Investment needs to achieve the Sustainable Development Goals

Daniel Jeong-Dae Lee Macroeconomic Policy and Financing for Development (MPFD), ESCAP

Workshop on Challenges in Graduating from LDCs for Bangladesh24 June 2019

Overview

• Many countries in Asia-Pacific region have mainstreamed the SDGs into their national plans, but few have examined the financial implications.

• SDG costing can help mobilize resources as well as allocate them to priority areas.

• This presentation summarizes ESCAP’s recent assessment of SDG investment needs in Asia-Pacific region, and discusses a planned manual for country-level assessment.

• Bangladesh’s experience in this regard could be invaluable for other countries in the region!

Bangladesh on SDGs

• Comprehensive approach led by the Prime Minister’s Office and the Planning Commission

• Mainstreamed into 7th national plan, 2016-2020• Priority SDG indicators, targets and monitoring

(www.sdg.gov.bd) • Voluntary national review (2017)• SDG needs assessment and financing strategy

(2017)• SDG progress report (2018)

Bangladesh: additional investment need

Source: Government of Bangladesh. SDG Financing Strategy: Bangladesh Perspective, 2017.

Bangladesh: composition of additional need

Source: Government of Bangladesh. SDG Financing Strategy: Bangladesh Perspective, 2017.

No povertyNo hunger

Health

Education Gender

Water & sanitation

Energy, economy & infrastructure

Reduced inequality

Cities

Natural resources

Climate action

Life under waterLife on land Peace

Partnership

Bangladesh: financing strategy

Source: Government of Bangladesh. SDG Financing Strategy: Bangladesh Perspective, 2017.

ESCAP Survey 2019 on SDG investment needs in Asia-Pacific region

Baseline scenario through 2030

0

100

200

300

400

500

600

0

1000

2000

3000

4000

5000

6000

7000

2015 2020 2025 2030

GDP (US$ billions)

India (left axis) BangladeshNepal PakistanSri Lanka

0

2

4

6

8

10

12

14

16

18

2015 2020 2025 2030

poverty incidence

Bangladesh IndiaNepal PakistanSri Lanka

Source: UN-DESA

Inclusive and sustainable development scenario

People Planet

Prosperity

How much would it cost to achieve the Sustainable Development Goals?

Using various costing models, ESCAP’s Economic and Social Survey 2019 finds that an additional investment of $1.5 trillion per year would allow Asia-Pacific developing countries to end extreme poverty and ambitiously move towards universal health coverage, quality education and enabling infrastructure, while staying on track to limit climate change.

General methodology and challenges

• Intervention- and unit cost-based costing for most social and infrastructure sectors

• Integrated models for energy and the environment

• Some SDGs do not have clear numerical targets• Establishing a baseline is challenging• Builds on costing models used by specialized

agencies in their respective area of work• Aggregation issues

Annual average additional investment needs

Annu

al a

vera

ge, 2

016-

2030

$

billio

ns in

201

6 co

nsta

nt p

rices

669

People Prosperity Planet

Annual average additional investment needs

Annu

al a

vera

ge, 2

016-

2030

$

billio

ns in

201

6 co

nsta

nt p

rices

669

People Prosperity Planet

Annual average additional investment needs

Annu

al a

vera

ge, 2

016-

2030

$

billio

ns in

201

6 co

nsta

nt p

rices

669

People Prosperity Planet

Annual average additional investment needs

Annual average additional investment needs

People

Prosperity Planet

≈$1 43₵

NO POVERTY & ZERO

HUNGER

HEALTH AND EDUCATION

12₵

SUSTAINABLE INFRASTRUCTURE FOR ALL

37₵

CLEAN ENERGY FOR ALL

PROTECTION FOR NATURE

Just under a dollar per person per day

Investing in PEOPLE to realize basic human rights and human capacities

• Targeted cash transfer32

317

421

158

138

0

100

200

300

400

500

600

700

Additional investment inPEOPLE per year

billi

on, U

nite

d S

tate

s do

llar

• Social protection floor

• Nutrition-specific interventions

• Agricultural productivity

• Universal health coverage

• Universal access to quality education

No poverty and hunger

0.00

0.40

0.80

1.20

1.60poverty gap transfers

0.002.004.006.008.00

10.0012.00 social protection floor

0%

20%

40%

60%

80%

100%

Bangladesh SAARC ASEAN Developing AP

Child MaternityUnemployment DisabilityOld‐age pension

0.00

0.01

0.02

0.03

0.04

Stunting Anemia Breastfeeding Wasting

nutrition interventions

SAARC Developing AP

(% of GDP)

Agriculture$ billions Public investment

sharePrimary agriculture and natural resources 4.13Soil conservation 0.43 30Water conservation/improved irrigation 1.93 30Preservation/improvement of: ..Crop 0.16 30Animal 0.12 30Fish 0.30 30Forest 0.13 30

Mechanization 1.05 10Agroprocessing operations 3.95Cold and dry storage 0.72 20Rural and wholesale market facilities 1.16 50First-stage processing 2.07 10Infrastructure 5.89Rural roads 3.93 90Rural electrification 1.96 80Institutional frameworks 2.68Land titling, tenure security 0.33 90Rural finance 1.96 50Food safety related regulations 0.39 90R&D and extension 3.27Research and development 1.31 90Extension 1.96 90Total 19.92 64

Source: ESCAP, based on FAO, IFAD and WFP (2015)

(South Asia)

Health

2016 2018 2020 2022 2024 2026 2028 2030

progress scenario

Additional Programme‐specificinvestmentsCommodities and supplies

Emergency Preparedness, RiskManagement and ResponseHealth financing policy +GovernanceSupply chain

Health information systems

Health workforce

Infrastructure (facilities andoperational cost)0

20,000

40,000

60,000

80,000

100,000

120,000

2016 2018 2020 2022 2024 2026 2028 2030

ambitious scenario

Source: Stenberg and others (2017)

(South Asia, $ millions)

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0

50

100

150

200

250

300

350

400

Pre‐primary

Primary Lowersecondary

Uppersecondary

Per p

upil cost, U

S do

llars

Millions of stude

nts

Developing Asia‐Pacific

Students (2015) Students (2030)Per pupil cost (2015) Per pupil cost (2030)

Education

Source: UNESCO-ESCAP Education Costing Model

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2015 2020 2025 2030

Millions of U

S do

llars

Bangladesh

ClassroomsSupport for the marginalizedNon‐salary recurrentTeacher salaries

Investing in PLANET to secure humanity’s future and live in harmony with nature

102

242

180

156

0

100

200

300

400

500

600

Additional investment inthe PLANET per year

billi

on, U

nite

d S

tate

s do

llar

• Universal access to electricity

• Universal access to clean cooking

• Renewable energy

• Energy efficiency

• Biodiversity

Energy

Source: ESCAP, based on IEA (2018)

(South Asia, $ billions)

0

20

40

60

80

2017 2018‐25 2025‐30

power generation

Other renewables Solar PV

Wind Hydro

Bioenergy Nuclear

Oil Gas

Coal

020406080100120140160180200

2017 2018‐25 2025‐30

energy investments

End‐use investment

Electricity networks

Power generation

Fuel supply

05101520253035404550

2018‐25 2025‐30

energy efficiency

Transport

Buildings

Industry

Resources efficiency

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

Per

cent

age

Deviation from historical trend of material intensity in 2030

Climate action

0.00

0.50

1.00

1.50

2.00 climate proofing of basic infrastructure

(% of GDP)

Biodiversity

0 10 20 30 40 50

Target 16: Nagoya Protocol

Target 10: Coral reefs

Target 13: Genetic diversity

Targets 1-4: Awareness training, values, incentives,…

Targets 17-20: National plan, science base and financing

Target 12: Species conservation

Target 15: Restoration of forests

Target 7: Sustainable agriculture, aquaculture and forestry

Target 14: Ecosystem restoration

Target 6: Fisheries

Target 9: Invasive alien species

Target 5: Reducing habitat loss (forests and wetlands)

Target 11: Protected areas (terrestrial and marine)

Target 8: Pollution

Investment needs based on the Aichi targets ($ billions)

Source: ESCAP, based on CBD (2012)

Investing in PROSPERITY through enablinginfrastructure

126

56

14

0

20

40

60

80

100

120

140

160

180

200

Additional investment in thePROSPERITY per year

billi

on, U

nite

d S

tate

s do

llar

• Transport

• Information and communications technology

• Water and sanitation

Investment needs vs. current flows in transport, ICT and WSS infrastructure

General methodology• Projection of future infrastructure demand based on economic,

demographic, urbanization variables • Estimation of public and private flows to infrastructure Transport (roads and railways)• Project-based country-specific unit costs • Resource optimization holds a high promiseICT (mobile and fixed-broadband) • High- and low-cost scenarios based on ITU data • Critical for the digital economyWater and sanitation • Within the premises, readily accessible, free from contamination• Challenges of water stress and water-related ecosystems

Methodology and considerations

Transport and ICT

0.00

1.00

2.00

3.00

4.00

5.00

roads and railways

0.00

0.50

1.00

1.50

2.00

mobile and fixed broadband

(% of GDP)

Water and sanitation

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

Water sources (low) Water sources (high)

Sanitation facilities (low) Sanitation facilities (high)

(% of GDP)

Investment gap varies significant across the region, rising to more than 16% of GDP in LDCsand more than 10% in South Asia

Inve

stm

ent g

ap b

y su

b-re

gion

s an

dan

d co

untry

gro

up, %

of G

DP Similarly, Pacific SIDS face steep challenges due to high vulnerability to climate change, but results are not shown given limited data availability.

024681012141618

Leastdevelopedcountries

South andSouth‐West

Asia

South‐EastAsia

East andNorth‐East

Asia

North andCentral Asia

People Prosperity Planet

Additional investment needs to achieve SDGs

0

5

10

15

20

25 (lower bound estimate, % of GDP)

However, achieving the Goals is NOT JUST about money

Goals whose achievement depends heavily on other factors (e.g. laws and regulations) but nevertheless benefit from other SDG investments

Meeting the investment needs through effective planning and financing

Prioritizing Goals: considering both progress and investment gaps

Prioritizing Goals: considering both progress and investment gaps

Prioritizing Goals: considering both progress and investment gaps

Prioritizing Goals: considering both progress and investment gaps

DEA-based estimation of efficiency frontiers

• Education (5) – enrolment in primary and secondary; quality of education system, primary education, and math and science

• Health (3) – Maternal and infant survival rate, life expectancy at birth

• Infrastructure (13) – road, railway, airport density and quality; mobile and fixed broadband subscription; energy use and perception; access to defecation facilities

COD

ZMB

TJK

LKALBN

BRB

SGPFIN

ARM

AUS

AZE

BGD

BRN

BTN

GEO

HKG

IDNIRN

JPN

KAZ

KGZKHM

KOR

LAO

LKA

MMR

MNG

MYS

NPL

NZL

PAK

PHLRUS

SGP

THATJK

TURVNM

.2.4

.6.8

1O

vera

ll Ed

ucat

ion

0 1000 2000 3000 4000 5000Public Expenditure on Education

Non-ESCAP Countries Efficiency FrontierESCAP Countries

Data Source: World Bank WDI and GCI

Education & Expenditure

0.0

0.2

0.4

0.6

0.8

1.0

Developing Asia-Pacificcountries

World Developed countries

Investment needs can be reduced substantially through improved efficiency

Potential savings

Micronesia

Maldives

Nepal

Cambodia

Myanmar

Samoa

Tonga

Sri Lanka

Armenia

Fiji

Japan

Kiribati

Philippines

TajikistanKyrgyzstan

SingaporeMarshall Islands

Australia

Azerbaijan

Republic of Korea

Vanuatu

New Zealand

Georgia

Viet Nam

Hong Kong, China

PakistanIndia

Mongolia

AfghanistanBangladesh

ThailandTurkey

Solomon Islands

China

Lao PDRIndonesia

Russian Federation

Kazakhstan

Uzbekistan

Malaysia

Macao, China

Papua New Guinea

Bhutan Timor-Leste

0

5

10

15

20

25

30

35

0 5 10 15 20 25 30

Tax

reve

nue

in 2

017

or la

test

in %

of G

DP

Tax revenue in 2012 in % of GDP

Overall, low tax revenues but some progress in recent years

The near-term outlook for public debt is relatively stable

01020304050607080

Uzb

ekis

tan

Rus

sian

Fed

erat

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Kaz

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Nep

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epub

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angl

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bodi

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Kyr

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Vie

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Lao

PD

RP

akis

tan

Indi

aS

ri La

nka

Per

cent

age

of G

DP

2017 2022

Upward pressure on public debt would increase in the event of adverse shocks

Cost of financing would also depend on access to international capital markets

(Record of public bond issuance, 1996-2016)

Most countries with wide SDG investment needs have limited access to affordable financing

Governments could actively engage private sector to meet the required investment

0102030405060708090

100

Per

cent

age

of to

tal i

nves

tmen

t Developing countriesDeveloped countries

Source: UNCTAD (2014)

Regional financial cooperation could match surplus savings with investment needs

Source: ESCAP Survey 2018

TAKEAWAY MESSAGES• In the journey towards sustainable development,

Prioritize ambitions beyond economic growth and invest in people and the planet first.

• The ticket is affordableat an additional $1.5 trillion per year ≈ $1/person/day.

• …if we harness synergies through integrated approaches…… and strengthen development partnership to ensure NO ONE IS LEFT BEHIND!

Please visitwww.unescap.org/publications/economic-and-social-survey-asia-and-pacific-2019