How Can Indonesia Foster Sustainable Infrastructure Solutions That Deliver Low-Carbon Development and Bring Additional Benefits?

The document introduces the Sustainable Asset Valuation (SAVi) methodology, a simulation-based tool designed to calculate environmental, social, governance, and climate risks, as well as externalities in infrastructure projects. It details the three-pronged modelling approach—system dynamics, project finance, and spatially explicit models—to provide a more comprehensive cost-benefit analysis than traditional financial valuations. The report provides sector-specific examples (energy, buildings, roads, wastewater, irrigation, and natural infrastructure) and outlines how these modules can be integrated into Indonesia's Vision 2045 (IV2045) system dynamics model to bridge top-down national strategy with bottom-up project implementation.

• The SAVi methodology improves traditional infrastructure valuation by simulating the 'Cost of Risk' (how climate and social risks affect financial performance) and the 'Cost of Externalities' (such as health costs related to emissions), helping stakeholders identify second-order gains and trade-offs.
• SAVi utilizes a three-part modelling approach: system dynamics to quantify causality and feedback loops, project finance modelling to assess bankability and IRR, and spatially explicit models (often using InVEST) to estimate land-cover changes and ecosystem service provisioning.
• In a German energy sector case study, an onshore wind portfolio proved more resilient and profitable than a gas-fired power plant when climate risks and externalities were monetized; the gas plant lost investment attractiveness under these conditions.
• A SAVi assessment of buildings in Johannesburg, South Africa, found that 'green' buildings result in significantly lower life-cycle costs (ZAR 312 million) compared to conventional buildings (ZAR 462 million) due to savings in energy, maintenance, and avoided GHG emissions.
• Analysis of the Pan Borneo Highway in Malaysia revealed that while economically appealing in traditional terms, negative environmental externalities (USD 665.5 million over 25 years) reduce the societal return on investment to USD 0.97 per USD 1 invested.
• In Colombo, Sri Lanka, upgrading wastewater treatment for Beira Lake was found to be a highly worthwhile investment with a benefit-to-cost ratio of nearly 40, potentially increasing local property values by over USD 14 million.
• In Tanzania's Southern Agricultural Growth Corridor (SAGCOT), drip irrigation's bankability depends on capital costs; with low CAPEX, it provides a net benefit of over USD 39 million and unlocks 10,600 hectares of productive land.
• For wetlands in Sardinia, Italy, avoiding degradation could generate an additional value of EUR 171 million between 2020 and 2060, and a circular business scenario reusing livestock manure could provide a net benefit of over EUR 200 million over 40 years.
• Integrating SAVi into Indonesia's Vision 2045 (IV2045) would bridge the current top-down national strategy with a bottom-up approach, allowing for asset-specific details (like land requirements for energy or road construction materials) to inform implementation and project financing.

APA

Bassi, A. M., Bechauf, R., & Cutler, E. (2021). How Can Indonesia Foster Sustainable Infrastructure Solutions That Deliver Low-Carbon Development and Bring Additional Benefits? International Institute for Sustainable Development. https://www.iisd.org/system/files/2021-07/indonesia-sustainable-infrastructure-solutions-annex.pdf

Chicago

Bassi, Andrea M., Ronja Bechauf, and Emma Cutler. How Can Indonesia Foster Sustainable Infrastructure Solutions That Deliver Low-Carbon Development and Bring Additional Benefits? International Institute for Sustainable Development, 2021. https://www.iisd.org/system/files/2021-07/indonesia-sustainable-infrastructure-solutions-annex.pdf.

Wikipedia

{{cite report |last1=Bassi |first1=Andrea M. |last2=Bechauf |first2=Ronja |last3=Cutler |first3=Emma |title=How Can Indonesia Foster Sustainable Infrastructure Solutions That Deliver Low-Carbon Development and Bring Additional Benefits? |publisher=International Institute for Sustainable Development |date=July 2021 |url=https://www.iisd.org/system/files/2021-07/indonesia-sustainable-infrastructure-solutions-annex.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bassi2021how, author = {Bassi, Andrea M. and Bechauf, Ronja and Cutler, Emma}, title = {{How Can Indonesia Foster Sustainable Infrastructure Solutions That Deliver Low-Carbon Development and Bring Additional Benefits?}}, institution = {International Institute for Sustainable Development}, year = {2021}, month = jul, url = {https://www.iisd.org/system/files/2021-07/indonesia-sustainable-infrastructure-solutions-annex.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }