A1709
Title: Public infrastructure investment delays and transition risks
Authors: Ibrahim Tahri - International Institute for Applied Systems Analysis (IIASA) (Austria) [presenting]
Abstract: The impacts of delays and cost overruns that frequently accompany the provision of public infrastructure are analyzed in the context of a transition to a low-carbon economy. Given the important role the public sector can play in transitioning to a green economy, the uncertainty surrounding the arrival of public funding can outweigh the positive spill-over effects on productivity in the private sector. Unforeseen delays in the allocation of public capital can lead to excessive consumption and inadequate private investment in a decentralized economic system, thus hindering the development of green sectors. Furthermore, delays in public investments can increase the risk premium associated with private capital. The presence of delays not only diminishes equilibrium growth but also leads to a growth trajectory that deviates from what is expected in the standard model (without any delays).
