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The infrastructure finance market needs to evolve to cater for innovations in the underlying sector.

Speakers at US Exim’s annual conference in Washington DC told delegates and GTR that with the pressures of population growth, urbanisation and climate change, infrastructure design and construction is going to have to undergo radical change.

The world’s population has grew by 1 billion from 1999 to 2011. It’s expected to reach 9.3 billion by 2050 (according to the UN) and 10.1 billion by 2100.

Currently, 27 out of the US’s top 29 economies are on coastal regions, or deltas. 65% of the world’s cities with populations above 2.5 million are located on coastlines.

Fragile ecologies have been degraded, with even manmade infrastructure being eroded more quickly than ever before.

“Take flooding,” said Judith Rodin, president of the Rockefeller Foundation, a private sector philanthropic organisation. “We can’t hold out water, we’ve realised that. We need to know how to live with it.”

Rodin said that the Japanese and Dutch have been leading the race to develop infrastructure which fails safer and recovers stronger.

In the aftermath of Hurricane Sandy, New York has been investigating ways in which to improve its storm surge technology. Many have suggested that the city should adopt systems similar to the Zuiderzee Works and Delta Works dam systems which protect huge swathes of the low-lying Netherlands from flooding.

Such a system would cost upward of US$15bn, and with more of the world’s cities (and higher portions of the population) becoming vulnerable to disasters, similar investments may need to be made elsewhere on the planet.

The problem is: where does the finance come from? “Innovation around finance is important, we need to catalyse new forms of investment,” said Rodin.

But with large portions of the world struggling to pay for even the most basic of infrastructure projects, expecting them to fork out for the most advanced in mitigating technologies. “Only 20% of Sub Saharan Africa has access to power, and it will have a population of 2 billion by 2050,” said Jin-Yong Cai, the CEO of the IFC, adding: “The biggest challenges is mobilising international capital. The pressure is on the private sector to invest.”

Multilaterals such as the IFC and national bodies such as US Exim will certainly have a large role to play. But the recent development of ‘bundling’ may prove to be a key innovation in the project finance sector.

A number of US cities have trialled bundling municipal projects together, contributing local governmental funds, and luring the private sector investment through a spread of long-term projects, rather than standalone initiatives.

The projects could be interlinked: for instance, if a city is trying to attract finance for a pipeline, why not lay broadband at the same time?

The Rockefeller Foundation is also trialling the initiative internationally, through its 100 Resilient Cities project.

Through this, the foundation funds the early stages of bundles of projects (such as the feasibility and early construction costs), thereby mitigating some of the financial risks, making the project more commercially viable. The projects are all geared towards making cities more robust, in the face of overpopulation and climate change.

Some of the cities that are signed up include Dakar, Christchurch, El Paso, Glasgow, Durban, Ramallah and Mandalay.

33 cities have currently signed up, with the foundation seeking applications from other cities which wish to improve their infrastructure in this way. The developments are certainly exciting, but a question mark remains over how swiftly and efficiently such initiatives can be rolled out.