OPINION. Building inclusive infrastructures for a ‘just transition’ – La Tribune

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This a a translation of a post published on la Tribune, find the original post in french on this page, it was published on 23/12/24 at 07:38 – Updated on 03/01/25 at 09:08

Investment in infrastructure has a causal effect on reducing income inequality. In France, 3.3 million people are still living in fuel poverty. By Gwenola Chambon, Managing Director and founding partner of Vauban Infrastructure Partners, Mounir Corm, Deputy Managing Director and founding partner of Vauban Infrastructure Partners and Thomas Bourleaud, Project Leader at Altermind.

By Gwenola Chambon, Mounir Corm, Thomas Bourleaud (*)

94,000 billion dollars. This is the amount of investment needed in the infrastructure sector (transport, energy, telecoms, etc.) between 2016 and 2040 worldwide to achieve the sustainable development goals set by the UN. This is a colossal challenge, but also a unique opportunity to design ‘quality’ infrastructures that are aligned not only with ecological and energy imperatives, but also with the growing need for inclusion and equity.

Income inequality and infrastructure: an ambivalent relationship

While there is academic consensus on the positive impact of infrastructure investment on economic growth, the academic literature is replete with arguments and counter-arguments regarding its impact on income inequality. A study conducted by Hooper, Peters and Pintus in 2017 found that the annual growth rate of public spending on higher education and the motorway network in the United States over a given decade is negatively correlated with the Gini index – the benchmark for measuring inequality – at the end of the decade. In other words, there is a causal effect of infrastructure investment in reducing income inequality, which is particularly strong for the bottom 40% of income earners.

However, the situation is not that simple. This is what Esther Duflo, winner of the 2019 Nobel Prize in Economics, reminds us in a report published in November 2024 by Vauban Infrastructure Partners, the InfraVision think tank and Altermind on inclusion and infrastructure, using China as an example: ‘the construction of motorways is likely to favour the cities located at the “ends”, by boosting trade and employment, but also to harm the intermediate regions by draining their local resources and workforce’.

Facing up to the risks of social regression in the ecological transition

‘Providing infrastructure is not enough to maximise its potential for creating ‘social’ value. Infrastructure and its associated services must be conceived, designed and operated for everyone. This is a collective responsibility for the sector because, to date, disparities in access to and quality of infrastructure persist on a global scale (between countries in the North and South) and within countries: in 2023, around 800 million people still did not have access to drinking water and 2.5 billion did not have adequate sanitation facilities. In France, 3.3 million people are still living in fuel poverty…

And the issue is even more critical in view of the ‘multiplier’ effect of inequalities in the low-carbon transition. On the one hand, in the absence of resolute action to promote the ecological and energy transitions, the poorest people will be the hardest hit by climate change, particularly in emerging countries. On the other hand, measures to promote eco-responsible infrastructures and services carry the risk of social regression and exclusion. The example of low-emission zones – in which polluting vehicles are progressively banned from city streets – is a textbook case: while their environmental impact is proven, they run the risk of ‘archipelitising’ territories and amplifying socio-spatial disparities, as the cost of access to electric vehicles is generally too high for low-income households.

This difficulty in reconciling social justice and ecology is well recognised, and is receiving increasing attention, particularly at European level. As part of the Fit for 55 package, the European Commission has set up a Social Climate Fund worth €65 billion over the period 2026-2036 to support measures to lower emissions from road transport and construction by reducing costs for vulnerable households, micro-businesses and users. In France, the Minister for Ecological Transition, Energy, Climate and Risk Prevention, Agnès Pannier-Runacher, said at the InfraVision launch conference on 6 November that ‘for ecology to facilitate a genuine sharing of value, we need to build a virtuous circle where decarbonisation, reindustrialisation, job creation and the fight against climate change go hand in hand’.

Working together to achieve a ‘just transition’ in infrastructure

In this context, guaranteeing that an infrastructure project is acceptable to local populations, that it meets the real needs of communities and that it is accessible to all (including the elderly and people with disabilities) are three essential building blocks for generating maximum social dividends. ‘For each new project, the involvement of local stakeholders must be inclusive, taking particular care to include marginalised populations and so-called ‘hard-to-reach’ communities’, emphasises Sadie Morgan, co-founder of the architecture firm dRMM.

While infrastructure projects are placing increasing emphasis and resources on involving all stakeholders and designing the most inclusive systems possible, the equation becomes complex when it comes to ‘putting a price’ on the service being marketed. Maximising the social and environmental return from infrastructure while guaranteeing a sufficient level of profitability for companies means rethinking pricing models and the parameters of contracts with public authorities. Cooperation, consultation and compromise are essential, and investors also have a key role to play. Without this shared commitment to a major social and ecological ambition, infrastructure will struggle to achieve its primary objective: to contribute to sustainable living together.

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