Integrating wellbeing objectives into long-term infrastructure planning is a necessary condition for ensuring the Wellbeing of Future Generations.
From empowering citizens to make decisions affecting their local communities to creating new jobs and building resilience to social, economic, and environmental shocks, public infrastructure helps attract businesses and determines the productive capacity of communities and nations.
The long-term ambition of the Well-being of Future Generations Act (henceforth, ‘the Act’) is exactly matched by the long-term nature of public infrastructure investments. Although there is much that policy can do in the short term, the promises on health, education, culture, and sustainability objectives set out in The Act and the Welsh Government’s Programme for Government will play out over generational rather than electoral time scales.
The Wealth Economy offers a new approach to defining and delivering economic prosperity, sustainability, and well-being. It is best introduced via a simple analogy. Imagine you are running a bakery. The size of the pie you can produce in the future depends on the stock of ingredients you have in the pantry. Run out of ingredients, and tomorrow’s pie is smaller. The economy operates in much the same way. But the economic pantry consists of human, natural, social, physical (infrastructure), and institutional capital. In the Wealth Economy approach,this portfolio of assets is known as Inclusive Wealth.
Whilst governments are familiar with the role that human and physical capital play in underpinning prosperity, thinking of social capital within an economic framework may be relatively new. But social infrastructure may be just as important as physical infrastructure for supporting well-being in towns and cities across the UK’s nations. Social infrastructure refers to physical spaces (e.g. libraries, cafes, pubs, schools, and community facilities) and services (e.g. adult day care, youth services, leisure centres, and charities) that promote community interaction and engagement in civic life.
For decades, economic measurement and policy have focused on GDP, the ‘size of the pie’, whilst ignoring the depletion of assets in the economic pantry. To deliver long-term well-being, productivity, and value for money, infrastructure investments should be considered in relation to the full portfolio of Inclusive Wealth.
Two key links between infrastructure and productivity can be considered. First, efficient infrastructure can reduce costs (e.g. of water and electricity) and enhance the reliability of supply chains. With lower costs, firms become more competitive and aggregate productivity rises.
Second, the availability and reliability of infrastructure can enhance the productivity of other inputs such as capital and labour. For example, lorries and HGV drivers can make more deliveries on time if roads are in good condition.
However, the empirical evidence on the productivity effects of public infrastructure is mixed. This is partially because infrastructure is hard to define and measure, partially because it is difficult to isolate the effect of infrastructure from other productivity-enhancing factors, and partially because many of the benefits from infrastructure are themselves difficult to measure. For instance, the benefits of IT infrastructure include the ability to work from home (which economic statistics do capture) but also the consumption of free digital goods such as YouTube and video chat services (which economic statistics do not capture well).
The Wealth Economy’s portfolio approach suggests that infrastructure investments are best considered not as a set of independent and isolated projects, but rather as a system of interconnected systems.
The Welsh Government’s Programme for Government 2021 – 2026 sets out a range of infrastructure commitments across multiple sectors including health, education, transport and digital.
The related infrastructural services including improved access to housing that meets care needs, low carbon social homes, or locally generated renewable energy can positively impact both personal welfare and the environment. Such investments can also enable access to jobs, education, and opportunities for the consumption of other goods.
This increasingly complex and interconnected landscape of infrastructure services can be understood as a system of systems that delivers the outcomes for people. It is vital that infrastructure investments are considered in context, alongside their impact on the rest of the Inclusive Wealth portfolio.
Approximately 70% of global greenhouse gas emissions come from infrastructure construction and operations such as power plants, buildings, and transport systems. The World Health Organisation estimates that under current emissions trajectories, deaths attributable to climate change will rise from 150,000 to 250,000 per year by 2030.
The unfolding climate and biodiversity emergencies mean measuring how infrastructure investment impacts natural capital is a priority.
Taken together, the processes that create infrastructure, the materials used in its construction such as iron, steel and cement and the behaviours it enables significantly contribute to carbon emissions which are the primary driver of climate change.
As the Wealth Economy framework argues, a new statistical infrastructure is needed to holistically account for the climate and environmental impacts of energy, transport, buildings, digital, water and waste systems.
Climate change considerations should be reflected in decision making across the infrastructure lifecycle from initial scoping to full operation including the way that projects are procured.
Retrofitting existing infrastructure and foregrounding carbon reductions in the context of new infrastructure avoids locking-in carbon intensive options for several decades. Failure to adapt and account for climate change in the planning, designing, building or decommissioning of infrastructure projects will have cost implications and can adversely impact communities.
Investment decisions will directly affect specific people and communities, who should be consulted once identified through robust social assessment and distribution impact analysis.
Crucially, such analysis should inform high-level decision making when considering which projects should be taken forward, rather than retrospectively once a project has already been approved.
When infrastructure is deemed appropriate, the outcomes of a social assessment should be used to identify the complementary policies and plans needed to realise intended benefits. Improving the way projects are appraised and selected calls for additional research into the potential impacts that infrastructure projects can have at different geographical scales.
It may also call for the adoption of a range of sometimes more sophisticated modelling and data analysis techniques to determine how each asset-level intervention affects the system.
The Well-being of Future Generations Act is a landmark achievement in moving ‘beyond GDP’. It takes a broad view on the definition of well-being, and charges ministers with the task of identifying the appropriate metrics and indicators for assessing progress.
There is an inescapable trade-off between the consistency of metrics and their responsiveness to the nuanced and changing needs of the public. Regular consultations with the public, possibly through citizens assemblies, can help ensure that well-being metrics accurately convey well-being realities.
The Welsh Government’s Programme for Government 2021-2026 has the potential to integrate well-being into every domain of government decision making. It is crucial that well-being, sustainability, and resilience are prioritised in infrastructure planning.