Categories
Climate Change

Climate Change Impacts on Transport

So how important is the impact of climate change on transport infrastructure?  Very important in developing countries it seems.  We have just completed a present cost analysis of this at a river crossing in the Solomon Islands. It looked out over a 25 year period.

In the absence of downscaled climate forecasts and detailed hydrological data a scenario analysis was developed.  Baseline asset performance in the absence of climate change was assessed against a range of climate change scenarios using actual flood event and cost data. This created estimates of days service lost as well as maintenance, repair and replacement costs.  Five different socio-economic impacts driven by service levels were also assessed identifying wider economic costs.

The upshot is that just at this one crossing the economic present cost of climate change is equivalent to around 5% of the current national transport budget. Any climate change adapation measure that fully mitigates that for less cost will increase economic welfare.  The analysis provides a rational basis for an adaptation budget when considering possible engineering design changes.

Categories
Economics

Q and A

At Lytton Advisory we say that providing commercially oriented economic solutions is all about ‘where infrastructure meets money’. In this Q and A, Lytton Advisory Principal Craig Lawrence explains what this means.

Q: So who are economists and what do they do?

A: Economists working with Lytton Advisory are typically postgraduate qualified professionals. We study, develop, and apply theories and concepts from applied microeconomics and write about economic policy. We study the firm and how its commercial operation affects its financial performance, as well as how groups of firms within an industry compete against one another, and how an industry meets the needs of a market.

Q: How does that relate to the development of infrastructure?

A: Because benefits are spread out over a long time and across a wide range of stakeholders. If all the benefits and costs were accrued in one year we could easily see whether the infrastructure was delivering and how risk was defined.

Q: Is it ever that simple?

A: No. Large capital costs of investing in economic infrastructure are recouped through small amounts of use by large numbers of stakeholders over a long period of time. Economic analysis helps identify where the risks are in building and operating infrastructure, ensuring risk is properly attributed to those best able to handle it. Invariably there are also significant social and environmental impacts that need to be considered.

So we help figure out:

  1. Why specific economic and social infrastructure is required and how users may benefit
  2. What infrastructure can cost to build, operate and maintain
  3. How external factors such as exchange rates, interest rates and technology impact on infrastructure project economics
  4. Whether infrastructure provides a sufficient rate of return to its owners, governing authorities and the wider community, as well as identifying in what form that return occurs – financial, economic, social, or environmental
  5. Who is best placed to bear the various risks around building and financing infrastructure

Q: When do you get involved in an infrastructure project?

A: We provide front-end advice and clarity before anybody even starts building; we do mid-project evaluation to ensure that the project remains commercially and economically valid; and we do post-project evaluation to ensure that infrastructure continues to deliver the right results.

Categories
Local Government

Waste Management in Local Government

Effective and efficient provision of waste management is a key municipal service. As elements of local government waste management systems are contracted out councils increasingly need to be able to assure rate payers they are achieving value for money.

Also, some councils are moving to separate charges for waste services. Complexities around collection, recycling and disposal tie together environmental issues, land planning, transport logistics and commercial arrangements with continuing governance oversight by councils.

A robust approach to full cost pricing enables councils to see where key costs lie, what drivers are involved and where community service obligations may be introduced. It also enables better investment planning and funding.

Lytton Advisory is currently developing a full cost pricing approach to waste service infrastructure for a local council in Queensland.

Categories
Climate Change

Climate Change Adaptation in the Pacific

Climate change is recognised as a serious risk to economic infrastructure.

In Australia a wide range of work has been underway. A lot of research is coordinated through the National Climate Change Adaptation Research Facility (http://www.nccarf.edu.au/). This is part of focus at the national level on climate change adaptation (http://http://www.climatechange.gov.au/climate-change/adapting-climate-change).

Lytton Advisory is currently working on climate change adaptation issues in the Pacific.

Categories
Lytton Advisory

Welcome

Welcome to Lytton Advisory. We help organisations make good infrastructure decisions using economic and financial analysis. Some of our thoughts on these issues are posted here.