Asia faces highest infrastructure losses from extreme weather

Blended finance could help unlock investment.

Asia is among the regions facing the greatest infrastructure losses from extreme weather, underscoring the need for more investment in climate-resilient assets.

Boston Consulting Group said the Americas and Asia currently face the highest annual average losses from extreme weather events.

Low- and middle-income countries face annual infrastructure-related losses of $127b, or about 14% of global annual average losses, from disruptions to energy, transport, telecoms, and water systems.

The report said existing and future infrastructure could generate economic losses of as much as 19% of GDP by 2050 if resilience gaps are not addressed.

Meeting infrastructure needs, achieving the UN Sustainable Development Goals, and reaching net zero by 2050 will require about $9.2t in annual investment.

Asia is already a major destination for blended infrastructure finance, with 70% of the 40 infrastructure-focused blended funds reviewed by BCG deployed in the region.

The report said this reflects Asia’s future infrastructure buildout needs and the high expected value of losses if resilience investment is delayed.

Energy and transport are the main sectors for resilient infrastructure financing, with 75% of reviewed blended funds focused on energy and 50% on transport. BCG said these sectors account for the highest annual average losses and exposure.

Funding for adaptation and resilience remains limited, with only $65b of climate finance going to the area in 2023.

BCG said blended finance could help close the gap by combining commercial capital with concessional funding, guarantees, first-loss facilities, technical assistance, resilience bonds, insurance solutions, and local-currency financing.