclusive economic growth.
To contribute to this end, the IDB conducted a study whose main objective is to estimate the investments that LAC would need to make by 2030 to make progress in meeting the SDGs, which propose comprehensive goals that incorporate criteria of affordability, resilience, and sustainability that require the adoption of public policies beyond the investments needed to provide more and better infrastructure.
This study gives a modular and consistent way to figure out how much infrastructure investment is needed. It can be found at: https://interactive-publications.iadb.org/La-brecha-de-infraestructura-in-America-Latina-y-el-Caribe.
According to the results of the research, it is estimated that Latin America and the Caribbean need to invest US$2.2 billion, representing 3.12% of its Gross Domestic Product (GDP), each year until 2030, in water and sanitation, energy, transportation, and telecommunications sectors to expand and maintain the infrastructure needed to meet the SDGs. 59% of this investment should go to building new infrastructure, and 41% should go to maintenance and replacing old assets.
It is estimated that 47% of the investment needed in LAC is associated with meeting SDG-9, which includes investments associated with road, airport, and telecommunications infrastructure; in second place are investments related to SDG-7, which represents 26% of infrastructure investment needs by 2030; in third place is SDG-6, which represents investments of around 17% of the total. Finally, meeting SDG-11 requires investment in urban mass transit systems and represents 10% of total estimated investments.
Water and sanitation services, including wastewater treatment, require an average annual investment effort of 0.5% of the region's GDP. In its case, the electricity sector must invest 0.8% annually to achieve universal access to electricity for the entire population and advance in the decarbonization of the electricity generation matrix. The transportation sector needs an average annual investment of 1.4% of GDP, while households need an average annual investment of 0.4% to connect to the internet through broadband and mobile technologies.
Even though these estimates have some problems, it is hoped that they will help make decisions about how to close the infrastructure gaps in Latin America and the Caribbean so that the SDGs can be reached faster.