CHAPTER 1.2  The Approach to Private Finance for Critical Infrastructure

One of the first observations to make about the infrastructure market is that it might not necessarily be the size of the infrastructure that makes it significant, but rather its criticality for socioeconomic development or national security. The types of infrastructure that might fall into this category include flood barriers; electricity generation, including nuclear power; water supply; and mass transit. The impact of such asset failure can mean different things in different countries or regions and will depend on the reliance of users on the infrastructure and the availability of alternatives. For example, in some countries the failure of water pumping stations might completely eliminate access to any clean water for a considerable time; in other countries, such a failure might result in a short-term reliance on bottled water. Therefore, essential infrastructure consists of those assets that are either monopolistic or safety critical-assets that are too important to fail. This feature of infrastructure impacts the choice and structure of financing.

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