SDG building investment indicator
9 Aug 2017
Preliminary estimates suggest that Overseas Development Aid (ODA) to LDCs could easily fund most of the investment in dwellings because LDC investment in dwellings is generally very small. The figure shows ODA as a percentage of the investment (GFCF - Gross Fixed Capital Formation) in Dwellings for LDCs.
UN Habitat is the Custodian Agency for SDG Indicator 11.c.1 ("Proportion of financial support to the least developed countries that is allocated to the construction and retrofitting of sustainable, resilient and resource efficient buildings utilizing local materials").
This is the only SDG indicator that addresses directly the built environment and the building and construction sector which is a key component of development, namely the provision of housing in the large and ever larger African and Asian cities.
The aim of theindicator is to measure the increase in financial support allocated to the construction or retrofitting of "sustainable, resilient and resource efficient buildings utilising local materials" in Least Developed Countries (LDCs).
Peter Boswell was nominated by the FIDIC Sustainable Development Committee to participate in June 2017 in a virtual EGM to review a zero draft of the metadata for the indicator.
The zero draft envisages as the indicator the percentage of total financial support allocated to LDCs that is allocated for the construction and renovation of sustainable buildings in LDCs.
A main outcome of the meeting was to identify the amount of investment in buildings for without this it will be impossible to determine the impact of financial support.
This consideration is central to the FIDIC-EFCA Consulting Engineering Survey.
Historically, it has been extremely difficult to estimate investment in the construction sector for LDCs. The hope is that with increasing interest in funding sustainable buildings in the emerging Asian and African cities, countries will encourage agencies responsible for national accounts to monitor construction investment.
The FIDIC-EFCA survey managed by Peter Boswell has been working to identify ways to estimate building investment in countries that do not publish adequate national accounts.
To data, work by the World Bank to identify investment in dwellings has been correlated with other data to give a reasonably accurate overview of the investment in dwellings (the most appropriate measure is the Dwellings component of Gross Fixed Capital Formation - GFCF - that is specified by the 2008 UN System of National Accounts).
The investment in buildings that are not residential and for which the investment in national accounts is recorded in Other Buildings and Structures GFCF is however much more difficult to determine for LDCs without comprehensive national accounts.
The only approach that seems feasible at the present time is to assume that the structures' investment (mainly for civil engineering works) is given by the general government GFCF investment. This however clearly underestimates the investment on non-residential buildings.
The underestimate is known from more accurate ways of determining the investment in infrastructure as opposed to buildings that uses approaches pioneered by the European Investment Bank and taken up by the European Commission, and revised recently by Belgian authorities (the approaches use investment in either industry sectors or in asset classes that correspond to COFOG functions of government database infrastructure categories).
It may however be possible to estimate the part of general government investment allocated to non-residential buildings, thereby improving estimates of the overall investment in buildings in LDCs.
Details of the methodology, which is being made available to the UN Habitat for the SDG indicator, will be published on the FIDIC-EFCA survey website.
UN Habitat envisages that methodologies and metadata for the SDG11.1.c indicate will evolve since the UN has in place a process to update indicators in the medium term.