Ideas and Solutions to Address the USD 50 Trillion Infrastructure Deficit

The report argues that the global infrastructure gap persists despite available capital due to a mismatch between investment instruments and project phases. It proposes shifting from bank loans to bond financing during operation phases, mitigating construction risk through guarantees and first-loss protection, and leveraging Islamic finance. The authors advocate for long-term master plans to resolve fiscal mismatches between federal and local governments, reforming procurement to prioritize life-cycle value over the lowest bid, and using fiscal incentives like green accelerated depreciation to encourage sustainable assets.

• There is a mismatch between available investment capital and infrastructure demand, which can be addressed by matching financial instruments to project phases. Bank loans are most suitable for the construction phase due to flexible disbursement and restructuring, while bond financing is more economically appropriate for the operation phase because of lower funding costs and the ability to make investments tradeable.
• Construction risk, including cost overruns and delays, acts as a major barrier for investors. This can be mitigated through turnkey EPC contracts, government or multilateral guarantees, first-loss protection (FLP) to provide subordinated capital, or viability gap funding (VGF) for socially essential projects.
• Islamic finance offers a sustainable alternative to conventional systems by prohibiting usury (riba), uncertainty (gharar), and speculation (maisir). It utilizes asset-backed financing and profit-loss sharing, and can be integrated into Public-Private Partnerships (PPPs) through modes such as Ijarah (lease purchase) and Istisna’a (commissioned manufacture).
• Small-scale infrastructure projects often struggle to attract investment because institutional investors and multilateral development banks typically prefer larger projects (e.g., above USD 30 million). Project aggregation—bundling smaller projects into a single fund or corporate structure—is proposed as a solution to achieve the necessary scale.
• A significant fiscal mismatch exists where municipal governments now own and operate over 80% of public infrastructure, yet federal and provincial governments collect over 90% of tax revenues. Long-term infrastructure master plans (10-30 years) are needed to decouple investment from annual operating budgets and transfer fiscal capacity to local governments.
• Public procurement often fails by prioritizing the cheapest initial bid over the total cost of ownership. The report recommends shifting to output- or performance-based specifications and adopting 'most economically advantageous tender' criteria, similar to European Union standards, to value non-financial benefits like climate resilience.
• Sustainable infrastructure is often 10% to 30% more expensive to design and build due to resource-efficient materials and inclusive planning. To offset these costs, the report suggests 'green accelerated depreciation,' allowing investors to recover upfront costs faster through higher tax allowances in early years.

APA

Perera, O., Uzsoki, D., & Silva, M. H. (2015). Ideas and Solutions to Address the USD 50 Trillion Infrastructure Deficit. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/G-20-ideas-solutions-infrastructure-deficit.pdf

Chicago

Perera, Oshani, David Uzsoki, and Mariana Hug Silva. Ideas and Solutions to Address the USD 50 Trillion Infrastructure Deficit. International Institute for Sustainable Development, 2015. https://www.iisd.org/system/files/publications/G-20-ideas-solutions-infrastructure-deficit.pdf.

Wikipedia

{{cite report |last1=Perera |first1=Oshani |last2=Uzsoki |first2=David |last3=Silva |first3=Mariana Hug |title=Ideas and Solutions to Address the USD 50 Trillion Infrastructure Deficit |publisher=International Institute for Sustainable Development |date=November 2015 |url=https://www.iisd.org/system/files/publications/G-20-ideas-solutions-infrastructure-deficit.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{perera2015ideas, author = {Perera, Oshani and Uzsoki, David and Silva, Mariana Hug}, title = {{Ideas and Solutions to Address the USD 50 Trillion Infrastructure Deficit}}, institution = {International Institute for Sustainable Development}, year = {2015}, month = nov, url = {https://www.iisd.org/system/files/publications/G-20-ideas-solutions-infrastructure-deficit.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }