A Root Cause of Diverse Risks and Root-Level Solutions

Abstract

Given that the strategy to spread green infrastructure globally presupposes institutional investors with US$ 92 trillion assets as its key player, this chapter looks for innovative risk-hedging mechanisms for institutional investors in infrastructure markets of emerging and developing countries. In this context, this chapter tries to pinpoint a root cause of such diverse risks in green infrastructure markets of developing countries. Understanding—and addressing—the common root cause helps in generating powerful solutions towards hedging the diverse risks. To this end, the chapter divides the development path of a state into five phases, and shows that the common root cause of diverse risks of the infrastructure market of developing countries is that these countries have not reached a specific development phase. Without reaching the specific development phase, various risks cannot be hedged within the system of the host country. Thus, alternative approaches are required: external protections and a decentralized approach.