Key Highlights

• The current planning process, especially in the land transport sector, fails to incorporate socio-environmental components in the selection of projects.
  
• Brazil has a good opportunity to leverage infrastructure into a powerful tool to achieve the country’s medium and long-term goals while taking into account the future of the Amazon – and other biomes – and how their natural resources are used.
  
• The creation and introduction of a new phase focused on pre-viability to the current project life cycle would improve the project selection process and assist in prioritizing projects currently in the portfolio.

There is a growing consensus that investments in infrastructure can help developing countries address two of their main challenges. First, better infrastructure can improve the quality of life of the population and make businesses more competitive. Second, it can increase resilience to climate change and reduce greenhouse gas emissions. In addition, in the current context of the Covid-19 pandemic, infrastructure spending is one of the key levers that government can pull to fuel economic growth. 

Brazil lags behind much of the world in terms of quality and quantity of infrastructure, leading to higher production costs, reduced productivity, and a lower growth potential for the economy.

Faced with this scenario, the Brazilian government intends to promote investments aimed at a comprehensive portfolio of projects, some of which are in the Amazon. This includes recent projects as well as projects inherited from national integration and occupation plans put in place over the last 50 years. 

In this brief, researchers from Climate Policy Initiative/Pontifical Catholic University of Rio de Janeiro (CPI/PUC-Rio) and Inter.B collaborated to analyze the instruments available for infrastructure planning – particularly those related to the land transport sector.

The analysis found that there is an opportunity to (i) enact a planning strategy that reflects a sustainable development model and includes decisions about the future of the Amazon and other biomes, and (ii) to introduce a pre-viability phase to improve the project selection process and assist in prioritizing projects currently in the portfolio.

This analysis reveals that the newly enacted Brazilian National Development Strategy (Estratégia Federal de Desenvolvimento para o Brasil – EFD), despite stating that it is a long-term strategy, is actually a medium-term one given its eleven-year time period. Additionally, while it establishes general key index and target goals, they may not be enough to address critical issues, such as deforestation.

Based on this analysis, the authors recommend the introduction of a planning strategy that reflects a sustainable development model and the demand for infrastructure services and underlying assets for the medium and long-term. The Amazon deserves a special chapter in such a strategy, given its position as the largest tropical forest in the world and its role as a provider of essential ecosystem services for Brazil’s economy and society at large.

To ensure greater integrity in the project selection process, the authors recommend introducing a new step between the planning and the viability analysis of large-scale greenfield infrastructure projects. They propose the creation of a pre-viability phase that would act as a filter to ensure that only viable projects move forward, avoiding an automatic track between planning and viability phases. In addition, the proposed pre-viability stage would be instrumental in helping prioritize the projects in the current portfolio.