Fluid populations, immobile assets: Synchronizing infrastructure investments with shifting demography

Abstract

In this article we reconstruct and test conventional economic theory’s deductive claims about the nature of infrastructure assets and the demography of end-users who demand infrastructure outputs. We find that the conventional theory puts forward three mutually reinforcing propositions: that infrastructure assets have a natural tendency towards monopoly owing to technical economies of scale; that infrastructure outputs (such as cubic metres of water or kilowatt–hours of electricity) and end-users of these outputs are essentially homogenous; and that future demand of infrastructure is predictable with a reasonable degree of certainty. These conventional propositions in practice have promulgated a ‘bigger is better’ paradigm in the planning of infrastructure assets and networks that has entrenched the practice of building large immobile infrastructure assets. In contrast, building on evidence from multiple cases – Berlin water authority (Berliner Wasserbetriebe) and World Bank-financed water supply projects in six developing countries – we show that conventional economics theory has led to the development of poor planning practices that are yielding unfavourable outcomes in infrastructure investments. We find that the heterogeneous populations of end-users (individuals, households and organizations) are fluid across space and time. This fluidity makes immobile assets subject to frequent and costly obsolescence. Instead of being theorized as large immobile (and monopoly tending) assets, infrastructure assets should be viewed as modular, plug-and-play, increments. These modules can be flexibly assembled over time to expand or contract capacity in specific places for specific users.